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CONVENTIONAL AND UNCONVENTIONAL OIL AND GAS: RESOURCES AND INFLUENCE ON THE WORLD MARKET

Vladimir Vysotsky, VNIIZARUBEZHGEOLOGIA (JSC)

RESOURCES AND INFLUENCE ON THE WORLD MARKET

Источник: et al, 2012

More than 500 oil and gas basins with a total area of 118 million sq km have been recognized. HC fields have been discovered in 240 basins. The Northern hemisphere harbors 93% world oil and 94% world gas resources. Twelve major oil and gas basins account for 70% world oil and 60% world gas resources. Deepwater basins (> 500 m) account for 6.4% world oil and 6.0% world gas resources.

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World conventional and tight oil resources, billion tonsWorld conventional and tight oil resources, billion tons

Conventional oil* Tight oil**

Cumulativeproduction

Cumulativeproduction

Remaining reserves

Remaining reservesproduction productionreserves reserves

566 47

Неоткрытые ресурсы

Undiscovered resources Undiscovered resources

Initial Reserves/ ultimate resources ratio – 64%Cumulative production/ultimate resources ratio – 30%

Oil recovery factor – 30%

Initial Reserves/ ultimate resources ratio – 1.9%Cumulative production/ultimate resources ratio - <1%

Oil recovery factor – 5%(* estimated by VZG as of 1.1.2013 )

y(** estimated by IEA, 2013)

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TIGHT OILTIGHT OIL

CONVENTIONAL AND TIGHT OIL POTENTIALCONVENTIONAL AND TIGHT OIL POTENTIAL(remaining reserves and undiscovered resources)(remaining reserves and undiscovered resources)

CONVENTIONAL OILCONVENTIONAL OIL((countries with conventional oil potential >countries with conventional oil potential >5 5 billion tonsbillion tons))

TIGHT OILTIGHT OIL((countries with tight oil potential >countries with tight oil potential >1 1

billion tonsbillion tons))

10 211

billion tons

10,2

7,98

9

10

4,4

3,7 3 54

5

6

7

3,7 3,5

1,81,2 1,2 1,1

1

2

3

4

0

Rus

sia

US

Chi

na

Arge

ntin

a

Liby

a

Vene

zuel

a

Paki

stan

Can

ada

Indo

nesi

a

Thirteen countries account for Thirteen countries account for 81% 81% of world total oil potential of world total oil potential including 75% of its unexplored resourcesincluding 75% of its unexplored resources

((VNIIZarubezhgeologiaVNIIZarubezhgeologia, 2013), 2013)

Ten countries account forTen countries account for 78% 78% of world oil of world oil potential potential

((IEA, 2013)IEA, 2013)

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20002000--2012 2012 US TIGHT OILUS TIGHT OIL PRODUCTION HISTORYPRODUCTION HISTORY

10090

MMt/yr (K2)(D3-C1) 2012 – 94.3 MMt

(29 5% f US t t l il d ti )90

80

70

(P2)(P1)(N )play

s

(29.5% of US total oil production)

Shale Revolution-27060

50

(N1)(D3)

(K2)Tigh

t oil

p

403020

(P1)(K2)

20

10

Source: IEA, 03.2013

Projections: 2015 – 180 (45%), 2020 – 260 (59%), 2025 – 330 (69%), 2030 – 380 (72%)

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World conventional and shale gas resources, trillion m3

Conventional gas * Shale gas **

Cumulative Remaining Undiscovered Cumulative production

greservesresourcesproduction

207703

Undiscovered resourcesRemaining

reserves

Initial Reserves/ ultimate resources ratio, % - 2.4Cumulative production/ultimate resources ratio, % - 0.5

Gas recovery factor – 25%**

Initial Reserves/ ultimate resources ratio, % - 46.8Cumulative production/ultimate resources ratio, % - 17.6

Gas recovery factor – 80%* Estimated by VNIIZarubezhgeologia 2013 ** Estimated by IEA 2013 Estimated by VNIIZarubezhgeologia, 2013 Estimated by IEA, 2013

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CONVENTIONAL AND SHALE GAS POTENTIAL CONVENTIONAL AND SHALE GAS POTENTIAL ((remaining reserves and remaining reserves and undiscoveredundiscovered resourcesresources))

CONVENTIONAL GASCONVENTIONAL GAS((countries with conventional gas potential >countries with conventional gas potential >10 10 trillion mtrillion m33

SHALE GASSHALE GAS((countries with shale gas potential >countries with shale gas potential >5 5

trillion mtrillion m33))

Ten countries account for Ten countries account for 6262..55% % of world total gas potential,of world total gas potential,Including Including 7272..22% % of its unexplored resourcesof its unexplored resources

((VNIIZarubezhgeologiaVNIIZarubezhgeologia, , 20132013))

Ten countries account for Ten countries account for 7979..1% 1% of world total of world total shale gas potentialshale gas potential

((IEA, 2013)IEA, 2013)

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2000-2012 US SHALE GAS PRODUCTION HISTORY

290 Shale gas plays

2012 production – 250 billion m3

(37% of US total saleable gas production)Bm3/yr

240 (K2)

(D3-C1)

(D2)Other plays

190

140

(J3)

(D2)

(D3)Marcellus

90 (C2)

Shale Revolution -1(C3)

(D )

Haynesville

40(D3)

Barnett

Forecast: 2015 – 300 (43%); 2020 – 350 (46%); 2025 – 380 (46%); 2030 – 400 (45%)Source: IEA, 03.2013

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WORLD UNCONVENTIONAL (OTHER THAN TIGHT OIL ANDWORLD UNCONVENTIONAL (OTHER THAN TIGHT OIL ANDSHALE GAS) OIL AND GAS RESOURCESSHALE GAS) OIL AND GAS RESOURCES

OIL, billion tons GAS, trillion cubic meters*Gas in low-permeabilityCoal-Bed Heavy and Extra

Heavy Oil permeability reservoirs(Tight Gas)

MethaneHeavy Oil

Oil shale***Oil Sand

* VNIGRI, 1989 ** OGR, 6, 2012*** Oil Sh l D i f h W ld 1988

* As reported by VNIIGAZ-GAZPROM, 2012, 2013*** Oil Shale Deposits of the World, 1988

Gas Hydrates – 10 000 trillion m3 (VNIIGAZ – GAZPROM)

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WORLD OIL PRODUCTION FORECAST

5400Growth - 1,2%

Production, mln.t

4800

5000

5200

Total Oil Production(Conventional and Unconventional Oil)

1,0%

0,8%

4400

4600

4800

C ti l Oil P d ti

Growth - 1,2%

43.7

4000

4200

Conventional Oil Production 1,0%

0,8%

43.1

43.4

38002010 2015 2020 2025 2030

43.1 Cummulative production/ultimate resources ratio, %

Oil Production Growth: 1970-1990 p.a. – 1,9%; 1991-2010 p.a. – 1,4%Scenarios: 2011-2030 p.a.: 0,8% (BP), 1,0% (EIA), 1,2% (LUKOIL)

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OIL AND GAS FIELDS DISCOVERED INOIL AND GAS FIELDS DISCOVERED IN 20122012

Country Basin Field name Sea depth,Reserves

Oil Gas

Number of discoveries and field sizes Largest oil and gas discoveries

yname

p ,m Oil,

MMtGas, Bm3

Angola Kwanza Cameia 1675 205 42.0

Mozambique Ruvuma Golfinho 1027 - 524.0

Mozambique Ruvuma Coral 2260 - 226.0

Mozambique Ruvuma Atum 1000 - 184.

Mozambique Ruvuma Mamba NE 1848 - 1700

Mozambique Ruvuma Mamba NE-2 1994 - 184.0

Mozambique Ruvuma Mamba North 1690 - 142.0

Brazil Santos Carcara 2027 109.6 8.0

Brazil Campos Pão de Açúcar 2788 67.2 41.8

Tanzania Ruvuma Zafarani 2580 - 113.2

* Forty-nine fields with average field sizes of 1.5-2.5 MMtoe have been discovered in Russia(according to N.Miletenko, 2013)

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North American Tight Oil Plays

D

*

D-C

*

*

K2

*

*

*

*

SpraberryN1

* M i P d ti

*K2

*

P1

* Main ProductionTight Oil Plays

Source: EIA, 2012

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US OIL AND GAS PRODUCTION FORECASTUS OIL AND GAS PRODUCTION FORECASTO I L

Variable 2012 2015 2020 2025 2030Variable 2012 2015 2020 2025 2030

Total production, MMt 395 400 440 480 525

of that, tight oil 94 180 260 330 380

Net imports, MMt 421 350 280 210 130

Consumption, MMt 794 750 720 690 655

2012 net imports – 421 MMt (9.9% of world total production).Chief suppliers – Canada (117 MMt), Saudi Arabia (69 MMt),

Consumption, MMt 794 750 720 690 655

tight oil % in total production 23.8 45 59.1 68.75 72.4

tight oil % in consumption 11.8 24 36.1 47.8 58

Chief suppliers Canada (117 MMt), Saudi Arabia (69 MMt), Venezuela (45 MMt), Mexico (49 MMt).After 2025 – imports from Canada only (2030 – 130 MMt).Decrease in imports from 2012 to 2030 – 291 MMtG A S

Variable 2012 2015 2020 2025 2030

Marketable production, billion m3 681 695 755 820 890

of that, Shale gas 250 300 350 380 400

Net imports, billion m3 43 30 0

Net exports, billion m3 0 35 75

2012 net imports – 43 billion m3.

Consumption, billion m3 724 725 755 785 815

Shale gas % in total production 36.71 43.17 46.36 46.34 44.94

Shale gas % in consumption 34.53 41.38 46.36 48.41 49.08

of that, shale gas

pChief supplier – Canada (net exports - 41 billion m3).By 2020 – the country becomes a net exporter.By 2025 – export potential is 35 billion m3, By 2030 – 75 billion m3.

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CANADA. BASINS AND FIELDS

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FORECAST OF OIL PRODUCTION IN CANADA AND VENEZUELAFORECAST OF OIL PRODUCTION IN CANADA AND VENEZUELA

CANADAVariable 2012 2015 2020 2025 2030

Total production, MMt 183 171 230 275 305

of that, from oil sands 85 115 160 210 250

Consumption, MMt 107 101 120 140 160

Total 2012 oil production was 183 MMt, of that 85 MMt from oil sands; 2030 oil

Net oil exports, MMt 62 70 110 135 145

Oil from oil sands production as a percentage of total oil production, % 46.5 67.25 69.57 76.36 81.97

production forecast is 305 MMt and 250 MMt, respectively.Net exports during 2020-2030 are estimated at 110-145 MMt/yr.

VENEZUELA

Variable 2012 2015 2020 2025 2030

Total production, MMt 161 180 310 320 330

of that, extra heavy oil 30 130 160 180 200

Consumption, MMt 40 50 52 60 70

Total 2012 oil production was 161 MMt including 30 MMt extra heavy oil; 2030

p ,

Net oil exports, MMt 86 130 258 260 260

Extra heavy oil production as a percentage of total oil production, % 18.63 72.2 51.6 56.25 60.6

Total 2012 oil production was 161 MMt including 30 MMt extra heavy oil; 2030 oil production forecast is 330 MMt and 200 MMt, respectively.Net exports during 2020-2030 are estimated at 260 MMt/yr

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VENEZUELA. ORINOCO BASIN

Resources – 81.6 bln.tReserves – 33.9 bln.t

Production:2012 – 30 mln.t

2030 200 mln t2030 – 200 mln.t

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BRAZIL. BASINS AND FIELDS

ESPIRITOSANTO BASIN

CAMPOS BASIN

BRAZILResources – 9830 mln.tReserves – 2210 mln.t

Production, mln.t:2012 – 139 (Export 13.4)

SANTOS BASIN

2020 – 2102030 – 300

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BRASIL. Santos Basin

STRUCTURE OF ATLANTIC MARGINS OF SOUTH AMERICA AND AFRICA

ANGOLA. Kwanza Basin

A t l a n t i c O c e a n

B t Rift d Oil d G C b t O i d S lt R kBasement(continent/ocean)

Rift sandy-argillaceous Sediments

Oil and GasSource Rocks

CarbonateRocks

Organic andCarbonate Structures

Salt Rocks

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ANGOLA. OIL FIELDS AND LICENCE BLOCKSANGOLA. OIL FIELDS AND LICENCE BLOCKS

Cameia OilField (2012)

Reserves – 205 mln.t

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IRAQ. DENSITIES OF HYDROCARBON RESOURCES MAPIRAQ. DENSITIES OF HYDROCARBON RESOURCES MAP

MAIN OIL FIELDSMAIN OIL FIELDS

Map № Name

Estimated Peak

Production mln.t

Principal Companies

MAIN OIL FIELDSMAIN OIL FIELDS

1 West Qurna 203 Lukoil

2 North Rumaila

140BP

1403 Rumaila PetroChina

4 Magnoon 89 Shell

5 Zubair 50 ENI

6 Halfaya 26 CNPC

Resources – 33,5 bln.tReserves – 20,1 bln.t

Production, mln.t,2012 – 152,4 (export – 120)

2020 – 4752030 - 500

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EAST AFRICA. BASINS AND FIELDS

UGANDAResources – 2.0 bln.tReserves – 490 mln.t

Production:2017 year 10 mln t2017 year - 10 mln.t

TANZANIA

MOZAMBIQUEResources – 4.2-5.2 trl.m3

Reserves – 127 bln.m3

Export LNG:2020 year-20 mln.t

TANZANIAResources – 2.0 trl.m3

Reserves – 34 bln.m3

Export LNG:2018 year - 6.6 mln.t

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L E V A N T B A S I N

Resources: Gas - 3450 bln. m3Oil – 230 mln. t

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TURKMENISTAN. AMU DARYA BASIN

Minara

YashlarEloten Osman South

Galkynysh gas field(Reserves 21-26 trln. m3)

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CONCLUSIONSCONCLUSIONSHydrocarbon production from unconventional sources in volumes sufficient for the essential redistribution of world export–import

flows is only possible in countries with extremely large unconventional hydrocarbon resources and with, mature oil and gas sector (large rig fleet) and favorable natural conditions (large freshwater resources).sector (large rig fleet) and favorable natural conditions (large freshwater resources).

These requirements are met in the US, China, and Russia.US (shale gas resources – 18.8 trillion m3, tight oil resources – 7.9 billion tons; rig fleet – >1800 rigs.)

Gas production growth rate suggests that domestic consumption will be satisfied and gas exports may start by 2020. Export potential is estimated at 35 billion m3 by 2025 and 75 billion m3 by 2030is estimated at 35 billion m3 by 2025 and 75 billion m3, by 2030.

Tight oil production will grow up to 380 MMt by 2030 and provide a possibility to reduce oil imports from 421 MMt in 2012 to 130 MMt in 2030. Oil can be supplied from Canada, whose export potential by 2030 is estimated at 145 MMt.

China (shale gas resources – 26-31 trillion m3, tight oil resources – 4.4 billion tons, rig fleet – 1500 rigs.)N ti l h l d l t i h l d ti t 80 billi 3 (23% f th t ’ t t lNational shale gas resource development program envisages shale gas production at 80 billion m3 (23% of the country’s total gas

production) in 2020 and 150 billion m3 (27.3%), in 2030. Based on field development scenarios prepared by international agencies and ВР, 2030 shale gas production in China is estimated at 60-90 billion m3. In all probability, the country’s import requirements by 2030 will be ranging from 100–200 billion m3.

Russia (shale gas resources 8 0 9 5 trillion m3Russia (shale gas resources – 8.0-9.5 trillion m3,tight oil resources – 10.2 billion tons, rig fleet – about 800 rigs.)

Shale gas production is not planned because of the high conventional gas reserves to production ratio. Tight oil production from the Bazhenovskaya Formation is anticipated at 15–20 MMt by 2020 and 70 MMt, by 2030. Total oil production in 2030 is anticipated at 540-550 MMt (ВР Forecast, 2013.)

Venezuela is likely to become world’s largest oil exporter mostly due to the development of extra heavy oil resources and supply about 260 MMt /yr oil to the market starting from 2020. By then, a significant increase in conventional oil production and exports, accordingly, is anticipated from Brazil and Iraq and conventional gas production and exports from Australia, Qatar and new participants (Mozambique, Tanzania). Excessive hydrocarbon supplies are highly probable on the European and, especially, Asia–Pacific markets. p , p y,

Increased competition may reduce oil and, especially, gas prices. In all probability, oil prices may drop down to US$90/bbl, and spot gas prices, down to US$300/1000 m3. At the same time, oil prices are hardly likely to drop down below US$80/bbl, because many nonconventional oil production projects will become uneconomic in this case.