A long-term global forecast for the extraction of oil and gas from shale formations

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1 A long-term global forecast for the extraction of oil and gas from shale formations Finding Petroleum, London, 10/10/2012 Per Magnus Nysveen Rystad Energy This document is the property of Rystad Energy. The document must not be reproduced or distributed in any forms, in parts or full without permission from Rystad Energy. The information contained in this document is based on Rystad Energy s global oil & gas database UCUBE, public information from company presentations, industry reports, and other, general research by Rystad Energy. The document is not intended to be used on a stand-alone basis but in combination with other material or in discussions. The document is subject to revisions. Rystad Energy is not responsible for actions taken based on information in this document.

2 Presentation roadmap Why is shale extraction so successful across North America? What is the likelihood for replicating this in other regions? How to get reasonable pre-drill estimates for economic recoverable shale resources? Subsurface analysis of 200 promising shale formations outside North America Surface analysis to estimate expected first commercial production and production profiles 2

Ideal conditions also existed in the Late Cretaceous, with carbonates contributing to improved brittleness of the shale, example: Eagle Ford and Niobrara The cretaceous Western

3 Ideal conditions also existed in the Late Cretaceous, with carbonates contributing to improved brittleness of the shale, example: Eagle Ford and Niobrara The cretaceous Western Interior Seaway creates rich sediments, anoxic conditions and calcite deposits The Cretaceous Rockies provides sediment source Source: Ron Blakey, Colorado Plateau Geosystems, Inc. 3

In North America, more than 20 unconventional shale plays are proved commercial, most of these are oil or liquids prone, in a belt east of the Rockies. U.S.

4 In North America, more than 20 unconventional shale plays are proved commercial, most of these are oil or liquids prone, in a belt east of the Rockies. U.S. and Canada shale formation - Sweet spots are dark brown Paleozoic to Mesozoic oil and liquid prone plays east of the Rockies thrust and fold belt Source: North America Shale Quarterly by Rystad Energy, published by Hart Energy 4

Example Barnett shale: Well curves, company acreage and geologic potential 3.0 2.0 Daily production Cumulative 1.2 0.9 0.6 1.0 0.3 4.0 3.

5 Example Barnett shale: Well curves, company acreage and geologic potential Daily production Cumulative Months Daily production Cumulative Months Daily production Cumulative Months

6 What we have assessed: Review of hydrocarbon bearing shales worldwide Chart shows the number of assessed shale formations by country. In total 260 shale formations in 53 countries are covered. *Note that Others include 17 countries with one shale formation each. Assessed shale formations by country *Others: Afghanistan, Mauritania, Norway, UAE, Thailand, Canada, Turkey, Yemen, Lithuania, Jordan, Malaysia, Uzbekistan, Ghana, Vietnam, Spain, Sweden, Romania Source: Rystad Energy research and analysis, Hart Energy 6 China Brazil Others* Germany Iraq Iran Argentina Australia India Libya Indonesia Venezuela Kuwait Oman United Kingdom Mexico Ukraine France South Africa Colombia Saudi Arabia Algeria Russia Tunisia Kazakhstan Bolivia Nigeria Syria Turkmenistan Qatar Netherlands Pakistan Morocco Denmark Azerbaijan Austria Poland 35 formations assessed in China

7 Outside North America, we estimate economically extractable shale resources to 700 Bboe Out of 700 billion boe total economically recoverable, we estimate 100 billion is crude oil and condensate. This estimate is about 50% of the estimate made by EIA for technically recoverable resources. 7

8 We expect no significant commercial shale development before 2020 outside North America Most promising exploration results is reported from Argentina. No liquids flow rate from fracked wells are reported from other countries. Most limiting factor is geology. There is still no evidence yet that analogues to the North American geology, with homogenous, unfolded and largely un-faulted, brittle and rich source rocks, can be found in other parts of the world. Oil and gas production from shale formations outside North America (kboe/d) kboed The minimum geologic requirements for commercial developments are: >2% TOC >100 feet thickness > 2000 feet depth < 60% clay content 0,6-2,5 Rho Homogeneity Drill ability Flat surface Other limiting non-geologic factors are the lack of capacity for completion services, immature infrastructure, lack of favorable regulations for leasing, high taxes and nationalized oil and gas industry. 8

9 Production from shales may contribution 10% to global oil and 25% to global gas by 2040 Global forecast of liquids (left) and gas (righ), split by unconventional type (kboe/d) 9

UCube - the unconventional database Rystad Energy Fjordalléen 16, 0250 Oslo www.rystadenergy.com +47 24 00 42 00 info@rystadenergy.

research products for E&P and oil service companies, investors and governments.

10 UCube - the unconventional database Rystad Energy Fjordalléen 16, 0250 Oslo info@rystadenergy.com Per Magnus Nysveen Partner & Head of Analysis Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy advisory and research products for E&P and oil service companies, investors and governments. Rystad Energy is headquartered in Oslo, Norway, with additional business center locations in UK (London), USA (New York & Houston) and South East Asia. Rystad Energy Products for Unconventional Assessment UCube Global and complete, field-by-field database NASQ North American Shale Quarterly Report, published by Hart Energy CanadaShale Newsletter Free newsletter on Canadian shale 10

Supplementary Appendix for. Version: February 3, 2014

Supplementary Appendix for. Version: February 3, 2014 Supplementary Appendix for When Do Governments Resort to Election Violence? Version: February 3, 2014 This appendix provides supplementary information not included in the published draft. Supplementary