2. Agenda
• What is unconventional gas?
• How is shale gas produced?
• Where is unconventional gas
located?
• Why did Statoil invest in North
American shale gas?
• Current status: Statoil’s JV with
Chesapeake
• Next steps in Statoil’s
unconventional gas journey
• Q&A
2-
3. What is unconventional gas?
• Many different types of
unconventional resources
• Low permeability and porosity -
difficult for gas and liquids to flow
through it
Shale outcrop, Marcellus, New York
3-
4. How is shale gas produced?
• To reach the deep target gas, a
normal well is drilled
• The bore is extended laterally to
create a horizontal well
• The well is hydraulically fractured,
allowing gas to flow
• At the surface gas enters
pipelines that take it to
market
• The well produces for
40 years
Source Chesapeake Energy
4-
5. How is shale gas produced?
A producing well pad
5-
7. Where is unconventional gas located?
Europe
Europe
Resource: 145 tcf
Resource: 145 tcf
Production: 0.0
Production: 0.0
bcfd
bcfd
North America
North America
Resource: 1,348
Resource: 1,348
tcf
tcf
Production: 28.3
Production: 28.3
bcfd
bcfd Asia
Asia
Resource: 203 tcf
Resource: 203 tcf
Africa
Africa Production: 1.32
Production: 1.32
Resource: 83 tcf
Resource: 83 tcf bcfd
bcfd
100%
Shale Increasing Attracts Investment Dollars
Production: 0.0
Production: 0.0
90% bcfd
bcfd
80%
Percent of L48 CAPEX
70%
60% All Other Plays
50% Shale Plays
40%
30% Australia
Australia
20%
10%
Resource: 78 tcf
Resource: 78 tcf
0% Latin America
Latin America Middle East
Middle East Production: 0.64
Production: 0.64
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Resource: 13 tcf
Resource: 13 tcf Resource: 25 tcf
Resource: 25 tcf bcfd
bcfd
Production: 0.04
Production: 0.04 Production: 0.0
Production: 0.0
bcfd
bcfd bcfd
bcfd
Source: WoodMac
7-
8. Where is unconventional gas located?
U.S. Shale Gas Basins
Source: U.S. Department of Energy
8-
9. Why did Statoil invest in North American
shale gas?
Marcellus – low
$ per MMBtu break evens
$12.00
$10.26
$10.00
$8.87
$8.05
$8.00
$6.78 $6.86
$6.47 $6.48
$6.00 $5.30
$5.04 $5.16
$4.59
$3.68 $3.74 $3.79 $3.89
$4.00 $3.38 $3.43 $3.63
$3.08
$2.00
$0.00
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Source: Barcap
9-
10. Why did Statoil invest in North American
shale gas?
US Gas Production by Type
90
80
70
60
bcfd 50
40
30
20
10
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Source: Wood Mackenzie
Conventional Shale Tight CBM
Transforming the world’s biggest energy market:
•Energy independence
•More viable energy mix
•Job and wealth creation for thousands of Americans
Source: WoodMac
10-
11. Why did Statoil invest in North American
shale gas?
Strategically positioned
Pipeline to Canada • US unconventional industry is
established
− Liquid market
Marcellus
Area − Existing industrial infrastructure
Cove Point • Marcellus - world class shale play
Re-gas terminal
− 7420 bcm of recoverable
New York resources (US DoE)
− Attractive break evens
Gulf of
Mexico
− Close to market and
pipeline capacity
11-
12. Current status: Statoil’s JV with Chesapeake
• JV with Chesapeake
• Organisation in place
• 50,000 boe/d in 2012
• Now 300,000 mcfd
(44,000 boepd)
• 26 rigs in operation
• 118 wells
12-
13. The central importance of HSE
• Chesapeake proven track record
• Standards above and beyond
• Aligned on regulation, water management, testing and the disclosure of
additives
13-
14. Next steps in Statoil’s
unconventional gas journey
• Early entrant
• Learn and prepare
• Build infrastructure and
competence
• Become a professional
unconventional operator
14-
15. Thank you
Statoil Unconventional Gas
John Knight
Senior Vice President, Global Unconventional Gas
www.statoil.com
15-
