Pennsylvania’s Shale Gas Industry – What’s Ahead?.
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Transcript of Pennsylvania’s Shale Gas Industry – What’s Ahead?.
Pennsylvania’s Shale Gas
Industry – What’s Ahead?
PIOGA/Independent Oil and Gas Producers
• PIOGA: largest and most diverse association of oil and gas businesses, over 750 members
• Represent conventional and Marcellus/Utica shale producers
• Pennsylvania activity:
Conventional natural gas/coal-bed methane well
Shallow oil wells Unconventional/Shale wells
Pennsylvania Oil and Natural Gas History
• Fueling Pennsylvania for more than 150 years
• 1859: Drake Oil Well near Titusville, “The start-up that changed the world”
• 1878: Haymaker Well in Murrysville, First commercial natural gas well in U.S.
• 350,000 vertical wells drilled
• 120,000 wells remain in production today
• 60 years of hydraulic fracturing
Marcellus Shale Formation
• Geological formation created about 380 million years ago in Middle Devonian age
• As formation aged and decayed, natural gas trapped in the shale
• Formation rests a mile or more below surface, thickness between 50-200 feet
• Approximately size of 95,000 square miles
• Reserves estimated at approximately 500 trillion cubic feet
Jobs, Jobs, Jobs
Over 250,000 jobs added in PA According to Raymond James analysts
90% of PA jobs added from 2005-2012 come from this industry
Among the highest paying jobs in the state
Impact of Shale Gas on Pennsylvania
In 2008, an Allegheny Conference on Community Development study found 26,500 jobs relating to the legacy oil and gas industry in Pennsylvania.
Several groups are claiming under 30,000 jobs exist from the shale industry today!
Seriously???!!!
Whose Numbers to Believe
Jobs Controversy?
One PA city has added 85 new companies just to service the Marcellus Shale industry in Pennsylvania.
Not to mention the existing hotels, restaurants, fuel dealers and other service and supply businesses that have benefitted and in many instances added employees to meet the needs of the industry.
New Business?
In 2007 Pennsylvania producers supplied 25%
of the Commonwealth’s natural gas needs.
In 2014 thanks to shale gas, Marcellus and Utica production account for 18% of the US natural gas supply!
Increased Natural Gas Production
In May 2008 natural gas prices were at $13.70
per MCF (thousand cubic feet). Today prices are at 2.71 per MCF, with PA
shale producers receiving far less at the wellhead.
Translates to lower gas prices delivered to residential, commercial and residential consumers.
Decreased Natural Gas Costs
Consumers have more discretionary dollars to spend
Businesses and manufacturers have lower overall energy costs
Chemical and Fertilizer Industries have cheaper feedstock.
Reduced carbon footprint
Business and Consumers Benefit
Benefits to the Commonwealth
Income taxesSales taxesLocal Impact Tax
State, Local and Federal
Higher Tax Revenues
Decreased energy costs encourage manufacturing rebirth
Natural Gas Liquids bring opportunity for Northeastern US chemical and plastics industry
Adds to Pennsylvania’s ability to attract new business development.
New Business Opportunities
Activists determined to stop fossil fuel development
Low commodity pricesRegulatory overreachTaxationInfrastructure
Challenges to the Future
The oil and gas industry has been targeted by anti-fossil fuel activists determined to destroy the industry.
They have mounted an effective disinformation campaign and galvanized a protest movement to undermine every effort to develop our resource base.
Anti-Fossil Fuel Activism
Can we run our economy on windmills and solar panels? No environmental impact on those energy forms – right?
How about biomass? We can convert more land to growing switch grass or just convert food plots instead –right?
No feedstock for chemical and plastics industry. We don’t need those for everyday uses or medical supplies or medicines nor anything else – right?
Then What?
Elected leaders buy into the misinformation, draft legislation, enable regulation and discourage the industry in fear the public will cost them their jobs.
Hysteria rules instead of common sense regulation and legislation and development is discouraged.
The Result
Decreased Activity Means Fewer Oil and Gas Jobs
Means Less Support JobsIncreased unemployment in related jobsLess development discourages investment in
manufacturing further damaging the job market.
Oil and Gas Impacts Jobs
Decreased Activity
Lower Tax Collections
Fewer Dollars Spent – Less TaxDecreased activity – Lower Impact FeesLess Investment in PA
Excessive taxation kills investmentExcessive regulation increases costs, lowers
investmentExcessive delays discourages investment
Government Policies Affect the Economy
The ultimate sound bite logic. How does that square with the taxes
other states have? What is the overall tax structure in each
state differ? What else is different in PA?
What other costs of business are in PA?
Every State has a Severance Tax
Setting a floor price far above what producers are getting for their product is patently ridiculous.
If you earn $40,000 per year should you be taxed at $100,000?
How about the Floor for Severance Tax
Shale plays across the nation have added production nationally which has created
an oversupply of natural gas. Natural Gas producers are receiving prices lower than those that would justify further drilling.
Then why drill?
Victims of our own Success
Please explain to me the fairness in taxing one extraction business different from any other.
Please explain to me how taxing any business in PA differently than any other is fairness.
Tax Fairness
Challenges to Pipeline and Facilities Construction is Major Impediment
Local Concerns - NIMBYAnti fossil fuel activists
Infrastructure
The future could and should be bright. PA should be able to attract jobs and
manufacturing to the Commonwealth Government could act as a partner
rather than a hindrance to developing this resource
Natural gas should be the foundation of economic rebirth to the Commonwealth
So What is the Future?
To change the should and could to will means PA must be competitive with other states
That will take cooperation between business and government
We must deal with the social license issue
Competitiveness
Pennsylvania has a future that should be the envy of any state – and many nations
Wonderful opportunity for jobs in industry and manufacturing
Stable EconomyKeep our kids at home!
If We Get This Right…