The Coming Natural Gas Economy - ALRDC - Home - Artificial

Scott W. Tinker, BEG, 2002

Gas Well Deliquification WorkshopMarch 1, 2004

The Coming Natural Gas Economy

Scott W. Tinker

Bureau of Economic GeologyJohn A. and Katherine G. Jackson School of Geosciences

The University of Texas at Austin




1. ENERGY2. WATER3. FOOD4. ENVIRONMENT 5. POVERTY6. TERRORISM & WAR7. DISEASE8. EDUCATION9. DEMOCRACY10. POPULATION

1. ENERGY2. WATER3. FOOD4. ENVIRONMENT 5. POVERTY6. TERRORISM & WAR7. DISEASE8. EDUCATION9. DEMOCRACY10. POPULATION

Humanity’s Top Ten Problemsfor next 50 years

Nobel LaureateDr. Richard Smalley, 2003

Scott W. Tinker, BEG, 2002 QAd1023

Outline

•• Global DecarbonizationGlobal Decarbonization•• The Trend Towards Natural GasThe Trend Towards Natural Gas•• Creating a Global Gas IndustryCreating a Global Gas Industry•• Summary and OpportunitiesSummary and Opportunities


GlobalDecarbonization



World Energy Consumption

QAc9841c

after Hefner, 1993

100

80

60

40

20

0

Perc

enta

ge o

f tot

al m

arke

t

Year1850 1900 1950 2000

Solids

GasesLiquids

U.S. ConsumptionGases (Natural Gas, Hydrogen, Nuclear, Renewables)

Solids (Wood, Coal)

Liquids (Oil)

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

WW

I

WW

II


Energy Demand

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

20

30

40

50

1980 1985 1990 1995

Ener

gy c

onsu

mpt

ion

(per

cent

)

Year

World oil

World coal

World gas, nuclear,hydro, renewables


1910191519201925193019351940194519501955196019651970

197519801985199019952000

U.S. Energy Consumption

100

90

80

70

60

50

40

30

20

10

100

90

80

70

60

50

40

30

20

10

100 90 80 70 60 50 40 30 20 10

Liquids (Oil)

Solids (Wood, Coal) Gases (Natural Gas, Hydrogen, Nuclear, Renewables)

Historical U.S. Energy Consumption

0%

20%

40%

60%

80%

100%

1845 1850 1855 1860 1865 1870 1875 1880 1885 1890 1895 1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Per

cen

tag

e o

f M

arke

t S

har

e

Solids

Liquids

Gases + Renewables

D t EIA

Data: EIA

1973

Price VolatilitySupply InstabilityGovernmental PolicyTechnology

1973

U.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

Qua

d B

TU

Renewable Energy

Hydroelectric

Nuclear Energy

Natural Gas

Oil Imported

Oil Produced

Coal

Wood and Waste

U.S. Energy Consumption Forecast

00.10.20.30.40.50.60.70.80.9

1

1845

1860

1875

1890

1905

1920

1935

1950

1965

1980

1995

2010

2025

2040

% o

f Tot

al M

arke

tGases and RenewablesLiquidsSolids


00.10.20.30.40.50.60.70.80.9

1

1845

1860

1875

1890

1905

1920

1935

1950

1965

1980

1995

2010

2025

2040

% o

f Tot

al M

arke

tGases and RenewablesLiquidsSolids


0.00

20.00

40.00

60.0080.00

100.00

120.00

140.00

160.00

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

Qua

d B

TU Gases and RenewablesLiquidsSolids

1 Quad Btu ~ 1 Tcf Gas

Tinker Forecast

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Why the Long-Term Trend Towards Natural Gas?

•• EfficiencyEfficiency•• EconomyEconomy•• EnvironmentEnvironment•• AvailabilityAvailability


Why Natural Gas?Efficiency

••Less costlyLess costly••Brought on line quicklyBrought on line quickly••Consume less waterConsume less water••Surface disturbance lessSurface disturbance less

QAd1023


Why Natural Gas?Economy

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

1970

19

73

1976

19

79

1982

19

85

1988

19

91

1994

19

97

2000

G

DP

Gro

wth

(% c

hang

e fr

om p

revi

ous

year

)

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

8.00%

10.00%GDP Growth

Crude Oil Domestic Wellhead Price

Cru

de O

il D

omes

tic W

ellh

ead

Pric

e ($

/bbl

)

QAd1023


Why Natural Gas?Environmental Quality

U.S. Carbon Dioxide Emissions from Energy Consumption by End-Use Sector

0

400

800

1,200

1,600

1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999

Non-Electricity Generation in Residential, Commercial and IndustrialTransportationElectricity Generation

Data: EIA, 2002

MM

Met

ric

Ton

s of

Coa

l

U.S. Electricity Generation by Fuel Source

0

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

Mkw

h

Other Renewables

Hydro

Nuclear

Natural Gas

Petroleum

Coal

Data, EIA, 2000

1950 1960 1970 1980 1990 2000

Carbon Dioxide Emissions from Electricity Generation

0

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 UnitsGas-Fired UnitsPetroleum-Fired UnitsCoal-Fired Units

Data, EIA, 2000

Shor

t To

ns

QAd1023


Why Natural Gas?Resource Availability

1999 NPC Study (NPC, 1999b)Recoverable Portion of In-Place 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

Cumulative Production (811)Reserves (157)

Proven Reserves

Reserve GrowthNew Fields

Historical U.S. Composition of Total Natural Gas Discoveries (1977-2001)

0

5,000

10,000

15,000

20,000

25,000

1977 1980 1983 1986 1989 1992 1995 1998 2001U.S

. Dry

Gas

Tot

al D

isco

verie

s (B

cf)

Data: EIA (2002)

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•• Enhance ReservesEnhance Reserves•• Create ResourcesCreate Resources•• TransportTransport•• SequesterSequester

Creating a Global Gas Industry


Creating a Natural Gas Industry

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

L48 Conventional Onshore

Associated and High-Perm Gas

Shallow OffshoreL48 Unconventional Onshore Tight Gas, Shale Gas, CBMDeepwater+Subsalt Offshore

0

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

Ann

ual N

atur

al G

as P

rodu

ctio

n (B

cf)

$2

$3

$1 Wel

lhea

d Pr

ice

($/m

cf)Demand

0

5

10

15

20

25

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

Qua

drill

ion

Btu

Natural Gas ConsumptionNatural Gas Production

1 Tcf Gas = 1 Quadrillion Btu

Data: EIA

17%

U.S. Natural Gas

QAd1023


U.S. Production

Conventional GasUnconventional Gas

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

Annu

al N

atur

al G

as P

rodu

ctio

n (B

cf)

0

1,000

2,000

3,000

4,000

Annu

al O

il Pr

oduc

tion

(mill

ion

bbls

)

Oil

25,000

20,000

15,000

10,000

5,000

0


EnhanceKey Technologies of the 90’s

Horizontal Drilling,

Geosteering, &Rotary Steering

Systems

Source: Bates, 2002, GCAGS Baker Hughes

Deep-water,

Sub-sea,FPSO

3D Seismic,Computer Assisted Exploration


EnhanceEnhanced Gas Recovery

from Wood et. al. BEG SGR Program

P r o d u c t i o n D e c l i n e C u r v e Fo r e c a s t o f Wa h a Fi e l d

y = 8 3 2 , 4 2 5 . 9 9 3 6 e-0.0008 x

400,000

600,000

800,000

1,000,000

1,200,000

0 24 48 72 96 120 144

Mo nt hs s i nc e 1 9 9 0

S GR pr oject s t ar t s

July 19 9 5

S GR pr oject en ds

Mar ch 19 9 8

2 year lag of r esult s

I n cr emen t al pr oduct ion of 12 % bet ween

s t ar t of pr oject an d 2 year lag af t er

Production Decline Curve Forecast of Lockridge Field

y = 821, 265. 2536e -0.004 2 x

400,000

600,000

800,000

1,000,000

0 24 48 72 96 120 144


SGR pr oje c t s t a r t s

J uly 1995

SGR pr oje c t e nds

Ma r c h 1998



s t ar t of pr oject an d 2 year lag af t er

P r o d u c t i o n D e c l i n e C u rv e Fo r e c a s t o f B o o n s v i l l e Fi e l d

y = 5 , 2 4 1, 6 0 6 . 2 8 6 8 e-0.004 6 x

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

0 24 48 72 96 120 144


S GR pr oject st ar t s

M ay 19 9 3

S GR pr oject en ds

Jun e 19 9 5

No s ign if ican t in cr emen t al pr oduct ion obser ved.

P r oduct ion declin e cur ve f or ecas t r emain s

P r o d u c t i o n D e c l i n e Fo r e c a s t o f S t r a t t o n Fi e l d

y = 2 , 2 6 6 , 0 2 1. 5 6 3 1e-0.003 3 x

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0 60 120 180 240 300



J an uar y 19 9 0

S GR pr oject en ds

Apr il 19 9 3

S in ce in cr eas in g pr oduct ion t r en d s t ar t ed pr ior t o

pr oject s t ar t , in cr emen t al pr oduct ion n ot claimed.

P ro d u c t i o n D e c l i n e C u rv e Fo re c a s t o f S e e l i g s o n Fi e l d

y = 4 , 0 8 8 , 9 8 4 . 0 16 6 e-0.01 02 x

0

1, 000, 000

2, 000, 000

3, 000, 000

4, 000, 000

5, 000, 000

0 60 120 180 240 300

M o n t h s s i n c e 1 9 8 0


S ept ember 19 8 8

S GR pr oject en ds

December 19 9 1



st ar t of pr oject an d 2 year lag af t er pr oject

P r o d u c t i o n D e c l i n e C u r v e Fo r e c a s t f o r Mc A l l e n R a n c h Fi e l d

y = 6 , 7 7 0 , 14 3 . 3 7 0 3 e-0.01 9 5 x

0

2 , 000, 000

4, 000, 000

6, 000, 000

8, 000, 000

10, 000, 000

12, 000, 000

0 24 48 72 96 120 144 168

M o n t h s s i n c e 1 9 8 8


Mar ch 19 8 9

S GR pr oject en ds

Febr uar y 19 9 2

2 year lag of r esult sI n cr emen t al pr oduct ion of 113 % bet ween

s t ar t of pr oject an d 2 year lag af t er pr oject

P r o d u c t i o n D e c l i n e C u rv e Fo r e c a s t o f La k e C re e k Fi e l d

y = 4 0 2 , 5 7 1. 4 7 0 6 e-0.03 1 9 x

0

200,000

400,000

600,000

800,000

1,000,000

0 24 48 72 96 120 144 168



S ept ember 19 8 9

S GR pr oject en ds

December 19 9 2


I n cr emen t al pr oduct ion of 15 9 %

bet ween st ar t of pr oject an d 2 year lag

Portfolio of EGR Field Studies

Overall EGR technologies in these seven fields yielded incremental production response of 231 Bcf.

Excellent Insignificant

QAd1023


CreateU.S. Natural Gas Production

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

L48 Conventional Onshore

Associated and High-Perm Gas

Shallow OffshoreL48 Unconventional Onshore Tight Gas, Shale Gas, CBMDeepwater+Subsalt Offshore

0

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

Ann

ual N

atur

al G

as P

rodu

ctio

n (B

cf)

$2

$3

$1 Wel

lhea

d Pr

ice

($/m

cf)

>50%

L48 Unconventional Onshore

“Conventional” UnconventionalsTight (Low Permeability) ShaleCoalbed Methane

“Unconventional” UnconventionalsDeep (>15,000 ft)SubsaltUltra-Deep Water Methane Hydrates

QAd1023


CreateTight Gas

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

4,000.0

1970 1975 1980 1985 1990 1995

Bcf

11 Tcf Incremental Gas

$2

$3

$1

Wel

lhea

d Pr

ice

($/M

cf)

*Advanced Stimulation Technology*Greater Green River Basin Shale Gas*Piceance Basin

DOE

GRI

Federal Alternative Fuels Production Credit for Unconventional Gas

State of Texas Tight Gas Incentives

Private Sector

GRI, 1999, GRI’s Gas Resource Database. DOE personal communication. QAd1023


MAJOR PRODUCTIVE TIGHT GAS BASINS(Technically Recoverable Resources)

600 km0

400 mi0

N

Rocky MountainForeland(137 Tcf)

Midcontinent(16.9 Tcf)

Arkla-Tex(29.8 Tcf)

Appalachian(18.3 Tcf)

Permian Basin(19.5 Tcf)

Texas GulfOnshore(9.1 Tcf)

San Juan(5.6 Tcf)*

137 Tcf

QAc9715c

Burea uofEc onomi c

Geo logy 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)

QAd1023


CreateShale Gas

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

1980 1985 1990 1995

Bcf

2.2 Tcf Incremental Gas

$2

$1

Wel

lhea

d Pr

ice

($/M

cf)

Antrim Shale ResearchAppalachian Basin Shales

DOE(1976-1992)

GRI

Private Sector



MAJOR PRODUCTIVE DEVONIAN SHALE BASINSTechnically Recoverable Resources

600 km0

400 mi0

NFt. Worth

Barnett Shale(7.2 Tcf)

IllinoisNew Albany

(2.9 Tcf)Cincinnati

Arch(2.2 Tcf)


Michigan Antrim(16.9 Tcf)

40 Tcf

Burea uofEc onomi c

Geo logy Data: NPC (2000)QAc9712c

QAd1023


CreateCoalbed Methane

Historical U.S. Coalbed Methane Production

0

300

600

900

1,200

1,500

1,800

1970 1980 1990 2000

Anna

ul P

rodu

ctio

n (B

cf)

DOE GRI

Federal Alternative

Fuels Credit for Unconventional

Gas

Private Sector



MAJOR PRODUCTIVE COALBED METHANE BASINS(Total Most Likely Resources)

600 km0

400 mi0

N

QAc9714c

Burea uofEc onomi c

Geo logy

Powder River(24.0 Tcf)

Hanna-Carbon (4.4 Tcf)Uinta & Piceance(5.5 Tcf)

San Juan(10.2 Tcf)

Northern Appalachianand PA Anthracite

(10.6 Tcf)

Black Warrior(4.4 Tcf)

Raton-Mesa (3.7 Tcf)

Alaska(Bering River, North Slope,

Chignik and Herendeen Bay)(57.0 Tcf)

SW Coal Region(5.8 Tcf)

Data: PGC (2001)

81 Tcf

QAd1023


MAJOR PRODUCTIVE DEEP (>15,000 FT) GAS BASINS(Total Most Likely Resources)

600 km0

400 mi0

N

MontanaFolded Belt

(5.2 Tcf)Wind River

(5.0 Tcf)Greater Green River

(8.4 Tcf)

San Joaquin(9.0 Tcf) Anadarko, Palo Duro

(17.7 Tcf)Permian(12.9 Tcf)


LA, MS, AL Salt(15.8 Tcf)

LouisianaGulf Coast(14.5 Tcf)Texas

Gulf Coast(14.3 Tcf)

62 Tcf

Burea uofEc onomi c

Geo logy Data: PGC (2001)QAc9713c

QAd1023


MAJOR PRODUCTIVE DEEP-WATER GAS BASINS(Total Most Likely Resources)

600 km0

400 mi0

N

Pacific Slope(8.9 Tcf)

Louisiana Slope(12.4 Tcf)

Texas Slope(4.3 Tcf)

Eastern Gulf Slope(7.6 Tcf)Gulf of Mexico OCS

(47.7 Tcf)

71 Tcf

Burea uofEc onomi c

Geo logy Data: PGC (2001)QAc9716c

QAd1023


Technology Investment = Resource Creation

L48 Unconventional OnshoreDeepwater+Subsalt Offshore

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

0

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

Ann

ual N

atur

al G

as P

rodu

ctio

n (B

cf)

170 Tcf

Unc. Gas Major Basins (Technically Recoverable)

Tight Gas 137 Tcf

Shale Gas 40 Tcf

CBM 81 Tcf

Deep Gas 62 Tcf

Deep Water 72 Tcf

392 TcfQAd1023


Source: A. Anders on/Cambridge Energy Res earch As s oc .

Trin

idad

Transport

North America

Natural Gas

Transports

(Bcf)



Sequester

The sustainability of a hydrocarbon-fueled economy requires that we support an

environment and energy win-win.

Capture carbon dioxide and return it to the subsurface for the economic benefit of

enhanced hydrocarbon recovery and the environmental benefit of reduced

atmospheric carbon dioxide.


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Sources (dot size =release)Refineries and chemical

plantsElectric power plants

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Summary and Opportunities


Summary

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

Qua

d B

TU

Gases and Renewables

Liquids

Solids

Global oil and coal consumption will remain at current levels for 30-50 years.Natural gas and other energy sources will need to fill the global demand gap.The global economy and environment will benefit from a transition to natural gas.

QAd1023


Opportunities

Research and technology for a natural gas industry are different than for an oil industry.Unconventional sources will require significantgeoscience and engineering advancements and talent. Sequestration of greenhouse gases should impact atmospheric emissions, and represents a new industry opportunity.The Private-Federal model must evolve, and will represent new partnership opportunities.

QAd1023


Thank You!

Documents

The Coming Natural Gas Economy - ALRDC - Home - Artificial