WORDLWIDE PANORAMA Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 16
REMAINING RECOVERABLE RESOURCES OF NATURAL GAS Source : EIA special report 2011 8,100 tcf 1,300 tcf 4,800 tcf 2,600 tcf 4,100 tcf 2,300 tcf 4,900 tcf 1 cm = 35.3 cf ; 1000 cf = 28.3 cm Unconventional gas: large and uncertain figures Conv. Tight gas Shale gas CBM Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 17
NORTH AMERICA Oil production : o 1985 to 2000 ~18$/b. Since 2000 ~ 41$/b with a peak at 132$/b in 2008 o end 90s, start of oil production decline in the US o the world starts to realize (conventional) oil resources are limited Geopolitical tensions : o USA become increasingly aware of their energetic dependency Technological improvements : o R&D programs, financial incentives (tax) o Rapid decrease in costs, in particular of drilling and hydraulic fracturing N. American specificities : o tight market, close from resources A favorable context o large gas infrastructure system, which eases commercialization o large number of dynamic contractors, on a declining conventional HC market o Legislation giving incentives to the land owner of production on its property Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 18
NORTH AMERICA Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 19
NORTH AMERICA US Bcm/yr 800 700 600 500 400 300 200 100 Shales CBM Tight Conv Total gas production in 2011: 600 Bcm 0 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 Shale gas production in 2011: 14.5 Bcf/d or 145 Bcm US dry gas production (EIA DOE 2011) 160 140 120 100 80 Bcm/yr Eagle Ford Haynesville Fayeteville 145 Bcm US shale gas production Marcellus Woodford Barnett FR Annual consumption: 50 Bcm 60 40 20 1 Bcf/d = 10 Bcm/yr 0 2005 2006 2007 2008 2009 2010 Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 20
NORTH AMERICA G A S S U P P L Y 700 600 500 400 300 200 100 0 70 228 AEO-2005 --60 10 +64 292 AEO-2009 LNG Shales ( 63 Bcm) CBM ( 49 Bcm) Tight (180 Bcm) Unconv Pipe Conv G A S P R I C E 24 22 20 18 16 14 12 10 8 6 4 2 0 janv.-04 juil.-04 janv.-05 juil.-05 janv.-06 juil.-06 janv.-07 juil.-07 janv.-08 juil.-08 janv.-09 juil.-09 janv.-10 juil.-10 janv.-11 juil.-11 140% 120% 100% 80% 60% 40% 20% 0% Brent ($/M Btu) HH ($/M Btu) Ratio HH/Brent US Power Generation by source (EIA-DOE ) Coal 31% Nat Gas 31% Others 50% 45% 19% 24% 2005 2010 Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 21
NORTH AMERICA Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 22
GAS PRICE EVOLUTION JAPAN EUROPE US Source World Data bank Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 23
NORTH AMERICA Technically recoverable shale gas reserves Break-even vs. cumulative resources* including Canada - Impact NGL not taken into account HH ($/Mcf) * Break-even: NPV10 «real term» = 0 Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 24
EUROPE NEEDS AFFORDABLE GAS Decreasing domestic production Shift away from nuclear power Objectives of GHG emissions limitation favoring gas over coal Political will to limit dependency on imports Industry competitiveness Source: CEDIGAZ (2009) Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 25
EUROPE - SEDIMENTARY BASINS WITH SHALE GAS POTENTIAL Exploration for shale gas started in Europe in 2007/2008 and has slowly progressed Little is known about its ultimate shale gas potential Various studies suggest significant resources. but this is yet to be proven 83 41 20 180 17 23 8 187 20 4 42 15 French consumption = 1.8 Tcf/yr Lacq = 8.5 tcf cumulated production Source: IEA 2012 Resources figures are as large as uncertain at this stage Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 26
EUROPE - SHALE GAS ACTIVITY Denmark Sweden Lithuania UK Germany Poland Netherlands Ukraine Czech Rep. France Switzerland Austria Romania Bulgaria Spain XXX Ban XXX Issues or moratorium XXX Activities are possible Drilling Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 27
WELL RESULTS TO DATE Baltic Basin 3/0 Lebien-2H (horizontal well) Stabilized flow rate @ 500 kscf/d for 21d 3/1 20/5 Other available indo <100kscf/d non-stab Preese Hall-1 (vertical well) Average initial flow rate @ 300 kscf/d Non-stabilized, 2x2 stages 8/2 4/1 8/1 Podlasie Basin No information on tests No information on test Lublin Basin Shale gas block Shale oil block CBM block Tight gas block (PL) 2009-2012 shale gas drilling activity 8/2 Wells drilled / tested Krupe-1 License map: November 2012 version Gaz de Schiste -Société Royale d'economie Politique de Belgique - 22/05/13 28