The Shale Gas Revolution: Global Implications in a Changing Energy Landscape Shale Gas World Europe 2013 Expo XXI Centre, Warsaw, Poland November 26-28, 2013 Dr Basim Faraj VP New Ventures Tamboran Resources Calgary, Alberta
Agenda Outline Introduction to Tamboran Resources Shale an overview The US Shale Revolution Can they be replicated elsewhere? Geopolitical and Economic Implications Summary 2
Tamboran s Global Interests NW Carboniferous Basin Northern Ireland and Ireland 0.4 million acres Tamboran holds permits and applications for over 32 million acres of rights prospective for unconventional oil and gas Ngalia Basin 3.6 million acres Beetaloo & McArthur Basins 6.3 million acres Gemsbok Basin, Botswana 13.2 million acres Officer Basin 4.5 million acres Pedirka Basin 3.8 million acres 3
Shale Gas Share of Total US Gas Production 4
Daily Production (BCF) Shale Gas is a Revolution and a Game Changer! 12 Shale Gas accounts for 41% (29 bcf/d) of Total US 2013 Production 2.1 times the total 2011 Canadian gas annual production 6.6 times of total 2011 Australian annual gas production 5.6 times Qatar production in 2011 12 10 8 6 4 Average Wellhead Price Marcellus Haynesville Barnett Fayetteville 10 8 6 4 Average Wellhead Price (USD/mmcf) 2 Eagle Ford 2 0 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013 0 5
Rapid Increase in Oil Production from Shale and Other Tight Resources shale and tight oil production million barrels per day Source: EIA based on DrillingInfo and LCI Energy Insight Adam Sieminski, NY Energy Forum, October 29, 2013
World Petroleum Resources Jarvie, 2012
World Class Shale Discoveries Chesapeake Energy, 2012 Annual Report
Global Energy Mix Through Time 80% Fossil Fuel! Wood Coal Oil Gas 1800 1900 2000 2040 ExxonMobil 2011 outlook to Energy- A view to 2040 9
Shale Gas Reservoirs Micro-Texture (Haynesville Shale) pores < 5 µm (4110 m depth) Barnett Shale pores ~ 5 µm (1280 m depth) 15 µm 20 µm Micrographs are from Core Lab Consortium, 2013
Distribution of Generative Organic Carbon Type I TOC (wt.%) Generative Organic Carbon (wt.%) Spent TOC Non-Generative Organic Carbon (wt.%) Type II TOC (wt.%) Generative Organic Carbon (wt.%) Spent TOC Non-Generative Organic Carbon (wt.%) Type III Generative Organic Carbon (wt.%) Spent TOC (wt.%) TOC Non-Generative Organic Carbon (wt.%) after Daly and Edman, 1987 11
Permeability Terminology Tighter than Tight Tight Conventional Extremely Tight Very Tight Tight Low Moderate High 0.0001 Granite 0.001 0.01 0.1 1.0 10.0 Montney Good Shale Barnett Permeability (md) 0 % porosity Limestone Sidewalk Cement General oilfield rocks Modified by B. Faraj after DOE, 2007 12
If There is A Well, There is a Way! Encana website, 2011
Microseismic Monitoring is Essential for Shale Completions! ~ 10% recovery N SPE Presentation, Faraj and Brown, 2009
Shale Microseismic (Density of fracturing) Recovery: 60 %! 2,000 ft
Significant Improvements Over Time Total Well Cost, Average Lateral Length, Average IP vs Time 5,000 4,985 Average IP (Mcf/d) Average Lateral Length (Ft) 4,000 3,000 2,000 1,000 2,104 1,261 $2.6 2,512 1,497 2,622 1,769 3,193 2,027 3,301 2,343 3,562 2,541 3,736 2,882 3,850 3,874 3,350 2,992 4,123 4,100 3,611 3,604 4,303 4,348 3,727 3,197 $2.9 $3.0 $3.0 $2.9 $2.8 $3.0 $3.1 $3.1 $2.9 $2.9 $3.0 $2.8 4,532 4,503 3,449 $3.1 3,281 4,667 3,472 3,231 Lateral length increased by 2.5 times (and frac size increased by over 6 times), while production rates tripled, all while keeping wells costs flat during a period of significant service cost increases $2.8 $2.7 $2.8-1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11 Total Well Cost ($MM) Average Lateral Length (ft) Average IP Rate (Mcf/d) Source: Modified from Southwestern Energy Presentations and Press Releases (Fayetteville Shale), 2009
Shale Oil/Gas Production Decline Barnett Gas Eagle Ford Sweet Spot Oil (1350 scf/stb) Barnett Oil Bakken Oil Jarvie, 2012
Should Arabia Explore for Shale? Play Gas In Place Est. (TCF) Barnett 2,100 Eagle Ford 2,100 Haynesville 1,800 Marcellus 4,700 Montney 5,700 Total 16,400 Tamboran Estimate modified from Deloitte LLP and Core Lab, 2013 Sources: US EIA 2013, US DOE 2009, Encana 2009, USGS, OilandGasInfrastructure.com 18
Ground Water is Safe CSUR website, 2013
8000 ft 5000 ft Frac Height Growth Data from US Shale Plays Aquifers After Fisher and Warpinski, 2011, SPE paper 145949
Shale Gas Production Reduces Greenhouse Gases! Reduction of about 1 billion metric tons! CO 2 Emissions are back to their 1994 level! EIA website, 2013
The Return of Long Term Cheap Gas to the US EIA and Hector van Vierssen Trip, 2013 CSUR presentation
mtpa LNG Opportunities for Natural Gas are Strong The LNG supply challenge 500 450 400 350 300 LNG trade (forecast) Supplydemand gap 175 mtpa 250 200 150 100 50 Australia Qatar Supply: existing and under construction 0 2000 2005 2010 2015 2020 2025 Source: BG Group interpretation of Wood Mackenzie data (Aug 2012) Huge LNG demand growth gap needs to be supplied 6
Impact of Unconventional Resources on US Economy Year/Output 2012 2020 2035 Total Upstream CAPEX US $ Billion Unconventional Activity Employment Value added by unconventional US $ Billion 87.3 172.5 353.1 1.8 Million 2.9 Million 3.5 Million 237.7 416.6 475.1 Source: The Recent Surge in Unconventional Oil and Gas Production and Its effect in the US (Jerry Eumont, IHS, CSUR Conference Canada, October 9, 2013) About 153 billion savings in gas price in 2012 alone!
Shale Gas Geopolitical Implications! "It has freed up our foreign policy, it has changed our global leadership on reducing carbon in the atmosphere, and it has revitalized our economy, "(Shale gas) has freed us up in order to identify what our vital interests are in the Middle East, as opposed to being drawn into aspects that would normally not be of core interest to the United States, American factories have added 500,000 manufacturing jobs in the last 2 years, the first sustained growth in that sector since the 1990s. The shale gas revolution is probably the biggest development in the energy sector since the North Sea came on line in the seventies. (Jeffrey Bleich, the US ambassador to Australia. The Australia Newspaper, September 6, 2013).
Summary Unique set of factors have enabled rapid growth of supply in the US to a point where export of oil and gas from the US is feasible. The economic competitive advantage offered by cheap gas in the US for manufacturing industries could be a significant driver of economic growth in the US for the next few decades. Opportunities exist to take the lessons learnt from North American shale plays to other countries where markets and infrastructure may not be as well developed. Europe need the clean energy desperately. Shale has surprised everyone to date and will continue to surprise going forward ( internet equivalent in energy Jack Welsh 2012) It is the responsibility of the media to ensure the flow of accurate and first-hand information about shale gas and shale oil