SWT, DPA Luncheon, 2006 QAd3931x QAd2349x The Future of Global Energy Trends, Technology and Talent Scott W. Tinker Bureau of Economic Geology Jackson

SWT, DPA Luncheon, 2006

QAd3931xQAd2349x

The Future of Global Energy

Trends, Technology and Talent

Scott W. TinkerBureau of Economic Geology

Jackson School of GeosciencesThe University of Texas at Austin

DPAAAPG/GSA/SPE Regional Meeting

May, 2006


QAd3931x

Outline

Trends

Technology

Talent

Tomorrow


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QAc9841c

Global Energy Consumption

U.S. Data: Annual Energy Review 1999 (EIA, 2000)World Data: International Energy Annual 1999 (EIA, 2000)

100

80

60

40

20

0

Per

cen

tag

e o

f to

tal

mar

ket

Year

1850 1900 1950 2000

H/C>4 (Natural Gas, Hydrogen, Nuclear, Emerging)

H/C<1 (Wood, Coal)

H/C~2 (Oil)


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Global Energy Consumption

Energy Information Administration

International Energy Annual 2003

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Year

% T

ota

l C

on

su

mp

tio

n

% Coal % Gas% Oil

% Hydro % Nuclear % Geothermal, Biomass, Solar & Wind

91% 86%


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Global Demand for Fossil Fuels Consumption and Efficiency

1999 Energy Use (ExaJoules)

0 20 40 60 80 100 120

Africa

C & S America

Middle East

Canada/Mexico

Japan & Australasia

Eastern Europe/FSU

Western Europe

Developing Asia

U S

Oil

Gas

Coal

Nuclear

Other

Data, 2002, IEO.

MJ/$GDPU.S. Energy Consumption

0

20

40

60

80

100

120

1845

1870

1895

1920

1945

1953

1958

1963

1968

1973

1978

1983

1988

1993

1998

Qu

ad

BT

U

Sustainable Energy

Hydroelectric

Nuclear Energy

Natural Gas

Oil Imported

Oil Produced

Coal

Wood and Waste

(Data: EIA, 2000)

Conservation


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Oil ResourcesOil Resources

Ahlbrandt et al., 2005

Con

v.

Oil

Un

con

v.

Oil

Tech-Progress

Undiscovered

Reserves

Consumed

Int Panel on Climate Change, 2000


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U.S. Oil Supply vs. Demand

0

2,000,000

4,000,000

6,000,000

8,000,000

1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004

Year

Oil

(th

ou

san

d b

bls

)

Supply

Demand

*Supply = domestic oil production & Demand = domestic oil consumption.

Data: EIA, 2005

U.S. Oil Production/Consumption


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Global OilProduction/Consumption

World Oil Supply vs. Demand

20,000,000

22,000,000

24,000,000

26,000,000

28,000,000

30,000,000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Oil

(th

ou

san

d b

bls

)

Supply

Demand

*Supply = world oil production & Demand = world oil consumption.

Data: International Energy Annual 2002 (EIA, 2005)


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M

ExxonMobil, 2005. http://www.exxonmobil.com/Corporate/Citizenship/Corp_citizenship_energy_outlook.asp

Peak OilThe Conventional Liquids

“Wedge”

35 MMBD new demand


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Oil Consumption Per CapitaBbl/Person/Year

Source of Consumption: BP Statistical Review of World Energy June 2004Source of Population: Working Alliance on Serial Publications, The Netherlands

0

5

10

15

20

25

1965 1970 1975 1980 1985 1990 1995 2000

Japan S. Korea China India

China

India

U.S.

Japan

S. Korea

If China and India each grow to 5 BY/person by 2030,that represents 48 MMBD of new demand


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Insert Picture of North Slope and 35 mbopd

Feeds into the Trans Alaska Pipeline

System, which peaked in 1988 at 2.1 mbopd and today accounts for < 1

mmbopd (and falling)

Photos by Scott Tinker


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Mitigation Option Time to Initiate Impact (+10 Yrs)

(Yrs) (MM bpd)

– Heavy Oils / Oil Sands 3 8– Vehicle Efficiency 3 2 – Gas-To-Liquids 3 2– Coal Liquids 4 5– Enhanced Oil Recovery 5 3– Shale Oil 10 2

22Modified after Hirsch et.al, 2005

Conventional Oil Mitigation


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M

ExxonMobil, 2005. http://www.exxonmobil.com/Corporate/Citizenship/Corp_citizenship_energy_outlook.asp

Peak OilThe Conventional Liquids

“Wedge”

Unconventionals

Plus EOR


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Natural Gas ResourcesNatural Gas Resources

Ahlbrandt et al., 2005

Tech-Progress

Undiscovered

Reserves

Consumed

Int Panel on Climate Change, 2000

Con

v.

Gas

Un

con

v.

Gas

Coa

l (19

TB

OE)


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Middle East

Eastern Europe/Former Soviet Union

UnitedStates

WesternEurope

AfricaAsia Pacific

WesternHemisphere

From Imam and others, Oil and Gas Journal, Aug. 16, 2004.

Natural Gas Production

0

10

20

30

40

1940

Pro

du

ctio

n (

Tcf

)

Year

1960 2000 204020201980 2060

ObservedCalculated

PRODUCTION RATE

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0

5,000

10,000

15,000

20,000

25,000

1949 1961 1973 1985 1997 2009

An

nu

al N

atu

ral G

as P

rod

ucti

on

(B

cf)

Yikes!


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Global Natural GasProduction/Consumption

World Natural Gas Supply vs. Demand

50

60

70

80

90

100

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Nat

ura

l G

as (

Tcf

)

Supply

Demand

*Supply = world natural gas production & Demand =world natural gas consumption.

Data: International Energy Annual 2002 (EIA, 2005)


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U.S. Natural Gas Supply vs. Demand

0.000

5.000

10.000

15.000

20.000

25.000

Year

Natu

ral

Gas (

Tcf)

Supply

Demand

*Supply = domestic natural gas production & Demand =domestic natural gas consumption.

Data: EIA 2005

U.S. Natural GasProduction/Consumption

U.S. Oil Supply vs. Demand

0

2,000,000

4,000,000

6,000,000

8,000,000

1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004

Year

Oil (

tho

usan

d b

bls

)

Supply

Demand

*Supply = domestic oil production & Demand = domestic oil consumption.

Data: EIA, 2005


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Natural Gas Trade in 2002

Modified from BP Statistical Review of World Energy 2003: June 2003, London, England, BP,

in Oilfield Review: Autumn 2003, Schlumberger, p.6.


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USGS World Petroleum Assessment 2000 (Tcf)

N. Caspian Basin(156.9) Tcf

Amu-Darya Basin(230.4 Tcf)

West Siberian Basin(1,271.8 Tcf)

Volga-Ural Region(99.2 Tcf)

Western Gulf(251.6 Tcf)

Gulf Cenozoic OCS(140.3 Tcf)

East Venezuela Basin(129.7 Tcf)

Qatar Arch (465.6 Tcf)Zagros Fold Belt (399.4 Tcf)Mesopotamian Frdp. Bsn. (298.3 Tcf)Greater Ghawar Uplift (248.6 Tcf)Rub Al Khali Basin (182.3 Tcf)

NorthwestGerman Basin

(141.7 Tcf)

Grand Erg/Ahnet Basin(114.2 Tcf)

North Sea Graben(160.6 Tcf)~3870 Tcf in Major Basins

~13,000 Tcf Total Resources

Current annual global consumption is ~90 Tcf

Does not include unconventional gas (shale, coal, tight), brines, gas

hydrates, or gasification of coal, heavy oil, tar.

Natural Gas Resource Availability


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1999 NPC Study (NPC, 1999b)Recoverable Portion of In-Place US Gas Resource (Tcf)

Reserves (1,004)

Reserve Growth (305)

Undiscovered, Unconventional

Unassessed Unconventional Reserves (400)

Geopressured Brine (Up to 24,000)

Gas Hydrate (Up to 300,000) Not Assessed by NPC

Increasing developmentcosts, technology needs,

uncertainty, and decreasing concentration

Natural Gas Resource Availability

QAd1023

Cumulative Production (811)

Reserves (157)Known Reserves


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Conventional Gas

Total Natural Gas

U.S. Natural Gas

Unconventional Gas

0

5,000

10,000

15,000

20,000

25,000

1949 1955 1961 1967 1973 1979 1985 1991 1997 2003 2009 2015

An

nu

al N

atu

ral G

as P

rod

ucti

on

(B

cf)

EIA (1949-1990) and NPC (1991-2015)


QAd3931xAfter 8/05 DOE Roundtable White

Paper

Potential Pathways

US In-place Resource

US Production Goal

1Tight Sandstones

1,000s of trillions of cubic feet of gas

Expand economically recoverable resource by 350 Tcf by 2015

2Unconventional Gas: Shale, Coal

1,000s of trillions of cubic feet

Approach annual production of >7 TcF by 2015

3 LNG 1,000s of trillions of cubic feet

Annual production of > 4 TcF by 2020

4 Deep Gas 1,000s of trillions of cubic feet of gas

By 2012 develop systems to enable economic recovery of 100 Tcf by 2020

5Coal Gasification

1,000s of trillions of cubic feet (~7Tcf/ton)

Approach annual production of > 2 TcF equivalent by 2020

6Methane Hydrates

10,000s of trillions of cubic feet of gas

Confirm safe, economical and environmentally sound at pilot scale by 2015

Natural Gas Mitigation Options


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EIA International Energy Annual 2002, International Energy Outlook 2004

Global proved oil and gas reservesRecoverable coal reserves

(oil shale and oil sands not included)

Global Reserves


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US Coal Resources

Anderson, John, and others, 2003, Oilfield Review, v. 15, no. 3, p. 10.


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U.S. Coal Consumption

0.0000

5.0000

10.0000

15.0000

20.0000

25.000018

50

1875

1900

1925

1949

1954

1959

1964

1969

1974

1979

1984

1989

1994

1999

2004

Co

al C

on

sum

pti

on

(Q

uad

BT

Us)


QAd3931x

Outline

Trends

Technology

Talent

Tomorrow


QAd3931x

QAc8962c

NJ

Ma

Washington

Oregon

Nevada

California

Idaho

Montana

Wyoming

Utah

Arizona

Colorado

New Mexico

Texas

Oklahoma

Kansas

Nebraska

South Dakota

North Dakota

Illinois

Louisiana

Arkansas

Missouri

Flor

Maine

Mich

Minnesota

Iowa

Miss AlaGeorgia

Tennessee

Kentucky

S Carol

N Carolina

VirginiaWV

Wisc

IndOhio

Pennsyl

New York

VtNH

CtRI

DelawareMd

Hawaii

Alaska

Unocal

Conoco

TexacoShell

Phillips

ARCO

Marathon

Amoco

Mobil

Chevron

ExxonMobil

ARCO

Marathon

Amoco

Mobil

Chevron

Conoco

Texaco

Phillips

Unocal

Technology


QAd3931x

* US E&P firms and the US R&D investments of international E&P firms; source Department of Energy, EIA, CERA analysis.** Traditional Oil Field Service companies (Baker Hughes, Halliburton, Schlumberger, Smith, Weatherford); source, company annual reports, CERA analysis.

Source: Cambridge Energy Research Associates, 2005

Technology R&D Investments in the Upstream Sector

($2004)

0

200

400

600

800

1,000

1,200

1,400

1977 1982 1987 1992 1997 2002

R&

D In

vest

men

t

($, m

illio

ns)

E&P Firms*

Service Companies**

Basic/Breakthrough Applied/Incremental


QAd3931x

TechnologyThe trend towards unconventional oil and natural gas production will

drive The Rock Revival•Rheology and rock mechanics

•Fracture modeling and simulation

•Diagenetic and rock quality modeling

•Petroleum system modeling


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Technology

•Logging Through Casing•Seismic Imaging: 4C and 9C•Surface/Subsurface Area: 1/2500

•Subsurface Combustion•Seafloor Operations•Real Time Sensors: Nanotech


QAd3931x

Outline

Trends

Technology

Talent

Tomorrow


QAd3931x

5

Talent

AAPG Website

US Undergraduate Geosciences AGI, 2003

1.1 mil

1.7 mil

0.7 mil

Employees Large O&G Co

$10

$80

Oil Price: 2003 Dollars BP Website

US Upstream R&D 2004 Dollars CERA


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5

Learning from the Past

Supply Push Demand PullRock R&D Information TechUS: Majors US: IndependentsMedian Age ~ 30 Median Age ~ 50S&E Strong S&E Weakening


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• Determine the real demand for talent

• Act for the long term in terms of talent investment (and try to ignore the Wall Street reaction!)

• Invest in universities in good and bad times. Universities are the seed crop.

•Do not expect quarterly bottom line impact

•Require performance measures

•Develop university partnerships outside of the standard faculty/student models

Industry Response


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•Do not overreact to industry talent demands (learn from the 1970s)

•Create tougher (not easier) enrollment and retention standards; focus on quality not quantity. One talented person is worth 10 warm bodies.

•Break out of the discipline silos: well-designed, integrated research programs.

•Establish global university partnerships that are long term, research based, and two-way.

University Response


QAd3931x

•Invest in longer-term, higher-risk research.

•Support programs that drive commercialization.

•Adapt US policies to fit a global industry. Energy independence is a sound bite. Structure for global interdependence.

•Work to bring respect and allure back to science and engineering.

Government Response


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•Get professional help to develop a coordinated, accurate, and interesting global message about energy.

•The story is international, and includes universities, government and industry.

•Find a credible storyteller, because there is a great story to tell!

Professional Society Response


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Outline

Trends

Technology

Talent

Tomorrow


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0

20

40

60

80

100

65%

16%

12%

7%

Source: PFC Energy research, based on BP’s 2005 Statistical Review of World EnergyFrom Ball (2006)

World’s Proved Oil and Natural-Gas Reserves?

Controlled by governments; notopen to Western companies

Russian reserves, held by Russian companies

Open to any oil company

Controlled by governments; limited access for Western companies

QAd4882x


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0

0.05

0.1

0.15

0.2

0.25

0.3

Aram

co (S

audi)

NIOC (I

ran)

INOC (I

raq)

KPC (Kuwai

t)

PDV (Ven

ezuel

a)

Adnoc (U

AE)

Libya

NOC

NNPC (Nig

eria

)

Pemex

(Mex

ico)

Lukoil

(Russ

ia)

Gazpro

m (R

ussia

)

ExxonM

obil

Yukos

(Russ

ia)

Petro

China

Qatar

Sonatra

ch (A

lger

ia)

BP

Petro

bras

(Bra

zil)

Chevro

nTota

l

Global Oil Reserves(2004 %)

% IOCs


QAd3931x

Follow the Molecules

•IOCs will focus on unconventional resources

• Liquids: shale oil, heavy oil, tar sands, coal liquefaction, and beyond

• Gases: coalbed methane, shale gas, tight gas, hydrates, coal gasification, and beyond

•Technology and Talent needed!


QAd3931x

TomorrowGlobal energy demand, combined with limited conventional energy choices and political instability in key regions, will keep the price of fossil fuels moderate to high, and volatile

Liquid fuels production will flatten over the next 30 years and incremental growth will come from unconventional forms

Natural gas reserve adds will be largely unconventional, LNG lanes will open, coal gasification will accelerate.

Natural gas prices will detach from oil and compete with coal in electricity markets


QAd3931x

Tomorrow

Rocks will make a revival

Great advances in subsurface measurement and drilling will continue

Fossil fuel emissions limits, based on global warming concerns, will be put into place (p.s. let them hear from you!)

Universities, industry, governments and professional societies must coordinate a energy message


QAd3931xQAd3931x

This is the greatest industry in the world, and

the most vital for the coming century.

Do well and have a blast!

Thank You!

This is the greatest industry in the world, and

the most vital for the coming century.

Do well and have a blast!

Thank You!

Documents

SWT, DPA Luncheon, 2006 QAd3931x QAd2349x The Future of Global Energy Trends, Technology and Talent Scott W. Tinker Bureau of Economic Geology Jackson