Human creativity and the shale revolution - Cameron … · Human creativity and the shale...

Human creativity and

the shale revolution: Will hydrocarbons continue to play a

role in Oklahoma’s future?

Outline Subjects covered in this brief

NYSE: DVN www.devonenergy.com page 2

Price spikes

and the call

for diversity

Technology

and

innovation

U.S. energy

policy that

allows

creativity

Unstoppable

global

demand So what for

Oklahoma

Global projection of renewables Clearly on the rise (Graph does not include hydroelectric power)


0

1

2

3

4

5

6

7

8

9

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Renewables share of power generation by region

World Asia Pacific Africa Middle East Europe & Eurasia S. & Cent. America North America

Source: BP Statistical Review of World Energy, June 2013, pg 37

Past decade gas prices


Ancient Chinese saying (Not really)


“ A billion Chinese are not going to continue to ride bikes, so that Americans can have 2 dollar gas!” - Confucius

Gas prices

• Response to price spikes of

‘05-’09

– Calls for increase price

controls

– Conservation mandates

– “Drill baby drill”

– Diversify into

alternatives and

renewables

• Importance of U.S. energy

policy

Spring of 2008


Crude oil imports/exports


Global petroleum market

Enter creativity

• Man’s ingenuity sought a solution to the global energy

constraints.

• Man began looking for energy in other places, and to harness the

energy all around, such as solar and wind.

• Man also turned back to oil and gas contained in very tight rock

and started what is now known as the shale revolution.


U.S. energy policy

“The fracking revolution required more than just favorable geology; it also

took financiers with a tolerance for risk, a property-rights regime that let

landowners claim underground resources, a network of service providers

and delivery infrastructure, and an industry structure characterized by

thousands of entrepreneurs rather than a single national oil company.

Although many countries possess the right rock, none, with the exception

of Canada, boasts an industrial environment as favorable as that of the

United States.”

- Robert D. Blackwell and Meghan L. O’Sullivan “America’s Energy Edge: The Geopolitical Consequences of the Shale Revolution,” (Foreign Affairs,

March/April, 2014) Council on Foreign Relations, Foreign Affairs online.

How America is different


U.S. energy policy Continued


Hydraulic fracturing a brief history


• Hydraulic fracturing is a

well-established

technology with a strong

environmental and safety

record

• The technology has been

used to complete more

than 1 million wells over

the past 60 years

Technology’s role: Why the revolution


Traps vs. shale's

Migrating hydrocarbons

Impermeable

sealing layer Shale

Frack Porous and permeable

reservoir layer

Hydrocarbon Trap

organic rich

source layer

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

Hydraulic fracturing How it’s done


Shale revolution timeline The accumulation of creativity and tenacity


1976 – First 3D seismic survey

done by Western & GSI

1984 – Sun-Oil horizontal

drilling

1995 – Continental drills very productive horizontal wells in N.

Dakota

1997 – Mitchell

Energy drills 3 wells in

Barnett Shale using “slick

water” fracture

2001 – Devon Energy buys

Mitchell Energy

2003 – Devon announces

combination of slick-water

frack and horizontal drilling at

AAPG symposium

U.S. shale plays


World shale plays


Fuel to electricity generation

In quadrillion BTU’s


Source: ExxonMobil Energy Outlook, June 2013, pg 29

A projection to 2040

World electricity demand A projection to 2040 In thousands of terawatt hours



World energy demand A projection to 2040 In quadrillion BTU’s


0

20

40

60

80

100

120

140

2000 2025 2040

OECD World energy demand projection

North America Europe Other OECD

0

20

40

60

80

100

120

140

2000 2025 2040

Non OECD World energy demand projection

China India Russia/Caspian Middle East Africa Latin America


Total hydrocarbon reserves Oil, coal, gas In Bboe


-

200

400

600

800

1,000

1,200

Unit

ed S

tate

s

Russ

ia

Chin

a

Aust

ralia

Iran

Venuzu

ela

Saudi Ara

bia

Kaza

khst

an

Canada

South

Afr

ica

Qata

r

Iraq

Unit

ed A

rab E

mir

ate

s

Turk

menis

tan

Kuw

ait

Nig

eri

a

Alg

eri

a

Bra

zil

Mexic

o

Angola

Total reserves of hydrocarbons by country

Oil Coal Nat Gas

Top 10 U.S. states 2012 Natural gas production


0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

TX LA PA OK WY CO NM AR WV UT

Natural Gas Marketed Production, million cu ft

Source: EIA.gov http://www.eia.gov/state/rankings/?sid=US#/series/47

U.S. energy policy

• Nations must have diversification of supply

• Policymakers recognize there is one (global) oil market

• Maintain a security margin and global spare capacity

• Government intervention and controls are not productive

• Build cooperative relations with export nations

• Build cooperative relations with import nations

• Maintain a proactive security framework

• Provide good quality information

• Maintain a technology-driven energy industry

• Commit to research, development and innovation across a broad spectrum of energy options

Source: Yergin, “Energy Security and Markets,” in Energy and Security: Toward a New Foreign Policy Strategy, eds. Jan H Kalicki and David L. Goldwyn (WDaniel ashington, DC: Woodrow Wilson Center Press, 2005), 55-57.

Yergin’s timeless 10 principles


Thank You

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Human creativity and the shale revolution - Cameron … · Human creativity and the shale...

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