The Shale Gas Revolution: Global Implications in a Changing Energy Landscape

Dr Basim Faraj VP New Ventures

Tamboran Resources
Calgary, Alberta

Shale Gas World Europe 2013

Expo XXI Centre, Warsaw, Poland November 26-28, 2013

Agenda Outline

Introduction to Tamboran Resources Shale an overview The US Shale Revolution Can they be replicated elsewhere? Geopolitical and Economic Implications Summary

Tamborans Global Interests

NW Carboniferous Basin Northern Ireland and Ireland 0.4 million acres

Tamboran holds permits and applications for over 32 million acres of rights prospective for unconventional oil and gas

Ngalia Basin 3.6 million acres

Beetaloo & McArthur Basins 6.3 million acres

Officer Basin 4.5 million acres Gemsbok Basin, Botswana 13.2 million acres

Pedirka Basin 3.8 million acres

Shale Gas Share of Total US Gas Production

Shale Gas is a Revolution and a Game Changer!

Shale Gas accounts for 41% (29 bcf/d) of Total US 2013 Production
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2.1 times the total 2011 Canadian gas annual production 6.6 times of total 2011 Australian annual gas production 5.6 times Qatar production in 2011

12

10
Average Wellhead Price Marcellus

10 Average Wellhead Price (USD/mmcf)

Daily Production (BCF)

Haynesville

Barnett

4
Fayetteville

Eagle Ford

0
Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013

Rapid Increase in Oil Production from Shale and Other Tight Resources
shale and tight oil production million barrels per day

Source: EIA based on DrillingInfo and LCI Energy Insight

Adam Sieminski, NY Energy Forum, October 29, 2013

World Petroleum Resources

Jarvie, 2012

World Class Shale Discoveries

Chesapeake Energy, 2012 Annual Report

Global Energy Mix Through Time

80% Fossil Fuel!

Gas
Coal Wood Oil

1800

1900

2000

2040
9

ExxonMobil 2011 outlook to Energy- A view to 2040

Shale Gas Reservoirs Micro-Texture

(Haynesville Shale)
pores < 5 m (4110 m depth)

Barnett Shale
pores ~ 5 m (1280 m depth)

15 m 20 m

Micrographs are from Core Lab Consortium, 2013

Distribution of Generative Organic Carbon

TOC (wt.%)

Type I
Generative Organic Carbon (wt.%)

Spent TOC
Non-Generative Organic Carbon (wt.%)

TOC (wt.%)

Type II
Generative Organic Carbon (wt.%)

Spent TOC Non-Generative Organic Carbon (wt.%)

Type III

Spent TOC (wt.%) TOC

Generative Organic Carbon (wt.%)

Non-Generative Organic Carbon (wt.%)

after Daly and Edman, 1987

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Permeability Terminology
Tighter than Tight Tight Conventional

Extremely Tight

Very Tight

Tight

Low

Moderate

High

0.0001

0.001

0.01

0.1

1.0

10.0

Granite Montney Good Shale Barnett

Permeability (mD)
0 % porosity Limestone Sidewalk Cement General oilfield rocks
12

Modified by B. Faraj after DOE, 2007

If There is A Well, There is a Way!

Encana website, 2011

Microseismic Monitoring is Essential for Shale Completions!

~ 10% recovery

SPE Presentation, Faraj and Brown, 2009

Shale Microseismic (Density of fracturing)

Recovery: 60 %!

2,000 ft

Significant Improvements Over Time

Total Well Cost, Average Lateral Length, Average IP vs Time
5,000 4,985 4,532 4,503 4,667

Average IP (Mcf/d) Average Lateral Length (Ft)

4,000 3,736 3,562 3,000 3,193 2,622 2,343 2,104 1,769 1,497 1,000 1,261 $2.6 $2.9 $3.0 $3.0 $2.9 $2.8 $3.0 $3.1 2,027 3,301 2,882 2,512 2,000 2,541 3,350 2,992 3,850 3,874

4,303 4,348 4,123 4,100 3,611 3,604 3,727

3,449 3,197

3,472 3,281 3,231

Lateral length increased by 2.5 times (and frac size increased by over 6 times), while production rates tripled, all while keeping wells costs flat during a period of significant service cost increases
$3.1 $2.9 $2.9 $3.0 $2.8 $3.1 $2.8 $2.7 $2.8

1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11

Total Well Cost ($MM)

Average Lateral Length (ft)

Average IP Rate (Mcf/d)

Source: Modified from Southwestern Energy Presentations and Press Releases (Fayetteville Shale), 2009

Shale Oil/Gas Production Decline

Barnett Gas

Eagle Ford Sweet Spot Oil (1350 scf/stb)

Bakken Oil Barnett Oil

Jarvie, 2012

Should Arabia Explore for Shale?

Play

Gas In Place Est. (TCF)

Barnett
Eagle Ford Haynesville Marcellus Montney Total

2,100
2,100 1,800 4,700 5,700 16,400

Tamboran Estimate modified from Deloitte LLP and Core Lab, 2013

Sources: US EIA 2013, US DOE 2009, Encana 2009, USGS, OilandGasInfrastructure.com

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Ground Water is Safe

CSUR website, 2013

Frac Height Growth Data from US Shale Plays

Aquifers 5000 ft
After Fisher and Warpinski, 2011, SPE paper 145949

8000 ft

Shale Gas Production Reduces Greenhouse Gases!

Reduction of about 1 billion metric tons! CO2 Emissions are back to their 1994 level!

EIA website, 2013

The Return of Long Term Cheap Gas to the US

EIA and Hector van Vierssen Trip, 2013 CSUR presentation

LNG Opportunities for Natural Gas are Strong

The LNG supply challenge

500 450 400 350 300
mtpa

LNG trade (forecast)

Supplydemand gap

175 mtpa

250 200 150 100 50 0 2000

Australia Supply: existing and under construction

Qatar

2005

2010

2015

2020

2025

Source: BG Group interpretation of Wood Mackenzie data (Aug 2012)

Huge LNG demand growth gap needs to be supplied

Impact of Unconventional Resources on US Economy

Year/Output Total Upstream CAPEX US $ Billion Unconventional Activity Employment 2012 87.3 2020 172.5 2035 353.1

1.8 Million

2.9 Million

3.5 Million

Value added by unconventional US $ Billion

237.7

416.6

475.1

Source: The Recent Surge in Unconventional Oil and Gas Production and Its effect in the US (Jerry Eumont, IHS, CSUR Conference Canada, October 9, 2013)

About 153 billion savings in gas price in 2012 alone!

Shale Gas Geopolitical Implications!

"It has freed up our foreign policy, it has changed our global leadership on reducing carbon in the atmosphere, and it has revitalized our economy, "(Shale gas) has freed us up in order to identify what our vital interests are in the Middle East, as opposed to being drawn into aspects that would normally not be of core interest to the United States, American factories have added 500,000 manufacturing jobs in the last 2 years, the first sustained growth in that sector since the 1990s. The shale gas revolution is probably the biggest development in the energy sector since the North Sea came on line in the seventies.
(Jeffrey Bleich, the US ambassador to Australia. The Australia Newspaper, September 6, 2013).

Summary
Unique set of factors have enabled rapid growth of supply in the US to a point where export of oil and gas from the US is feasible. The economic competitive advantage offered by cheap gas in the US for manufacturing industries could be a significant driver of economic growth in the US for the next few decades.

Opportunities exist to take the lessons learnt from North American shale plays to other countries where markets and infrastructure may not be as well developed. Europe need the clean energy desperately.
Shale has surprised everyone to date and will continue to surprise going forward (internet equivalent in energy Jack Welsh 2012) It is the responsibility of the media to ensure the flow of accurate and first-hand information about shale gas and shale oil