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Gas in North America & the Potential Impact on the International Energy Trade
Analysis of Production History
Remaining ReservesCumulative Production
Reserve Adds
Initial Production & Decline Rates
Field Size Distribution => Yet To Find (YTF) All Content 2003 IHS Energy
North American Gas Reserves - 2000
1200
Original Remaining YTF YTF >300BCF
600USA
Can
Mex
200
400
800
1000
TCF
All Content 2003 IHS Energy
Gas Reserves vs. Production
RemainingProductionRemainingReserves Rate R/P Ratio YTF(tcf) (tcf/yr) (yrs) (tcf)
Canada 71.3 7.5 9.5 169.5
USA 197.9 24.1 8.0 401.2
Mexico 50.0 1.7 29.4 58.2
Note: combined USA & Canada R/P is 7.4 without Alaska and Canadian Frontier
All Content 2003 IHS Energy
Natural Gas Reserves Added to the System
25
USA & Canada by Region(Avg. Prod. = 31.5 TCF/Y)
1990 2001
30
20
15
10
5
35 Avg. Prod.
TCF
All Content 2003 IHS Energy
North American Gas in 2000
USA, Canada & Mexico combined
67 BCFD Gas Delivered to Consumers
91 BCFD Raw Gas Production
120 BCFD Pipeline System
3 BCFD LNG Re-gas Capacity
4 TCF Storage(78 BCFD in/out)
14 BCFD Fuel & Extr. Losses
10 BCFD Alaska
All Content 2003 IHS Energy
Existing InterstatePipeline Network
Largely Unconstrained Year to YearAll Content 2003 IHS Energy
Total US Gas Storage
Little Growth since 1980, Except in Swing Volume
Total Gas in Storage(from EIA)
0
1000
2000
3000
4000
5000
6000
7000
8000
Dec
-73
Dec
-74
Dec
-75
Dec
-76
Dec
-77
Dec
-78
Dec
-79
Dec
-80
Dec
-81
Dec
-82
Dec
-83
Dec
-84
Dec
-85
Dec
-86
Dec
-87
Dec
-88
Dec
-89
Dec
-90
Dec
-91
Dec
-92
Dec
-93
Dec
-94
Dec
-95
Dec
-96
Dec
-97
Dec
-98
Dec
-99
Dec
-00
Dec
-01
Time
BC
F
8,241 BCF Total Capacity
Monthly Demand is Variable
Annual Swing can be 40 BCFDAll Content 2003 IHS Energy
US Raw Gas Demand Sensitivity
5 10 15 20 25 30
BCFD
Power
Industrial
ResidentialSevere Weather
Mild Weather
Low Gas Price
High Gas Price
Low Gas Price (relative to Fuel Oil)
High Gas Price (relative to Fuel Oil)
4.0 BCFD
3.3 BCFD
6.0 BCFD
Delta
All Content 2003 IHS Energy
US Power & Alt. Fuels
Coal 37.2 %
Gas 27.2 %
Nuclear 11.6 %
Hydro 10.6 %
Oil 8.0 %
Other 5.4 %
About 50% of Gas can shift to Oil – for a 150% increase in oil requirements, while 10% of Coal and 40% of Oil can shift to Gas – for a 25% increase in Gas.
All Content 2003 IHS Energy
Gas Balance by Region
BCFD Pacific(9+12)
Mtn.(8+11)
Canada Mexico W. Cent.(4+7)
GOMOn+Off
E. Cent.(3+6)
Atlantic(1+2+5+10)
Supply + 1.0 + 11.1 + 20.6 + 4.7 + 16.7 + 26.1 +2.7 + 0.0
Demand - 9.5 - 3.9 - 9.4 - 5.6 - 23.0 - 0.0 -15.2 -15.7
Net - 8.5 + 7.2 +11.2 -0.9 - 6.3 + 26.1 - 12.5 -15.7
Canada
Mexico
Data for 2001 – some numbers are roundedAll Content 2003 IHS Energy
Raw Gas Demand
0
20
40
60
80
100
120
140
1990 1995 2000 2005 2010 2015 2020
BC
FD
Mexico
Canada
Atlantic
E. Central
W. Central
Rockies
Pacific
All Content 2003 IHS Energy
Gas Supply – Current Activity Level
(Note: Alaska gas production shown as pipeline only)
120
100
80
1990 2020
BCFD
All Content 2003 IHS Energy
Existing YTF Drilling Frontier Dev. LNG Imports Alaska Pipeline
Gas Supply – Maximum Activity Level
(Note: Alaska gas production shown as pipeline only)
120
100
80
1990 2020
BCFD
All Content 2003 IHS Energy
Existing YTF Drilling Frontier Dev. LNG Imports Alaska Pipeline
Supply DemandAll Content 2003 IHS Energy
Frontier Canada Gas• Reserves (Discovered Undeveloped)
• 8.9 tcf in NWT – Mackenzie Delta• 17.7 tcf in East Coast Canada
• Labrador, Grand Banks, & Scotian Basins
• Depends upon Pipelines for Development• Expect 1-2 BCFD from NWT – Mackenzie Delta• Expect 2-3 BCFD from East Coast Canada
• Economic to Develop in $3 - $4.5 Price Range• Consistently Robust Price is Key to Investment
• Expected Timing – Late in this Decade at Best
All Content 2003 IHS Energy
Canadian Export PotentialCanada Gas Balance
0
5
10
15
20
25
30
35
1990 1995 2000 2005 2010 2015 2020
Raw
Gas
(B
CF
D)
Gas Supply $5.00
Gas Supply $3.50
$2.00 Demand
$3.50 Demand
$5.00 Demand
All Content 2003 IHS Energy
Alaska Gas Potential
• 44.1 TCF Remaining Reserves (41.4 on N. Slope)• Almost all Production Currently Re-injected • Gas in Cook Inlet Exported as LNG to Asia
• Gas Pipelines must Traverse Canada• 26.6 TCF Competing Reserves Closer to Market
• Long Term Contracts & Gov’t Support before Investment• Free Trade Issues are Rising Between US & Canada
• Expected Volume & Timing – 2 to 4 BCFD post 2010
All Content 2003 IHS Energy
Mexican Gas
Mexico Gas Balance
0
2
4
6
8
10
12
14
16
1990 1995 2000 2005 2010 2015 2020
Raw
Gas
(B
CF
D)
$2.00 Demand
$3.50 Demand
$5.00 Demand
Gas Supply
All Content 2003 IHS Energy
LNG Import Potential
2001 2010
9 BCFD
5 BCFD
LNG valid in $3.50 - $5.00 Price Range
New
Existing
Convert
Expand
1 BCFD
3 BCFD
7 BCFD
All Content 2003 IHS Energy
World Gas Situation
CanadaUSAMexicoWorld
CanadaUSAMexicoWorld
7% of the World’s Population Consumes 31% of the World’s Gas Production
Population Consumption
Reserves Production
5% of the World’s Gas Reserves Produce 32% of the World’s Gas Production
All Content 2003 IHS Energy
Gas Price Forecast
• Continental gas supply will be marginally adequate with sustained gas prices @ $3.50/ mcf
• High decline rates make the system unstable at gas prices below $3.00/mcf
• Large supplies of LNG are available at gas prices around $4.50-$5.00/mcf, but normally require longer term agreements
All Content 2003 IHS Energy
Conclusions• US-Canadian trade relations are critical to continued gas exports to
the USA and future development of frontier gas reserves in Alaska, NWT and the East Coast of Canada
• Mexico must re-invent itself soon or face rising costs for gas imports from either the USA or via LNG or both
• LNG import volumes to the USA will cause a shift in both the world gas trade and the way gas is contracted in the USA (long term contracts similar to European markets)
• Logistical constraints of alternative fuels and steep domestic gas decline rates will strain the traditional gas to oil price linkage
All Content 2003 IHS Energy
Gas in North America & the Potential Impact on the International Energy Trade