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SHALE presentation final edited
- 1. Shale Gas Introduction | Current situation in the US | Shale Boom | Implications Done by: Andrew Seow
- 2. What is Shale gas and its uses? Shale Consumption Uses (2012) Electric power generation – 9.11 TCF (36%) Industrial – 7.2 TCF (28%) Residential – 4.15 TCF (16%) Commercial – 2.9 TCF (11%) Lease and plant fuel – 1.39 TCF (5%) Pipeline and distribution – 0.73 TCF (3%) Vehicle fuel 0.03 TCF (<1%) Unconventional natural gas trapped within shale formations Done by: Andrew Seow
- 3. Where are Shale reserves found? • 137 shale formations in 41 countries outside the United States • Account for 32% of the world’s natural gas resources • US and Canada are the only commercially viable shale producers Done by: Andrew Seow
- 4. When was Shale first extracted? • Shale Gas was first extracted in 1825 – at small quantities • Production became commercially available and produced at large scales in the past decade due to extraction advancements – Horizontal drilling and Hydraulic Fracturing • Rejuvenating natural gas industry in US Done by: Andrew Seow
- 5. How is Shale obtained? Combination of horizontal drilling and hydraulic fracturing technology Technological advancements in ‘fracking’ techniques allow commercially large scale productions of Shale Done by: Andrew Seow
- 6. Current Situation of Shale in the US Capacity • 2,203 TCF recoverable natural gas (92 years) Production rate (2012) • 29.5 TCF of natural gas • 10.3 TCF of shale • 482,822 producing well Consumption rate (2012) • 25.5 TCF of natural gas Done by: Andrew Seow Prices • 2012 spot price = $2.75/MMBtu • Production price = $0.92/MMBtu • Relative to supply & demand • Relative to industry – (graph on slide 8) • Low prices ($4 per mil Btu) – abundant supply & efficient production • Prices predicted to increase after 2015 to $7.48 per mil Btu in 2040 Exports & Imports (2012) • Exports = 1.62 TCF (pipeline and LNG) • Imports = 3.14 TCF (pipeline and LNG) • Increasing domestic supply reducing need for imports
- 7. Done by: Andrew Seow
- 8. Done by: Andrew Seow
- 9. Company Average Daily Production (bcf) 1. Exxon Mobil (listed) 3.9 2. Chesapeake Energy (listed) 2.6 3. Anadarko listex (listed) 2.4 4. Devon Energy (listed) 2 5. BP (listed) 1.9 6. Encana 1.8 7. ConocoPhillips 1.6 8. Southwestern Energy Co. 1.3 9. Chevron (listed) 1.3 10. Williams Energy 1.2 10 Biggest Natural Gas producers in the US Done by: Andrew Seow
- 10. •Result of natural gas shortage in 1970s (oil embargo) •Horizontal drilling, Hydraulic Fracturing, 3D seismic imaging Tech Innovation •Government funded R&D programs •Provided tax creditFunding (resources) •Private land & mineral rights ownership (Section 209 of Federal Land Policy & Management Act of 1976) •Mitchell Energy (1981) - boosted Shale Boom Ownership Regulation •Existence of pipeline network as transport mechanismPipeline Infrastructure •Financial firms providing capital for drillingCapital Market •Barnett Shales in Texas very profitable •$4/Mcf to earn 10% ROR vs. $7/Mcf for Eagle Ford Shale Geology •3 million gallons per well • Abundant supply of groundwater Water Availability Factors Leading to Shale Boom Done by: Andrew Seow
- 11. Implication of Shale Boom Production •Grows 113% from 2011- 2040 •Largest contributor to natural gas growth (50% of total NG in 2040) Prices •Price increase due to higher cost •Affected by oil prices (transportation consumption & LNG export) Exports Vs. Imports •Importer Exporter •Exports grow 17.7% from 2020-2040 •Converting import terminals to export facilities of LNG in Texas •Pipeline exports to Mexico: •0.5 Tcf 2011 2.4 Tcf 2040 •Imports from Canada decrease drastically •Oil companies lobbying for crude oil exports1 Job Opportunities •Created 2.1 million jobs, expected 1.25 million more •Industries related to Shale production: •Sand suppliers •Chemical industry •Water suppliers •Transportation •Foreign import terminals Economic Improvements •Annual economic growth from exports ≈ $75 billion •$118.2 billion to nation’s GDP Malaysian Petroleum Industry •35% of government revenue 2011 •Substantially damage to Malaysian GDP •2nd largest exporter of LNG and could become obsolete when shale is self sustainable Done by: Andrew Seow
- 12. Summary Shale exploration is an extremely large industry – expected to grow continuously over the next 3 decades A result of initiatives from the oil crisis in 1970s Economic implications: Generating high profitability Change in export & import dynamics globally Job opportunities Economic improvements Done by: Andrew Seow
- 13. Sources CHESAPEAKE ENERGY CORPORATION . (2012). 2012 Annual Report. Oklahoma: Chesapeake Energy. Energy Modeling Forum Stanford University. (2013). CHANGING THE GAME?: EMISSIONS AND MARKET IMPLICATIONS OF NEW NATURAL GAS SUPPLIES . Stanford : Stanford University . International Energy Agency. (2011). Are We Entering A Golden Age of Gas. Paris: IEA Publications. Wang, Z., & Krupnick, A. (2013). A Retrospective Review of Shale Gas Development in the United States . Washington : Resources for the Future. http://www.eia.gov/tools/faqs/faq.cfm?id=50&t=8 http://www.eia.gov/analysis/studies/worldshalegas/ http://www.eia.gov/tools/faqs/faq.cfm?id=907&t=8 http://www.eia.gov/tools/faqs/faq.cfm?id=46&t=8 http://www.bizjournals.com/pittsburgh/news/2013/07/19/companies-most-statewide-shale-gas- wells.html http://www.eia.gov/energy_in_brief/article/about_shale_gas.cfm http://www.eia.gov/naturalgas/weekly/ Done by: Andrew Seow
Notes de l'éditeur
- Prices Henry Hub Spot prices are used as benchmarks for the entire North American natural gas market (market price) 1 MMBtu = 1000 cf $2.75/MMBtu = $2.75/Mcf Chesapeake energy (2012) Natural gas, oil, NGL production = $0.92/Mcf Natural gas prices – $ per thousand cubic feet (2012) Export price = $3.25 By pipeline = $3.08 As LNG = $12.82 Import price = $2.88 By pipeline = $2.79 As LNG = $4.27 Exports Exports are restricted by the oil export ban License to export crude oil must be obtained from the Commerce department
- The Barnett Shale – TEXAS The Woodford Shale – OKLAHOMA The Haynesville Shale – EAST TEXAS / NORTHERN LOUISIANA The Marcellus Shale – NEW YORK The Bakken Shale – NORTH DAKOTA
- Graph depicts the different natural gas prices in various industries Overall price trend decreases sharply between 2005-2010 due to efficient and economical production of natural gas *Natural gas prices – $ per thousand cubic feet (2012) Export price = $3.25 By pipeline = $3.08 As LNG = $12.82 Import price = $2.88 By pipeline = $2.79 As LNG = $4.27
- 1* Crude oil exports were banned in the 1970s to conserve domestic oil reserves due to the oil embargo by OPEC. US producers are barred from exporting crude oil without a license from the Commerce Department. However, the shale boom has resulted in huge scale productions of natural gases and oils. Oil companies are lobbying to allow exports, as it could help the US trade balance & increase energy market efficiency A change in export regulation to allow exports can significantly improve economic growth in the US.