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Coal Bed Methane (CBM) supply potential and its implication for Global LNG trade. Prepared for 3rd International Natural Gas Symposium INGAS 2009, Istanbul, Turkey 10 th June 2009. Outline. CBM Overview CBM Development - Key Success Factors Conclusion. Outline. CBM Overview - PowerPoint PPT Presentation
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Coal Bed Methane (CBM) supply potential and its implication for Global LNG trade
Prepared for
3rd International Natural Gas SymposiumINGAS 2009, Istanbul, Turkey
10th June 2009
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CBM Overview CBM Development - Key Success Factors Conclusion
Outline
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CBM Overview CBM Development-Key Success Factors Conclusion
Outline
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North America has demonstrated CBM potential when critical success factors are in place
The source of gas supply in the US is changing rapidly as traditional reservoirs begin to decline
CBM is one of the leading new sources and activity continues to ramp up
CBM accounts for about 10% of total gas production in the US but this number continues to grow
Significant upside from some newly announced plays—Haynesville, Marcellus, BC Horn River
Bcf
per
day
Projected US Natural Gas Production
Source: ICF International
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Australia is the emerging power in CBM landscape
Eastern Australia has been producing CBM over last fifteen years
CBM accounts 30 % of gas supplied in Queensland area
World’s first CBM to LNG Plant is getting build and more than Ten LNG trains are currently under construction at various location
Australian CBM promises large volumes and economic benefits- major players BG,BP, Shell, Statoil, Petronas and ConocoPhillips are already part of the business
DateAnnounced
Start-up Date
Annual LNGVolume
(MT)
Arrow/LNGI May 2007 2011 1.0 - 1.3
Santos/? July 2007 2014 3-0 – 4.0
Sunshine/Sojitz
December 2007
2012 0-5
BG/QGC February 2008 2013 3-0 – 4.0
CBM to LNG Project Proposals
Source: Arrow Energy
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Is the Future Unconventional ?
Globally over 70 countries have recoverable coal reserves and potential CBM recovery
The U.S. Geological Survey (USGS) estimated 210 Tm3 of CBM potential in 1994
Key Regions: Australia, Canada, China, India, Russia, United Kingdom, United States , Indonesia
Asia’s CBM stores remain untapped and could emerge hot energy play
China:• China’s CBM resource potential is greater than the United
States and Australia combined• The CBM development is still at an early stage, in 1996
government formed dedicated entity “China United Coal bed Methane Corporation (CUCBM) to explore CBM in china
• At present CBM is produced and consumed locally, with no governmental direct price as conventional gas
• China has set a target of 10 billion cubic feet of annual CBM production by 2010
• More and more multi-national energy companies are entering into China’s CBM market
• CBM development will depend on the integration of existing demand centres and pipeline infrastructure to evacuate remote CBM gas
Source: CBM sector overview by Fox-Davies Capital Limited
Identified CBM Regions
Global CBM Resources
Source: CBM sector overview by Fox-Davies Capital Limited
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Cont. India:
• CBM development in India is also at early stage with lone commercial production started on July 14, 2007 by Great Eastern Energy Corporation Ltd (GEECL) from its Ranigunj block in West Bengal
• CBM reserve estimates are highly uncertain and not known with any great precision, current reserves estimates of around 4.5 TCM are probably optimistic, but are still expected to be considerable reserves
• India has so far awarded 26 CBM blocks through 3 rounds of bidding covering an area of 13,600 sq. kilometres. Government has recently announced 4th round with 10 blocks for auction
• CBM reserves are mainly confined to eastern-northeast region which are stranded from current demand centres, infrastructure development will be the key
• State owned ONGC and private player RIL is expected to begin their commercial production by 2011-12 from Jharia in Jharkhand and Sohagpur (East) block in Madhya Pradesh respectively
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CBM Overview CBM Development - Key Success Factors Conclusion
Outline
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CBM Development -Key Success Factors
1. Resource .
• Abundant coal basins, with thick coal seams, high gas content and suitable reservoir characteristics• Understanding of resources characteristics, recoverable reserves and production potential • Use of proven and appropriate technology with continued development • Availability of adequate pipeline infrastructure
2. Market Fundamental• Supply/Demand Gap (existing or potential)• Sufficient, sustained and deregulated Price• Competitive market• Mix of experienced CBM players
Cash Flow• Enough margin to support projects over project life. This suggest an alignment of Resources costs and Gas
price. Presently very few markets in world are fitting both criteria, over last few years China and India has developed investors confidence
Strong Government Support• Preferential policies to encouragement investment in CBM• Significant tax and fiscal incentives in initial phase of CBM development
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Rising unconventional natural gas production could provide a competitive alternative to imports of LNG
0
20
40
60
80
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Japa
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Kore
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Taiw
an
Indi
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Chi
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Othe
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Fran
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Italy
Spai
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UK
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USA
Can
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2010 2020 2030
Asia Pacific Europe Atlantic
Source: Natural gas and LNG Supply/Demand trends in Asia Pacific and Atlantic Markets, IEEJ 2008
World LNG Demand Forecast
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CBM Overview CBM Development - Key Success Factors Conclusion
Outline
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Conclusion
Unconventional gas will continue to grow as a complement to conventional fossil fuel and increasing world demand
Pipeline gas/LNG imports could potentially pose a risk associated with the rising level of dependence in certain geographic areas, the development of unconventional gases like CBM could eventually become a priority for security of supply
In Europe, China and India economics look potentially attractive but they remain tentative as projects are at an early stage or on a small scale
Australia’s eastern region CBM success story has demonstrated CBM gas can work in low gas price environment
Major energy companies and independent exploration and production companies (E&Ps) are viewing unconventional resources as key elements of their future energy strategy
Unconventional gas set to become Conventional over long run
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For More Information
Sachin [email protected]
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Disclaimer: The view expressed in the paper are personal views of the authors and do not reflect that of ICF International