Outlook for Oil and Gas and Implications for Biomass John P. Martin, Ph.D. New York State Energy Research and Development Authority February 17, 2010
Misc. Pictures Here Energy Choices
21 st Century Energy Supply Choices SUN - FUSION Direct solar PV, thermal Indirect solar -- wind, waves, hydro Chemical energy from photosynthesis (hydrocarbons) Biomass new (or very, very, very young coal) Fossil Fuels ancient, sequestered energy NUCLEAR - FISSION EARTH - GEOTHERMAL Primordial Radioactive decay MOON - GRAVITY Tidal
Life Cycle Analysis of Energy Supply Choices: Decision-making Factors Energy accessibility (related to the direct costs of energy and expected diffusion) Energy availability (related to the security/reliability dimension) Energy acceptability (environmental externalities) Relative rankings in the perspective of factors important for decision-making: F = energy source in favourable position M = energy source in medium/neutral position D = energy source in disfavoured position O = Critical USA issues not in the bounds of the study (hydro siting, nuclear waste disposal) Coal Oil Gas Biomass Nuclear Hydro Wind Solar F M M M F F D D F M F/M M F F D D D D M F F /O F /O F F After the World Energy Council, Comparison of Energy Systems Using Life Cycle Assessment, 2004 The combustion of natural gas emits almost 30 percent less carbon dioxide than oil, and just under 45 percent less carbon dioxide than coal. (these numbers do not consider refining or mining emissions)
Misc. Pictures Here Energy Consumption
GWPC and ALL Consulting, MODERN SHALE GAS DEVELOPMENT IN THE UNITED STATES: A PRIMER, 20009 Energy Today: United States Primary Energy Consumption by Fuel, 2007
Energy Today: New York State Energy Consumption, 2007 39.7% 29.2% 6.1% 22.6%
quadrillion Btu Overall United States Energy Consumption Projections by Fuel Type EIA, Annual Energy Outlook 2010 Early Release Overview
New York Overall Energy Consumption by Fuel Type, 2009 State Energy Plan
Misc. Pictures Here Oil and Gas Supply
Oil and Gas Proved Reserves, USA
Average Depth to Drilling, USA
Worldwide Expenditures for Exploration, Form EIA-28 Companies (27 major USA-based energy companies)
Finding Costs, Form EIA-28 Companies
Lifting Costs, Form EIA-28 Companies
Natural Gas Pricing Outlook Natural gas wellhead price is projected to rise from low levels experienced during 2008-2009 recession 2008 dollars per thousand cubic feet 10 History Projections 8 6 4 2 AEO2010 reference case Updated AEO2009 reference case 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Richard Newell, SAIS, December 14, 2009 16 Source: Annual Energy Outlook 2010
Crude Oil Pricing Outlook Oil prices in the reference case rise steadily; the full AEO2010 will include a wide range of prices 2008 dollars per barrel History 225 200 Projections High oil price 175 150 125 100 75 50 25 AEO2009 reference AEO2010 reference Low oil price 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Richard Newell, SAIS, December 14, 2009 17 Source: Annual Energy Outlook 2010
Misc. Pictures Here Supply Implications: Risk and Security
Risk Assessment Model Criticality Import Dependence Capacity Concentration Vulnerability John Martin, 1991 (after Anderson, 1988)
Security of Supply and Critical Resource Dependence: USA Natural Gas Represents 20% of USA primary energy production, 22% of demand. North America supplies 99% of its natural gas demand. Many natural gas competitors with limited concentration Low supply vulnerability Petroleum Represents 11% of USA primary energy production, 40% of demand. 65% is imported. Controlled by large multinationals and national oil companies with small competitive fringe (the independents ). High supply vulnerability
Security of Supply and Critical Resource Dependence: NY Only 13% of NYS total primary energy requirement was met from in-state resources supplied by hydro (49%), biofuels (40%) and oil and natural gas (11%) For petroleum: New York produced only 0.1% 88% imported (47.9% from OPEC)
Misc. Pictures Here Outlook
120 100 Overall Energy Supply Outlook Non-fossil energy use grows rapidly, but fossil fuels still provide 78 percent of total energy use in 2035 quadrillion Btu History Projections Renewables (excluding liquid biofuels) 80 60 40 Liquid fuels Coal Liquid biofuels 20 Natural gas 0 Nuclear 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Richard Newell, SAIS, December 14, 2009 23 Source: Annual Energy Outlook 2010
Liquid Fuel Supply Outlook Biofuels meet most of the growth in liquid fuels supply million barrels per day 25 20 History Projections Biofuels including imports 15 Petroleum supply 10 Natural gas plant liquids 5 Net petroleum imports 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Richard Newell, SAIS, December 14, 2009 24 Source: Annual Energy Outlook 2010
trillion cubic feet Natural Gas Supply Outlook, Short Term Shale gas has been the primary source of recent growth in U.S. technically recoverable natural gas resources 2250 2000 1750 Unproved shale gas & other unconventional 1500 1250 1000 750 Unproved conventional (including Alaska*) 500 250 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Richard Newell, SAIS, December 14, 2009 AEO edition * Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation. Proved reserves (all types & locations) 25 Source: U.S. Geological Service, Mineral Management Service, private data, and EIA.
Natural Gas Supply Outlook, Long Term Shale gas and Alaska production offset declines in supply to meet consumption growth and lower import needs trillion cubic feet 25 20 History Projections Alaska Shale gas 15 10 Coalbed methane Non-associated onshore 5 0 Non-associated offshore Associated with oil Net imports 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Richard Newell, SAIS, December 14, 2009 26 Source: Annual Energy Outlook 2010
USA Shale Gas Potential Resource Estimate Potential Gas Committee (2009): 616 Tcf
Sources: William Zagorski, PTTC Workshop, Erie, PA, 2009; Schrider, Leo A., Komar, C.A., Pasini III, J., Overbey Jr., W.K., Natural Gas from Eastern Shales, SPE Annual Fall Technical Conference and Exhibition, 9-12 October 1977, Denver, Colorado. Potential Resource: Appalachian Marcellus Some Perspective: Devonian Recoverable Resource Estimate Marcellus Recoverable Resource Estimates Total Gas produced from Appalachian Devonian Shales before Marcellus 3.0 TCF. 1977 Schrider 240 TCF 1985 Kuuskraa 67 TCF 2005 USGS Milici 2.1 TCF 2007 Engelder and Lash 50 TCF 2008 Engelder 168 to 363 TCF 2009 USGS 262 TCF 2009 Engelder 489 TCF Total Gas produced from 1,000s fields from 100 separate horizons in the entire Appalachian Basin is 40 TCF to 47 TCF. Top 15 worldwide fields have projected reserves of 50 TCF to 1,400 TCF.
Estimated Potential Resource: New York Marcellus and Total Devonian Shale Gas Total Devonian Shale Resource: Total Devonian Recoverable: Total Marcellus Resource: Total Marcellus Recoverable: 163-313 Tcf 16.3-62.6 Tcf 92.8 Tcf 9.3-18.6 Tcf Estimates of recoverable resources and the NYS Marcellus resource are estimates by the author. only Recoverable low estimate assumes 10% recovery factor of the lower value and high estimate assumes 20% recovery factor. Of the upper value. Devonian Shale estimates from Hill, David G., Lombardi, Tracy E. and Martin, John P., Fractured Shale Potential in New York, Proceedings of the 2002 Ontario New York Oil and Gas Conference, Ontario Petroleum Institute, London, Ontario, v. 41, 2002. Marcellus Shale estimates derived from data provided in Milici, Robert C. Christopher S. Swezey, Assessment of Appalachian Basin Oil and Gas Resources: Devonian Shale Middle and Upper Paleozzoic Total Petroleum System (version 1.0), U.S. Geological Survey Open-File Report 2006-1237, 2006 (calculated by 100% of plays 6, 15, 16, 19 and 50% of play 17)
Praxair Process: Natural Gas-Sourced H 2 Addition to Increase Biofuel Yield Natural Gas Steam Steam Methane Reforming System Flue gas Tail gas H 2 Biomass Gasification Syngas conditioning Fuel synthesis Product recovery Ethanol / Diesel / Hydrocarbon Oxygen / steam Praxair estimates that H 2 addition Increases biofuel yield by >40% Improves overall carbon footprint (Wells-to-wheels) Reference: Conversion of Natural Gas to Transportation Fuels via the Shell Middle Distillate Synthesis (SMDS) Process, Van Wechem and Senden, Natural Gas Conversion (1994), pp 43-71, Elsevier Science.
Concluding Thoughts Even realizing the state s energy efficiency and renewable energy goals, New York State will continue to need a secure liquid fuel and natural gas supply. Shale gas will be a key part of this supply for decades to come. Biomass will continue to be an important source of heating but also can serve as a liquid fuel source. Ultimately, natural gas will serve as a bridge to the expected development and maturation of renewable energy sources.