Progress Authority Natural Gas

Utilization Value-Added PresentationOctober 29, 2015

Presented by Anthony J. Ventello, Executive Director

INTRODUCTION Progress Authority – Who We

Are – IDA/IDC

Outlook on US industrial and

commercial gas use and

opportunities

Bradford and Susquehanna

Counties - #1 and #2 drilled

upon counties

Long-Term Solution –value-

added utilization statewide

in balance with Export

Examples: Timber and Dairy

IDC/IDA

Stats• Home to 5,700 permitted and

2,300 spud wells

• Moving 6.5 bcf+ per day; single

well producing 30-35 mcf

• US production at all-time high

• Gas at sub $2.50/mlf

DISTRIBUTIONThe Root of Vertical Integration

(Unless at Wellhead)

Leatherstocking Gas CompanyFacts:

Commercial 41

Public Authority 14

Residential 164

Total Active Meters 219

New Services, No Meter 103

Miles of Main 16.5

Local Gas for Local People

$9.6 million invested

To date

5 Office Jobs – Many Local

Businesses Used in

Construction and Services

Endless Mountains

Health Systems

New Guthrie Troy

Facility

• $51 million investment• 182 Jobs

Natural Gas Served Large Energy Savings

• $35 million investment• 130 jobs• Existing but value-added

Elk Lake School District

Gas Wells on Campus

Oil Conversion

PUC allows for 2 connections

Average Energy Savings of

30 – 40% or more

PIPELINE CONSTRUCTION

ENERGY GENERATIONBroader Market Impact for Utilization

Panda Power Station, Asylum Township• 829 megawatt combined cycle generation

• 40 – 45 full time jobs; 300 – 600 during construction

• Sister Plant – Patriot, Lycoming County

• $900 million investment

IMG Roundtop Energy

Confidential Material

20 MW Natural Gas Fired Power Generation facility

interconnected to First Energy Penelec Transmission

Direct interconnect to Williams’ Overfield Gas Gathering System

for fuel supply, with gas supplied by Chief Oil and Gas

Construction started in January ‘15 and commercial operation is

scheduled for October ’15

Technology provides quick start times and flexibility supporting

grid security and reliability

Plant provides wholesale energy, capacity and ancillary services

to PJM electric market

Up and running in October, 2015

Started second plant in Bradford County, Canton Township –

Beaver Dam Station

$20 million in new investment

Jobs 7+

Support Services

Up and Running in 5 Minutes

7 proposed in the Northern Tier

Currently 3 Other Generation Companies Doing Due Diligence

Electrical Generation/Steam/Thermal Demand

• Guthrie Healthcare

• GTP (Global Tungsten Powders)

• Cornell University in NY (ironic)

• JeldWen Re-started Their Existing Cogen Due to Pricing

• Proctor & Gamble – Model Project

Combined Heat and Power

(CHP)

Cheap Fuel Stock Rising Electrical Pricing Make Proforma Payback Feasible

Guthrie

CHP Project

CHP Plants can be approximately 75% efficient at primary fuel conversion to useful energy and, because they are located on site, have no/minimal transmission loss.

Largest Regional Employer at 5,000+

CHP Plant Investment - $6 million

Act 129 Rebate; ACE Grant

5 – 7 Year Payback

Medical Record Energy Demand

CHP Plant at 2 megawatts Hospital

Global Tungsten & Powders Corp.

CHP Project

Approximately $10 million in investment

Supports 500 jobs

$2 million rebate – Act 129

Power buyback

7.5 – 10 megawatts

Cornell University Combined Heat and Power

• Supports 12,842 Employees

• 21,600 Students

• Over 300 Buildings Serviced

• $180 Million Investment Made

• Anti-Natural Gas Positioning

• Conversion from Coal – Built in 1922; 65,000

• tons of Coal Per Year

• Two 15 megawatt generators

• 77% Operating Efficiency

CNG

(Compressed Natural Gas)

CNG (Compressed Natural Gas)

Public CNG fueling stations (fast fill)

$1.5 million investment per station

Public Transportation

Private CNG fueling station

• Vehicles

• Trucks

• Compressions Units for well

completion

• Mehoopany, Wyoming County Model Manufacturing Dynamic

INDUSTRIAL UTILIZATION

Clean

Efficient

Abundant

Low cost

Feed Stock

Energy is at the Top of Common Concerns

GAS TO LIQUIDS

REV LNG (Liquified Natural Gas)

Herrick Township, Bradford County (SWN)

$10 Million Investment

Non-Piped Distribution

Reduction Demand Due To Gas Industry Slowdown

New England Market Demand

Global Tungsten PowdersTowanda Borough and Township, Bradford County

• Largest User of hydrogen on the East Coast

• Sintering metal – purge furnaces

• Partnering Air Products and hydrogen facility

• Thermal Cracking of natural gas to make hydrogen used in manufacturing

Gas to LiquidsGTL:

• Diesel Fuel

• Unleaded Gas

• Waxes

• Lube oils

• Other Products

• Methanol Several Companies investigating sites, products and investments

Fuel Stock Never Cheaper vs Competition with Crude Oil Prices and High Cap Expenditure

Sites Evaluated in Bradford and Susquehanna Counties

Eureka ResourcesStanding Stone Township, Bradford County

• Value-added from produced water 31 Employees

• Crystallization $30 Million of Investment

• Downstream products Broader Market Uses for Chlorides

• Road Salt

Procter & Gamble Mehoopany

Wyoming County

Marcellus Gas Utilization Paper Manufacturing Site

Region’s Largest Manufacturing Site at 3,000 employees

Energy Intensive

Industrial Campus of 90 Acres, owns 1,400 Acres Total

Horizontally Drill

Consume 800 billion kwhr (equivalent of 40,000 homes)

Now 100% self-Sufficient with co-generation

Off the Grid – Sell 10 to 20 megawatts Back to the Grid

Use 10 Billion Cubic Feet of Natural Gas/Year; Excess to Interstate Pipeline

Reduced Per Unit Consumption of

Energy by 30%; Will Hit 40% in 2 Years

Receive Lease, Bonus and Royalties

Transportation Savings on Natural Gas

Plus Savings on Capacity,

Compression and Other Supply Chain

Reduction Efficiencies

Developed 15 Gas Wells On-Site. Tied

to Midstream and Interstate Pipeline

Gas is Purer than Gulf Sources

“Tri-Generation”

So, they are CHP with electrical generation, steam, hot air

(paper processing) and absorption.

They power their fleet with CNG and have their own CNG station.

• $50,000 Million Invested

DRILLING ON P & G CAMPUS

All New P & G Opportunities Look at This Site First

HOUSING AND

DOWNTOWN REVITALIZATION

ACT 13

DCED

FUNDED

HOUSING

• Susquehanna County, Bridgewater Township

• Meadows at Tiffany Pines

• 40 Units of Housing – Completely Occupied

• Natural Gas Served

• $11 million in investment

HOUSING

Towanda Terrace

• 400 Block Revitalization

• Bradford County, Towanda Borough

• Burned out furniture store revitalization

• 4 story commercial with 39 units of residential

• 230 space parking garage developed

• $15 million in investment

• Completion scheduled for December 2015; May 2017 for

parking garage

• PHFA Housing Funds

• County Infrastructure Loan Via Act 13 Program

• Natural Gas Served

TOWANDA TERRACE

LOCATIONS

Route 81 Corridor, Susquehanna County

Where It Can Happen Downstream:

Site near interstate or substantial

midstream

Liquid distribution lines for export of

products from site

Rail served

Infrastructure:

• Power/transmission lines

• Sewer

• Water

• Route 81 Corridor Analysis

• Target site assessment

• Energy corridor development

*Support the Development of the Keystone Energy Enhancement Act (KEEA Tax Abatements)

• 500+ acres

• Power

• IBCF/day gas production

Diaz Manufacturing Relocation

Bridgewater Township

Susquehanna County

Joint Infrastructure Development

• Gas, Public Water Distribution shared corridor

• Manufacturing Expansion

• Housing

• $1.6 million investment in infrastructure

• $12 million investment total

• 150 Job Impact

Infrastructure Funding:

Act 13 County Funds

PA American Water Company

Pennsylvania First Program

Leatherstocking