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Modeling Primary Energy Substitution in Asia Pacific Roberto F. Aguilera Washington DC, 11 October 2011

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics OBJECTIVES To present projections of the future energy mix in Asia Pacific using a Global Energy Market Model (GEM) To discuss effects of energy policy To assess the availability of natural gas

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Methodology

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific Population and Consumption

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific Energy Mix (Reference) Source: Aguilera and Ripple (2011c), Applied Energy, under review

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific Energy Mix (Alternative 1) Source: Aguilera and Ripple (2011c), Applied Energy, under review POLICIES: Gas price setting Coal subsidies Restrict foreign investment

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific Energy Mix (Alternative 2) Source: Aguilera and Ripple (2011c), Applied Energy, under review POLICIES: Environmental (e.g. taxes on fuel, emissions, subsidies for NGVs,) Deregulation, privatization Consistency across borders Nuclear restrictions

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific H/C Ratio Source: Aguilera and Ripple (2011c), Applied Energy, under review

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific Gas Consumption

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics USGS World Petroleum Assessment (2000) USGS (2000) divides Asia Pacific into 290 provinces Evaluated 77 provinces for known + undiscovered gas quantities

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics USGS World Petroleum Assessment (2000) 1. Northwest Shelf 2. Kutei Basin 3. Greater Sarawak Basin 4. Malay Basin 6. Tarim Basin 5. Ganges-Br. Delta

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Variable Shape Distribution (VSD) Model Used to estimate volumes natural gas in previously unassessed provinces Unlike other models, VSD is not based on an assumed distribution (e.g. Pareto or lognormal)

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Source: Aguilera and Ripple (2011a), Applied Energy VSD (Variable Shape Distribution) Model

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics VSD (Variable Shape Distribution) Model Source: Aguilera and Ripple (2011a), Applied Energy

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics VSD (Variable Shape Distribution) Model Source: Aguilera and Ripple (2011a), Applied Energy

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics VSD (Variable Shape Distribution) Model Source: Aguilera and Ripple (2011a), Applied Energy

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific Natural Gas Endowment Source: Aguilera and Ripple (2011a), Applied Energy

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific Natural Gas Endowment Source: Aguilera and Ripple (2011a), Applied Energy Cumulative Production (264 TCFG) Source: BP (2011)

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Distribution of Gas Endowment by Country TOTAL: 2,240 TCFG Source: Aguilera and Ripple (2011a), Applied Energy

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics Asia Pacific Gas Supply Cost Curve Source: Aguilera and Ripple (2011b), WPC Source: BP (2011)

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics SHALE GAS Source: Aguilera et al. (2008), World Petroleum Congress

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics SHALE GAS TECHNOLOGY: HYDRAULIC FRACTURING Source: American Petroleum Institute (2010)

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics AUSTRALIAN GAS RESOURCE PYRAMID Source: Geoscience Australia (2010)

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics AUSTRALIAN SHALE GAS BASINS Source: Geoscience Australia (2010) Source: adapted from USGS (2000)

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics WORLD GAS SUPPLY CURVE Source: Ripple (2011), Australian Ambassadors Speaker Series

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics WORLD GAS SUPPLY CURVE Source: International Energy Agency (2009)

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CRICOS Provider Code Curtin 00301J (WA) 02637B (NSW) www.business.curtin.edu.au/creme Centre for Research in Energy and Minerals Economics CONCLUSIONS Natural gas in Asia Pacific more abundant and economic than commonly assumed Appropriate energy policy needed to access potential with minimal environmental impact Gas will have positive impact on energy security, environment, economic growth

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Modeling Primary Energy Substitution in Asia Pacific THANK YOU Washington DC, 11 October 2011 r.aguilera@curtin.edu.au