Transcript North American Gas Business Model

Gas in North America & the
Potential Impact on the
International Energy Trade
Analysis of Production History
Initial Production
& Decline Rates
Reserve
Adds
Cumulative Production
Remaining Reserves
Field Size Distribution => Yet To Find (YTF)
All Content  2003 IHS Energy
North American
Gas Reserves - 2000
TCF
1200
1000
Mex
800
USA
600
400
200
Can
Original
All Content  2003 IHS Energy
Remaining
YTF
YTF >300
BCF
Gas Reserves vs. Production
Remaining Production Remaining
Reserves Rate
R/P Ratio YTF
(tcf)
(tcf/yr)
(yrs)
(tcf)
Canada
USA
Mexico
71.3
7.5
9.5
169.5
197.9
24.1
8.0
401.2
50.0
1.7
29.4
58.2
Note: combined USA & Canada R/P is 7.4
without Alaska and Canadian Frontier
All Content  2003 IHS Energy
Natural Gas Reserves
Added to the System
TCF
35
Avg.
Prod.
30
25
20
15
10
5
1990 USA & Canada by Region
(Avg. Prod. = 31.5 TCF/Y)
All Content  2003 IHS Energy
2001
North American Gas in 2000
14 BCFD Fuel
& Extr. Losses
91 BCFD
Raw Gas
Production
4 TCF Storage
(78 BCFD in/out)
120 BCFD
Pipeline
System
10 BCFD
Alaska
67 BCFD Gas
Delivered to
Consumers
3 BCFD LNG
Re-gas Capacity
USA, Canada & Mexico combined
All Content  2003 IHS Energy
Existing Interstate
Pipeline Network
Largely Unconstrained Year to Year
All Content  2003 IHS Energy
Time
Little Growth since 1980, Except in Swing Volume
Dec-01
Dec-00
Dec-99
Dec-98
Dec-97
Dec-96
Dec-95
Dec-94
Dec-93
Dec-92
Total Gas in Storage
(from EIA)
Dec-91
Dec-90
Dec-89
Dec-88
Dec-87
Dec-86
Dec-85
Dec-84
Dec-83
Dec-82
Dec-81
Dec-80
Dec-79
Dec-78
Dec-77
Dec-76
Dec-75
Dec-74
Dec-73
BCF
Total US Gas Storage
8,241 BCF Total Capacity
8000
7000
6000
5000
4000
3000
2000
1000
0
Monthly Demand is Variable
Annual Swing can be 40 BCFD
All Content  2003 IHS Energy
US Raw Gas Demand
Sensitivity
Delta
Power
Low Gas Price (relative to Fuel Oil)
High Gas Price (relative to Fuel Oil)
6.0 BCFD
Low Gas Price
Industrial
3.3 BCFD
High Gas Price
Residential
Severe Weather
4.0 BCFD
Mild Weather
5
10
15
20
BCFD
All Content  2003 IHS Energy
25
30
US Power & Alt. Fuels
Other 5.4 %
Oil 8.0 %
Hydro 10.6 %
Coal 37.2 %
Nuclear 11.6 %
Gas 27.2 %
About 50% of Gas can shift to Oil – for a 150% increase in oil requirements,
while 10% of Coal and 40% of Oil can shift to Gas – for a 25% increase in Gas.
All Content  2003 IHS Energy
Gas Balance by Region
Canada
Mexico
BCFD
Pacific
Mtn.
(9+12)
(8+11)
Supply
+ 1.0
+ 11.1
+ 20.6
Demand
- 9.5
- 3.9
Net
- 8.5
+ 7.2
All Content  2003 IHS Energy
Canada Mexico W. Cent. GOM E. Cent. Atlantic
(4+7)
On+Off
(3+6)
(1+2+5+10)
+ 4.7
+ 16.7
+ 26.1
+2.7
+ 0.0
- 9.4
- 5.6
- 23.0
- 0.0
-15.2
-15.7
+11.2
-0.9
- 6.3
+ 26.1
- 12.5
-15.7
Data for 2001 – some numbers are rounded
Raw Gas Demand
140
120
100
Mexico
Canada
Atlantic
E. Central
W. Central
Rockies
Pacific
BCFD
80
60
40
20
0
1990
All Content  2003 IHS Energy
1995
2000
2005
2010
2015
2020
BCFD
120
Gas Supply – Current
Activity Level
100
80
1990
Existing
YTF Drilling
Frontier Dev.
LNG Imports
Alaska Pipeline
(Note: Alaska gas production shown as pipeline only)
All Content  2003 IHS Energy
2020
BCFD
Gas Supply – Maximum
Activity Level
120
100
80
Existing
YTF Drilling
Frontier Dev.
LNG Imports
Alaska Pipeline
1990
(Note: Alaska gas production shown as pipeline only)
All Content  2003 IHS Energy
2020
All Content  2003 IHS Energy
Supply
Demand
Frontier Canada Gas
• Reserves (Discovered Undeveloped)
• 8.9 tcf in NWT – Mackenzie Delta
• 17.7 tcf in East Coast Canada
• Labrador, Grand Banks, & Scotian Basins
• Depends upon Pipelines for Development
• Expect 1-2 BCFD from NWT – Mackenzie Delta
• Expect 2-3 BCFD from East Coast Canada
• Economic to Develop in $3 - $4.5 Price Range
• Consistently Robust Price is Key to Investment
• Expected Timing – Late in this Decade at Best
All Content  2003 IHS Energy
Canadian Export Potential
Canada Gas Balance
35
30
Raw Gas (BCFD)
25
Gas Supply $5.00
Gas Supply $3.50
$2.00 Demand
$3.50 Demand
$5.00 Demand
20
15
10
5
0
1990
All Content  2003 IHS Energy
1995
2000
2005
2010
2015
2020
Alaska Gas Potential
• 44.1 TCF Remaining Reserves (41.4 on N. Slope)
• Almost all Production Currently Re-injected
• Gas in Cook Inlet Exported as LNG to Asia
• Gas Pipelines must Traverse Canada
• 26.6 TCF Competing Reserves Closer to Market
• Long Term Contracts & Gov’t Support before Investment
• Free Trade Issues are Rising Between US & Canada
• Expected Volume & Timing – 2 to 4 BCFD post 2010
All Content  2003 IHS Energy
Mexican Gas
Mexico Gas Balance
16
14
12
Raw Gas (BCFD)
10
$2.00 Demand
$3.50 Demand
$5.00 Demand
Gas Supply
8
6
4
2
0
1990
All Content  2003 IHS Energy
1995
2000
2005
2010
2015
2020
LNG Import Potential
9 BCFD
7 BCFD
New
5 BCFD
Convert
3 BCFD
Expand
1 BCFD
Existing
2001
2010
LNG valid in $3.50 - $5.00 Price Range
All Content  2003 IHS Energy
World Gas Situation
Reserves
Canada
USA
Mexico
World
Canada
USA
Mexico
World
Production
5% of the World’s Gas Reserves Produce 32% of the World’s Gas Production
Cana
Population
Canada
USA
Mexico
World
da
USA
Consumption
Mexi
co
7% of the World’s Population Consumes 31% of the World’s Gas Production
Worl
d
All Content  2003 IHS Energy
Gas Price Forecast
• Continental gas supply will be marginally
adequate with sustained gas prices @ $3.50/ mcf
• High decline rates make the system unstable at
gas prices below $3.00/mcf
• Large supplies of LNG are available at gas
prices around $4.50-$5.00/mcf, but normally
require longer term agreements
All Content  2003 IHS Energy
Conclusions
• US-Canadian trade relations are critical to continued gas
exports to the USA and future development of frontier gas
reserves in Alaska, NWT and the East Coast of Canada
• Mexico must re-invent itself soon or face rising costs for
gas imports from either the USA or via LNG or both
• LNG import volumes to the USA will cause a shift in both
the world gas trade and the way gas is contracted in the
USA (long term contracts similar to European markets)
• Logistical constraints of alternative fuels and steep
domestic gas decline rates will strain the traditional gas to
oil price linkage
All Content  2003 IHS Energy
Gas in North America & the
Potential Impact on the
International Energy Trade