billpike.pdf

Upstream: A Mature Industry

Oil and Gas in the 21st Century

William J. PikeBOMA 2006


Renewable Energy is a Promise That Wont Be Fulfilled Soon

Oil and Gas Will Fuel the World Economy for the Foreseeable Future

The Metrics for Oil and Gas Development are Changing


Worldwide Energy Options Renewable Energies Traditional Energies

Coal Nuclear Oil and Gas


Viable Alternative Fuel Options

Photovoltaic Hot Dry Rocks

Photovoltaic Option

20042004 20502050

Source: Nate Lewis, California PolytechnicSource: Nate Lewis, California Polytechnic

Hot Rock Process

MonitoringSeismic & EM

Heat exchange

PerforationProduction

Electricity Generation

Hot Rock

Injection


Non-Viable Alternative Fuel Options

Wind Tides Biomass Solar Heat More


Current Major Energy Sources

Coal Nuclear Oil & Gas


Coal

Abundant Currently considered environmentally

unfriendly Many plants aging badly, requiring

costly upgrades or new construction


Nuclear

Expensive Legacy of tragic failures Long lead time to first production A fuel shortage


Oil and Gas Abundant Easily extractable Portable Cost effective In place Supports massive infrastructure


Hurry, before this wonderful product is depleted from natures laboratory. Advertisement for Kiers Rock Oil, 1855

Source: The Wall Street Journal, October 8-9, 2005


The United States [has] enough petroleum to keeps its kerosene lamps burning for only four years. Pennsylvania geologist, 1874



There are oil wells drying up all over the world. President Carter, 1979



At present rates of exploitation, the U.S. will exhaust its own petroleum reserves in about 10 years. Alan Madian, Foreign Policy magazine, 1979



In moving towards 1990, the industrialized countries will be walking an oil tightrope. International Energy Agency, 1981



Both oil and natural-gas availability have been severely impaired, and the effect of this will reverberate through the economy of this country for some time. Samuel Bodman, U.S. energy secretary, 2005



World oil discoveries peaked in the 1960s. You cant pump what you havent found. Where will the additional oil production come from and at what price? Rep. Roscoe Barlett (R, Md.), 2005



With due respect to Representative Bartlett, and the others, we can: Find a bit more Increase recovery rates from existing fields Develop technologies to efficiently and

economically produce unconventional reserves

Primary Energy Production (1015 btu) Petroleum 155

Natural Gas 96

Coal 98

Nuclear 27

Other 31

Source: Energy Information Administration, U.S. Department of Energy


Primary Energy Demand (1015 btu)2010 2015 2020 2025

Petroleum 185 204 224 245

Natural Gas 108 122 139 156

Coal 108 117 127 140

Nuclear 30 31 32 30

Other 39 43 47 50

Source: Energy Information Administration, U.S. Department of Energy


In Summary Over 60% of the worlds current energy supply is oil and gas Over the next 20 years that percentage will increase

Despite the hype, there are no viable alternatives for the medium term

Where Will the Oil and Gas Come From?



Three Types of Oil and Gas Reserves: Traditional Incremental Unconventional

Primary Sources of Oil and Gas

To 1970 50-60% from new fields

To 1990 20-25% from new fields

Today 15-18% from new fields

Tomorrow 7-10% from new fields



Going forward, at least 80% (probably 90) of all oil and gas will come from mature fields/basins and unconventional reserves

For the next 20 years (at the least), more than half the worlds total energy supply will come from mature fields and unconventional reserves


Where will the oil and gas come from? New fields 10%

Two thirds of undiscovered reserves may be in the Arctic regions

The balance will be in deeper water and more remote and hostile environments, both in terms of operating conditions and politically

Environmental considerations will severely impact new reserves development


Where will the oil and gas come from? Mature fields 65 - 70%

We have left behind 75 85% of all the oil and gas we have found

New technologies will drive increased recovery levels

Intelligent fields Continuous reservoir management Expanded reservoir contact Improved wellbore deliverability

Additional Reserves at 50% Recovery Factor1.02 Trillion Barrels

222

80

78

158

276

102 102


Where will the oil and gas come from? Unconventional reserves 15 - 20%

Huge, but costly Heavy Oil Oil Sands Oil Shales Tight/Shale Gas Methane Hydrates


Implications for the oil and gas industry Emphasis shifts to the reservoir Risk control becomes paramount Technology, not opportunity, becomes the

driver Existing infrastructure becomes key Gas becomes a global commodity


Implications for the oil and gas industry Emphasis shifts to the reservoir

Longer analysis before development sanction Continuous management drives development

direction Integrated development teams revolve around

reservoir performance


Implications for the oil and gas industry Risk control becomes paramount

The bulk of new reserves are in difficult places Capital intensive projects tend to bust budgets Wall Street does not reward risk very well Developments in stable political and economic

environments become crucial


Implications for the oil and gas industry Technology, not opportunity, becomes the

driver New technology has already improved recovery rates

dramatically Developing technology to recover stranded, bypassed, un-

recovered reserves, and unconventional reserves is less risky and more cost effective than drill bit exploration


Implications for the oil and gas industry Existing infrastructure becomes key

Marginal reserves development will not support large capital expenditures for infrastructure

Increased-recovery-factor production will rely on existing and refurbished infrastructure

Environmental considerations will impact the ability to design and site new infrastructure


Implications for the oil and gas industry Gas becomes a global commodity

Transportation of gas to remote markets is crucial to gas reserves development

New and developing transportation technologies will be as crucial as reserves availability

LNG CNG GTL


In summary: We dont have viable, short term alternatives

to replace oil and gas For the next 20 years, or more, oil and gas

production from mature assets will have to supply at least half the worlds energy

The old operating parameters for oil and gas production will be eclipsed by new practices, new drivers and new technology

Upstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryPhotovoltaic OptionHot Rock ProcessUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryAdditional Reserves at 50% Recovery Factor1.02 Trillion BarrelsUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature IndustryUpstream: A Mature Industry

billpike.pdf

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