Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
Permian Goes GlobalHow to leverage USA LNG in a changing global market?
Dr. Ning LinChief Economist, Bureau of Economic Geology
Bureau of Economic Geology
• Jackson School of Geoscience -$300 million endowment, and the largest university-based geoscience program in US
• One of three Jackson School of Geosciences - $30 - 35 million/year budget, 90% grants & contracts• Established in 1909, 2nd largest research unit at UT• 250 researchers, staff & students• Assets include 3 core facilities, labs, field test sites.
Industry Consortium Sponsors
Roadmap
•Research Scope and Methodology•Regional Natural Gas and LNG Point of View•What matters to USA LNG?
•Supply•Cost positions•Demand shocks
Research on Natural Gas Value Chain
Upstream Midstream Downstream
North America Market Simulator
Global Gas and LNG Analysis
Gas to Power Integration
Hydrogen and other new markets
Flaring and CCUS
Geologic and Reservoir Analysis
Recovery and Productivity
Well Economics
Production Outlook
Waste and Water Management
Infrastructure Support Electricity, Water and
Processing
Drilling Patterns
Energy Transition Policies and
Economic Impacts
Upstream Resource AssessmentGeologyStratigraphic Framework
Petrophysics
3D Models
Production Outlook
(from Baumgardner, Hamlin and Rowe, 2016; computed from XRF data)
History Matching
Statistical Modeling
Expected DrillingProfitability and well inventory maps are used to create expected drilling maps:1. Depending on previous year’s drilling
and expected prices & costs we derive a projection for the drilling portfolio
2. Profitability map reveals which locations are likely to be drilled
3. Probability of drilling is assigned based on the inventory of wells available and drilling expected according to the portfolio.
Workflow of Natural Gas Market SimulatorsModel Inputs
Supply Builder
Demand Builder
Infrastructure Builder
Supply Flows
LNG Contract Flows
(TORA)Bottom-up resource
evaluation
Courtesy of RBAC, Inc.
Customized assumptions to
focus on specific
projects or markets
North America – GPCM• 245 Pipelines• +440 Storage areas• LNG Exports /
Imports• 100 Market Points)• Import and Exports
Global Gas Market – G2M2•Sectoral(5) Demand of
100+ countries•LNG Contracts and
Infrastructure •Pipeline (400+) and
Storage (600+)•Multi-tanker classes•Source and Destination
Flows•Imports and Exports by
pipe and LNG
Graphic Display of Flows
Demand and Supply Balance
Gas Security Ratio –Production/Consumption By Country
From left to right, countries have increasing dependency on imported gas.
Regional LNG Production versus Capacity
10
North America – LNG as an outlet not a driver
• With upcoming projects, capacity constraints are not a major concern, except localized areas.
• Upstream gas procurement and facility utilization should be the focus, and
• What to monitor in the market:• upstream supply outlooks • supply region market basis
11
Asia - Still a growth story despite of short disruptions
0
100
200
300
400
500
600
1/1/
2011
1/1/
2013
1/1/
2015
1/1/
2017
1/1/
2019
1/1/
2021
1/1/
2023
1/1/
2025
1/1/
2027
1/1/
2029
1/1/
2031
1/1/
2033
1/1/
2035
1/1/
2037
1/1/
2039
Mil
Met
ric T
ons
LNG Imports in Asia
China
Asia - SW
Asia - SE
Asia - NE
12
4.6%
3.9%
3.2%
2.6%
1.9%1.5%
2.9%
0.6% 0.6%
0.2%
2.1% 2.1%
0%
1%
2%
3%
4%
5%
0
200
400
600
800
1000
1200
1400
2015
2020
2025
2030
2035
2040
BCM
Regional Gas Demand - BCMRegional Gas Production - BCMRegional Gas Demand - CAGR5YR
North East Asia
0
50
100
150
200
250
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
Mill
ion
MT
United States
Australia
Russia
Qatar
Indonesia
Malaysia
Canada
Equatorial Guinea
Angola
Papua New Guinea
Peru
Brunei
Oman
13
0
50
100
150
200
250
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
20…
Mill
ion
MT
Qatar
Malaysia
Australia
Nigeria
United States
Papua NewGuineaIndonesia
Brunei
Russia
Canada
China
Anticipated lower winter peak for upcoming winter due to improved infrastructure supportDevelopment of regional index and trading platform, supported by government
Long term need for LNG remains, while US becomes a major competitor to Australia and Qatar.
Europe – Uncertainty increases gas dependency
• Uncertainty of Climate Change Policies adds dependency to gas fired generations.
• Infrastructure interruption from Russia via Ukraine
• Potential hydrogen in the mix and integration of hydrogen into gas infrastructure and value chain.
14
-4.4%
1.2%0.7% 0.7%
0.1%-0.2%
-4.1% -4.1%
-1.7%
1.6%
-1.2% -1.1%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
0
100
200
300
400
500
600
70020
15
2020
2025
2030
2035
2040
BCM
Regional Gas Demand - BCM
Regional Gas Production - BCM
Regional Gas Demand - CAGR5YR
Regional Gas Production - CAGR5YR
Upstream - Be Aware of Decline Rates
Well Economics
Production Outlook
Drilling Patterns
Production outlook is a function of expected drilling, well economics and market and price conditions.
Geologic and Reservoir Analysis
Recovery and Productivity
Alternative Case – Faster Decline Rate
Decline Rate is one of the most critical factors, for determining the future price and Gulf LNG production. An alternative case which only includes an adjusted supply profile USA West South Central (including Permian as well as Barnett and Hayesville)
LNG CostStack2020 – 2025
• Demand is coming - By 2025, there is a fastgrowth of LNG demand, about 30% growth in 5 years, 120 Million tons, (16 bcf/d).
• In past 5 years, US added about 12 bcfd of liquefaction capacity, and there is another 6 bcfd for next 5 years.
Competition of LNG after 2025
Different scale
• Demand increase slows down after 2025, it takes 15 years for another 100 million tons (13 bcfd)
• With the decline rateprojected here, would USlose the competition? What are the caveats?
• Overestimating of decline rateselsewhere, and Uncertainty around shale production development in many developing countries.
• US have the best experience inshale production and cost reduction of the world
Short Term Demand Shocks• 15% down in Asia demand in
2020, 5% in 2021
• Warm winter for Europe in 2020-2021
• Price differential:• Henry Hub >=-0.10/mmbtu• Asia -$1.44/mmbtu• NBP -$0.25/mmbtu• TTF - $0.50/mmbtu
Summary - Permian Gas Goes Global
20
Upstream
• Disciplined operation is key for upstream success.
• Ongoing study on shale production outside US
Midstream
• Sufficient domestic takeaway to LNG terminals; USA LNG Terminals' utilization rate average above 70% before 2030
Downstream
• Downstream potential is robust for the medium to long term.
• Greater demand potential in Asia and Europe for LNG as moves into energy transition, like H2.
• Additional cross-product monetization options for oil and gas industry in Texas
Thanks!
The Center for Energy Economics (CEE) performs research and provides training and outreach on energy economics, markets, and frameworks for commercial and strategic investment. CEE is externally funded through research grants and contracts, corporate and government partnerships, and our training programs.