Outlook For American Natural Gas - Sieminski - 11112014

Outlook for North American Natural Gas
For
LDC Natural Gas Forum
November 11, 2014 | Toronto, Ontario, Canada
By
Adam Sieminski, Administrator
U.S. Energy Information Administration
U.S. Energy Information Administration
Independent Statistics & Analysis
www.eia.gov
The Americas are the second largest region in natural gas

reserves and resources
regional natural gas reserves and resources, 2012
trillion cubic feet
Middle East and North Africa

Americas
Former Soviet Union
Asia and Pacific
Sub-Saharan Africa
Proved Reserves
Estimated Reservoired Accumulations of Undiscovered
Technically Recoverable Gas Resources
Europe
Estimated Technically Recoverable Shale Gas Resource
South Asia
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Source: U.S. Energy Information Administration, Oil and Gas Journal, U.S. Geological Survey, EIA/ARI World Shale
Gas and Shale Oil Resource Assessment
November 11, 2014
The Americas hold an abundance of shale gas resources,

undeveloped except in the U.S. and Canada
Americas natural gas reserves and resources, 2012
trillion cubic feet
1,600
Estimated technically recoverable shale gas
resources
1,400
1,200
Estimated reservoired accumulations of undiscovered

technically recoverable gas resources
1,000
Proved natural gas reserves
800
600
400
200
0
United
States
Argentina
Canada
Brazil
Mexico
Venezuela Colombia
Bolivia
Source: U.S. Energy Information Administration, Oil and Gas Journal, U.S. Geological Survey, EIA/ARI World Shale
Gas and Shale Oil Resource Assessment.
November 11, 2014
North American shale plays

November 11, 2014
Americas natural gas production is pulling away from other regions

dry natural gas production by region
trillion cubic feet
40
Americas
35
30
Former Soviet Union
25
Middle East
20
Asia and Oceania
15
Europe
10
Africa
5
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: EIA, International Energy Statistics

November 11, 2014
Total dry natural gas production in the Americas is outpacing

consumption, largely driven by U.S. shale gas production
production of Americas dry natural gas
trillion cubic feet
40
consumption of Americas dry natural gas

trillion cubic feet
40
35
35
30
30
25
25
20
20
15
15
10
10
United States
Canada
Mexico
Trinidad & Tobago
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Argentina
Venezuela
Brazil
Other Americas
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

November 11, 2014
These seven regions accounted for 95% of U.S. oil production

growth and all U.S. natural gas production growth from 2011-2013
Source: EIA, Drilling Productivity Report

November 11, 2014
The U.S. has experienced a rapid increase in natural gas and oil
production from shale and other tight resources
Eagle Ford (TX)
U.S. tight oil production

million barrels of oil per day
4.5
Bakken (MT & ND)

Spraberry (TX & NM Permian)
4.0
Delaware (TX & NM Permian)

Yeso-Glorieta (TX & NM Permian)
Niobrara-Codell (CO, WY)
Haynesville
Utica (OH, PA & WV)
Marcellus
Woodford (OK)
Granite Wash (OK & TX)
Austin Chalk (LA & TX)
Haynesville (LA & TX)

Eagle Ford (TX)
Bonespring (TX & NM Permian)

Wolfcamp (TX & NM Permian)
U.S. dry shale gas production

billion cubic feet per day
40
Marcellus (PA & WV)
3.5
Fayetteville (AR)
3.0
Barnett (TX)
2.5
Woodford (OK)
Bakken (ND)
2.0
Antrim (MI, IN, & OH)
1.5
Utica (OH, PA & WV)

Rest of US 'shale'
1.0
35
30
25
20
15
10
Monterey (CA)
2000 2002 2004 2006 2008 2010 2012 2014
0.5
0.0
0
2000 2002 2004 2006 2008 2010 2012 2014
Sources: EIA derived from state administrative data collected by DrillingInfo Inc. Data are through August 2014 and
represent EIAs official tight oil & shale gas estimates, but are not survey data. State abbreviations indicate primary state(s).
November 11, 2014
U.S. shale gas leads growth in total gas production through 2040,
when production exceeds 100 billion cubic feet per day
U.S. dry natural gas production
trillion cubic feet
40
2012
projections
history
100
35
90
30
80
25
70
60
20
Shale gas
50
15
10
40
Tight gas
Non-associated onshore
30
20
Non-associated offshore
0
1990
Alaska
Associated with oil
Coalbed methane
1995
2000
2005
2010
2015
2020
2025
2030
2035
10
0
2040
Source: EIA, Annual Energy Outlook 2014, Reference case

November 11, 2014
Natural gas consumption growth is driven by electric power,

industrial, and transportation use
U.S. dry gas consumption
trillion cubic feet
35.0
history
projections
30.0
11.0
25.0
electric
power
8.5
20.0
15.0
11.2
industrial*
9.1
10.0
0.7
2.9
5.0
4.2
1.7
transportation**
3.6
commercial
4.1
residential
0.0
2005
2012
2020
2025
Source: EIA, Annual Energy Outlook 2014, Reference case

November 11, 2014
2030
2035
2040
*Includes combined heat-and-power and lease and plant fuel

**Includes pipeline fuel
10
U.S. becomes a net exporter of natural gas in the near future

U.S. dry natural gas
trillion cubic feet per year
history
40

projections
2012
100
30
75
Consumption
20
50
Domestic supply
10
Net exports
-10
1990
25
-25
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
Source: EIA, Annual Energy Outlook 2014 Reference case

November 11, 2014
11
Projected U.S. natural gas trade depends on assumptions

regarding resources and future technology advances
Reference case
8
High Oil and Gas Resource case

8
exports to
Mexico
4
exports to
Canada
billion cubic
feet per day
20
15
10
5
lower 48
LNG exports
0
-2
imports from
Canada
-2
-5
LNG imports
-4
2010
2015
2020
2025
-4
2010
-10
2015
2020
2025
Source: EIA, Annual Energy Outlook 2014, Reference case and High Oil and Gas Resource case
November 11, 2014
12
Currently, most of the US exports are via pipeline, but liquefied natural
gas export projects have been proposed.
Proposed non-FTA LNG export facilities as of March 2014
Potential export-oriented natural gas liquefaction facilities
Kitimat: 0.7 Bcf/d proposed
Douglas Island: 0.25 Bcf/d
Prince Rupert Island: 1.0 Bcf/d
Alaska
Kitimat: 2.0 Bcf/d potential
Canada
Oregon LNG: 1.25 Bcf/d
Kenai: 0.3 Bcf/d
Goldboro: 0.67 Bcf/d potential
LNG Facilities
Jordon Cove: 1.2 Bcf/d
Texas
Approved for exports

Proposed
Operating
Canadian Facilities
LNG Facility Capacity (Bcf/d)

2 to 3
1 to 2
0 to 1
Louisiana
Golden Pass:
2.6 Bcf/d Venture Global: 0.7 Bcf/d
Cameron: 1.7 Bcf/d
Freeport:
Lake
2.8 Bcf/d approved
Charles
2.0 Bcf/d
Delfin
Sabine Pass:
1.8 Bcf/d
2.2 Bcf/d approved
Magnolia
0.9 Bcf/d proposed
1.08 Bcf/d
Melford: 1.8 Bcf/d potential
Cove Point:
1.0 Bcf/d
Elba Island: 0.5 Bcf/d
Corpus Christi: 2.1 Bcf/d

Gulf LNG Liquefaction Company:1.5 Bcf/d
Lavaca Bay, TX: 1.38 Bcf/d
CE FLNG: 1.07Bcf/d
Ingleside, TX: 1.09Bcf/d
Main Pass Energy Hub:3.2 Bcf/d
Barca FLNG: Gulf Coast: 2.8 Bcf/d
EOS FLNG: 1.6 Bcf/d
1.6 Bcf/d
Mexico
Source: U.S. Energy Information Administration based on information from the Department of Energy (DOE), Office of Fossil Energy and the Canadas National
Energy Board. Note: Capacity estimated from larger of FTA or non FTA capacity proposals.

November 11, 2014
13
Most liquefaction projects are in North America and will increase

the regions total capacity 8-fold by 2019
Liquefaction (bcf/d)
Country
Operating Construction Engineering

Peru
0.6
Trinidad and Tobago
2.0
Colombia
0.1
United States
1.2
13.1
Brazil
0.4
Canada
3.3
Total
2.6
1.3
16.8
Regasification (bcf/d)
Liquefaction, operating
Liquefaction, construction
Liquefaction, engineering
Regasification, operating
Regasification, construction
Source: IHS EDIN

Note: Displays larger import/export facilities only
November 11, 2014
Country
Operating Construction Engineering
Argentina
0.9
Brazil
1.2
0.8
Canada
1.0
Chile
0.6
Dominican Republic
0.2
Mexico
2.3
Puerto Rico
0.4
United States
10.2
Total
16.8
0.8
0
14
Currently, the Panama Canal can accommodate only 9% of the

worlds LNG carrier fleet; after the expansion, it will be able to
accommodate 88% of currently active carriers
The Panama Canal and the Trans-Panama Pipeline are not
currently used for significant volumes of petroleum trade and
no LNG trade
The Panama Canal expansion project will open the canal route
to Aframax tankers and 80% of the current global LNG carrier
fleet, resulting in increased regional petroleum and LNG trade
By 2019, liquefaction capacity in the Americas is expected to
increase eight-fold, with most of the projects in the United
States
EIA anticipates increased LNG trade between countries in the
Americas, but traffic from the Americas to Asia (the largest LNG
import market) through the Panama Canal will also increase
November 11, 2014
15
Shale gas in eastern Canada
Of the four shale plays in Eastern Canada, two

have been assessed by ARI
Utica in Quebec has 31.1 Tcf of technically

recoverable resources
Horton Bluff in Nova Scotia has 3.4 Tcf of
technically recoverable resources
These shale resource volumes are not included in

NEBs 2013 estimates
Quebec enacted a hydraulic fracturing moratorium

in 2012 pending further research
New Brunswick permits hydraulic fracturing, but

has imposed strict rules surrounding it
Nova Scotia, similar to Quebec, will not permit

hydraulic fracturing until the completion of a
review, due mid-2014

November 11, 2014
Source: Advanced Resources International, Technically

Recoverable Shale Oil and Shale Gas Resources: An
Assessment of 137 Shale Formations in 41 Countries
Outside the United States
16
LNG export projects in eastern Canada

Planned year in service
Liquefaction capacity
Storage capacity
Contract
Supply sources
NEB approval
Goldboro LNG Terminal
H-Energy LNG Terminal
2019
1.3 Bcf/d
14.6 Bcf
20 year supply deal with E. On AG
2020
0.6 Bcf/d
N/A
N/A
Marcellus, eastern Canada
N/A
Under review
N/A
Maine
Source: Company websites

November 11, 2014
17
Resources in eastern Canada are modest compared with the

Canada national total
Canada marketable resources in trillion cubic feet
as of 12/31/12
Ontario and Quebec
West coast
YK
17
East coast
91
BC
AB
Northern Canada
NU
NT
116
SK
NL
MB
QC
ON
NB
WCSB*
NS
861
0
500
1000
Note: WCSB stands for Western Canada Sedimentary Basin . All Territories are included under Northern Canada.
Source: National Energy Board, Canadas Energy Future 2013

November 11, 2014
18
Key Takeaways from Updated EIA Study of added LNG exports

Prices: Projected average natural gas prices at the producer level average 4% to 11% above
the Reference case projection across export scenarios over 2015-40, while residential natural
gas prices in the export scenarios average 2% to 5% above their base projection
Natural gas production: With the exception of one baseline/scenario pairing, higher natural
gas production satisfies 60% to 80% of the increase in natural gas demand from LNG exports
over 2015-40
Natural gas consumption: The electric power sector accounts for most of the decrease in
delivered natural gas. The electric generation mix shifts towards other generation sources,
including coal and renewables, with some decrease in total generation as electricity prices rise
CO2 emissions: Higher coal use leads to higher carbon dioxide output
Expenditures: On average, from 2015 to 2040, natural gas bills paid by end-use consumers in
the residential, commercial and industrial sectors combined increase 1% to 8% across pairings
of export scenarios and baselines. Increases in electricity bills paid by end-use customers
range from 0% to 3%
Economic gains: Changes in the level of GDP relative to baseline range from 0.05% to 0.17%
and generally increase with the amount of added LNG exports required to fulfill an export
scenario; EIAs NEMS model may understate the economic benefits

November 11, 2014
19
Areas of uncertainty in the outlook

Oil and natural gas prices
Chinas energy demand growth; particularly in transportation
Increasing global trade of natural gas and hydrocarbon gas
liquids in addition to oil
Global development of tight oil and shale gas resources
Policy decisions on crude oil exports and pipeline permits
Impact of geopolitical tensions on energy supply
Constraints on CO2

November 11, 2014
20
For more information

U.S. Energy Information Administration home page | www.eia.gov
Annual Energy Outlook | www.eia.gov/aeo
Short-Term Energy Outlook | www.eia.gov/steo
International Energy Outlook | www.eia.gov/ieo
Monthly Energy Review | www.eia.gov/mer
Today in Energy | www.eia.gov/todayinenergy
State Energy Portal | www.eia.gov/state
Drilling Productivity Report | www.eia.gov/petroleum/drilling/

November 11, 2014
21
Supplemental Slides

November 11, 2014
22
A larger share of new wells produce both oil and natural gas
Share of new wells by production type
100%
natural gas only
90%
80%
70%
oil only
60%
50%
marketed gas
oil and natural gas
production
40%
30%
non-marketed gas
production
20%
10%
0%
2007
2008
2009
2010
2011
2012
2013 2014 YTD
Note: 2014 figure represents averages from January to September 2014

Source: EIA based on DrillingInfo
November 11, 2014
23
Resource and technology assumptions have major implications for

projected U.S. crude oil production beyond the next few years
High Oil and Gas Resource case
million barrels per day
Reference case
2012
14
history
2012
14
history
projections
projections
12
STEO October 2014 U.S. crude oil projection
12
10
10
tight oil
8
tight oil
8
6
6
4
other lower 48
states onshore
lower 48 states
offshore
Alaska
0
1990
2000
2010
2020
other lower 48
states onshore
lower 48 states
offshore
Alaska
0
1990
2000
2010
2020
Source: EIA, Annual Energy Outlook 2014; Short Term Energy Outlook, October 2014
November 11, 2014
24
Most significant contributors to non-OPEC crude and lease

condensate production: Canada, Brazil, U.S., Kazakhstan, Russia
non-OPEC crude and lease condensate production, Reference case
24
2010
2025
2040
18
12
0
Canada
United States
Mexico
Brazil
Kazakhstan
Russia
Other
Source: EIA, International Energy Outlook 2014

November 11, 2014
25
In the Americas, recent gains in oil production are concentrated

in countries with open investment structures
crude oil production by select Americas country
7
United States
6
5
4
Canada
3
Mexico
Venezuela
Brazil
Colombia
Argentina
Ecuador
1
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012

November 11, 2014
26
Tight oil production will spread to nations outside of the United

States and Canada over the projection
tight oil production, Reference case
8
AEO2014 High Resource case
2010
2025
2040
6
5
5.0 MMbbl/d in 2015 (STEO)
3.9 MMbbl/d in 2014 (STEO)
2.9 MMbbl/d in 2013
2
1
0
United States
Canada
Mexico
Russia
Argentina
China
Rest of world
Source: EIA, International Energy Outlook 2014

November 11, 2014
27

Outlook For American Natural Gas - Sieminski - 11112014

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Outlook for North American Natural Gas

Independent Statistics & Analysis

The Americas are the second largest region in natural gas

Middle East and North Africa

Estimated Technically Recoverable Shale Gas Resource

The Americas hold an abundance of shale gas resources,

Estimated reservoired accumulations of undiscovered

Proved natural gas reserves

North American shale plays

LDC Natural Gas Forum

Americas natural gas production is pulling away from other regions

Former Soviet Union

Source: EIA, International Energy Statistics

Total dry natural gas production in the Americas is outpacing

consumption of Americas dry natural gas

Source: EIA, International Energy Statistics

These seven regions accounted for 95% of U.S. oil production

Source: EIA, Drilling Productivity Report

Eagle Ford (TX)

U.S. tight oil production

Bakken (MT & ND)

Delaware (TX & NM Permian)

Haynesville (LA & TX)

Bonespring (TX & NM Permian)

U.S. dry shale gas production

Antrim (MI, IN, & OH)

Utica (OH, PA & WV)

2000 2002 2004 2006 2008 2010 2012 2014

billion cubic feet per day

Source: EIA, Annual Energy Outlook 2014, Reference case

Natural gas consumption growth is driven by electric power,

Source: EIA, Annual Energy Outlook 2014, Reference case

*Includes combined heat-and-power and lease and plant fuel

U.S. becomes a net exporter of natural gas in the near future

billion cubic feet per day

Source: EIA, Annual Energy Outlook 2014 Reference case

Projected U.S. natural gas trade depends on assumptions

High Oil and Gas Resource case

Kitimat: 2.0 Bcf/d potential

Oregon LNG: 1.25 Bcf/d

Kenai: 0.3 Bcf/d

Goldboro: 0.67 Bcf/d potential

Jordon Cove: 1.2 Bcf/d

Approved for exports

LNG Facility Capacity (Bcf/d)

Melford: 1.8 Bcf/d potential

Elba Island: 0.5 Bcf/d

Corpus Christi: 2.1 Bcf/d

LDC Natural Gas Forum

Most liquefaction projects are in North America and will increase

Operating Construction Engineering

Source: IHS EDIN

Currently, the Panama Canal can accommodate only 9% of the

Shale gas in eastern Canada

Of the four shale plays in Eastern Canada, two

Utica in Quebec has 31.1 Tcf of technically

These shale resource volumes are not included in

Quebec enacted a hydraulic fracturing moratorium

New Brunswick permits hydraulic fracturing, but

Nova Scotia, similar to Quebec, will not permit

LDC Natural Gas Forum

Source: Advanced Resources International, Technically