The Unconventional Oil & Gas Industry

Transcription

1 The Unconventional Oil & Gas Industry Natural Gas Exploration & Development in New Brunswick Sheri Somerville Natural Gas Advisor, CAPP Canadian Bar Association NB Forum February 8, 2014 Presented By The Canadian Association of Petroleum Producers (CAPP) Represents large and small producers who explore for, develop and produce natural gas, natural gas liquids, crude oil and oil sands throughout Canada Produce about 90 per cent of Canada s natural gas and crude oil Part of a national industry with revenues of about $110 billion per year Associate members provide a wide range of services that support the upstream crude oil and natural gas industry The New Brunswick Oil & Natural Gas Association (NBO&NGA) Established in 2011 Facilitates the effective exploration, development, production, transmission and distribution of New Brunswick s hydrocarbon resources in an environmentally safe and responsible manner NBO&NGA and CAPP joined to engage with communities, business leaders, governments and people interested in an open, fact-based dialogue about natural gas and oil development

2 The Global Energy Spotlight on Canada World-Class Resource World-Class Capability Competitiveness -> Market Diversification -> Workforce Social License -> Performance -> Communication 3 Advancing the 3Es the 3Es Generating Economic Benefits Jobs and revenues across North America Providing Energy Security Safe, secure and reliable energy Large energy resource potential Providing Environmental Stewardship Strong regulations Technology advances

3 Global Primary Energy Demand 20,000 18,000 16,000 14,000 million tonnes oil equivalent Other Renewables Bioenergy Hydro Nuclear Natural Gas Oil Coal 12,000 10,000 8,000 6,000 4,000 2,000 Ongoing reliance on fossil fuels (share of energy consumption): 2010: 81% 2035: 75% 0 Source: International Energy Agency New Policies Scenario World Energy Outlook Source: International Energy Agency World Energy Outlook 2012 Natural Gas 6 Natural gas is the cleanest burning hydrocarbon Natural gas is a lower GHG emission energy option, such as in the transportation and electricity generation sectors NB Department of Environment has started baseline air quality monitoring At Stoney Creek, carbon dioxide generated from operations per day is equal to one truck driving on the road for 2/3 of a day Source: Contact Exploration Inc. Home Heating Pollution in Pounds Per 24 Hours Wood stove New wood stove Pellet stove Oil furnace N. Gas furnace

4 How Will Demand Be Met? Technological advances have unlocked vast unconventional gas resources. Resource assessments are ongoing (GSC, NEB and others) in many new areas, and new opportunities continue to emerge (Eastern Canadian shale gas, etc.) *Estimated Recoverable Marketable Gas North American Shale Gas Plays

5 How Will Demand Be Met? What does this mean for Canada? Jobs (Upstream from Western Canada Natural Gas) Natural Gas industry employment: 317,000 jobs (direct, indirect and induced) across Canada by ,693,000 person years of employment between now and 2035 $339 billion natural gas employees will earn over next 25 years Revenue, Royalties, Taxes (To all Canada from Western Can. NG) Natural Gas industry will: contribute $1.5 trillion to Canadian GDP over next 25 years generate $199 billion in royalties generate $170 billion in federal taxes generate $130 billion in provincial taxes

6 The Atlantic Canada Opportunity Economic Benefits of Oil and Gas Activity in Atlantic Canada Employs over 5,600 people (thousands more indirectly) Supports over 800 local supply/service companies Cumulative expenditures since 1996: Over $31 billion in NL Over $8 billion in NS Impact of production on provincial GDP: Oil production accounts for 30% of GDP in NL Mining and oil and gas production account for 2% of GDP in NS Significant growth potential in NB, NS and NL

7 NB Opportunity: Proven and Potential Resources Source: DNR NB Natural Gas and Oil Industry in New Brunswick: First oil well drilled at Dover in oil and gas wells were drilled in NB by 2010 Since 1990, 40 oil wells drilled and 40 Natural Gas wells 29 natural gas and 18 oil wells are currently producing Since 1990, 49 wells have been hydraulically fractured for oil and gas in NB

8 Why Is This Important To NB? Location, location, location Domestic energy supply Relationship to energy consumers Energy corridor Employment opportunities Education and employment diversity Long term & largely in province Revenue & royalties Royalties Taxes BENEFITS Direct: Spending by natural gas companies Indirect: Supply chain opportunities Induced: Transactions throughout economy by workers indirectly or directly NB Business Council/Future NB Deloitte: Economic Benefits

9 Supply Chain Opportunities Construction, manufacturing and transportation Drilling, completion and production Geological and geophysical Pipeline and associated infrastructure Environmental & other consulting services Legal & land Natural gas distribution Service industries, logistics & distribution Retail, food, health, education & financial services Work boots, uniforms & uniform cleaning Well pad cleaning Alternate housing RVs, minihomes Fencing, landscaping & irrigation Concrete Security, EMTs, engineers, lawyers, accountants, surveyors, etc. Home sales, hotels, restaurants, entertainment, retail, auto sales (e.g., pickup trucks) Catering Geology of Natural Gas Resources Source: U.S. Energy Information Administration

10 Stages of Exploration and Production for Unconventional Resources Nova Scotia New Duvernay Horn River Marcellus Brunswick Geophysical Exploration (Seismic): Vibroseis truck Seismic charge

11 Technology Makes it Work Drilling technology improvements Longer horizontal laterals Multiple-stage hydraulic fractures per lateral Horizontal drilling and hydraulic fracturing result in gas wells with long stable production lives Ground water is separated by thousands of feet and tons of impermeable rock Significant amount of water is recycled Micro-seismic technology evolving and enabling greater precision in fracturing wells Small surface footprint for multiple, extended wells How does hydraulic fracturing stimulation work? Approximately 4,000 cubic metres (4 million litres) of water used to fracture each stage of a well Water amounts may vary depending on type and location of reservoir. Total water used at the 4 major shale plays in the USA is less than 1% of total water usage in each state Fracture stimulation fluid consists of 98.5% water/sand and 1.5% chemical additives All chemical additives are disclosed by industry to regulators before hydraulic fracturing occurs

12 Fracture Fluid Use & Disclosure The water, sand, and additives used to convey pressure from the surface to the reservoir to create fractures to be created 98.5% Water & Sand 1.5 % Additives Gelling Agents Cross Linkers Clay Control Breakers Surfactants Biocides Energizers Fracture Fluids TYPE Source Purpose Common Use Gelling Agent Guar Gum Polyacrylamide Increase viscosity, helps support and carry proppant better than straight water Clay Control Potassium Chloride Prevents clay from swelling Surfactants Naphthalene Lowers surface tension and helps used fracture fluid return to the surface Food grade product (ice cream, condiments, canned soup, etc.) Found in disposable diapers Potash, fertilizer, and table salt substitute Found in moth balls Windex Biocide Energizers Glutaraldehyde (can also be derived from plants or bacteria) CO2 Nitrogen Eliminates bacteria from water that can produce corrosive by products Improves stimulation or recovery of fluids Disinfectants, sterilizer for medical and dental equipment Odorless, non toxic.

13 Migration Rocks naturally purify water Chemical and physical filtering Sandstones sieve migrating waters Clays most effective in ionic bonding Most chemicals begin to decompose shortly after use Stoney Creek pore volume Source: Contact Exploration Inc. Multi-Well Pads Vertical Well Pad Horizontal Well Pad Advantages of Multi-Well Pads: Reduction of land use for the pad, access roads & pipelines. Easier monitoring of site and enforcement of regulations. Conducive to establishing and enforce traffic/trucking corridors. Optimization of location. Establish and enforce noise, light, air emission and water plans. Source: ERCB 2011

14 McCully Field, Sussex Who Regulates Oil & Natural Gas Sector Federal & Provincial Departments Environment (Environment & Local Government) Energy (Energy & Mines) Natural Resources Transportation Fisheries and Oceans (Agriculture, Aquaculture & Fisheries) Finance Public Safety Others may be involved: Aboriginal Affairs, Economic Development Federal & Provincial regulatory entities: National Energy Board (NEB) Energy and Utilities Board (EUB) Federal Programs: Chemicals management program New Substances program

15 Regulatory Considerations: The New Rules We Support Strong Regulations Consistent and Stable Operating Environment Responsible Environmental Management of Oil &Natural Gas Activities Public Opinion Polling Natural Gas & Oil Sands For each of the following types of energy, please indicate if your overall feelings are very negative, negative, neutral, positive, or very positive.

16 Guiding Principles for Hydraulic Fracturing We will: 1 2 Safeguard the quality and quantity of regional surface and groundwater resources, through sound wellbore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical. Measure and disclose our water use with the goal of continuing to reduce our effect on the environment. 3 4 Support the development of fracturing fluid additives with the least environmental risks. Support the disclosure of fracturing fluid additives. 5 Continue to advance, collaborate on and communicate technologies and best practices that reduce the potential environmental risks of hydraulic fracturing. Operating Practices for Hydraulic Fracturing

17 Being Part of the Discussion - Fact vs. The Way Forward: Sustainability & Growth Opportunities Market demand Competitive supply NA self-sufficiency? Build on strong foundation Industry Competitiveness Market growth & diversification Skilled workforce availability Industry Social License Performance + Communication Must be earned (every day!) Key levers: Technology & innovation Collaboration (within sector, along value chain, w/ aligned interests) Atlantic Canada important part of national dialogue 34

18 Responsible Energy Development Canadians want to know that shale gas can and will be developed safely Strong regulation that has worked successfully in Canada can provide framework for emerging provinces Companies are committed to: Responsible energy development and abide by codes of conduct that further supports strong regulation Accountability and transparency Strong regulatory frameworks, enforcement policies Scientific research and continuous improvement Natural gas is a significant opportunity with positive effects on economy and energy supply. Support the Responsible Exploration and Development of Natural Gas For More information CAPP.ca Follow CAPP on Like CAPP on Facebook: facebook.com/oilgascanada CSUR.com Morefactslessfriction.ca Canadiannaturalgas.ca

19 THANK YOU QUESTIONS? Sheri Somerville Natural Gas Advisor, NB