Oil, Gas and Energy: Myths and Realities - PowerPoint PPT Presentation

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Oil, Gas and Energy: Myths and Realities

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    3. Myth #1: The world is running out of oil and gas. Reality #1: Oil and Natural gas will continue to be the primary energy sources for years to come. Unconventional oil and gas will become increasingly more important.

    9. Where will all this oil and gas come from? Well, most of the places would not be on your list of top vacation destinations.

    10. Worldwide Oil & Gas Reserves

    11. Where to go Countries with Growth Potential For example, Shells recent analysis shows that oil production in the US and the North Sea could decline by as much as 5 million barrels a day by 2020, from current levels. So these regions will rely more and more on OPEC volumes; and on the resource base that we see in Russia, the Caspian and deepwater West Africa. Many players are saying that deepwater could be the saviour for the USA in terms of gas supply, or at least play a major role. For example, Shells recent analysis shows that oil production in the US and the North Sea could decline by as much as 5 million barrels a day by 2020, from current levels. So these regions will rely more and more on OPEC volumes; and on the resource base that we see in Russia, the Caspian and deepwater West Africa. Many players are saying that deepwater could be the saviour for the USA in terms of gas supply, or at least play a major role.

    13. The Importance of Mature and Unconventional Resources

    14. The Importance of Mature Fields To date, we have produced approximately 1 trillion barrels of oil from existing fields Recovery rates of oil in place have averaged 15% to 18% worldwide If we increase our recovery rate in these existing fields to 35%, we will add another trillion barrels of recoverable oil reserves to the global inventory The same is true for natural gas

    15. Unconventional Resources CRUDE OIL Oil Shale - Shell has a large investment in this and will soon begin a pilot project in Southern Wyoming (in-situ recovery method) Tar Sands - If Canada counts these as reserves, they are right behind Saudi Arabia in amount of oil Heavy Oil - If Venezuela counts these as reserves, they are right behind Saudi Arabia in amount of oil

    16. Unconventional Resources NATURAL GAS Coal Bed Methane - currently 13% of the US gas produced Shale gas - at recent ATW it was estimated that there are 40-120 BCF reserves/sq mile Tight Gas and Ultra-tight Gas 0.01 mD (0.00001md) the largest gas discovery in the US in the last 15 years is the Jonah Field in Wyoming with an estimated 8-15 TCF in reserves which is ultra-tight Wells drilled on 10 acre spacing with $1-2 MillionUS/frac job Gas Hydrates - worldwide estimated to be 70 to 130 times the proven reserves of conventional natural gas

    17. Price Sensitivity

    18. Oil and Gas Supply Summary Over the next 25 years, oil and gas demand will rise dramatically, primarily in developing countries There is sufficient oil and gas to meet increases in demand But: Most conventional oil and gas is located in remote, potentially unstable areas The bulk of new supply will have to come from more expensive mature assets and unconventional resources

    19. What is the story for the U.S.? We have significant amounts of mature and unconventional resources to moderate declines in domestic oil and gas production However, they wont be enough to end our dependency on imported oil and gas

    23. Issues of oil and gas pricing Supply and demand Political and economic instability in major producing regions coupled with unreliable reserves estimates for those regions Price point panic on the markets and with traders The oil and gas industry does not want $65 oil or $10 natural gas any more than you do

    25. Instability and Worldwide Oil & Gas Reserves

    26. The spot and futures markets Fear that wars, political maneuvering and/or nationalizations will disrupt oil and gas supplies leads market traders to buy and hedge upwards to guarantee supply This probably accounts for as much as $15 of the price of a barrel of oil today Most producers would be happy with an oil price of $35 to $40 per barrel

    27. The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil. Sheikh Zaki Yamani

    28. Myth #3: The industry is low tech. Reality #3: The oil and natural gas industry is very high tech.

    29.

    30. E&P Fundamentals Oil and gas is not found in pools but, rather, in mineral formations ranging from mostly solid rock (shale, for example) to beach-like sand A reservoir requires storage space (porosity) and trapping mechanisms (tops and sides to keep the contents from leaking out) A reservoir also requires paths of communication to allow the fluids to flow from one point to another. We call this permeability.

    31. Subsurface Traps Much of the expansion was related to post - World War II growth Benton and Lucas are the oldest fields at 62 (born in 1936) Much of the expansion was related to post - World War II growth Benton and Lucas are the oldest fields at 62 (born in 1936)

    32. A Geologic Cross-Section

    33. The Oil and Gas Process

    34. The petroleum industry uses more computing power on a daily basis than any other industry except the entertainment industry.

    35. Seismic data acquisition in Gabon

    36. Offshore Seismic Acquisition - Angola

    37. Geovision in 3-D at Pau, France

    38. Drilling Site at Yariapo, Bolivia

    40. Costlier Deepwater Ventures: New Technology Allows Industry to Access Resources in Deeper Water The Deepwater Pathfinder drillship (shown) can drill in water depths up to 10,000 feet Dynamic-Positioning - Small thrusters and global positioning technology keep the drillship stable, shifting less than 50 feet in any direction. This stability enables the ship to drill in very deep water and in most weather conditions.

    41. Horizontal Drilling

    43. New Offshore Production Structures Enable Development in Deeper Water Industry has moved from fixed to floating structures to develop oil and gas in deeper water

    44. Offshore Oil Production

    45. Myth #4: The oil and natural gas industry is environmentally insensitive. Reality #4: The oil and natural gas industry operates in a safe and environmentally responsible manner. The oil and natural gas industry will be part of the CO2 solution.

    46. Drilling Site at Yariapo, Bolivia

    47. Drilling Site at Yariapo, Bolivia after restoration

    48. it took 20-plus years for Western companies and countries to understand and manage their footprint on the natural world. A few days ago, I was in a rain forest on the Tambopata River where Mobil Oil once explored. It did it in a way, though that left no trace today. Source: Thomas Friedman, Turning Red China into Green China is challenge. Reprinted from The New York Times in The Rocky Mountain News, 3 July 2006, p 33A.

    49. Natural Seeps Contribute 46% of the Oil in Oceans Worldwide E&P Accounts for Less Than 4% Worldwide

    50. The CO2 Hockey Stick

    51. Myth #5: Oil and gas can be easily and economically replaced with renewables in the next few years. Reality #5: Oil, natural gas, and coal cannot be easily or economically replaced with renewables in the next few years.

    52. Future Energy Options Current: Oil and Gas Coal Nuclear Hydro Wind Others

    53. Solar Energy Production Area that has to be covered by present - efficiency solar cell to produce 3 and 20 Terawatts/hr. respectively. 3 TW is close to the total electric energy of the USAArea that has to be covered by present - efficiency solar cell to produce 3 and 20 Terawatts/hr. respectively. 3 TW is close to the total electric energy of the USA

    57. Global energy mix Today 85.5 percent = fossil fuels (oil, gas, coal) 14.5 percent = nuclear and all other sources By 2025 87 percent = fossil fuels (oil, gas, coal) 13 percent = nuclear and all other sources -- Source:Energy Information Administration

    58. Todays oil and gas companies are also todays energy companies. BP is one of the worlds largest producers of photovoltaic solar cells. Chevron is the worlds largest developer of geothermal energy. The oil and gas industry is the largest producer and user of hydrogen. XOM, BP, CVX, Shell, and COP are key players in government/industry hydrogen fuel and vehicle partnerships such as the DOE FreedomCar and Fuel Partnership and the California Fuel Cell Partnership. Shell is one of the top players in the worldwide wind industry.

    59. Myth #6: There is no future in working in the petroleum industry. Reality #6: There is a VIBRANT future for young people entering the petroleum industry.

    60. Manpower Supply & Demand

    63. Myth #7: Quality of life and GDP are not significantly influenced by energy use. Reality #7: Higher quality of life and GDP are proportional to energy use. The fossil fuels oil, gas, and coal are the largest sources of energy.

    65. Questions?

    66. Myth #3: The industry is reaping huge profits taking advantage of the public. Reality #3: The oil and gas industry reinvests about half of total profits to find more oil and natural gas. The other half of total profits were returned to shareholders.

    67. According to Lord John Browne, BP The industry invested over $550 billion in exploration, development, and production from 2000-2004. This represents about half of total profits. The other half of total profits were returned to shareholders.

    68. Company profit on a $3 per gallon gasoline at the pump is about 10 cents a gallon.

    69. Typhoon Tension Leg Platform Before & After Rita