DukeEnergyWritesDown

  • Subscribe to our RSS feed.
  • Twitter
  • StumbleUpon
  • Reddit
  • Facebook
  • Digg

Tuesday, 28 August 2012

Projected Natural Gas Prices Depend On Shale Gas Economics

Posted on 13:32 by Unknown

Considerable uncertainty exists regarding the size of the economically recoverable U.S. shale gas resource base and the cost of producing those resources. Across four shale gas resource scenarios from the Annual Energy Outlook 2012 (AEO2012), natural gas prices vary by about $4 per million British thermal units (MMBtu) in 2035, demonstrating the significant impact that shale gas resource uncertainty has in determining future natural gas prices. This uncertainty exists primarily because shale gas wells exhibit a wide variation in their initial production rate, rate of decline, and estimated ultimate recovery per well (or EUR, which is the expected cumulative production over the life of a well).

If a resource assessment of a shale formation relies on "sweet spot" production rates, where wells produce at rates higher than expected elsewhere in the formation, then the productive and economic potential of the entire formation could be exaggerated. On the other hand, future technological improvements that reduce production costs and/or enhance well productivity, along with closer well spacing, would increase the economic potential and resource recovery of the U.S. shale gas formations.

AEO2012 includes an analysis of varying future shale gas well production estimates and the associated EUR, along with a change in shale gas well spacing, to test the influence of shale gas resource uncertainty on future natural gas prices. In addition to the reference case, the three AEO2012 shale gas resource scenarios are:

  • Low well productivity case (green line in chart). The EUR per shale gas well is assumed to be 50% lower than in the Reference case, nearly doubling the per-unit cost of developing the resource. Unproved shale gas resources are reduced to 241 trillion cubic feet (as of January 1, 2010), as compared with 482 trillion cubic feet of unproved shale gas resources in the Reference case.

  • High well productivity case (light blue line). The EUR per shale gas well is assumed to be 50% higher than in the Reference case, nearly halving the per-unit cost of developing the resource. Unproved shale gas resources are increased to 723 trillion cubic feet.

  • High resources case (orange line). The well spacing for all shale gas plays is assumed to be 8 wells per square mile, which increases the well density in about half the shale gas plays, and the EUR per shale gas well is also assumed to be 50% higher than in the Reference case. Unproved shale gas resources are increased to 1,091 trillion cubic feet, more than twice the unproved shale gas resources in the Reference case.
U.S. natural gas prices are determined by supply and demand conditions in the North American natural gas market, in which the United States constitutes the largest regional submarket. Future natural gas prices reflect the cost of developing incremental production capacity. Because shale gas production is projected to be a large proportion of U.S. and North American gas production, changes in the cost and productivity of U.S. shale gas wells have a significant effect on projected natural gas prices. In the Reference case, for example, shale gas production accounts for 49% of total U.S. natural gas production in 2035.

In 2031, natural gas prices dip in the low EUR case as model results reflect completion of an Alaska gas pipeline, which would transport about 1.6 trillion cubic feet per year of gas from the North Slope to the lower 48 states. Because an Alaska gas pipeline would make up for some of the reduction in lower 48 states' shale gas production, the difference between projected prices in the Reference and Low EUR case is reduced after the pipeline is completed. (EIA)
Email ThisBlogThis!Share to XShare to FacebookShare to Pinterest
Posted in | No comments
Newer Post Older Post Home

0 comments:

Post a Comment

Subscribe to: Post Comments (Atom)

Popular Posts

  • Radon-222 Content In Natural Gas
    Fracking Opponents and Proponents Weigh In A debate is raging in the fracking area about the content of radioactive radon-222 in Marcellus ...
  • D.C. Water Management
    In 2004 the D.C. Water and Sewer Authority was forced to settle a federal lawsuit that claimed it failed for decades to stop its sewers from...
  • Sodium Sulfur Battery
    Sodium Sulfur (NaS) batteries are high capacity battery systems developed for electric power applications. A NaS battery consists of liquid...
  • White House Meets With Climate/Energy Stakeholders
    The White House with more than a dozen energy experts and industry officials last Thursday.  President Obama has pledged to focus aggressiv...
  • African American & Latino Energy Employment Program (ALEEP)
    The Center, through its outreach arm, the African American Environmentalist Association (AAEA), is implementing an African American & La...
  • (no title)
  • EPA & USDA Partner To Reduce Wasted Food
    Today, EPA and USDA announced the launch of a challenge that asks farmers, processors, manufacturers, retailers, communities and government...
  • EPA and Commerce Link Environmental Solutions Toolkit
    Offers Other Countries U.S. Approach to Specific Environmental Issues The U.S. Environmental Protection Agency (EPA) and the Department of C...
  • Carbon Dioxide Emissions Rose 1.4 Percent in 2012
    Global emissions of carbon dioxide from energy use rose 1.4 percent to 31.6 gigatons in 2012, setting a record and putting the planet on cou...
  • Mining Industry Wins Mountaintop Removal Court Ruling
    Mountaintop Removal U.S. District Judge Reggie B. Walton Tuesday threw out tougher water-quality standards issued by the Environmental Prote...

Blog Archive

  • ►  2013 (245)
    • ►  August (16)
    • ►  July (36)
    • ►  June (34)
    • ►  May (26)
    • ►  April (33)
    • ►  March (31)
    • ►  February (27)
    • ►  January (42)
  • ▼  2012 (255)
    • ►  December (33)
    • ►  November (49)
    • ►  October (11)
    • ►  September (36)
    • ▼  August (31)
      • NRC Denies License for Proposed Calvert Cliffs Nuc...
      • New Stormwater Management Rule in Washington, DC
      • Continuous Emissions Monitoring System (CEMS)
      • Big Coal Faces Steel Slowdown Amid Shale-Gas Pain
      • Pennsylvania DEP Amending Fracking Rules
      • Projected Natural Gas Prices Depend On Shale Gas E...
      • Obama Administration Finalizes 54.5 MPG Fuel Effic...
      • The White House Forum on Urban Innovation
      • HUD Innovation of the Day
      • Center Partners With Water Management, Inc
      • Exelon and First Solar
      • Center Seeking Keystone Pipeline Construction Cont...
      • Mitt Romney Energy Plan
      • Shipbreaking in Brownsville, Texas
      • Natural Gas Key To Renewable Energy Use
      • Natural Gas v. Coal
      • Court Strikes Down EPA Cross State Air Pollution Rule
      • Natural Gas & Renewables Dominate 2012 Capacity Ad...
      • Resources For The Future: New Shale Gas Research
      • GAO Report on EPA Regulations and Electricity
      • Pipelines
      • Center Partners with S.L. Sibert Management & Cons...
      • DC Stormwater Proposed Rule (Tradable Stormwater R...
      • Environmental Liability Transfer & Sparrows Point ...
      • Paul Ryan's Family Energy Business Interests
      • Tidal Wave Power Project in Eastport, Maine
      • Exelon To Sell 3 Coal Power Plants for $400 Million
      • Sparrows Point Purchased For $72 million By Liquid...
      • New Ethanol Coalition Fights To Save Federal Biofu...
      • Murkowski or Wyden Will Chair Senate Energy
      • Mining Industry Wins Mountaintop Removal Court Ruling
    • ►  July (30)
    • ►  June (39)
    • ►  May (26)
Powered by Blogger.

About Me

Unknown
View my complete profile