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Global natural gas resources
EnergyVol. 14, No. 12, pp. 773-784, 1989 Printed in Great Britain. All rights reserved
03~5442/89 $3.00 + 0.00 Copyright 0 1989 Pergamon Press plc
GLOBAL NATURAL
GAS Rl%OURCESt
DANIELA. DREYFUS$and ANNE B. ASHBY§ *Strategic Planning and Analysis and #Energy Modeling and Analysis, Gas Research Institute, 1331 Pennsylvania Avenue, N.W., Suite 730 North, Washington, DC 20004-1703, U.S.A. (Received 28 March 1989)
Abstract--The potential of the global natural gas resource has gained renewed attention in recent years as energy diversification and environmental concerns have risen in significance. Conventional estimates affirm the importance of gas as an underutilized element in the portfolio of energy sources available to serve future requirements. Current estimates of remaining recoverable gas reserves worldwide are 8000 trillion ft’, of which 3900 trillion ft3 are proved reserves established by drilling information.
INTRODUCTION For most of their history, the development of natural gas markets has followed the emergence of liquid petroleum as the dominant global fuel. Natural gas has been discovered in association with oil since the earliest days of the petroleum industry, but gas is not as readily stored and transported as crude oil. Prior to World War II, natural gas was treated at best as a by-product and more generally as a waste product of the search for and production of crude oil. Well into the 1970s and even today, though to a much lesser extent, gas has been flared in the more inaccessible oil fields, an indication of the low economic value placed upon it by the owners of the oil. Over time, however, the use of gas as a fuel became more generally feasible. In the 195Os, technology for the efficient, long-distance transmission of gas by pipeline had progressed to the extent that continental gas sources in Europe and North America were capable of serving the major centers of energy demand. Natural gas replaced much more expensive manufactured gas in residential and commercial applications and began to be viewed as a competitive energy source for industrial uses and for the generation of electricity. Later, technologies for the seaborne transportation of gas in liquefied form (LNG), though much more costly, made some of the isolated sources of gas viable options for energy markets remote from the gas fields. In recent years, the value of the global gas resource has become more widely realized. It is now viewed as a major component of the energy resource base with a potential for moderating dependence upon liquid petroleum and for generally diversifying the global energy mix. The relatively low pollution emissions and the low contribution to greenhouse gases resulting from combustion of natural gas in comparison to other fossil fuels has lent new significance to the world gas resource as new emphasis is placed upon air quality and as potential global warming emerges as an international issue. The natural gas resource base is quite large in relation to the current levels of demand upon it. Proved reserves of natural gas, those amounts which are reasonably well known based upon drilling information, are estimated to be the energy equivalent of about 708 billion barrels of crude oil. This amount approaches the global proved reserves of oil (907 billion barrels), but the annual production of natural gas is only about half that of petroleum. The global reserve to production ratio for natural gas, a measure which is often used as an indication of near-term supply capability, is about 57 : 1. In comparison, the ratio for petroleum is 43 : 1. The estimated total remaining worldwide gas resource base which could be economically recoverable with current technology is much larger then the proven reserves. Estimates of total remaining recoverable reserves, which include undiscovered portions of the resource base, are
tInvited survey paper. 773 Em14:12-11
DANIEL A. DREYFW and ANNE B. ASHBY
774
on the order of 1.3 trillion barrels of oil equivalent. Clearly, the natural gas resource is capable of supporting much greater levels of production. It will, undoubtedly, continue to increase in its significance as an energy source in the coming decades.
DEFINITIONS
AND
APPROACHES
TO
RESOURCE
ESTIMATION
Resource estimation
Estimation of natural gas resources is done for a variety of purposes and at widely varying levels of precision and detail. At one end of the spectrum lie the resource estimates associated with reservoir engineering. They are based upon considerable knowledge of the subsurface situation through detailed, on-site, geologic exploration, seismic investigation of the subsurface formations, confirmatory information from the drilling of wells, and sometimes actual production experience with the particular reservoir. These estimates are associated with the technical and economic operation of the reservoir. The extreme alternative is the appraisal of the undiscovered, recoverable resources which might exist in areas of national, regional, or even global scope. Studies of the latter type are done for more abstract economic motives, for public policy decisions, or for general scientific and academic interest. While they also rely upon a history of the exploration and production experience with developed gas resources and upon specific geologic, seismic, and drilling data where it is available, they extend their scope to a more generalized inference of the probable occurrence of producible gas based upon broad geologic conditions. Definitions
There is no universally adopted set of precise definitions to describe the nature of gas resource estimates. There are descriptive categories, however, which are generally used to indicate the nature of the available information that underlies the professional judgment leading to the estimate. Recoverable resources. The initial distinction to be made is that of recoverable resources. Natural gas resource estimates of more than scientific interest are generally limited to the consideration of methane contained in deposits that might be amenable to discovery and production using conventional practice and reasonably foreseeable technical and economic extensions of that practice. This limitation excludes significant portions of the longer-range resource potential from consideration. The global gas resource estimates surveyed in this paper, therefore, are comparable to similar estimates of alternative energy forms such as the coal and petroleum quantities that could be provided using conventional practice. They are appropriate estimates for discussions of energy supply issues in the near term, that is, for two or three decades. For discussions of the energy situation beyond the middle of the next century, especially when significant advances in the technologies of alternative sources such as commercial electric power from fusion energy reactions, power storage in superconductive devices, and advanced solar concepts are being considered, the conventional gas resource estimates are somewhat limiting. For example, substantial amounts of methane are known to be present locked in hydrate form in permanently frozen arctic areas and in the deep ocean floor. Large sedimentary basins are known to exist in such circumstances and estimates of the methane present are enormous, ranging as high as 3 x lo* trillion ft3, although the technologies required to exploit this resource are currently beyond reach. In another sense, theories have been advanced suggesting that the abiogenic sources of oil and gas found in sedimentary deposits, which are the basis for all conventional natural gas resource estimates, do not fully explain the occurrence of methane in the earth’s crust. If the theories of an abiogenic origin of methane, such as those advanced by Thomas Gold, were to be confirmed, the occurrence of producible quantities of hydrocarbons outside of the currently known and estimated sedimentary areas would have to be considered. In any event, resource estimates usually omit from consideration those quantities of gas which occur in situations that would require the investment of energy of production in amounts
Global natural gas resources
775
approaching the energy value of the gas produced. To some extent, this constraint also might be subject to revision should major breakthroughs in technology occur. Even within the more conventional resource situations, the notion of a recoverable resource estimate includes some notion of technological feasibility and economic attractiveness. Although the precise criterion of technical recoverability is seldom explicitly stated by the estimator, it generally implies the current, or conventional, technical practice of the industry along with such evolutionary improvements in technology as a knowledgeable practitioner can foresee. These limitations are revised from time to time to reflect advances in practice and theory but the potential for scientific breakthroughs, or even major innovations in engineering not yet apparent in practice, are usually excluded. Judgments of economic recoverability are more ethereal. They also imply a strong reliance upon current circumstances, but the estimator’s attitude about future values of gas are usually unstated. Obviously, estimates of the recoverable quantities of resources can be significantly influenced by the current market situation and by prevailing attitudes about the economic outlook. The economic assumptions underlying resource estimates, therefore, represent a significant variable. Proved reserves. In any region with a history of production, some of the resource base has already been depleted. Cumulative production is, of course, a reasonably well-documented quantity which is sometimes noted in resource estimates and which, from time to time, must be deducted from precise estimates of ultimately recoverable resources. Within the notion of recoverable resources, the most significant further distinction is that between reserves (or proved reserves) and remaining resources. Proved reserves are the recoverable quantities of gas which are estimated to remain in known oil and gas reservoirs. Usually proved reservoirs have actual production histories or conclusive engineering and geologic data to establish their ability to produce. Proved reserve estimates in the form of reserve to production ratios are commonly viewed as a measure of near-term capability to sustain production. They are, of course, a sort of inventory in the sense that considerable investment has been made in the exploration of the deposits. Exploration costs may amount to half the ultimate cost of producing the gas and the exploration investments still remains to be made in the case of undiscovered gas in frontier or unexplored areas. As a category of resources, proved reserves are simply that portion of the total recoverable resource base for which extensive descriptive data exists. Estimates of reserves, therefore, may be assigned a greater degree of precision than estimates of undiscovered resources. Proved reserves are, however, not an indicator of the magnitude of the total recoverable resource base, as is sometimes implied in non-technical literature. Large volumes of recoverable resources undoubtedly exist in areas in which no reserves have yet been proven. Within estimates of undiscovered resources, there usually will be a range of circumstances confronting the estimator. The Potential Gas Committee (PGC), a volunteer group of industry, government, and academic analysts that periodically estimate U.S. natural gas resources, characterize their estimates in three categories. Probable resources are those associated with known fields. Estimates are based upon relatively large amounts of geologic and engineering information. The resources include extensions of discovered pools into as yet undrilled areas and new pool discoveries within existing fields in reservoirs or formations that are known to be productive elsewhere in the same geologic province. Possible resources are postulated to exist outside of known fields but are associated with a productive formation in a productive province. These resources are expected to be discovered because of judgmental projections of plays from producing formations based on geologic information. Speculative resources are those expected to be discovered in formations or provinces that have not yet been proven to be productive. The judgments are made by analogy to geologic conditions in productive areas. The extension of available drilling data and specific geophysical information into the lesser known portions of the potential resource base involves increasing degrees of judgment on the
776
DANIEL A. DREYFUS and ANNE B. ASHBY
part of the estimator. To some degree, statistical methods can be used to extrapolate drilling experience into future discoveries. By analogy, statistical approaches even can be applied well into the most nebulous of speculative resources. Judgment, however, remains the dominant factor in estimates of undiscovered resources. UNCERTAINTIES
IN
RESOURCE
ESTIMATES
It should be self-evident that any effort to estimate the remaining recoverable global resource of natural gas will afford imprecise results. In approaching estimates of the global gas resource, it is important to remember that the U.S. hydrocarbon resource has been more intensely explored and drilled than any other in the world. More than 90% of the world’s historical drilling experience has occurred in the U.S. and Canada. Outside of the U.S. there is much less historical experience, exploration drilling and production data are scarce, and in many areas, that data which does exist may be difficult to obtain, or of questionable validity, or both. Aggregate global compilations are always drawn from a broad range of disparate sources. The sources not only will vary greatly in regard to their individual capabilities, but consistency among the approaches must be expected to be far less than among U.S. estimates. Some general factors that will affect the estimates are the following: Data. Each of the estimates relies on the data available to the estimators; there is not a single, authoritative and comprehensive data base used by all estimators even in the well explored and well documented areas of the mature U.S. domestic gas producing regions. Significant discrepancies in the publicly available data must be resolved by each estimator, and some have access to exclusive, proprietary data unavailable to others. Dejinitions and scope. Each estimator has chosen to include certain components of the resource base. Variations particularly are found in the treatment of the less conventional resource components (coal bed methane, Devonian shale, tight formations, etc.). Although there are economic and technology considerations involved, some estimates simply exclude some resource categories even where there is actual production experience. There are variations as well concerning the depth of resource considered, the assumed limitation of water depth on the deep offshore potential, attitudes about the ultimate accessibility of remote resources, etc. Judgmental attitudes. Estimators differ in their judgments even about the potential for relatively well-known conventional resources. These judgmental attitudes, in addition to differences in professional geologic interpretations, are colored by attitudes about future economic parameters (sales prices of gas and costs of factors of production) and relative optimism about the future pace of innovation in exploration and production technologies and their application in the field. ESTIMATES
OF
GLOBAL
PROVEN
RESERVES
There are four primary sources of comprehensive estimates of global proven natural gas reserves. The Oil and Gus Journal’ (OGJ) and World Oil2 (WO) are both periodicals in which independent estimates of proven reserves are published annually. The OGJ publishes its estimates at the end of the calendar year and defines the estimates to be as of the first of the following year. World Oil publishes its reserve estimates each August and defines the estimates to be as the end of the previous year. Cedigaz3 and the World Energy Conference4 (WEC) are membership organizations that gather, compile, and publish salient natural gas statistics. Cedigaz publishes its reserve estimates in June of each year with the estimates as of the first of that year. The WEC publishes its estimates every 2 or 3 yr. The estimates are generally 2 yr old at the time of publishing. All four primary sources use surveys to compile regional reserve estimates. The OGJ and WO send surveys to various oil industry participants in each country. Where possible, the reserve estimates provided by government entities are adopted. Because reserve estimates tend to play a role in deciding individual production quotas, the estimates provided by the governments of OPEC countries are generally discounted slightly. In cases where the
777
Globai natural gas resources
governments do not respond to the survey, estimates provided by operating companies are used. When countries do not respond at all to the survey, the periodicals will modify the most recent estimates published by Cedigaz with information they have gleaned from their monthly production surveys and other sources. In the event that no tangible estimate is available, the periodicals may assign an estimate based on a judgmental relationship between known production levels and reserves. Cedigaz and the WEC also use the survey technique to obtain reserve estimates. Because these are both membership organizations, and the surveys are sent principally to members, the estimates can be evaluated for accuracy before publishing. As a result, the reserve estimates generated by these two organizations are relied upon by other independent sources. Table 1 provides a detailed breakdown of reserve estimates made by the four primary sources. The breakdown is augmented by some individual country estimates made by the U.K., the U.S., Canada, and the OPEC countries. Some of the differences in estimates of proven reserves can be attributed to the date the estimates were made. For example, the OGJ estimates are the most recent and reflect the effects of reserve additions and cumulative production through 1988. At the other end of the spectrum, the estimates generated by the WEC are the oldest of those shown on the table and reflect circumstances as of the year ending 1984. The WEC estimates, however, do provide some insights into how circumstances of reserve additions and production changed when they are compared to the more recent reserve estimates. Table lt indicates, for example, that production exceeded reserve additions in the intervening years between the WEC U.S. reserve estimate and the other more recent U.S. estimates. Similarly, the WEC Venezuelan reserve estimate does not reflect the vast reserve additions attributable to the giant discoveries of both associated and non-associated natural gas since 1984. In general, the four primary sources show relatively consistent reserve estimates with respect to the more mature resources of North America and Western Europe. The differential among the estimates of the same overall vintage, however, tends to widen as experience with the resource declines such as in the countries of the Asia-Pacific region where oil and gas have been discovered only recently. Estimates of proven reserves prepared by secondary sources, such as OPEC’ and the Canadian National Energy Board6 (NEB), may reflect differences in estimation techniques, definitions, or political motivations. The NEB, for instance, is known to be highly conservative in its estimates of the Canadian resource base. In the past, this posture supported a relatively strict export policy. It is not clear why the NEB continues to estimate reserves conservatively in the era of the Free Trade Agreement. Overall, it is remarkable that the various reserve estimates show such a high degree of consistency given the large role played by judgment. As will be seen in Table 2, however, the role of judgment becomes more pervasive as the definition of resources expands. ESTIMATES
OF REMAINING
RECOVERABLE
NATURAL
GAS
RESOURCES
Sources
The 1986 IGT World Reserves Survey’ included an assessment of world conventional natural gas resources as of the year ending 1984. This compilation was prepared by Sala and drew upon a number of earlier global assessments and specific country estimates. In Table 2, the IGT assessment is shown, together with two other comprehensive global assessments, namely, Masters et al,* as reported in the proceeding of the 12th World Petroleum Congress, 1987 (year-ending 1984 d a t a ) and the World Energy Conference Survey of Energy Resources’ data, as summarized in 1986 and incorporating data reported predominantly for 1984, although values for a few countries are based on earlier data. The global resource data have also been augmented by the most recent estimates of the U.S. resources made by the PGC in their authoritative update of the “Potential Supply of Natural tTbe superscript Arabic number in the tables refer to references that are listed under Notes to the tables.
Table 1. Worldwide proven gas :eserves (trillion ft’).
-
03’
Region or country
Western Hemisphere' Argentina Barbados BOllVia Brazil Canada Chile Colombia Ecuador Guatemala Mexico Peru Trinidad and Tobago Venezuela United States Others
518.44 26.70 0.0' 5.35 3.70 95.10 4.20 3.94 4.02 0.02 74.03 0.62 '0.50 102.24 187.20
W. Hemisphere
OPEC
Western Europe+ Austria Denmark France W. Germany Greece Ireland Italy Netherlands Norway Spain Turkey United Kingdom Others
ido2
edigaz3
5'5.7' 24.49
535.38 26.77
5.33 3.72 95.60 4.20 3.94 4.03
5.01 3.71 96.23 4.24 4.06 4.03
74.83 0.65 '0.20 '00.20 188.50 22.10
74.03 '2.0' '6.24 '00.37 '87.70
06.26
'04.23
'04.40
'00.12 0.42 4.32 1.18 9.39 0.14 1.80 '0.24 62.51 85.50 0.84 1.04 22.14
227.09 0.33 2.90 1.18 9.62 0.02
‘92.47 0.42 4.34 I.20 6.32 0.14
'0.22 62.5' "6.36 0.43 0.50 22.74 0.79
'0.24 62.51 80.70 0.85 1.17 22.74
1.a0
'The
totals may not represent
OGJ’ I ,182.l;! 183.5() 6.7(1 5.02 494.4() 95.0(I 0.0: 0.9E 42.5C '2.3C 9.32 156.7C 2.oc '45.85 'l.OC '3.13 3.70
Middle
1 ,‘35.97
76.70 0.88 '0.24 58.76 206.10
'46.25 0.30 3.65 1.84 9.39 3.88 1.25 8.83 53.50 37.01 0.51 0.49 25.60
-
I
due to independent
I402
Cedigaz: I
1 .'67.03 '83.11 6.70 4.70 497.00 95.00
37.50 8.10 9.32 163.20 '41.85 5.10 5.00
OPEC4
1.064.75, '83.51I 6.95I 5.0' 494.41 35.32 0.041 0.95, 42.55,
494.41 35.32
42.56
22.70
rounding.
I
WEC.6
7.77
300.47 28.25 0.0'
'56.80
35.32 7.06 3.07 "1.24
'46.05
72.40
'91.20
31.78
I ,066.37
674.52
9.6' ‘56.80 , I.20 ,
'00.47 10.98 '3.14 3.71
1 ,'22.36
',030.27
253.3' '04.20 I.90 3.88 2.44 '1.47 0.60 3.53 25.70 0.10 2.29 85.00 0.2' 1.76 3.00 4.10 3.10 0.03
205.82 '05.90 1.70 3.89 2.48 9.40 0.53
257.02 '04.'8 1.9' 3.00 2.44 11.48 0.57 3.53 25.67 0.11 2.30 85.00 0.2' 1.77 3.00 4.17 3." 0.04 3.67
2'5.50
117.64
25.65 0.53 45.56
1.00
2.95 6.7'
tOta's
85.6C
3.70
9.96
Africa OPEC
+The
NEE;
62.86
II
Middle East+ Abu Dhabi Bahrain Dubai Iran Iraq Israel Jordan Kuwait Neutral Zone Oman Qatar Ras al-Khaimah Saudi Arabia Sharjah Syria N. Yemen United Arab Emirate!s* Others
Egypt Gabon Ivory Coast Libya Morocco Mozambique Nigeria Somalia South Africa Sudan Tanzania Tunisia Zaire Others
WEC6
4.94 3.28 91.82 4.24 4.13 4.10
I 87.2'
'01.68
--
21.93
97.65
the sum of the components
-
Africa+ Algeria Anaola-Cabinda Caieroon congo
4.03
I
EIA:
-
Region or country
East OPEC
OPEC4
may not repreSent
'04.18
0.64 25.67
85.00
1'1.24. 1.07 3.35 2.47 6.00 0.42 2.12 21.19 0.14 49.44
I I 215.42
the suns of the components
0.10 0.20 3.00 0.06
215.49
182.29
due to independent
*United Arab Emirates contain the countries Abu Dhabi. Ajman, Fujairah. Ras al-Khaimah, Sharjah, and Umm al-Qaiwain.
rounding
Dubai
continued opposite
779
Giobal natural gas resources Table
l-on&wed
Region or Country Asia-Pacffict Australia Bangledesh Brunei Burma Chfna-Taiwan Indfa Indonesia Japan Malaysia New Zealand Pakistan Papua New Guinea Phillippines Thailand Others Africa OPEC
Cedigaz3
OGJl 240.65 16.63 12.72 11.60 9.46 0.89 22.86 83.59 1.41 51.70 5.15 17.72 ~ 3.03 0.01 3.89
327.37 80.59 12.71 11.69 9.46 0.88 35.49 83.59 1.41 52.51 5.23 22.11 3.04
245.03 29.83 12.00 5.10 0.70 17.80 87.00 1.07 52.20 4.06 17.79 0.18 3.12 13.75
~1x6
OPEC'
204.71 31.43 6.78 7.77
83.55
0.81 12.36 66.04 0.95 53.00 5.47 15.89 0.49 3.72
6.50 2.15
83.59
83.59
83.55
66.04
~
Centrally Planned Economiest Albania Bulgaria China Czechoslovakia East Germany Hungary Poland Romania U.S.S.R. Yugolsavia Others
0.17 31.70 30.24 0.32 6.60 4.40 3.95 4.82 1,500.00 1 ,448.00 2.98 29.00
World Total+ Percent OPEC Percent CPEs
3.955.34 31,862.37 40.0% 37.07. 39.0% 39.0%
1.560.70
I’ ,501.70 0.22
I
1.531.96 0.35 0.18 31.78 0.53 6.60 4.20 5.90 6.99 1.472.64 2.83
1.284.27 0.28 0.25 24.72 0.35 2.12 4.70 4.52 8.12 1.236.03 3.18
3.900.77 37.0x 39.0x
3,019.43 33.0% 43.0%
'The totals may not represent the sun of the conponents due to independent rounding.
-
kites to Table 1
1 Dil
and Gas Journti "Worldwide Report," December 26, 1988; reserves as of 111189. ’
2 World Oil,
"43rd Annual Internattonal Outlook," August 1988; reserves as 12/31/8?.
3 CEDIGAZ. Natural Gas in the World in 1987 June 1988; reserves as of 12/31/87 and converted from Bcm to Tcf'by using the factor lcm - 35.315cf. 4 m4nnual Statistical Bulleti_~..U&Z: reserves as of 12131187 and converted from Bcm to Tcf by using the factor lcm - 35.315cf. 5 Energy Information Admlnistrat~on. U.S. Crude Oil. Natural Gas. &nd Natural Gas Liouids Rese_ rx..s;Washington, D.C. (1988); reserves as of 12/31/87. 6 1986 World Energy Conference, "Survey of Energy Resources;" reserves as of 1984 and converted from Bcm to Tcf by using the factor lcm - 35.315cf. 7 National Energy Board, Canadigo Eaerav Suoolv and &Rand 1987-2005 September 1988; reserves as of 12131/86 and converted from exajoules to Tcf by using the factor 13 = 0.92cf. a British Petroleum Company. BP Statistical Review of &rld (1988); reserves as of 12/31/87.
Energy; London
..__-.
Gas in the United States.“” A recent estimate of Canadian resources made by the Geological Survey of Carradar’ is also included. As Table 2 indicates, estimates of the remaining recoverable natural gas resource base vary widely by estimator. The estimates for the U.S., for example, vary by over 300 trillion ft3. The variations can be explained by differences in estimation techniques, definitions of what constitutes a recoverable resource, and judgments on what types of resources to include, e.g.,
DANIEL A. DREYFUS and ANNE B. ASHBY
c __
Table 2. Worldwide remaining recoverable resources (trillion ft’), T
Region
or Country
Western Hemisphere Argentina Brazil Canada Colombia Ecuador Mexico Peru Venezuela & Trinidad United States Others Western Europe Norway United Kingdom Others
M asters1
IGT2
1,498 49 43 433 18 9 196
1,902
193 377-395 78 299-317
;z
Africa Algeria
2,126 947 135 52 21 15 335 166 455
1.903
Centrally Planned China Romania U.S.S.R Others
Economies
World
453-653
568 358 31 44
127 4 4
630 132 36 140 Ill 211
671-833 152
307 85 21 :: 41
2,807 222 2,585
1,966-2,80; 109-147 96 1,761
8,107
7.352-7.83(
Notes
’ c
212 92 48 132
115
183 17 156
Asia-Pacific Australia-New Zealand India Indonesia MalayslalBrunei Others
739
600
570 145 28 41
Egypt Libya Nigeria Tunisia Others
GSC5
474
247 2 143 1,089
987
423 268
Middle East Iran Iraq Kuwait Neutral Zone Oman Saudi Arabia United Arab Emirates Others
1,649 30 4 134
469
11: 599 22
PCC4
WEC3
to Table
5,585 95 5,474 16
2
D. Masters, E. Attanasi, W. Dietzman, R. F. Meyer, R. Mitchell, and of Crude Oil, Natural Gas, Natural Bitumen and D. Root, "World Resources Shale Oil." Preprint of the Twelfth World Petroleum Congress, Houston, Texas, 1987. The remaining recoverable resources refer to l/l/85 and were calculated by estimating the ultimate resources less the cumulative production.
2 Institute of Gas The remaining
Technology, recoverable
IGT World resources
Reserves Su ey May refer to 12::1/84.
16,
1986.
3 1986 World Energy Conference, "Survey of Enrgy Resources;" resources as of 1984. The remaining recoverable resources are assumed to be equivalent to the World Energy Conference nomenclature of proved recoverable reserves plus estimated additional reserves recoverable. Data were converted from Bcm to Tcf by using the factor lcm - 35.315cf. 4 Potential Gas Committee, Potential SUDD~V of Natural Gas in the United St&es, April 1987; resources as of 12/31/86. The remaining recoverable resources are assumed to represent the sum of the PGC probable, possible, and speculative categories. 5 Geological Survey of Canada, "Oil and Natural Gas Resources of Canada, 1983," 1984; resources as of 12/31/83. The remaining recoverable resources are assumed to be the average expectation of ultimate technically recoverabie resources estimates. Data were converted from exajoules to Tcf by using the factor 1J = 0.92cf.
Global natural gas resources
781
conventional vs unconventional natural gas. Nonetheless, the table does suggest that natural gas resources may be nearly two and one-half times larger than proven reserves and that the natural gas resource base could easily support a much higher level of production than the 1987 level of 67.2 trillion ft3. Variations among U.S. resource estimates
In Table 3, we compare several reasonably contemporary, authoritative estimates of the U.S. natural gas resource base. The entries in Table 3 are only crude characterizations of the classifications used in the individual estimates and the notes do not exhaustively qualify the entries. Nevertheless, these estimates have each been advanced as a rational measure of the extent of the remaining recoverable U.S. gas resource. Most casual users of the results will apply no more distinctions or qualifications to the numbers than those noted in the table. At the technical, professional level, however, exhaustive efforts have been made to reconcile the differences among these studies and the continuing discussions include a major review of the Department of Interior’s approach by a panel of the National Research Council. The estimates can be reconciled to a degree by considering major differences in the definitions or the scope of the resources considered. For example, the DOE study12 explicitly estimated the growth in recoverable resource estimates which should be anticipated as new theories and practices for more intensive recovery of oil and gas from discovered reserves are more extensively applied. The other studies did not include any estimate of this amount. The exclusion, at least on the part of the GRI study, does not constitute a judgment that such growth will not take place but rather a lack of sufficient data to estimate its size. Unconventional resources, such as gas from coal seams and from the less permeable formations, are variously treated in the estimates. Again, some of the exclusions do not constitute explicit determinations of infeasibility. In the case of the USGS estimate,13 for example, some resources which were excluded from consideration, such as Eastern Devonian Shale resources, have an actual production history. They were probably excluded for definitional reasons or because the large size of the ultimate unconventional resource base was deemed to obscure the estimates of the more conventional resources. The PGC, similarly, has added coalbed methane to its estimate only in the most recent update. If the estimates are normalized regarding scope, however, significant differences among the technical judgments of the remaining recoverable resource base can still be found even in the most intensively explored and developed areas. Furthermore, it should be recognized that the definitional and scope differences, the differing perceptions of the economic and technological constraints that should be applied, and the appropriate treatment of the less conventional resources do constitute real differences in opinion among the analysts who authored the studies concerning the way in which the remaining recoverable resources should be viewed. The uncertainties inherent in global estimates of recoverable gas resources, or even of proven reserves, are affected by these same factors to a much greater degree. The information reported by or inferred for some geographic areas is further colored by deliberate political motivation, scarcity of fundamental data, inconsistency among reporting sources regarding the definition of terms, and the prevailing national attitudes concerning the economic and political motivations to develop indigenous resources. OUTLOOK
FOR GLOBAL NATURAL AND INTERNATIONAL
GAS CONSUMPTION TRADE
Natural gas resources remain adequate to sustain potential requirements for decades to come even in the large and mature North American markets. Global resources are extensive, well in excess of 100 times current annual production. There is a distinct geographic imbalance, however, between the centers of current and probable future natural gas consumption and the location of proven reserves and remaining recoverable resources. This imbalance suggests that if natural gas is to play its optimum role in the global energy future, long-distance (interregional) trade in natural gas must expand significantly.
1
1188
771
pbtential Ges &mcy,
as -lxxmnwltid-
trj rn).
pmved reEe_,
reser.m/probehle -~dundi~resanreS.
methane(not chssifled
Agq-e@te of inferred
abed
llE pbtmtial Ges Gxmdttee does mt estimate for th? end of the 1987calendar year.
Not estimated.
Data ezmliog12/31/&L
826
33 78 (111)
984
33 119 (152)
159
d
149 4 407 42214 (1127)
hrch
1989.
of Fnergy
mu Baeeum FYojecticn of U.S.
Lut h9s adoptedan estiIB.xe IEA by the Ike
supporting th? “ma
“pbtential Supply of NahIral Gas in the united states;
Gas Ikseamh Institute, dEBal frm the Qu I$dmarbm Model data bee pnergv Supply ind Ilanandco 2010,” wcwhhgm, D.C. (1988).
Potential Gas Gmdttee (Kz),
568
33 6 (39)
1542 164 6 423 916 (832)
‘An Assessmentof the P+smral c&s Resource Base of the
Noces'coTahLe3
t
33 96 (129)
7 7 (14)
:
(12)
(5::)
6
324 123 (715)
95
173
6
95
108 180 353 259 (1059)
108 115 229 146 (757) 261 6 (529)
173
159
159
108 86 142
Ffecoverable- Alecoverable Ilecoverable- lecoverable IRecoverable I\ecoverable f5HCf 51.80
159
ecoverable $3&f
“.,L
U.S. Ilqs. of w (DOE), office of pblicy Plarming ad Al-dysis, united states,” way 1988.
Total - U.S
Proved Reserves Resources9 (Subtotal - Alaska)
Proved Reserves5 Inferred Reserves/ Probable Resources Extended Reserve Growth Undiscovered Resources Unconventional Resources (Subtotal - L-48 States)
Lower-48 States
Region
Table 3. Comparison of recent estimates of U.S. natural gas resources (trillion ft3). USGS Ius2 PGC3 CR14 --Iiconmicallv ITethnically iconomicallv 'ethnically Ir(ostLikely 1lost Likely conofnically
783
Global natural gas resources
Table 4 displays the consumption of natural gas in 1987 aggregated by major geopolitical regions of the world. It also displays a projection of the growth in that demand to the year 2010. The year 2010 projection is drawn from the Global Outlook for Service Sector Energy Requirements14 (GOSSER) which concentrates upon the end-use energy service sectors (transportation, industry, electricity generation, and residential/commercial). The probable future energy requirements for end-use services are projected based upon historical use patterns, economic growth, and considerations of changing energy intensity of use, such as the pace of technological change, economic restructuring, and conservation behavior. The projected fuel choice patterns required to serve energy needs take into account the capital and operating costs and fuel availability for alternative energy sources. Industrialized countries, developing economies, and the centrally planned economies are considered independently. Finally, the sectoral energy requirements are aggregated to derive a global projection. Table 4 also displays the proved reserves at the end of 1987 aggregated for these geopolitical regions and the net of the interregional imports and exports of natural gas for the year 1987. The total international trade in gas was, of course, larger than the trade among these regions. The total international gas trade for 1987 is estimated to be 9.0 trillion ft3, of which 7.0 trillion ft3 was by pipeline and 2.0 trillion ft3 was by liquefied natural gas (LNG) shipment. Large components of the international gas trade take place within the regions shown in the table. Transfers among Western European countries, within the Soviet Bloc, between Canada and the U.S., and among Pacific Rim nations are the most significant aggregations. The outlook, however, is for a much larger global trade between those regions which have large reserve to production ratios and remaining recoverable resources relative to their indigenous energy requirements and those regions which face growing needs for natural gas relative to their resource bases. To some extent, the GOSSER projection already has been constrained in its forecast of fuel choices to reflect the regional availability of natural gas or the capital cost associated with Table 4. Outlook for global consumption of natural gas (trillion ft3),
T
Region
Proved
I
Reserves: I
Exports (+I ZY-%O
(U.S.) Total, North America Total, Western Europe Total, Australasia
17.1) (19.4) 19.4 22.9 14.6 8.5 1.6 0.7
(186.7) 284.7 218.8 23.0
(-0.9) 0.0 -2.4
(-2.6) -1.0 -6.3 +0.7
(Japan) Total, Pacific Rim5 Total, Latin America Total, Middle East Total, Africa Total, Chlna Total, Soviet Bloc
(1.5) 2.9 3.0 2.1
(1.0) 201.0 226.6 1084.0 248.6 30.7 1479.3
(-1.4) -0.1 +o.o +O.l +0.9 0.0 +1.5
,C-3.8)
Total, World
;:: 25.3
I
63.7
(3.8) 6.9 :.: 217 5:::
-2.1 +0.6 +2.8 +1.8 0.0 +3.5
121.3
Interreglonal Trade
2.2
9.4
Notes to Table 4
BP Statistical Review of World Energy, June 1988. Drawn from Ashby, Dreyfus. Global Outlook for Service Sector Energy Demand (GOSSER). 1988. End of 1987. Adopted from CEDIGAZ, Natural Gas in the World, 1987. Includes Japan, South and Southeast Asia and Pacific Nations, but excludes Australia and China.
784
DANIEL A.
DREYFUS and ANNE B. ASHBY
long-distance transportation facilities. The projected regional requirements for the year 2010, therefore, are an indication of the relative attractiveness of gas in competition with alternative energy sources despite the requirements for interregional transportation which requires additional pipeline and LNG transportation facilities. Table 4 indicates that the interregional trade in natural gas must increase threefold by the year 2010 to accommodate the patterns of use that are emerging. Of the 9.4 trillion ft3 of interregional gas trade in 2010, as much as 6.0 trillion ft3 may be intercontinental LNG shipments. REFERENCES 1.
2. 3. 4. 5. 6. 7. 8. 9. 10.
11. 12.
13.
14.
“Worldwide Report,” Oil Gas J. 86, (December 1988). “43rd Annual International Outlook,” Wld Oil 207, (August 1988). Cedigaz, “Natural Gas in the World in 1987,” Cedex, France (1988). World Energy Conference, 1986 Survey of Energy Resources, Holywell Press, Oxford (1986). Organization of the Petroleum Exporting Countries, “OPEC Annual Statistical Bulletin,” Vienna (1987). National Energy Board, “Canadian Energy Supply and Demand 1987-2005,” Minister of Supply and Services Canada, Ottawa (1988). Institute of Gas Technology, “IGT World Reserves Survey as of December 31, 1984,” Chicago, IL (1986). C. D. Masters, E. Attanasi, W. Dietzman, R. F. Meyer, R. Mitchell, and D. Root, “World Resources of Crude Oil, Natural Gas, Natural Bitumen and Shale Oil,” Twelfth World Petroleum Conference, Houston, TX (1987). World Energy Conference, 1986 Survey of Energy Resources, Holywell Press, Oxford (1986). Potential Gas Committee, “Potential Supply of Natural Gas in the United States,” Golden, CO (1987). Geological Survey of Canada, “Oil and Natural Gas Resources of Canada, 1983,” (1984). University of Texas at Austin, Bureau of Economic Geology, ICF-Lewin Energy Division, ICF, Inc., and Argonne National Laboratory, “An Assessment of the Natural Gas Resource Base of the United States,” Washington, DC (May 1988). U.S. Department of Interior, U.S. Geological Survey, and Minerals Management Service, “National Assessment of Undiscovered Conventional Oil and Gas Resources,” USGS-MMS Working Paper, Open-File Report 88-373 (1988). A. B. Ashby and D. A. Dreyfus, “Global Outlook for Service Sector Energy Requirements (GOSSER),” Gas Research Institute, Washington, DC (1988).
03~5442/89 $3.00 + 0.00 Copyright 0 1989 Pergamon Press plc
GLOBAL NATURAL
GAS Rl%OURCESt
DANIELA. DREYFUS$and ANNE B. ASHBY§ *Strategic Planning and Analysis and #Energy Modeling and Analysis, Gas Research Institute, 1331 Pennsylvania Avenue, N.W., Suite 730 North, Washington, DC 20004-1703, U.S.A. (Received 28 March 1989)
Abstract--The potential of the global natural gas resource has gained renewed attention in recent years as energy diversification and environmental concerns have risen in significance. Conventional estimates affirm the importance of gas as an underutilized element in the portfolio of energy sources available to serve future requirements. Current estimates of remaining recoverable gas reserves worldwide are 8000 trillion ft’, of which 3900 trillion ft3 are proved reserves established by drilling information.
INTRODUCTION For most of their history, the development of natural gas markets has followed the emergence of liquid petroleum as the dominant global fuel. Natural gas has been discovered in association with oil since the earliest days of the petroleum industry, but gas is not as readily stored and transported as crude oil. Prior to World War II, natural gas was treated at best as a by-product and more generally as a waste product of the search for and production of crude oil. Well into the 1970s and even today, though to a much lesser extent, gas has been flared in the more inaccessible oil fields, an indication of the low economic value placed upon it by the owners of the oil. Over time, however, the use of gas as a fuel became more generally feasible. In the 195Os, technology for the efficient, long-distance transmission of gas by pipeline had progressed to the extent that continental gas sources in Europe and North America were capable of serving the major centers of energy demand. Natural gas replaced much more expensive manufactured gas in residential and commercial applications and began to be viewed as a competitive energy source for industrial uses and for the generation of electricity. Later, technologies for the seaborne transportation of gas in liquefied form (LNG), though much more costly, made some of the isolated sources of gas viable options for energy markets remote from the gas fields. In recent years, the value of the global gas resource has become more widely realized. It is now viewed as a major component of the energy resource base with a potential for moderating dependence upon liquid petroleum and for generally diversifying the global energy mix. The relatively low pollution emissions and the low contribution to greenhouse gases resulting from combustion of natural gas in comparison to other fossil fuels has lent new significance to the world gas resource as new emphasis is placed upon air quality and as potential global warming emerges as an international issue. The natural gas resource base is quite large in relation to the current levels of demand upon it. Proved reserves of natural gas, those amounts which are reasonably well known based upon drilling information, are estimated to be the energy equivalent of about 708 billion barrels of crude oil. This amount approaches the global proved reserves of oil (907 billion barrels), but the annual production of natural gas is only about half that of petroleum. The global reserve to production ratio for natural gas, a measure which is often used as an indication of near-term supply capability, is about 57 : 1. In comparison, the ratio for petroleum is 43 : 1. The estimated total remaining worldwide gas resource base which could be economically recoverable with current technology is much larger then the proven reserves. Estimates of total remaining recoverable reserves, which include undiscovered portions of the resource base, are
tInvited survey paper. 773 Em14:12-11
DANIEL A. DREYFW and ANNE B. ASHBY
774
on the order of 1.3 trillion barrels of oil equivalent. Clearly, the natural gas resource is capable of supporting much greater levels of production. It will, undoubtedly, continue to increase in its significance as an energy source in the coming decades.
DEFINITIONS
AND
APPROACHES
TO
RESOURCE
ESTIMATION
Resource estimation
Estimation of natural gas resources is done for a variety of purposes and at widely varying levels of precision and detail. At one end of the spectrum lie the resource estimates associated with reservoir engineering. They are based upon considerable knowledge of the subsurface situation through detailed, on-site, geologic exploration, seismic investigation of the subsurface formations, confirmatory information from the drilling of wells, and sometimes actual production experience with the particular reservoir. These estimates are associated with the technical and economic operation of the reservoir. The extreme alternative is the appraisal of the undiscovered, recoverable resources which might exist in areas of national, regional, or even global scope. Studies of the latter type are done for more abstract economic motives, for public policy decisions, or for general scientific and academic interest. While they also rely upon a history of the exploration and production experience with developed gas resources and upon specific geologic, seismic, and drilling data where it is available, they extend their scope to a more generalized inference of the probable occurrence of producible gas based upon broad geologic conditions. Definitions
There is no universally adopted set of precise definitions to describe the nature of gas resource estimates. There are descriptive categories, however, which are generally used to indicate the nature of the available information that underlies the professional judgment leading to the estimate. Recoverable resources. The initial distinction to be made is that of recoverable resources. Natural gas resource estimates of more than scientific interest are generally limited to the consideration of methane contained in deposits that might be amenable to discovery and production using conventional practice and reasonably foreseeable technical and economic extensions of that practice. This limitation excludes significant portions of the longer-range resource potential from consideration. The global gas resource estimates surveyed in this paper, therefore, are comparable to similar estimates of alternative energy forms such as the coal and petroleum quantities that could be provided using conventional practice. They are appropriate estimates for discussions of energy supply issues in the near term, that is, for two or three decades. For discussions of the energy situation beyond the middle of the next century, especially when significant advances in the technologies of alternative sources such as commercial electric power from fusion energy reactions, power storage in superconductive devices, and advanced solar concepts are being considered, the conventional gas resource estimates are somewhat limiting. For example, substantial amounts of methane are known to be present locked in hydrate form in permanently frozen arctic areas and in the deep ocean floor. Large sedimentary basins are known to exist in such circumstances and estimates of the methane present are enormous, ranging as high as 3 x lo* trillion ft3, although the technologies required to exploit this resource are currently beyond reach. In another sense, theories have been advanced suggesting that the abiogenic sources of oil and gas found in sedimentary deposits, which are the basis for all conventional natural gas resource estimates, do not fully explain the occurrence of methane in the earth’s crust. If the theories of an abiogenic origin of methane, such as those advanced by Thomas Gold, were to be confirmed, the occurrence of producible quantities of hydrocarbons outside of the currently known and estimated sedimentary areas would have to be considered. In any event, resource estimates usually omit from consideration those quantities of gas which occur in situations that would require the investment of energy of production in amounts
Global natural gas resources
775
approaching the energy value of the gas produced. To some extent, this constraint also might be subject to revision should major breakthroughs in technology occur. Even within the more conventional resource situations, the notion of a recoverable resource estimate includes some notion of technological feasibility and economic attractiveness. Although the precise criterion of technical recoverability is seldom explicitly stated by the estimator, it generally implies the current, or conventional, technical practice of the industry along with such evolutionary improvements in technology as a knowledgeable practitioner can foresee. These limitations are revised from time to time to reflect advances in practice and theory but the potential for scientific breakthroughs, or even major innovations in engineering not yet apparent in practice, are usually excluded. Judgments of economic recoverability are more ethereal. They also imply a strong reliance upon current circumstances, but the estimator’s attitude about future values of gas are usually unstated. Obviously, estimates of the recoverable quantities of resources can be significantly influenced by the current market situation and by prevailing attitudes about the economic outlook. The economic assumptions underlying resource estimates, therefore, represent a significant variable. Proved reserves. In any region with a history of production, some of the resource base has already been depleted. Cumulative production is, of course, a reasonably well-documented quantity which is sometimes noted in resource estimates and which, from time to time, must be deducted from precise estimates of ultimately recoverable resources. Within the notion of recoverable resources, the most significant further distinction is that between reserves (or proved reserves) and remaining resources. Proved reserves are the recoverable quantities of gas which are estimated to remain in known oil and gas reservoirs. Usually proved reservoirs have actual production histories or conclusive engineering and geologic data to establish their ability to produce. Proved reserve estimates in the form of reserve to production ratios are commonly viewed as a measure of near-term capability to sustain production. They are, of course, a sort of inventory in the sense that considerable investment has been made in the exploration of the deposits. Exploration costs may amount to half the ultimate cost of producing the gas and the exploration investments still remains to be made in the case of undiscovered gas in frontier or unexplored areas. As a category of resources, proved reserves are simply that portion of the total recoverable resource base for which extensive descriptive data exists. Estimates of reserves, therefore, may be assigned a greater degree of precision than estimates of undiscovered resources. Proved reserves are, however, not an indicator of the magnitude of the total recoverable resource base, as is sometimes implied in non-technical literature. Large volumes of recoverable resources undoubtedly exist in areas in which no reserves have yet been proven. Within estimates of undiscovered resources, there usually will be a range of circumstances confronting the estimator. The Potential Gas Committee (PGC), a volunteer group of industry, government, and academic analysts that periodically estimate U.S. natural gas resources, characterize their estimates in three categories. Probable resources are those associated with known fields. Estimates are based upon relatively large amounts of geologic and engineering information. The resources include extensions of discovered pools into as yet undrilled areas and new pool discoveries within existing fields in reservoirs or formations that are known to be productive elsewhere in the same geologic province. Possible resources are postulated to exist outside of known fields but are associated with a productive formation in a productive province. These resources are expected to be discovered because of judgmental projections of plays from producing formations based on geologic information. Speculative resources are those expected to be discovered in formations or provinces that have not yet been proven to be productive. The judgments are made by analogy to geologic conditions in productive areas. The extension of available drilling data and specific geophysical information into the lesser known portions of the potential resource base involves increasing degrees of judgment on the
776
DANIEL A. DREYFUS and ANNE B. ASHBY
part of the estimator. To some degree, statistical methods can be used to extrapolate drilling experience into future discoveries. By analogy, statistical approaches even can be applied well into the most nebulous of speculative resources. Judgment, however, remains the dominant factor in estimates of undiscovered resources. UNCERTAINTIES
IN
RESOURCE
ESTIMATES
It should be self-evident that any effort to estimate the remaining recoverable global resource of natural gas will afford imprecise results. In approaching estimates of the global gas resource, it is important to remember that the U.S. hydrocarbon resource has been more intensely explored and drilled than any other in the world. More than 90% of the world’s historical drilling experience has occurred in the U.S. and Canada. Outside of the U.S. there is much less historical experience, exploration drilling and production data are scarce, and in many areas, that data which does exist may be difficult to obtain, or of questionable validity, or both. Aggregate global compilations are always drawn from a broad range of disparate sources. The sources not only will vary greatly in regard to their individual capabilities, but consistency among the approaches must be expected to be far less than among U.S. estimates. Some general factors that will affect the estimates are the following: Data. Each of the estimates relies on the data available to the estimators; there is not a single, authoritative and comprehensive data base used by all estimators even in the well explored and well documented areas of the mature U.S. domestic gas producing regions. Significant discrepancies in the publicly available data must be resolved by each estimator, and some have access to exclusive, proprietary data unavailable to others. Dejinitions and scope. Each estimator has chosen to include certain components of the resource base. Variations particularly are found in the treatment of the less conventional resource components (coal bed methane, Devonian shale, tight formations, etc.). Although there are economic and technology considerations involved, some estimates simply exclude some resource categories even where there is actual production experience. There are variations as well concerning the depth of resource considered, the assumed limitation of water depth on the deep offshore potential, attitudes about the ultimate accessibility of remote resources, etc. Judgmental attitudes. Estimators differ in their judgments even about the potential for relatively well-known conventional resources. These judgmental attitudes, in addition to differences in professional geologic interpretations, are colored by attitudes about future economic parameters (sales prices of gas and costs of factors of production) and relative optimism about the future pace of innovation in exploration and production technologies and their application in the field. ESTIMATES
OF
GLOBAL
PROVEN
RESERVES
There are four primary sources of comprehensive estimates of global proven natural gas reserves. The Oil and Gus Journal’ (OGJ) and World Oil2 (WO) are both periodicals in which independent estimates of proven reserves are published annually. The OGJ publishes its estimates at the end of the calendar year and defines the estimates to be as of the first of the following year. World Oil publishes its reserve estimates each August and defines the estimates to be as the end of the previous year. Cedigaz3 and the World Energy Conference4 (WEC) are membership organizations that gather, compile, and publish salient natural gas statistics. Cedigaz publishes its reserve estimates in June of each year with the estimates as of the first of that year. The WEC publishes its estimates every 2 or 3 yr. The estimates are generally 2 yr old at the time of publishing. All four primary sources use surveys to compile regional reserve estimates. The OGJ and WO send surveys to various oil industry participants in each country. Where possible, the reserve estimates provided by government entities are adopted. Because reserve estimates tend to play a role in deciding individual production quotas, the estimates provided by the governments of OPEC countries are generally discounted slightly. In cases where the
777
Globai natural gas resources
governments do not respond to the survey, estimates provided by operating companies are used. When countries do not respond at all to the survey, the periodicals will modify the most recent estimates published by Cedigaz with information they have gleaned from their monthly production surveys and other sources. In the event that no tangible estimate is available, the periodicals may assign an estimate based on a judgmental relationship between known production levels and reserves. Cedigaz and the WEC also use the survey technique to obtain reserve estimates. Because these are both membership organizations, and the surveys are sent principally to members, the estimates can be evaluated for accuracy before publishing. As a result, the reserve estimates generated by these two organizations are relied upon by other independent sources. Table 1 provides a detailed breakdown of reserve estimates made by the four primary sources. The breakdown is augmented by some individual country estimates made by the U.K., the U.S., Canada, and the OPEC countries. Some of the differences in estimates of proven reserves can be attributed to the date the estimates were made. For example, the OGJ estimates are the most recent and reflect the effects of reserve additions and cumulative production through 1988. At the other end of the spectrum, the estimates generated by the WEC are the oldest of those shown on the table and reflect circumstances as of the year ending 1984. The WEC estimates, however, do provide some insights into how circumstances of reserve additions and production changed when they are compared to the more recent reserve estimates. Table lt indicates, for example, that production exceeded reserve additions in the intervening years between the WEC U.S. reserve estimate and the other more recent U.S. estimates. Similarly, the WEC Venezuelan reserve estimate does not reflect the vast reserve additions attributable to the giant discoveries of both associated and non-associated natural gas since 1984. In general, the four primary sources show relatively consistent reserve estimates with respect to the more mature resources of North America and Western Europe. The differential among the estimates of the same overall vintage, however, tends to widen as experience with the resource declines such as in the countries of the Asia-Pacific region where oil and gas have been discovered only recently. Estimates of proven reserves prepared by secondary sources, such as OPEC’ and the Canadian National Energy Board6 (NEB), may reflect differences in estimation techniques, definitions, or political motivations. The NEB, for instance, is known to be highly conservative in its estimates of the Canadian resource base. In the past, this posture supported a relatively strict export policy. It is not clear why the NEB continues to estimate reserves conservatively in the era of the Free Trade Agreement. Overall, it is remarkable that the various reserve estimates show such a high degree of consistency given the large role played by judgment. As will be seen in Table 2, however, the role of judgment becomes more pervasive as the definition of resources expands. ESTIMATES
OF REMAINING
RECOVERABLE
NATURAL
GAS
RESOURCES
Sources
The 1986 IGT World Reserves Survey’ included an assessment of world conventional natural gas resources as of the year ending 1984. This compilation was prepared by Sala and drew upon a number of earlier global assessments and specific country estimates. In Table 2, the IGT assessment is shown, together with two other comprehensive global assessments, namely, Masters et al,* as reported in the proceeding of the 12th World Petroleum Congress, 1987 (year-ending 1984 d a t a ) and the World Energy Conference Survey of Energy Resources’ data, as summarized in 1986 and incorporating data reported predominantly for 1984, although values for a few countries are based on earlier data. The global resource data have also been augmented by the most recent estimates of the U.S. resources made by the PGC in their authoritative update of the “Potential Supply of Natural tTbe superscript Arabic number in the tables refer to references that are listed under Notes to the tables.
Table 1. Worldwide proven gas :eserves (trillion ft’).
-
03’
Region or country
Western Hemisphere' Argentina Barbados BOllVia Brazil Canada Chile Colombia Ecuador Guatemala Mexico Peru Trinidad and Tobago Venezuela United States Others
518.44 26.70 0.0' 5.35 3.70 95.10 4.20 3.94 4.02 0.02 74.03 0.62 '0.50 102.24 187.20
W. Hemisphere
OPEC
Western Europe+ Austria Denmark France W. Germany Greece Ireland Italy Netherlands Norway Spain Turkey United Kingdom Others
ido2
edigaz3
5'5.7' 24.49
535.38 26.77
5.33 3.72 95.60 4.20 3.94 4.03
5.01 3.71 96.23 4.24 4.06 4.03
74.83 0.65 '0.20 '00.20 188.50 22.10
74.03 '2.0' '6.24 '00.37 '87.70
06.26
'04.23
'04.40
'00.12 0.42 4.32 1.18 9.39 0.14 1.80 '0.24 62.51 85.50 0.84 1.04 22.14
227.09 0.33 2.90 1.18 9.62 0.02
‘92.47 0.42 4.34 I.20 6.32 0.14
'0.22 62.5' "6.36 0.43 0.50 22.74 0.79
'0.24 62.51 80.70 0.85 1.17 22.74
1.a0
'The
totals may not represent
OGJ’ I ,182.l;! 183.5() 6.7(1 5.02 494.4() 95.0(I 0.0: 0.9E 42.5C '2.3C 9.32 156.7C 2.oc '45.85 'l.OC '3.13 3.70
Middle
1 ,‘35.97
76.70 0.88 '0.24 58.76 206.10
'46.25 0.30 3.65 1.84 9.39 3.88 1.25 8.83 53.50 37.01 0.51 0.49 25.60
-
I
due to independent
I402
Cedigaz: I
1 .'67.03 '83.11 6.70 4.70 497.00 95.00
37.50 8.10 9.32 163.20 '41.85 5.10 5.00
OPEC4
1.064.75, '83.51I 6.95I 5.0' 494.41 35.32 0.041 0.95, 42.55,
494.41 35.32
42.56
22.70
rounding.
I
WEC.6
7.77
300.47 28.25 0.0'
'56.80
35.32 7.06 3.07 "1.24
'46.05
72.40
'91.20
31.78
I ,066.37
674.52
9.6' ‘56.80 , I.20 ,
'00.47 10.98 '3.14 3.71
1 ,'22.36
',030.27
253.3' '04.20 I.90 3.88 2.44 '1.47 0.60 3.53 25.70 0.10 2.29 85.00 0.2' 1.76 3.00 4.10 3.10 0.03
205.82 '05.90 1.70 3.89 2.48 9.40 0.53
257.02 '04.'8 1.9' 3.00 2.44 11.48 0.57 3.53 25.67 0.11 2.30 85.00 0.2' 1.77 3.00 4.17 3." 0.04 3.67
2'5.50
117.64
25.65 0.53 45.56
1.00
2.95 6.7'
tOta's
85.6C
3.70
9.96
Africa OPEC
+The
NEE;
62.86
II
Middle East+ Abu Dhabi Bahrain Dubai Iran Iraq Israel Jordan Kuwait Neutral Zone Oman Qatar Ras al-Khaimah Saudi Arabia Sharjah Syria N. Yemen United Arab Emirate!s* Others
Egypt Gabon Ivory Coast Libya Morocco Mozambique Nigeria Somalia South Africa Sudan Tanzania Tunisia Zaire Others
WEC6
4.94 3.28 91.82 4.24 4.13 4.10
I 87.2'
'01.68
--
21.93
97.65
the sum of the components
-
Africa+ Algeria Anaola-Cabinda Caieroon congo
4.03
I
EIA:
-
Region or country
East OPEC
OPEC4
may not repreSent
'04.18
0.64 25.67
85.00
1'1.24. 1.07 3.35 2.47 6.00 0.42 2.12 21.19 0.14 49.44
I I 215.42
the suns of the components
0.10 0.20 3.00 0.06
215.49
182.29
due to independent
*United Arab Emirates contain the countries Abu Dhabi. Ajman, Fujairah. Ras al-Khaimah, Sharjah, and Umm al-Qaiwain.
rounding
Dubai
continued opposite
779
Giobal natural gas resources Table
l-on&wed
Region or Country Asia-Pacffict Australia Bangledesh Brunei Burma Chfna-Taiwan Indfa Indonesia Japan Malaysia New Zealand Pakistan Papua New Guinea Phillippines Thailand Others Africa OPEC
Cedigaz3
OGJl 240.65 16.63 12.72 11.60 9.46 0.89 22.86 83.59 1.41 51.70 5.15 17.72 ~ 3.03 0.01 3.89
327.37 80.59 12.71 11.69 9.46 0.88 35.49 83.59 1.41 52.51 5.23 22.11 3.04
245.03 29.83 12.00 5.10 0.70 17.80 87.00 1.07 52.20 4.06 17.79 0.18 3.12 13.75
~1x6
OPEC'
204.71 31.43 6.78 7.77
83.55
0.81 12.36 66.04 0.95 53.00 5.47 15.89 0.49 3.72
6.50 2.15
83.59
83.59
83.55
66.04
~
Centrally Planned Economiest Albania Bulgaria China Czechoslovakia East Germany Hungary Poland Romania U.S.S.R. Yugolsavia Others
0.17 31.70 30.24 0.32 6.60 4.40 3.95 4.82 1,500.00 1 ,448.00 2.98 29.00
World Total+ Percent OPEC Percent CPEs
3.955.34 31,862.37 40.0% 37.07. 39.0% 39.0%
1.560.70
I’ ,501.70 0.22
I
1.531.96 0.35 0.18 31.78 0.53 6.60 4.20 5.90 6.99 1.472.64 2.83
1.284.27 0.28 0.25 24.72 0.35 2.12 4.70 4.52 8.12 1.236.03 3.18
3.900.77 37.0x 39.0x
3,019.43 33.0% 43.0%
'The totals may not represent the sun of the conponents due to independent rounding.
-
kites to Table 1
1 Dil
and Gas Journti "Worldwide Report," December 26, 1988; reserves as of 111189. ’
2 World Oil,
"43rd Annual Internattonal Outlook," August 1988; reserves as 12/31/8?.
3 CEDIGAZ. Natural Gas in the World in 1987 June 1988; reserves as of 12/31/87 and converted from Bcm to Tcf'by using the factor lcm - 35.315cf. 4 m4nnual Statistical Bulleti_~..U&Z: reserves as of 12131187 and converted from Bcm to Tcf by using the factor lcm - 35.315cf. 5 Energy Information Admlnistrat~on. U.S. Crude Oil. Natural Gas. &nd Natural Gas Liouids Rese_ rx..s;Washington, D.C. (1988); reserves as of 12/31/87. 6 1986 World Energy Conference, "Survey of Energy Resources;" reserves as of 1984 and converted from Bcm to Tcf by using the factor lcm - 35.315cf. 7 National Energy Board, Canadigo Eaerav Suoolv and &Rand 1987-2005 September 1988; reserves as of 12131/86 and converted from exajoules to Tcf by using the factor 13 = 0.92cf. a British Petroleum Company. BP Statistical Review of &rld (1988); reserves as of 12/31/87.
Energy; London
..__-.
Gas in the United States.“” A recent estimate of Canadian resources made by the Geological Survey of Carradar’ is also included. As Table 2 indicates, estimates of the remaining recoverable natural gas resource base vary widely by estimator. The estimates for the U.S., for example, vary by over 300 trillion ft3. The variations can be explained by differences in estimation techniques, definitions of what constitutes a recoverable resource, and judgments on what types of resources to include, e.g.,
DANIEL A. DREYFUS and ANNE B. ASHBY
c __
Table 2. Worldwide remaining recoverable resources (trillion ft’), T
Region
or Country
Western Hemisphere Argentina Brazil Canada Colombia Ecuador Mexico Peru Venezuela & Trinidad United States Others Western Europe Norway United Kingdom Others
M asters1
IGT2
1,498 49 43 433 18 9 196
1,902
193 377-395 78 299-317
;z
Africa Algeria
2,126 947 135 52 21 15 335 166 455
1.903
Centrally Planned China Romania U.S.S.R Others
Economies
World
453-653
568 358 31 44
127 4 4
630 132 36 140 Ill 211
671-833 152
307 85 21 :: 41
2,807 222 2,585
1,966-2,80; 109-147 96 1,761
8,107
7.352-7.83(
Notes
’ c
212 92 48 132
115
183 17 156
Asia-Pacific Australia-New Zealand India Indonesia MalayslalBrunei Others
739
600
570 145 28 41
Egypt Libya Nigeria Tunisia Others
GSC5
474
247 2 143 1,089
987
423 268
Middle East Iran Iraq Kuwait Neutral Zone Oman Saudi Arabia United Arab Emirates Others
1,649 30 4 134
469
11: 599 22
PCC4
WEC3
to Table
5,585 95 5,474 16
2
D. Masters, E. Attanasi, W. Dietzman, R. F. Meyer, R. Mitchell, and of Crude Oil, Natural Gas, Natural Bitumen and D. Root, "World Resources Shale Oil." Preprint of the Twelfth World Petroleum Congress, Houston, Texas, 1987. The remaining recoverable resources refer to l/l/85 and were calculated by estimating the ultimate resources less the cumulative production.
2 Institute of Gas The remaining
Technology, recoverable
IGT World resources
Reserves Su ey May refer to 12::1/84.
16,
1986.
3 1986 World Energy Conference, "Survey of Enrgy Resources;" resources as of 1984. The remaining recoverable resources are assumed to be equivalent to the World Energy Conference nomenclature of proved recoverable reserves plus estimated additional reserves recoverable. Data were converted from Bcm to Tcf by using the factor lcm - 35.315cf. 4 Potential Gas Committee, Potential SUDD~V of Natural Gas in the United St&es, April 1987; resources as of 12/31/86. The remaining recoverable resources are assumed to represent the sum of the PGC probable, possible, and speculative categories. 5 Geological Survey of Canada, "Oil and Natural Gas Resources of Canada, 1983," 1984; resources as of 12/31/83. The remaining recoverable resources are assumed to be the average expectation of ultimate technically recoverabie resources estimates. Data were converted from exajoules to Tcf by using the factor 1J = 0.92cf.
Global natural gas resources
781
conventional vs unconventional natural gas. Nonetheless, the table does suggest that natural gas resources may be nearly two and one-half times larger than proven reserves and that the natural gas resource base could easily support a much higher level of production than the 1987 level of 67.2 trillion ft3. Variations among U.S. resource estimates
In Table 3, we compare several reasonably contemporary, authoritative estimates of the U.S. natural gas resource base. The entries in Table 3 are only crude characterizations of the classifications used in the individual estimates and the notes do not exhaustively qualify the entries. Nevertheless, these estimates have each been advanced as a rational measure of the extent of the remaining recoverable U.S. gas resource. Most casual users of the results will apply no more distinctions or qualifications to the numbers than those noted in the table. At the technical, professional level, however, exhaustive efforts have been made to reconcile the differences among these studies and the continuing discussions include a major review of the Department of Interior’s approach by a panel of the National Research Council. The estimates can be reconciled to a degree by considering major differences in the definitions or the scope of the resources considered. For example, the DOE study12 explicitly estimated the growth in recoverable resource estimates which should be anticipated as new theories and practices for more intensive recovery of oil and gas from discovered reserves are more extensively applied. The other studies did not include any estimate of this amount. The exclusion, at least on the part of the GRI study, does not constitute a judgment that such growth will not take place but rather a lack of sufficient data to estimate its size. Unconventional resources, such as gas from coal seams and from the less permeable formations, are variously treated in the estimates. Again, some of the exclusions do not constitute explicit determinations of infeasibility. In the case of the USGS estimate,13 for example, some resources which were excluded from consideration, such as Eastern Devonian Shale resources, have an actual production history. They were probably excluded for definitional reasons or because the large size of the ultimate unconventional resource base was deemed to obscure the estimates of the more conventional resources. The PGC, similarly, has added coalbed methane to its estimate only in the most recent update. If the estimates are normalized regarding scope, however, significant differences among the technical judgments of the remaining recoverable resource base can still be found even in the most intensively explored and developed areas. Furthermore, it should be recognized that the definitional and scope differences, the differing perceptions of the economic and technological constraints that should be applied, and the appropriate treatment of the less conventional resources do constitute real differences in opinion among the analysts who authored the studies concerning the way in which the remaining recoverable resources should be viewed. The uncertainties inherent in global estimates of recoverable gas resources, or even of proven reserves, are affected by these same factors to a much greater degree. The information reported by or inferred for some geographic areas is further colored by deliberate political motivation, scarcity of fundamental data, inconsistency among reporting sources regarding the definition of terms, and the prevailing national attitudes concerning the economic and political motivations to develop indigenous resources. OUTLOOK
FOR GLOBAL NATURAL AND INTERNATIONAL
GAS CONSUMPTION TRADE
Natural gas resources remain adequate to sustain potential requirements for decades to come even in the large and mature North American markets. Global resources are extensive, well in excess of 100 times current annual production. There is a distinct geographic imbalance, however, between the centers of current and probable future natural gas consumption and the location of proven reserves and remaining recoverable resources. This imbalance suggests that if natural gas is to play its optimum role in the global energy future, long-distance (interregional) trade in natural gas must expand significantly.
1
1188
771
pbtential Ges &mcy,
as -lxxmnwltid-
trj rn).
pmved reEe_,
reser.m/probehle -~dundi~resanreS.
methane(not chssifled
Agq-e@te of inferred
abed
llE pbtmtial Ges Gxmdttee does mt estimate for th? end of the 1987calendar year.
Not estimated.
Data ezmliog12/31/&L
826
33 78 (111)
984
33 119 (152)
159
d
149 4 407 42214 (1127)
hrch
1989.
of Fnergy
mu Baeeum FYojecticn of U.S.
Lut h9s adoptedan estiIB.xe IEA by the Ike
supporting th? “ma
“pbtential Supply of NahIral Gas in the united states;
Gas Ikseamh Institute, dEBal frm the Qu I$dmarbm Model data bee pnergv Supply ind Ilanandco 2010,” wcwhhgm, D.C. (1988).
Potential Gas Gmdttee (Kz),
568
33 6 (39)
1542 164 6 423 916 (832)
‘An Assessmentof the P+smral c&s Resource Base of the
Noces'coTahLe3
t
33 96 (129)
7 7 (14)
:
(12)
(5::)
6
324 123 (715)
95
173
6
95
108 180 353 259 (1059)
108 115 229 146 (757) 261 6 (529)
173
159
159
108 86 142
Ffecoverable- Alecoverable Ilecoverable- lecoverable IRecoverable I\ecoverable f5HCf 51.80
159
ecoverable $3&f
“.,L
U.S. Ilqs. of w (DOE), office of pblicy Plarming ad Al-dysis, united states,” way 1988.
Total - U.S
Proved Reserves Resources9 (Subtotal - Alaska)
Proved Reserves5 Inferred Reserves/ Probable Resources Extended Reserve Growth Undiscovered Resources Unconventional Resources (Subtotal - L-48 States)
Lower-48 States
Region
Table 3. Comparison of recent estimates of U.S. natural gas resources (trillion ft3). USGS Ius2 PGC3 CR14 --Iiconmicallv ITethnically iconomicallv 'ethnically Ir(ostLikely 1lost Likely conofnically
783
Global natural gas resources
Table 4 displays the consumption of natural gas in 1987 aggregated by major geopolitical regions of the world. It also displays a projection of the growth in that demand to the year 2010. The year 2010 projection is drawn from the Global Outlook for Service Sector Energy Requirements14 (GOSSER) which concentrates upon the end-use energy service sectors (transportation, industry, electricity generation, and residential/commercial). The probable future energy requirements for end-use services are projected based upon historical use patterns, economic growth, and considerations of changing energy intensity of use, such as the pace of technological change, economic restructuring, and conservation behavior. The projected fuel choice patterns required to serve energy needs take into account the capital and operating costs and fuel availability for alternative energy sources. Industrialized countries, developing economies, and the centrally planned economies are considered independently. Finally, the sectoral energy requirements are aggregated to derive a global projection. Table 4 also displays the proved reserves at the end of 1987 aggregated for these geopolitical regions and the net of the interregional imports and exports of natural gas for the year 1987. The total international trade in gas was, of course, larger than the trade among these regions. The total international gas trade for 1987 is estimated to be 9.0 trillion ft3, of which 7.0 trillion ft3 was by pipeline and 2.0 trillion ft3 was by liquefied natural gas (LNG) shipment. Large components of the international gas trade take place within the regions shown in the table. Transfers among Western European countries, within the Soviet Bloc, between Canada and the U.S., and among Pacific Rim nations are the most significant aggregations. The outlook, however, is for a much larger global trade between those regions which have large reserve to production ratios and remaining recoverable resources relative to their indigenous energy requirements and those regions which face growing needs for natural gas relative to their resource bases. To some extent, the GOSSER projection already has been constrained in its forecast of fuel choices to reflect the regional availability of natural gas or the capital cost associated with Table 4. Outlook for global consumption of natural gas (trillion ft3),
T
Region
Proved
I
Reserves: I
Exports (+I ZY-%O
(U.S.) Total, North America Total, Western Europe Total, Australasia
17.1) (19.4) 19.4 22.9 14.6 8.5 1.6 0.7
(186.7) 284.7 218.8 23.0
(-0.9) 0.0 -2.4
(-2.6) -1.0 -6.3 +0.7
(Japan) Total, Pacific Rim5 Total, Latin America Total, Middle East Total, Africa Total, Chlna Total, Soviet Bloc
(1.5) 2.9 3.0 2.1
(1.0) 201.0 226.6 1084.0 248.6 30.7 1479.3
(-1.4) -0.1 +o.o +O.l +0.9 0.0 +1.5
,C-3.8)
Total, World
;:: 25.3
I
63.7
(3.8) 6.9 :.: 217 5:::
-2.1 +0.6 +2.8 +1.8 0.0 +3.5
121.3
Interreglonal Trade
2.2
9.4
Notes to Table 4
BP Statistical Review of World Energy, June 1988. Drawn from Ashby, Dreyfus. Global Outlook for Service Sector Energy Demand (GOSSER). 1988. End of 1987. Adopted from CEDIGAZ, Natural Gas in the World, 1987. Includes Japan, South and Southeast Asia and Pacific Nations, but excludes Australia and China.
784
DANIEL A.
DREYFUS and ANNE B. ASHBY
long-distance transportation facilities. The projected regional requirements for the year 2010, therefore, are an indication of the relative attractiveness of gas in competition with alternative energy sources despite the requirements for interregional transportation which requires additional pipeline and LNG transportation facilities. Table 4 indicates that the interregional trade in natural gas must increase threefold by the year 2010 to accommodate the patterns of use that are emerging. Of the 9.4 trillion ft3 of interregional gas trade in 2010, as much as 6.0 trillion ft3 may be intercontinental LNG shipments. REFERENCES 1.
2. 3. 4. 5. 6. 7. 8. 9. 10.
11. 12.
13.
14.
“Worldwide Report,” Oil Gas J. 86, (December 1988). “43rd Annual International Outlook,” Wld Oil 207, (August 1988). Cedigaz, “Natural Gas in the World in 1987,” Cedex, France (1988). World Energy Conference, 1986 Survey of Energy Resources, Holywell Press, Oxford (1986). Organization of the Petroleum Exporting Countries, “OPEC Annual Statistical Bulletin,” Vienna (1987). National Energy Board, “Canadian Energy Supply and Demand 1987-2005,” Minister of Supply and Services Canada, Ottawa (1988). Institute of Gas Technology, “IGT World Reserves Survey as of December 31, 1984,” Chicago, IL (1986). C. D. Masters, E. Attanasi, W. Dietzman, R. F. Meyer, R. Mitchell, and D. Root, “World Resources of Crude Oil, Natural Gas, Natural Bitumen and Shale Oil,” Twelfth World Petroleum Conference, Houston, TX (1987). World Energy Conference, 1986 Survey of Energy Resources, Holywell Press, Oxford (1986). Potential Gas Committee, “Potential Supply of Natural Gas in the United States,” Golden, CO (1987). Geological Survey of Canada, “Oil and Natural Gas Resources of Canada, 1983,” (1984). University of Texas at Austin, Bureau of Economic Geology, ICF-Lewin Energy Division, ICF, Inc., and Argonne National Laboratory, “An Assessment of the Natural Gas Resource Base of the United States,” Washington, DC (May 1988). U.S. Department of Interior, U.S. Geological Survey, and Minerals Management Service, “National Assessment of Undiscovered Conventional Oil and Gas Resources,” USGS-MMS Working Paper, Open-File Report 88-373 (1988). A. B. Ashby and D. A. Dreyfus, “Global Outlook for Service Sector Energy Requirements (GOSSER),” Gas Research Institute, Washington, DC (1988).