June 14, 2016 Paul McCloskey - Vice President of Energy & Business Development
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? “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. “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
U.S.A. Pennsylvania CorePA Clearfield County “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
“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 City, State - Drive Time (305,841) (Population) Philadelphia, PA - 4 Hours Conclusion: Access to major population centers (+12,346,612 people) within 1 day drive. (1,560,297) “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
County-wide Economic Membership-Based Development Organization Land & Building Business Attraction Development Business Expansion Energy Department Increased Tax Base Financial Lending “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Timber Coal Natural Gas PA- largest producer 5,228 Conventional 3 rd largest county of hardwoods in U.S. Wells* producer of coal in 150 Unconventional Annual revenues Pennsylvania from PA forest Wells* Thermal & Met. Coal products industry 3 Natural Gas exceeds $5.5 billion Transmission Lines *Source: Pennsylvania Forest * Appx. Numbers - Source: PA DEP Products Association “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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”
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
“Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Exploration & Production Companies in Clearfield County
United States Shale Gas Generates Interest From Around the Globe “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Foreign Delegations in CorePA
Foreign Delegations in CorePA Chinese Fertilizer Company
Foreign Delegations in CorePA
Foreign Delegations in CorePA China Petroleum & Petrochemical Engineering Institute
Foreign Delegations in CorePA Lanling County Government Lanling County, Linyi City, People’s Republic of China
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 U.S. Department of Energy, U.S. Shale Basins
Bakken The Competition (o (oil il) Eagle Ford (emerging) U.S. Department of Energy, U.S. Shale Basins
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 “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 “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
How the Marcellus Region Fits In 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. Source July 2015: http://www.eia.gov/todayinenergy/detail.cfm?id=26552 “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Ethane (C 2 H 6 ) Propane (C 3 H 8 ) Butane (C 4 H 10 ) “Dry Gas” = Methane (CH 4 ) “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
Historic Energy Pricing in US Oil & gas prices were linked until shale revolution Commodity Prices (per mmBtu) (2012) • Crude Oil------$17.20 • Natural Gas----$3.00 Commodity Prices (per mmBtu) (June 13, 2016) • Crude Oil------$8.46 • Natural Gas----$2.62 “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. “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
“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 “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” “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 “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 PA Cost of gas supply in IA ($1.46/mcf) ($1.96/mcf) 60,000 units 60,000 units x 1.46 per unit x 1.96 per unit $87,600/day $117,600/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. “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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? “Proudly Serving the Community to Create Growth & Opportunity in Clearfield County, Pennsylvania”
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