NORTHERN PIPELINES- PIE IN THE SKY OR PATHWAYS TO PROSPERITY? Alan - - PowerPoint PPT Presentation
1 NORTHERN PIPELINES- PIE IN THE SKY OR PATHWAYS TO PROSPERITY? Alan Murray SNAME Arctic Section January 19 th 2012 Outline A Brief History The Resource The Demand The Potential Projects The Competition Whats Next?
NORTHERN PIPELINES- PIE IN THE SKY OR PATHWAYS TO PROSPERITY?
Alan Murray SNAME Arctic Section January 19th 2012
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Outline
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A Brief History
Alaska
>North Yukon-> Delta -> Mackenzie Valley -> Alberta
and criss crossing Canada
Northern Homeland” concludes “no pipeline should be built through the northern Yukon, and that a pipeline through the Mackenzie Valley should be delayed for 10 years”
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A Brief History
conclusions to Berger noting ” most of the economic benefits of the pipeline would go outside of the Yukon, but that there was large conditional support for the project if native land claims were settled and the pipeline companies agreed to pay to mitigate negative social impacts of the project.
Alaska Gas Inducement Act (AGIA) to pursue Stage Two of the AHGP (funding of $500MM provided to develop project)
a “sunset” condition, onus now on proponents
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Northern Canada Total Wells Drilled
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Courtesy: Dan Masterson Chevron
The Resource
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Distribution of Natural Gas Resources Outside the WCSB in Tcf
Arctic Islands UR 8.0-33.0+ DR 12.0-20.0 RR 0.0 CP 0.0 Total 20.0-53.0 Grand Banks / Labrador UR 36.5 DR 9.6 RR 0.0 CP 0.0 Total 46.1 Scotia Shelf UR 15-41 DR 3.6-5.3 RR 2.7 CP 0.5 Total 18.6-46.3 Ontario UR 1 DR 1 RR 0.7 CP 1.2 Total 2.4 Other Frontier ** UR 34.0 DR 0.0 RR 0.0 CP 0.0 Total 40.0
** Other Frontier areas include: the Georges Bank, Laurentian, East Newfoundland Basin and Southern Grand Banks, the St. Lawrence Lowland and Maritimes Basin, Hudson's Bay, Baffin Bay and offshore British Columbia.CP = Cumulative Production RR = Remaining Marketable Reserves DR = Discovered Resources
Mackenzie/Beaufort UR 52.0 DR 9.0 RR 0.0 CP 0.0 Total 61.0
Source: National Energy Board, Canada’s Conventional Natural Gas Resources: A Status ReportUR = Undiscovered Resources
Offshore West Coast UR 17.0-43.4 DR 0.0 RR 0.0 CP 0.0 Total 17.0-43.4 Yukon & NWT UR 10.3 DR 25.0-26.0 RR <1.0 CP 0.3 Total 36.6-37.6
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The Demand
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Natural Gas End Use Demand – Canada
273,370 766,994 173,993 79,626 882,133 181,858
Provincial Gas Consumption End use, Final Demand 2008 (Terajoules) Canada 2,376,882
Source: Statistics Canada 57-003-X1E1,256 16,314 Atlantic Provinces 9
Canadian Natural Gas Consumption
Residential 689,049 (25.2%)
2,731,476 Terajoules (2008)
Commercial &
468,656 (17.2%) Industrial 1,025,391 (37.5%) Agriculture 22,635 (<1%) Public Administration 22,313 (<1%)
Source: Statistics Canada 57-003-X1ETransportation 148,837 (5.4%) Power Generation 354,594 (13%)
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US Natural Gas Consumption Consumers by Sector
22,167 Bcf (2010)
Residential 4,951 Bcf = 22.3% Industrial* 6599 Bcf = 29.8% Commercial 3,205 Bcf = 14.5% Power Generation 7,377 Bcf = 33.2%
Source: US Energy Information Administration 2007 StatisticsTransportation 32.9 Bcf = .15%
* Includes Pipelines and Distribution System own-use 11
US Annual Natural Gas Consumption
2009 = 22,810 Bcf
West 14.6% Central 14.9% Midwest 18.6% Gulf 24% South Atlantic 11.2% Northeast 14.2% Alaska 1.8%
Source: US Energy Information Administration12
Oil & Gas Jnl April 7 2009
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Historical Production in Canada
* Raw Gas is raw natural gas production less raw and processed gas injection.
Source: CAPP 2009 Statistical Handbook, Tables 3.9b and 3.10a14
Projected Annual Natural Gas Production from United States
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The Potential Projects
Region Pipeline Resource Potential Tcf Alaska North Slope AHPP 126 Mackenzie D/Beaufort Sea MVP/MGP 52 North Yukon MVP or AHPP 11.3 16
Mackenzie/Beaufort and Alaska Gas Transportation
Source: Oil and Gas Journal17
The Northern Route is fanciful at best! The Denali Project backed by BP and Conoco Philips and solely funded by them was cancelled in May 2011 due to a combination of poor open season response, low gas prices and the technological advances in shale gas development in the lower 48 states Much closer to the markets.
Bridging to the Arctic -MVP
Norman Wells Great Slave Lake
Northwest Terrotories
Great Bear Lake Fort Good Hope Mackenzie River –
Mackenzie Delta & Beaufort Sea Middle Mackenzie Valley Liard River Basin Cameron Hills
Proposed Mackenzie Valley Pipeline
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Mackenzie Valley Pipeline
3 anchor field holders, Imperial Oil, Exxon Mobil Canada, Conoco- Phillips, Shell Canada.
Group in return for rights to acquire an interest in the pipeline and future expansions
Alberta and could ship up to 1.2 bcf/day ( with compression)
Norman Wells connecting to the existing Enbridge NW line
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Mackenzie Valley Pipeline
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Phase Envelopes for Hydrocarbons
Mackenzie Valley Pipeline
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Mackenzie Valley Pipeline
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Project would use about 440,000 tonnes of steel Would require facility and camp modules, construction and drilling equipment, borrow material and fuel. Plan is to move materiel and fuel to Hay River then barge to locations north of Fort Simpson and truck to points south . Personnel would be moved by plane and bus Borrow material ( soil and gravel used for construction) would be moved by truck on project roads Peak Activities would occur: In summer, with barges on the Mackenzie from Hay River and Fort Liard. In winter with trucks transporting material to infrastructure sites. At the start and end of winter with aircraft transporting project personnel
MGP – the Regulatory Decision
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“We have decided that the project is in the public interest. In reaching this Decision, we have considered the social , environmental and economic effects And listened to the views of Northerners and other parties. Our approval of the applications ...depends on the companies meeting a combined total of more than 200 conditions to address the concerns we have heard” “The economic benefits would be real and large. The companies proposing the project estimate they would spend $16.2 billion. This would increase Canada’s GDP by more than $13Bn, generate almost $6Bn in labour income and Governments would gain $2.9Bn in tax revenues” “Our decision requires that the gathering and transmission pipelines provide “Open Access”… encouraging further exploration and production” “We are confident that the companies are fully capable of designing, constructing and operating the proposed facilities in a safe manner” Our decision is a major step towards allowing the project to proceed, but does not mean that it will be built. It is up to the companies to decide whether theproject makes economic sense for them based on their view of gas prices ad project costs. By the end of 2013 we require the companies to file an updated cost estimate and decide on building the project Actual construction must begin by end of 2015 for our approval to remain valid.
Alaskan Pipeline Project
Prudhoe Bay Boundary Lake Graphic Courtesy of TransCanada’s Alaskan Pipeline Project25
The ANGTS Pipeline received US and Canadian Government Approvals in 1977 Led to the creation of the Northern Pipeline Agency in Canada Foothills Stage 1 Pre build 35Tcf of recoverable gas Question: Is the original approval still valid for the present proposal?
In Canada a further 972 miles of pipe
Alaskan Pipeline Project
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Project parameters
Point Thomson transmission pipeline
Alberta Case (Prudhoe Bay to Alberta)
–– Pipeline length (Alaska): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745 miles (1198 km) –– Pipeline length (Canada):. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 972 miles (1564 km)
Valdez LNG Case (Prudhoe Bay to Valdez)
Compression Alberta Case Alberta Case Valdez LNG Case 4.5 bcf/d 5.9 bcf/d 3.0 bcf/d Total compressor stations (Alaska) 8 17 2 Total compressor stations (Canada) 11 20 n/a In areas of continuous permafrost or where permafrost is predominant, gas will be chilled on the discharge side of compressor stations
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Proposed Project Timeline
Open Season & Commercial Developments
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Received approval from the U.S. Federal Energy Regulatory Commission (FERC) to conduct the first natural gas open season in North Slope history. Developed a credible cost estimate and competitive commercial offering for potential shippers to evaluate during the open season. The project conducted its initial open season in 2010,and is currently engaged in negotiations with potential shippers to execute signed precedent agreements
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Regulatory Approvals & the Permitting Process
The project is actively working to file major permit applications with FERC and the Northern Pipeline Agency (NPA) in 2012 by advancing the essential groundwork for securing permits, including environmental, regulatory, and land field studies and stakeholder engagement.
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Engineering & Construction Planning
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Engineering & Construction Planning
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Oil Sands & the “Big Picture”
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The competition
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US Shale Gas Deposits
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Approved North American LNG Terminals
Source: US Federal Energy Regulatory Commission (FERC)35
What’s Next?
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Natural Gas Pricing
Historical Western Canadian Natural Gas Prices
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Recent Horn River News
EnCana announced in 2009 over 500 Tcf Horn River gas in place
are bigger
declining 50% after one year
in other shale plays.
lines/ higher gas prices
CBM at over 600 tcf, but low estimates can be 250 tcf of which 10-20% is maybe recoverable
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Lessons Learned
Irrespective of the business outcome of the current proposals unquestionably Governments, Regulators, proponents and the industry at large has learned much
Thus Dec 2015 condition on MGP
Thus the creation in Canada of the Major Project Management Office The TAPS pipeline was designed, approved and built in 8 years almost as much time as the MGP Hearings!
Development of high strength steels with good fracture control properties Development and Use of Strain based design methods Development of Structural Reliability Design for use in Pipelines Improved understanding of material properties Development of semi and fully automatic high productivity welding Improved inspection techniques and flaw acceptance in plastic zones Development of remote sensing ground movement and pipe straining
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Questions?
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MPMO
the regulatory review of major resource projects.
projects as one team. As a means to that end, the system has been devised so that industry is provided with a single point of entry into federal processes, accompanied with explicit service
execution of project agreements, signed by all deputy ministers and heads of regulatory agencies involved in major projects. As a result, issues are escalated to deputy ministers and agency heads before they become a problem. Project agreements and the service standards embodied in them are a good demonstration of the doctrine of "what gets measured gets done".
regulatory work in the territories.
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