Transcript Title

James A. Baker III Institute for Public Policy - Rice University
NATURAL GAS IN NORTH AMERICA: MARKETS & SECURITY
November 16, 2007
An Overview of Canada’s Natural Gas
Supply – Past, Present and Future
George Eynon, P.Geol.
CERI - Vice President
[email protected]
‹
Canadian Energy Research Institute
• Not-for-profit energy and environment economics research
• Established 1975…
• Funded by governments and private sector…
• Energy economics research…
• Short courses and training…
• Industry conferences…
• Public & Media interaction…
Independent - Objective - Relevant
‹
WCSB
Supply Region
• 6 Tcf per year
• i.e., supplies ~24%
of Canada/US
consumption
Source: CERA
Balancing Natural Gas Policy, NPC (2003)
‹
Canada
Gas
Canada Marketable
Monthly NaturalNatural
gas Production
Bcfpd
Bcfpd
20
18
16
14
12
10
8
6
4
2
1980
1985
1990
1995
2000
2005
‹
WCSB Gas Production & R/P Ratio
‹
Drilling and Gas Supply Trends
• WCSB natural gas supply “treadmill”
• More activity; lower rate and fewer reserves
• Increasing costs have slowed drilling activity
• Regulatory and Royalty changes
• How is industry meeting the challenges?
‹
The treadmill's a good machine for politicians
because you run like hell
and you get nowhere
Ralph Klein (ex-Premier of Alberta)
Brixton Prison ca. 1800-1825‹
Competing Forces
Production
Lost
Production
Rate
X
Composite
Decline
Rate
Rate
Additions
(replacement)
New Wells
X
Rate Added
per Well
‹
WCSB Wells and Production
# producing wells &
MMcfpd production
35,000
MMcfpd per
producing well
1.400
30,000
1.200
MMcf per day
per producing well
25,000
Number of
producing wells
20,000
15,000 production
Increasing
in early 90s did not need
proportionately
more wells…
10,000
1.000
0.800
0.600
MMcf per day
total production
5,000
0
0.400
0.200
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
‹
WCSB Wells and Production
# producing wells &
MMcfpd production
35,000
30,000
but wells required
increased dramatically
as production grew
in late 90s…
MMcf per day
per producing well
25,000
MMcfpd per
producing well
1.400
Number of
producing wells
1.200
1.000
20,000
0.800
15,000
0.600
10,000
0.400
MMcf per day
total production
5,000
0
0.200
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
‹
WCSB Wells and Production
# producing wells &
MMcfpd production
MMcfpd per
producing well
1.400
35,000
1.200
30,000
MMcf per day
per producing well
25,000
Number of
producing wells
20,000
15,000
10,000
1.000
0.800
And average production
per producing well fell…
0.600
MMcf per day
total production
5,000
0
0.400
0.200
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
‹
WCSB Wells and Production
# producing wells &
MMcfpd production
35,000
MMcfpd per
producing well
1.400
30,000
1.200
MMcf per day
per producing well
25,000
Number of
producing wells
1.000
20,000
0.800
15,000
0.600
10,000
MMcf per day
total production
5,000
0
0.400
0.200
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
‹
WCSB Gas Supply and Production Replacement
BCFPD
WCSB:
Production Replacement
Bcfpd
supply growth
18
production replacement
17
remaining from prior year
16
15
14
~3.5 Bcfpd
13
12
~2 Bcfpd
11
10
9
1 Bcfpd
'90
8
'95
'00
'05
‹
Rate Additions by Year Onstream
Additions 1.7 Bcfpd 1990; 3.9 Bcfpd in 2001; avg 3.6 Bcfpd 2001-2005; connections
increased 69% since 2000 Rate Added and Event Count
4,500
18,000
4,000
16,000
3,500
14,000
3,000
12,000
2,500
10,000
2,000
8,000
1,500
6,000
1,000
4,000
500
2,000
0
Event Count
Rate Added, MMcfd
First Year Rate Added
Event Count
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year Onstream
‹
SupplyWCSB
by Period
Onstream
Gas Production by Period Onstream
18,000
Wells Onstream 1990 to 2005
Wells Onstream Pre-1990
Calendar Daily Marketable Gas Rate, MMcfd
16,000
•
Total production UP >70%
1990 - 2001
12,000
•
Flat at best since 2001
10,000
•
Wells onstream 1989->
produce 85% of gas
•
Probable decline in 2007 reduced gas drilling
14,000
8,000
6,000
4,000
2,000
0
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
F
E
source: Forward Energy, CAPP
‹
Activity by Deliverability Class
event count as % of 1990 base
Event Count, as % of 1990 Event Count
1200%
0 to .5 MMcfd
.5 to 1 MMcfd
1 to 2 MMcfd
1000%
2 to 4 MMcfd
Event Count, as % of 1990 Event Count
4 to 8 MMcfd
> 8 MMcfd
800%
600%
400%
200%
0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Year Onstream
‹
60°N
6M
3M 126
4M
5M
120
Rate Added per Township
MMcfd
16 to 21
(5)
8 to 16
(54)
4 to 8
(157)
2 to 4
(322)
1 to 2
(597)
0.5 to 1
(814)
0 to 0.5 (1677)
120
120
110
Fort Nelson
110
110
100
100
100
90
Fort McMurray
90
90
80
Fort St. John
80
80
70
70
Grande Prairie
70
60
Low Deliverability =
37% of rate additions
42,370 zones connected
60
60
Edmonton
Hinton
50
Lloydminster
50
40
Saskatoon
40
30
30
Deliverability Class: 0 to .5 MMcfd
20
Calgary
Rate Added per Township
Swift Current
20
Events Onstream 2003 - 2005, MMcfd
10
10
Medicine Hat
Lethbridge
Natural Gas Supply Trends
1
49°N
1
‹
60°N
6M
3M 126
4M
5M
120
Rate Added per Township
MMcfd
32 to 59
16 t0 32
8 to 16
4 to 8
2 to 4
1 to 2
0.5 to 1
0 to 0.5
(9)
(21)
(48)
(69)
(24)
(0)
(1)
(0)
120
120
110
Fort Nelson
110
110
100
100
100
90
Fort McMurray
90
90
80
Fort St. John
80
80
70
70
High Deliverability =
15% of rate additions
242 zones connected
Grande Prairie
70
60
60
60
Edmonton
Hinton
50
Lloydminster
50
40
Saskatoon
40
30
30
Deliverability Class: 4 MMcfd and Greater
20
Calgary
Rate Added per Township
Swift Current
20
Events Onstream 2003 - 2005, MMcfd
10
10
Medicine Hat
Lethbridge
Natural Gas Supply Trends
1
49°N
1
‹
WCSB Gas Production
year-end 2004
Conventional 67%
Unconventional 33%
Shallow 14.86%
CBM 0.80%
Shale 0.11%
Deep/tight 17.27%
‹
Canadian
RigFleet
Utilization
Canadian Rig
Utilization
weekly average active rigs
1000
total rig drilling fleet
900
active rigs
800
700
600
500
400
300
200
100
0
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
‹
Western
Western Canada
Canada Active
Active Rigs
Rigs
weekly average
800
700
600
500
400
2007
300
2006
200
5-year avg
100
0
1
5
9
13
17
21
25
29
33
37
41
45
49
‹
Alberta’s New Royalty Framework
• New Natural Gas Crown Royalty rates
– Single graduated sliding scale
– Minimum 5 % to Maximum 50 %
• Currently 0-35 %
– Varies with Market prices, Well productivity, and Depth
• Shallow Rights “Reversion”
‹
Alberta’s New Royalty Rate (%) vs Price ($/GJ)
Alberta New Royalty Rate (%) vs Price ($/GJ)
for some representative natural gas wells
60%
1.0 MMcfpd -2500m
500 Mcfpd - 2500m
50%
250 Mcfpd - shallow
100 Mcfpd - shallow
40%
current 35% royalty maximum
30%
20%
10%
0%
$1
$3
$5
$7
$9
$11
$13
$15
$17
$19
‹
Other Natural Gas Supply Issues
•
East Coast Offshore
– Sable Island – Exxon-Mobil
– Deep Panuke – EnCana + Nova Scotia Government
• New fiscal structure
•
Mackenzie Valley Pipeline delayed yet again
–
–
–
–
•
Rapidly increasing capital costs
>C$18 Bill full field development + pipeline etc
Regulatory process bogged down
Earliest on-stream = 2012?
Arctic Islands
– Delivery as LNG, GTL of CNG?
•
Demand from Oil Sands development
‹
Alberta’s Oil Sands
‹
Alberta‘s Oilsands
•
Total Resources
– ~1694 bill BO
•
Cold Lake
– ~200 bill BO
•
Athabasca
– ~1300 bill BO
•
Peace River
– ~150 bill BO
• Established
reserves
– ~178 bill BO
‹
World Oil Reserves
billion barrels of proven oil reserves
300
250
200
150
100
50
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‹
Oil
Sands
Gross
Bitumen Production
Gross
Bitumen
Production
MMbopd
7
6
5
4
3
as announced
with delays
with 2x delays
2
1
lower output
2007
2012
2017
2022
2027
‹
Natural
for
Sands
NaturalGas
Gas Use
Use in
OilOil
Sands
Development
Bcfpd
7
as announced
with delays
6
with 2x delays
lower output
5
4
3
2
1
-
2007
2012
2017
2022
2027
‹
Natural
Natural Gas
Gas Use
Use for
for Oil
Oil Sands
Sands
Bcfpd for Constrained Case (With Delays)
7
Upgrading
In Situ
6
Mining and Extraction
5
4
3
2
1
2007
2012
2017
2022
2027
‹
Alternative Fuels for Oil Sands’
Steam Production and Electricity Generation…
• Gasification
– coal
– petcoke
– asphaltenes
• Bitumen emulsion (Quadrise MSAR)
• Uranium and nuclear power
• Geothermal
‹
Western Canada Marketable Gas Throughput
Bcfpd
20
18
16
14
12
10
Alaska
Mackenzie Valley
Kitimat LNG
SK conv
BC conv
AB unconv
AB conv
8
6
4
2
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
-
‹
James A. Baker III Institute for Public Policy - Rice University
NATURAL GAS IN NORTH AMERICA: MARKETS & SECURITY
November 16, 2007
An Overview of Canada’s Natural Gas
Supply – Past, Present and Future
George Eynon, P.Geol.
CERI - Vice President
[email protected]
‹