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Transcript of COGA August, 2003 Decarbonization: The Coming Natural Gas Economy Scott W. Tinker Bureau of Economic...
COGA August, 2003
Decarbonization:The Coming Natural Gas
Economy
Scott W. Tinker
Bureau of Economic GeologyJohn A. and Katherine G. Jackson School of Geosciences
The University of Texas at AustinScott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
The four EEEEs — Energy, Environment, Economy,
and Education — are inextricably linked. We
have a unique opportunity to positively impact the global 4-E balance in the
21st century.
The four EEEEs — Energy, Environment, Economy,
and Education — are inextricably linked. We
have a unique opportunity to positively impact the global 4-E balance in the
21st century.Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
1. ENERGY2. WATER3. FOOD4. ENVIRONMENT 5. POVERTY6. TERRORISM & WAR7. DISEASE8. EDUCATION9. DEMOCRACY10. POPULATION
1. ENERGY2. WATER3. FOOD4. ENVIRONMENT 5. POVERTY6. TERRORISM & WAR7. DISEASE8. EDUCATION9. DEMOCRACY10. POPULATION
Humanity’s Top Ten Problems
for next 50 years
Nobel LaureateDr. Richard Smalley, 2003
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
QAd1023
Outline
• Global DecarbonizationGlobal Decarbonization• Why the Trend Towards GasWhy the Trend Towards Gas• Creating a Global Gas EconomyCreating a Global Gas Economy• Challenge of Meeting DemandChallenge of Meeting Demand• OpportunitiesOpportunities
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
QAc9841c
after Hefner, 1993
100
80
60
40
20
0
Per
cen
tag
e o
f to
tal
mar
ket
Year
1850 1900 1950 2000
World Energy Consumption
WW
I
WW
II
Oil
Em
bar
goSolids
Gases
Liquids
U.S. ConsumptionGases (Natural Gas, Hydrogen, Nuclear, Renewables)
Solids (Wood, Coal)
Liquids (Oil)
U.S. Data: Annual Energy Review 1999 (EIA, 2000)World Data: International Energy Annual 1999 (EIA, 2000)
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
U.S. Data: Annual Energy Review 1999 (EIA, 2000)World Data: International Energy Annual 1999 (EIA, 2000)
20
30
40
50
1980 1985 1990 1995
En
erg
y co
nsu
mp
tio
n (
per
cen
t)
Year
Energy Demand
World oil
World coal
World gas, nuclear,hydro, renewables
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
1910191519201925193019351940194519501955196019651970
197519801985199019952000
U.S. Energy Consumption
100
90
80
70
60
50
40
30
20
10
100
90
80
70
60
50
40
30
20
10
100 90 80 70 60 50 40 30 20 10
Liquids (Oil)
Solids (Wood, Coal) Gases (Natural Gas, Hydrogen, Nuclear, Renewables)
Historical U.S. Energy Consumption
0%
20%
40%
60%
80%
100%
1845 1850 1855 1860 1865 1870 1875 1880 1885 1890 1895 1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Perc
enta
ge o
f Mar
ket S
hare
Solids
Liquids
Gases + Renewables
Data: EIA
Data: EIA
1973
Supply InstabilityPrice VolatilityGovernmental PolicyTechnology
1973
U.S. Energy Consumption
0
20
40
60
80
100
120
1845
1870
1895
1920
1945
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
Qu
ad
BT
U
Renewable Energy
Hydroelectric
Nuclear Energy
Natural Gas
Oil Imported
Oil Produced
Coal
Wood and Waste
U.S. Energy Consumption Forecast
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1845
1860
1875
1890
1905
1920
1935
1950
1965
1980
1995
2010
2025
2040
% o
f Tot
al M
arke
tGases and Renewables
Liquids
Solids
U.S. Energy Consumption Forecast
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
1845
1860
1875
1890
1905
1920
1935
1950
1965
1980
1995
2010
2025
2040
% o
f Tot
al M
arke
tGases and Renewables
Liquids
Solids
U.S. Energy Consumption Forecast
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Qua
d B
TU
Gases and Renewables
Liquids
Solids
QAd1023QAd1023
1 Quad Btu ~ 1 Tcf Gas
Tinker Forecast
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
QAd1023
Why the Long-Term Trend Towards Natural
Gas?• EfficiencyEfficiency• EconomyEconomy• EnvironmentEnvironment• AvailabilityAvailability
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Why Natural Gas?Efficiency
QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Why Natural Gas? Economy/Efficiency
Per
cap
ita
inco
me
0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
0 5 10 15 20 25 30
Per-capita oil consumption (bbl/yr)
Saudi Arabia
India
China
Indonesia
RussiaBrazil
Mexico
United KingdomFrance
Italy
Japan
Canada
United States
Germany
Note: 15 largest economies shown in red.
Source: JPT, May 2001QAd1023QAd1023
World Energy Consumption per Capita
0
50
100
150
200
250
300
350
400
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Ene
rgy
Con
umpt
ion
(Qua
d bt
u)/P
opul
atio
n (b
illion
s)
World excluding U.S.
U.S.
World Energy Consumption per GDP Share
2.0
2.5
3.0
3.5
4.0
4.5
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
Ene
rgy
cons
umpt
ion
shar
e of
the
wor
ld
(Q
uad
btu)
/GD
P
World excluding U.S.
U.S.
QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Why Natural Gas? Economy
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
GD
P G
row
th (
% c
ha
ng
e f
rom
pre
vio
us
ye
ar)
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
Cru
de
Oil
Do
me
sti
c W
ell
he
ad
Pri
ce
($
/bb
l)
8.00%
10.00%GDP Growth
Crude Oil Domestic Wellhead Price
QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
U.S. Carbon Dioxide Emissions from Energy Consumption by End-Use Sector
0
400
800
1,200
1,600
1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999
Non-Electricity Generation in Residential, Commercial and IndustrialTransportationElectricity Generation
Data: EIA, 2002
MM
Metr
ic T
on
s o
f C
oal
U.S. Electricity Generation by Fuel Source
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
3,500,000,000
Mkw
h
Other Renewables
Hydro
Nuclear
Natural Gas
Petroleum
Coal
Data, EIA, 2000
1950 1960 1970 1980 1990 2000
Why Natural Gas? Environmental Quality
QAd1023
Carbon Dioxide Emissions from Electricity Generation
0
500,000,000
1,000,000,000
1,500,000,000
2,000,000,000
2,500,000,000
3,000,000,000
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Other Units
Gas-Fired Units
Petroleum-Fired Units
Coal-Fired Units
Data, EIA, 2000
Sh
ort
Ton
s
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
1999 NPC Study (NPC, 1999b)Recoverable Portion of In-Place Gas Resource (Tcf)
Reserves (1,004)
Reserve Growth (305)
Undiscovered, Unconventional
Unassessed Unconventional Reserves (400)
Geopressured Brine (Up to 24,000)
Gas Hydrate (Up to 300,000) Not Assessed by NPC
Increasing developmentcosts, technology needs,
uncertainty, and decreasing concentration
Why Natural Gas? Resource Availability
QAd1023
Cumulative Production (811)
Reserves (157)Known Resources
Reserve GrowthNew Fields
Historical U.S. Composition of Total Natural Gas Discoveries (1977-2001)
0
5,000
10,000
15,000
20,000
25,000
1977 1980 1983 1986 1989 1992 1995 1998 2001
U.S
. D
ry G
as
To
tal
Dis
co
ve
rie
s (
Bc
f)
Data: EIA (2002)
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
QAd1023
• Enhance ReservesEnhance Reserves• Create ResourcesCreate Resources• TransportTransport• SequesterSequester
Creating a Global Gas Economy
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Qua
d B
TU Gases and Renewables
Liquids
Solids
EnhanceU.S. Consumption Forecast
QAd1023
Natural Gas Decline for the Past DecadeSource: EOG, Baker Hughes
Enhance
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
EnhanceKey Technologies of the 90’s
3D Seismic,Computer Assisted Exploration
Deep-water,
Sub-sea,FPSO
Horizontal Drilling,
Geosteering, &
Rotary Steering Systems
Source: Bates, 2002, GCAGS Baker Hughes
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
EnhanceEnhanced Gas Recovery
Production Decline Curve Forecast of Waha Field
y = 832, 425. 9936e-0.0008x
400,000
600,000
800,000
1,000,000
1,200,000
0 24 48 72 96 120 144
Months since 1990
SGR project starts
J uly 1995
SGR project ends
March 1998
2 year lag of results
I ncremental product ion of 12% between
start of project and 2 year lag af ter
project complet ion = 5 Bcf
Production Decline Curve Forecast of Lockridge Field
y = 821,265.2536e-0.0042x
400,000
600,000
800,000
1,000,000
0 24 48 72 96 120 144
Months since 1990
SGR pr oject star ts
J uly 1995
SGR pr oject ends
Mar ch 1998
2 year lag of results
I ncremental product ion of 4% between
start of project and 2 year lag af ter
Production Decline Curve Forecast of Boonsville Field
y = 5, 241, 606. 2868e-0.0046x
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
0 24 48 72 96 120 144
Months since 1990
SGR project starts
May 1993
SGR project ends
J une 1995
No significant incremental production observed.
P roduction decline curve forecast remains
unchanged.
Production Decline Forecast of Stratton Field
y = 2, 266, 021. 5631e-0.0033x
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
0 60 120 180 240 300
Months since 1980
SGR project starts
J anuary 1990
SGR project ends
April 1993
Since increasing production trend started prior to
project start , incremental production not claimed.
Production Decline Curve Forecast of Seeligson Field
y = 4, 088, 984. 0166e-0.0102x
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
0 60 120 180 240 300
M onths s i nc e 1980
SGR project starts
September 1988
SGR project ends
December 1991
2 year lag of results
I ncremental production of 19% between
start of project and 2 year lag af ter project
Production Decline Curve Forecast for McAllen Ranch Field
y = 6, 770, 143. 3703e-0.0195x
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
0 24 48 72 96 120 144 168
M onths s i nc e 1988
SGR project starts
March 1989
SGR project ends
February 1992
2 year lag of resultsI ncremental production of 113% between
start of project and 2 year lag af ter project
Production Decline Curve Forecast of Lake Creek Field
y = 402, 571. 4706e-0.0319x
0
200,000
400,000
600,000
800,000
1,000,000
0 24 48 72 96 120 144 168
Months since 1988
SGR project starts
September 1989
SGR project ends
December 1992
2 year lag of results
I ncremental production of 159%
between start of project and 2 year lag
Excellent Insignificant
Portfolio of EGR Field Studies
Overall EGR technologies in these seven fields yielded incremental production response of
231 Bcf.QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
QAd1023
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Qua
d B
TU Gases and Renewables
Liquids
Solids
Create New Resources
Create
Enhance
U.S. Consumption
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
EIA (1949-1990) and NPC (1991-2015)
L48 Conventional Onshore
Associated and High-Perm Gas
Shallow Offshore
L48 Unconventional Onshore Tight Gas, Shale Gas, CBMDeepwater+Subsalt Offshore
0
5,000
10,000
15,000
20,000
25,000
30,000
1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013
Year
An
nu
al N
atu
ral G
as P
rod
uct
ion
(B
cf)
$2
$3
$1 Wel
lhea
d P
rice
($/
mcf
)
>50%
L48 Unconventional Onshore
CreateU.S. Natural Gas Production
Demand
“Conventional” Unconventionals
Tight (Low Permeability)
Shale
Coalbed Methane
“Unconventional” Unconventionals
Deep (>15,000 ft)
Subsalt
Ultra-Deep Water
Methane HydratesQAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
3,500.0
4,000.0
1970 1975 1980 1985 1990 1995
Bcf
11 Tcf Incremental Gas
GRI, 1999, GRI’s Gas Resource Database. DOE personal communication.
$2
$3
$1
Wel
lhea
d P
rice
($/
Mcf
)
*Advanced Stimulation Technology*Greater Green River Basin Shale Gas*Piceance Basin
DOE
GRI
Federal Alternative Fuels Production Credit for Unconventional Gas
State of Texas Tight Gas Incentives
CreateTight Gas
QAd1023
Private Sector
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
600 km0
400 mi0
N
QAc9715c
Burea uo fEc onomi c
Geo logy
MAJOR PRODUCTIVE TIGHT GAS BASINS(Technically Recoverable Resources)
Data: NPC (2000), * Based on estimates of NPC (1993), San Juan Basin tight gas resource included with oil field reserve appreciation and new fields in NPC (2000)
Rocky MountainForeland(13.7 Tcf)
Midcontinent(16.9 Tcf)
Arkla-Tex(29.8 Tcf)
Appalachian(18.3 Tcf)
Permian Basin(19.5 Tcf)
Texas GulfOnshore(9.1 Tcf)
San Juan(5.6 Tcf)*
78 Tcf
QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
1980 1985 1990 1995
Bcf
2.2 Tcf Incremental Gas
GRI, 1999, GRI’s Gas Resource Database. DOE personal communication.
$2
$1
Wel
lhea
d P
rice
($/
Mcf
)
Antrim Shale ResearchAppalachian Basin Shales
DOE(1976-1992)
GRI
CreateShale Gas
QAd1023
Private Sector
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
600 km0
400 mi0
N
QAc9712c
Ft. WorthBarnett Shale
(7.2 Tcf)
IllinoisNew Albany
(2.9 Tcf)Cincinnati
Arch(2.2 Tcf)
Appalachian(23.4 Tcf)
Data: NPC (2000)
Burea uo fEc onomi c
Geo logy
Michigan Antrim(16.9 Tcf)
MAJOR PRODUCTIVE DEVONIAN SHALE BASINSTechnically Recoverable Resources
40 Tcf
QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
0.0
200.0
400.0
600.0
800.0
1,000.0
1,200.0
1980 1985 1990 1995
Bcf
DOE
GRI
GRI, 1999, GRI’s Gas Resource Database. DOE personal communication.
$2
$1
Wel
lhea
d P
rice
($/
Mcf
)
4.5 Tcf Incremental Gas
Federal Alternative Fuels Production Credit for Unconventional Gas
CreateCoalbed Methane
QAd1023
Private Sector
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
600 km0
400 mi0
N
QAc9714c
Burea uo fEc onomi c
Geo logy
Powder River(24.0 Tcf)
Hanna-Carbon (4.4 Tcf)Uinta & Piceance(5.5 Tcf)
San Juan(10.2 Tcf)
Northern Appalachianand PA Anthracite
(10.6 Tcf)
Black Warrior(4.4 Tcf)
Raton-Mesa (3.7 Tcf)
Alaska(Bering River, North Slope,
Chignik and Herendeen Bay)(57.0 Tcf)
SW Coal Region(5.8 Tcf)
Data: PGC (2001)
MAJOR PRODUCTIVE COALBED METHANE BASINS(Total Most Likely Resources)
81 Tcf
QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
600 km0
400 mi0
N
QAc9713cData: PGC (2001)
Burea uo fEc onomi c
Geo logy
MontanaFolded Belt
(5.2 Tcf)
Wind River(5.0 Tcf)
Greater Green River(8.4 Tcf)
San Joaquin(9.0 Tcf) Anadarko, Palo Duro
(17.7 Tcf)Permian(12.9 Tcf)
Appalachian(5.0 Tcf)
LA, MS, AL Salt(15.8 Tcf)
Louisiana Gulf Coast(14.5 Tcf)
TexasGulf Coast(14.3 Tcf)
MAJOR PRODUCTIVE DEEP (>15,000 FT) GAS BASINS(Total Most Likely Resources)
62 Tcf
QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
600 km0
400 mi0
N
QAc9716c
Burea uo fEc onomi c
Geo logy
MAJOR PRODUCTIVE DEEP-WATER GAS BASINS(Total Most Likely Resources)
Data: PGC (2001)
Pacific Slope(8.9 Tcf)
Louisiana Slope(12.4 Tcf)
Texas Slope(4.3 Tcf)
Eastern Gulf Slope(7.6 Tcf)Gulf of Mexico OCS
(47.7 Tcf)
71 Tcf
QAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
L48 Unconventional OnshoreDeepwater+Subsalt Offshore
Technology Investment = Resource Creation
EIA (1949-1990) and NPC (1991-2015)
0
5,000
10,000
15,000
20,000
25,000
30,000
1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013
Year
An
nu
al N
atu
ral G
as P
rod
uct
ion
(B
cf)
170 Tcf
Unc. Gas Major Basins
(Technically Recoverable)
Tight Gas 78 Tcf
Shale Gas 40 Tcf
CBM 81 Tcf
Deep Gas 62 Tcf
Deep Water 71 Tcf
332 TcfQAd1023
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Source: A. Anderson/
Cambridge Energy Research Assoc.
North America
Natural Gas
Transports
(Bcf)
Tri
nid
ad
0
5
10
15
20
25
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
Qu
ad
rill
ion
Btu
Natural Gas Consumption
Natural Gas Production1 Tcf Gas = 1 Quadrillion Btu
Data: EIA
17%
U.S. Natural Gas
Transport
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Sequester
The sustainability of a hydrocarbon-fueled economy requires that we
support an environment and energy win-win.
Capture carbon dioxide and return it to
the subsurface for the economic benefit of enhanced hydrocarbon
recovery and the environmental benefit of reduced atmospheric carbon dioxide.
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Injector
Monitor
“C”
“B”
“A”
440 ft
100 ft
BEG TexasFrio Pilot Project
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
QAd1023
Challenge of Meeting Natural
Gas Demand
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
21992 1994 1996 1998
3
4
5
Pri
vat
e S
ecto
rB
illi
on
$
Year
2000 2002 2004
Meeting DemandOil and Gas R&D Funding
Private Sector Data: Chris Ross, World Energy (2001, v. 4, no. 2)
1998 $
Note Scale Difference
DO
E O
&G
Mil
lio
n $
20
40
60
80
100
120
Fuel Cells and Gas Turbines removed
from 1996-1999 for comparison
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
1,800
1,000
600Nu
mb
er
of
emp
loy
ees
(th
ou
sa
nd
s)
1978 19981994199019861974Year
1982
1,400
Meeting Demand
Oil Company Employment
Largest 25 Oil Companies
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
QAd1731c
Source: AGI
10,000
20,000
Meeting Demand
UNIVERSITY ENROLLMENTS
Geoscience Graduate Students
Petroleum Engineering
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Time
O&G R&D FundingUniversity
Enrollments O&G Employment
Demand, esp. Natural Gas
Technology Requirements
The Challenge
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Summary
QAd1023
Global oil and coal consumption will remain at current levels for 30-50 years.Natural gas and other energy sources will need to fill the global demand gap.
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Qua
d B
TU Gases and Renewables
Liquids
Solids
The global economy and environment will benefit from a transition to natural gas.
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Global Opportunities& Benefits
QAd1023
Research and technology for a gas industry are different than for an oil industry.Unconventional sources will require significant geoscience and engineering advancements to be economically viable.
Sequestration of greenhouse gases will be required to handle atmospheric emissions, and will need geoscience and engineering understanding.
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003
Thank You!
Scott Tinker, DirectorBureau of Economic GeologyAugust 4, 2003