Global Unconventional Potential at $50 Oil What are you missing? August 2017 Ian Cockerill

Transcription

1 Global Unconventional Potential at $50 Oil What are you missing? August 2017 Ian Cockerill

2 Presentation Outline GLOBAL PERSPECTIVE NORTH AMERICAN PERSPECTIVE PLAY PERSPECTIVE PLAY MAPPING QUANTIFICATION RESOURCE OPTIMISATION 1

3 What is Unconventional? OIL SHALE HEAVY OIL BITUMEN CONVENTIONAL RESERVOIRS TIGHT GAS REMAINING IN-PLACE RESOURCE BASIN CENTRED GAS COAL SEAM GAS SHALE GAS GAS HYDRATES THERE ARE NO HARD LINES BETWEEN CONVENTIONAL AND UNCONVENTIONAL RESOURCES UNCONVENTIONAL RESERVOIRS SHARE A LOT OF SIMILAR CHARACTERISTICS TO CONVENTIONAL RESERVOIRS Zones of higher Porosity / Permeability Zones of higher Resistivity Zones of higher Pressure Regional structures or structural highs ITS NOT JUST A GAME OF FINDING A SHALE AND FRACKING THE BEJEEZUS OUT OF IT 2

4 What is Unconventional? OIL SHALE HEAVY OIL BITUMEN CONVENTIONAL RESERVOIRS TIGHT GAS REMAINING IN-PLACE RESOURCE BASIN CENTRED GAS COAL SEAM GAS SHALE GAS GAS HYDRATES THERE ARE NO HARD LINES BETWEEN CONVENTIONAL AND UNCONVENTIONAL RESOURCES UNCONVENTIONAL RESERVOIRS SHARE A LOT OF SIMILAR CHARACTERISTICS TO CONVENTIONAL RESERVOIRS Zones of higher Porosity / Permeability Zones of higher Resistivity Zones of higher Pressure Regional structures or structural highs ITS NOT JUST A GAME OF FINDING A SHALE AND FRACKING THE BEJEEZUS OUT OF IT 2

5 INCREASING RESERVES In-place versus Recoverable Hydrocarbons BIG CONVENTIONAL RESERVOIRS EASY RECOVERY MORE TIGHT GAS HEAVY OIL BASIN CENTRED GAS BITUMEN COAL SEAM GAS LESS OIL SHALE REMAINING IN-PLACE RESOURCE SHALE GAS GAS HYDRATES BIGGER HARD INCREASING PRICE 2

6 INCREASED DEMAND (PRICE) IMPROVED TECHNOLOGY INCREASING RESERVES In-place versus Recoverable Hydrocarbons BIG CONVENTIONAL RESERVOIRS EASY RECOVERY MORE TIGHT GAS HEAVY OIL BASIN CENTRED GAS BITUMEN COAL SEAM GAS LESS OIL SHALE SHALE GAS GAS HYDRATES BIGGER HARD INCREASING PRICE 2

7 DECREASED DEMAND (PRICE) INCREASED SERVICE COSTS INCREASING RESERVES In-place versus Recoverable Hydrocarbons BIG CONVENTIONAL RESERVOIRS EASY RECOVERY MORE TIGHT GAS HEAVY OIL BASIN CENTRED GAS BITUMEN COAL SEAM GAS LESS OIL SHALE SHALE GAS GAS HYDRATES BIGGER HARD INCREASING PRICE 2

8 INFLATION ADJUSTED OIL PRICE $50 Oil: The new norm PERMANIA OIL PRICE >$120 OIL Proven North American unconventional resources supplying demand in the nearmid-term $100 - $120 OIL $80 - $100 OIL $60 - $80 OIL <$60 OIL US RIG COUNT 400 YEAR

9 INFLATION ADJUSTED OIL PRICE Good Oil trends ASX Unconventional focused companies PERMANIA WHAT ARE WE MISSING? 40% 30% 20% 10% Company presentations at the Good Oil Conference with a focus on Unconventional Percentage of RISC projects classified as Unconventional YEAR 4

10 Oil versus Gas split of North American Rotary Rig Count The Second Coming: North American Shift to Liquids % GAS % OIL MARCELLUS DRY GAS MARKET SATURATION ASSOCIATED GAS HENRY HUB NATURAL GAS SPOT PRICE $/MMBTU 4 2 $3/MMBTU YEAR 5

11 Global unconventional potential Technically Recoverable Shale Gas Resource (Tcf) 1 US 1,161 2 China 1,115 3 Argentina Algeria Canada Mexico Australia South Africa Russia Brazil 245 Others Total 1,535 7,795 6

12 Global unconventional interest Technically Recoverable Shale Gas Resource (Tcf) 1 US 1,161 2 China 1,115 3 Argentina Algeria Canada Mexico Australia South Africa Russia Brazil 245 Others Total 1,535 7,795 OIL PRICE RELATIVE COMMERCIAL INTEREST 7

13 Leading North American unconventional plays MONTNEY OIL PLAYS LIARD MONTNEY HORN RIVER GAS PLAYS DUVERNAY COLORADO BAKKEN MONTEREY MANCOS NIOBRARA POWDER RIVER GREEN RIVER ANTRIM NEW ALBANY UTICA MARCELLUS STACK SCOOP PERMIAN ARKOMA TMS FAYETTEVILLE BARNETT HAYNESVILLE EAGLE FORD EAGLE FORD 1000km PIMIENTA 1000km 8

14 Leading North American unconventional plays MONTNEY OIL PLAYS LIARD MONTNEY HORN RIVER GAS PLAYS DUVERNAY COLORADO BAKKEN MONTEREY MANCOS NIOBRARA POWDER RIVER GREEN RIVER ANTRIM NEW ALBANY UTICA MARCELLUS STACK SCOOP PERMIAN ARKOMA TMS FAYETTEVILLE BARNETT HAYNESVILLE EAGLE FORD BREAK EVEN PRICE EAGLE FORD BREAK EVEN PRICE 1000km PIMIENTA HIGH LOW 1000km HIGH LOW 8

15 Break-even oil prices for new wells in North American plays KEY PLAYS RANGE OF BREAK-EVEN IN THE NORTH AMERICAN UNCONVENTIONAL PLAYS ($/BBL) MONTNEY (CANADA) WOLFCAMP MIDLAND WOLFCAMP DELAWARE EAGLE FORD CRETACEOUS (CANADA) BAKKEN BONE SPRING NIOBRARA SCOOP/STACK DUVERNAY (CANADA) THREE FORKS SWEET- SPOTS FRINGE

16 Breaking point in the Eagle Ford $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 100% of Eagle Ford break-even at $70> Oil (8,000,000 acres) 100km 10

17 Breaking point in the Eagle Ford $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 58% of Eagle Ford break-even at <$70 Oil (4,634,000 acres) 100km 10

18 Breaking point in the Eagle Ford $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 46% of Eagle Ford break-even at <$60 Oil (3,653,000 acres) 100km 10

19 Breaking point in the Eagle Ford $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 31% of Eagle Ford break-even at <$50 Oil (2,508,000 acres) 100km 10

20 Breaking point in the Eagle Ford $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 18% of Eagle Ford break-even at <$40 Oil (1,482,000 acres) 100km 10

21 Breaking point in the Eagle Ford $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 31% of Eagle Ford break-even at <$50 Oil (2,508,000 acres) 100km 10

22 Breaking point in the Eagle Ford $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 46% of Eagle Ford break-even at <$60 Oil (3,653,000 acres) 100km 10

23 Growth of the Eagle Ford Eagle Ford 2007 Eagle Ford 2017 OIL WELL OIL WELL 50km GAS WELL 50km GAS WELL 11

24 1350m Cost efficiencies: Multi-lateral drilling PERMIAN BASIN COLUMN 235m (Brookfield Place) 12

25 Cost efficiencies: The rise of pad based drilling 7G (Montney) Super pads designed to House 36 wells. Four active rigs on one pad at any one time LEGEND PAD DRILLED WELL NON-PAD WELL 13

26 Wellhead break-even prices for key North American Unconventional Plays Development in wellhead break-even prices for key Unconventional Plays Average WTI break-even price for NEW Unconventional wells per play ($/bbl) Source: Rystad Energy NASWellCube 14

27 Mexico Eagle Ford extension 50km OIL WELL GAS WELL 50km 15

28 Unconventional challenges outside of North America REGION HIGHER COSTS SERVICE SECTOR REGULATORY FRAMEWORK OPPOSITION INFRA- STRUCTURE SECURITY WATER SHORTAGES GAS PRICE Mexico Higher costs / Smaller service industry Poor regulatory framework Lack of infrastructure Lack of security Water shortages Low prices Mexican gas prices are linked to those in the US. 4.5 BCF/D US Gas exported to Mexico* Contract sanctity (July 2018 presidential election, where energy nationalist Andrés Manuel López Obrador has been leading in the early polls) *US gas prices would be a around $2 without Mexico exports 16

29 The challenges outside of North America REGION HIGHER COSTS SERVICE SECTOR REGULATORY FRAMEWORK OPPOSITION INFRA- STRUCTURE SECURITY WATER SHORTAGES GAS PRICE Mexico Australia Europe South America Asia Africa 17

30 Understanding heterogeneity and finding sweet-spots OIL PLAYS LIARD GAS PLAYS MONTNEY MONTNEY HORN RIVER DUVERNAY COLORADO BAKKEN ANTRIM MONTEREY MANCOS NIOBRARA NEW ALBANY UTICA MARCELLUS STACK PERMIAN SCOOP TMS FAYETTEVILLE HAYNESVILLE EAGLE FORD BREAK EVEN PRICE EAGLE FORD BREAK EVEN PRICE 1000km PEMIENTA HIGH LOW 1000km HIGH LOW 18

31 Finding and quantifying sweet-spots MAPPING PLAY CHARACTERISTICS CALIBRATION ESTIMATING ULTIMATE RECOVERY 19

32 Finding and quantifying sweet-spots COMMON RECOVERY SEGMENT MAP CALIBRATION ESTIMATING ULTIMATE RECOVERY 19

33 Finding and quantifying sweet-spots MONTNEY - LIQUIDS ESTIMATED ULTIMATE RECOVERY POTENTIAL 20

34 The Montney Play Atlas 21

35 Montney EUR per Company Acreage Positions Estimated Ultimate Recovery 22

36 Montney EUR per Company Acreage Positions 22

37 Development Optimisation UPPER MONTNEY LIQUIDS EUR/SECTION UPPER MONTNEY LOCATIONS UPPER MONTNEY LOCATIONS AT $75 OIL LOCATION PLANNING DIRECTLY LINKED TO UNDERLYING RESOURCE QUANTIFICATION PRICE SENSITIVE WELL LOCATION PLANNING 94 locations LOWER MONTNEY LIQUIDS EUR/SECTION LOWER MONTNEY LOCATIONS LOWER MONTNEY LOCATIONS AT $75 OIL LOCATION PLANNING DIRECTLY LINKED TO UNDERLYING RESOURCE QUANTIFICATION PRICE SENSITIVE WELL LOCATION PLANNING 72 locations Source: Transerv Energy 23

38 Development Optimisation UPPER MONTNEY COMMERCIAL LOCATIONS $75 OIL LOWER MONTNEY COMMERCIAL LOCATIONS $75 OIL 94 locations $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 72 locations 24

39 Development Optimisation UPPER MONTNEY COMMERCIAL LOCATIONS LOWER MONTNEY COMMERCIAL LOCATIONS $55 OIL $55 OIL 7 locations $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 7 locations 24

40 Development Optimisation UPPER MONTNEY COMMERCIAL LOCATIONS $75 OIL LOWER MONTNEY COMMERCIAL LOCATIONS $75 OIL 94 locations $30 OIL PRICE SLIDER BAR $40 $50 $60 $70 $80 72 locations 24

41 Summary North America Unconventional production will be the short/medium term kingmaker for oil price Understanding heterogeneity and sweet-spots in unconventional plays is key Opportunities still exist in North American unconventional plays. Providing you do your homework Global unconventional opportunities will require a niche market and technical and commercial understanding and expertise 25

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