Availability, Economics and Potential of North American Unconventional Gas

Transcription

1 Availability, Economics and Potential of North American Unconventional Gas Harry Vidas Vice President Natural Gas Consulting (703) ICF International INGAA Foundation Palm Coast FL November 15,

2 Objectives What are the major categories of unconventional gas that will impact future gas production? What is the potential gas production from each? What is the cost of development? What will it take to develop these resources? What are the potential obstacles? Future Work: Impact of Future Gas Production on Interstate Transmission Network 2

3 Resource Definitions 3

4 Primary Unconventional Resources 4

5 Additional Unconventional Resources 5

6 Unconventional Fraction of U.S. Gas Production 25 60% 20 50% 40% Tcf per Year Percent Unconventional 30% 20% 5 10% % L-48 Total Unconventional % Unconventional 6

7 U.S. Unconventional Gas Production Rapid growth of unconventional gas. 10,000 9,000 Historically, shale has lagged in comparison with tight and coalbed methane. Bcf per Year 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, Coalbed Shale Tight

8 Lower-48 Tight Gas, Shale Gas, and Coalbed Methane Trends 7,000 Tight Regional impacts differ for tight gas, shale gas, and coalbed methane. 6,000 5,000 4,000 3,000 2,000 Permian (W. TX) Mid-Continent San Juan Rockies Williston (MT + ND) Gulf Coast East TX Eastern U.S. Bcf per Year 1, Shale Gas 1,800 1,600 1,400 1,200 1, Mid-Continent North TX Michigan -IL Eastern U.S. Coalbed Methane 1,800 1,600 1,400 1,200 1, Bcf per Year 600 Mid-Continent San Juan Rockies Warrior (AL) Eastern U.S. Bcf per Year

9 Impact of Major Unconventional Plays 8 BCFD Added since 2000 A few major gas plays are responsible for U.S. production growth. Production from these plays has more than compensated for declines elsewhere. BCF per Day Gas Producton Through 2007 From Selected Plays and Basins Piceance Basin Pinedale Field Jonah Field Woodford Shale Fayetteville Shale Bossier Sand Barnett Shale 9

10 Fracturing Technology Greater use of horizontal drilling in shales, CBM and other low permeability environments has been one of the major technology trends in recent years. Multiple, large fracs of horizontal wells have made them even more productive. Fracturing of tight gas wells has improved and costs have been reduced by faster processes for multi-zone wells Learning-by-doing has been watchword Infill drilling, re-completes and re-stimulations in old nonconventional gas reservoirs produce a gift that keeps on giving. 10

11 Rig Rates and Directional Drilling Trends 2,000 1,800 1,600 1,400 1,200 1, Horizontal Directional Vertical 1/4/1991 1/4/1992 1/4/1993 1/4/1994 1/4/1995 Rigs 1/4/1996 1/4/1997 1/4/1998 1/4/1999 1/4/2002 1/4/2000 1/4/2001 1/4/2003 1/4/2004 1/4/2005 1/4/2006 1/4/2007 1/4/2008 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Q1.99 Q3.99 Q1.00 Q3.00 Q1.01 Q3.01 Q1.02 Q3.02 Q1.03 Q3.03 Q1.04 Q3.04 Q1.05 Q3.05 Q1.06 Q3.06 Q1.07 Q3.07 Q1.08 More drilling is nonvertical Horizontal growth is almost all shale gas and shale oil. Rig rates and other costs are subject to supply and demand. High costs erode profitability caused by higher oil and gas prices Quarter Dollars per Day

12 Shale Formations of the U.S. Shale formations are widely distributed. Devonian shales are expanding and other shale formations - some much younger - are emerging. 12

13 Shale Plays Emerging This Year Haynesville - Louisiana Marcellus and Huron Appalachia Rockies Pierre, Mancos, etc. Utica - Quebec Montney - BC Horn River Basin BC Pearsall, W. TX 13

14 Uncertainties in Shale Development Unknown geologic variability and production engineering learning curve. Land access Likely access restrictions in Appalachia, Rockies, and Canada Water usage and disposal State regulation likely to become more restrictive More water recycling; injection Access to pipelines and gas processing Rig and crew availability Day rates and tubulars 14

15 ICF Lower-48 Gas Production Forecast Through 2020 Tcf per Year Unconventional 10.7 Tcf 42% of total North America 2020 Unconventional 18.3 Tcf 64% of total US Conv. US Tight US Coalbed US Shale Can. Conv. Can. Tight Can. Coalbed Can. Shale Lower-48 and Canada production: 29 Tcf in 2020, excluding Alaska. L-48 unconventional percentage: 48% currently to 72% by Canada unconv. Percentage: 24% currently to 54% by Real Henry Hub prices : $8 - $10/MMBtu 15

16 Summary of Results by Resource Category A wide range of gas resources was evaluated. U.S. U.S. Forecast Recoverrable 2020 Resource Resource Production Cost Category (Tcf) (Tcf) ($/MMBtu) Comments Coalbed methane $4.20 Wide range of costs Gas Shales $5.00 Upside production potential Tight Gas $5.90 Wide range of costs Oil Shale -_Horizontal Drilling 2 + (tens?) $5.30 Currently producing Oil Shale -Thermal Hundreds of Tcf negl. $5 - $7 Best areas only; access questionable Aboveground Coal Gasification Thousands of Tcf $ $9.00 Large plants; GHG issues Underground Coal Gasification Thousands of Tcf pilots only $ $6.30 GHG issues Landfill 1,800 sites 0.8 $3 + Helped by GHG legis. Biogas /- $10 - $19 Helped by GHG legis. Gas Hydrates 300,000 in place negl. $2 - $24 Very uncertain role 16

17 Summary and Future Plans Unconventional gas will continue to grow in the future. Impact of shale plays will be large. Much uncertainty in shale resource assessments; risk component. Aboveground coal gasification and landfill gas has significant potential. Gas hydrates may eventually contribute. Several potential impediments, including GHG legislation, access, and water use. Issues differ by resource. Future plans: Study of natural gas infrastructure needs has now begun 17