Rigs Don't Matter -- Laying Down Rigs, Shutting In Wells, And Still It Rises -- And So Do Exports .... Natural Gas -- Part 2 -- May 30, 2020

In response, I suppose, to my post earlier today: rigs don't matter -- US natural gas production continues to increase, a reader sent me a note. But before we get to that note, a reminder of what I wrote earlier:

Natural gas fill rate, link here. Look at these numbers, simply staggering. And this comes despite the industry "shutting down" as fast as it can:

• working gas storage: an increase of 109 BCF from the previous week
• working gas storage: an increase of 42% year-over-year
• working gas storage: an increase of 19% over 5-year-average (and the 5-year average keeps increasing)

Not entirely true, but from my perspective, the three major US shale oil plays are actually giving the US shale natural gas plays a run for their money.

Over the past few weeks, I have caught some of the stories regarding the US natural gas industry but a reader really, really put it into perspective. So, while protesters tear down the US and drive to their destinations in SUVs running on inexpensive, readily accessible, and consistently pure-grade gasoline or diesel fuel, this is what "their" US energy sector is doing. Again, a huge "thanks" to the reader for putting this all together:

• Deals:
• Ukraine just signed purchase agreement for US LNG for annual out put of one (1) standard LNG train (~5 mtpa); the Ukraine is in Russia's backyard;
• Turkey is not repairing the damaged gas pipeline from Iran and, instead, is purchasing US LNG
• likewise, US LNG is cheaper than piped Gazprom pricing (~$7/mmbtu) and so Turkey is also reducing LNG from Russia 
• the Yamal-Poland gas pipe currently not flowing supply as Poland ramps up purchases of US LNG
• both Algeria and Egypt have greatly curtailed exports of natgas due to low pricing.
• Customers such as Cyprus, Croatia, Italy, Hungary are either now switching to US LNG purchases or are planning to
• Qatar is struggling to extend LNG supply contracts to both India and Pakistan as their ~$7/mmbtu prices are higher than current ~$4/$5 spot mostly sourced from USA 
• Singapore is not renewing contracts to receive piped gas from nearby Malaysian and Indonesian suppliers as  US LNG prices are so much lower 
• the reader's favorite: the world's leading LNG exporter - Australia - may start IMPORTING LNG from US into Port Kembla by next year.
• Reader's comments:
• people seem generally oblivious to the ultra-low cost to extract US 'shale' natgas, liquefy it, and transport it in ships that use the "boil off gas" for fuel (essentially cost free fuel).
• just as the Saudi government is pinched for oil-connected revenues, other global players are starting to be squeezed in a BIG way by competition from US LNG.

My comments:

Those are amazing data points; I had no idea of the "immensity."

I had seen a few of these data points over the past few weeks but I only caught a few of them. When all of them are put together, as you note, it's a reminder (for lack of a better word) how incredibly dominant the US energy sector really is.

Some years from now, I suspect, the current demand destruction issue / COVID-19 pandemic will be seen as a speed bump and at best a footnote in America's energy history.

Boil off gas (link here): 

Wow, It Simply Never Quits -- UAE Natural Gas Discovery Could Be Largest Since 2005 -- Bloomberg -- February 3, 2020

Link here.

• new discovery: the Jebel Ali reservoir
• located between Dubai and Abu Dhabi (two biggest sheikhdoms in the United Arab Emirates)
• 80 trillion cubic feet of gas resources;
• the country is seeking to become self-sufficient in gas supply by 2030, a step that would allow it to break its reliance on imports from Qatar
• is that around 150 billion boe?
• could meet the country's gas demand for nearly three decades
• building nuclear, solar and coal-fired power plants, while Adnoc has invited international companies to help tap previously inaccessible gas deposits
• the Jebel Ali discovery is the biggest since the Galkynysh field was found in Turkmenistan 15 years ago, according to WoodMac’s Yates
• the announced resources would make it the fourth-biggest gas field in the Middle East behind Qatar’s North Field and Iran’s South Pars, which are part of the same Persian Gulf deposit that make up the world’s largest offshore gas field
• Abu Dhabi’s Bab field is the third-largest, according to WoodMac. 

See this post to put 80 trillion in perspective.

McKinsey: Natural Gas Update -- Through 2035 -- September 11, 2019

US natural gas: making America great. Link to report on McKinsey Energy Insights. Globally, new natural gas production forecast to be 635 billion cubic meters by 2035; half of that to be produced by US.

Data points:

• among fossil fuels, only natural gas will likely continuously grow in demand through 2035
• 2018: the turning point in terms of gas and LNG market dynamics
• China became the world's biggest LNG importer
• highest volume of liquefaction projects taking final investment decision (FID)
• that set the tone through 2035 -- long term projects
• Asian economies in the ascendancy, led by China; growing energy demand
• US continues to rank highly for both supply and demand
• supply side -- Europe and Asia's second-tier economies falling away
• 2018: China took overtook Japan as the world's biggest importer of gas
• China surpassed South Korea to become the second-biggest LNG importer
• through 2035, Asia (all of Asia) will account for 95% of glboal LNG demand growth until at least 2035
• demand
• global demand: will grow at about 1% annually
• Asian demand: will grow twice as fast, more than 2% annually
• production
• global production: new production to grow by at least 635 billion cubic meters
• US to supply more than half of that; 380 bcm
• Russia: 110 bcm of new production
• Africa: 110 bcm of new production
• Pipeline, note US-Mexico:

... new pipeline construction will add more than 200 bcm of cross-border gas capacity by 2025, with the U.S. and Russia retaining their major piped gas exporter positions. The firm also noted that three U.S.-Mexico projects totaling 60 bcm in capacity – the largest set of pipelines set to be completed anywhere in the world by 2025 – should conclude by the end of this year. Nord Stream 2, which will ship Russian gas to Germany (and the European Union) via the Baltic Sea, represents the second-largest set of pipeline projects and will reach a total of 55 bcm by next year

Finally, LNG and FID:

... “a record volume” of LNG projects – more than 60 million tonnes per annum (mtpa), or 20 percent of today’s market – took FID in the last 12 months and will push the LNG supply-demand balance into the late-2020s.

“Looking ahead, only one in 10 proposed LNG projects will take FID, with over 100 LNG projects totaling 1,100 mtpa of capacity competing to fill the 125 mtpa supply gap by 2023,”

Beetaloo Basin, Australia -- May 3, 2019

From Bloomberg, data points:

• the Australian basin could hold 500 trillion cubic feet of natural gas (14 trillion cubic meters?)
• = 3x the world's annual consumption of natural gas
• local government ended the ban on fracking
• shale rock
• basin has been compared to US shale regions such as the Marcellus and Barnett
• very, very remote

See this post: natural gas -- US remains the natural gas king; includes listing of global natural gas basins.

Marcellus, Utica, Qatar in the 500 - 1,000 trillion cubic feet neighborhood, so this single basin in Australia could be in that same range.

From the 2018 annual review by BP: (numbers rounded)

• proved natural gas reserves, global: 200 trillion cubic meters (tcm)
• sufficient to meet 50 years of global production at 2017 levels
• Israel: largest single contributor
• by region, the Middle East holds the largest proved reserves (80 tcm; 41%of the global total)
• #2: CIS (60 tcm, 31% share)
• Trillion cubic meters at end of 2016:
• North America:
• US: 8.7
• Canada: 2.0
• Mexico: 0.2 (was 1.8 in 1997)
• Mideast
• Iran: 33.2
• Qatar: 24.9 (was 8.8 in 1997)
• others each below 10, most below 5
• CIS
• Russian Federal: 34.8
• Turkemnistan: 19.5
• the rest, inconsequential

Note: one cubic meter equals 35.3 cubic feet.

Disclaimer: these numbers are often in dispute. If this information is important to you, go to he source.

Disclaimer: I often make typographical and factual errors.

Gasoline Demand Shows A Bit Of Life; Did Some One Tell A Mis-Truth When Mailing Those "Suspected" Explosive Devices -- October 24, 2018

Link here.

4-Second Elevator "Speech"
 

Finally, we can say it. Global demand for crude oil to hit 100 million bopd any day now.  US, Russia, and Saudi Arabia produce about a third of that.

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Natural Gas

For what it's worth: a SeekingAlpha contributor suggests natural gas could double in price this winter/next summer.

Here's what I pointed out some weeks ago: there's enough historical evidence to suggest that it is not unthinkable to think that natural gas could triple in price.

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Global LNG Production 

Qatar, US, and Australia. Can't we all just get along? Some great stats.

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Federal Courts Need To Get Things Back Under Control

Re-posting.

WCS: how much is Alberta "losing" because the TransMountain Pipeline expansion was killed? $100 million / day. Per day. Around $60 million / month goes into the North Dakota Legacy Fund. Divided by 30 days that works out to $2 million / day. Compare that to $100 million / day in Alberta. British Columbia's First Nation is costing Alberta $100 million / day. Democratic values and greater good issues come to mind.

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The North Texas Deluge Continues

Linked here -- record-setting October -- rain and cold. In the screenshot below, Tuesday is October 23, 2018 -- another full week to go. But look at that: cold and rain. DFW Airport with 15 more inches of rain that it usually gets in October. To put this in perspective, the average total annual rainfall in Portland, OR is 36.69 inches (posted Jul 18, 2017 -- at least that's what wiki says). So far in our backyard -- we still have two rainy months to go -- almost 44 inches of rain this year.

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Someone Must Have Lied -- Or Told a Mis-truth

If this was hand-delivered by a non-postal employee, that's one thing, but if this was actually accepted by the US Postal Service, how did this ever get accepted? Whenever you mail a package through USPS you have to declare whether it's a pipe bomb or not. But then again, if not an explosive, not illegal to mail, I suppose. First thought: "clock boy."

Idle Rambling On Natural Gas Imports Around The World; Wow, Look At Italy -- October 19, 2018

From wiki, natural gas imports, ranked by country (the data is not the most current, but looking at several sources, it's fairly accurate on a "currency" basis):

I assume the Canadian and US imports are pretty much based on region and cost; one might consider US-Canada one natural gas market (supply and demand).

I was curious about this after reading this in oilprice.com regarding China, from April, 2018:

Earlier this month Sinopec said it had plans to boost its LNG import capacity to 26 million tons annually over the next six years from the current 9 million tons. 

China’s total of LNG import capacity is 17 million tons. State energy companies have also begun turning depleted gas fields into gas storage facilities to avoid a repeat of this winter’s supply crunch.

Plans are to have all 25 underground gas storage sites before winter, and to increase LNG imports: according to Wood Mac, China’s LNG imports are set for a 25-percent increase this year, to 48-49 million tons. 

And this from same source, today:

Last year, China became the world’s second-largest LNG importer, taking in some 38 million tons of the fuel, a 46-percent increase on 2016. Even so, some parts of the country suffered shortages because the gas could not reach them fast enough.

As a result, China is now actively working on expanding its LNG storage capacity and pipeline network. It is also expanding its domestic natural gas production and storage capacity.

In the past 10 years China’s natural gas consumption has risen fourfold to more than 25 billion cu ft daily. Now, companies are turning depleted gas fields into storage facilities as part of efforts to avoid a repeat of last winter’s shortage.

After reading that China moved into the #2 position when ranked by natural gas imports, I was curious what country was #1. A lot of the data is "old" and, I assume, some of the data is questionable. Having said that, I was amazed to see where Germany, Italy, Great Britain, and France were on the list. I was amazed. Especially with Italy. How do they afford to pay for all that energy? Wow. 

I've talked about the growing gap between energy-rich countries (pretty much only the US) and the energy-poor countries (pretty much the rest of the world). Yes, the Mideast countries are energy rich but they are hardly major economic players in the big scheme of things; even Russia and Saudi Arabia are not giants in the overall global economy.

Also, Italy at this link also -- at the top of the list. It's 2014 / 2015 data but Italy is right up there with China (of course, China, back in 2014/2015 was using a lot of coal, but that's another story).

This Is Really Cool: New England Shuns Marcellus; Yankees' Loss Is Dixie's Gain -- RBN Energy -- August 24, 2018

Blinked: China's Unipec to resume US oil purchases after tariff policy changes. LOL. Did anyone think otherwise? From oilprice:

The international trading arm of China’s refining major Sinopec, Unipec, will resume U.S. crude oil purchases from October.

The company had suspended crude oil imports from the United States amid the trade spat between Washington and Beijing in anticipation of crude oil making it onto the tariff list. When this did not happen, Unipec started buying U.S. crude again despite the trade dispute escalation that saw China slap 25-percent tariffs on U.S. oil products and coal.

Peak oil, what peak oil: analyst suggests Alaska's North Slope is an "arrested, late-emerging-phase 'super basin' rather than a mature basin."

• analysis doe not provide "actionable" intel
• data points of interest, remaining reserves:
• 38 billion bbls boe
• that figure includes 50 trillion cubic feet of natural gas
• 28 billion bbls of oil
• EUR of the North Slope: 55 billion boe (specifically the analyst suggests 54.8 billion boe, not 54.7 or 54.9 but 54.8 -- that's when you know ...)
• 38 boe yet to be produced, combined with the 16.8 billion that has already been extracted
• let's see what the divisor was
• 38 billion boe - 28 billion = 10 billion NG boe 
• 50 trillion / 10 billion NG boe = 5,000 (I've always used 6,001
• compare the estimated natural gas reserves in the North Slope with other global reserves at this post: https://themilliondollarway.blogspot.com/2018/08/us-remains-natural-gas-king-oilprice.html. 
• the US: 341 trillion cubic feet
• although one source suggest the Marcellus-Utica could produce a quadrillion cubic feet (1,000 x trillion)

NG exports: will triple over the next 12 months (2019). Will account for 10% of US production.

WTI: trending toward $69. OPEC basket" $71.75.

Burnaby update: Canada's Supreme Court rules against Burnaby, for the pipeline. Time to start bringing in the sacred bulldozers.

Saudi Aramco IPO: in case folks have lost the bubble on the IPO -- bottom line, the Prince will shelve the Saudi Aramco IPO and take a stake in Sabic, becoming perhaps the world's largest petrochemical company?

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Back to the Bakken

Only one well coming off the confidential list today --

• 30524, 884, CLR, Burr Federal 23-26H2, Sanish, fracked 10/23/17 - 10/23/17 -- problem? only one day frack; 7.8 million gallons of water; 88% water; t5/18; cum 32K over 47 days; apparently no problem with the frack; Three Forks 2; 63 stages; 8.1 million lbs;

Active rigs:

$68.55↑↑	8/24/2018	08/24/2017	08/24/2016	08/24/2015	08/24/2014
Active Rigs	62	54	31	74	192

RBN Energy: northeast gas pulled south by Florida power plants and Sabal trail.

• Florida’s increasing demand for natural gas for power generation isn’t new, but like a young alligator in the Everglades, its appetite is voracious and growing. More and more gas-fired power plants have been coming online, increasing gas demand and spurring the development of new gas pipeline capacity into the state. And, because of big shifts in where gas is being produced and where it’s flowing, the Sunshine State will soon be receiving an increasing share of its gas needs from the Marcellus region. Today, we begin a two-part look at how rising generation-sector demand for gas and a new pipeline are changing gas-flow dynamics in the U.S. Southeast.

One doesn't have to read much more to see who the winners are, who the losers are. As to paraphrase, the NY governor, NY never was that great. Certainly not when it comes to strategic planning.

US Remains The Natural Gas King -- Oilprice -- August 5, 2018

Updates

January 30, 2023: US proved reserves of natural gas grew to new record of 625 trillion cubic feet in 2021. 

October 25, 2021: the original post did not include natural gas reserves in Saudi Arabia. Simon Watkins provides those numbers:

• Jafurah field: 200 trillion cubic feet (compare with reserve numbers in original post)

February 3, 2020: UAE discovery; Jebel Ali reservoir; 80 trillion cubic feet; 

May 3, 2019: Beetaloo Basin, Australia, could add 500 trillion cubic feet; see this post;

December 6, 2018: USGS 2018 Survey of The Permian -- 46 billion bbls of crude oil; 281 trillion cubic feet of natural gas; and 20 billion bbls of NGLs.

Original Post

30-second elevator speech when it comes to natural gas: there is so much natural gas in the world, that as a commodity, it's all about free market capitalism and governmental policies (at all levels) that will determine winners (suppliers/consumers) and losers (suppliers/consumers) for the next fifty years.

For those in the know, I doubt there is anything new here, but some nice data points for future reference.

From oilprice, the data comes from BP's annual review, 2017 data.

US natural gas production (flat over the past three years):

• 2017: 71.1 billion cubic feet per day
• 2016: 71.1 billion cubic feet per day
• 2015: 71.6 billion cubic feet per day
• accounts for 20% of world's total natural gas production

Global history:

• until the 1980s: US dominated global natural gas production
• 1980s: Russia took the lead
• past 50 years: the Middle East has grown its natural gas production at a much faster rate, and is on pace to take the lead in the next decade (2020s)

US history:

• natural gas production in decline until the fracking boom which began in the middle of the last decade (the Bakken boom began in Montana, 2000; in North Dakota, in 2007)
• production from the US grown by an astounding 51% from 2005 to 2015 -- the years of the Bakken boom -- pushed the US back into the global lead (memo to self: note to Jane Nielson)

US exports, LNG:

• 2017: 1.7 bcfpd; about 2.4% of US production
• Asia Pacific: received 41% of this production
• Mexico: received 22%

US exports, pipeline:

• 6.3 bcfpd, or 8.9% of US daily production
• Mexico: accounts fo 64% of the total
• exports to Mexico are growing rapidly; last week, RBN Energy reported that exports to Mexico hit 5.0 bcfpd for the first time ever

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Reserves

So, with all that, I assumed US reserves looked huge compared to the rest of the world, but this is simply astounding.

Reserves:

• Middle East: 2.8 quadrillion cubic feet = 2,080 trillion cubic feet (quadrillion is 10^15; trillion is 10^12)
• US: 309 trillion cubic feet (but see below)

I've long lost the bubble on global natural gas reserves (and I'm sure the reserves are currently way under-estimated) but back in 2016, this post:

Disclaimer: I often make simple arithmetic errors. Numbers rounded. Natural gas reserves according to BP/wiki, 2013 - 2014 (US estimate as of December 2013). Top five countries:

• Russia: 6,000 trillion cubic feet 
• another 11 TCF discovery, 2018; the Arctic
• Iran: 1,000 trillion cubic feet
• Qatar: 900 trillion cubic feet
• Turkmenistan: 600 trillion cubic feet
• US: 350 trillion cubic feet
• #11: Australia: 152 trillion cubic feet (as of January, 2014). (See this post.) 
• Beetaloo Basin could add 500 trillion cubic feet (2019)
• Pakistan: 10,000 trillion cubic feet (highly unlikely, something tells me we are mixing apples and oranges, reserves vs technically recoverable

Now, let's go back and re-run the numbers that were posted earlier:

• that recent huge Mediterranean natural gas find: 30 trillion cubic feet
• Barnett, revised USGS figures: 53 trillion cubic feet
• Utica, newly revised figures: 782 trillion cubic feet
• Marcellus, EIA revised estimates: 65 trillion cubic feet, "proved" reserves
• Bakken/Three Forks, USGS estimate: 7 trillion cubic feet
• Qatar: 800 trillion cubic feet, wiki, conversion
• Mozambique, from the story above: 85 trillion cubic feet

That was back in 2013. Certainly we can do better.

From the 2018 BP review (2017 data), global natural gas reserves:

US natural gas reserves, February 13, 2018, EIA:

• 341.1 trillion cubic feet; increased by 5% over 2016
• Pennsylvania: added 6.1 tcf natural gas reserves, the largest net increase of all states in 2016 as a result of the Marcellus)
• next largest net gains, after Pennsylvania: Oklahoma (3.7 tcf); Ohio (3.1 tcf); SCOOP, STACK, Utica
• natural gas from shale as a percentage of total production: increased from 54% in 2015 to 62% in 2016
• additions exceeded consumption by 30%

Discrepancies, observations, and further comments:

As noted above, the official EIA estimates for the US: 341 trillion cubic feet, but I think those numbers are "way low."

And from the numbers above, the numbers are all over the place (from the official EIA estimates to estimates by others.

Another source suggests the Marcellus-Utica could produce a quadrillion cubic feet -- which greatly exceeds current EIA estimates of total US natural gas reserves.

From NaturalGasIntel, undated but probably in 2015:

The Utica Shale is a massive formation that lies beneath portions of Ohio, West Virginia, Pennsylvania, Kentucky, Maryland, New York, Tennessee, Virginia and a part of Canada.

In a September 2012 report, the United States Geological Survey (USGS) estimated that the Utica has a recoverable potential of 940 million barrels of oil, and approximately 38 trillion cubic feet of natural gas.

That estimate, though, has proved conservative at best. With far more drill bits having proved-up the play in Ohio, a West Virginia University-led study released in mid-2015 estimated that the Utica contains more than 20 times as much technically recoverable natural gas resources than previously thought when the USGS released its report (see Shale Daily, July 14, 2015). 

20 x 38 = 760 trillion cubic feet of natural gas.