North America s Natural Gas Crisis: The Big Picture Overview and the Role of Unconventional Gas Canadian Institute s 3 rd Annual Coalbed Methane Conference June 21, 24 J. David Hughes Geological Survey of Canada dhughes@nrcan.gc.ca GEOLOGICAL SURVEY OF CANADA CALGARY COMMISSION GÉOLOGIQUE DU CANADA CALGARY
Overview: - The Big Picture of Gas in the World and North America - North America Supply-Demand trends and forecasts - Solutions to projected North American gas supplydemand shortfalls - The Importance of Unconventional Gas as part of the solution
World Primary Energy Consumption: 1965-22 Million Tonnes Oil Equivalent 1 9 8 7 6 5 4 3 By Region Asia Pacific Africa Middle East Former Soviet Union S. & C. America Europe North America 456% 51% 78% 33% 396% 612% Million Tonnes Oil Equivalent 1 9 8 7 6 5 4 3 By Fuel 144% increase in World Consumption (3.9%/year uncompounded) Coal Gas 61% 261% Hydro Nuclear 182% 2 1 85% 2 1 Oil 13% 1965 197 1975 198 1985 199 1995 2 Highest growth in 22 = Asia Pacific 7.9%; Coal 6.9% 1965 197 1975 198 1985 199 1995 2 (data from BP Statistical Review of World Energy, 23)
Quadrillion Btu Forecast Growth In World Energy Consumption, 21-225 (EIA, 24, Reference Economic Case) 7 6 5 4 3 2 By Region 54% increase in World Consumption (1.8%/year) Former Soviet Union +42% Developing +91% Quadrillion Btu 7 6 5 4 3 2 By Fuel Hydro/Renewables +56% Nuclear +15% Coal +47% Gas +68% 1 Industrialized +33% 1 Oil +57% 21 25 21 215 22 225 21 25 21 215 22 225 (data from Energy Information Administration International Energy Outlook, May, 24)
World Gas Production and Consumption: 197-22 Billion cubic feet per Day 25 2 15 1 Production Asia Pacific Africa Middle East Former Soviet Union S. & C. America Europe North America 275% 1719% 13% 635% 482% Billion cubic feet per Day 25 2 15 1 Consumption 147% Increase in Consumption (4.6%/year Uncompounded) 24% 1894% 1144% 447% 182% 317% 5 5 14% 18% 197 1975 198 1985 199 1995 2 197 1975 198 1985 199 1995 2 (data from BP Statistical Review of World Energy, 23)
World Gas Reserves: 198-22 6 1% 9% Trillion Cubic Feet 5 4 3 2 Former Soviet Union Middle East 1 Europe Asia-Pacific Africa S&C America N. America 198 1983 1986 1989 1992 1995 1998 21 Percentage of Remaining Reserves 8% 7% 6% 5% 4% 3% Europe Former Soviet Union Middle East 2% Asia-Pacific Africa 1% N. America S&C America % 198 1983 1986 1989 1992 1995 1998 21 (data from BP Statistical Review of World Energy, 23)
North American Gas Production and Movements: 1986-22 7 United States Total Consumption 6 Imports Billion cubic feet per Day 2 15 1 5 Canada: 131% increase in production 1986-22 Canada 1986 1989 1992 1995 1998 21 Exports Consumption 56% Billion cubic feet per Day 5 4 3 2 Production 1 1986 1989 1992 1995 1998 21 (data from BP Statistical Review of World Energy, 23)
Lifespan in s at Current Production Rates 9 8 7 6 5 4 3 2 1 North American Gas Reserve/Production Ratio: 198-22 198 1985 199 1995 2 21 22 USA Canada Mexico North America Region (data from BP Statistical Review of World Energy, 23)
Canada s Remaining Discovered and Undiscovered Conventional Natural Gas Resources According to NEB (24) Estimates including Lifetime assuming 21 Production Rates 63% CONSUMED PROVEN (7.6 years) POSSIBLE (4.9 years) 22% 78% HOPED FOR: UNDISCOVERED (45.3 years) PROVEN (7.6 years) POSSIBLE (4.9 years) 13% 9% 15% Discovered Resources Remaining Discovered and Undiscovered Resources (Estimates from National Energy Board, April, 24)
Remaining Discovered Nominal Marketable Gas in Canada Remaining Undiscovered Nominal Marketable Gas in Canada East Coast 16% East Coast 11% Arctic 17% WCSB 57% Arctic 7% WCSB 63% North/Delta 1% North/Delta 19% WCSB North/Delta Arctic Eastern/Offshore 95.8 Tcf 137.8 Tcf (data from Canadian Gas Potential Committee, 21)
Produced, Established and Nominal Marketable Natural Gas in the WCSB (Tcf) - Canadian Gas Potential Committee, 21 Contained in 28,77 pools discovered with 1, exploration wells Remaining Reserves 22% (54 Tcf) Contained in 23,27 pools that will require more than 2, exploration wells to discover 9% Undiscovered Nominal Marketable 35% Cumulative Production 43% (17 Tcf) (88 Tcf) (data from Canadian Gas Potential Committee, 21)
Canada s Exploration Treadmill more and more drilling to find less and less gas Number of Gas Well Completion 14 12 1 8 6 4 2 Well Completions Production Reserves 1996 1998 2 22 Production (bcf/day) 17 16 15 14 13 12 11 1 9 8 7 6 5 4 3 2 1 1996 1998 2 22 Reserves (Tcf) 66 65 64 63 62 61 6 59 58 57 56 55 Estimate 54 53 52 51 5 1996 1998 2 22 Canadian Association of Oil Well Drilling Contractors, 24 (1996-23 well completions); Statistics Canada, 24 (1996-23 Marketable Production); Canadian Association of Petroleum Producers, 23 (1996-22 reserves)
NEB, July, 23, Deliverability Scenarios from Existing Gas Sources 2 18 16 14 Supply Push Scenario Techno-Vert Scenario 2 Peak 21 Peak 21 18 16 14 MMcf/day 12 1 8 MMcf/day 12 1 8 6 6 4 4 2 2 21 25 29 213 217 221 225 21 25 29 213 217 221 225 WCSB Solution WCSB Existing Gas WCSB Additions Sable
Productivity Assumptions of NEB Scenarios for the Western Canada Sedimentary Basin WCSB drilling rates will be sustained at the record levels of 21 until 75% of the ultimate recoverable resource has been produced. Initial productivity of new wells will remain at current levels Initial productivity has declined from an average 7 mcf/day in 1997 to 35 mcf/day in 23 this trend may continue in the future. Decline rates in new wells will remain at current levels First year decline rates have increased from <2% in 199 to nearly 35% in 2 - this trend may continue in the future. The overall decline rate of the WCSB has increased from 13% in 1992 to 23% in 22 this means 3.8 Bcf/day of production must be replaced each year to keep production flat, which hasn t happened since 21. NEB (December, 23) expects production to decline by 3% through 25. (assumptions included in National Energy Board Report of July, 23, and data provided in December, 23, National Energy Board Report)
Marketable gas production by month (5 month moving average to February 24) 16 14 12 1 8 23 Production down 5.3% 23 Production down 3.6% Versus 22 6 4 2 Jan-87 Jan-88 Jan-89 Jan-9 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan- Jan-1 Jan-2 Jan-3 Month (Source of data Statistics Canada, 24) Thousand cubic metres per month
Jan-89 Jan-9 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan- Jan-1 Jan-2 Jan-3 25 2 15 1 5-5 -1 over year change in production by month (5 month moving average through February 24) Ladyfern Discovery 23 Production down 3.6% Versus 22 Month (Source of data Statistics Canada, 24) Jan-87 Jan-88 to year % change
2 18 16 14 NEB, July, 23, Deliverability Scenarios from Existing and Proposed Conventional Gas Sources Supply Push Scenario 2 Peak 21 Peak 21 18 16 14 Techno-Vert Scenario MMcf/day 12 1 8 MMcf/day 12 1 8 6 6 4 4 2 2 21 25 29 213 217 221 225 WCSB Solution Sable WCSB Non-Associated Newfoundland WCSB Additions Panuke 21 25 29 213 217 221 225 Mackenzie NS Offshore BC Offshore LNG Imports NB LNG Imports Quebec
NEB, July, 23, Deliverability Scenarios from Existing and Proposed Conventional Gas Sources Including Coalbed Methane 2 18 16 Supply Push Scenario Peak 21 2 Peak 215 18 16 Techno-Vert Scenario CBM MMcf/day 14 12 1 8 CBM MMcf/day 14 12 1 8 6 6 4 4 2 2 21 25 29 213 217 221 225 21 25 29 213 217 221 225 WCSB Solution WCSB Non-Associated WCSB Additions Sable Newfoundland Panuke Mackenzie NS Offshore BC Offshore LNG Imports NB LNG Imports Quebec CBM
U.S. Coalbed Methane Reserves and Production By Region 1989-22 Trillion Cubic Feet 2 18 16 14 12 1 8 6 4 2 Coalbed Methane Reserves Other States Colorado Alabama New Mexico Peak 1992 Peak 1993 1989 1992 1995 1998 21 Ten Months of U.S. Supply At 22 Consumption Rates Trillion Cubic Feet per Yea 1.8 1.6 1.4 1.2 1.8.6.4.2 Coalbed Methane Production 8.5% of U.S. Production Other States Colorado Alabama New Mexico Most Productive Areas Peak 1999 Peak 1998 Peak 1997 1989 1992 1995 1998 21 69% of U.S. CBM Production (Source of data Energy Information Administration, 24)
Actual Coalbed Methane Production in the U.S. 1989-22 Compared to NEB Coalbed Methane Production Scenarios 23-225 Trillion Cubic Feet per 1.8 1.6 1.4 1.2 1.8.6.4.2 Coalbed Methane Production 8.5% of U.S. Production Other States Colorado Alabama New Mexico Most Productive Areas Peak 1999 Peak 1998 Peak 1997 1989 1992 1995 1998 21 69% of U.S. CBM Production Trillion Cubic Feet per 1.8 1.6 1.4 1.2 1.8.6.4.2 NEB Canadian CBM Production Scenarios 23% of Canadian production Supply Push Techno-Vert 23 27 211 215 219 223 (Source of data Energy Information Administration, 24)
12 NEB, 23, Canadian Domestic Natural Gas Demand Scenarios by Sector, 22-225 Supply Push Scenario 53% growth in domestic consumption 22-225 12 Techno-Vert Scenario 53% growth in domestic consumption 22-225 MMcf/day 1 8 6 4 Other Commercial Residential Electricity +343% 22-225 23% MMcf/day 1 8 6 4 Other Commercial Residential Electricity +2% 22-225 16% 2 Industrial 2 Industrial 22 26 21 214 218 222 22 26 21 214 218 222 (data from National Energy Board, July, 23)
Canadian Electricity Generation Scenarios by Fuel, 2-225 Supply Push Scenario Techno-Vert Scenario Terrawatt Hours 12 1 8 6 Renewables Natural Gas Oil Orimulsion Coal Nuclear Hydro 421% 42% 52.4% total increase 22-225 Terrawatt Hours 12 1 8 6 Renewables Natural Gas Oil Orimulsion Coal Nuclear Hydro 1% 274% 5.6% total increase 22-225 644% 4 61.3% 4 98.3% 2 19.3% 2 18.6% 2 23 26 29 212 215 218 221 224 2 23 26 29 212 215 218 221 224 (data from National Energy Board, July, 23)
Trillion Cubic Feet/ 3 28 26 24 22 2 18 16 14 12 1 8 6 4 U.S. Gas Consumption by Sector, 1986-22 Consumption by Sector 1986-22 Transportation Industrial Commercial Residential Electric Power +27% +34% +14% 2 +113% 1986 1989 1992 1995 1998 21 Trillion Cubic Feet/ 3 28 26 24 22 2 18 16 14 12 1 8 6 4 2 Consumption by Sector 1996-22 Transportation Industrial Commercial Residential Electric Power -14% -1% -6% +46% 1996 1997 1998 1999 2 21 22 (data from Energy Information Administration, 23)
Forecast U.S. Electricity Generation by Fuel Type 21-225 (EIA Annual Energy Outlook, 24, Reference Economic Case) Terrawatt Hours 6 5 4 3 2 Other Renewable Sources Petroleum Nuclear Power Gas Coal 51% total increase 22-225 35% 6% 15% (23 Forecast 185%) 1 59% (23 Forecast 41%) 21 23 25 27 29 211 213 215 217 219 221 223 225
U.S. Natural Gas Supply by Source (EIA Annual Energy Outlook, 24, Reference Economic Case) 35 38% Total Growth from 22-225 3.4 Tcf Trillion cubic feet per 3 25 2 15 1 26.7 Tcf Lower 48 +6.9% 22-21 Canada Offshore-Gulf Offshore-Associated Onshore-Associated Unconventional Liquefied Natural Gas +272% 22-225 Lower 48 +15.5% 22-22 Alaska 5 Conventional 21 23 25 27 29 211 213 215 217 219 221 223 225 (data from Energy Information Administration Annual Energy Outlook, 24)
Canadian Shortfalls in Gas Supply Given Domestic Production Scenarios and Forecast EIA (AEO 24) Reference U.S. Import Requirements Tcf/ 9 8 7 6 5 4 Supply Push Scenario Requirement: Domestic Demand Plus Forecast EIA Exports Total Domestic Production Net Exports Shortfall 2.4 Tcf Tcf/ 9 8 7 6 5 4 Techno-Vert Scenario Requirement: Domestic Demand Plus Forecast EIA Exports Total Domestic Production Shortfall Net Exports.75 Tcf 3 3 2 2 1 Domestic Consumption 1 Domestic Consumption 21 25 29 213 217 221 225 Note: Forecast Canadian LNG Imports are Excluded from Domestic Production 21 25 29 213 217 221 225 (data from National Energy Board, July, 23, and EIA Annual Energy Outlook, 24)
North America Natural Gas Movements 2-24 6 U.S. Natural Gas Imports and Exports 2-24 (5 Month Moving Average) 6 Net U.S. Imports of Natural Gas (5 Month Moving Average) 5 Exports to Mexico Exports to Canada LNG Imports Canada Imports 5 Net Imports Trillion cubic feet per 4 3 2 1 LNG 2% of 23 U.S. Consumption Trillion cubic feet per 4 3 2 1 Net Imports Down 21.5% January 21 - December 23 Jan- 2 Jul- 2 Jan- 21 Jul- 21 Jan- 22 Month Jul- 22 Jan- 23 Jul- 23 Jan- 2 Jul- 2 Jan- 21 Jul- 21 Jan- 22 Month Jul- 22 Jan- 23 Jul- 23 (Data from Energy Information Administration, May, 24)
U.S. Supply with Canadian Imports and Shortfalls Given NEB, 23, Supply Scenarios, EIA Production Growth Scenarios and EIA Reference Case Import Requirements 35 Supply Push Scenario 35 Techno-Vert Scenario Tcf/ 3 25 2 15 Liquefied Natural Gas Shortfall Alaska Canada Offshore-Gulf Offshore Associated Onshore Associated 7.2 Tcf (23%) Tcf/ 3 25 2 15 Canada Offshore-Gulf Offshore Associated Onshore Associated Liquefied Natural Gas Alaska 5.4 Tcf (17%) 1 Unconventional 1 Unconventional 5 5 Conventional Conventional 21 25 29 213 217 221 225 21 25 29 213 217 221 225 (data from Energy Information Administration Annual Energy Outlook, 24, and National Energy Board, July, 23)
Number of Successful Gas Wells Drilled 25 2 15 1 5 The U.S. Gas Exploration Treadmill U.S. Gas Wells Drilled 1993-23 23 Estimated Trillion Cubic Feet per 25 2 15 1 U.S. Dry Gas Production 1993-23 22 EIA Forecast 21 EIA Forecast Production Peak 2Q 21 5 1993 1995 1997 1999 21 23 1993 1995 1997 1999 21 23 (data from Independent Petroleum Association of America, May, 24, and U.S. Energy Information Administration, May, 24; 23 drilling estimate based on first 1 months of 23 compared to same period in 22)
21 2.5 2 U.S. Dry Gas Production 1995-23 (3 Month Moving Average) Peak 2Q 21 EIA Estimates EIA 21 Production Forecast Trillion cubic feet per 19.5 19 18.5 18 17.5 17 Growth 1.1%/year 1995-21 Raymond James Decline 3.5%/year EIA Decline 1.3%/year 16.5 Jan-1995 Jan-1996Jan-1997 Jan-1998 Jan-1999Jan-2 Jan-21Jan-22 Jan-23 Month (data from Energy Information Administration, May, 24; Raymond James and Associates Inc. decline rates based on independent survey of producers)
Baker-Hughes Weekly Active Rig Count 14 12 1 8 6 4 2 U.S. Active Drilling Rig Count and Dry Gas Production 2-23 (23 U.S.A. Decline Rate is now 28%) Active Rigs 2-24 Peak 2Q 21 Oil Gas Trillion Cubic Feet per 24 23 22 21 2 19 18 17 16 15 Dry Gas Production (3-month moving average) Peak 2Q 21 EIA 22 Forecast EIA 21 Forecast (Raymond James Decline = 3.5%/year) EIA Decline ~ 1.3%/year -3.3% From Peak 2Q 21 2 21 22 23 (data from Baker-Hughes, 24, and Energy Information Administration, May, 24; Raymond James and Associates Inc. decline rates based on independent survey of producers) 14 Jan- Jan-1 Jan-2 Jan-3 EIA Estimates
U.S. Supply with Canadian Imports and Shortfalls Assuming NEB, 23, Canadian Supply Scenarios, Flat Lower 48 Production and EIA Reference Case Import Requirements 35 Supply Push Scenario 35 Techno-Vert Scenario Tcf/ 3 25 2 15 Canada Liquefied Natural Gas Canada Shortfall Lower 48 Shortfall Alaska 9.5 Tcf (3%) Tcf/ 3 25 2 15 Canada Liquefied Natural Gas Lower 48 Shortfall Alaska 7.8 Tcf (25%) 1 Lower 48 if production Flat at estimated 23 level 1 Lower 48 if production Flat at estimated 23 level 5 5 21 25 29 213 217 221 225 21 25 29 213 217 221 225 (data from Energy Information Administration Annual Energy Outlook, 24, and National Energy Board, July, 23)
U.S. Supply with Canadian Imports and Shortfalls Assuming NEB, 23, Canadian Supply Scenarios, a 1% Decline in Lower 48 Production and EIA Reference Case Import Requirements 35 Supply Push Scenario 35 Techno-Vert Scenario Tcf/ 3 25 2 15 Canada Liquefied Natural Gas Canada Shortfall Lower 48 Shortfall Alaska 13.2 Tcf (42%) Tcf/ 3 25 2 15 Canada Liquefied Natural Gas Lower 48 Shortfall Alaska 11.6 Tcf (37%) 1 Lower 48 if production declines at 1%/year from estimated 23 level 1 Lower 48 if production declines at 1%/year from estimated 23 level 5 5 21 25 29 213 217 221 225 21 25 29 213 217 221 225 (data from Energy Information Administration Annual Energy Outlook, 24, and National Energy Board, July, 23)
FUTURE OUTLOOK: - IMPLICATIONS If supply and demand forecasts are to be believed, there appear to be serious supply shortfalls in Continental natural gas coming Canada is unlikely to be able to fill the supply gap - SOLUTIONS - probably involve a portfolio of options: - Conservation and Efficiency -LNG already factored into existing forecasts; GEOPOLITICAL + NIMBY IMPLICATIONS - Unconventional Gas - already factored into existing forecasts in a big way - Fuel Switching to oil or coal capacity quite limited without new capital investment - Destroy Demand move gas intensive industries offshore (fertilizer and petrochemical plants) - this is already happening; GEOPOLITICAL IMPLICATIONS
LNG Logistics OPERATING COSTS (FREEPORT, TEXAS 1 ): - Production = $US.5-$1./mcf - Liquefaction = $US.8-$1./mcf - Shipping = $US.5-$1.45/mcf - Receiving = $US.24-$.4/mcf - TOTAL = $US 2.4-$3.85/mcf LNG is very cost competitive at Today s domestic gas prices ( 1 Reimer, Freeport LNG, 23)
LNG Logistics SCALEUP TO COMPLETELY COVER A NORTH AMERICA SHORTFALL OF 13 TCF/YEAR WITH LNG WOULD REQUIRE A TRIPLING OF THE WORLD S LNG CAPACITY. REQUIREMENTS WOULD BE IN THE ORDER OF: - 212 new 3bcf capacity Ships - 35 1bcf/day North America-based receiving terminals - 18 Foreign based 5 Train liquefaction terminals - Capital investment in the order of $US9+ Billion - Time to Build Total Capacity = 1-2+ s - OVERCOMING NIMBY SYNDROME IN LOCATING NEW TERMINALS - ACCEPTING THE GEOPOLITICAL IMPLICATIONS OF DEPENDENCY ON OFFSHORE SUPPLY SOURCES
FERC Existing and Proposed Lower-48 LNG Terminals (plus Canada and Mexico) 18 39 16 8 14 2925 28 27 26 February 24 34 Office of Energy Projects 3 36 A 7 2 13 22 B 4 C 1 23 1 D 19 12 37 3 5 9 6 35 38 11 17 2 4 21 15 24 33 32 31 Existing Terminals with Approved Expansions A. Everett, MA : 1.35 Bcfd (Tractebel) B. Cove Point, MD : 1. Bcfd (Dominion) C. Elba Island, GA : 1.2 Bcfd (El Paso) D. Lake Charles, LA : 1.2 Bcfd (Southern Union) Approved Terminals 1. Hackberry, LA : 1.5 Bcfd, (Sempra Energy) 2. Port Pelican: 1.6 Bcfd, (Chevron Texaco) 3. Bahamas :.84 Bcfd, (AES Ocean Express)* 4. Gulf of Mexico:.5 Bcfd, (El Paso Global) Proposed Terminals FERC 5. Bahamas :.83 Bcfd, (Calypso Tractebel) 6. Freeport, TX : 1.5 Bcfd, (Cheniere / Freeport LNG Dev.) 7. Fall River, MA :.8 Bcfd, (Weaver's Cove Energy) 8. Long Beach, CA :.7 Bcfd, (SES/Mitsubishi) 9. Corpus Christi, TX : 2.6 Bcfd, (Cheniere LNG Partners) 1. Sabine, LA : 2.6 Bcfd (Cheniere LNG) 11. Corpus Christi, TX : 1. Bcfd (Vista Del Sol/ExxonMobil) 12. Sabine, TX : 1. Bcfd (Golden Pass/ExxonMobil) 13. Logan Township, NJ : 1.2 Bcfd (Crown Landing LNG BP) Proposed Terminals Coast Guard 14. California Offshore: 1.5 Bcfd, (Cabrillo Port BHP Billiton) 15. Louisiana Offshore : 1. Bcfd (Gulf Landing Shell) 16. So. California Offshore :.5 Bcfd, (Crystal Energy) Planned Terminals and Expansions 17. Brownsville, TX : n/a, (Cheniere LNG Partners) 18. Humboldt Bay, CA :.5 Bcfd, (Calpine) 19. Mobile Bay, AL: 1. Bcfd, (ExxonMobil) 2. Somerset, MA :.65 Bcfd (Somerset LNG) 21. Louisiana Offshore : 1. Bcfd (McMoRan Exp.) 22. Belmar, NJ Offshore : n/a (El Paso Global) 23. Bahamas :.5 Bcfd, (Seafarer - El Paso/FPL ) 24. Altamira, Tamulipas : 1.12 Bcfd, (Shell) 25. Baja California, MX : 1. Bcfd, (Sempra & Shell) 26. Baja California :.6 Bcfd (Conoco-Phillips) 27. Baja California - Offshore : 1.4 Bcfd, (Chevron Texaco) 28. Baja California :.85 Bcfd, (Marathon) 29. California - Offshore :.5 Bcfd, (Chevron Texaco) 3. St. John, NB :.75 Bcfd, (Irving Oil & Chevron Canada) 31. Point Tupper, NS.75 Bcf/d (Access Northeast Energy) 32. Harpswell, ME :.5 Bcf/d (Fairwinds LNG CP & TCPL) 33. St. Lawrence, QC : n/a (TCPL and/or Gaz Met) 34. Lázaro Cárdenas, MX :.5 Bcfd (Tractebel) 35. Gulf of Mexico : 1. Bcfd (ExxonMobil) 36. Providence, RI :.5 Bcfd (Keyspan & BG LNG) 37. Mobile Bay, AL: 1. Bcfd (Cheniere LNG Partners) 38. Lake Charles, LA:.6 Bcfd (Southern Union) 39. Cherry Point, WA:.5 Bcfd (Cherry Point Energy LLC) 4. Cove Point, MD :.8 Bcfd (Dominion) *US pipeline approved; LNG terminal pending in Bahamas Intense Public Opposition Cancelled Due to Public Opposition (Modified after Kelly, 24, U.S. Federal Energy Regulatory Commission; Status from New York Times, May 14,24)
Number of Terminals 2 18 16 14 12 1 8 6 4 2 LNG Supply Forecasts of U.S. National Petroleum Council (September, 23) versus Requirement Scenarios Available Receiving Terminals Balanced Case Reactive Case Low Sensitivity Case Maximum 9 New Terminals by 225 2 25 21 215 22 225 Billion cubic feet per Day 5 45 4 35 3 25 2 15 1 Supply Gap with Different Lower-48 Production Scenarios Growth Flat 1%/year decline 2%/year decline -2% -1% Growth Flat Balanced Reactive 5 Low Sensitivity 23 27 211 215 219 223 (data from National Petroleum Council 23; supply gap based on Energy Information Administration, Annual Energy Outlook 24 forecasts and National Energy Board 23 Supply Push scenario for Canada)
Where Does this Leave Us? THERE ARE CHALLENGES AHEAD IN MEETING DEMAND EXPECTATIONS FOR NORTH AMERICAN NATURAL GAS - The BAD NEWS is that we are on a gas production treadmill that requires ever more drilling to keep up with demand, and it looks like we may be losing - The GOOD NEWS is that the GAS price outlook looks good for the forseeable future
Can CBM fill the Supply Gap? - Probably not, but it is an important and growing part of the solution - CBM production growth is exploding in Canada - Although in situ CBM resources are estimated at more than 5 Tcf by some groups, recoverable resources are likely to be much smaller, probably in the order of 2-4 Tcf in the foreseeable future
If we didn t connect any new gas wells in Canada the current yearly decline would be 3.8 bcf/day, or 23% of production - CBM production in 23 is.5 bcf/day or 1.3% of decline - CBM production in 24 is estimated to be.1 bcf/day or 2.6% of decline - If we could recover CBM resources of 25 Tcf in 3 years we need to boost production to an average of 2.3 bcf/day, or 6% of decline - Unfortunately, declines are likely to increase going forward
There is a BIG JOB ahead and Canada s Gas Industry is taking up the Challenge
CBM Drilling in Canada Holes drilled and Connected 1 9 8 7 6 5 4 3 2 1 pre- 199 Drilled Connected 1992 1994 1996 1998 2 22 24
CBM Industry Activity as of October 23: Alberta: 17 companies B.C.: 13 companies Saskatchewan: 3 companies Nova Scotia: 1 company Yukon: 1 company
Thank you Contact Coordinates: Dave Hughes dhughes @ nrcan.gc.ca 43 292-7117