The Unconventional Oil & Gas Industry

Transcription

1 The Unconventional Oil & Gas Industry Natural Gas Exploration & Development in New Brunswick Sheri Somerville Natural Gas Advisor, CAPP Probus of Greater Moncton June 4, 2014

2 Presented By The Canadian Association of Petroleum Producers (CAPP) Represents large and small producers who explore for, develop and produce natural gas, natural gas liquids, crude oil and oil sands throughout Canada Produce about 90 per cent of Canada s natural gas and crude oil Part of a national industry with revenues of about $110 billion per year Associate members provide a wide range of services that support the upstream crude oil and natural gas industry The New Brunswick Oil & Natural Gas Association (NBO&NGA) Established in 2011 Facilitates the effective exploration, development, production, transmission and distribution of New Brunswick s hydrocarbon resources in an environmentally safe and responsible manner NBO&NGA and CAPP joined to engage with communities, business leaders, governments and people interested in an open, fact-based dialogue about natural gas and oil development

3 Advancing the 3Es the 3Es Generating Economic Benefits Jobs and revenues across North America Providing Energy Security Safe, secure and reliable energy Large energy resource potential Providing Environmental Stewardship Strong regulations Technology advances

4 Global Primary Energy Demand Energy Demand Growth All Forms of Energy, Developed Responsibly Technology - Key Lever for Sustainable Growth Population growth Standard of living Ongoing high reliance on hydrocarbons Increasing role for renewables Shift to non-conv. oil & natural gas Production Cost competitiveness Environmental performance 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 million tonnes oil equivalent Other Renewables Bioenergy Hydro Nuclear Natural Gas Oil Coal Source: International Energy Agency New Policies 1990 Scenario World Energy Outlook 2011 Source: International Energy Agency World Energy Outlook 2013 Ongoing reliance on fossil fuels (share of energy consumption): 2011: 82% 2035: 76%

5 How Will Demand Be Met? Technological advances have unlocked vast unconventional gas resources. Resource assessments are ongoing (GSC, NEB and others) in many new areas, and new opportunities continue to emerge (Eastern Canadian shale gas, etc.) *Estimated Recoverable Marketable Gas

6 North American Shale Gas Plays

7 Top 10 World Natural Gas Producers in 2012 Trillion Cubic Feet per Year US Russian Federation Iran Qatar Canada Norway Canada, is the 5 th largest producer of natural gas in the world. (5.56 tcf/year) China Saudi Arabia Algeria Indonesia Source: BP Statistical Review 2013

8 The Atlantic Canada Opportunity

9 Economic Benefits of Oil and Gas Activity in Atlantic Canada Employs over 6,000 people (thousands more indirectly) Supports over 800 local supply/service companies Accounts for total provincial revenues of 24% (NL) and 1.8% (NS) Cumulative expenditures since $37 Billion Impact of production on provincial GDP in 2012: 28% of GDP in NL 2.5% of GDP in NS (Mining, Oil & Gas) Significant growth potential in NB, NS and NL

10 NB Opportunity: Proven and Potential Resources Source: DNR NB

11 Natural Gas and Oil Industry in New Brunswick: First oil well drilled at Dover in oil and gas wells were drilled in NB by 2010 Since 1990, 40 oil wells drilled and 40 Natural Gas wells 29 natural gas and 18 oil wells are currently producing Since 1990, 49 wells have been hydraulically fractured for oil and gas in NB

12 Why Is This Important To NB? Location, location, location Domestic energy supply Relationship to energy consumers Energy corridor Employment opportunities Education and employment diversity Long term & largely in province Revenue & royalties Royalties Taxes BENEFITS Direct: Spending by natural gas companies Indirect: Supply chain opportunities Induced: Transactions throughout economy by workers indirectly or directly

13 NB Business Council/Future NB Deloitte: Economic Benefits

14 Supply Chain Opportunities Construction, manufacturing and transportation Drilling, completion and production Geological and geophysical Pipeline and associated infrastructure Environmental & other consulting services Legal & land Natural gas distribution Service industries, logistics & distribution Retail, food, health, education & financial services Work boots, uniforms & uniform cleaning Well pad cleaning Alternate housing RVs, minihomes Fencing, landscaping & irrigation Concrete Security, EMTs, engineers, lawyers, accountants, surveyors, etc. Home sales, hotels, restaurants, entertainment, retail, auto sales (e.g., pickup trucks) Catering

15 Geology of Natural Gas Resources Conventional Resources Small volumes, easy to develop Unconventional Resources Large volumes, difficult to develop Source: U.S. Energy Information Administration

16 Stages of Exploration and Production for Unconventional Resources Nova Scotia New Brunswick Duvernay Horn River Marcellus

17 Geophysical Exploration (Seismic): Vibroseis truck Seismic charge

18 Technology Makes it Work Drilling technology improvements Longer horizontal laterals Multiple-stage hydraulic fractures per lateral Horizontal drilling and hydraulic fracturing result in gas wells with long stable production lives Ground water is separated by thousands of feet and tons of impermeable rock Significant amount of water is recycled Micro-seismic technology evolving and enabling greater precision in fracturing wells Small surface footprint for multiple, extended wells

19 How does hydraulic fracturing stimulation work? Approximately 4,000 cubic metres (4 million litres) of water used to fracture each stage of a well Water amounts may vary depending on type and location of reservoir. Total water used at the 4 major shale plays in the USA is less than 1% of total water usage in each state Fracture stimulation fluid consists of 98.5% water/sand and 1.5% chemical additives All chemical additives are disclosed by industry to regulators before hydraulic fracturing occurs

20 Fracture Fluid Use & Disclosure The water, sand, and additives used to convey pressure from the surface to the reservoir to create fractures to be created 98.5% Water & Sand 1.5 % Additives Gelling Agents Cross Linkers Clay Control Breakers Surfactants Biocides Energizers

21 Fracture Fluids TYPE Source Purpose Common Use Gelling Agent Guar Gum Polyacrylamide Increase viscosity, helps support and carry proppant better than straight water Clay Control Potassium Chloride Prevents clay from swelling Food grade product (ice cream, condiments, canned soup, etc.) Found in disposable diapers Potash, fertilizer, and table salt substitute Surfactants Naphthalene Lowers surface tension and helps used fracture fluid return to the surface Found in moth balls Windex Biocide Glutaraldehyde (can also be derived from plants or bacteria) Eliminates bacteria from water that can produce corrosive by products Disinfectants, sterilizer for medical and dental equipment Energizers CO2 Nitrogen Improves stimulation or recovery of fluids Odorless, non toxic.

22 Multi-Well Pads Vertical Well Pad Horizontal Well Pad Advantages of Multi-Well Pads: Reduction of land use for the pad, access roads & pipelines. Easier monitoring of site and enforcement of regulations. Conducive to establishing and enforce traffic/trucking corridors. Optimization of location. Establish and enforce noise, light, air emission and water plans. Source: ERCB 2011

23 McCully Field, Sussex

24 Who Regulates Oil & Natural Gas Sector Federal & Provincial Departments Environment (Environment & Local Government) Energy (Energy & Mines) Natural Resources Transportation Fisheries and Oceans (Agriculture, Aquaculture & Fisheries) Finance Public Safety Others may be involved: Aboriginal Affairs, Economic Development Federal & Provincial regulatory entities: National Energy Board (NEB) Energy and Utilities Board (EUB) Federal Programs: Chemicals management program New Substances program

25 Regulatory Considerations: The New Rules We Support Strong Regulations Consistent and Stable Operating Environment Responsible Environmental Management of Oil &Natural Gas Activities Rules For Industry in NB Seismic testing procedures Air Emissions and GHGs Well bore construction, casing, containment, testing, etc. Public safety and Emergency Planning Managing wastes and potential contaminants Monitoring to protect water quality Communities and the environment Reducing financial risks and protecting landowner rights Sustainable use of water management and reporting Sharing information

26 Public Opinion Polling Natural Gas & Oil Sands For each of the following types of energy, please indicate if your overall feelings are very negative, negative, neutral, positive, or very positive.

27 Guiding Principles for Hydraulic Fracturing We will: 1 Safeguard the quality and quantity of regional surface and groundwater resources, through sound wellbore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical Measure and disclose our water use with the goal of continuing to reduce our effect on the environment. Support the development of fracturing fluid additives with the least environmental risks. Support the disclosure of fracturing fluid additives. 5 Continue to advance, collaborate on and communicate technologies and best practices that reduce the potential environmental risks of hydraulic fracturing.

28 Being Part of the Discussion - Fact vs.

29 The Way Forward: Sustainability & Growth Opportunities Market demand Competitive supply NA self-sufficiency? Build on strong foundation Industry Competitiveness Market growth & diversification Skilled workforce availability Industry Social License Performance + Communication Must be earned (every day!) Key levers: Technology & innovation Collaboration (within sector, along value chain, w/ aligned interests) Atlantic Canada important part of national dialogue 29

30 Responsible Energy Development Canadians want to know that shale gas can and will be developed safely Strong regulation that has worked successfully in Canada can provide framework for emerging provinces Companies are committed to: Responsible energy development and abide by codes of conduct that further supports strong regulation Accountability and transparency Strong regulatory frameworks, enforcement policies Scientific research and continuous improvement Natural gas is a significant opportunity with positive effects on economy and energy supply. Support the Responsible Exploration and Development of Natural Gas

31 For More information CAPP.ca Follow CAPP on Like CAPP on Facebook: facebook.com/oilgascanada CSUR.com Morefactslessfriction.ca Canadiannaturalgas.ca

32 THANK YOU QUESTIONS? Sheri Somerville Natural Gas Advisor, NB