The Shale Gas Revolution: Global Implications in a Changing Energy

Landscape

Expo XXI Centre, Warsaw, Poland November 26-28, 2013

Shale Gas World Europe 2013

Dr Basim Faraj VP New Ventures

Tamboran Resources Calgary, Alberta

Agenda Outline

• Introduction to Tamboran Resources

• Shale – an overview

• The US Shale Revolution

• Can they be replicated elsewhere?

• Geopolitical and Economic Implications

• Summary

2

3

Tamboran’s Global Interests

NW Carboniferous Basin Northern Ireland and Ireland

0.4 million acres

Gemsbok Basin, Botswana 13.2 million acres

Pedirka Basin 3.8 million acres

Ngalia Basin 3.6 million acres

Beetaloo & McArthur Basins 6.3 million acres

Tamboran holds permits and applications for over 32 million acres of rights

prospective for unconventional oil and gas

Officer Basin 4.5 million acres

4

Shale Gas Share of Total US Gas Production

5

0

2

4

6

8

10

12

0

2

4

6

8

10

12

Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013

Ave

rage W

ellh

ead

Price

(USD

/mm

cf) D

aily

Pro

du

ctio

n (

BC

F)

Haynesville

Barnett

Marcellus

Fayetteville

Eagle Ford

Average Wellhead Price

Shale Gas accounts for 41% (29 bcf/d) of Total US 2013 Production 2.1 times the total 2011 Canadian gas annual production 6.6 times of total 2011 Australian annual gas production 5.6 times Qatar production in 2011

Shale Gas is a Revolution and a Game Changer!

Source: EIA based on DrillingInfo and LCI Energy Insight

Adam Sieminski, NY Energy Forum, October 29, 2013

shale and tight oil production million barrels per day

Rapid Increase in Oil Production from

Shale and Other Tight Resources

World Petroleum Resources

Jarvie, 2012

World Class Shale Discoveries

Chesapeake Energy, 2012 Annual Report

Global Energy Mix Through Time

9 ExxonMobil 2011 “outlook to Energy- A view to 2040”

Wood

Coal Oil

Gas

80% Fossil Fuel!

1800 1900 2000 2040

Shale Gas “Reservoirs” Micro-Texture

20 µm

Barnett Shale pores ~ 5 µm

(1280 m depth)

15 µm

(Haynesville Shale) pores < 5 µm

(4110 m depth)

Micrographs are from Core Lab Consortium, 2013

Distribution of Generative Organic Carbon

Type II

Type III

Type I

11

Non-Generative Organic Carbon (wt.%)

Non-Generative Organic Carbon (wt.%)

Non-Generative Organic Carbon

(wt.%)

TOC (wt.%)

Generative Organic Carbon (wt.%)

TOC (wt.%)

Generative Organic Carbon (wt.%)

TOC (wt.%)

Generative Organic Carbon (wt.%)

Spent TOC

Spent TOC

Spent TOC

after Daly and Edman, 1987

Permeability (mD)

0.001 0.01 0.1 1.0 10.0

Extremely Tight

Very Tight Tight Low Moderate High

Conventional Tight Tighter than Tight

Granite

Montney

Barnett Sidewalk Cement

0 % porosity Limestone

General oilfield rocks

0.0001

Good Shale

Permeability Terminology

12 Modified by B. Faraj after DOE, 2007

If There is A Well, There is a Way!

Encana website, 2011

N

SPE Presentation, Faraj and Brown, 2009

Microseismic Monitoring is Essential

for Shale Completions!

~ 10% recovery

Shale Microseismic (Density of fracturing)

2,000 ft

Recovery: 60 %!

$2.6 $2.9 $3.0 $3.0 $2.9 $2.8 $3.0 $3.1 $3.1 $2.9 $2.9 $3.0 $2.8 $3.1 $2.8 $2.7 $2.8

2,104

2,512 2,622

3,193 3,301

3,562 3,736

3,850 3,874

4,123 4,100 4,303 4,348

4,532 4,503 4,667

4,985

1,261

1,497

1,769

2,027

2,343 2,541

2,882

3,350

2,992

3,611 3,604 3,727

3,197

3,449 3,281

3,472

3,231

-

1,000

2,000

3,000

4,000

5,000

1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11

Total Well Cost ($MM) Average Lateral Length (ft) Average IP Rate (Mcf/d)

Significant Improvements Over Time

Source: Modified from Southwestern Energy Presentations and Press Releases (Fayetteville Shale), 2009

Total Well Cost, Average Lateral Length, Average IP vs Time

Ave

rage

IP (M

cf/d

)

Ave

rage

Lat

era

l Le

ngt

h (

Ft)

Lateral length increased by 2.5 times (and frac size increased by over 6 times), while production rates tripled, all while keeping wells costs flat during a period of significant service cost increases

Shale Oil/Gas Production Decline

Barnett Oil

Bakken Oil

Eagle Ford Sweet Spot Oil (1350 scf/stb)

Barnett Gas

Jarvie, 2012

18

Should Arabia Explore for Shale?

Play Gas In Place Est. (TCF)

Barnett 2,100

Eagle Ford 2,100

Haynesville 1,800

Marcellus 4,700

Montney 5,700

Total 16,400

Sources: US EIA 2013, US DOE 2009, Encana 2009, USGS, OilandGasInfrastructure.com

Tamboran Estimate modified from Deloitte LLP and Core Lab, 2013

Ground Water is Safe

CSUR website, 2013

Frac Height Growth Data from US Shale Plays

After Fisher and Warpinski, 2011, SPE paper 145949

50

00

ft

80

00

ft

Aquifers

Shale Gas Production Reduces Greenhouse Gases!

CO2 Emissions are back to their 1994 level!

EIA website, 2013

Reduction of about 1 billion metric tons!

The Return of Long Term Cheap Gas to the US

EIA and Hector van Vierssen Trip, 2013 CSUR presentation

LNG Opportunities for Natural Gas are Strong

The LNG supply challenge

0

50

100

150

200

250

300

350

400

450

500

2000 2005 2010 2015 2020 2025

mtp

a

6

Qatar

LNG trade

(forecast)

Australia

Supply-

demand

gap

Supply:

existing and

under

construction

Source: BG Group interpretation of Wood Mackenzie data (Aug 2012)

175 mtpa

Huge LNG demand growth gap needs to be supplied

Year/Output 2012 2020 2035

Total Upstream CAPEX

US $ Billion

87.3 172.5 353.1

Unconventional Activity

Employment

1.8 Million

2.9 Million

3.5 Million

Value added by unconventional

US $ Billion

237.7

416.6

475.1

Impact of Unconventional Resources

on US Economy

Source: “The Recent Surge in Unconventional Oil and Gas Production and Its effect in the US” (Jerry Eumont, IHS, CSUR Conference Canada, October 9, 2013)

About 153 billion savings in gas price in 2012 alone!

Shale Gas Geopolitical Implications!

• American factories have added 500,000 manufacturing jobs in the last 2 years, the first sustained growth in that sector since the 1990s.

• The shale gas revolution is probably the biggest development in the energy sector

since the North Sea came on line in the seventies. (Jeffrey Bleich, the US ambassador to Australia. The Australia Newspaper, September 6, 2013).

• "It has freed up our foreign policy, it has changed our global leadership on reducing carbon in the atmosphere, and it has revitalized our economy,”

• "(Shale gas) has freed us up in order to identify what our vital interests are in the

Middle East, as opposed to being drawn into aspects that would normally not be of core interest to the United States,”

Summary

• Unique set of factors have enabled rapid growth of supply in the US

to a point where export of oil and gas from the US is feasible.

• The economic competitive advantage offered by cheap gas in the

US for manufacturing industries could be a significant driver of

economic growth in the US for the next few decades.

• Opportunities exist to take the lessons learnt from North American

shale plays to other countries where markets and infrastructure may

not be as well developed. Europe need the clean energy

desperately.

• Shale has surprised everyone to date and will continue to surprise

going forward (‘internet’ equivalent in energy – Jack Welsh 2012)

• It is the responsibility of the media to ensure the flow of accurate

and first-hand information about shale gas and shale oil