Tight Oil - Possibilities, Challenges, and Policy
Tight Oil - Possibilities, Challenges, and Policy Economic, Political and Environmental Issues 16th Annual Washington Energy Policy Conference Washington, DC
Lou Pugliaresi, President Energy Policy Research Foundation, Inc. (EPRINC) April 3, 2012 Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
1
Projected Imports of LNG vs. Actual (or why forecasters should have humility) 3.00
10 9
2.50
8 7
2.00
Actual US Net LNG Imports
6 1.50
5 4
1.00
$/MMBTU
tcf per year of LNG
Reference Case - Net U.S. imports of LNG (tcf) - 2008 EIA Annual Energy Outlook
Henry Hub Gulf Coast Natural Gas Spot Price ($/MMBTU) (right axis)
3 2
0.50
1 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
0.00
Source : EIA data and forecasts
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
2
NPC Findings
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
3
Oil and Gas Permits in Past 90 Days
As of Feb 13th
As of March 16th
Source: HPDI March 16 , 2012
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
4
Rig Count and Permits
Source: Photo Baker Hughes Interactive Rig Count Jan 25, 2012
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
5
Technology Progression, ND and MT
Source: Continental Resources , from Platts Midstream Development & Management Conference, May 12, 2011.
Estimated Ultimate Recovery
Source: Brigham Exploration via World Oil
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
7
Williston Basin Production 600,000 North Dakota 500,000 Eastern Montana
Barrels Per Day
400,000
South Dakota
300,000
TOTAL
North Dakota accounts for almost 10% of US Production
200,000
100,000
Almost all new production is from the Bakken/Three Forks Jan-12
Nov-11
Sep-11
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
Mar-10
Jan-10
Nov-09
Sep-09
Jul-09
May-09
Mar-09
Jan-09
Nov-08
Sep-08
Jul-08
May-08
Mar-08
Jan-08
Nov-07
Sep-07
Jul-07
May-07
Mar-07
Jan-07
0
Source: NDIC
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
8
9/1/2011
11/1/2010
1/1/2010
3/1/2009
5/1/2008
7/1/2007
9/1/2006
11/1/2005
1/1/2005
3/1/2004
5/1/2003
7/1/2002
9/1/2001
11/1/2000
1/1/2000
3/1/1999
5/1/1998
7/1/1997
9/1/1996
11/1/1995
1/1/1995
250000
300000
0
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org mcf/day
LIQ
3/1/1994
5/1/1993
7/1/1992
9/1/1991
11/1/1990
1/1/1990
3/1/1989
5/1/1988
7/1/1987
9/1/1986
11/1/1985
1/1/1985
Barrels Per Day
Trend Area Daily Average Production 600000
200000 500000
GAS 400000
150000
100000 200000
50000 100000
0
Source: HPDI March 21, 2012
9
Eagle Ford Production 350000
1800000 1600000
300000
1400000
250000 1200000
GAS 200000
1000000
150000
800000
mcf/day
Barrels Per Day
LIQ
600000 100000 400000 50000
200000
9/1/2011
4/1/2011
11/1/2010
6/1/2010
1/1/2010
8/1/2009
3/1/2009
10/1/2008
5/1/2008
12/1/2007
7/1/2007
2/1/2007
9/1/2006
4/1/2006
11/1/2005
6/1/2005
1/1/2005
8/1/2004
3/1/2004
10/1/2003
5/1/2003
12/1/2002
7/1/2002
2/1/2002
9/1/2001
4/1/2001
11/1/2000
6/1/2000
0 1/1/2000
0
Source: HPDI March 21, 2012
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
10
Unconventionals Production and Forecast (Crude oil, no NGLs) 5 4.5 Eagle Ford Liquid Daily Average
million barrels per day
4 3.5
Bakken/Three Forks Liquid Daily Average
3
2.5
Niobrara/Codell Liquids Daily Average
2 1.5
Permian Basin Liquids Daily Average
1 0.5
7/1/2017
10/1/2016
1/1/2016
4/1/2015
7/1/2014
10/1/2013
1/1/2013
4/1/2012
7/1/2011
10/1/2010
1/1/2010
4/1/2009
7/1/2008
10/1/2007
1/1/2007
4/1/2006
7/1/2005
10/1/2004
1/1/2004
4/1/2003
7/1/2002
10/1/2001
1/1/2001
4/1/2000
7/1/1999
10/1/1998
1/1/1998
4/1/1997
7/1/1996
10/1/1995
1/1/1995
0
Source: HDPI data, EPRINC estimates
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
Resources for the Future on the Keystone XL Pipeline* …from a national perspective, whether the pipeline is approved or not is relatively unimportant. Instead, we should focus on reducing our contribution to the global carbon footprint and improving the efficiency of our carbon-based fuel use.
Putting Politics Aside: The Consequences of the Keystone XL Rejection RFF Feature, By Joel Darmstadter and Alan J. Krupnick, January 24, 2012
*Did they miss something? Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
12
North American Crude Oil Pipelines
Source: GeoWeb Portal Rextag Hart Energy Mapping Service Feb 13 2012
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
13
North American Pipes
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
14
Canadian Imports and Potential Markets
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
15
Choke Points
Source: Savage, Presentation Bakken Product Markets and Take-Away Denver Jan 31-Feb 1 2012 with EPRINC Additions
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
16
North Dakota Crude Oil Transport October Estimates, 2011
December Estimates, 2011
January Estimates, 2012
Source: North Dakota Pipeline Authority
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
17
Bakken Prices at Clearbrook
Source: Bloomberg, Mar 16, 2012 Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
18
Final Observations Major new pipeline infrastructure will deliver sustained and large scale benefits. Keystone decision has created uncertainty on whether those benefits will be realized. U.S. is now poised for major economic renaissance from the both oil sands and unconventional natural gas and liquids. Net present value of $1 to $2 trillion if appropriate policies put into place. Paradigm shift and large scale economic benefits are possible, but not without new approach to government regulations (and permitting) of both midstream and downstream facilities --- refinery expansions and modifications, natural gas processing, petrochemicals, LNG. U.S. now poised to be a major export platform for value added oil and gas processing. Major expansion of domestic manufacturing --transformation of national economy now in the cards. Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
Lou Pugliaresi, President Energy Policy Research Foundation, Inc. (EPRINC) April 3, 2012 Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
1
Projected Imports of LNG vs. Actual (or why forecasters should have humility) 3.00
10 9
2.50
8 7
2.00
Actual US Net LNG Imports
6 1.50
5 4
1.00
$/MMBTU
tcf per year of LNG
Reference Case - Net U.S. imports of LNG (tcf) - 2008 EIA Annual Energy Outlook
Henry Hub Gulf Coast Natural Gas Spot Price ($/MMBTU) (right axis)
3 2
0.50
1 0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
0.00
Source : EIA data and forecasts
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
2
NPC Findings
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
3
Oil and Gas Permits in Past 90 Days
As of Feb 13th
As of March 16th
Source: HPDI March 16 , 2012
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
4
Rig Count and Permits
Source: Photo Baker Hughes Interactive Rig Count Jan 25, 2012
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
5
Technology Progression, ND and MT
Source: Continental Resources , from Platts Midstream Development & Management Conference, May 12, 2011.
Estimated Ultimate Recovery
Source: Brigham Exploration via World Oil
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
7
Williston Basin Production 600,000 North Dakota 500,000 Eastern Montana
Barrels Per Day
400,000
South Dakota
300,000
TOTAL
North Dakota accounts for almost 10% of US Production
200,000
100,000
Almost all new production is from the Bakken/Three Forks Jan-12
Nov-11
Sep-11
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
Mar-10
Jan-10
Nov-09
Sep-09
Jul-09
May-09
Mar-09
Jan-09
Nov-08
Sep-08
Jul-08
May-08
Mar-08
Jan-08
Nov-07
Sep-07
Jul-07
May-07
Mar-07
Jan-07
0
Source: NDIC
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
8
9/1/2011
11/1/2010
1/1/2010
3/1/2009
5/1/2008
7/1/2007
9/1/2006
11/1/2005
1/1/2005
3/1/2004
5/1/2003
7/1/2002
9/1/2001
11/1/2000
1/1/2000
3/1/1999
5/1/1998
7/1/1997
9/1/1996
11/1/1995
1/1/1995
250000
300000
0
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org mcf/day
LIQ
3/1/1994
5/1/1993
7/1/1992
9/1/1991
11/1/1990
1/1/1990
3/1/1989
5/1/1988
7/1/1987
9/1/1986
11/1/1985
1/1/1985
Barrels Per Day
Trend Area Daily Average Production 600000
200000 500000
GAS 400000
150000
100000 200000
50000 100000
0
Source: HPDI March 21, 2012
9
Eagle Ford Production 350000
1800000 1600000
300000
1400000
250000 1200000
GAS 200000
1000000
150000
800000
mcf/day
Barrels Per Day
LIQ
600000 100000 400000 50000
200000
9/1/2011
4/1/2011
11/1/2010
6/1/2010
1/1/2010
8/1/2009
3/1/2009
10/1/2008
5/1/2008
12/1/2007
7/1/2007
2/1/2007
9/1/2006
4/1/2006
11/1/2005
6/1/2005
1/1/2005
8/1/2004
3/1/2004
10/1/2003
5/1/2003
12/1/2002
7/1/2002
2/1/2002
9/1/2001
4/1/2001
11/1/2000
6/1/2000
0 1/1/2000
0
Source: HPDI March 21, 2012
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
10
Unconventionals Production and Forecast (Crude oil, no NGLs) 5 4.5 Eagle Ford Liquid Daily Average
million barrels per day
4 3.5
Bakken/Three Forks Liquid Daily Average
3
2.5
Niobrara/Codell Liquids Daily Average
2 1.5
Permian Basin Liquids Daily Average
1 0.5
7/1/2017
10/1/2016
1/1/2016
4/1/2015
7/1/2014
10/1/2013
1/1/2013
4/1/2012
7/1/2011
10/1/2010
1/1/2010
4/1/2009
7/1/2008
10/1/2007
1/1/2007
4/1/2006
7/1/2005
10/1/2004
1/1/2004
4/1/2003
7/1/2002
10/1/2001
1/1/2001
4/1/2000
7/1/1999
10/1/1998
1/1/1998
4/1/1997
7/1/1996
10/1/1995
1/1/1995
0
Source: HDPI data, EPRINC estimates
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
Resources for the Future on the Keystone XL Pipeline* …from a national perspective, whether the pipeline is approved or not is relatively unimportant. Instead, we should focus on reducing our contribution to the global carbon footprint and improving the efficiency of our carbon-based fuel use.
Putting Politics Aside: The Consequences of the Keystone XL Rejection RFF Feature, By Joel Darmstadter and Alan J. Krupnick, January 24, 2012
*Did they miss something? Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
12
North American Crude Oil Pipelines
Source: GeoWeb Portal Rextag Hart Energy Mapping Service Feb 13 2012
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
13
North American Pipes
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
14
Canadian Imports and Potential Markets
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
15
Choke Points
Source: Savage, Presentation Bakken Product Markets and Take-Away Denver Jan 31-Feb 1 2012 with EPRINC Additions
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
16
North Dakota Crude Oil Transport October Estimates, 2011
December Estimates, 2011
January Estimates, 2012
Source: North Dakota Pipeline Authority
Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
17
Bakken Prices at Clearbrook
Source: Bloomberg, Mar 16, 2012 Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
18
Final Observations Major new pipeline infrastructure will deliver sustained and large scale benefits. Keystone decision has created uncertainty on whether those benefits will be realized. U.S. is now poised for major economic renaissance from the both oil sands and unconventional natural gas and liquids. Net present value of $1 to $2 trillion if appropriate policies put into place. Paradigm shift and large scale economic benefits are possible, but not without new approach to government regulations (and permitting) of both midstream and downstream facilities --- refinery expansions and modifications, natural gas processing, petrochemicals, LNG. U.S. now poised to be a major export platform for value added oil and gas processing. Major expansion of domestic manufacturing --transformation of national economy now in the cards. Energy Policy Research Foundation, Inc. | 1031 31st St, NW Washington, DC 20007 | 202.944.3339 | www.eprinc.org
