Shale Directories · March 21, 2017. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Our Membership • 200+...

MARCELLUSCOALITION.ORG | @MARCELLUSGAS

David J. SpigelmyerPresident

Marcellus Shale Coalition

Industry UpdateShale Directories

March 21, 2017


Our Membership• 200+ diverse members• Producers, midstream and suppliers

Our Focus• Long-term development• End use opportunities• Addressing landowner and

public issues• Maximizing benefits to secure our

region’s energy future


Associate Members are an integral part of

the MSC and the industry's robust

supply chain.More than 95% of the natural gas in Pennsylvania is

produced by MSC member

companies. The MSC Board of Directors

consists of 34 major producer and midstream

companies in theAppalachian

Basin.

About MSC

2


9555 unconventional wells*• 547 shut in• 749 drilling not completed• 669 inactive

7435 unconventional wells producing natural gas

415+ billion cubic feet/month• 5 trillion+ cubic feet/year• 37% of total U.S. shale gas production

Drilling Activity in PA

3

* Dec. 2016 (most recent data available)


4

Protecting Our Environment

5245

10,56311,762 11,713 11,265

13,186

14,702

1280 1221 711 528 425 404 348352 240 243 197 140 128 1060

2000

4000

6000

8000

10000

12000

14000

16000

2010 2011 2012 2013 2014 2015 2016

Unconventional Natural Gas Compliance2010 – 2016

Inspections Violations EnforcementsSource: PA Department of

Environmental Protection

MARCELLUSCOALITION.ORG | @MARCELLUSGASSource: Baker Hughes


111

82

71

54 55 58 5546

28

13

29 32

0

20

40

60

80

100

120

Dec '11 June'12 Dec '12 June '13 Dec '13 June '14 Dec '14 June '15 Dec '15 June '16 Dec '16 Mar '17

PA Rig Count 2011-2017

PA Rig Count 5


6


332

817

1600

1958

13511218

1372

789

504576

2005

33653564

2648

29663158

2076

1315

0

500

1000

1500

2000

2500

3000

3500

4000

2008 2009 2010 2011 2012 2013 2014 2015 2016

Unconventional Well Activity2008-2016

Spud PermittedSource: PA DEP Well Permit & Spud Data Report Marcellus Shale Coalition


Challenges

7


Primary PA Interconnect Points

March Bid Week Pricing (Inside FERC's Gas Market Report)

Tennessee Zone 4 $1.90/MMBTU

Leidy Receipts $1.94/MMBTU

Dominion Appalachia $2.06/MMBTU

Average Gas Sales $ $1.98/MMBTU

Average Gathering of $0.87/ MMBTU (Independent Fiscal Office)

8


9

Appalachian Price Differential

* March 2017 Price

$4.04

$1.96*

$4.19

$2.63

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

2011 2012 2013 2014 2015 2016 2017

$ pe

r mcf

PA Price Basis DifferentialMarch 2017

NYMEX Average PA Average


10

2016 Appalachian Price Differential

0

0.5

1

1.5

2

2.5

3

3.5

Jan Feb March April May June July Aug Sept Oct Nov Dec

PA Price Basis DifferentialJan. – Dec. 2016

NYMEX Average PA Average

$2.37

$3.23

$2.27

49%

30%

71%34%

$1.20

Reduced price received by PA producers


ChallengesVital need for Infrastructure

• 24 FERC projects (Tri-State Area)• $12.9 Billion (PA)

Promote Localized DemandClimate Certainty

• Chapter 78a• GP-5 and GP-5A• Permit delays• Severance tax• Post-production costs• Local zoning

11


Benefiting Pennsylvania Consumers

Electric prices down 40% since 2008

Natural gas prices for end-use customers down 54% -73% since 2008

Average annual savings > $1,200 per household

12


Natural Gas = Cleaner AirSince 2008*:

Sulfure dioxide (contributes to acid rain): 75% decrease

Nitrogen oxide (contributes to ground level ozone & respiratory issues): 25% decrease

Particulate matter (asthma & respiratory issues): 45% decrease

$14 - $37 billion annual public health benefits realized

27-year low in CO2 emissions* Reflects onset of Marcellus production; reductions from power generation sources (PA DEP) 13

Environmental


14

Benefiting PA Communities

$18m

$101.8m

$27.2m

$40.7m

Impact Fee Distributions2016

State Agency Oversight Local Government

All Counties - Parks & Bridges Statewide - Environmental


Electric prices down 40% since 2008

Natural gas prices for end-use customers down 54 -73% since 2008

Average annual savings > $1,200 per household

15

Benefiting Consumers

Lower Prices = Customer Savings


Utility PGC Rate / mcf % Change CustomerSavings

2008* 2015* 2008-2015 MonthlyPECO $11.10 $3.53 - 68% $113.55

NFG $10.34 $3.10 - 70% $108.60

PGW $10.58 $4.17 - 61% $96.15

Columbia $10.25 $4.68 - 54% $83.55

Equitable $11.81 $4.22 - 64% $113.85

UGI $11.79 $4.85 - 59% $104.10

UGI Penn $10.66 $4.22 - 60% $96.60

Peoples $9.53 $2.59 - 73% $104.10

* 1st Quarter 2008 & PUC-approved rate for 2015 * Residential heating customer using 15 mcf/month

Benefiting ConsumersLower Prices = Customer Savings

16


Market Opportunities

Feedstock for industries and other liquids use

−Rebirth of manufacturing / Crackers

Exports / Ethane

Electricity generation, heating

17


Renaissance in Manufacturing

18


The Ethane Factor

19


20

Opportunities Related to Crackers

1. Shell Cracker

Construction 4 Operations

2 2. Co/Byproducts 1 3. Supply Chain

4. Plastics Manufacturing: Compounders Converters

3 Intermediaries / Logistics

5. Additional Cracker(s):

PTT – Dilles Bottom, OH

Other

6. Other PetChem Facilities

7. Midstream Infrastructure


“Active Cracker Projects

21

Shell

PTT

Braskem


Shell’s Monaca Site

22


23Ludwigshafen, Germany

BASF Ethane Cracker Facility


$6B+ Capital Investment

~3.5B Pounds of Polyethylene / Year

600 Full-time Employees

6000 During Construction Phase

Operations

24


25

Polyethylene Grades

High Density Low Density Linear Low Density


Proximity to End Customers

26


Reliability

Transportation Costs:• Potential Savings of ~2¢ / lb.*

• `1.5% COGS*

Reduced Delivery Time:• Reduced Inventory Carrying Costs

Transportation Options

*PRA Estimates based on available industry data27

Advantages to Local PE Supply


Pellet Distribution / Transloading

28


Use It Or Lose It

29


Follow The Gas

30


Downstream Powergen Strategy

31


Tell the Story

32


Life-sustaining medicationsPlasticsHeatingElectricity 24/7ChemicalsFertilizing food supplies

Life sustaining uses of natural gas

33


CookingWater heatingTransportationDrying clothesCosmeticsSteelPlasticsGlassPowdered Metals

Everyday uses of natural gas

34


SHALE INSIGHT™

ATTEND | SPONSOR | EXHIBIT

REGISTRATION NOW OPEN!


Grassroots Initiatives

• Take Action on public policy priorities

• Connect with shale supporters• Get involved in advocacy events• Access timely shale-related

information

www.UnitedShaleAdvocates.com


Thank you!

Marcelluscoalition.org

37

Shale Directories · March 21, 2017. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Our Membership • 200+...

Documents

Transcript of Shale Directories · March 21, 2017. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Our Membership • 200+...