Issues & Trends in Natural Gas Supply & Production. June 30, 2011 Washington, DC

Transcription

1 Issues & Trends in Natural Gas Supply & Production June 30, 2011 Washington, DC

2 Thank you to today s host

3 About the BCSE The Business Council for Sustainable Energy (BCSE) is a coalition of companies and trade associations from the energy efficiency, natural gas and renewable energy sectors Founded in 1992, the Council advocates for policies at state, national and international levels that increases the use of commercially available clean energy technologies, products and services.

4 2011 BCSE Members

5 Clean Energy Coast to Coast

6 I. Welcome Lisa Jacobson, President, Business Council for Sustainable Energy II. III. IV. Panel I Natural Gas Supply Forecasts Chris McGill, Managing Director of Policy Analysis, American Gas Association Panel II Issues for Safe & Environmentally Sound Production Dr. Terry Engelder, Office of Geoscience, Penn State University Ron Edelstein, Director of Regulatory & Government Relations, Gas Technology Institute Questions and Answers V. Closing Remarks and Adjourn

7 Issues & Trends in Natural Gas Supply & Production June 30, 2011 Washington, DC

8 Potential Supply of Natural Gas in the United States Report of the Potential Gas Committee (December 31, 2010) Business Council for Sustainable Energy June 30, 2011

9 Potential Gas Committee: 100 Volunteer Geoscientists & Petroleum Engineers Biennial Assessment - since 1964 of the Technically Recoverable U. S. the Technically Recoverable U. S. Natural Gas Endowment PGC + EIA Proved Reserves = Potential Future Supply

10 Organization of Potential Gas Studies Potential Gas Committee Larry M. Gring President/General Chairman Darrell L. L. Pierce Chairman, Board of of Directors Develops assessment policy and procedures, directs and manages studies of of natural gas resources, recruits personnel and supervises work, prepares reports on on natural gas resources. Potential Gas Agency Colorado School of of Mines (supported by industry) Dr. John B. B. Curtis, Director Approves criteria and methods, insures maintenance of of standards and objectivity, reviews and evaluates reports, publishes final assessments of of gas resources. Potential Gas Agency Colorado School of Mines

11 Proved Reserves vs Resources Known gas reservoirs Discovered Existing economic conditions Existing operating conditions Undiscovered Effects of technology Effects of economics Potential Gas Agency Colorado School of Mines

12 Natural Gas Resource Assessment of the Potential Gas Committee, 2010 (mean values) Traditional Gas Resources Coalbed Gas Resources Total U.S. Gas Resources Proved Reserves (EIA)* Future Gas Supply 1,739.2 Tcf Tcf 1,897.8 Tcf Tcf 2,170.3 Tcf Potential Gas Agency * Latest available value (dry gas), year-end 2009 Colorado School of Mines

13 PGC Resource Assessment 2010 Total Traditional Resources (mean values) by category Probable (existing fields) Tcf Possible (new fields) Tcf Speculative (frontiers) Tcf Total 1,739.2 Tcf Data source: Potential Gas Committee (2011)

14 PGC Resource Assessment 2010 Total Coalbed Gas Resources (mean values) by category Probable (existing fields) 13.4 Tcf Possible (new fields) 48.1 Tcf Speculative (frontier) 96.2 Tcf Total Tcf Data source: Potential Gas Committee (2011)

15 PGC Resource Assessments, Total Potential Gas Resources (Mean Values) Data source: Potential Gas Committee (2011)

16 Potential Gas Committee Determination of Future Supply of Natural Gas in the United States (TCF) DOE Traditional Coal Future Cumulative Ultimate Reserves + Resources + Gas = Supply + Production = Resource , , , , , , , , , , , , ,314 1,013 2, ,312 1,053 2, , ,532 1,091 2, , ,074 1,132 3, , ,170 1,176 3,347

17 Regional Resource Assessment Traditional Coalbed Total U.S 1,739.2 Tcf Tcf 1,897.8 Tcf Data source: Potential Gas Committee (2011)

18 Regional Resource Assessment Summary PGC Area Traditional Gas Resources (Mean, Tcf) Coalbed Gas Resources (M.L., Tcf) Total Pot. Resources (Tcf, rounded) Traditional Proportion of Total US Gulf Coast Atlantic Rocky Mountain Mid-Continent Pacific North Central Total Lower 48* Alaska Total U.S. (means)* Data source: Potential Gas Committee (2011) , , , , % 20.3% 19.7% 15.6% 3.1% 1.2% 11.1% * Separately aggregated totals, not arithmetically additive.

19 State Hydraulic Fracturing Regulatory Emphasis Well Permit and Reporting Requirements Registration of Water W/D, Location and Volume Public Water Usage Permitting Baseline Hydro-Chemical Sampling Risk of Subsurface Fluid Migration Plans Accident Prevention and Contingency Plans 19

20 State Hydraulic Fracturing Regulatory Emphasis (continued) Casing and Cementing Plans Chemical Constituents Listing and Management Additives Identification Toxicological Data Waste Management Plan Total Dissolved Solids Strategy (TDS) Inventory of Naturally Occurring Radioactive Materials (NORM) Hydrogen Sulfide Safety Requirements Containment Vessel Requirements Site Containment System 20

21 State Hydraulic Fracturing Regulatory Emphasis (continued) Transportation and Disposal Tracking Recycling of Waste Water Fluids Disposal Injection Well Monitoring Treatment and Surface Disposal Transport to Other State Centralized Facility Waste Disposal Surface Reclamation and Closing of Pit(s) Well Completion Reports Well Plugging Procedures 21

22 Thank You! Christopher B. McGill Managing Director, Policy Analysis 22

23 Twelve Days in June 2011 The NY Times v. Gas Shales Terry Engelder Department of Geosciences The Pennsylvania State University

24 Boalsburg, PA E mail written to NY Times while packing for a trip to study gas shale in France Twelve (12) days ago You have, no doubt, learned that Art Berman is casting rain clouds all over the North American gas shale play.. Berman claims that "Half of EUR has no value because it is so far in the future." I have seen economic models that recognize an 8 10 year payout of gas shales which is well beyond Berman's window for profitability. Can't accuse industry of covering up anything in this regard. Art states, "Most of my oil and gas clients require payout in 2 3 years at most"... There is a disconnect between Berman and what industry tells its investors as far as I can tell and the investors are going into this with their eyes wide open. No one has claimed that gas shales can payout in 2 3 years.

25 Flysch Noir: Albian Cenomanian (100 million year old) gas shale Col du Tourmalet Pyrenees Mountain, France Seven (7) days ago

26 Average = 1.27 Detroit Metropolitan Airport Air France flight from Paris, France Four (4) days ago

27 The Pennsylvania State University Eight (8) hours responding to reporters phone calls Three (3) days ago Note: These averages includes 300 horizontal wells that are no longer active

28 Gas plume in gray shale above the Geneseo black shale at Taughannock Falls State Park, NY. The presence of an ancient gas plume over a black shale is indicated by a dense network of natural hydraulic fractures. Contact Area horizontal well These are the natural fractures (joints) along which sand and other chemicals are pumped:

29 Horizontal well (white) with hydraulic fractures (blue)

30 Steady State 1 st Transient 2 nd Transient Horizontal well (white) with hydraulic fractures (blue) depleting gas (red)

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34 Use early production data for determining reserve potential of Marcellus Statistical Analysis Objective reserve potential is strongly dependent on establishing confidence in facts* Initial Production, Pro Forma Decline Curve, Geological Evaluation» Expected EUR = 489 Tcf (August 2009) * Engelder. 2009, Fort Worth Basin Oil and Gas Magazine

35 * Engelder. 2009, Fort Worth Basin Oil and Gas Magazine Four Two County Core: PA Forest Bradford Leases: Susquehanna Tioga

36 log (IP)-probability graph * Engelder. 2009, Fort Worth Basin Oil and Gas Magazine Pennsylvania does not require the reporting of production data!

37 Bradford County Engelder EUR model for 489 Tcf* (tier 1) Chesapeake 5.2 Bcf EUR model 180/242 (75%) > tier 1 * Engelder. 2009, Fort Worth Basin Oil and Gas Magazine

38 Susquehanna County 90/113 (80%) > tier 1 Engelder EUR model for 489 Tcf* (tier 1) Chesapeake 5.2 Bcf EUR model * Engelder. 2009, Fort Worth Basin Oil and Gas Magazine

39 Greenhouse Gas Emissions of Natural Gas and Other Energy Sources > Ron Edelstein Director, Regulatory and Government Relations GTI BCSE Briefing June 30, 2011 Business Confidential

40 Summary of Changes to EPA Production Emissions Estimates >All gas well completions were assumed to be flared; now 68% assumed flared or recovered >Well completions with hydraulic fracturing are assumed to have much larger emissions due to less flaring and revised emissions factors >Gas STAR Partner-reported emissions and reductions for well liquids unloading are much higher than previous inventories Ref: R. Fernandez, EPA, May 19, 2011 Presentation Business Confidential 40

41 Comments on Howarth Paper > Howarth uses short-term global warming potential (GWP) numbers for methane 105 (IPCC number actually 72 for short term) instead of the internationally accepted long-term GWP of 25 > Howarth overestimates methane lost during transport, distribution and storage, mistaking lost and unaccounted for for leakage > Howarth overestimates methane leakage from shale wells; ignoring the new EPA estimates and using what he admits are skimpy data > Howarth does not acknowledge that most of the wellhead emissions are already being mitigated either through flaring or reduced-emission completions > Howarth does not take into account higher efficiencies of natural gas combined cycle turbine power plants Business Confidential 41

42 Greenhouse Gas Comparisons: Natural Gas and Coal (lb/mmbtu) Source Natural Gas Coal Methane Emissions (Fugitive and Vented) Upstream Combustion Non Combustion CO Fuel Based CO Totals Natural gas has 35% less CO2e than coal when combusted Ref: El Paso and GTI calculations Business Confidential 42

43 Efforts by the Natural Gas Industry to Further Reduce GHG Emissions >Reduction in unintended venting of methane >Use of plungers during liquids unloading >Recycle vented gas from compressors for fuel use; compressor seals reduced methane emissions >Increase efficiency of compressor engines >Replacement of cast iron and bare steel pipe on distribution lines >Increased use of fly-overs (with infrared detectors) of gas transmission lines to locate major leakage sources Business Confidential 43

44 Methane Reductions During Completion and Flowback Equipment designed to separate sands from liquids during flowback, and liquids from gases (ref: Williams) Business Confidential 44

45 Plunger Lift Reduces Emissions during Liquids Unloading Ref: Weatherford Business Confidential 45

46 Compressor Seals Reduce Methane Blow by Ref: EPA, IBID Business Confidential 46

47 Greenhouse Gas Comparisons: Power Plants Natural Gas and Coal CO2 Emissions (lb/mmbtu) Heat Rate (Btu/kWhr) CO2 Output (lb/mwhr) CO2 output (tonnes/mwhr) Natural Gas CCT Coal Steam Turbine ,826 9, , Natural gas has 54% less CO2e than coal when producing electricity Ref: El Paso and GTI calculations Business Confidential 47

48 Direct Gas Use Comparisons Full Fuel Cycle Analysis GHG Emissions Heating Unit Site Efficiency Source Efficiency Electric Resistance Electric Heat Pump Fully Condensing Gas Furnace Ref: GTI calculations 100% 27% % 69% % 88% 4.4 Source Based CO2 Emissions (tonnes/yr) Assumes average US furnace load of 66 MMBtu/yr Business Confidential 48

49 Conclusions >Natural gas remains the lowest GHG emitting fossil fuel >Full-fuel cycle analysis is critical for measuring GHG emissions of end-use equipment >The natural gas industry, through Natural Gas STAR, continues to take steps to further reduce GHG emissions Business Confidential 49

50 Thank you for participating. Presentations will be made available at