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New YorkShale Gas Potential

L. W. AllstadtIthaca

October 30,2013

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What Drives

The Oil and Gas Industry

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Maximize Share Price

Higher Share Price =Increased borrowing ability for expansion

Still higher share prices

Higher executive compensation

RESERVESAdd Reserves: Increase share price

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What Wall Street Looks For

Reserves oil/gas in the ground that can be

extracted with existing technology atcurrent prices.

Increase production

Replace more reserves than what is

produced Miss targets and Wall Street hits

share price5

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Shale Wells Lack Staying Power

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The Economic Realities

Financial resourcesallocated to best prospects among

many plays

Historical Price relationship

Oil $$$ >> Wet Gas $$ >> Dry Gas $

Dry Gas needs very high volumes to

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The Process

Buy leases in several prospective areas

Obtain permits for most promising leases

Drill exploration wells Reserves?

Drill delineation wells More Reserves?

Drill producing wells / build infrastructure

Some companies do all phases

others specialize

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Companies Value Well Data

Proprietary (limited reporting) Includes information on

formations the well encounters Archived

Needed to evaluate future drilling Needed for sale of wells or company

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< Marcellus

< Utica< BlackRiver

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< Oatka Creek

Grey Shale

low TOC

< Union SpringsBlack Shalehigh TOC

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NY DEC Well Data Base

Searchable Public Data By Operator, County, Target Formation, etc.

Well location, production, formation depths,type well

Company input not checked by DEC Following Charts

Show completed wells that targeted or passed

through Marcellus. Many through Utica. Show active permit applications

Exclude wells not completed

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What does all this mean for NY?

Central NY Drilling Boom - Highly Unlikely

Intensive Drilling - Possiblenear PA borderUnlikely to be wide spread

Test Wells - near PA - Very Likely

- elsewhere - Probably

Infrastructure impacts - Likely(proportional toCentralizer ponds development)

Compression stations

Gathering/ Transmission linesFlow-back fluids

Disposal Wells

Brine spreading on roads

Cuttings to landfills

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