All the world’s extra oil supply is likely to come from expensive and environmentally damaging unconventional sources within 15 years
In their latest study titled Unconventional Hydrocarbons - The hidden opportunity, oil industry consultancy Wood Mackenzie, examines the key types of unconventional oil and gas, namely; heavy oil, tight gas, coal bed methane and shale oil.
The study outlines the resource potential and location of these resources (which are also referred to as non-conventionals), and examines the challenges surrounding their development. Further, the study identifies which companies are leading the way in this area. The study signals increasing reliance on hard-to-develop sources of energy such as the Canadian oil sands and Venezuela’s Orinoco tar belt.
Wood Mackenzie undertook the study in a climate of anticipated tightening global oil supply, regional tightening in gas supply and demand growth, both of which have resulted in an increasing interest in the exploitation of unconventional hydrocarbons.
Phaedra Powilanska-Burnell, Managing Consultant for Wood Mackenzie, said; "Wood Mackenzie believes that the size of the of the unconventionals hydrocarbon prize is potentially enormous, approaching 3.6 trillion barrels of oil equivalent (boe) of resources globally". Putting this in context, this exceeds estimates of undiscovered conventional resources in the world.
Looking to the future, Wood Mackenzie says that by 2025 unconventional oil is expected to supply more than 20% of global demand. Unconventional gas is likely to be at least as important; Wood Mackenzie forecasts it will account for over 40% of US gas supply by 2010. Spurred on by an immediate requirement to secure future gas supply, North America is at the forefront of unconventional exploitation and with the recent run up in commodity prices, an increasing amount of these resources can be economically produced.
In areas such as India and China, coalbed methane (CBM) and tight gas are attracting interest due to the improved gas prices. Combined with fiscal incentives in these countries, which are driven by security of supply concerns, the high price has fuelled a growing interest in unconventional gas, particularly CBM. Development is at an early stage but unconventional gas is likely to play a significant part in the future gas supply mix in these countries.
The study identifies the critical factors for successful development of these hydrocarbons. These factors span technical, commercial, fiscal and environmental issues. In particular, Wood Mackenzie warns that in order to unlock the potential of unconventional hydrocarbons, companies will need to fully understand the risks associated with the different challenges to ensure their investments are successful.
"As unconventional resources are distributed widely around the globe, the key risk is not discovering the resource, but in identifying areas where the critical factors are in place to enable economic development," said Powilanska-Burnell. The study concludes that short to mid-term development will be driven by commodity prices. Wood Mackenzie's medium-term oil price (US$40/bbl flat real) and gas price (US$5.20/mcf Henry Hub flat real) suggest a favourable environment for the exploitation of unconventional oil and gas (with the exception of shale oil), outside of the existing North America areas. Regional and country specific factors, therefore, have a large impact on the development of these hydrocarbons.
Wood Mackenzie says that the unconventionals sector is presently dominated by the independents who have pioneered development in North America. However this is beginning to change, with the supermajors beginning to establish larger positions in the unconventional arena. Powilanska-Burnell concluded; "With conventional non-OPEC supply expected to peak within the next decade and the difficulties in discovering accessible gas reserves, international oil companies (IOCs) with growth ambition cannot afford to ignore these unconventional resources."
Wood Mackenzie's multi-client study entitled Unconventionals - The Hidden Opportunity examines the location, size and key issues associated with developing Unconventional Hydrocarbons around the world. The study includes a database of around 1,100 unconventional companies across the globe that can be cross examined using an Excel tool and a web based browser. In addition there is a comprehensive report on Heavy Oil, Shale Oil, Coalbed Methane and Tight Gas.
Dr Rhodri Thomas, Management Consultant for Wood Mackenzie, discusses the key findings of the Unconventionals study in an interview. This is available to view as a video podcast at http://www.woodmac.com/unconventionals.
Tar sands (also referred to as oil sands) are a combination of clay, sand, water, and bitumen, a heavy black viscous oil. Tar sands can be mined and processed to extract the oil-rich bitumen, which is then refined into oil. The bitumen in tar sands cannot be pumped from the ground in its natural state; instead tar sand deposits are mined, usually using strip mining or open pit techniques or produced in-situ by underground heating or other tertiary recovery processes. |
Source: Finfacts Ireland, http://www.finfacts.com/irelandbusinessnews/publish/article_10009136.shtml
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