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It’s Gonna be Gas: Let’s Make it a Smooth Ride

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Presentation on theme: "It’s Gonna be Gas: Let’s Make it a Smooth Ride"— Presentation transcript:

1 It’s Gonna be Gas: Let’s Make it a Smooth Ride
Natural Gas Technology: Investing in a Healthy U.S. Energy Future Plenary Panel: Balancing the Technology Role It’s Gonna be Gas: Let’s Make it a Smooth Ride Scott W. Tinker Eugene Kim Bureau of Economic Geology John A. and Katherine G. Jackson School of Geosciences The University of Texas at Austin QAd1023

2 U.S. Energy Consumption Natural Gas & NRH Drivers Efficiency
U.S. Energy Consumption Forecast 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1845 1860 1875 1890 1905 1920 1935 1950 1965 1980 1995 2010 2025 2040 % of Total Market Gases and Renewables Liquids Solids U.S. Energy Consumption Forecast 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1845 1860 1875 1890 1905 1920 1935 1950 1965 1980 1995 2010 2025 2040 % of Total Market Gases and Renewables Liquids Solids U.S. Energy Consumption Forecast 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 160.00 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Quad BTU Natural Gas, NRH Liquids Solids U.S. Energy Consumption 20 40 60 80 100 120 1845 1870 1895 1920 1945 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 Quad BTU Renewable Energy Hydroelectric Nuclear Energy Natural Gas Oil Imported Oil Produced Coal Wood and Waste U.S. Energy Consumption 0% 20% 40% 60% 80% 100% 1845 1870 1895 1920 1945 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 % of Total Market Renewable Energy Hydroelectric Nuclear Energy Natural Gas Oil Imported Oil Produced Coal Wood and Waste 1973 U.S. Energy Consumption 1973 Supply Instability Price Volatility Governmental Policy Technology 100 90 80 70 60 50 40 30 20 10 Liquids (Oil) Solids (Wood, Coal) Gases (Natural Gas, Nuclear, Renewables, Hydrogen) l 1910 l 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 Forecast Tinker Data: EIA Natural Gas & NRH Drivers Efficiency Economic Stability Economic Well Being Environmental Quality Resource Availability l 1975 1980 1985 1990 1995 2000 l QAd1023 QAd1023

3 Efficiency Natural Gas is Efficient Relative to Other Electricity Generation Fuels QAd1023

4 Natural Gas Could Help Stabilize Energy Price Volatility
Economic Stability -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 GDP Growth (% change from previous year) $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 Crude Oil Domestic Wellhead Price ($/bbl) 8.00% 10.00% GDP Growth Crude Oil Domestic Wellhead Price Natural Gas Could Help Stabilize Energy Price Volatility QAd1023

5 Per-capita oil consumption (bbl/yr)
Economic Well-Being Per capita income $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 5 10 15 20 25 30 Per-capita oil consumption (bbl/yr) Saudi Arabia India China Indonesia Russia Brazil Mexico United Kingdom France Italy Japan Canada United States Germany Note: 15 largest economies shown in red. Source: JPT, May 2001 Economic Prosperity Relies on Available, Affordable Energy QAd1023

6 Natural Gas is Clean(er)
Environmental Quality U.S. Electricity Generation by Fuel Source 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 3,500,000,000 Mkwh Other Renewables Hydro Nuclear Natural Gas Petroleum Coal Data, EIA, 2000 1950 1960 1970 1980 1990 2000 U.S. Carbon Dioxide Emissions from Energy Consumption by End-Use Sector 400 800 1,200 1,600 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 Non-Electricity Generation in Residential, Commercial and Industrial Transportation Electricity Generation Data: EIA, 2002 MM Metric Tons of Coal Natural Gas is Clean(er) Carbon Dioxide Emissions from Electricity Generation 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Other Units Gas-Fired Units Petroleum-Fired Units Coal-Fired Units Data, EIA, 2000 Short Tons QAd1023

7 Resource Availability & Sustainability
1999 NPC Study (NPC, 1999b) Recoverable Portion of In-Place Gas Resource (Tcf) Cumulative Production (811) Reserves (157) Reserve Growth (305) Undiscovered, Unconventional Reserves (1,004) Unassessed Unconventional Reserves (400) Geopressured Brine (Up to 24,000) Gas Hydrate (Up to 300,000) Not Assessed by NPC QAd1023 U.S. Production to Date Increasing development costs Increasing technology needs Increasing Potential Resource Decreasing gas concentration Increasing uncertainty Natural Gas Resources are Available Although More Unconventional

8 An Unconventional Future
U.S. Natural Gas An Unconventional Future “Conventional” Unconventionals Tight (Low Permeability) Shale Coalbed Methane 5,000 10,000 15,000 20,000 25,000 30,000 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Year Annual Natural Gas Production (Bcf) L48 Unconventional Onshore Deepwater+Subsalt Offshore Deepwater+Subsalt Offshore Demand Tight Gas, Shale Gas, CBM $2 $3 $1 Wellhead Price ($/mcf) L48 Unconventional Onshore Shallow Offshore L48 Conventional Onshore “Unconventional” Unconventionals Deep (>15,000 ft) Subsalt Deep Water Methane Hydrates Associated and High-Perm Gas EIA ( ) and NPC ( ) QAd1023

9 Tight Gas, Shale Gas, CBM Fractures
Transmitted Light CL Match point Fracture Strike Laubach et al., 2000, The Leading Edge Laubach, 1997, AAPG Bulletin East Texas, Travis Peak Formation QAd1023

10 Federal Alternative Fuels Production Credit for Unconventional Gas
Policy & Investment Tight Gas Resources *Advanced Stimulation Technology *Greater Green River Basin Shale Gas *Piceance Basin DOE GRI 4,000.0 $2 $3 $1 Wellhead Price ($/Mcf) Federal Alternative Fuels Production Credit for Unconventional Gas 3,500.0 State of Texas Tight Gas Incentives 3,000.0 2,500.0 Bcf 2,000.0 1,500.0 11 Tcf Incremental Gas 1,000.0 500.0 0.0 1970 1975 1980 1985 1990 1995 GRI, 1999, GRI’s Gas Resource Database. DOE personal communication. QAd1023

11 78 Tcf MAJOR PRODUCTIVE TIGHT GAS BASINS
(Technically Recoverable Resources) 6 k m 4 i N Rocky Mountain Foreland (13.7 Tcf) Appalachian (18.3 Tcf) Midcontinent (16.9 Tcf) San Juan (5.6 Tcf)* Permian Basin (19.5 Tcf) Arkla-Tex (29.8 Tcf) 78 Tcf Texas Gulf Onshore (9.1 Tcf) B u r e a o f E c n m i G l g y Data: NPC (2000), * Based on estimates of NPC (1993), San Juan Basin tight gas resource included with oil field reserve appreciation and new fields in NPC (2000) Q A c 9 7 1 5 QAd1023

12 Shale Gas Resources Policy & Investment 2.2 Tcf Incremental Gas
Antrim Shale Research Appalachian Basin Shales 350.0 $2 $1 Wellhead Price ($/Mcf) 300.0 GRI 250.0 200.0 Bcf 150.0 100.0 2.2 Tcf Incremental Gas DOE ( ) 50.0 0.0 1980 1985 1990 1995 GRI, 1999, GRI’s Gas Resource Database. DOE personal communication. QAd1023

13 40 Tcf MAJOR PRODUCTIVE DEVONIAN SHALE BASINS
Technically Recoverable Resources 6 k m 4 i N M i c h g a n A t r m ( 1 6 . 9 T f ) A p a l c h i n ( 2 3 . 4 T f ) I l i n o s N e w A b a y ( 2 . 9 T c f ) Cincinnati A r c h ( 2 . T f ) 40 Tcf F t . W o r h B a n e S l ( 7 2 T c f ) B u r e a o f E c n m i G l g y D a t : N P C ( 2 ) Q A c 9 7 1 2 QAd1023

14 Coalbed Methane Resources
Policy & Investment Coalbed Methane Resources 1,200.0 1,000.0 GRI Federal Alternative Fuels Production Credit for Unconventional Gas 800.0 DOE $2 Bcf 600.0 Wellhead Price ($/Mcf) 400.0 4.5 Tcf Incremental Gas 200.0 $1 0.0 1980 1985 1990 1995 GRI, 1999, GRI’s Gas Resource Database. DOE personal communication. QAd1023

15 MAJOR PRODUCTIVE COALBED METHANE BASINS (Total Most Likely Resources)
6 k m 4 i N Powder River (24.0 Tcf) Northern Appalachian and PA Anthracite (10.6 Tcf) Uinta & Piceance (5.5 Tcf) Hanna-Carbon (4.4 Tcf) Raton-Mesa (3.7 Tcf) SW Coal Region (5.8 Tcf) San Juan (10.2 Tcf) Black Warrior (4.4 Tcf) 81 Tcf Alaska (Bering River, North Slope, Chignik and Herendeen Bay) (57.0 Tcf) B u r e a o f E c n m i G l g y D a t : P G C ( 2 1 ) Q A c 9 7 1 4 QAd1023

16 Seismic Attribute Analysis
Deep Gas Seismic Attribute Analysis Cocuite Mirador Veracruz Jalapa Córdoba Cardel Golfo de México P.Oro Angostura Cópite Gloria Lagarto M.Pionche M.R.A. Mecayucan Miralejos Nopaltepec Novillero R.Pacheco San Pablo T. Higueras Veinte Tlacotalpan Estanzuela Coapa 277 Km² 240 Km² 280 Km² 180Km² CAMPO DE GAS O ACEITE SÍSMICA 3D Playuela Source: A. Guzman, 2001, HGS PEMEX E&P Planning QAd1023

17 62 Tcf MAJOR PRODUCTIVE DEEP (>15,000 FT) GAS BASINS
(Total Most Likely Resources) 6 k m 4 i N Montana Folded Belt (5.2 Tcf) Wind River (5.0 Tcf) Appalachian (5.0 Tcf) Greater Green River (8.4 Tcf) 62 Tcf San Joaquin (9.0 Tcf) Anadarko, Palo Duro (17.7 Tcf) Permian (12.9 Tcf) LA, MS, AL Salt (15.8 Tcf) Louisiana Gulf Coast (14.5 Tcf) Texas Gulf Coast (14.3 Tcf) B u r e a o f E c n m i G l g y D a t : P G C ( 2 1 ) Q A c 9 7 1 3 QAd1023

18 Deep Water Gas Salt Tectonics Physical Models Seismic Studies
Field Studies Numerical Models Martin Jackson, AGL, BEG QAd1023

19 MAJOR PRODUCTIVE DEEP-WATER GAS BASINS (Total Most Likely Resources)
Pacific Slope (8.9 Tcf) 6 k m 4 i N 71 Tcf Louisiana Slope (12.4 Tcf) Texas Slope (4.3 Tcf) Eastern Gulf Slope (7.6 Tcf) Gulf of Mexico OCS (47.7 Tcf) B u r e a o f E c n m i G l g y D a t : P G C ( 2 1 ) Q A c 9 7 1 6 QAd1023

20 Creating Unconventional Resources (Technically Recoverable)
Policy & Investment Creating Unconventional Resources Unc. Gas Major Basins (Technically Recoverable) Tight Gas 78 Tcf Shale Gas 40 Tcf CBM Tcf Deep Gas 62 Tcf Deep Water 71 Tcf 332 Tcf U.S. Fossil Energy R&D Funding $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 1992 1993 1994 1995 1996 1997 1998 1999 Millions $ Private Federal Data: Science and Engineering Indicators 2000, NSF. 5,000 10,000 15,000 20,000 25,000 30,000 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Year Annual Natural Gas Production (Bcf) L48 Unconventional Onshore Deepwater+Subsalt Offshore 170 Tcf EIA ( ) and NPC ( ) QAd1023

21 Summary Efficiency, economy, environment and resource availability all point towards a natural gas future. Natural gas will come increasingly from “unconventional sources”, and history shows that a balance between production incentives and technology investment will result in the creation of new unconventional natural gas resources. The Federal/Private research and technology investment ratio needs to be increased if the U.S. transition to natural gas is to be smooth. QAd1023

22 Thank you! QAd1023

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