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Regional
Gas Production Multi-Client Studies |
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The Changing Face of North American Gas Supply
A Series of Four Regional Multi-Client Studies
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OVERVIEW
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The next 10 years will witness radical
shifts in both the regional and
geological mix of North America natural
gas supply, which will have profound
impacts on regional pricing. On one
hand, most conventional supply areas
have been extensively explored, but
record-high prices are generating
intensive E&P efforts to offset the
negative impact of that
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maturity. One consequence is an unprecedented re-orientation in upstream
spending toward non-conventional supply such as gas from tight formations,
shale and coal-bed methane — a
change bound to
dramatically slow decline of indigenous production. On the other hand, the massive expansion of
LNG imports will have an equally profound impact on the mix of gas supply especially in coastal regions (Eastern, Gulf Coast, and Western).
These supply dynamics and their related effects on infrastructure will influence the bottom line of virtually every North American gas market player. For starters, escalating costs associated with record-high gas drilling could subject the returns on new E&P expenditures to the greatest risks since the early 1980s. At the same time, a timely understanding of these regional changes will give gas marketers (including LNG suppliers) a decisive competitive advantage when assessing market risks and opportunities. The same can be said when dealing with such issues as customer cost of service, supply sourcing and diversification, the ability of merchants to build new gas-fired electricity generation, and company merger values. |
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THE STUDIES
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To address these supply dynamics, PIRA Energy Group, in collaboration with
Lippman Consulting Inc.
(LCI), is offering a series of multi-client studies,
The Changing Face of North American Gas Supply. Each study,
done by region, combines the intensive use of LCI’s basin-by-basin
gas forecast and pipeline loading models with PIRA’s price-forecasting expertise.
They are, in order:
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Ready for Prime
Time: Future Rockies Supply and Western Basis –
Study 1
The first study — completed in September 2006 — focuses on the impact of future gas supply (including LNG) on western U.S. infrastructure and regional pricing. Similar to earlier studies, “Ready for Prime Time” analyzes and forecasts gas production by year for the listed individual basins through 2015.
However, unlike previous studies, this study’s “bottom-up” vintage models deal effectively with the wide-ranging variety of specific plays within those basins and, therefore, is in a superior position to assess the innate characteristics of targeted reserves.
Click here for more
details.
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The Outlook for Gulf of Mexico Supply and Pricing:
Barnett Shale vs. LNG –
Study 2
Released in October 2007, this second study provides new, in-depth U.S. Gulf Coast indigenous production forecasts as well as assesses the timing and impact of specific LNG terminal development. The analysis takes a close look at how huge potential seasonal swings in LNG imports (high summer, low winter) have the potential to dramatically alter the region’s supply mix. By doing so, the study highlights similar infrastructure issues to those addressed in the Rockies study and gives subscribers new insights into how these issues will affect future Henry Hub pricing and basis.
Click here for more
details
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Dawning of a New
Era: The Outlook for Western Canadian Supply and Exports –
Study 3
An in-depth look at Western Canadian Sedimentary Basin prospects for conventional gas as well as for tight deep formation gas and coal bed methane. Additionally, factors surrounding the proposed Mackenzie Delta pipeline and future gas requirements for oil sands and bitumen conversions to crude oil demand
are carefully reviewed. In sum, this third part of the series,
released in August 2008, helps determine prospects for western Canadian gas net exports to the U.S. and eastern Canada.
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Future East
Coast Gas Supply: The Impact of Marcellus Shale
on the North American Gas Market –
Study 4
The final study in the series examines the driving
forces behind the potential for unconventional
gas supply deliverability in the East Coast
markets, growth and changes in demand
(particularly gas-fired power generation),
together with issues such as Marcellus shale gas
production, LNG terminal development, pipeline
assets, infrastructure investments, and regional
gas prices. This examination will help study
subscribers make more informed decisions related
to the future financial performance of East
Coast regional gas assets, including trading and
marketing activities, basis management, firm
capacity commitments, acquisitions, expansions,
gas processing and electric power projects.
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Why four different studies?
The four designated regions are unique from one another, distinguishable in terms of supply/demand, infrastructure and basis pricing, thus warranting their own comprehensive, dedicated analysis.
The Rockies possesses dynamic supply potential tied to non-conventional gas production and market access.
The Gulf of Mexico faces indigenous production challenges that will interface with expanding volumes of LNG and future demand in the region’s electric power and industrial sectors.
Western Canada also faces production challenges plus Arctic pipeline and heavy-oil recovery issues, while
East Coast markets must cope with future North American production, LNG imports, and local demand issues (especially in the power sector) that will profoundly affect gas values within the region and in relation to Gulf Coast gas prices.
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WHO WILL BENEFIT FROM THE CHANGING FACE OF NORTH AMERICAN SUPPLY?
The stakes are high when it comes to making decisions regarding future North American gas balances and basis pricing. Inevitably, market participants will end up on either side of multi-million-dollar gains or losses.
“The Changing Face of North American Gas Supply” will help market participants keep ahead of the competition through a better understanding of the future interplay between regional gas balances, related infrastructure issues, and regional gas pricing. Those market participants should include:
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- Gas Producers know the importance of maintaining an in-depth knowledge and sensitivity to prospective regional shifts in North American gas supply in the process of developing E&P strategies with emphasis on maximizing returns on assets. The studies will help producers identify and evaluate the risks of future pipeline-capacity constraints and their impact on regional pricing.
- Global LNG Suppliers and Marketers need to keep ahead of regional supply/demand dynamics involving potential transportation constraints and thus affecting marketing strategies to maximize exporter netbacks. The studies also will assess the strengths and weaknesses of competing LNG projects.
- Pipeline Companies that effectively anticipate constraints and surpluses in pipeline corridors will have a strategic advantage when valuing existing assets, targeting potential acquisitions and planning expansions. The studies will help clarify the competitive challenges and opportunities facing those pipelines.
- Local Distribution Companies face difficult choices regarding the purchase of new supplies and/or the renewal of existing supply arrangements. The studies will assist them to conclude optimal terms under which supply can be contracted given the dynamics of regional competitive forces.
- Gas and Power Marketers need timely insights into how changes in regional gas supply and costs will impact the value of power marketers’ portfolios as well as marketing strategies and trading desk risks.
- Electric Generators and Other End-Users constantly must consider how changing regional gas supply dynamics will influence pipeline service choices, transportation and siting options. The studies will make end-users better equipped to adapt to supply shifts, rather than respond to crises, and help new project developers make more effective evaluations of fuel supply options and project viability.
- Financial Institutions must make sound evaluations of how changing market conditions will affect the economics and financing of new drilling, gathering and pipeline ventures.
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DATA SOURCES
Gas supply and demand data for “The Changing Face of Gas Supply” come from U.S. federal and state agencies, as well as agencies in Canada and Mexico. Transportation data generally comes from LCI’s Database Service, and gas production models reflect proprietary data developed by
LCI.
WHAT DO STUDY SUBSCRIBERS RECEIVE?
For each regional study purchased, subscribers will obtain a valuable set of services:
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WORKSHOP. PIRA/LCI will host a workshop to discuss the preliminary findings of each regional analysis. During and after each workshop, subscribers are encouraged to make suggestions concerning the content and findings.
PIRA/LCI will contact companies during and/or after the workshop to elicit input. Three (3) participants from each Client organization will be invited to the workshop. Clients ordering the study after the workshop would receive a CD-ROM version of the presentation material.
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ONLINE PRESENTATION. About a month prior to the release of the final report, PIRA will host
an online conference call (via WebEx) to discuss the final conclusions and findings of each regional study, including production forecasts and associated impacts on pipeline transportation and capacity, LNG demand, and regional flows and basis.
- REPORT. Clients will receive three (3) copies of
the final report, which will spell out the findings of the regional market analysis, a recap the workshop’s content, and a discussion of key uncertainties that impact the major findings. The reports also will link the regional forecasts and alternative cases to PIRA’s overall North American gas market Reference Case.
- DATABASE. Clients receive three (3) copies of a CD that will provide
historical and forecast region-specific supply/demand and basis point pricing data through
2015. Where appropriate, gas production will be analyzed and forecast down to individual field levels along with volume flows on specific pipelines. Aggregated results of the Rockies’ producers survey will be included. All data will be accessible on Excel spreadsheets.
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FEES AND OPTIONS
Each study in The Changing Face of North American Gas Supply series can be purchased on its own or in any combination of regions. Existing PIRA and LCI retainer clients receive a reduced price on all packages. In addition, companies that sign up for a study
before its Charter Deadline will receive a discount on the fee. Fees for multiple regions are discounted further for all subscribers.
Click here for detailed service pricing options.
Please have a sales representative contact me to discuss the studies.
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ABOUT LIPPMAN CONSULTING
From a modest beginning in 1996, LCI has become the nation’s largest consulting firm specializing in, and the premier provider of, natural gas supply statistics. It has a diversified staff of 19 professionals, including three engineers, who provide monthly gas production data for all of North America with details by specific basin and by field as well as by type, conventional and CBM. LCI also provides monthly gas flow data for over 50 pipelines, encompassing all major North American gas transmission systems. In addition to having the largest gas supply database in the industry, LCI has two forecast models: one for domestic natural gas production and the other for gas transmission operations. LCI services a large client base, from governmental agencies to producers, pipelines and marketers. For more information on LCI, call (915) 838-1619 or email
LCI@LippmanConsulting.com.
George Lippman (President) is a nationally recognized gas supply expert with over 35 years of experience. He has extensive knowledge of the nation’s interstate pipeline system and has worked with the various major national gas flow models. Prior to establishing LCI, Mr. Lippman worked in various capacities for the El Paso Natural Gas Co. He is a participating member of various committees dealing with national gas supply issues throughout North America. He has served as the Chairman, Rocky Mountain section of the American Gas Association’s Committee on Natural Gas reserves and is currently serving on the Potential Gas Committee. He has worked with the Gas Research Institute (GRI), the Canadian Energy Research Institute (CERI) and the California Energy Commission (CEC). Mr. Lippman holds a BS degree from the University of Arizona School of Engineering.
LCI’s engineering staff includes John Uxer and Jeff
Peace, who are Registered Professional Engineers in Texas and New Mexico, respectively. Both hold BS degrees and MS degrees in engineering from New Mexico State. Collectively, they have over 50 years of experience in reservoir and gas storage analyses and drilling as well as in production and pipeline operations, particularly in the western U.S. Both have served on the Potential Gas Committee (PGC) and Pipeline Research Committee (PRC) and on AGA committees. They have made numerous presentations on natural gas issues to audiences across the U.S.
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