1. N. America Gas Supply Without Any Drilling or Development
Bcfd
Demand ?
100
Canada 80 60
This is what would happen if the industry were to stop drilling and developing gas reserves in North America today. The production level would rapidly fall off and reach a critical level almost immediately.
USA 40 20
1990
Mexico
2010

2. Natural Gas Reserve Adds Fail to Match Production
32 Tcf
Tcf 30 25
Canada 20 15 10
As you can see, the gas reserve adds over the past decade have been averaging around 22.5 TCF/year – against a production level of around 35 TCF/year. Even with discounting for re-injection of Alaskan gas, the industry has been unable to match production volumes.
The different colors reflect reserves added in the various areas around North America, with some of the more significant areas notes.
GOM 5
1990
2000
US & Canada by Region
(32 Tcf Raw Prod. In 2000)

3. Paths & Pitfalls Toward a U.S. 34 Tcf Market
EIA 2002 Outlook:
34 Tcf 2020 demand (2% avg. ann. Growth)
Are DOE supply assumptions realistic?
Rockies Tcf
Canada Tcf
Gulf coast Tcf
Deepwater GOM Tcf
Appalachian Tcf
Mid-continent Tcf
Alternatives
LNG imports Tcf

4. Western Canada Vintaged Daily Gas Production 1990 - 2010

5. Western Canada has Potential if the Price is Right …
30 Bcfd
44.6 Tcf
Remaining
$5.00 Gas Price
2010
Canada contains the largest Remaining Gas Reserves in North America
- largely located in Western Canada – where some 44.6 TCF of remaining reserves exist
- but also include some 26.7 TCF in Frontier areas like the Mackenzie Delta and offshore East Coast Canada .
20 Bcfd
$2.00 Gas Price
…and Government
Policy Cooperates.
1990
2010

6. Mean 2P Gas Resources Bcf
AK - N. Slope
77,572
U.S. Probable Possible Speculative Total*
223, , , ,090,997
Rocky
Mountain
135,796
51,543
10,660 ?
70%
North
Central
7,460
Atlantic
40,751
13,912
Pacific
17,027
Mid
Continent
95,790
3,050
This map shows December 2000 Potential Gas Committee estimates of most likely probable gas resources by region. Probable resources are those associated with known producing trends and could be developed with current technologies. Conventional resources are in bright red; coalbed methane resources in dark red. Most of the probable resources are in existing proven producing provinces including offshore GOM, Gulf Coast onshore, mid-continent, Rocky Mountains and Alaska North slope. The rather modest estimate for offshore GOM amplifies prior concerns about the potential for offshore fields to yield substantial increases in gas production. Rocky Mountain Basins with a combination of untested conventional and coalbed methane resources is perceived to have the largest probable resource base. There likely will be a shift in E&P investments toward this region.
If we are to meet 30Tcf gas demand forecasts while maintaining reserve/production ratios it will be necessary to find and develop at least 300 Tcf of reserves over the next decade. Theoretically, this would encompass all of the estimated probable resource and a good part of the possible resources identified in this report. This represents a considerable challenge.
Gulf Coast
85,247
*Includes Coalbed Gas
67,664
Source: PGC: December 2000
© Petroleum Information/Dwights LLC d/b/a IHS Energy Group.

7. Central Rockies 2001 Wells
Pavilion
7,866 wells
250 Bcf 2001
Jonah
Madden
Bruff
Wamsutter
Echo Springs
EIA: 43% of Rockies gas - "unavailable for drilling due to
environmental regulations, lack of pipeline capacity,
or other barriers to development."
Natural Buttes
Drunkards
Wash
Wattenburg
Grand Valley
Rocky Mountain Region Permits YTD August 9
March July
New , , ,
Abandoned ,042
Raton
San Juan
Basin

8. San Juan, Black Warrior, Powder River, and other US Basins
Coal Bed Methane
BCFD 4 3 2 1
1990
2010
San Juan, Black Warrior, Powder River, and other US Basins

9. Offshore GOM Vintaged Daily Avg. Gas Production

10. Alaska Gas Potential 44.1 Tcf remaining reserves (41.4 on N. Slope)
Almost all used for pressure maintenance
Gas in Cook Inlet exported as LNG to Asia
Gas pipelines must traverse Canada
26.6 Tcf competing reserves closer to market
Gov’t support required for investment
Bottom line potential – 4 to 6 Bcfd post 2010

11. LNG Import Potential 2001 2010 LNG valid in $3.50 - $5.00 Price Range
Bcfd 9 7
New 5
Convert 3
Expand
Improvements in LNG technology and construction techniques have lowered the cost to liquify, transport and regasify natural gas in recent years. Current LNG Regas capacity in the United States is around 3 BCFD, and plans are a-foot to increase that capacity to around 5 BCFD in the near future through expansion and conversion of existing facilities on the East and Gulf Coasts of the USA. New facilities are under negotiation for Baha California, Tampico Mexico, and several other locations along the US Gulf Coast.
One feature you might keep in mind about LNG is this – terminals located along the US Gulf Coast could easily feed into the existing gas pipeline infrastructure as domestic supplies deplete – and the existing gas pipeline network is already much more advanced than any liquid fuel distribution system in addition to the far superior environmental position of gas over either oil or coal.
Existing 1
2001
2010
LNG valid in $ $5.00 Price Range

12. North America Gas Production Forecast @ $3.00
Projected Demand

13. North America Gas Production Forecast @ $5.00
Projected
Demand

14. Natural Gas Going Forward
Market shifting from demand-driven to supply-driven
Industry will find it difficult to maintain flow
Canadian energy policy will have big influence
LNG imports increasingly important
Paradigm shift to imports outside of North America
Frontier Canada, Deepwater GOM, CBM and other projects share importance – all needed
Bottom line: Fundamental upward pressure on gas prices
In summary, the

15. Gas Supply & Policy Issues
Gas supply issues more urgent than oil.
Drilling alone won’t meet demand growth
Smaller reserves, steeper production declines
Price (volatility) not adequate to pull needed capital
5 + years to tap new supplies
Policy principles same as oil:
Access to prospective lands
Investment incentives – tax credits, royalty relief
Efficient regulatory processes – reduce delays & costs
Long term stability:
Arctic and LNG: price > $4.00 Mcf

16. Critical Issue: Capital Requirements
Global Oil & Gas Supply
Critical Issue: Capital Requirements
Oil: To achieve 119 Bbo demand in 2020
Need 42 MMbd new + 48 MMbd replacement
Estimate $1 Trillion for oil E&P investment
Natural gas: To achieve 162 Tcf demand in 2020
Need 180 Bcfgd new capacity
Estimate $2T overall investment (LNG & pipelines)
Assuming an average capacity increase cost of US$ 10 billion per million barrels of oil per day and a requirement for 5 million barrels per day of new production, over 20 years this totals a nice round trillion US dollars!

17. “Energy and Environment: A Partnership that Works”
2002 AAPG Briefing
“Energy and Environment:
A Partnership that Works”
Energy Supply Setting
Pete Stark
IHS Energy Group
Washington, D.C.
23 September, 2002