Natural Gas from Shale:
How, Where, and Why?
Danny Ferguson
Vice President, Government &
Community Relations
Southwestern Energy
Company founded 1929 under
the name of Arkansas Western
Gas.
Independent energy company
primarily engaged in natural gas
and crude oil exploration,
development, and production.
Currently, over 2,200 employees
company-wide.
1
Areas of operation
Exploration & Production Segment
NB
CANADA
2013
6,976 Bcfe* of proved reserves
657 Bcfe of production
New Brunswick
Acreage: 2.5 million net acres
Marcellus Shale
2014 est. production: 740 – 752 Bcfe
Acreage: 292,446 net acres (at 12/31/13)
2013 Reserves: 1,963 Bcfe (28% of total)
2013 Production: 151 Bcfe (23% of total)
Marcellus Shale
CO
PA
Denver Julesburg
Basin
Fayetteville Shale
Fayetteville Shale
Denver
Julesburg Basin
OK
AR
Acreage: 302,000 net acres
Acreage: 905,684 net acres (at 12/31/13)
2013 Reserves: 4,795 Bcfe (69% of total)
2013 Production: 486 Bcfe (74% of total)
Brown Dense Project
Acreage: 459,000 net acres (at 12/31/13)
Ark-La-Tex
TX
LA
Acreage: 152,937 net acres (at 12/31/13)
2013 Reserves: 215 Bcfe (3% of total)
2013 Production: 18 Bcfe (3% of total)
• Bcfe is an equivalent measurement of one billion cubic feet of mixed oil
and gas reserves
• ** Arkoma acreage excludes 124,653 net acres in the conventional
Arkoma Basin operating area that are also within the company’s
Fayetteville Shale focus area.
How
How Natural Gas is Formed
• A fossil fuel
• Plants, animals and micro-organisms
compressed under the earth hundreds
of millions of years ago
How
Conventional Gas Properties
• Good porosity
– Has pores between
rock particles that hold
gas
• Good permeability
– Has spaces between
the rock particles that
allow gas to permeate
or flow
How
Unconventional Gas Properties
• An increasingly larger
percentage of the
world’s gas supply
picture
• Unconventional gas:
– Coal bed methane
– Tight natural gas
– Shale gas
How
6
Conventional and Unconventional Reservoirs
How
How Natural Gas is Explored
How
How Natural Gas is Explored – 2 D Seismic
2D seismic
shows a
single cross
section
through the
earth along a
relative
straight line,
much like a
slice of
bread.
How
How Natural Gas is Explored – 3 D Seismic
Where
Shale Plays in Lower 48 States
Source: Energy Information Administration based on data from various published studies.
Updated May 9, 2011
Where
Marcellus Shale Formation
Why
The Case for Natural Gas
Natural Gas is the
alternative fuel for
America’s future:
• Clean
• Abundant
• Domestic
• Economical
Why
Natural Gas is …
Clean
Reduced emissions
CO2
20-30%
Reduced emissions
CO
Compressed
Natural Gas
70-90%
Reduced emissions
Compared to
gasoline or diesel
NOx
75-95%
Reduced emissions
Particulate
Matter
90%
Reduced emissions
VOC
Source: ANGA
89%
Why
Natural gas is the cleanest burning fossil fuel
Why
Emission Reductions
Source: EPA
Why
Natural Gas is …
Abundant More than
100
100
Enough for more than
The U.S. has
2,543
YEARS
YEARS
Trillion
cubic feet
of natural gas
Source: ANGA
Why
Abundant Supply
Why
Unconventional Gas will Become the Standard
Source: EIA, Annual Energy Outlook 2013 Early Release
Natural Gas is…
Why
Economical
Average Price
Natural Gas and Gasoline Prices from 2004 - 2013
2004
Gasoline
Natural Gas
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Why
Savings for Americans
Why
U.S. Energy Demand
Why
Global Energy Demand
Global Energy Demand by Region: 2008 & 2035
200
175
Quarillion Btu
150
125
100
75
50
25
0
2035
2008
Why
Oil Imports to the U.S.
Source: Energy Information Administration; BP; O&G Magazine
Why
Resource Nationalism
Why
Citizens Sharing in the Revenue
SWN paid $1.2 BILLION to
Arkansas
mineral
in royalty
The Energy
ofowners
Employment
payments from 2007-2013
Why
Economic Impact of Marcellus Shale in Pennsylvania
2nd in 2013 in rank of natural gas
producing states
240,000 oil & gas associated jobs
$84,388 avg wage O&G core jobs,
$65,000 avg wage ancillary jobs
$13.5 billion investment by E & P
companies in 2013
$1,000 per year energy savings for
avg Pennsylvania household
Pennsylvania State Energy Plan
Why
Fueling the US Economy
40%
job growth increase
11 million
associated oil & gas jobs
$300–$400 billion
annually to the economy
Manufacturing Renaissance
Manhattan Institute, 2/19/14; Boston Consulting Group, 2/13/14
Why
Economic Impact on the U.S.
– Millions of jobs, both direct and
indirect
– $533 billion added to U.S. GDP by
2025
– Trade deficit reduction of more than
$164 billion in 2020
– $3,500 annual savings per
household from lower energy costs
by 2025; favorable energy rates for
business & manufacturing
– Change the geopolitical balance
IHS Global Insight
How, Where, Why
Key Slides to Remember
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