paul mccloskey - vice president of energy & …...x 1.96 per unit $117,600/day cost of gas...
TRANSCRIPT
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June 14, 2016
Paul McCloskey - Vice President of Energy & Business Development
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Who we are: CorePA/Clearly Ahead Development
Overview of Marcellus Shale
PA – Gas importer to gas exporter.
o What’s that mean for prices now & in the future?
Overview of US natural gas & pricing.
What are other companies doing with energy in PA?
What are we (Clearly Ahead) trying to do with energy in Clearfield County, PA?
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Illustrate that the USA and particularly Pennsylvania has a superabundance of natural gas.
Show how this superabundance will ensure long-term price stability & affordability of natural gas in Pennsylvania & provide at least 2 distinct advantages to companies locating here.
Identify 7 energy-intense industries that would be ideal for expansion/relocation into CorePA.
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
U.S.A.
Pennsylvania
CorePA
Clearfield County
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Buffalo, NY - 3.5 Hours (258,959)
New York, NY - 4.5 Hours (8,550,405)
Washington DC - 4 Hours (658,893)
Baltimore, MD - 3.5 Hours (622,104)
Cleveland, OH - 3.5 Hours (390,113)
Pittsburgh, PA - 2 Hours (305,841)
Philadelphia, PA - 4 Hours (1,560,297)
City, State - Drive Time (Population)
Conclusion: Access to major population centers (+12,346,612 people) within 1 day drive.
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
County-wide Economic Development
Business Attraction
Business Expansion
Increased Tax Base
Membership-Based Organization
Land & Building Development
Energy Department
Financial Lending
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
PA- largest producer of hardwoods in U.S.
Annual revenues from PA forest products industry exceeds $5.5 billion
*Source: Pennsylvania Forest Products Association
Coal
3rd largest county producer of coal in Pennsylvania
Thermal & Met. Coal
Timber Natural Gas
5,228 Conventional Wells*
150 Unconventional Wells*
3 Natural Gas Transmission Lines
* Appx. Numbers - Source: PA DEP
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Sample of Companies Engaged in “Upstream” Sector of Shale Gas Industry in Clearfield County
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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Exploration & Production Companies in Clearfield County
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United States Shale Gas Generates Interest From
Around the Globe
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Foreign Delegations in CorePA
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Foreign Delegations in CorePA
Chinese Fertilizer Company
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Foreign Delegations in CorePA
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Foreign Delegations in CorePA
China Petroleum & Petrochemical Engineering Institute
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Foreign Delegations in CorePA
Lanling County Government Lanling County, Linyi City, People’s Republic of China
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U.S. Department of Energy, U.S. Shale Basins
Marcellus Shale • Marcellus fairway is 40,000 –
50,000 square miles
Estimates of recoverable
reserves up to 500 tcf; current U.S. natural gas
demand is 23 tcf per year
Not all of the Marcellus will
produce the same...
Barnett core is 5,000 square mile
Barnett is largest U.S. gas field, providing 6% of US natural gas
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U.S. Department of Energy, U.S. Shale Basins
Bakken
(oil) The Competition
Eagle Ford (emerging)
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
How Much Natural Gas Does the US Have?
The U.S. Energy Information Administration estimates that as of January 1, 2013 there were about 2,276 trillion cubic feet (Tcf) of technically recoverable resources of dry natural gas in the United States. At the rate of U.S. dry natural gas consumption in 2013 of about 27 Tcf per year, the United States has enough natural gas to last about 84 years.
Source: http://www.eia.gov/tools/faqs/faq.cfm?id=58&t=8
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
How Much Natural Gas Does the US Consume?
Source: http://www.eia.gov/todayinenergy/detail.cfm?id=26552
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
How the Marcellus Region Fits In
Source July 2015: http://www.eia.gov/todayinenergy/detail.cfm?id=26552
EIA's latest data show that natural gas produced from U.S. shale basins now accounts for 56% of U.S. dry natural gas production. Collectively, shale gas production from the Marcellus and Utica regions increased by 12.6 Bcf/d from January 2012 to June 2015, making these regions the driving forces behind overall U.S. natural gas production growth.
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
“Dry Gas” = Methane (CH4)
Butane (C4H10)
Ethane (C2H6)
Propane (C3H8)
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Historic Energy Pricing in US
Commodity Prices (per mmBtu)
(June 13, 2016)
•Crude Oil------$8.46 •Natural Gas----$2.62
Commodity Prices (per mmBtu)
(2012)
•Crude Oil------$17.20 •Natural Gas----$3.00
Oil & gas prices were
linked until shale revolution
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
How natural gas is priced in US Natural gas transported from source
through a network of pipelines & priced at various “hubs” throughout
the US.
Locations of various price “hubs” across the US. The “Henry Hub” in Louisiana sets the baseline for the US.
Since nat. gas is difficult to transport, it is priced as a regional commodity using the “Henry Hub” price as the benchmark.
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Discounted Spot Pricing
at Leidy Hub in PA. -Henry Hub cost:
$2.59/thousand cubic feet or
~$73/thousand cubic meters*
-Leidy Hub cost:
$1.46/thousand cubic feet or
~$41/thousand cubic meters**
*as of June 14, 2016 – Bloomberg Energy
**as of June 14, 2016 – Natural Gas Intel
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
1. Superabundance of natural gas
1. Huge reserves = High Supply
2. Low demand (1.09Tcf annual demand in 2013*
3.20Tcf annual production in 2013*)
3. “Shut-in” wells
2. Lack of pipeline infrastructure
3. Marcellus has one of the lowest breakeven costs
of any shale play in the USA.
*Pennsylvania Public Utility Commission’s “Gas Outlook Report, June 2015”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
“The Marcellus shale has fundamentally altered the outlook for the US natural gas industry. The US is emerging as a low-cost chemicals producer and is poised to become an exporter of natural gas—a feat unthinkable just 5 years ago when it was widely believed that increasing LNG imports would be needed to meet domestic demand.”
http://www.ogj.com/articles/uogr/print/volume-2/issue-3/marcellus-continues-to-defy-expectations-driving-us-gas-production-ever-higher.html
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Suppose a fertilizer company or power plant
uses 60,000mcf/day & is investigating locations.
Cost of gas supply in IA
($1.96/mcf)
60,000 units
x 1.96 per unit
$117,600/day
Cost of gas supply in PA
($1.46/mcf)
60,000 units
x 1.46 per unit
$87,600/day
The fertilizer company would save $30,000/day in operating costs by locating in PA. Of course, other factors would determine ultimate realized savings including transportation
costs, taxes, logistics, labor costs, etc.
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Well, yes, the price of gas in PA is low now, but what about in the future? What if the price of natural gas at the Leidy Hub is equal to the price of natural gas at the Henry Hub?
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
As shown earlier, the USA and Pennsylvania in particular have immense natural gas resources along with the technology to recover those resources which will result in stable, low-cost energy for the foreseeable future. Even if PA gas evens out with Henry Hub gas, it will still be some of the most affordable on the planet.
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UK: ~$4.80/mmBtu (spot LNG)*
Japan: ~$4.90/mmBtu (spot LNG)*
Dutch: ~$5.10/mmBtu*
Russian export to Germany: ~$6.15/mmBtu*
US prices
Nymex: $2.59/mmBtu**
Pennsylvania (Leidy): $1.46/mmBtu***
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Sources:
*BP Statisticial Review of World Energy Report 2016 **Bloomberg Energy ***Natural Gas Intel
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
• E&P Companies Willing to Entertain Long-Term Contracts
• 5 - 20 years (depending on volume & price)
• Why?
•Over-supplied Natural Gas Market
•No definitive end in sight
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Source: Clearfield County GIS Department (www.gis.clearfieldco.org/)
16” Natural Gas
Pipeline
8” LPG
Pipeline
20” Natural Gas
Pipeline
30” Natural Gas
Pipeline
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Source: Clearfield County GIS Department (www.gis.clearfieldco.org/)
Gas-fired
Power Plant
603MW
115 kV
345 kV
230 kV
Electric
Transmission
Lines
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
The closer you can locate to heavy infrastructure, the lower your development costs will be and you’ll save
At least 6 intersections identified in Clearfield County with industrial land available for development.
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Methane (CH4) Butane (C4H10)
Ethane (C2H6)
Propane (C3H8)
“Wet Gas” “Dry Gas”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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Major Publicly Announced Projects Utilizing Natural Gas
Gas-to-Liquids
2,000 bpd
Gas-to-Liquids
1,000 bpd
GTL
C2H6 Ethane Cracker
World-Scale
GTL
Liberty Plant
830MW Gas-Fired
Power Plant
Moxie Energy
Patriot Plant
830MW Gas-Fired
Power Plant
Moxie Energy
Good Spring Plant
700MW Gas-Fired
Power Plant
Energy Self-sufficient
Manufacturing Facility
Proctor &
Gamble
LNG Exports via Cove Point, MD
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Power Generation
Gas-to-Liquids (GTL)
Pulp & Paper
Fertilizer Production
Chemical Production
Cement & Brick Production
Pulp & Paper
pic
G
T
L
Food & Beverage Processing
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Source: Clearfield County GIS Department (www.gis.clearfieldco.org/)
603 MW Power
Plant
Currently
undergoing
conversion to gas
Power Generation
1,837 Acre Site For Sale
Site prepped for Coal Power Plant
but stalled in 2008.
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Gas-to-Liquids (GTL)
Syn-crude
Diesel
Gasoline
Di-methyl Ether
Ethylene
Potential outputs from various GTL processes:
Pennsylvania Grain Processing, LLC
•110 Million gallons of Ethanol
•330,000 tons Dry Distiller’s Grain
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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Pulp & Paper
Historic Timber Industry/Hardwood Resources
Natural Gas for Drying Kilns
Wood Processing Cluster:
BWP
Appalachian Wood Products
Domtar
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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Fertilizer Production
Proximity to Markets
32,458 Harvested Acres in Clearfield County*
3,942,079 Harvested Acres in Pennsylvania*
* Source: United States Department of Agriculture based off of most recent census data
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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Chemical Production
Methane utilized as fuel source & feedstock for various chemical products:
Syngas
Methanol
Ammonia
DME
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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Transportation
Location Along Interstate
CNG Conversion Companies
Several Major Area Fleets
-WalMart Distribution Center -C&S Wholesale Grocers DC
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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Cement & Brick Production
Abundant Raw Materials
World-Class Sandstone Quarries
County Formerly Home to Two Brick Refractories:
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Commerce Park in Clearfield
County is the first industrial park in
the Commonwealth of Pennsylvania
to be certified for food & beverage
manufacturing.
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KopRnik French firm of energy analysts assisting energy-intense European companies with relocation to US to take advantage of energy environment.
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Website launching July 1st, 2016: http://www.alex-andlauer.com/
Alexandre Andlauer Christophe Hecker
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Ethane (C2H6) is “cracked” into ethylene.
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
• an ethane cracker with an approximate annual average capacity of 1.5 million metric tons of ethylene; • three polyethylene units with a combined annual production of approximately 1.6 million metric tons; and • power and steam generation, storage, logistics, cooling water and water treatment, emergency flare, buildings and warehouses.
Source: http://www.shell.us/about-us/projects-and-locations/appalachian-petrochemical-project/about-the-appalachian-petrochemical-project.html
June 7, 2016 - Shell Chemical announced decision to move forward with construction of world-scale multi-billion dollar ethane cracking facility.
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Mariner East Pipeline
Sunoco Logistics Mariner East Pipeline will transport wet gas from SW-PA to Marcus Hook refinery.
511 Spruce Street (Suite #5)
Clearfield, Pennsylvania 16830 814-768-7838
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
1. The USA (and PA in particular) has an abundance of energy which will help to ensure long-term price stability making it a great location for investment.
2. Pennsylvania is home to the Leidy Hub which is currently the lowest-cost spot-price hub in the country.
3. We have relationships with O&G company executives and natural gas marketers to assist you with securing long-term, fixed-price contracts.
4. We have access to existing heavy infrastructure in our county so your company can tap into our natural gas and electricity resources with the least amount of capital expense.
5. We’ve identified the top 7 energy-intense industries that would enjoy a distinct energy advantage by locating here.
6. Pennsylvania has an Office of International Business Development (OIBD) dedicated to assisting foreign companies with investing in PA.
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“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Paul McCloskey VP of Energy & Business Development
511 Spruce Street – Suite 5 Clearfield, PA 16830
1-814-768-7838 [email protected]
Contact Information