Transcript Slide 1

© OECD/IEA 2013
The Role of Unconventional Gas
Ian Cronshaw
Madrid October 2014
© OECD/IEA 2013
Overview
 1. Key Findings From the World Energy Outlook 2013
 2. The Gas World Changes, Moving Towards a Global market
 3. Unconventional Gas and its Impacts
 4. Golden Rules for the Golden Age of Gas
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The world energy scene today
 Some long-held tenets of the energy sector are being rewritten
 Countries are switching roles: importers are becoming exporters…
 … and exporters are among the major sources of growing demand
 New supply options reshape ideas about distribution of resources
 But long-term solutions to global challenges remain scarce
 Renewed focus on energy efficiency, but CO2 emissions continue to rise
 Fossil-fuel subsidies increased to $544 billion in 2012
 1.3 billion people lack electricity, 2.6 billion lack clean cooking facilities
 Energy prices add to the pressure on policymakers
 Sustained period of high oil prices without parallel in market history
 Large, persistent regional price differences for gas & electricity
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The engine of energy demand growth
moves to South Asia
Primary energy demand, 2035 (Mtoe)
Share of global growth
2012-2035
Eurasia
Latin
America
Europe
1 370
United
States
4 060
2 240
Middle 1 050
East
Brazil
480
1 030
Africa
1 540
5% 4%
8%
China
1 710
Eurasia OECD
1 000
Africa
440
Japan
Southeast
Asia
8%
Middle 10%
East
65%
India
Non-OECD
Asia
China is the main driver of increasing energy demand in the current decade,
but India takes over in the 2020s as the principal source of growth
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A mix that is slow to change
Growth in total primary energy demand
1987-2011
Gas
2011-2035
Coal
Renewables
Oil
Nuclear
500
1 000
1 500
2 000
2 500
3 000
Mtoe
Today's share of fossil fuels in the global mix, at 82%, is the same as it was 25 years
ago; the strong rise of renewables only reduces this to around 75% in 2035
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Emissions off track in the run-up
to the 2015 climate summit in France
‘Carbon budget’ for 2 °C
Cumulative energy-related CO2 emissions
Total emissions
1900-2035
Gt 800
Remaining
budget
600
Non-OECD
Non-OECD
49%
OECD
400
1750-2011
‘Carbon budget’
for 2 °C
2012-2035
200
OECD
51%
1900
-1929
1930
-1959
1960
-1989
1990
-2012
2013
-2035
Non-OECD countries account for a rising share of emissions, although 2035 per capita
levels are only half of OECD; the
the22°C°C‘carbon
carbonbudget’
budget is being spent much too quickly
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mb/d
Reductions in net oil imports in the United States
in the New Policies Scenario, by source
10
2011 net oil import level
9
Projected net imports
8
Reductions due to:
Demand-side efficiency
7
6
Biofuels use in transport
5
Natural gas use in transport
4
Increased oil supply
3
2
1
0
2011
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2015
2020
2025
2030
2035
Gas Markets—Towards a more Global Market?
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Current market conditions vary
markedly across the world
Natural gas demand and production growth in selected regions, 2005-2012
Production
United States
Rest of Middle East
Qatar
China
Russia
-60
-30
0
30
60
90
120
150
180
bcm
-30
0
30
60
90
120
150
180
bcm
Middle East
Demand
United States
China
Japan and Korea
European Union
-60
Regional differences in gas prices have also grown, with potential implications for
investment decisions and company strategies in energy-intensive industries
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Regional Gas Prices Continue to
Diverge
Henry Hub blue, NBP brown, German purple, Japan green
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Gas growth strongest in emerging markets
Natural gas demand
United States
Middle East
2035
European Union
2011
Russia
China
India
Japan
100
200
300
400
500
600
700
800
bcm
The biggest absolute increases in demand are in China & the Middle East,
where gas use overtakes that of the European Union before 2020
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Air pollution issues encourages gas use
in China
China’s gas demand by sector, 2000-19
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Gas demand in China will gain 150 bcm, 2 times UK’s gas consumption
All sectors contribute to the demand additions, in particular the power generation sector and
the transport sector
 Natural gas, together with nuclear and renewable energies will contribute to dampen
coal’s demand increase in the power generation sector
 The use of gas in road and maritime transport is promoted by the imperative to improve
air quality in big cities
A new diversity in gas supply
Change in annual natural gas production
China
United States
Russia
2011-2020
2020-2035
Australia
Qatar
Iraq
Brazil
Turkmenistan
Iran
Algeria
-30
0
30
60
90
120
150
180
210
240
bcm
Natural gas production increases in every region of the world
between 2011 and 2035, with the exception of Europe
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Unconventional Gas—The game changer?
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Unconventional resources are
widely distributed
Remaining unconventional gas resources in selected regions, end-2012 (tcm)
Resources of unconventional gas are globally abundant, but there are numerous
obstacles to developing these resources at the scale seen in North America
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Unconventionals account for
half of gas output growth
Growth in unconventional gas production by type
Shale gas
Coalbed
methane
United States
China
Canada
Argentina
India
European Union
Algeria
Mexico
Indonesia
2011-2020
2020-2035
Australia
China
India
Canada
United States
0
20
40
60
80
100
120
140
160
bcm
Unconventional gas development spreads well beyond North America, notably after
2020, with China and Australia major contributors to global production growth
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US Dry Natural Gas Production 1990-2040
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US Monthly Shale Gas Output
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Marcellus Region just keeps growing
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Shale Gas Drives Prices Lower
but not everywhere…..
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China: No 1 Technically Recoverable
Shale Gas Reserves Globally
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Australia Too….
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Two OECD regions contribute Big
Chunks of the additional LNG supply
LNG liquefaction capacity, existing and under construction
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150 bcm of LNG export capacity is under construction, much of it in Australia
LNG from the United States
can shake up gas markets
Indicative economics of LNG export from the US Gulf Coast (at current prices)
$/MBtu
18
15
12
$/MBtu
12
9
9
6
6
3
3
To Asia
Average import price
Liquefaction, shipping
& regasification
United States price
To Europe
New LNG supplies accelerate movement towards a more interconnected global
market, but high costs of transport between regions mean no single global gas price
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Most of the new LNG will be
consumed by Asia
LNG imports, 2013-19
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Consequently, global LNG trade will rise from 320 bcm in 2013 to 450 bcm in 2019.
Golden Rules for a Golden Age
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Golden Rules for a Golden Age of Gas
The “Golden Rules” are principles that can allow key stakeholders to
address environmental & social impacts of unconventional gas:
1.
Measure, disclose & engage
2.
Watch where you drill
3.
Isolate well & prevent leaks
4.
Treat water responsibly
5.
Eliminate venting, minimise flaring & other emissions
6.
Be ready to think big
7.
Ensure a consistently high level of environmental performance
They are “Golden Rules” because their application can ensure operators
have a “social license to operate”, paving the way for a golden age of gas
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IEA Unconventional Gas Forum
WEO-2009 with natural gas focus
WEO-2011 special report:
Are we entering a Golden Age of Gas?
WEO-2012 special report
Golden Rules for a Golden Age of Gas
Inaugural Unconventional Gas Forum in Paris
22 March 2013
2nd Forum in Calgary
26 March 2014
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Some Concluding Thoughts
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Who has the energy to compete?
Ratio of industrial energy prices relative to the United States
Natural gas
Electricity
5×
Reduction
from 2013
4×
2035
2013
2003
3×
2003
2×
United States
Japan
European
Union
China
Japan
European
Union
China
Regional differences in natural gas prices narrow from today’s very high levels
but remain large through to 2035; electricity price differentials also persist
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An energy boost to the economy?
Share of global export market for energy-intensive goods
+3%
European Union
+1%
Today
36%
10%
+2%
+2%
7%
3%
2%
China
Middle East
India
Japan
7%
United States
-3%
-10%
The US, together with key emerging economies, increases its export market share
for energy-intensive goods, while the EU and Japan see a sharp decline
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Orientation for a fast-changing Gas world
 China drives the growing dominance of Asia in global energy and
gas demand & trade
 Technology is opening up new gas resources, first in North
America, then Australia, China…but who else? And when?
 Regulation is a key part of the Industry—and much to be learned
from other countries
 Regional price gaps & concerns over competitiveness are here
to stay, but there are ways to react – with efficiency first in line
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