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The State of Natural Gas Supply APPA Meeting. Dave Risser, Marathon Mark Quartermain, Shell. March 15,2011 Phoenix, AZ. A Decade Makes A Difference. Then. Now. Burgeoning production Market-based storage rates Eight-plus active LNG ports Shale gas growing fast 100-year supply

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The State of Natural Gas Supply APPA Meeting

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The state of natural gas supply appa meeting

The State of Natural Gas SupplyAPPA Meeting

Dave Risser, Marathon

Mark Quartermain, Shell

March 15,2011

Phoenix, AZ


A decade makes a difference

A Decade Makes A Difference

Then

Now

Burgeoning production

Market-based storage rates

Eight-plus active LNG ports

Shale gas growing fast

100-year supply

Most transparent fuel market in world

Highly market-responsive supply

  • Shale known but uneconomic

  • Storage rates regulated

  • Four LNG ports, not all active

  • Conventional gas dominates

  • 63-year supply

  • Incomplete price transparency

  • Limited means to respond to sudden demand changes

2


Decade of growing natural gas infrastructure

Decade of Growing Natural Gas Infrastructure


The state of natural gas supply appa meeting

4


The state of natural gas supply appa meeting

5

5


How shale produces natural gas

How Shale Produces Natural Gas

6

6


The state of natural gas supply appa meeting

Technology’s role:

Why the revolution

Traps vs. shales

Fracture stimulation 5,000’ – 15,000’ below the surface

Hydrocarbon Trap

Impermeable

sealing layer

Migratinghydrocarbons

Shale

organic richsource layer

Frack

Porous and permeable

reservoir layer


The state of natural gas supply appa meeting

#


The state of natural gas supply appa meeting

Ebb and Flow of Commodity PricesNatural Gas 2002-2010

Changes in price

Source: CME Group, a CME/Chicago Board of Trade Company


The state of natural gas supply appa meeting

Ebb and Flow of Commodity PricesNatural Gas compared to Crude Oil & Coal 2002-2010

Source: CME Group, a CME/Chicago Board of Trade Company


The state of natural gas supply appa meeting

Ebb and Flow of Commodity PricesNatural Gas compared to other Major Commodities 2002-2010

Source: CME Group, a CME/Chicago Board of Trade Company


Natural gas myths

Natural Gas Myths

MYTH #1 –”There’s not enough natural gas to meet demand from manufacturers and electrics”

  • U.S. supply up 40 percent since 2006 due to shale – 100-year supply with potential to grow

    MYTH #2 – “Offshore drilling ban will hurt natural gas customers”

  • Most GOM gas production located in shallow water and excluded from ban

    MYTH # 3 – “Heavy-handed regulation of shale could stop its production”

  • States are heavily invested in shale production – 50,000 jobs created in 2009 in Pennsylvania alone

    MYTH #4 – “Natural gas is vulnerable to Middle East policies”

  • Between 1 and 3 percent of U.S. demand is met by LNG imports

  • 75 percent of those imports are from Trinidad & Tobago, remainder from Norway, Algeria, Egypt, Nigeria and Qatar.


Nyt radium issue

NYT/Radium Issue

  • New York Times alleges that radium from produced shale water ends up in Pennsylvania drinking water

  • Producers take all such allegations seriously

    • PA authorities subsequently published test results showing water meets fed/state radium standards

    • Producer goal: Recycle 100% produced water—up to 65% now

    • Support further state testing


Final thoughts

Final Thoughts

  • Entire gas industry significantly expanded since 2000

  • Industry takes “Fracking” issue seriously, but believes it can be managed

  • Competitive market has dampened price volatility

  • “Dash to Gas” issue overstated

  • U.S. enjoys most robust, transparent, and reliable natural gas industry in world


Thank you

Thank You


Backup slides

Backup Slides


Natural gas among cleanest electric generation alternatives

Tons /year/thousand households

Biomass

(Wood)

Nuclear &

Coal

Natural Gas

Renewables

CO

51

5.8

1.5

0.0

CO2)

0.0

9,362

3,558

0.0

NOx

28

3.4

0.3

0.0

Particulate Matter

2.7

0.9

0.0

0.0

VOCs

5.6

0.2

0.0

0.0

SO2

2.8

5.0

0.2

0.0

Mercury

0.0

0.0001

trace

0.0

Natural Gas Among Cleanest Electric Generation Alternatives

Most emissions

Middle emissions

Least emissions

Source: R.W. Beck


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