Energy issues have always been important in international relations, but in recent years may have become even more important than in the past due to the widespread awareness of existing limits to energy sources and negative climate impacts. The course discusses global trends in energy consumption and production, various available scenarios for potential developments in the coming decades, the availability of oil reserves and the evolution of the oil industry. It then discusses natural gas and highlights the differences between oil and gas. It will also discuss renewable energy sources, nuclear energy and EU energy policy. The course aims at providing students whose main interest is in international relations a background on energy resources, technology and economic realities to allow them to correctly interpret the political impact of current developments. It also aims at providing students, who already have a technical background in energy science or engineering, with the broad global view of energy issues that will allow them to better understand the social, economic and political impact of their technical knowledge. ABOUT THE INSTRUCTOR : Giacomo Luciani Scientific Advisor for the Master in International Energy at the Paris School of International Affairs (PSIA) Sciences Po, Giacomo Luciani is also Adjunct Professor at the Graduate Institute of International and Development Studies, Geneva and Director of the Executive Master in International Oil and Gas Leadership. For the period 2010-13 he was appointed Princeton University Global Scholar, attached to the Woodrow Wilson School and the Department of Near Eastern Studies. His research focuses on the political economy of the Middle East and North Africa and on global energy issues. RECOMMENDED BACKGROUND : The course requires no special scientific, mathematical or economic background; all key concepts are clearly and elementarily explained. It is expected that it will be of interest to undergraduate and graduate students in schools where an equivalent course is not offered (this being the case for the vast majority of schools). USPC Sorbonne Paris Cité Supported by Université Sorbonne Paris Cité IDEX Investissements d'Avenir Funded by Investissements d'Avenir - 'ANR. Info : Course content : Licence Creative Commons BY NC SA
What is natural gas and where is it found? - part 1
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Del curso dictado por Sciences Po
Politics and Economics of International Energy
730 calificaciones
De la lección
Week #4 : The economics of natural gas
This module presents the Introduction to natural gas, The international gas market, New gas developments
Conoce a los instructores
Giacomo LucianiProfessor and Scientific Advisor for the Master in International Energy
Paris School of International Affairs
-In this unit, we are going to discuss the distribution of gas reserves.
Which are the countries that possess the largest gas reserves?
How much gas do they produce?
And what is the availability of gas?
In the first slide that you can see on your screen,
we have the representation of proven gas reserves.
Here, the concepts are exactly the same as for oil.
We have defined proven reserves
and we have seen a similar chart for oil reserves.
As for oil reserves,
proven gas reserves have increased over the years.
It means that our exploration and our understanding
of the gas fields, of the gas resources, has evolved over time.
We now believe that there is more gas than we used to believe.
From 1993 to 2013, we have added fairly significant gas reserves.
We have gone from about 115 trillion cubic meters
to 186 trillion cubic meters.
So there has been a very significant increase.
The distribution of these reserves is somewhat more balanced than for oil
in the sense that the Middle East remains very important
and has not declined in its importance
as the case has been for oil.
Actually, the contrary.
But we also have very important gas reserves in Europe and Eurasia.
In fact, this is a bit deceiving
in the sense that the important gas reserves are entirely in Eurasia,
Russia and Central Asia.
And then, of course, we also have significant gas reserves elsewhere.
Gases are ubiquitous and so they are found in many parts of the world
and in almost all countries.
In the next slide we see the countries that possess the largest gas reserves.
We can see that as of the end of 2013,
the country that claims to have the largest gas reserve is Iran.
As I said for oil, I have to stress that this is a claim.
We have no independent confirmation or auditing of these reserve figures.
So it is essentially the Iranian government that accomplishes,
every year or frequently, a revision of the estimate of their gas reserves.
This is the number they have published recently.
Russia, the Russian Federation,
which until very recently, until last year,
used to be the number one country is now number two.
Whether they will revise their own numbers, I do not know,
we will see when the year comes to an end
or whenever they feel like announcing a new number,
a new estimate for their reserves.
The next slide is a slide showing
the ratio of natural gas reserves to actual production in 2012.
And this is very significant
because it tells us that we have some very large reserves.
Compared to recent production,
the reserves are very significant.
And we can produce at the same level for many, many years.
In the case of the Middle East,
the so-called R/P ratio, reserves-to-production ratio,
exceeds 125 years.
The Middle East could keep producing gas at this rate for over 125 years.
The ratio is also very high in Africa and in Eurasia.
Notice that it is very small in North America.
That is not because there is a lack of gas in North America.
In fact, North America is a very large producer of gas
but it is simply because there are no incentives in exploring for gas
unless you have a market for it.
At the moment, the prices for gas in North America are low
and so producers do not feel a lot of incentives to explore for gas.
The next slide tells us what are the remaining recoverable resources.
You remember the difference between reserves and resources.
Reserves are those quantities that we believe we can produce
with 90, 50 or 10% probability.
Resources are vaster, larger,
the underlying total amount of resources
that are available under the ground.
As you can see, Russia has by far the largest resources.
Most of it is conventional, which is represented in light blue.
Some of it is in tight rock formations so it requires fracking.
Equally, some of it is in shale formations, again requiring fracking.
Finally, the last component is coalbed methane.
This is gas that can be produced out of coal seams,
that are again fracked.
The coal seams always contain a certain amount of methane
so one can exploit them
by producing the methane without extracting the coal.
Very large resources are also in the United States.
But there, the importance of tight formations is greater.
Finally, it is important to note
that China has overall very large reserves
but they are mostly non-conventional, so mostly shale gas
and a significant amount of coalbed methane as well.
The next slide tells us who are the major gas-producing countries.
We see immediately that the major gas producing countries
are not the countries that have the largest reserves.
Number one is the United States. Number two is the Russian Federation.
The Russian Federation is also number two for gas reserves.
Number three is Iran,
which is number one in terms of gas reserves, and so on and so forth.
Why is the production in the United States so large?
Because there is a market there.
What is important to determine the extent of production,
the volume of production, is not so much the availability of reserves
but the availability of a market.
If you have a large market, you will produce a lot of gas,
you will sell a lot of gas,
even if your reserves are smaller than those of somebody else.
Next, there is a slide that shows the provenance of gas,
from which region it is produced
and also to what extent it is traded internationally, across regions.
You can see that the total world gross gas production,
which is represented by the long horizontal red bar in the middle,
is composed of conventional gas, the red portion of the bar,
and to some extent, non-conventional gas,
and that is the pink section of the bar.
This is partly vented or flared, I will come back to this
and explain why some of the gas is simply burned at the tip of the well
or allowed to escape into the atmosphere.
Some of it is reinjected in the field.
This is especially common for associated gas,
which is then produced with the oil and reinjected in the field
to maintain the pressure that facilitates further production of oil.
You have something called shrinkage losses that simply refers
to the fact that the volume of the gas is reduced when it is cool.
And the rest of it is marketed production.
If you look at the green horizontal bar,
which is divided into darker green and lighter green,
the lighter green part is the gas which is consumed, utilized,
within the very same region where it is produced.
The darker green portion of the bar is that which is traded across regions.
Why is it that most of the gas is consumed
in the same region where it is produced?
For oil, this is not true.
Most of the oil is traded internationally
but for gas, that is not the case.
The point is gas is very expensive to transport.
So it is highly convenient to use gas close to the point of production
and not export it over long distances.
Exporting, the process of transporting gas is very expensive.
The best value for the producer is obtained
if you have a customer nearby, just around the corner.
Unfortunately, sometimes it is difficult to have a customer nearby
and so the gas has to be transported across long distances.
That explains also why, if you are an oil and gas producing company,
you will always want to maximize domestic use of gas
and export of oil.
Oil is easy to export, it travels easily.
Gas does not travel easily and has a much lower value when exported.
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