Underground Gas Storage and Gas Strategies in North America

Transcription

1 Underground Gas Storage and Gas Strategies in North America Fredrick W. Metzger Kinder Morgan Energy Partners 2009 World Gas Conference October 5-9, 2009 Buenos Aires, Argentina Underground Gas Storage and Gas Strategies in North America Introduction Natural Gas Transportation Underground Gas Storage Natural Gas Exploration & Production Activity Dramatic Changes in the Dynamics of the Gas Industry When will LNG Imports Increase as Predicted? When will the Arctic Natural Gas flow South?

2 North American Gas Pipelines Canada 40,000 Miles of Transmission Pipeline (15,000 Miles, TransCanada Pipelines UNITED STATES 1.9 Million Miles of Distribution 0.3 Million Miles of Transmission 2.2 Million Miles of Pipeline 3 North American Gas Pipelines Rockies Express KM Louisiana PL Fayetteville Express Midcontinent Express Kinder Morgan Second largest Transporter of Natural Gas in U.S. Approximately 22,000 miles of interstate / intrastate pipeline 4

3 North American Gas Storage Kinder Morgan Energy Partners Second largest Operator of Underground Gas Storage in North America 5 Depleted Reservoirs 9 Aquifers 9 Salt Dome Caverns 400 Bcf of Working Capacity 5 United States Storage Industry 75 Storage Operators 400 Storage Facilities 30 States 326 facilities in depleted oil and gas reservoirs 43 facilities in aquifer reservoirs 31 facilities in salt caverns 4,300 BCF of Working Gas Capacity (122 BCM) BCF per day of peak deliverability (2.5 BCM/D) Operate over 17,500 Storage Facility Wells

4 North American Gas Storage 7 Canadian Storage Industry 9 Storage Operators 50 Storage Facilities 5 Provinces 42 facilities in depleted oil and gas reservoirs 0 facilities in aquifer reservoirs 8 facilities in salt caverns 650 BCF of Working Gas Capacity (18 BCM) 5-10 BCF per day of peak deliverability ( MMCM/D) Operate over 650 Storage Facility Wells

5 North American Storage Types 9 North American Storage Types 4,500, ,000,000 3,995,585 Working Capacity 3,500,000 Volume in MMCF 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , , ,669 33,118 Depleted Reservoir Aquifer Domal Salt Caverns Bedded Salt Caverns

6 North American Storage Reservoir Geology 3,500,000 Sandstone Carbonate Salt 3,000,000 3,073,228 Volum me in MMCF 2,500,000 2,000,000 1,500,000 1,281,378 1,000, , ,787 Sandstone Carbonate Salt North American Storage Capacity 12

7 Maximum Deliverability 13 New Storage Developments 14

8 Abandoned Storage Fields 15 Cumulative North American Storage Development History 5,000,000 4,500,000 4,000,000 3,500,000 Canada US Volume in MMCF 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , s-1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s Est Canada 0 12,510 39, , , , , ,000 US 110, ,855 1,210,665 2,009,716 2,924,040 3,224,766 3,512,955 4,300,000

9 Top North American Operators 600, ,000 Working Capacity Volume in MMCF 400, , , ,000 0 Working Capacity by US State and Canadian Province 700,000 Working Capacity 600, ,000 Volume in MMCF V 400, , , ,000 - Michigan Texas Louisiana Pennsylvania Illinois California Ontario Alberta West Virginia Ohio

10 Total Wells by Operator 4,000 Total Wells Operated 3,500 3,000 2,500 2,000 1,500 1, NiSource Dominion National Fuel Gas Supply Corp. TransCanada Corp/ANR Consumers Energy Kinder Morgan Southern Star Central Gas Pipeline Louisville Gas & Electric Co. Nicor Gas Boardwalk Pipeline Partners LP United States Storage Inventory Through September 25, , Tcf 491 Bcf > 2008; 481 Bcf > 5 Yr. Ave. 262 Bcf > than ever on this date 3,500 3,000 2,500 2,000 1,500 1, BCF 0 Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

11 United States Gas Production & Consumption BCF Per Day EIA Sept 2009 Projection TCF Per Year Annual Production Annual Consumption. Rigs Drilling for Gas in the United States 1, Current Week 09/25/09 1,400 1,200 1,

12 North American Supply Basins W 12 0 W W 8 0 W 60 W 4 0 W 7 0 N 20 W 20 W W B e a uf o r t S e a GRE E NLAN D B a f f i n B ay Alaska V ic U.S.A. Ba nd ff in Is la it tra ss 160 W a Is la vi Da to ri A l a s ka nd Canadian Arctic Yu k o n N o rt h W e s t T e rr i t o r ie s L ab r a d o r S e a B r itis h C o lu m b ia 50 N 50 N N u n av u t Western Canada A l b e rt a H ud s o n B a y N e w fo u n d l a n d S as k a t c h e w a n Eastern Canada M a n it ob a Q u e b ec V a nc o u v e r I s l a nd CANADA O n tar i o W a s h i n g to n VT in ia li C a ro A t la n ti c O c ea n na 30 N Co lo SanAJuan ri z o n a Northeast M ar y l a n d V ir g N o rt h see Te nnes RI N e w J e r se y y K en t u ck M i s so u ri O k la h o m a ia s y lv an A r ka n s a s iss ipp Alabama i N e w M ex i co Mi ss ia n uis Lo T e xa s Gulf Coast S o u t h C a r o li n a G e o rg i a a Permian Basin 60 W o ra d K an s a s Mid Midcontinent ti t U N ITE D S TA TE S O F A M E RIC A i 30 N C o l o ra d o p sip sis da C alifo r n ia M is vva P ac i f ic O c e a n s. Mas CO k Yo r O h io IInd iana 140 W s tain Ne West Coast P sn n I l l in o i s ne NH o Ne w E r ie Io w a N e b ra s k a U t ah ta ri On n iga o un rr a Sie N e va d a Mai H ur o n W is c o n s in ri W y o m i ng M i n n es o t a h Mic M cky S o u th D ak o t a s ou Mis Ro Id a h o Michigan Rockies O re g o n S up e r io r W e Vir s t g in ia N o rt h D ak o t a M o n ta n a ida Fl or T HE BA HAM AS G u lf of M ex i c o Gulf of Mexico CUBA M E X IC O 10 N Source: 1 20 W 10 0 W 8 0 W North American Shale Basins 1 40 W 12 0 W 10 0 W 8 0 W 60 W 4 0 W 7 0 N 20 W 20 W 16 0 W Lisburne B e a uf o rt S e a GR E E N LAN D B af f i n B ay V ic U.S.A. an Ba d ff in Is la it tra ss 160 W 1 a Is l vi Da to ri A l a s ka nd Yuk on N o rt h W e s t T e rr i t o r ie s L ab r ad or S e a 50 N N u n av u t B r i ti s h C o lu m b ia 50 N BC Shales H ud s o n B ay A l b e rt a N e w fo u n d l a n d S as k a tch e w a n M a n it ob a Q u e b ec V a nc o uv er I s l a nd CANADA O n tar i o Utica Colorado Group Antrim W a s h i n g to n S u p e r io r M i n n es o ta ne Mai H ur o n O re g o n RI Devonian/Ohio ((Marcellus)) W e Vir s t g in ia h N o rt M ar yl a n d Vir g in ia lin C a ro A t la n ti c O c e a n a 30 N Michigan S o u t h C a r o li n a Floyd/Neal/Conasauga G e o rg i a a 60 W i issipp ia n uis T e xa s s. Mas CO Fayetteville Miss Lo Barnett/Woodford k N e w Je r se y O h io see Te nne s A r ka n s a s N ew M ex i co NH o Yor Ne w ia y lv a n sn n s ky K en t u c M i s s o u ri Woodford O k la h o m a A ri z o n a Lewis ta ri Alabama do ra K an s a s U N I T E D S Woodford/Caney TA TE S O F A M E R IC A i a C o lo Pierre P p sip sis va d C al i fo r n i a E r ie Io w a I l l in o i s New Albany Ind iana 140 W N e b ra s k a C o l o ra d o M is Ne 30 N s tain Baxter U tah On igan o un rr a Sie P a c i f ic O c e a n ri W y o m i ng W is c o n s in h Mic M cky Mancos N e va d a S o u th D ak o t a s ou Mis Ro Id a h o VT N o rt h D ak o t a M o n ta n a ida Flor Barnett G u lf Pearsall of M ex i c o T HE BA HAM AS Haynesville CUBA M E X IC O 10 N Source: 1 20 W 10 0 W 80 W

13 United States Potential Gas Resources 2,000 1,800 1,836 1,600 1,400 1,321 Volume es - TCF 1,200 1, Long Term Supply Outlook Shale Production Changes Everything Source:

14 US Electric Generation Source US EIA Supply Surge driven by Shale Gas 60,000 US Production Forecast 50,000 The current economy and low price will reverse growth in the near term mmcfd 40,000 30,000 20,000 10, Source: Conventional CBM Tight Gas Shale

15 Arctic Ocean ARC Proposal Bering Sea Gulf of Alaska Alaska Pipeline to LNG Plant ANGTS Project Beaufort Sea Mackenzie Proposal Arctic Gas Pipeline Alternatives British Columbia NOVA/ TransCanada Pipeline West Coast Transmission Alberta Pacific Ocean A lliance Pipeline United States of America Foothills Pipeline Source: Cambridge Energy Research Associates LNG Deliveries into North America Expected to Climb Rapidly? Canada Mexico US 3.5 North American LNG Imports bcfd Source:

16 Underground Gas Storage and Gas Strategies in North America Conclusions Natural Gas Transportation Shifts from south to north to west to east Underground Gas Storage Growth Bcf/year working gas Natural Gas Exploration & Production Activity Significant growth in shale gas production underway. Dramatic Changes in the Dynamics of the Gas Industry will continue 100 s of years remain in the North American natural gas era! Transportation Drivers (2005 vs Current) Avg 07/19 09/ Malin, OR $7.46 $2.72 $0.25 $0.28 Rockies $7.22 $2.44 $1.29 $0.25 $1.98 $0.26 Chicago $8.51 $2.69 Clarington, OH $9.19 $2.70 $0.25 $0.33 ($1.62) ($0.18) So. California $7.54 $2.77 Henry Hub $8.83 $2.62

17 Major New Natural Gas Pipelines Built Since Six intrastate header pipelines with in excess of 3.4 Bcf/d of capacity, primarily to transport coalbed methane gas to interstate pipeline interconnections Alliance Pipeline (2.0 Bcf/d) 2006 Grasslands Pipeline (0.1 Bcf/d) 2007 Cheyenne Plains Pipeline (0.8 Bcf/d) 2008 Rockies Express Pipeline (1.8 Bcf/d) 2002 Guardian Pipeline (0.7 Bcf/d) 2002 Horizon Pipeline (0.4 Bcf/d) 2000 Vector Pipeline System (1.0 Bcf/d) 2007 Rockies Express Entegra Pipeline (1.5 Bcf/d) 1999 Maritimes & Northeast 1999 Portland Natural Gas pipeline systems TransColorado Pipeline System (0.4 Bcf/d) 2008 Millennium Pipeline (0.5 Bcf/d) 2002 Questar Southern Trails Pipeline (0.1 Bcf/d) Capacity (million cubic feet per day) 15, North Baja Pipeline ( 0.5 Bcf/d) 9,000 3, Five intrastate pipelines from the Barnett Shale formation area to interconnections with interstate pipelines (more than 3 Bcf/d) 2008 Centerpoint Perryville Extension (1.2 Bcf/d) 1998 Destin Pipeline (1 Bcf/d) 2006 Independence Trail Pipeline (1 Bcf/d) 2008 Southeast Supply Header Pipeline (1.1 Bcf/d) 2002 = Direction = Gulfstream of of Flow Pipeline System = Bi-directional (1.1 Bcf/d 2007 Cypress Pipeline System (0.4 Bcf/d) Major New Natural Gas Pipelines Built Since Six intrastate header pipelines with in excess of 3.4 Bcf/d of capacity, primarily to transport coalbed methane gas to interstate pipeline interconnections Alliance Pipeline (2.0 Bcf/d) 2006 Grasslands Pipeline (0.1 Bcf/d) 2007 Cheyenne Plains Pipeline (0.8 Bcf/d) 2008 Rockies Express Pipeline (1.8 Bcf/d) 2002 Guardian Pipeline (0.7 Bcf/d) 2002 Horizon Pipeline (0.4 Bcf/d) 2000 Vector Pipeline System (1.0 Bcf/d) 2007 Rockies Express Entegra Pipeline (1.5 Bcf/d) 1999 Maritimes & Northeast 1999 Portland Natural Gas pipeline systems TransColorado Pipeline System (0.4 Bcf/d) 2008 Millennium Pipeline (0.5 Bcf/d) 2002 Questar Southern Trails Pipeline (0.1 Bcf/d) Capacity (million cubic feet per day) 15, North Baja Pipeline ( 0.5 Bcf/d) 9,000 3, Five intrastate pipelines from the Barnett Shale formation area to interconnections with interstate pipelines (more than 3 Bcf/d) 2008 Centerpoint Perryville Extension (1.2 Bcf/d) 1998 Destin Pipeline (1 Bcf/d) 2006 Independence Trail Pipeline (1 Bcf/d) 2008 Southeast Supply Header Pipeline (1.1 Bcf/d) 2002 = Direction = Gulfstream of of Flow Pipeline System = Bi-directional (1.1 Bcf/d 2007 Cypress Pipeline System (0.4 Bcf/d)

18 North American Storage Capacity 35 Gas Storage by Region The Consuming East (including Eastern Canada) region relies extensively on storage gas to meet peak demand during the winter months. Its share of US and E. Canada totals: 54% of total working gas capacity 54% of the storage deliverability (44 Bcf/d out of 80) Approximately 65% of gas consumption Due to storage and transport limitations into the U.S. Northeast, it is difficult to secure adequate storage services and hence price spikes occur almost every winter Much of the storage in the Producing Region are linked to market centers and play a vital role in the efficient export and transmission of natural gas to other areas

19 EIA Gas Storage Regions Working Gas Capacity by Region 1.3 Tcf 07T 0.7 Tcf 43Tcf Tcf - Consuming East Producing Consuming West Total

20 Major Portions of the Gas Resource Base are Not Accessible 21 TCF 346 TCF 100% 40% 31 TCF 100% Restricted Percentage 43 TCF 56% Approximately 29 trillion cubic feet (TCF) of the Rockies gas resources are closed to development and 108 TCF are available with restrictions. Source:AGA North American Supply Forecast 80, ,000 60,000 mmcfd 50,000 40,000 30,000 20,000 10, GoM Gulf Coast Rockies San Juan Southwest Mid-Cont West Coast Northeast Canada Alaska

21 Basin Development Costs per Mcf for a 10% IRR $9.00 $8.00 $8.20 $8.50 $7.00 $6.90 $6.90 NYMEX ($/Dth) $6.00 $5.50 $5.50 $6.00 $6.10 $6.10 $5.00 $4.80 $4.00 $3.50 $3.50 $3.60 $3.90 $4.20 $4.30 $4.40 $3.00 Producing Basin Source: Morgan Stanley Electric Power Generation bcfde 2009 Nuclear, Oil, Hydro Wind, Solar 30% Coal 48% Gas 22% % 22% % Gas Share 20% 18% 16% 14% 12% 0 10% Gas Coal Other Gas share Source: