This document discusses the potential for shale gas and tight oil production to expand globally based on the success of these unconventional resources in the United States. It notes that non-OECD economies are driving increased energy consumption and outlines US policies supporting its energy independence. Technological advances like horizontal drilling and hydraulic fracturing enabled large-scale shale gas production in the US, lowering domestic natural gas prices. The US is projected to become a net exporter of natural gas by 2020. Significant shale oil and gas resources exist globally but face challenges in other regions due to infrastructure, policy, environmental and economic issues.

1. 19-11-2013
Shale: Can it go Global?
Lucia van Geuns
Utrecht , 12 November 2013
The Tale of Two Worlds
Source: Exxon, 2012
OECD Energy Demand
Non OECD Energy Demand
Quadrillion BTUs
Quadrillion BTUs
500
500
400
400
Rest of Non OECD
Russia/Caspian
Africa
300
300
Middle East
Rest of OECD
200
Latin America
200
India
Europe OECD
100
100
China
North America
0
1990
2015
2040
0
1990
2015
2040
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2. 19-11-2013
Non-OECD economies drive energy consumption growth…
Source: BP energy Outlook 2030, 2012
Foundations of global energy system shifting
(EIA WEO 2012)
1. All-time high oil prices acting as brake on global economy
2. Divergence in natural gas prices affecting Europe and Asia
3. Policy makers face critical choices in reconciling energy,
environmental & economic objectives
4. US petroleum renaissance is a remarkable achievement of
technology and innovation
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3. 19-11-2013
US Energy Policy Direction 2005
“During the next four years, we will continue to enhance our economic
security and our national security through sound energy policy. We will
pursue more energy close to home, in our own country and in our own
hemisphere, so that we're less dependent on energy from unstable parts
of the world. And we will continue to work closely with Congress to
produce comprehensive legislation that moves America toward greater
energy independence.”
President Bush - On the nomination of Secretary Bodman - Dec., 10, 2004
Types of unconventional gas
Unconventional gas requires extensive use of horizontal
drilling and hydraulic fracturing
Source: E-on, 2010
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The Barnett Story – Technology Makes the Difference
3000
Vertical Wells
Deviated Wells
Horizontal Wells
Million Cubic Feet
2500
2000
1500
1000
500
0
85
90
*IHS Database
95
00
05
Date of First Production
10
Source: Schlumberger, 2013
Shale gas production leads growth in production through 2040
U.S. dry natural gas production
trillion cubic feet
History
Projections
2011
Shale gas
Non-associated offshore
Tight gas
Alaska
Coalbed methane
Associated with oil
Non-associated onshore
Source: EIA, Annual Energy Outlook 2013 Early Release
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5. 19-11-2013
Natural gas consumption is quite dispersed with electric power,
industrial, and transportation use driving future demand growth
U.S. dry gas consumption
trillion cubic feet
History
Projections
*Includes combined heat-and-power and lease and plant fuel.
**Includes pipeline fuel.
Electric
32% power
31%
33%
Industrial*
33%
2%
6%
Gas to liquids
Transportation**
3%
13%
12% Commercial
19%
14% Residential
Source: EIA, Annual Energy Outlook 2013 Early Release
Domestic natural gas production grows faster than consumption
and the U.S. becomes a net exporter of natural gas around 2020
U.S. dry gas
trillion cubic feet
History
Projections
2011
Consumption
Domestic supply
Net imports
Source: EIA, Annual Energy Outlook 2013 Early Release
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The success of shale gas in the US
• In 2001, 1% of natural gas production came from shale
compared to >20 today
• Prices plummeted with positive effects on manufacturing
(steel, petrochemical industry) by reducing costs of operations
• The rapid expension of shale gas production occured because
it was largely free of highly restrictive government policies
• Expansion took place almost entirely on private land and was
not subject of extensive access restriction and other federal
regulations
Percentage change in selected indicators
in the United States, 2006-2011
Source: IEA. WEO, 2012
GDP (MER)
Total primary energy demand
CO2 emissions
Gas demand
Gas-fired power output
Coal demand
Coal-fired power output
Renewables
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
From 2006-2011, United States CO2 emissions went down by 7% due to coal-to-gas
fuel switching, power generation efficiency gains & increased renewables output
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US lower 48 oil and gas shale plays
Source: EIA, 2012
US oil production and rig counts
Source: Argus
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U.S. tight oil production leads a growth in domestic
production of 2.6 mb/d between 2008 and 2019
U.S. crude oil production
million barrels per day
History
2011
Projections
8
STEO April 2013 U.S. crude oil projection
6
Tight oil
4
Other lower 48 states onshore
2
Lower 48 states offshore
Alaska
0
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2013 Early Release and Short-Term Energy Outlook, April 2013
Gas flares from Bakken fracking are visible from space
Image: NASA Earth Observatory image/Suomi NPP
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9. 19-11-2013
Shale oil and gas have the potential to dramatically
alter world energy markets
map of basins with assessed shale oil
and gas formations, as of May 2013
Source: United States: EIA and USGS; Other basins: ARI
Top ten countries with technically recoverable shale resources
Shale oil
Shale gas
Rank
Country
Billion barrels
Rank
Country
Trillion cubic feet
1
Russia
75
1
China
1,115
2
United States
58
2
Argentina
802
3
China
32
3
Algeria
707
4
Argentina
27
4
United States
665
5
Libya
26
5
Canada
573
6
Venezuela
13
6
Mexico
545
7
Mexico
13
7
Australia
437
8
Pakistan
9
8
South Africa
390
9
Canada
9
9
Russia
285
10
Indonesia
8
10
Brazil
245
World total
345
World total
7,299
Source: United States: EIA and USGS; Other basins: ARI.
Note: ARI estimates U.S. shale oil resources at 48 billion barrels and U.S. shale gas resources at 1,161 trillion cubic feet.
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Shale gas and tight oil resources and production
Source: BP energy Outlook 2030, 2012
US shale gas and tight oil production success
•
•
•
Globally 240 Bbbs tight oil; 200 Tcm shale gas (technical recoverable
resources)
In 2012: 2.1 Mb/d (24%) of US oil production from tight oil; 24 Bcf (37%) of
natural gas from shale gas
US will continue to dominate in 2030 because of the importance of ‘above
ground’ factors:
– competitive environment
– rig availability
– robust service sector
– land access facilitated by private ownership
– deep financial markets
– favourable fiscal and regulatory terms
A competitive industry spurs continued technological innovation
Source: BP energy Outlook 2030, 2012
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Current European positions on shale gas drilling
Source: The Economist, Febr 2013
Economics of unconventional gas in Europe
The development of shale gas will only be successful in Europe if the
environmental and economic boundary conditions can be fulfilled
• Increase drilling efficiency; rig automation technology; zero harmful
emissions; lowest possible environmental footprint
• Reduce drilling and fracture cost by 50%
• Development of clean fracturing technology
• Investment in R&D to establish and build the required technology
• Build human resource capacity to support large-scale field development
• Develop and build required infrastructure
Break-even costs for shale gas production in Europe: $5-12/MBtu
Source: JRC, 2012
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12. 19-11-2013
Thank you
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