WORLD GAS RESERVES

MARIAM NASIR
Manager Research, PAGE
Feb 11 - 17, 2008

As natural gas is essentially irreplaceable (at least with current technology), it is important to have an idea of how much natural gas is left in the ground for us to use. However, this becomes complicated by the fact that no one really knows exactly how much natural gas exists until it is extracted. Measuring natural gas in the ground is no easy job, and it involves a great deal of inference and estimation. With new technologies, these estimates are becoming more and more reliable; however, they are still subject to revision.

A common misconception about natural gas is that we are running out, and quickly. However, this couldn't be further from the truth. Many people believe that price spikes, such as were seen in the 1970's, and more recently indicate that we are running out of natural gas. The two aforementioned periods of high prices were not caused by waning natural gas resources - rather, there were other forces at work in the marketplace. In fact, there is a vast amount of natural gas estimated to still be in the ground.

Natural gas demand usually peaks during the colder months of the year (November-March) and winds down during the warmer months. During the warmest summer months, the demand increases due to electricity generated by gas fired power plants. Any adverse weather conditions will increase the demand for natural gas. The colder the weather is during the winter, the more pronounced the winter peak will be. On the other hand, a warmer winter usually results in a less noticeable winter peak. The opposite applies for the summer. If the summer season is extremely hot, it can result in greater cooling demands, which in turn may result in increased summer demand for natural gas.

The world's largest gas field by far is Qatar's offshore North Field, estimated to have 25 trillion cubic metres (900 trillion cubic feet) of gas in place enough to last more than 200 years at optimum production levels. The second largest natural gas field is the South Pars Gas Field in Iranian waters in the Persian Gulf. Connected to Qatar's North Field, it has estimated reserves of 8 to 14 trillion cubic metres (280-500 trillion cubic feet) of gas; see List of natural gas fields.

World total natural gas reserves has been on a rising trend since past decade, however the same has been flat during the past five years. As in 2006, total gas reserves stand at 180,899 000' Million Standard Cubic Metres as against 83,600 000' Million Standard Cubic Metres in 1980.

WORLD PROVEN NATURAL GAS RESERVES (000' MILLION STANDARD CUBIC METRES)

World's top 20 gas producers have as much as reserves that they account for nearly 90% of the total. As of 2006, Russia is the country which has the highest gas reserves at 1,680tn cu ft, followed by Iran at 971tn cu ft and the third position was bagged by Qatar at 911tn cu ft. World largest oil reserves holder, Saudi Arabia ranks fourth with 241tn cu ft of reserves.

PAKISTAN OIL AND GAS RESERVES

Pakistan currently produces only 18.3% of the oil it consumes, fostering a dependency on imports that places considerable strain on the country's financial position. The country's proven natural gas reserves are around 32 trillion cubic feet and as per present gas production of 4 billion cubic feet per day, will last for next 22 years. According to official sources in the Ministry of Petroleum, presently, 42 companies are working in Pakistan with 118 exploration licenses and 127 leases. Seventeen new blocks have been opened which would give further impetus to the ongoing exploration activities in the country and would open tremendous opportunities for the prospective investors in diversified fields. On the other hand, hydropower and coal are perhaps underutilized today, as Pakistan has ample potential supplies of both. The government has approved the upstream Pakistan Petroleum (Exploration & Production) Policy 2007. It is aimed at accelerating Exploration and Production (E & P) activities in Pakistan with a view to achieving self-sufficiency in energy by increasing oil and gas production, promoting investment in the energy sector and enhancing security of energy supply.

During FY07, 66 new wells were drilled against the target of 90 wells. Out of these wells, 32 were exploratory, whereas the remaining 34 were development wells. In FY07, E&P sector made 16 oil and gas discoveries from 32 exploration wells. This has resulted in an impressive success ratio of 1:2 wells (50%), which is significantly higher than the country's historical average of 1:3.4 wells (29%). This ratio of 1:2 is based on total exploratory wells that have been drilled so far in FY07. Oil and gas production of the country during 1Q/FY08 eased off a little, but showed healthy growth of 7.3% y-o-y to reach 746k boepd (thousand barrels of oil equivalent per day) compared to 696k boepd in the same period last year. Of this oil production increased by 12% to 71,776bopd whereas gas production increased by 7.4% to 3,881mmcfd.

New reservoirs of Gas are being continuously struck in Pakistan. However, the main gas reservoirs are seriously depleting and output from them is declining. Out of total 71 natural gas reservoirs, 67% are in Sindh, 28% are in Balochistan while 5% are in Punjab with balance recoverable reserves of 15.95tcf against the Pakistan total of 24.04tcf. Currently country's indigenous gas resources are insufficient. With annual production being 0.875tcf and a growth rate of 6.6% the gas will be exhausted within two decades. Keeping in view the present gas demand-supply and future requirements, the import of gas has become a necessity to cover the demand-supply gap beyond 2010. Gas import options range from developing LNG terminals to transnational pipelines and for that purpose GOP is actively pursuing long term options to import gas to fulfill the growing demand. The projects which the government is actively pursuing are: Turkmenistan-Afghanistan-Pakistan Gas Pipeline Project, Iran-Pakistan-India Gas Pipeline Project and Pakistan "Mashall" LNG Project.