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AGI Leadership Forum

AGI Leadership Forum. Scott W. Tinker Bureau of Economic Geology. Humanity’s Top Ten Problems for next 50 years. ENERGY WATER FOOD ENVIRONMENT POVERTY TERRORISM & WAR DISEASE EDUCATION DEMOCRACY POPULATION. 2003 6.3 Billion People 2050 8-10 Billion People.

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AGI Leadership Forum

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  1. AGI Leadership Forum Scott W. TinkerBureau of Economic Geology

  2. Humanity’s Top Ten Problemsfor next 50 years • ENERGY • WATER • FOOD • ENVIRONMENT • POVERTY • TERRORISM & WAR • DISEASE • EDUCATION • DEMOCRACY • POPULATION 2003 6.3 Billion People 2050 8-10 Billion People Richard Smalley, 2003

  3. U.S. Energy Consumption 120 Renewable Energy 100 Hydroelectric 80 Nuclear Energy Natural Gas Quad BTU 60 Oil Imported 40 Oil Produced Coal 20 Wood and Waste 0 1870 1920 1945 1953 1958 1963 1973 1978 1983 1988 1993 1998 1845 1895 1968 U. S. Energy Consumption U.S. Data: Annual Energy Review 1999 (EIA, 2000)

  4. 1 0 0 8 0 Solids 6 0 Percentage of total market Solids (Wood, Coal) 4 0 Liquids (Oil) U.S. Consumption 2 0 Gases (Natural Gas, Hydrogen, Nuclear, Renewables) Liquids Gases 0 1850 1900 1950 2000 QAc9841c Year after Hefner, 1993 World Energy Consumption

  5. 50 World oil 40 Energy consumption (percent) World gas, nuclear, hydro, renewables 30 World coal 20 1980 1985 1990 1995 Year U.S. Data: Annual Energy Review 1999 (EIA, 2000) World Data: International Energy Annual 1999 (EIA, 2000) Energy Demand

  6. 30,000 Deepwater+Subsalt Offshore L48 Unconventional Onshore 25,000 Shallow Offshore $3 L48 Conventional Onshore 20,000 Wellhead Price ($/mcf) $2 Annual Natural Gas Production (Bcf) 15,000 10,000 $1 5,000 0 1949 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Year U.S. Natural Gas Production Tight Gas, Shale Gas, CBM Associated and High-Perm Gas EIA (1949-1990) and NPC (1991-2015) QAd1023

  7. Historical U.S. Composition of Total Natural Gas Discoveries (1977-2001) Cumulative Production Known Reserves 25,000 Reserves Reserve Growth Reserve Growth New Fields INCREASING Development costs Technology needs Uncertainty DECREASING Concentration 20,000 Undiscovered, Unconventional Reserves 15,000 Unassessed Unconventional Reserves U.S. Dry Natural Gas Total Discoveries (Bcf) 10,000 Geopressured Brine 5,000 0 Not Assessed by NPC 1977 1980 1983 1986 1989 1992 1995 1998 2001 Gas Hydrates Data: EIA (2002) Supply & Technology Data: Natural Gas (NPC, 1999) Recoverable Portion of In-Place Gas Resource (Tcf)

  8. U.S. Energy Research Budget $801 Million (3%) Renewable Coal Energy 40% 33% Natural Gas 3% Nuclear Oil 16% 2% Proposed 2004 DOE Budget Total DOE Budget: $23,375 million %3 Directed at U.S. Major Energy Source: DOE, FY 2002 Budget Request

  9. DOE Sponsored Research What Should be the Focus? Short Term: Support Independents Long Term: Support Gas Economy Advanced Recovery Unconventional Natural Gas CO2 Sequestration Data Preservation QAd1023

  10. What can be done? Support efforts to advance DOE O&G What you will hear- “Corporate Welfare” Three myths: Wealthy industry does not need federal support It is a poor federal investment Being done by the private sector QAd1023

  11. Amerada Hess Fina Amoco Kerr-McGee Anadarko Mobil Ashland Occidental ARCO Oryx BP America Phillips Petroleum Burlington Resources Shell Oil Chevron Sun Coastal T exaco DuPont (Conoco) Union Pacific Res. 25 Enron Unocal FRS companies Exxon USX (Marathon) 20 S&P Industrials 15 Percent ~10 percent ROI* 10 *Source: Energy Information Administration, FRS 5 Layoffs Layoffs Layoffs 0 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 Sources: FRS companies: Energy Information Administration, Form EIA-28 (Financial Reporting System). S&P Industrials: Compustat PC Plus, a service of Standard and Poor’s. QAc8982c Myth 1: Wealthy Oil Industry

  12. Myth 2: Being Done by the Private Sector W ashington Maine Minnesota Montana North Dakota Vt Oregon NH Wisc Idaho Ma South Dakota New York Ct Mich RI Wyoming NJ Pennsyl Iowa Nebraska Ohio Nevada Md Delaware Illinois Ind Utah Marathon Marathon WV California Virginia Colorado Kansas Missouri Conoco Conoco Phillips Phillips Kentucky N Carolina Arizona Amoco Amoco Tennessee Chevron Chevron Arkansas S Carol Oklahoma New Mexico ARCO ARCO Georgia Ala Miss Mobil Mobil Texas Texaco Texaco Flor Louisiana Shell Alaska Hawaii QAc8962c Exxon Prod. Res.

  13. 120 5 1998 $ 100 80 4 Private Sector Billion $ DOE O&G Million $ Fuel Cells and Gas Turbines removed from 1996-1999 for comparison 60 3 40 20 2 2004 1998 2000 2002 1992 1994 1996 Private Sector Data: Chris Ross, World Energy (2001, v. 4, no. 2) Year Myth 2: Being Done Privately Oil and Gas R&D Funding Note Scale Difference

  14. Myth 2: Being Done Privately Oil Company Employment 1,600,000 1,600,000 1,400,000 1,400,000 1,200,000 Global Energy Demand will Counter Trend 1,200,000 Total Number of Petroleum Industry Employees 1,000,000 1,000,000 800,000 800,000 600,000 600,000 (FRS Companies) 400,000 400,000 200,000 200,000 1974 1979 1984 1989 1994 2000 2005 1974 1979 1984 1989 1994 2000 2005 AAPG Website Arthur L. Smith, CFA - Abilene, Texas, 1996

  15. >25 26-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ Myth 2: Being Done Privately1998 Demographics For a Typical Major Age Brackets for Geoscientists Worldwide 300 1975-83 Boom Hiring 255 250 191 200 140 150 Increasing Retirement Insufficient Replacement 90 100 76 48 50 23 15 3 0 Source: AAPG Website Age (yrs)

  16. Myth 2: Being Done Privately2008 Demographics For a Typical Major Age Brackets for Geoscientists Worldwide (2008*) 300 255 250 191 200 Gone Fishing 153 140 150 100 76 50 23 3 0 >25 26-29 30-34 35-39 40-44 45-49 50-54 55-59 60+ *with normal attrition and no replenishment Age (YRS)

  17. 20,000 Geoscience Graduate Students 10,000 Petroleum Engineering QAd1731c Source: AGI Myth 2: Being Done Privately U.S. UNIVERSITY ENROLLMENTS

  18. $62 Billion (257x) Economic Value** $2.5 Billion (10%) Private ROI 70,000 62,332 60,000 50,000 40,000 Private 30,000 22,621 Federal 20,000 10,000 2,513 241 0 Myth 3: Poor Federal Investment Federal Investment ~ 1% of Private Federal Return on Investment ~ 257x Private 17.7 Tcf Incremental Unconventional Gas through 1996 $241 Federal $23 Billion Private* * Private sector = 17.7 Tcf * $1.42 average price/Mcf from 1970-1996*90% (1-average FRS ROI from 1970-1996) ** Economic Value = 17.7 Tcf * $1.42 average price/Mcf from 1970-1996*Economic Value Multiplier of 2.48 (BEA, 1992)

  19. Today Demand, esp. Natural Gas Technology Requirements O&G R&D Funding University Enrollments O&G Employment The Challenge Time

  20. AGI Leadership Write/Visit Your Congressman Write the Vice President and OMB Must hear from the major oil companies Emphasize: Technical Business: Need Energy Research Independents: U.S. EOR and EGR TheU.S. Transition to Natural Gas Gas Economy: Research and Technology Demographics: Students and Industry A Changed World: New Private/Federal Model QAd1023

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