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By: ,
By: ,
17th INTERNATIONAL CONFERENCE & EXHIBITION
ON LIQUEFIED NATURAL GAS (LNG 17)
Access to Gas – Revisiting the LNG Industry’s
Big Challenge
By: Frank Harris,Head of Global LNG Consulting
Wood Mackenzie
17th April 2013
17th INTERNATIONAL CONFERENCE & EXHIBITION ON
LIQUEFIED NATURAL GAS (LNG 17)
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Strictly Private & Confidential – Wood Mackenzie Disclaimer
This presentation has been prepared by Wood Mackenzie Limited for delivery on
April 17th, 2013 at the LNG17 Conference. It has not been prepared for the
benefit of any particular attendee and may not be relied upon by any attendee or
other third party. If, notwithstanding the foregoing, this presentation is relied
upon by any person, Wood Mackenzie Limited does not accept, and disclaims,
all liability for loss and damage suffered as a result.
These slides and the contents of this presentation may not be disclosed to any
other person or published by any means without Wood Mackenzie Limited's prior
written permission.
© Wood Mackenzie 2
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Accessing gas feedstock for LNG projects has been a consistent
challenge for the industry
© Wood Mackenzie 3
At LNG 15 we considered the challenges associated with accessing NOC
controlled gas resources, and forecast a shift towards exploration by the IOCs
At LNG 16 we looked at the challenges of using unconventional gas to feed LNG
plants as players began to develop projects utilising gas from coal-seams or coal-beds (CSG/CBM) and from shale
Today, at LNG 17, we revisit those challenges and consider where the industry
goes from here
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The industry needs a lot of extra gas to support LNG production
© Wood Mackenzie 4
Demand is set to nearly double by
2025
Need to factor in loss of production
from existing plants (which tends to be
under-estimated)
Gap in 2025 of ~160 mtpa equates to
~180 tcf of gas feedstock to support
20 year production
Additional LNG Requirement (2025)
Demand
0
50
100
150
200
250
300
350
400
450
2012 2025
m
p a
Operational Under Construction
Gap of ~160 mtpa,~8.5 tcf per year
Demand
Source: Wood Mackenzie
Gap of ~160 mtpa,
~8.5 tcf per year
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That gas is expected to come from a combination of three types
of resource
© Wood Mackenzie 5
Already discovered
conventional gas- NOC and/or IOC
controlled
Exploration foradditional
conventional gas
Unconventional gas:
from shale and/orcoal
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~7800 tcf
The gas resource base has grown massively since LNG 15…
© Wood Mackenzie 6
Unconventional gas in North
America has been huge
Exploration has also been amajor focus and opened up
East Africa to the LNG industry
(2007) (2012)
Global Gas Resource
~4900 tcf
0
20
40
60
80
100
120
2007 2008 2009 2010 2011 2012 1H
t c f
Discovery year
Rest of World Australia East Africa East MediterraneanSource: Wood Mackenzie
Conventional Unconventional
Conventional Gas Resource Additions via Exploration (2007 – 2012)
~4900 tcf ~7800 tcf
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…and IOCs now have access to more resource opportunities,
without the need for NOCs
© Wood Mackenzie 7
IOCs have discovered a lot
more gas via exploration
NOCs have upgraded reserves
But most unconventional gas is
controlled by the IOCs
So, critically, IOCs now have
more gas to play with therefore
a greatly reduced need to
focus on NOC opportunities
65%~3120 tcf
35%~1660 tcf
65%~3860 tcf
35%~2100 tcf
(2007) (2012)
Conventional Gas Resource – NOC vs. IOC
Source: Wood Mackenzie
NOC IOC
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We expect IOCs to pursue a mix of unconventional gas,
discovered conventional gas and exploration
© Wood Mackenzie 8
While the volume of unconventional gas potentially available has increasedmassively, there are limits on its use as LNG feedstock
So in addition, IOCs will focus on the conventional resources that they control,
with East Africa increasingly supplementing Australia
Players will continue to explore, but careful focus will be required to ensure that
gas can be commercialised
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This mix is reflected in the evolving portfolios of selected IOCs
that are big players in LNG
© Wood Mackenzie 9
Focus has broadened in the last six years, to encompass less NOC
opportunities, exploitation of discovered gas, exploration plus unconventional
Gas Resource for LNG Supply – Focus Countries Early
2013
Gas Resource for LNG Supply – Focus Countries Early
2007
Source: Wood Mackenzie
Important to several
of the selected IOCs
Important to nearly all of
the selected IOCs
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LNG Project Developers also have to take buyers’ preferences
and requirements into account
© Wood Mackenzie 10
US
Canada
East Africa
Australia
Russia
Traditional Asia
Supply
Diversity
HH Pricing
Exposure
Unconventional
UpstreamRicher
LNG
In aggregate, these suggest that the current focus on North America is
appropriate, and that East Africa could prove to be a harder saleSource: Wood Mackenzie
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Conclusions
© Wood Mackenzie 11
C o n c l u
s i o n s
Lots of gas needed to meet demand growth and to replace lost capacity
Good news is that the resource base has grown massively
Challenge now is less about how to access gas, more how to combine options
It appears that this will comprise a mix of unconventional, IOC controlled conventionalgas and more exploration, as reflected in IOC gas portfolios
NOC controlled gas is the big loser
Developing LNG projects will never be easy, but perhaps we should all now feel a littlemore comfortable
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Contacts
© Wood Mackenzie 12
Name: Noel Tomnay
Position: Head of Global Gas, Gas Research
T: +44 131 243 4511
E: noel.tomnay@woodmac.com
Name: Giles Farrer
Position: Senior Analyst – LNG & Global Gas Research
T: +44 203 060 0461
E: giles.farrer@woodmac.com
Name: Frank Harris
Position: Head of Global LNG Consulting
T: +44 (0)131 243 4249
E: frank.harris@woodmac.com
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© Wood Mackenzie 13