BG Group Are We Facing Peak Gas Geological Society Petroleum Evening Meeting Peak Oil 15 April 2008 Malcolm Brown Senior Vice President, Exploration
Legal Notice Important Notice No part of this presentation constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection…
Introduction Definition of Peak Gas The permanent decline in gas production Peak Gas debate needs to consider: Ultimate resource base both conventional and unconventional Current and future consumption rates What are the…
Conventional and Unconventional Gas Plays Geological Setting Cartoon Unconventional Gas Coal Bed Methane Land Surface Seabed Unconventional Gas Conventional Gas Conventional Gas Gas Hydrates Structural Gas Accumulation Gas Cap…
Global Reserve Estimates Proven Conventional Gas Reserves Proved reserves at end 2005 Proven Reserves (1P) Reserves estimated with 90% South & Central America 2594 probability to be commercially North America 2264 recoverable from…
Global Gas Estimates Proven and Probable Conventional Gas Reserves Global 2P Discoveries 40 Unproven reserves which analysis of 35 geological and engineering data suggests Number of Discopveries 1Tcf 30 are more likely than…
Global Gas Estimates Proven + Probable + Possible Conventional Reserves 3P Reserves Unproven reserves which analysis of geological and engineering data suggests has at least a 10% probability of recovering more than proved +…
Has Conventional Gas Been Effectively Explored For There are twice as many oil fields as gas fields This is not geologically rational Gas has often been found when oil was the target Gas has not been pursued with the same vigour…
BG Group Technology Driving Unconventional Gas
Improved Technology Improved technology and increased market prices have led to accessing of previously uneconomic resources Tight gas sands < 0.1 mD (US definition) Coal bed methane or coal seam gas Shale gas In US +/- 40% of gas…
Controls on Peak Gas Technological Advancement US Tight Sand Pinedale Tight Gas Sands Reduced porosity and permeability in comparison to conventional sands Development challenge fraccing and completions play Over 600 wells in an…
Controls on Peak Gas Technological Advancement CBM How is CBM produced Methane is adsorbed on the surface of the coal Gas held in place by water pressure As pressure is reduced, methane desorbs and flows through the cleats Many…
Controls on Peak Gas Technological Advancement CBM Australia Queensland Basin CBM Commercial CBM started in 1996 Compensates for shortfall in conventional gas Increased gas prices created opportunity Recoverable estimate: 220 tcf…
Controls on Peak Gas Technological Advancement US Shale Gas Barnett Shale Gas Technological breakthroughs in completion technology 1998 slick water fracturing replaced gel fracturing 2002 horizontal drilling and fracturing…
Natural Gas Hydrates New Technology Required to Produce Gas in a cage of water molecules at high pressure and low temperature Global estimate for gas hydrate reserves 100,000 tcf WoodMac, 2006 Postulated Proven Global…
BG Group Markets
Controls on Peak Gas Market Trends 1990s LNG became cost competitive with end of pipeline gas High pressure high temperature drilling targeted deeper gas CCGT technology enables dash for gas Pre 2003 Gas beating oil and coal for…
Production Trends The Global Fuel Mix Historic fuel mix Mid 1980s through 1990s natural 4500.0 Global Production by Fuel Type gas was the preferred fuel 4000.0 Oil Average annual growth rate 3% 3500.0 Market share 3000.0 Coal…
North American Gas Production Has this peaked Source BP 2005 and others Conventional Peak 1973; Combined Peak 2002 or beyond 21
Unconventional Gas in the US Market Compensates the Decline in Conventional Gas 4% US Unconventional Gas Growth Tight gas sands dominate 9% 5 tcf produced in 2005 27% CBM produced 1.7 tcf in 2005 Gas shales Shale gas produced 0.7…
Market Trends Global Gas trends Early 1990s Algeria Middle East Trinidad W. Africa S.E. Asia Australia Markets LNG Pipe Source: BG Group Industry evolution: from three main trade regions 23
Market Trends Global Gas Trade Evolution Norway / Russia Sakhalin Middle East N.Africa Egypt W. Africa Trin / Ven S.E. Asia Markets S. America Australia LNG Pipe Existing & Proposed Primary ( 20 mtpa) Equity…
BG Group Conclusions
The Resource Pyramid Defining the Controls on Peak Gas Gas Resource Pyramid Increasing Gas Price / Innovation Each side represents: Cost of Extraction Gas price Host country tax regime Technology of the day Cost of…
The Resource Pyramid Defining the Controls on Peak Gas Gas Resource Pyramid Increasing Gas Price / Innovation Each side represents: Cost of Extraction Gas price Host country tax regime Technology of the day Cost of…
Conclusions I Using 2006 global production levels +/- 100 tcf p.a. this suggests gas could last between 60 and several hundred years Gas has significant advantages as a fuel, it has the lowest carbon intensity and continued growth…
Conclusions II But The resource base can supply global demand for the foreseeable future and will not control Peak Gas Peak Gas will be driven instead by price, access, security of supply, climate change and timing of newer…
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