ASPO November, 2012 Unconventional Oil and Gas Reservoirs Mountain or Molehill? Scott W. Tinker Bureau of Economic Geology Jackson School of Geosciences The University of Texas at Austin
Population (millions) Global Population and Energy Primary energy (quads) 8000 7000 500 6000 5000 400 Energy demand is about people 300 4000 3000 200 2000 1000 100 0 1980 1985 1990 1995 2000 2005 2010 0 Year Source: BP Statistical Review of World Energy, 2012 http://www.eia.gov/iea/wecbtu.html QAe874
Outline Unconventional Gas Reservoirs To Frack or not to Frack Unconventional Oil Reservoirs Mountain or Molehill Options to Oil Nothing is Perfect
Marketed Production (Tcf) U.S. Natural Gas Production and Reserves 30 300 25 20 15 10 5 Annual U.S. Production End-of-Year U.S. Proved Reserves 250 200 150 100 50 Proved Reserves (Tcf) 0 0 After Steve Harvey, EIA
25 U.S. Natural Gas Production (TcF) 20 15 10 Shale gas Coalbed methane Tight gas Non-associated offshore Alaska Associated with oil Non-associated onshore 5 0 1990 1995 2000 2005 2010 http://www.eia.gov/energy_in_brief/about_shale_gas.cfm
Hydraulic Fracturing Fracking 3,000 to 10,000+ feet 3,000 10,000 feet Shale
Woodford Shale Frac Depth
Annual shale gas production, Tcf U.S. Gas Shale Production QAe63 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Eagle Ford Shale Marcellus Shale Haynesville-Bossier Shale Model: Rice University, Medlock, 2012 Model: Rice University, Medlock, 2012 Woodford Shale Fayetteville Shale Barnett Shale Antrim Shale 0 2000 2001 2002 5 Tcf/y today Barnett 2003 2004 2005 2006 2007 2008 2009 2010 Year Boyer, C., Clark, B., Jochen, V., Lewis, R., and Miller, C. K., 2011, Shale gas: a global resource: Oilfield Review, Autumn, p. 30 [adapted from U.S. DOE and NETL, 2011, Shale Gas: Applying Technology to solve America s Energy Challenges, Washington, D.C.: http://www.netl.doe.gov/technologies/oil-gas/publications/brochures/shale_gas_march_2011.pdf (accessed 8-22-11)].
Human Hair Barnett Shale Nanopores in Organics Orange dots are 20 nm in diameter 50 µm T.P. Sims #2; 7625 0.2 m 200 nm After Reed, BEG
Unconventional Reservoirs Environmental Traffic/noise/light Water Land Use NORM Methane Quakes Carbon Energy Security Available Affordable Reliable Clean Implications
Barnett drilling location University of Texas at Arlington From XTO annual report Innovation driven by necessity Carrizo location UT Arlington
1 mile
Landowner Royalty Mixed Negative Neg Positive Positive Positive Source: IHS CERA Potential Global Shale Gas Basins
Production cost (2008 $/Mbtu) Produced Conventional Coal Bed Methane Arctic Deep Water Natural Gas Supply - Resources and Production 15 10 Natural gas will be more expensive 5 Tight 4X Shale Sour LNG 0 0 100 200 300 400 500 600 700 800 900 1,000 1,100 Resources (trillion cubic meters) Source: IEA World Energy Outlook (2009) QAe980
Trillion cubic feet U.S. Unconventional Gas Reserves 4000 3000 National Petroleum Council NPC Survey Low NPC Survey Mid NPC Survey High Potential Gas Committee Energy Information Administration/ Department of Energy/Minerals Management Service Interstate Natural Gas Association of America ICF International, Inc. Massachusetts Institute of Technology American Natural Gas Alliance 2000 1000 0 1999 2000 2003 2004 2005 2007 2006 2008 2009 2010 2011 Year Note: Materials Management Service (MMS) no longer exists, its functions are now administered by the Bureau of Ocean Energy Management, Regulation and Enforcement. QAe873
Outline Unconventional Gas Reservoirs To Frack or not to Frack Unconventional Oil Reservoirs Mountain or Molehill Options to Oil Nothing is Perfect
U.S. Oil Production
Production cost (2008 $) MB/d Oil Supply 40,000 psi 140 120 Resources and Cost Reservoir Temp v Pressure EOR Arctic 140 Deepwater / HPHT 120 30,000 20,000 10,000 100 Oil shales Coal Gulf of Mexico Shale oil to 80 liquids Oil will be 2X CO 2 EOR more expensive Scorpio, Gas 60 Heavy Campos, to Gulf of Mexico Other oil Brazil 40 20 Produced Source: IEA World Energy Outlook (2009) Deepwater and ultra-deepwater 2X conventional oil Conventional operating envelope Source: Rod Nelson, Schlumberger MENA Norne, Norway Blind Faith, & bitumen liquids Krishna, India Ghawar, Saudi Arabia Deg C 0 50 100 150 200 250 0 2000 4000 6000 8000 10,000 Resources 1950s (billion 1980s barrels) 2000s 100
US Oil Production Source: EIA From: James D. Hamilton, Working Paper 17759, NATIONAL BUREAU OF ECONOMIC RESEARCH, 2012
U.S shale liquids projected growth.(mbpd) U.S. SHALE LIQUIDS PROJECTIONS 5 4 3 2 3.8 mmbod by 2022 10% IRR: $68/bbl 10% IRR: $51/bbl 10% IRR: $50/bbl 10% IRR: $44/bbl 10% IRR: $50/bbl Monterey Woodford/Anadarko Utica Barnett Uinta Niobrara Permian Midland Permian Delaware Granite wash Eagle Ford 1 10% IRR: $44/bbl Bakken 0 2010 2012 2014 2016 2018 2020 2022 After Morse et. al., 2012, Energy 2020: North America, the new Middle East: Citi GPS: Global Perspectives & Solutions, figure 14, p. 17. IRR Source: Rystad Energy QAe465
Thousand barrels/year US Oil Production (BBY) 1.4 bby shale oil by 2022 From: James D. Hamilton, Working Paper 17759, NATIONAL BUREAU OF ECONOMIC RESEARCH, 2012
Trillion Barrels of Oil Global Conventional Oil Resource Forecasts 6 Each color represents a different forecaster 5 4 3 2 1 1950 1960 1970 1980 1990 2000 after Ahlbrandt et al., 2005
Outline Unconventional Gas Reservoirs To Frack or not to Frack Unconventional Oil Reservoirs Mountain or Molehill Options to Oil Nothing is Perfect
Options to Oil for Transport I. Biofuels II. o o Valuable supplement, lower carbon Scale, land use, cost CNG, LPG, LNG, GTL Cleaner than oil, regionally cheap, available o No form of energy is perfect o Dirtier than others, regionally expensive III. IV. o o o Electricity Clean depending on source, efficient engine Expensive, chemicals, range Hydrogen Ten years away