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J. David Hughes
.
B.C. LNG: Myths and Realities
Skeena Watershed Conservation Coalition
September 20, 2016
1
Points to be covered:
- Gas Supply and energy security
- Environmental Impacts: Fracking, land use,
greenhouse gas emissions
- Economic Viability
2
© Hughes GSR Inc, 2016 (from BC Government website, February, 2016)
2013 Throne Speech – 100,000 jobs;
$100 Billion Prosperity Fund3
0
50
100
150
200
250
300
350
Entire2015
GlobalLNG trade
Total ofBC LNG
proposals
B.C. Gov'tHigh
B.C. Gov'tMedium
CCPAMedium
KPMGMedium
CCPALow
Millio
n T
on
ne
s p
er
Ye
ar
Scenarios
5 Terminals
82 mtpa
Global LNG Trade compared to B.C. LNG Scenarios
2-4 Terminals
34-50 mtpa
1 Terminal
17.7 mtpa
© Hughes GSR Inc, 2015 (B.C. Government literature and websites; CCPA reports; Wood Mackenzie, 2016)
20 Terminals
300+ mtpa
4
0
2
4
6
8
10
12
14
16
18
20
2001 2003 2005 2007 2009 2011 2013 2015
Bil
lio
n c
ub
ic f
ee
t p
er
Da
y
Year
BCNWT & YukonEast CoastSaskatchewanAlberta
Marketable Gas Production by Province, 2001-2016
© Hughes GSR Inc, 2016 (data from National Energy Board, 1998-2016, 12 month centred moving average)
BC
30%
Alb
erta
66%
Peak 2001
14% Below Peak
5
0
5000
10000
15000
20000
25000
0
2
4
6
8
10
12
14
16
18
20
2000 2005 2010 2015 2020 2025 2030 2035 2040
We
lls D
rilled
pe
r Ye
ar
Bil
lio
n c
ub
ic f
ee
t p
er
Da
y
Year
Rest of CanadaSaskatchewanB.C.AlbertaWells Drilled per Year
NEB 2016 Reference Gas Forecast by Province – 2000-2040
© Hughes GSR Inc, 2016
2013 Trough
Peak 2001
53%
46%
Renaissance
(data from National Energy Board Energy Futures, January, 2016)
B.C.+85% 2015-2040
6
0
2
4
6
8
10
12
14
16
18
20
2000 2005 2010 2015 2020 2025 2030 2035 2040
Pro
du
cti
on
(B
illio
n c
ub
ic f
ee
t p
er
da
y)
Year
Peak 2001
NEB 2016 Reference Case Production, Exports and
Domestic Demand, 2000-2040
Canadian Demand
LNG Exports
Land Exports
(data from National Energy Board Energy Future, January, 2016)© Hughes GSR Inc, 2016
ForecastHistory
7
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
2000 2005 2010 2015 2020 2025 2030 2035 2040
Bil
lio
n c
ub
ic f
ee
t p
er
Da
y
Year
CCPA Low
KPMG Medium
CCPA Medium
B.C. Gov't Medium
B.C. Gov't High
NEB Reference Case without exports
Net Natural Gas Available for Export, 2000-2040
© Hughes GSR Inc, 2016 (data from NEB Energy Futures Reference Case, January, 2016; BC Government literature; CCPA reports)
-10 Tcf 12.7Tcf
-31.7 Tcf
No LNG Exports
-22.4 Tcf
-75 Tcf
Cumulative 2016-2040 Surplus/Deficit illustrated
based on NEB 2016 Reference Case production
and domestic demand projections
Five LNG Terminals
Shortfall
8
0
5
10
15
20
25
30
35
2000 2005 2010 2015 2020 2025 2030 2035 2040
Pro
du
cti
on
(B
illio
n c
ub
ic f
ee
t p
er
da
y)
Year
Peak 2001
NEB Reference Case Gas Production, Exports and Demand
including 5 LNG Terminal Case, 2000-2040
BC Gov’t LNG Exports
(5 Terminals in total)
NEB LNG Exports
Land Exports
(data from National Energy Board Energy Future, January, 2016; BC Government literature)© Hughes GSR Inc, 2016
ForecastHistory
47%
102 Tcf exported by
2040 with 5 terminals
Canadian Demand
9
Montney65%
Horn River19%
Other Shale gas10%
Conventional6%
BC Marketable Gas Resources in 2014
Total = 416 Tcf (94% unconventional) © Hughes GSR Inc, 2016 (data from National Energy Board Energy and BC O&G Commission, 2013; per CCPA report, May, 2015)
10
© Hughes GSR Inc, 2016 (data from National Energy Board Energy Future, January, 2016)
Key Producing Regions According to NEB 2016
Montney
Horn River
11
0
1
2
3
4
5
6
1985 1990 1995 2000 2005 2010 2015
Billio
n C
ub
ic F
ee
t p
er
Da
y
Year
Montney
Horn River
Other
B.C. Raw Gas Production by Reservoir,1985-2015
© Hughes GSR Inc, 2016
64%
64% of production now
comes from just 2 plays
All other plays
Montney
(data from Drillinginfo, December, 2015; 12 month centred moving average)
12
0
1
2
3
4
5
6
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Bil
lio
n C
ub
ic F
ee
t p
er
Da
y
Year
Horizontal
Vertical/Directional
B.C. Raw Gas Production by Drill Type
1965-2015
© Hughes GSR Inc, 2016 (data from Drillinginfo, December, 2015; 12 month centred moving average)
82%
Vertical/Directional
Horizontal
13
© Hughes GSR Inc, 2016
Montney, Duvernay Drilling and Earthquakes
(data from Drillinginfo, 2015 and NRCan earthquake database, 2016)
M 3-4
M 4-5
14
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
B.C. Gov'tHigh
B.C. Gov'tMedium
CCPAMedium
KPMGMedium
CCPA Low NoTerminals
Pe
rce
nta
ge
of
Pla
y A
rea
Export level Scenarios
Land Disturbance in Montney and Horn River Plays in
addition to existing land disturbance, 2014-2040
© Hughes GSR Inc, 2015 (CCPA LNG Report, 2015)
Assuming Multi-well pads
With 10 wells per pad
15
0
200
400
600
800
1000
1200
1400
B.C. LNG (20year)
Chinese Coal (20year)
B.C. LNG (100year)
Chinese Coal (100year)
Kg
of
CO
2e p
er
Meg
aw
att
-Ho
ur
Coal vs Gas Comparison
Electricity T&DPower Plant OperationsLNG RegasificationTanker/Rail TransportLiquefactionPipelineProcessingExtraction
Greenhouse Gas Emissions, B.C. LNG versus
Best-technology Chinese coal on 20- and 100-year bases
© Hughes GSR Inc, 2015 (data from U.S. NETL, 2014; based on 46% efficient ultrasupercritical coal power plants per CCPA report, 2015)
B.C. LNG
27% worse
7% improvement
16
0
100
200
300
400
500
600
700
800
1990 1995 2000 2005 2010 2015 2020 2025 2030
Mil
lio
n T
on
nes
per
Year
CO
2eq
Year
GHG Emissions by Sector, with Oil Sands capped at
100 Mt and other O&G Projections from NEB Ref Case
© Hughes GSR Inc, 2016 (data from Environment Canada National Inventory, April 2016; NEB Energy Future 2016; COP21, December 2015)
Upstream Oil Sands
O&G Sector 45%
Electricity
Transportation
Heavy Industry
Buildings
Agriculture
Waste
Non–Oil and Gas
Must Contract by
47% from 2014
Levels by 2030
Paris Agreement
30% below 2005 by 2030
17
40
45
50
55
60
65
70
75
80
1990 1993 1996 1999 2002 2005 2008 2011 2014
An
nu
al E
mis
sio
ns
Me
ga
ton
ne
sC
O2e
Year
BC Emissions and Carbon Tax 1990-2014
© Hughes GSR Inc, 2016 (Environment Canada NIR 2016; CEAA draft report February 2016; Climate Leadership Plan, 2015)
Campbell’s Climate
Plan and Carbon Tax
implemented 2008Emissions down
0.9% from 2007
Campbell’s
2012 Target
18
CEAA on Pacific Northwest LNG
Emissions:
Mt/year
CO2e
% of total
BC emissions
Total 2014 BC Emissions 62.9
LNG facility 5.3 8.4%
Upstream production 6.5-8.7 10.3%-13.8%
Full cycle LNG
emissions11.8-14.0 18.7%-22.2%
© Hughes GSR Inc, 2016 (Environment Canada NIR 2016; CEAA draft report February 2016)
19
0
10
20
30
40
50
60
70
80
90
1990 1995 2000 2005 2010 2015 2020 2025 2030
An
nu
al E
mis
sio
ns
Me
ga
ton
ne
sC
O2e
Year
BC Emissions 1990-2014 with Projections to 2030
including Pacific Northwest LNG full-cycle emissions
© Hughes GSR Inc, 2016 (Environment Canada NIR 2016; CEAA draft report February 2016; Climate Leadership Plan, 2015)
Campbell’s Climate
Plan and Carbon Tax
implemented 2008
Emissions down
0.9% from 2007
in 2014
Pacific Northwest
LNG emissions
(28% of 2030 total)
Paris Agreement
30% below 2005
With Pacific Northwest
LNG the rest of the
BC economy must
reduce emissions by
48% from 2014 levels
BC must reduce
emissions by 27%
from 2014 levels
to meet the
Paris Agreement
LNG
48%
Red
uctio
n in
no
n-L
NG
secto
rs re
qu
ired
20
© Hughes GSR Inc, 2016 (data from FERC, September 2016)
LNG Landed Prices as of August, 2016
Minimum Break Even
Price for BC Exports
$10.00 (with no profit)
21
There’s no such thing as a
FREE LUNCH
22