Unconventional

Oil and Gas

Global Perspective

Stephen A. Holditch

April 2014

Wind Solar Nuclear Biomass CCS Low

Carbon

Options

2008—12,271 Mtoe per year 2035—16,765 Mtoe per year

World Energy Supply-History and Projected (IEA, 2010)

Coal, 27%

Oil, 33%

Gas, 21%

Non-Fossil

Fuel, 19%

Coal, 22%

Oil, 27%Gas, 25%

Non-Fossil Fuel, 26%

Outline

• What are unconventional reservoirs?

Resource Triangle

History in North America

• What are the global implications?

Correlations from North America

Extrapolation to rest of the world

• Conclusions

Resource Triangle

Conventional Reservoirs

Small volumes that are

easy to develop

Unconventional

Large volumes

difficult to

develop

Impro

ved t

echnolo

gy

Incre

ased p

ricin

g

Implications

• All natural resources are distributed log

normally – gold, silver, oil, gas, etc.

• The high grade deposits are difficult to

find but easy to extract

• As you get deeper into the resource

triangle, you need adequate product

prices and improved

technology

Implications

• Low quality reservoirs can be enormous

• There should be a log normal

distribution of resources by quality in

every oil and gas basin we now produce

• Thus, there should be very

large volumes of gas and oil in

unconventional reservoirs

around the world

Outline

• What are unconventional reservoirs?

Resource Triangle

History in North America

• What are the global implications?

Correlations from North America

Extrapolation to rest of the world

• Conclusions

Shale gas leads growth in total gas production through 2040 to reach

half of U.S. output

U.S. dry natural gas production

trillion cubic feet Source: EIA, Annual Energy Outlook 2013

Adam Sieminski , Deloitte,

May 21, 2013 9

Associated with oil

Coalbed methane

Tight gas

Shale gas

Alaska

Non-associated onshore

Non-associated offshore

Projections History 2011

U.S. tight oil production leads growth in domestic production

million barrels per day

Source: EIA, Annual Energy Outlook 2013 and Short-Term

Energy Outlook, May 2013

Adam Sieminski , Deloitte,

May 21, 2013 10

Projections History 2011

Alaska

Tight oil

Other lower 48 states onshore

Lower 48 states offshore

STEO May 2013 U.S. crude oil projection

Projections History 2011

Alaska

Tight oil

Other lower 48 states onshore

Lower 48 states offshore

Reference case High resource case

Outline

• What are unconventional reservoirs?

Resource Triangle

History in North America

• What are the global implications?

Correlations from North America

Extrapolation to rest of the world

• Conclusions

12

Last Global Unconventional Gas Assessment Is Now Conservative

New emergence of UG plays around the world since 1997

Uncertainty of Rogner’s assessment was not quantified

Data Source: Rogner, 1997

Regions CBM

OGIP, Tcf

Shale

OGIP, Tcf

Tight Sands

OGIP, Tcf Total, Tcf

Australia & Asia (AAO) 1,724 6,151 1,802 9,677

North America (NAM) 3,017 3,840 1,371 8,228

Commonwealth of

Independent States (CIS) 3,957 627 901 5,485

Latin America (LAM) 39 2,116 1,293 3,448

Middle East (MET) 0 2,547 823 3,369

Europe (EUP) 274 549 431 1,254

Africa (AFR) 39 274 784 1,097

World 9,051 16,103 7,405 32,559

Introduction

Resource Triangle

Conventional Reservoirs

Small volumes that are

easy to develop

Unconventional

Large volumes

difficult to

develop

Impro

ved t

echnolo

gy

Incre

ased p

ricin

g

15

Evaluated global conventional OOIP and OGIP from published data

Methodology to Update Global Unconventional OGIP Assessment

Global Unconventional OGIP Assessments

Collected public data for North American unconventional gas resources

Assessed global unconventional OGIP by

Developing theoretical statistical relationships between conventional hydrocarbons and unconventional gas

Fitting these relationships to North American publically available data

Applying North American theoretical statistical relationships of conventional to unconventional gas to estimate world unconventional gas

Region OGIP (P50), Tcf TRR (P50), Tcf

CBM Tight gas Shale

gas Total CBM Tight gas

Shale

gas Total

AAO 1,348 6,253 2,690 10,291 483 3,783 676 4,942

NAM 1,629 10,784 5,905 18,318 584 6,525 1,505 8,614

CIS 859 28,604 15,880 45,343 308 17,307 3,924 21,539

LAM 13 3,366 3,742 7,122 5 2,037 964 3,006

MET 9 15,447 15,416 30,872 3 9,346 4000 13,349

EUP 176 3,525 2,194 5,895 63 2,133 561 2,757

AFR 18 4,000 3,882 7,901 7 2,420 1007 3,434

World 4,052 71,981 49,709 125,742 1,453 43,551 12,637 57,641

16

Texas A&M Study Results From Zhenzhen Dong Dissertation – August 2012

Centuries of Natural Gas Supply

• Recent research at TAMU has computed

natural gas resource estimates for tight

sands, coal seams and shales

Area OGIP TRR USE Supply

(Tcf) (Tcf) (Tcf) (years)

North America 18,318 8,614 32 269

World 125,742 57,641 118 488

Centuries of Natural Gas Supply

• Not all of the TRR is Economically

Recoverable (ERR) at todays prices and

using todays technology

• However, at least 25 – 50% of the TRR

should be converted to ERR as prices rise,

technology improves and markets develop

• Conclusion – We are not going to run out of

resource – oil or natural gas any time soon.

Outline

• What are unconventional reservoirs?

Resource Triangle

History in North America

• What are the global implications?

Correlations from North America

Extrapolation to rest of the world

• Conclusions

Conclusions

• Natural Resources are distributed log

normally in nature

• In every basin that has produced

substantial quantities of conventional oil

and gas, there is much more left in

unconventional reservoirs

• Current development is from source rocks

• We will not run out of producible

hydrocarbons this century