Middle East Shale: Potential and Implications. MENA Shale Abu Dhabi, December 2013

Transcription

1 Middle East Shale: Potential and Implications MENA Shale Abu Dhabi, December

2 Middle East shale overlooked, but important Middle East [was] not addressed by the current study. This was primarily because there [are] significant quantities of conventional natural gas reserves (EIA 2011) Shale gas is neither plentiful nor cheap Qatar Petroleum (2010) 2

3 Middle East Shale: Key points Most attention to date has focussed on impact of North American shale gas/oil on the Middle East But MENA shale raises important questions: Does MENA have shale oil/gas resources? Where and how much? Does the region need to develop its shale oil and gas? Can the region develop shale resources technically & economically? What are the challenges to be overcome? 3

4 Global Shale Impact 4

5 Gas resources (trillion cubic feet) Global gas resources Tight gas Shale gas Coalbed methane Conventional gas Asia & Australia North America Former Soviet Union Middle East & Africa Latin America Shale means a huge jump in global resources Detailed assessment of Middle East unconventional gas not publicly available MENA s dominance in conventional gas challenged by unconventional gas Europe 02/02/ Source: Rogner (1997), EIA (2011, 2013)

6 MENA shale resources 6

7 Abu Dhabi examples: Diyab, Shilaif Diyab (Late Jurassic) Well B1 tested 1000 bpd from natural fractures Shilaif (Mid-Cretaceous) 31 billion bbl generated, most not migrated out of source rock Source: Ziegler (2001) 7 7

8 Middle East shales compare favourably with USA Country Shale Age TOC % Thickness (m) Oman Athel Silicilyte Infracambrian- Cambrian Regional Qusaiba Silurian Jordan, Iraq Mudawwara Silurian Turkey Dadas Silurian Iraq Chia Gara Jurassic Iraq, Iraq, Kuwait Nahr Umr Cretaceous Iran, Iraq Pabdeh Palaeocene USA Barnett Carboniferous USA/Canada Bakken Devonian- Carboniferous Middle Eastern shales often deep (4000+ m) but comparable to Haynesville Likely many are high liquids; carbonate rich (easier to fracture) 8

9 Numerous different Gulf unconventional gas plays Gulf unconventional plays varied, potentially large Sour and contaminated gas (CO 2, H 2 S, nitrogen) Tight gas (sands & carbonates) Shale gas, condensate and oil Deep and ultra-deep Mixed resources (e.g. deep, tight and sour) Also: Egypt, Tunisia, Algeria CURRENT ACTIVITY Source: PacWest; Manaar research 9

10 Gas resources (Tcf) MENA gas: Shale resources significant locally and globally Shale gas (Tcf) Exploration potential (Tcf)1 Gas reserves (Tcf) Sources: BP, USGS, EIA, Petrenel, Baker Hughes, Manaar research 10

11 Middle East need for shale 11

12 Does Middle East need to produce shale oil? Demand Non-OPEC + NGLs 0 OPEC Source: OPEC Bulletin & World Oil Outlook North American shale oil challenges OPEC OPEC itself sees only slow growth in call for its crude Forecasts slowly-falling market share from 34% today to 32% by Intra-OPEC competition from Iraq, Iran, etc However shale oil can be important for non-opec producers Oman, Egypt, Tunisia, etc Algeria? Associated liquids - Kuwait 12

13 Gas exports/imports (Bcf/day) Gas exports/imports (Bcf/day) Does Middle East need to produce shale gas? UAE Bahrain Syria Lebanon Yemen Libya Algeria Jordan Kuwait Iran Israel Oman Egypt Qatar Jordan Bahrain Kuwait Syria Iran Lebanon -5 Net gas exports / imports Source: Fattouh & Stern,eds. (2010) -3.0 UAE Net importers only

14 % power generation from oil Many MENA countries have motivations for shale gas Yemen Iraq Lebanon Bring gas to domestic consumers 90% 70% Kuwait Save domestic oil for export Syria Libya 50% Saudi Arabia Limit dependence on gas imports Grow domestic gas to sustain exports Oman Egypt 30% Iran UAE - Northern Emirates Morocco Jordan Qatar Algeria 10% Tunisia Dubai -100% -50% 0% Bahrain 50% 100% Abu Dhabi -10% 02/02/2014 Net gas imports 14 Bubble size indicates market size

15 Implications of soaring MENA gas demand Need for improved efficiency and end to gas flaring Challenges to gas-based industrialisation & job creation Need for new gas exploration & development Power cuts and unrest 15

16 Challenges to overcome 16

17 MENA unconventional gas SWOT analysis Strengths Strong existing transportation networks and infrastructure Numerous organic-rich shale/carbonate horizons Carbonate-rich shales (easy to fracture) Preferential pricing for shale gas (Oman) Incentives for exploration and development (Algeria new Petroleum Laws) Fast-growing, gas-short domestic markets Opportunities Adequate resources of shale gas and tight gas Gain to export in thriving gas industry Local market conditions - gas shortage countries have potential for long term gas supply contracts Many unexplored reserves in North Africa and Iraq Saline-water & non-water fracs such as CO 2 and LPG to alleviate water shortages Weaknesses More expensive to produce than conventional gas Gas prices not high enough to support high costs Water scarcity Lack of drilling and exploration resources in North Africa at present as well as skilled labour Only 3 dominant pumpers in the MENA: Schlumberger, Baker Hughes and Halliburton Deep reservoirs Uneven distribution of gas reserves between countries Traditional mindset of NOCs Threats Insufficient increases in gas prices Lack of adaptation of fiscal regimes Environmental opposition in Egypt and Tunisia Political instability, particularly in North Africa Competition from exports from US, East Africa, East Mediterranean 17

18 Gas price equivalent ($/MMBtu) Gas pricing reform slowly materialising 25 HIGH-COST FUELS INTERNATIONAL BENCHMARKS HIGH NEXT-GENERATION PRICES 5 LOW LEGACY PRICES HIGH NEXT-GENERATION PRICES 0 Source: Manaar research 18

19 Electricity generation cost ($ /kwh) Unconventional gas still competitive Dubai retail rate Kuwait retail rate Gas/oil fuel prices $/MMBtu Alternative generation (solar, nuclear, coal CCS) is cheaper than LNG or oil However, high-cost domestic gas (e.g. unconventional) at ~$8/MMBtu is still competitive against alternatives 02/02/2014 Source: Manaar research 19

20 Conclusions Shale oil and gas present both challenge and opportunity to MENA MENA likely to have large shale oil & gas resources, spread across many countries Less immediate need for shale oil given market constraints But could be important in non-opec, second-tier producers Shale gas potentially important in meeting regional gas demand Relevant to almost every country Barriers to development Mainly: commercial terms, low gas prices Also: water, service companies, deep reservoirs Region gearing up to activity: Jordan, Saudi Arabia, Oman, Algeria, Abu Dhabi, etc 20

21 Contact Details Robin Mills, Head of Consulting, Manaar Energy Consulting, Dubai, UAE