Shale Gas. A Game Changer for U.S. and Global Gas Markets? Flame European Gas Conference March 2, 2010, Amsterdam. Richard G. Newell, Administrator

Transcription

1 Shale Gas A Game Changer for U.S. and Global Gas Markets? Flame European Gas Conference March 2, 2010, Amsterdam Richard G. Newell, Administrator Richard Newell, March SAIS, December 2, ,

2 Overview History of U.S. shale gas production Began with technical success in Barnett Shale Has grown to over 10% of U.S. gas production Role of shale gas in the U.S. gas market Enables growth in U.S. reserves, production, and consumption Reduces projected gas prices and import volumes Shale gas resources outside the U.S. Significant potential in several key gas importing and exporting countries Development will depend on resource characteristics, access, and market competitiveness relative to other gas Potential global effects of increased shale gas production Increased overall production and consumption Reduced gas trade and prices, relative to scenario without shale Richard Newell, March 2,

3 History of U.S. shale gas production Richard Newell, March 2,

4 Since 1997, more than 12,000 gas wells completed in the Barnett shale Richard Newell, March 2,

5 The result has been an accelerating increase in production from the Barnett field gas production billion cubic meters wells drilled thousands Richard Newell, March 2, 2010 Source: EIA 5

6 Success in the Barnett prompted companies to look at other shale formations in the U.S. U.S. shale gas plays Richard Newell, March 2,

7 At this stage, the Haynesville and the Marcellus formations appear to be the most attractive rigs drilling for gas Barnett Haynesville Marcellus Fayetteville Woodford 0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Richard Newell, March 2, 2010 Source: Smith International 7

8 Over the last decade, U.S. shale gas production has increased 8-fold shale gas production billion cubic meters Antrim Barnett Fayetteville Woodford Haynesville Marcellus Richard Newell, March 2, 2010 Source: EIA, Lippman Consulting (2009 estimated) 8

9 Role of shale gas in the U.S. gas market Richard Newell, March 2,

10 Shale gas has been the primary source of recent growth in U.S. technically recoverable natural gas resources technically recoverable gas resources trillion cubic meters Unproved shale gas & coal-bed methane Unproved conventional (including tight gas and Alaska*) EIA Annual Energy Outlook Proved reserves (all types & locations) * Alaska resource estimates prior to AEO2009 reflect North Slope resources not included in previously published documentation. Richard Newell, March 2, 2010 Source: U.S. Geological Service, Mineral Management Service, private data, EIA. 10

11 Shale gas development has also enabled total proved U.S. gas reserves to increase proved gas reserves trillion cubic meters Richard Newell, March 2, 2010 Source: EIA 11

12 In the last five years, accelerating shale gas production has caused total U.S. gas production to trend upward U.S. gas production billion cubic meters per day % per year Richard Newell, March 2, 2010 Source: EIA 12

13 EIA expects shale gas and Alaska production increases to more than offset declines in other supplies U.S. gas production billion cubic meters 750 History Projections Alaska Shale gas Coalbed methane Non-associated onshore 125 Non-associated offshore Associated with oil 0 Net imports Richard Newell, March 2, 2010 Source: EIA, Annual Energy Outlook

14 Shale gas availability and a reluctance to add new coal plants underpins increased gas use in the electric power sector U.S. gas consumption billion cubic meters 750 History Projections 625 Electric Power Sector Industrial Sector 250 Other* Commercial Sector 125 Residential Sector *- natural gas used for transport, pipelines, and lease and plant fuel Richard Newell, March 2, 2010 Source: EIA, Annual Energy Outlook

15 Shale gas production will play an even larger role if new climate change policies cause a rise in U.S. gas demand electricity generated using gas billion kilowatt hours 1,800 ACESA no international/limited 1,500 1, ACESA high cost Reference ACESA basic Major emissions reductions in electricity generation require EXISTING coal capacity to be retired in favor of NEW generation capacity Conventional coal generation declines and renewables grow in all climate policy cases Level of natural gas generation is sensitive to the availability and costs of nuclear power, coal with CCS, biomass, and offsets Richard Newell, March 2, Source: Energy Market and Economic Impacts of H.R (August 2009)

16 Oil prices are likely to remain well above U.S. gas prices as the availability of shale gas restrains gas price growth ratio of oil prices to natural gas prices on a thermal equivalent basis 5 History Projections Richard Newell, March 2, 2010 Source: Annual Energy Outlook

17 Global shale gas resources Worldwide shale potential A 2007 study ranked 688 shale formations in 142 petroleum basins. Richard Newell, March 2, 2010 Source: Schlumberger 17

18 Shale gas resources could also play a significant role in other markets Technically recoverable shale gas resources in the U.S. estimated at 12 trillion cubic meters (tcm), or 20% of total remaining recoverable gas resources Shale resource estimates are much less certain for other regions (less commercial shale gas activity) Current estimates of remaining recoverable gas shale resources Canada: 2 tcm, 15% of resources OECD Europe: 3 tcm, 11% of resources China: 15 tcm, 56% of resources Also substantial shale gas in Russia and the Middle East but given the magnitude of other gas resources, shale gas is less likely to be a game changer in these regions Richard Newell, March 2,

19 By 2030, we expect shale gas to represent 7% of total global gas production global gas production trillion cubic meters 5 4 Shale gas Other natural gas Richard Newell, March 2, 2010 Source: EIA 19

20 EIA expects increased shale gas production to have the largest market effects in North America and China gas production in 2030 billion cubic meters 1, Shale gas Other natural gas US China Canada OECD Australia/ Latin Other Middle Europe New America Europe/ East Zealand Eurasia Russia Richard Newell, March 2, 2010 Source: EIA 20

21 Potential global effects of increased shale gas production Richard Newell, March 2,

22 Over the past 5 years, EIA has significantly lowered its projection of LNG imports into the U.S. U.S. net LNG imports billion cubic meters 200 History Projections AEO AEO Richard Newell, March 2, 2010 Source: EIA, Annual Energy Outlooks 22

23 Significantly reduced expectations for future U.S. LNG imports relative to conventional wisdom a few years ago LNG trade expectations as of : National Petroleum Council s Hard Truth s study billion cubic meters per year Richard Newell, March 2, 2010 Source: National Petroleum Council,

24 Shale gas production significantly affects projected U.S. gas imports, and could have similar effects in other gas importing countries total U.S. natural gas imports billion cubic meters 150 History Projections 120 No new U.S. shale scenario 90 Reference scenario High U.S. shale scenario Richard Newell, March 2, 2010 Source: preliminary EIA projections 24

25 For more information U.S. Energy Information Administration home page Short-Term Energy Outlook Annual Energy Outlook International Energy Outlook Monthly Energy Review National Energy Information Center (202) Live expert from 9:00 AM 5:00 p.m. EST Monday Friday (excluding Federal holidays) Richard Newell, March 2,