Shale Revolution and Energy Security: Role  of LNG
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Shale Revolution and Energy Security : Role of LNG Presentation Transcript

  • 1. Shale Revolution and Energy Security : Role of LNGFebruary 2013, BangkokNobuo TANAKA Former Executive Director of the IEA Global Associate of Energy Security and Sustainability, IEEJ © OECD/IEA 2011
  • 2. Emerging economies steer energy markets Share of global energy demand 6 030 Mtoe 12 380 Mtoe 16 730 Mtoe100% Rest of non-OECD Non-OECD Middle East80% India China60% OECD40% IEA WEO201220% 1975 2010 2035 Global energy demand rises by over one-third in the period to 2035, underpinned by rising living standards in China, India & the Middle East 2
  • 3. Primary Energy Demand by Fuel IEA WEO2012 3
  • 4. A United States oil & gas transformation US oil and gas productionmboe/d 25 IEA WEO2012 20 Unconventional gas 15 10 Conventional gas Unconventional oil 5 Conventional oil 1980 1990 2000 2010 2020 2030 2035 The surge in unconventional oil & gas production has implications well beyond the United States 4
  • 5. Iraq oil poised for a major expansion IEA WEO2012 Iraq oil production Iraq oil exports mb/d 9 North mb/d 9 Other 8 Centre 8 Asia 7 South 7 6 6 5 5 4 4 3 3 2 2 1 1 2012 2020 2035 2012 2020 2035 Iraq accounts for 45% of the growth in global production to 2035;by the 2030s it becomes the second-largest global oil exporter, overtaking Russia 5
  • 6. Middle East oil to Asia: a new Energy Silk Road Middle East oil export by destinationmb/d 7 2000 6 2011 2035 5 4 IEA WEO2012 3 2 1 China India Japan & Korea Europe United States By 2035, almost 90% of Middle Eastern oil exports go to Asia; North America’s emergence as a net exporter accelerates the eastward shift in trade 6
  • 7. Different trends in oil & gas import dependency IEA WEO 2012 Net oil & gas import dependency in selected countries 100% Japan & Korea Gas 2010Gas imports 80% European Union 2035 60% 40% China 20% India United States 0%Gas exports -20% ASEAN -40% -60% 0% 20% 40% 60% 80% 100% Oil Imports Oil While dependence on imported oil & gas rises in many countries, the United States swims against the tide 7
  • 8. IEA WEO2012 8
  • 9. Overseas Investments by Chinese National Oil Companies: Assessing the Drivers and Impacts 9
  • 10. Golden Age for Natural Gas? IEA WEO2012 10
  • 11. Natural gas: towards a globalised market IEA WEO2012 Major global gas trade flows, 2010 2035 Rising supplies of unconventional gas & LNG help to diversify trade flows,putting pressure on conventional gas suppliers & oil-linked pricing mechanisms 11
  • 12. Russia goes to East :Russian Natural Gas PipelinesECD/IEA, 2011 Figure 8.15 Major gas fields and supply infrastructure in Russia Selected gas field Chukchi Sea Existing gas pipeline Other offshore Arctic IEA WEO 2011 Pipeline planned/under const. Bering Sea Existing LNG export terminal E S ast iberianSea Planned LNG export terminal Barents Sea Norway Other offshore Arctic Shtokman LaptevSea Neth. Den. Sweden Finland Murmansk K ea araS Export to BarentsSea Germany N o d r S e r t a m BalticSea Finland Yamal Cz. Poland Estonia Peninsula SouthT ambei Export to Latvia Timan Bovanenkovo Rep. Pechora Europe Lithuania St. Petersburg Slov. Rep. SR . usskoe Yamburg Hungary Belarus N n e h t r o L t h s ig Zapolyarnoe Yakutsk Medvezhye Sakhalin Ukhta Seaof Moscow Urengoy Eastern Siberia Okhotsk Romania Sakhalin Export to Mol. Ukraine Surgut R U S S I A Island Europe Volga/ Komsomolsk Sth Urals Western Siberia ou Tyumen Chayandin Sa trem Khabarovsk Orenburg Krasnoyarsk Black S ea Volgograd Tomsk Kovykta Caspian Kemerovo Daqing Astrakhan Novosibirsk Georgia Irkutsk Harbin Turkey K hvalynskoe Vladivostok T sentralnoe Kazakhstan Arm. China Japan Azer. Caspian North Syria Mongolia Sea China Korea U b ki This map is for illustrative purposes and is without prejudice to the status of or sovereignty over any territory covered by this map. 12
  • 13. February 2012 saw a jump of the European hub price level due to a sudden increase in demand asresult of extremely cold weather and reduced Russian supplies. However, Day-Ahead prices returne International Gas Pricesto normalcy within two weeks after Russian supplies dropped below nominated levels (see Box 1). How can Asia reduce Asian coal and Brent, 2008-12 Figure 54 International gas prices, Asian Premium? 25 20 15 USD/MBtu 10 5 0 Henry Hub NBP German border price Japan LNG Brent Asian coal markerSource: ICE, Japanese Customs, and the German customs. IEA Mid Term Gas Market Review 2012 13
  • 14. IEA WEO2012 14
  • 15. Golden Rules for a Golden Age of Gas The “Golden Rules” are principles that can allow governments, industry & other stakeholders to address these environmental & social impacts: 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 performanceThey are “GoldenRules” because theirapplication can ensureoperators have a“social license tooperate”, paving theway for a golden ageof gas 15
  • 16. Conversion or Diversion? Trends of International Gas Prices 1.6 Natural gas:Fuel price divided by oil price 1.4 Japan Europe 1.2 United States 1.0 Coal: 0.8 OECD 0.6 0.4 0.2 IEA WEO 2012 0 1990 2000 2010 2020 2030 2035 Natural gas prices are assumed to remain low relative to oil prices, while coal prices rise much less than those of both oil & gas 16
  • 17. Technology helps! Hydrogen Economy with MCH• Large volume Hydrogen transportation & storage technology will be essential to build ‘Hydrogen Community’.• ‘Hydrogen Community’ realizes Low Emission Carbon Recycling Society, with empowered resistance against disasters.• New path toward the Hydrogen Society will enhance innovation and create New Industries. ・CO2 Recycle Renewable Energy (Global) Energy Sector ( CO2 + H2→CO+H2O) Industrial Sector City Gas ・H2 Mixture Petroleum Chemical Power Gen. ・Feedstock ・Desulfurization Green Hydrogen Power Storage ・Heat Recycle ・Cracking (Renewable Sources) MCH ・Elec. Stabilizer ・Pure H2/ Mixed Fuel Steel Clean Hydrogen ・Stand-by for Emergency ・Fuel Cell ・H2 Reduction (Hydrocarbon Sources) Logistics Sector MCH Port Facility ・Petro/Chem. By-product ・FC /Engines Hydrogen Supply Logistics ・SRM with EOR/CCS Tanker / Ferry (Dehydrogenation) MCH ・FC forklift ・Gasification MCH MCH ・H2mixed Fuel GHP ・Fuel Cell Ship MCH MCH ・Hydrogen mixed fuel Engine MCH Truck Strategic Energy Reserve Hydrogen / H2-CNG Office & Commercial Sector (Large volume) Train Fueling Station ・FCV Bus ・Heat Recycle ・H2-CNG Engine MCH ・Fuel Cell Train ・H2 mixed fuel Engine Office & Commercial Solar Residential Sector ・FCV Building MCH ・H2-CNG Engine Wind MCH MCH MCH Renewable Energy Distributed House / Condominium (Local) Power Gen. Distributed DHC MCH Car Power Gen. ・Boiler / Chiller MCH ・Fuel Cells ・H2 mixed fuel Engine ・FCV (Pure H2/mixed) ・CNG mixed engine ・Cogeneration Hydrogen ・Backup Power ・Energy Storage Heat Electricity(Note) MCH : Methylcyclohexane FC : Fuel Cell FCV : Fuel Cell Vehicle GHP : Gas Heat Pump DHC : District Heating and Cooling 17
  • 18. A power shift to emerging economies Change in power generation, 2010-2035 IEA WEO2012 Coal Gas Nuclear Renewables China India United StatesEuropean Union Japan -1 000 0 1 000 2 000 3 000 4 000 5 000 6 000 TWh TWhThe need for electricity in emerging economies drives a 70% increase in worldwide demand, with renewables accounting for half of new global capacity 18
  • 19. The multiple benefits of renewables come at a cost Global renewable energy subsidies IEA WEO2012Billion $250 Biofuels: $1 200 billion $200 2011-2035 $150 Electricity: $100 2012-2035 $2 600 billion Existing capacity $50 $960 billion 2011 2015 2020 2025 2030 2035Renewable subsidies were $88 billion in 2011; over half the $4.8 trillion required to 2035 has been committed to existing projects or is needed to meet 2020 targets 19
  • 20. IEA WEO2012About 1/5 of German pretax price for electricity was due torenewables. 12% in Italy, 11% in UK and 4% in France. 20
  • 21. Japan’s Power Sector: Renewables, gas and energy efficiency leading the charge IEA WEO2012 A decline in nuclear is compensated by a 3-fold increase in electricity fromrenewables, a continued high reliance on LNG imports & improvements in efficiency 21
  • 22. Wide variations in the price of power IEA WEO2012 Average household electricity prices, 2035cents/kWh 25 20 2011 15 OECD average 10 2011 Non-OECD 5 average China United States European Union Japan Electricity prices are set to increase with the highest prices persisting in the European Union & Japan, well above those in China & the United States 22
  • 23. Not only Feed-in-tariffs but Grid integration ! Snapshot of present penetration potentials “Harnessing Variable Renewables” by IEA 23
  • 24. Power Grid Connection in Europe Physical energy flows between European countries, 2008 (GWh) Source: ENTSO-E 24
  • 25. Power grid in Japan Generating Hokkaido Hydro Gas Coal company Oil Nuclear Other In-house Power utility company generation Tohoku 60 hz <------- Chugoku Kansai Hokuriku TokyoKyushu29GW Shikoku 12GWOkinawa Chubu --- 50 hz 2GW 40GW Source: Agency for Natural Resources and Energy, The Federation of Electric Power Companies of Japan, Electric Power System Council of Japan, The International Energy Agency 25
  • 26. Nuclear Power in World Energy Outlook 2012 IEA WEO2012In aggregate, world nuclear capacity reaches 580GW in 2035, 50GW lower from2011 WEO. Production rises from 2756TWh to 4370TWh, almost 60%increase, though the share in total generation falls from 13% to 12%. 26
  • 27. Lessons of the Fukushima• Lessons to be Shared – Think about the unthinkable; Tsunami and Station Black Out. Large scale Blackout. Change total mind set for “Safety”. – Prepare for the severe accidents by defense in depth, common cause failure & compound disasters. – Clarify why it happened only to Fukushima Daiichi and NOT to other sites.• Safety Principles – Fukushima accident was caused by human error and should have been avoided. (Parliament Investigation Commission report ) – International Cooperation : A nuclear accident anywhere is an accident everywhere. – Independent Regulatory authority ; Transparency and Trust, “Back Fitting” of regulation• Secured supply of Electricity – Power station location – Strengthened interconnection of grid lines• Once disaster has happened, Recovery from disaster is at least as important as preparing for it. – FEMA like organization and training of the nuclear emergency staff including the self defense force ; integration of safety and security.– New Technology. New type of Reactors such as Integral Fast Reactor, Thorium Reactor 27
  • 28. Integral Fast Reactor and Pyroprocessing Dr. YOON IL CHANG Argonne National Laboratory IFR has features as Inexhaustible Energy Supply ,Inherent Passive Safety ,Long-term Waste Management Solution , Proliferation-Resistance , Economic Fuel Cycle Closure. 28
  • 29. What is Energy Security in the 21st Century? 29
  • 30. Diversity means Energy Security . ”Safety and certainty in oil lie in variety and variety alone.” ( Churchill ) Energy Self -Sufficiency rates by fuels in 2010 ASEAN 96% 30% 0% IEA 51% 8% 11% EU 27 26% 10% 14% 0% 20% 40% 60% 80% 100% 120% 140% Self sufficiency =inland production / tpes (2010 estimates) IEANuclear is an important option for countries with limited indigenous energy resources . 30
  • 31. North American Gas InfrastructureMid-Term Oil & Gas Market 2010, IEA 31
  • 32. ンとLNG基地を建設中。 Gas Infra in Europe: New Pipelines and LNG ports. 現在 ロシア以外からのパイプライン ロシアからのパイプライン LNG基地(1999年までに運開) LNG基地(2000年以降運開) LNG基地(建設中・計画中) (出所)ガス事業のあり方に関する検討会資料(日本ガス協会) - 31- 32
  • 33. Connecting MENA and Europe: " Desertec" as visionary “Energy for Peace" Source: DESRETEC Foundation 33
  • 34. ASEAN is working on Power Grid Interconnections. 34
  • 35. © OECD/IEA, 2009 ASEAN is working on Gas Pipeline System. Figure 15.16 The Trans-ASEAN Gas Pipeline (TAGP) Chapter 15 - Overview of energy trends in S Existing gas pipeline CHINA Planned or under construction gas pipeline INDIA Gas production area LNG liquifaction plant Hanoi Planned LNG liquifaction plant MYANMAR LAOS Planned LNG regasification terminal Vientiane Yangon THAILAND Luzon VIETNAM Mariveles Manila outheast Asia Bangkok Map Ta Phut CAMBODIA LNG(Baatan) Phnom Penh PHILIPPINES Ho Chi Minh Khanom Palawan Krabi Mindanao Arun Lubuan M A L A Y S I A Lumut BRUNEI Medan Natuna Bandar Seri Kuala Lumpur Begawan Dumai SINGAPORE Bintulu MLNG Jurong Isl. Bontang Sumatra Sungiasalak Kalimantan Senipah Tangguh Plaju Sulawesi Seram I N D O N E S I A Papua Bali W Java est Lombok Km Surabaya Jakarta Sumbawa Flores EAST TIMOR 0 500 Pasuruan Masela Java East Java Dili 575 The boundaries and names shown and the designations used on maps included in this publication do not imply official endorsement or acceptance by the IEA. Source: ASCOPE Secretariat 35 15
  • 36. New concepts for North East Asia Gas & Pipeline Infrastructure 36
  • 37. Energy for Peace in Asia. A New Asian Vision? Presentation by Mr. Masayoshi SON 37
  • 38. One cannot enhance energy security by risking someoneelse‘s. ’ 38
  • 39. ANNEX 39
  • 40. Global Middle-class expands from 1 to 3 billion by 2030 (Global Trends 2030 by National Intelligence Council ) Middle-class membership is defined as per capita household expenditures of $10-50 per day at PPP. Goldman Sachs used a comparable GDP per capita of $6,000-30,000 per year,Addition of 2 billion people triggers the price revolution in commodities, labor, etc. 40
  • 41. The Efficient World Scenario: a blueprint for an efficient world Total primary energy demand by scenario Mtoe 18 000 New Policies Reduction in 2035 17 000 Scenario Coal 1350 Mtce 16 000 Oil 12.7 mb/d Gas 680 bcm 15 000 Others 250 Mtoe 14 000 Efficient World Scenario 13 000 12 000 2010 2015 2020 2025 2030 2035Economically viable efficiency measures can halve energy demand growth to 2035; oil demand savings equal the current production of Russia & Norway 41
  • 42. Game changers : China then India. 6 billion people join 1 billion. WEO 2007 42
  • 43. Economic Death Spiral may hit Japan• Blockage of the Strait of Hormuz – Oil Price may double to $160 / barrel – Japan’s current account surplus ( 9 trillion yen in 2011 ) may turn to deficit of 6 trillion yen. – Without further restarting of nuclear power plants, deficits may reach 12 trillion yen.• Confidence on Japan’s public finance may be lost. – Current Account surplus is the basis for confidence – Persisting Deficit may lead to capital flight from Japan – Power crisis enhances flight of manufacturing industries• Loss of Confidence in JGB and Yen. Capital move into commodities means higher prices of oil.• Total Economic Melt Down may happen. 43
  • 44. Fossil Fuel Consumption Subsidies IEA WEO2012 In 2011, fossil-fuel consumption subsidies worldwide are estimated to have totalled $523 billion, $111 billion higher than in 2010, at a weighted-average rate of 24% 44
  • 45. Dr. YOON IL CHANGArgonne National Laboratory 45