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Global Gas Resources - Implications for North America

Stark, Pete
IHS Energy, Englewood, CO

According to IHS Energy, worldwide proven plus probable technically recoverable remaining gas resources at the end of 2002 were11,800 Tcf . The Middle East with 3,900 Tcf and the Former Soviet Union with 3,500 Tcf, hold 63 % of the estimated resource. North America ranks third with 1,200 Tcf. But North America is an anomaly: more than half of the original resource has been produced and much of the remaining resource is attributed to unconventional reservoirs.

Worldwide gas discovery volumes exceeded oil discovery volumes during the five-year period from 1996 to 1970 and gas discoveries peaked during the next period, 1971 to 1975. During 1999, studies identified about 800 Tcf in stranded gas reserves, of which 500 Tcf could be produced with life cycle cost of about $0.50 per Mcf.

During the 1990’s industry began to pursue ways to monetize their stranded gas resources. LNG exploited markets in industrialized countries like Japan with little indigenous natural gas. Technologies and cost reductions also allowed LNG to compete in Europe where demand exceeded local supplies. Now, globalization of gas markets is underway. Operators with stranded gas resources are tying to enter the U.S. gas market with LNG. During fourth quarter 2003, twenty-one gas liquefaction projects were proposed to deliver 9.6 Bcfd to North America.

Thus, imported LNG poses a competitive threat to Rocky Mountain region gas resources which are burdened with moratoria, environmental and legal impediments and transportation constraints. The issue is not just a matter of gas resources. Increasingly, it is a matter of creating appropriate public policies and business climate to allow specific resources to compete in a global gas market.