shale directories · march 21, 2017. marcelluscoalition.org | @marcellusgas our membership • 200+...
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
David J. SpigelmyerPresident
Marcellus Shale Coalition
Industry UpdateShale Directories
March 21, 2017
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
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* Dec. 2016 (most recent data available)
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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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
Drilling Activity in PA
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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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Drilling Activity in PA
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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Challenges
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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)
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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Benefiting PA Communities
$18m
$101.8m
$27.2m
$40.7m
Impact Fee Distributions2016
State Agency Oversight Local Government
All Counties - Parks & Bridges Statewide - Environmental
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
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Benefiting Consumers
Lower Prices = Customer Savings
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Market Opportunities
Feedstock for industries and other liquids use
−Rebirth of manufacturing / Crackers
Exports / Ethane
Electricity generation, heating
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Renaissance in Manufacturing
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
The Ethane Factor
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
“Active Cracker Projects
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Shell
PTT
Braskem
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Shell’s Monaca Site
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
23Ludwigshafen, Germany
BASF Ethane Cracker Facility
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
$6B+ Capital Investment
~3.5B Pounds of Polyethylene / Year
600 Full-time Employees
6000 During Construction Phase
Operations
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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Polyethylene Grades
High Density Low Density Linear Low Density
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Proximity to End Customers
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Pellet Distribution / Transloading
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Use It Or Lose It
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Follow The Gas
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Downstream Powergen Strategy
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Tell the Story
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Life-sustaining medicationsPlasticsHeatingElectricity 24/7ChemicalsFertilizing food supplies
Life sustaining uses of natural gas
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
CookingWater heatingTransportationDrying clothesCosmeticsSteelPlasticsGlassPowdered Metals
Everyday uses of natural gas
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
SHALE INSIGHT™
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MARCELLUSCOALITION.ORG | @MARCELLUSGAS
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
MARCELLUSCOALITION.ORG | @MARCELLUSGAS
Thank you!
Marcelluscoalition.org
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