Global%20Energy%20Resources

1
AGI Leadership Forum Perceptions of the
Geosciences
Global Energy Resources Perceptions, Realities
Myths
Arthur R. Green, Chief Geoscientist ExxonMobil
Exploration Co., Retired Gig Harbor,
Washington May 1, 2006
2
Format

• Conclusions
• Scale and Complexity
• History
• Processes for Finding and Producing Oil and Gas
• Future Scenario

3
Global Energy The Next Decade and Beyond

• CONCLUSIONS
• Modern civilization, a growing population and
  globalization will become increasingly more
  dependent on access to large volumes of oil, gas,
  coal, industrial materials and water at
  reasonable costs.
• Oil and gas supplies ?65 of the worlds energy
  (84 mb/d and 226 bcf/d gas. By the end of the
  decade it will be 90 mb/d and 280 bcf/d of gas).
  Renewable energy, excluding hydroelectric and
  nuclear represent about 2 of production
  worldwide.
• The geography and geopolitical setting of both
  production and consumption of oil and gas and
  petroleum based products is evolving toward
  fundamental change.
• The peaking of conventional oil and gas
  production is sure to happen, and while the
  timing is uncertain, there are signs of change on
  the horizon. Enhanced oil recovery efforts and
  developing heavy oil and tar deposits will
  stretch supply.
• Increased gas production will become more
  important and the required transport and
  facilities infrastructure will require huge up
  front investment.
• Coal and nuclear power will play an increasing
  role in conventional energy sources as hydrogen,
  solar, wind, bio-derived (diesel / ethanol /
  alcohol), and new energy sources evolve.

4
Global Energy The Next Decade and Beyond

• CONCLUSIONS
• The modern energy industry has experienced many
  discontinuities and has evolved to meet the
  challenges. The next stage of the energy
  business will be its greatest challenge as
  nations and corporations try to meet the ever
  increasing demand for new sources of oil and gas
  as old fields are depleted.
• These changes in the global energy balance have
  the potential for geopolitical (Nations)
  environmental, economic and security disruptions
  worldwide.
• Recognizing and facing energy realities,
  learning from history and developing an
  integrated plan is critical for an industry that
  requires lead times of 10-15 years. Such a plan
  must include international relations - trade,
  global, economics, massive up front investment,
  innovative science and applied technology
  (Industry - Academic - Government).
• I am optimistic about our energy future and the
  leadership that will be furnished by science
  and creative technology in a world without
  walls. The plans and operations must be
  conducted within the context of the environment
  of our beautiful planet and its wealth of
  creatures large and small.

5
World Oil Production Capacity by Region and
Country, Reference Case, 1990-2025 84 - 126
mbopd Oil consumed at a rate of 40,000 gallons
every second 230 million barrels of oil
equivalent from all energy sources
Sources History Energy Information
Administration (EIA), Energy Markets and
Contingency Information Division. Projections
EIA, System for the Analysis of Global Energy
Markets (2003) and US Dept. of the Interior, US
Geol. Survey, World Petroleum Assessment 2000
(Reston, VA, July 2000)
US Dept. of Energy / International Energy
Outlook, May 2003 This publication on the WEB at
www.eia.doe.gov/oiaf/ieo/index.html
6
World Natural Gas Consumption, 1970-2025
Sources History Energy Information
Administration (EIA), International Energy Annual
2001, DOE/EIA-0219 (2001) Washington, DC, Feb.
2003. Projections EIA, System for the Analysis
of Global Energy Markets (2003)
US Dept. of Energy / International Energy
Outlook, May 2003 This publication on the WEB at
www.eia.doe.gov/oiaf/ieo/index.html
7
Factors Driving Global Energy
Global Geopolitical Economic Environment
Representative Governments Global Economy
Relations Trade - Regulations - Blocks Security -
War - Terrorism Energy Consumption World
Banking and Investment
Business Operations
Energy Dynamics Opportunities Challenges
Energy Discovery and Production Trade -
Transport Refining to Products Job Creation Gross
Domestic Product - GDP Company Vitality -
Research and Investment
Science Technology
Knowledge Innovation - Creativity Information
Systems digital A Goggle World
People - Human Technology
Education - Skills Population Demographics Prosper
ity vs Poverty Emotional Maturity World Peace a
Sustainable Environment
8
Petroleum Industry Time Line
1992 Political Barriers Fall Global Exploration
and Trade
1959 Global Basin Analysis and Discovery
1911 Jersey Standard Dissolution
1975 OPEC Embargo Venezuelan Nationalization Oil
Price Rise
2001 9/11 WTC
Production Peaking ?
1882 Standard Oil Company Nobel Oil Baku
1942 W.W. II
1860 1880 1900 1920
1940 1960 1980 2000
2020
W.W. I
W.W. II
Walls Fall
Production
Discovery Acquisition
Modern Petroleum Industry
Global Discovery and Acquisition
Post WWII Technology and Subsurface Imaging
Western World Exploration and Discovery
Global Oil Gas Field Dev. Deep Water
Discoveries
Step-outs and Production
Post 9/11 Globalization Enhanced Oil
Recovery Heavy Oil Gas - LNG
Pre-Industry Kerosene
ERAS
I
II
III
IV
V
VI
VII
VIII
9
Stage 4
Post World War II

• Global Geopolitical Economic Environment
• Surge in Demand
• US becomes Net Importer
• Winds of Nationalization
• Geopolitical Restructuring
• State of Israel formed and Colonies fall
• Marshall Plan
• Cold War 1947 - Korean War 1950 - 1953
• Stock Market (DOW) Reaches 500 milestone in
  1956
• Population Inflection / Baby Boom

• Business Operations
• Aggressive Global Search and Discovery
• On-site Geologic and Engineering
  Investigations
• Reestablishing Global Reach limited to The
  Western World
• Increasing Flow of Oil Gas and Refined
  Products
• ARAMCO Restructured
• Companies Reorganized

• Science - Technology - Knowledge
• (Data - Information - Knowledge - Wisdom)
• Revolutionary Advancements from War Years -
  High Octane Fuel, Butyl Rubber, Lubricants,
  Plastic and Polymers, Catalytic Cracking
• Direct and Indirect Impact of Technology
• Technical Leadership in Academia, Government
  and Industry
• Corporate Research Centers - Upstream and
  Downstream Enlarged
• 1st Offshore Drilling
• Scouting - Global Information

• Human Technology
• Experienced Staff
• Inventive can do Attitude
• Global Maturity
• Travel and Communication Advances
• Training - Schools and Mentoring

10
Billions of Oil-Equivalent Barrels / US
Dollars Relative Numbers Stage 5 Discoveries
11
1995 2005
Stages 7 8

• Global Geopolitical Economic Environment
• Major Mergers - Restructuring
• Stock Market Surges (1995) and Falls (2001) and
  Recovers (2005)
• Globalization/Post cold war economy develops /
  China and India blooms
• Europe United - EU Currency
• Balkins - Bombing (1999)
• 9-11 World Trade Center and Pentagon Struck
  (2001)
• War in Afghanistan and Iraq
• Islamic World awakens
• Terrorists attacks worldwide
• WMD Nuclear Biologic
• Global Pandemics ?
• Population surges to 6.5 billion
• Sanctions on Iran, Iraq, Libya

• Science - Technology - Knowledge
• Micro Chips and PCs Advance - Efficiency Surge
• 3-D Seismic and Attribute Analysis
• Visualization
• Communications - Cell Phones and Broad Band
• Satellites - GPS, ICONOS, Interferometery
  Geostat
• Smart Materials
• Robotics
• Nano Technology Micro Machines
• Human Genome Mapped
• Medical Advances - Genes and Stem Cells
• Cloning
• Fuel Cells - Photo Voltaics and Combination
  Cars Advance
• Climate Science Advances
• Ethanol from Corn and Cane
• Hybred Autos

• Business Operations
• Major Corporations Develop from Mergers
• Offshore West Africa Blooms
• Caspian Sea North and South
• Niger Delta, Angola, Malaysia, Indonesia and
  Sakhalin
• Russian Industry Advances / problems?
• Middle East Production Evolves /
• Tensions Rise
• GDP in China and India Surge (10)
• Technology Traded for Market Shares
• Economic / Flat Earth

• Human Technology
• Integrated Geoscience Emerges
• Team Projects
• Staff Ages and is Reduced in Numbers
• Hiring and Training Globalized

12
World Gravity
David Sandwell, SCRIPPS Institute ExxonMobil
Exploration Company, 2000
13
Walking in the Subsurface World
14
The Marine Challenge
15
Deep Water Drilling Rig
16
Integrated Basin Analysis, Resource Assessment,
and Business Operations
17
The Parts of a Petroleum System
18
Merging Science - Business Ventures - Human
Technology
After N. G. DeAth, 1997
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Win / Win Human Relations
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The Future to 2025

• Global Political Economic Environment
• Increasing Degree of Volatility and
  Discontinuities A Confluence of Changes
• Peak Oil A World of Declining Petroleum
  Resources
• Global Population from 6.5 to 8.0 billion by
  2030. 80 Non OECD / 25 years. Aging US and
  European Populations
• Increasing Demand for Crude, Natural Gas and
  Petroleum Products
• Intense Competition for Quality Producing and
  Exploration Oil and Gas Properties
• Aggressive Competition for Economic Power /
  Trading Blocks
• Pressure on Earnings Growth / Costs Down /
  Volumes up
• Terrorism and Wars Challenge Security and
  Stability
• Asia and Islamic Nations Surge
• Emotional Maturity and Ethics Critical
  (Governments-Industry- Academia-Individuals)

• Science - Technology - Knowledge
• Fundamental Knowledge Developing in many
  Areas that will Impact the Production and Use
  of Energy Resources
• Complexity Science Non- Linear Integration
  at the Edges
• Medical Science Genome Code, Cloning, Stem
  Cells and Imaging
• Materials, Polymers, Smart Materials and
  Composites
• Advanced Dynamic Subsurface Fluid Models
• Non-seismic Geophysics
• Nano Technology / Self Reproducing Micro
  Machines
• Military Research / Satellites Gravity, Robots
• Advanced Data and Information Systems (Google)
• New Energy Sources and Increased Efficiency
• The Flat Earth Science (T. Friedman)
  / Resources, Manufacturing, Research, Jobs,
  and Nuclear Capacity
• Environmental Revitalization

• Business Operations
• Huge Investments in Producing, Transportation
  and Refining Facilities
• World Basins Continue to Mature
• Shifting Center of Growth for Producing
  Properties
• Natural Gas becomes a Major Player in the
  Energy Mix (LNG / GTL)
• Increasingly Complex High Risk Geologic
  Opportunities
• Increased Development of Static Petroleum
  Resources
• Coal and Nuclear Business Increases
• Partner of Choice
• New Energy Sources Evolve
• Sound Safety and Environmental Performance
• Scientific and Technical Leadership
• Ethics and Global Maturity
• Doing the Right Thing Right

• Human Technology
• A Learning Organization / Flat Earth
  Competition
• Adaptive Self-Organizing System - Leadership
• People Network - Multi - Cultural and Evolving
  Demographics
• Congruency, Integration and Communication
• Innovation and Creativity by All

21
World Energy Consumption, GDP / 1970-2025
World Energy Consumption China and India
Rise
32 - 67 Trillion
World Gross Domestic Product by Selected
Countries and Regions
Sources History Energy Information
Administration (EIA), International Energy Annual
2001, DOE/EIA-0219 (2001) Washington, DC, Feb.
2003. Projections EIA, System for the Analysis
of Global Energy Markets (2003)
Sources Global Insight, Inc., World Economic
Outlook, Vol. 1 (Lexington, MA, Third Quarter
2003), and Energy Information Administration,
System for the Analysis of Global Energy Markets
(2003)
US Dept. of Energy / International Energy
Outlook, May 2003 This publication on the WEB at
www.eia.doe.gov/oiaf/ieo/index.html
22
Unconventional Hydrocarbon Resources Obstacles
to Commercialization
Low HC Gas
Hydrates
HC Saturation
Oil Shales
Heavy Oil / Bitumen
Complex Accumulations Subtle Traps
Tight Gas / Coalbed Methane
Gas H2S CO2 N2
Conventional
Deep Drilling
Deepwater
Arctic
Accessibility
After Bill Drennen/Art Green - April 10, 2002
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(No Transcript)
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An Energy Scenario A Complex Story of Interacting
Variables and Uncertain Reserve Figures

• ASSUMPTIONS
• USGS World 2000 World Resources (-) (slightly
  below mean)
• World GDP 2
• No major wars, terrorists mega events or
  economic collapses
• Global free flow of energy products to
  consumers
• Major construction of international transport
  and refining infrastructure
• Globalization develops / Middle classes grow
• Population increases
• More nations prosper (Asia / China / India)
• New energy sources viable at end of period
• Moderate conservation and efficiency increases
• National oil companies and private companies
  cooperate
• No national hoarding or embargos

25
World Petroleum Assessment 2000
Thomas S. Ahlbrandt / USGS
Conventional Oil Endowment of the World
26
World Petroleum Assessment 2000
Thomas S. Ahlbrandt / USGS
Conventional Natural Gas Endowment of the World
27
USGS 2000 Oil Endowment (graduated green color)
of Assessed Provinces Superimposed on Earth by
Night Image
Thomas S. Ahlbrandt / USGS
28
USGS 2000 Oil Endowment (graduated red color) of
Assessed Provinces Superimposed on Earth at
Night Image
Thomas S. Ahlbrandt / USGS
29
Marimba-1 (Angola) - Ocean Valent 1998
ExxonMobil
30
The Years of Discovery
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BACK-UP SLIDES
32
1999 Industrial Physics Forum Standard of Living
Consumption Consumption
Application of Earth X
of Energy X of Ingenuity
X Political Habitat (Raw) Materials
Sources Motivation

E L E C T R I C A L
Top Soil Water Biomass Building
Materials Metals Non-Metalics Fertilizers Precious
Metals Stones
Oil Gas Coal Ethanol/Alcohol Oil
Shale Uranium Solar Water Geothermal Wind Animal
Scientific Technological Management Project
Engineering Work Ethic
Governmental Policy Business Economics Environment
- Social Economic Physical Core Values
A. R. Green Vincent McKelvey, Director, USGS
33
Energy, GDP, Affluence and Life Style
World Gross Domestic Product in Three Economic
Growth Cases, 1970-2025
GDP Growth and Energy Closely Linked 1970-2020
World Energy Consumption in Three Economic Growth
Cases, 1970-2025
Note GDP and energy use are shown in
logarithmic scale
US Dept. of Energy / International Energy
Outlook, May 2003 This publication on the WEB at
www.eia.doe.gov/oiaf/ieo/index.html
Sources History Energy Information
Administration (EIA), International Energy Annual
2001, DOE/EIA-0219 (2001) Washington, DC, Feb.
2003. Projections EIA, System for the Analysis
of Global Energy Markets (2003)
34
Who has Access to the Worlds Proved Oil and
Natural Gas Reserves
Source PFC Energy research, based on BPs 2005
Statistical Review of World Energy
35
How Do Oil Industry Earnings Compare to Other
Industries?
Pharmaceuticals Biotechnology Banks Semiconducto
rs Semiconductor Equip. Diversified
Financials Household Personal Products Consumer
Services Software Services Telecommunication
Services Food, Beverage Tobacco Oil Natural
Gas Real Estate Capital Goods All
Industries Technology Hardware
Equipment Utilities Consumer Durables
Apparel Media Commercial Services
Supplies Materials Retailing Health-Care
Equipment Services Insurance Food Staples
Retailing Transportation
Source Company filings as reported by Oil Daily
for the oil and gas industry, and by
Pricewaterhouse Coopers LLP from data compiled by
Standard and Poors Compustat for all other
industries