North American Natural Gas Pathways
CERI Study 138
The North American natural gas market has been transformed by the emergence of unconventional gas developments. With significant natural gas continental supplies the question has become “How can industry, government and others work together to grow natural gas demand in the coming decades?” The Canadian Energy Research Institute (CERI), in collaboration with ICF International, whatIf? Technologies Inc., and Scenarios to Strategy Inc. (S2S) developed four plausible views of the future depicting the influence of high/low natural gas usage for power generation, and high/low liquefied natural gas (LNG) export scenarios for both the United States (US) and Canada on the North American natural gas market.
Conventional Natural Gas Supply Costs in Western Canada - An Update
Study 136 Update
The abundance of shale gas developments in the United States has led to sustained low natural gas prices across North America, making the majority of Canada’s dry gas resources uneconomic to develop. The exception is those resources that contain significant amounts of natural gas liquids (NGLs).
The presence of liquids improves the economics of gas extraction. The analysis shows that the dry-gas portion of the supply cost can decline significantly in the presence of liquids. In some cases, the dry-gas costs are almost completely offset by revenues from the liquids.
This report updates CERI Study No. 136, Conventional Natural Gas Supply Costs in Western Canada released in June 2013 to include the supply cost of producing gas on a liquids-basis (that is, including the revenues and costs for both dry gas and NGLs) for numerous areas across Western Canada. Previously, the study only looked at supply costs on a dry-gas basis, effectively ignoring the liquids component.
The supply cost calculation provides an indicator of the economic viability of producing gas in each of the study areas. With the inclusion of NGLs in the analysis, this update presents a more realistic evaluation of the economic viability of natural gas production in liquids-rich areas across Western Canada.
Conventional Natural Gas Supply Costs in Western Canada
CERI Study 136
Report currently not available.
Potential Economics of Developing Quebec's Shale Gas
CERI Study 132
The profound impact of shale gas cannot be understated, and the impact is truly global. With natural gas being the energy source of choice across various sectors, demand continues to increase. Declines in conventional gas production both in Canada and the US have brought attention to various unconventional natural gas resources, particularly shale gas. In Canada, production from Alberta and British Columbia’s shale and tight gas will likely play a large role in mitigating the effects of declining conventional production on total production. In the past five years, the Utica Shale in Québec has received attention from a number of companies seeking to extract natural gas between Montreal and Québec City. The provincial government in Québec has since placed a moratorium on oil and gas activity, halting development at least until the completion of a Strategic Environmental Assessment, expected in late 2013.
The economic impacts of two hypothetical scenarios are investigated in this study. In the first scenario, drilling takes place to build and maintain a production level of approximately 500 million cubic feet per day (MMCFPD) – Québec’s current consumption of natural gas. In the second scenario, drilling takes place to build and maintain a production level of approximately 1,500 MMCFPD, which would allow for 1,000 MMCFPD of export capacity on top of Québec’s own consumption needs. Each of the scenarios assumes that the moratorium on oil and gas activities is lifted, and makes the assumption that the cost of drilling reflects the cost of field development, rather than exploratory wells. Results for GDP, employment, tax and royalty revenue are calculated using an I/O model and are presented for each province across Canada.
Global LNG: Now, Never, or Later?
CERI Study 131
Low continental prices and an abundance of natural gas have generated interest both publically and privately to look into exporting liquefied natural gas (LNG). Of particular interest are the Asian markets where North American exporters hope to arbitrage high Asian prices against low continental prices. However, North American LNG exporters are not alone in trying to access the Asian gas premium. Australia has committed to considerable LNG export capacities and other gas producing countries are following suit. Concurrently, the abundance of continental gas supplies has increased domestic natural gas end-user demand within the utility, petrochemical, industrial and transportation sectors as well as sparked a debate on whether the United States should export large amounts of LNG. Thus, exporting LNG has significant challenges and North American exporters face considerable risks. With multiple pressures facing the North American LNG industry, many have been wondering if the window of opportunity for North American exports has vanished. This study summarizes current regasification and liquefaction capacities, explains LNG pricing, and reviews some of the risks for North American LNG exporters. The study concludes with addressing the question of whether there is room for North American LNG exporters in an Asian-Pacific market.
Natural Gas Liquids in North America: Overview and Outlook 2013
CERI Study 130
Like the changes brought about by unconventional oil production, shale gas has also revolutionized North American natural gas dynamics. With long-term forecasted depressed North American prices, gas producers have started development in infrastructure to access Asian markets in order to obtain more lucrative netbacks. Part III of CERI’s Pacific Access report continues the examination of opening the West Coast for energy exports by focusing on the supply chain of extracting gas at Horn River and exporting it via the Kitimat LNG terminal. CERI’s Regional Input-Output (I/O) model that was introduced in Part II is used to calculate the impacts of developing wells in Horn River, the construction and operation of the Pacific Trail pipeline, and the construction and operation of the Kitimat LNG terminal.
Pacific Access: Part VI - Foreign Investment in the Oil Sands and British Columbia Shale Gas
CERI Study 129
Development of Alberta’s oil sands and shale gas resources in British Columbia will not occur if financial capital is not available to pay for these projects. More recently, this capital is coming in a form of foreign direct investment from various companies around the globe. Countries, such as but not limited to the US, Europe, China and Korea are active either in the merger and acquisitions activity or complete take-overs. This paper gives a detailed overview of all the recent foreign investment deals that took place in the last few years within Alberta oil sands and BC shale gas regions.
Pacific Access: Part V - Overview of Transportation Options
CERI Study 129
While not a recent concept, oil tankers mooring off British Columbia’s west coast have caused quite a stir. In fact, oil tankers have been loading crude off the west coast since the 1,150 kilometre Trans Mountain Pipeline (TMX) opened in 1957. Thus far, Kinder Morgan’s Westridge Terminal remains the only oil terminal on Canada’s west coast.
This, however, may change.
There are currently 3 pipeline proposals and a rail proposal to transport crude oil from Alberta’s oil sands to the west coast. All aforementioned proposals require marine terminals to be built to transport crude oil to energy-hungry Asian markets. As such, these proposals are drawing a lot of attention—from industry, environmental groups, First Nations and various governments.
This study provides an overview of transportation options, as well as explores and investigates oil tanker and marine terminal safety. In addition to providing a background of oil tankers and the international regulatory structure that governs the safety of the shipping industry, various operational and design measures are also discussed. These mandatory measures are discussed from a Canadian perspective, exploring regulations on a national and provincial level, bringing it down to the terminal level. The latter focuses on Port Metro Vancouver (PMV)—Canada’s busiest port and only marine terminal on the west coast to export crude oil—and Enbridge’s proposed Northern Gateway Marine Terminal. Their unique facilities, marine environments and regulations and safety protocols governing the movement of oil tankers are examined, respectively.
Economic Impacts of Drilling, Completing and Opertion of Gas Wells in Western Canada (2010-2035)
CERI Study 124b
The exploration and development of natural gas resources within the Western Canada Sedimentary Basin (WCSB) peaked in 2006 with the completion of over 23,000 new wells, a production level of 17,500 mmcf/day and royalties paid to Alberta, British Columbia and Saskatchewan totalling $8.2 billion. This included conventional resources; coalbed methane (CBM) and early developments of shale/tight gas resources (BC Montney area). The worldwide recession of 2008 affected the gas industry in the same fashion as other industries around the world. Demand for gas retracted, gas prices fell and new drilling activity slowed. Between 2007 and 2010, new drilling activity within the WCSB dropped by close to 70 percent. Production started to decline as new wells failed to counter the natural decline from existing wells. In concert with the production decline, prices dropped resulting in provincial royalties of just $2 billion. At the same time, shale gas developments in the US ramped up to the point where gas supply was starting a push back of Canadian imports into the US. The golden age of gas within the WCSB was in trouble and the future is unclear! This report presents a “realistic” development forecast for the WCSB gas industry in the form of drilling activity, both vertical and horizontal wells, production levels and royalty payments. In addition, the capital requirements for development and operation of existing and future wells are calculated and the economic impacts for Canada and the United States are estimated.
North American Natural Gas Dynamics: Shales Gas Plays in North America - A Review (Section i)
CERI Study 123
North American Natural Gas Dynamics: Global LNG - A Review (Section II)
CERI Study 123
The global liquefied natural gas (LNG) market has grown significantly over the past decade, with new emerging LNG markets and a growing number of LNG producers. A plethora of new LNG re-gasification and liquefaction projects that are currently under construction will commence operations over the next few years, and construction will begin on many of the proposed LNG projects that are now in the planning phase. According to International Energy Agency (IEA) estimates, annual LNG trade will more than double from 2008 levels to approximately 17.7 TCF, or 48.4 BCFPD, by 2035.
The purpose of this study is to present an overview of existing LNG re-gasification and natural gas liquefaction capabilities around the world and to provide projections of future capacity additions at the regional and global levels. LNG re-gasification and liquefaction capacities in each region are summed by status and by start-up year, and probability factors for cancelling or delaying capacities, based on the status, are applied to produce a projection of future capacities. These probabilities will be adjusted depending on the region, as the likelihood of projects proceeding, or being delayed, will be affected by region-specific factors. The global LNG overview will also provide a brief discussion on existing LNG contracts and potential global LNG spot market supplies.
Coal power plants conjure up strong images for individuals and groups on both sides of a raging debate about the future of electricity generation and the environment.
Whether they are changes in national legislation and regulation, or state/provincial programs and initiatives promoting reductions in GHGs or increasing the use of various renewables, many jurisdictions are trying to discover the balance between minimizing environmental impacts and maintaining a modern, reliable electricity system. While the province of Ontario is moving steadily to permanently shut down all coal-fired generation by 2014 – as part of the Open Ontario Plan – other jurisdictions suggest that advances in coal technology, such as supercritical coal-fired generation, CO2/O2 combustion, CO2 capture and sequestration and Integrated Gasification Combined Cycle (IGCC) offer cleaner coal options.
Amidst the debate and discussions and planning, one thing is abundantly clear; the worlds’ thirst for energy is growing, as is the demand for energy in North America.
This study focuses on North America and the current state of coal-fired generation in the United States and Canada, within a global context. The latter reviews global coal reserves, production and consumption. While not providing a synopsis of who is pulling and pushing in the debate to find a balance over energy production and the environment, this study reviews the current state of coal-fired power generation in North America and explores various elements and statistics of the industry in the US and Canada.
North American Natural Gas Dynamics: Natural Gas Vehicles - A Review (Section IV)
CERI Study 123
This paper explores the possibilities of introducing natural gas vehicles (NGVs) to the North American Transportation sector. Noting that NGV’s have much to offer in terms of reduced greenhouse emissions, increased efficiencies and, in many cases, lower operating costs, the paper nevertheless argues that the place for NGVs in the overall transportation mix will be a small one for years to come. Grandiose visions of an NGV revolution, such as the Pickens Plan, are found to be infeasible over the next decade. Instead, the idea of introducing NGV’s into certain transportation corridors, as recommended by NRCan in their report “Natural Gas Use in the Transportation Sector”, is considered both possible and desireable. However, it will require time, effort, education, incentives, and infrastructure development to establish natural gas as a true alternative to crude-based fuels.