unconventional oil & gas: reshaping energy markets · 2019. 4. 15. · can the bakken story be...
TRANSCRIPT
Unconventional Oil & Gas: Reshaping Energy Markets
Guy CarusoSenior Advisor
Presented at Journees Annuelles des Hydrocarbures23 October 2013
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US Perspective: from Resource Scarcity to….
- US is heading towards 90% Energy Self-Sufficiency But Still Part of a Global Market
- Changing Demand Growth Centers- New Emerging Players but Old Institutions- Policies Based on Resource Scarcity and
Rising US Demand Need to Be Revisited- Environmental Issues Still Loom Large- The “Great Dilemma” of How We Go Forward
Petroleum System Process
324803
120° F120° F
350° F350° FGenerationGeneration
MigrationMigration
Seal RockSeal Rock
ReservoirRockReservoirRock
OilOil
WaterWater
Gas CapGas Cap
EntrapmentEntrapment
Source: USGS, April 3, 2012
Conventional vs. Continuous (Source Rock) Resources
Source: USGS
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Hydraulic Fracturing
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Unconventional Natural GasResources
U.S. shale gas production from the major plays has increased dramatically
US Natural Gas Production
Source: U.S. Energy Information Administration, Annual Energy Outlook 2013, June 25, 2013
50%
34%
Diapositive 9
CSIS2 New SlideCSIS User; 30/08/2013
High demand, advanced technology, moderate development cost
Natural Gas Resources Have Potential to Supply the Market for Decades
0
2
4
6
8
10
12
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
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2011
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2013
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2015
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2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
Natural gas price projections significantly lower due to an expanded shale gas resource base
natural gas spot price (Henry Hub) per million BTU
Sources: EIA, Annual Energy Outlook 2011; EIA, Annual Energy Outlook 2010; and EIA, An Updated Annual Energy Outlook 2009 Reference Case
ProjectionsHistory
Updated AEO2009
AEO2011
AEO2010
AEO2013(201
1$)
Increased Production Allows U.S. to Transition from Net Importer to Net Exporter of Natural Gas
Source: U.S. Energy Information Administration, Annual Energy Outlook 2013, June 25, 2013
Henry Hub spot market natural gas Prices
(2011 dollars per million Btu)History Projections2011
Diapositive 12
CSIS3 Updated SlideCSIS User; 30/08/2013
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But…Major Policy Questions Remain
• Industry desire for “demand pull” to increase prices vs. gov’t need to ensure development is done right
• Gas Utilization Options (power generation, transport, petrochem or refinery feedstocks, industrial use?)
• Export Policy and Volumes• Compatibility with Industrial Policy, Energy Security and
Environmental Goals• Regulation at Federal or State/Local levels • Funding for/Pace of Infrastructure buildout
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Tight/Unconventional OilResources
NPC Study Identifies Large Oil Potential as Well
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01 0002 0003 0004 0005 0006 0007 0008 0009 000
10 00019
0019
0519
1019
1519
2019
2519
3019
3519
4019
4519
5019
5519
6019
6519
7019
7519
8019
8519
9019
9520
0020
0520
1020
15
‘000
s b/
d
1900-2007 2008-2010 2011-2016
Forecast through 2016 shows continued growth
Source: EIA, Excludes NGLs and Other Liquids
1988
Tight oil production for selected plays through August 2012 exceeds 1.8 million b/d
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Can the Bakken Story be Replicated (Again and Again)?
0
500
1000
1500
2000
2500
2005 2010 2015 2020
000 b/d Surging U.S. Shale Liquid Production (oil and NGL)
Woodford
Niobrara
Marcellus
Lower Monterey
Granite Wash
Eagle Ford
Barnett
Bakken
Avalon/ Leonard
Source: Energy Security Analysis, Inc. (ESAI) April 3, 2012
Source: EIA, Texas RRC, North Dakota DMR
US Production Backing Out Imports
Thou
sand
Bar
rels
*Avg monthly production based on annual figures
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000av
r.-20
10
mai
-201
0
juin
-201
0
juil.
-201
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août
-…
sept
.-…
oct.-
2010
nov.
-201
0
déc.
-201
0
janv
.-…
févr
.-…
mar
s-…
avr.-
2011
mai
-201
1
juin
-201
1
juil.
-201
1
août
-…
sept
.-…
oct.-
2011
nov.
-201
1
déc.
-201
1
janv
.-…
févr
.-…
mar
s-…
avr.-
2012
mai
-201
2
juin
-201
2
juil.
-201
2
août
-…
sept
.-…
oct.-
2012
Bakken production
Eagle Ford Production
Angola Crude and Products
Nigeria Crude and Products
Algeria Crude and Products
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Source, EIA AEO 2013, STEO (April 2013)
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Source: EIA Annual Energy Outlook 2013 Early Release
Continued liquids growth and reduced demand means lower imports
US Liquid fuels supply, 1970-2040M
illio
n b/
d
Environmental/Regulatory/Societal Challenges
Realizing the full promise of shale resources is not a certainty and US domestic policy is important
• All shales are not alike; application of drilling/reservoir fracturing technology & operational experience matters
• Steep decline rates require ongoing investment and drilling; and repeated fracturing
• Cost escalation and low commodity prices limit prospects
• Infrastructure build-out and refinery rationalization
•Well design and management of surface chemicals/materials are the best barriers to protecting water aquifers•Disclosure of components of fracking• Scale of water use, treatment & disposal are challenging •Community Issues – infrastructure, land use, population density, noise, haze, health issues, road congestion and repair need to be addressed•Seismicity – associated with wastewater injection•Regulation and enforcement are essential
Technical/Economic ChallengesTechnical/Economic Challenges
Potential Implications for U.S. Market
• With a leveling or decline in demand, new supply growth will shape the market
• Spare refining capacity (as currently configured) in US Gulf Coast will encourage export of petroleum products
• New infrastructure could distribute domestic crudes east and west as well as south
• US Policy objectives need to be understood– Industrial policy to make jobs and comparatively low-priced energy– Environmental policy to protect water and air resources– Climate policy to reduce carbon emissions– Energy Security and BOP Policy to reduce oil imports
Implications for Europe
• Higher energy costs could hinder European competitiveness, especially in highly industrial and export oriented countries
• Competitive pressure from US refineries exacerbate troubled European refineries
• Increased used of coal due to cheaper prices and nuclear shutdowns pose an obstacle to climate change goals
• Energy costs likely to remain higher in Europe, even with export of US LNG or development of unconventional resources
• Flat European demand forces Russia to look for new consumers– LNG exports to Asian consumers– Pipeline to China
So What Could Alter the Forecasts?
• Resource Over/Under Performance or Steep decline rates• Technology Advancements, including Disruptive Technologies
in Competing Areas• Commerciality/Economics/Energy Prices & Costs• Investment Climate for Participants• Timing/Expense of Infrastructure Build-out• Public Sentiment – License to Operate (upstream &
downstream)• Geopolitical and/or Catastrophic Events/Accidents• Policy & Regulations• Saudi/OPEC response• Climate Change & the Transformation to Low Carbon Energy
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Thank youMerci beaucoup
• Questions?