natural gas dynamics - mod 2
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Natural gas dynamics_Module 2TRANSCRIPT
Gas Exploration,Production and Unconventional Gas
Natural Gas Dynamics Module 2
Vivek Chandravchandra@natgas.infowww.natgas.infowww.naturalgasdynamics.comv1202 Copyright held by author – copying multiple slides prohibited
Natural Gas Dynamics 2
Gas exploration Exploration methods for both gas and oil are very similar Exploration is based on principles of Geology and Geophysics Prior to these methods, oil and gas usually found by surface indications such
as seeps and gas releases Exploration Chronology
Regional geologic surveys Based on gravity and other large scale, low resolution surveys – to
identify large structures Focused mapping and modeling
Based on detailed seismic surveys to model the possible hydrocarbon system and identify source, reservoir, trap and seal
Exploration Drilling To confirm rock and fluid structure by driling and wireline (well-logs)
data
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Focus mapping: Seismic
• Energy waves are sent into the ground and their reflections and strength measured by sensors
• Reflected waves influenced by density and thickness of rock layers allowing calculations of depth of rock layers
• Data collected and processed to produce virtual cross-sections of the earth
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Onshore and offshore seismic
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Seismic data processing
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Seismic technology has improved ..
Onshore field in United States
Better technology and computing power can add potential to old fields
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Well log data
• Wells are drilled to collect subsurface data• Data collected by sophisticated tools lowered
into well, measuring electrical, nuclear, sonic, and pressure data
• Data can be matched with Seismic data to give accurate depth matching
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Gas production at surface
• Gas and other fluids from well (Oil, Water, NGLs, etc) channeled into smaller pipe called tubing. • There may be multiple tubingsin well, producing from different depths• On surface, fluids pass through a valve system (‘Christmas Tree’) and then to surface processing facilities for separation and further processing
Unconventional Gas
Natural Gas Dynamics 9Source: EIA 2011
Unconventional gas
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Growth of unconventional gas has reversed decades of declining gas reserves in North America
Source: Bank of America Merrill Lynch “Shale Gas: Present & Future” presentation February 2009
Magnitude of unconventionals is huge
Natural Gas Dynamics 11Source: ConocoPhillips presentation “Gas Resource Plays – New Frontiers “APPEA June 2009
Unconventional gas will dominate US supply
Natural Gas Dynamics 12Source: FACTS FGE presentation: Unconventional Gas: Implications for the Global LNG Market , LNGA, March 2012
In 2035, ~80% unconventional
In 2008, shale gas accounted for 30% of total US gas discoveries, rising to over 60% in 2011 –predictions of 75% by 2015 and 80% by 2030
Unconventional impact will be global (1)
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Source: ExxonMobil ‘The Outlook For Energy – View to 2040 ; 2012
Global extent of unconventional gas(2)
Natural Gas Dynamics 14Source: Graph from TriZen report “Impact of Unconventional Gas 2011. Text from Bernstein Research “How unconventional gas fits into the gas market” , Finding Petroleum Conference April 2010
Natural Gas Dynamics 15Source: Daiwa Capital Markets report “The New Energy Primer” – September 2011
Global distribution of unconventional gas (3)
Unconventionals will change production rankings
Natural Gas Dynamics 16Source: IEA World Energy Outlook “Golden Rules for a Golden Age of Gas” 2012
Coal seam methane (CSM)• Coal seam methane (also called CBM – coal bed methane or CSG – coal
seam gas) is methane, produced during the creation of coal from peat.• It is mostly methane gas held in place on surface of coal by water
pressure. • Water pressure must be reduce to allow methane to flow from the coal. • The amount of gas present in a coal seam depends on the depth and
thickness of the seam and the coal constituency and flow rates depend on the permeability of the coal.
• Coal seam methane refers to the source of the gas but, once produced, it is otherwise indistinguishable from conventional natural gas methane.
• In contrast with natural gas sources:• Coals seam wells often have lower gas flows;• Wells to extract coal seam gas are generally shallower (300 m - 1,000 m);• Coal seam gas processing plants are less complex since the gas has less
impurities or NGLs or CO2
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Not all coal contains CSM
Natural Gas Dynamics 18Source: NRLC Coalbed Methane Conference April 2002 William T Brown
The coal must have the correct composition to encourage methane production, and must also contain fractures (or cracks) in the coal seam to allow methane to flow to the well bore
CSM production profile
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CSM well diagram : moving water to get gas
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• Large amounts of water are usually produced to release methane molecules from coal face
• Disposal of water is a major issue with CSM development
• Number of wells required for CSM production significantly larger than that for conventional fields, but wells are generally less deep
• For GLNG, a LNG project based on Australian CSM gas, the first 3 MTA train would require gas from 500 wells + further 800 wells over the 20 year life of the field to produce 5 tcf. By contrast, a conventional LNG project such as Pluto needs only 5-6 wells to produce the same amount of gas
Salinity of water from CSM production
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Water must be disposed (by pumping back in ground, or left in surface ponds, or must be treated prior to use
CSM development mindset
Natural Gas Dynamics 22Source: Santos presentation “CSG to LNG – A world first” APPEA June09
CBM to LNG will require enormous number of wells
Natural Gas Dynamics 23Source: APLNG Project Overview, Origin Energy, September 2011
300 to 500 wells required every year !
How do they estimate the future cost of this ?
So far, it seems that the results are not encouraging..
Calorific value of CBM is much lower
Natural Gas Dynamics 24Source: Arrow Energy presentation : Asian LNG : Feb 2010
CSM vs. conventional development Conventional Gas Coal Seam Methane
Reservoir Typically carbonate or sandstone where gas is stored in pores between rock grains. Average depth > 1,500 meters
Methane absorbed on surface of coal, which is both the source and the reservoir for the gas. Typical reservoirs 400 – 900 meters deep
Gas composition
Typically, natural gas will contain methane + NGL + some impurities
Very dry methane with no NGL or impurities
Exploration Expensive, technically sophisticated process based on high risk / high reward
Based primarily on simple drilling and coring, often leveraging on coal mining data
Production Quick ramp-up, high production rates per well possible. Limitedwater production during early phase
Dewatering required prior to production, peak production may take long time to achieve, limited production per well, quick decline possible
Reserves Certification
Usually done during exploration / evaluation phase using data from relatively few wells
Majority of reserves certified during production phase, typically using data from large number of wells.
Natural Gas Dynamics 25Source: Based on Citibank QGC Report September 2008 and author analysis
CSM production to grow worldwide
Natural Gas Dynamics 26Source: ConocoPhillips presentation “Gas Resource Plays – New Frontiers “APPEA June 2009
CSM observations• CSM is already playing a very important role in gas production in certain
regions of the world• In the US, 8% of all onshore gas is produced from CSM and 20% of
Eastern Australian gas is coming from CSM• CSM reserves, if believed, are enormous (100s of tcf in Eastern
Australia) but it is still not clear if production can be low cost• LNG from CSM can be supported as long as LNG prices stay high.
However, challenges remain :• Drilling results are not always consistent• Ongoing well drilling requirement is a ‘wildcard’ as costs - difficult to estimate
over 20 yrs• Water disposal a growing issue• Rising labor costs
• Large LNG companies (Shell, BG, ConocoPhillips. Petronas) are betting that CSM will be a viable feed for future LNG projects and thus partnering with local companies. I am not convinced as yet..
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Shale gas Shale gas is now becoming a true ‘game-changer’ in the
industry, especially in the US Massive reserves – some estimates are 750 – 2000 Tcf in North
America alone Today, shale gas accounts for around 5 bcf/d (out of total around 23
bcf/d). In 2005, the entire industry barely existed! Maybe 50% of production in 10 years as conventional gas reserves decline
Although difficult to extract, the gas may contain significant NGLs
Producing gas from a rock with ultralow permeability significant porosity required new efficient technology Production growth coincided with horizontal well technology, and
improvement in hydraulic fracturing skills & materials – greatest achievements in last decade!
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How the world has changed !
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What we knew 25 years ago
What we now know
Source: ConocoPhillips presentation “Gas Resource Plays – New Frontiers “APPEA June 2009
Permeability Comparisons
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As compared to conventional gas reservoirs, permeability in Shale and Tight gas is very low - Much lower than cement !
Source: Wilson HTM Equities Research – Australian Shale Gas Sector Report July 2011
Shale gas drilling in US
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Source: Citibank report “Shale Gas – a game changer for chemical industry” March 2010
Complicated logistics for shale gas
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Trucks filled with sand
Fracpump trucks
Source: Canadian Energy Research Institute : Shale Gas Plays in North America , February 2011
Total capex for one full crew could be ~$40-50 MM and require 50 crew members
Production per well can decline quickly
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Typically, shale gas wells deliver 25% of ultimate potential in first year, and 50% within four years –but even in a small area, results can vary significantly
Operators are getting more efficient...
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Break even prices keeping in-line with lower gas prices –plentiful supply will keep US prices low for a while
Shale gas can be competitive with conventional gas
Natural Gas Dynamics 35Source: WoodMac Energy Seminar: North America Shale Gas, May2010
Onshore Canada
....especially if the gas has NGLs
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Generally drier gas (with less liquids !)
Source: Credit Suisse Global Gas Report – November 2011
North American shale gas resource is huge
Natural Gas Dynamics 37Source: Wilson HTM Equities Research – Australian Shale Gas Sector Report July 2011
EIA estimates technically recoverable resource = 862 Tcf
(Conventional resource = 2,543 Tcf)
Marcellus could be the 2nd largest gas field in the world !
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According to Chesapeake Energy, US Shale gas fields have recoverable reserves that would rank three of them in the top six gas fields in the world
Source: Wilson HTM Equities Research – Australian Shale Gas Sector Report July 2011
Shale gas in US is truly a ‘game-changer’
Natural Gas Dynamics 39Source: ConocoPhillips :”The Bright Future of Natural Gas” June 2010
Global shale gas numbers from EIA
Natural Gas Dynamics 40Source: FACTS FGE presentation: Unconventional Gas: Implications for the Global LNG Market , LNGA, March 2012
China’s potential could be larger than US
Can the US shale gas experience be repeated globally ?
Five factors that were key influencing elements for shale gas growth in the U.S
Limited gas reserves driving increased prices. Technological advances in horizontal drilling and
fracturing techniques Nimble independent exploration and production
companies, working with service providers to advance conventional technologies into unconventional gas
Availability of capital. Relatively easy access to land, fueled by the private
ownership of surface and mineral rights and industry-friendly regulations.
Natural Gas Dynamics 41Source: Deloitte: Natural Gas Revolution or evolution? - 2011
Shale gas development challenging outside US
Natural Gas Dynamics 42Source: Wood Mac presentation “North American Shale: Global Gas Markets” April 2011
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Source:International Gas Union presentation “The Transformation of Global Gas Markets: New Dynamics and Commercial Drivers”,Oct 2011
Even with challenges, unconventionals can’t beignored
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Questions ?
Vivek Chandravchandra@natgas.infowww.natgas.infowww.naturalgasdynamics.comv1202
Copyright held by author –copying multiple slides prohibited