uk gas security of supply seminar · 2013-07-31 · – madrid – paris – milan – vienna –...
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UK GAS SECURITY OF SUPPLY SEMINAR
The Impact of Unconventional Gas2 February 2012Lucy Field
AGENDA
2
1. Introduction
2. Pöyry
3. Potential in Europe and around the World
4. Impact on GB gas market
5. Recent developments
6. Conclusions
AGENDA
3
1. Introduction
2. Pöyry
3. Potential in Europe and around the World
4. Impact on GB gas market
5. Recent developments
6. Conclusions
INTRODUCTION
Could a US-style boom be repeated in Europe?
What is the global potential for UG?
Pöyry researched UG developments around the world, then projected a range of possible outcomes by 2030
These were combined to create three scenarios: Boom, Balanced and Restrained
Pöyry’s analysis indicates a range of potential effects on UK gas prices, gas demand and sources of supply
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In 2011, Pöyry undertook a study for Ofgem to investigate the potential impact of unconventional gas (UG) developments around the world, on Europe and the UK
AGENDA
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1. Introduction
2. Pöyry
3. Potential in Europe and around the World
4. Impact on GB gas market
5. Recent developments
6. Conclusions
PÖYRY MANAGEMENT CONSULTING
Offering expert advice from strategy to implementation on policy, regulation, business operations, financing and valuation and sustainability
Providing in-depth market intelligence across Europe
Over 250 energy market experts in 14 offices across Europe:
– Düsseldorf – Oxford– Helsinki – Stockholm– London – Stavanger– Madrid – Paris– Milan – Vienna– Moscow – Villach– Oslo – Zurich
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Pöyry’s experience across Europe made it ideal for this project
(c) grafikdienst.com
Pöyry offices
Pöyry Management Consulting offices
SAMPLE OF CLIENTS
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AGENDA
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1. Introduction
2. Pöyry
3. Potential in Europe and around the World
4. Impact on GB gas market
5. Recent developments
6. Conclusions
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MUCH UNCERTAINTY IN EUROPEAN UG POTENTIAL
…leading to three scenarios for Europe as a whole
UG production by 2030 – a range of outcomes
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bcm
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bcm
Boom Balanced Restrained
Pöyry used data published on shale gas potential in various countries and projected the rate at which rigs could be dispatched and new wells drilled
EU SHALE POTENTIAL DWARFED BY US FORECASTS
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US growth is currently projected to be three times bigger than Pöyry’s European Boom, which is also set to commence 10 years later
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Projected US Shale production (EIA 2011, trended to 2030)Historic US Shale ProductionTotal EU production under Boom scenario
Built up country-by-country
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UK
Italy
Austria
Hungary
Romania
Netherlands
France
Germany
Poland
DIFFERENT COUNTRIES HAVE VERY DIFFERENT DRIVERS
Russia dominated by conventional gas but has started to exploit CBM
Australia has developed, and is planning more, CBM for export as LNG
India and China have potential in UG, however, the total energy supply-demand balanced needs to be considered before projecting the impact on world gas balance
new gas could displace domestic coal rather than imported LNGgrowth in energy demand could absorb any new gas produced
Some countries, such as South Africa, have UG potential but their isolation means their impact on world gas markets is likely to be small
Developments in the US will have influence on the world LNG market
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Coal bed methane (CBM) features widely outside of the US
AGENDA
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1. Introduction
2. Pöyry
3. Potential in Europe and around the World
4. Impact on GB gas market
5. Recent developments
6. Conclusions
UG BOOM DOES NOT CAUSE A COLLAPSE IN PRICES
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But prices remain much lower in the Boom scenario due to a well supplied LNG market and large volumes of shale gas being produced in the EU
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Rea
l 201
0 p/
ther
m
Boom Balanced Restrained HistoricalPrices rise in the Restrained as US shale gas production stalls
GB
gas
pric
e
LOWER PRICES UNDER THE BOOM LEAD TO HIGHER DEMAND
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Demand for gas in power generation is 10bcm/year higher under the Boom scenario, than the Restrained.
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Boom Balanced Restrained
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dem
and
THE BALANCED SEES THE GREATEST VOLUMES OF LNG IN GB
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Tightness in the US diverts LNG away from the UK in the Restrained scenario. Imports from the continent displace LNG in the Boom scenario
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LNG
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s to
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)Restrained Balanced Boom
LNG
into
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LNG
Norway
Russian imports
Unconventional
Conventional
UG VOLUMES IN NW EUROPE MODERATE COMPARED TO US
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Under the Boom scenario 10% of gas supplied to NWE is UG by 2030, but demand is higher.
5%
10% 5% 2%
44bcm range by 2030 across scenarios in NWE
Sou
rces
of s
uppl
y to
NW
Eur
ope
AGENDA
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1. Introduction
2. Pöyry
3. Potential in Europe and around the World
4. Impact on GB gas market
5. Recent developments
6. Conclusions
RECENT DEVELOPMENTS
In September 2011, Cuadrilla announced enormous potential shale gas resources near Blackpool and there have also been earth tremors
France and Bulgaria have banned fracking completely
There have been reports of disappointing early results from Poland and Hungary
The continued growth in shale gas production in the US has led to plans for the US to build capacity of up to 90bcm/year for the export of LNG
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Since Pöyry finished this study in June 2011 there have been developments
PÖYRY ANALYSIS OF THE POTENTIAL BLACKPOOL BOOM
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Even with a Blackpool Boom, by 2030 the UK would still be importing over half its gas
Current Pöyry Boom Scenario for UG in UK Potential 'Blackpool Boom' in UG in UK
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-20
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/yea
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Norway
LNG
GB Unconventional
GB Conventional
Net imports fromContinent
Pöyry article in New Power UK at http://www.poyry.co.uk/News_items/1325772480.html
AGENDA
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1. Introduction
2. Pöyry
3. Potential in Europe and around the World
4. Impact on GB gas market
5. Recent developments
6. Conclusions
CONCLUSIONS
Environmental, planning and resource concerns make our Boom Scenario a low probability outcome
Even moderate development of unconventional gas resources in Europe could keep gas prices in Great Britain lower from 2020 onwards, but a crash in prices is unlikely
The future production of unconventional gas in the US has the potential to significantly impact upon the world LNG market
And, new developments make this an even more pressing question
The security of gas supply to GB and wider Europe is improved by any increase in the indigenous gas reserves and diversity of supply
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