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The State of Natural Gas Supply APPA Meeting

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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  1. The State of Natural Gas SupplyAPPA Meeting Dave Risser, Marathon Mark Quartermain, Shell March 15,2011 Phoenix, AZ

  2. 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

  3. Decade of Growing Natural Gas Infrastructure

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  5. 5 5

  6. How Shale Produces Natural Gas 6 6

  7. 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

  8. #

  9. Ebb and Flow of Commodity PricesNatural Gas 2002-2010 Changes in price Source: CME Group, a CME/Chicago Board of Trade Company

  10. Ebb and Flow of Commodity PricesNatural Gas compared to Crude Oil & Coal 2002-2010 Source: CME Group, a CME/Chicago Board of Trade Company

  11. Ebb and Flow of Commodity PricesNatural Gas compared to other Major Commodities 2002-2010 Source: CME Group, a CME/Chicago Board of Trade Company

  12. 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.

  13. 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

  14. 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

  15. Thank You

  16. Backup Slides

  17. 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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