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Shale Gas in North America:

Effects on Canada and CO2 Policies

Maurice B Dusseault

University of Waterloo, Waterloo, Canada

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World Energy Consumption

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The Shale Gas (and oil) Revolution

Since ~2000, vast quantities of natural gas

“found” in low permeability rocks (“shales”)

It has been “unlocked” through technology

Long horizontal well bores can contact ~2 km of

the low permeability reservoir

And, multiple hydraulic fracturing stages along

the well greatly enhances the drainage area

Cheap CH4 is changing the world…

…and, USA oil production is increasing…

Changing CO2 emissions, perceptions, policy

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Fracturing a Horizontal Well

Fracturing takes place

at several locations

along the wellbore

drained

region

cemented

surface

casing

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World Gas Production 2010

Prod in

North

America is

90% USA

and Canada

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Energy – USA – India – China

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The Biggest Producers...

USA now produces more gas than any other

country and is continuing to grow

Russia a close 2nd, gas supplier to the EU…

Canada is third, and about 45% of it used to

be exported to the USA in 2007, now this is

dropping rapidly, probably below 30%

Other countries are increasing production

China is 7th now, growing rapidly, getting

foreign companies in to make investments in

shale gas and tight gas development

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Natural Gas Annual Production

0 200 400 600x109 m3

United States 611

Russia 589

Canada 152

Iran 139

Qatar 117

Norway 106

China 103

Netherlands 85

Algeria 85

Saudi Arabia 84

x109 m3

In 5 years… (since 2007)

Russia has dropped 10%

Canada has dropped 10%

But USA has increased 5%

Source: CIA World Factbook website

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Gas Occurrence Shale Gas: continuous

formation, no “trap”, low k,

low ø, may be sweet spots,

naturally fractured regions

Very deep

gas zones

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Unconventional Gas - Resources

Region

Coalbed Methane

(Tcf)

Shale Gas (Tcf)

Tight Sand Gas (Tcf)

Total (Tcf)

North America 3,017 3,840 1,371 8,228

Latin America 39 2,116 1,293 3,448

Western Europe 157 509 353 1,019

Central & Eastern Europe 118 39 78 235

Former Soviet Union 3,957 627 901 5,485

Middle East & North Africa 0 2,547 823 3,370

Sub-Saharan Africa 39 274 784 1,097

Centrally planned Asia & China 1,215 3,526 353 5,094

Pacific OECD 470 2,312 705 3,487

Other Pacific Asia 0 313 549 862

South Asia 39 0 196 235

World 9,051 16,103 7,406 32,560

(From Kawata and Fujita,

2001; after Rogner, 1997)

How much is this?

Based on current

consumption, >60 yr

with 30% recovery. But,

these are very old data!

8228

Tcf

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US Energy Consumption by Fuel

THIS WILL GROW!

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Natural Gas Use by Sector

THIS IS GROWING!

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Canada Shale Gas

This is the major

Canadian activity area.

It is probably a modest

fraction (30-40%) of

overall Cdn potential

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Shale Gas Growth in the USA

In 2005, 4% of USA natural gas came from

“shale gas reservoirs” (Barnett, in Texas)

In 2011, June, 23% came from “shale gas”!

Haynesville, Barnett, Eagle Ford, Marcellus,

and other shale gas plays...

This will likely rise to over 40% by 2020

China is likely to follow the same path, but

about 8-10 years later...

What happens to Canadian exports?

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Canadian Shale Gas Plays

Horn River

Potential gas in place: 144 to 600 Tcf

Producing since 2007

Montney

Potential gas in place: 80 to 700 Tcf

Producing since 2005

Colorado

Potential gas in place: > 100 Tcf

Producing since 1930s

How much is 1400 Tcf?

Canadian production

is now about 6 Tcf/yr

30% recovery = 420 Tcf

= ~70 yr reserves, just

from these three areas

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Shale Gas Effects...

United States is importing LESS gas

LNG shipments must go elsewhere (China)

Gas partly replaces oil in some applications

Gas is replacing coal for electrical power

generation, no new coal plants & less CO2

The economic power of Russia, Venezuela,

and Iran will diminish internationally

The world energy game is changing, and...

Canada is being impacted!

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Price over 35 Years

Effect of shale gas

Now – in late 2012 – the

price for CH4 remains

below $2.50/MMBTU

…drilling has slowed, but

a CH4 glut will remain for

quite a few years!

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http://petroviews.blogspot.ca/2012/02/natur

al-gas-price-how-low-can-it-go.html

Gas Prices and Recessions…

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…and, Generating Electricity…

http://www.petrostrategies.org/Graphs/gas_and_residual_fuel_comparison.htm

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Future Growth…

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Economic Risks to Canada

TCPL is now at 50% capacity, and this will

drop lower in the next 10-15 years

Imports from USA in Ontario & Quebec

Alberta’s and BC’s central Canada markets?

Encana almost on the ropes, very badly hit

…and other Canadian CH4 producers also

New markets are needed

Pipelines + LNG Terminals West Coast

LNG to Japan, Taiwan, Philippines…

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On the CO2 side…

USA has more than met its CO2 Kyoto

proposed targets

No new USA coal-fired plants to be built

Displacement of some gasoline will take

place – CNG city cars, shorter haul trucks

LNG exports to Japan and other countries

will lower CO2 emissions world wide

CO2 has “fallen off the radar” in the US, EU

…and, the economic, political and social

impacts in Canada are large…