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July 11 hagerstown part 2


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Eggs & Issues presentation on July 11, 2012.

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July 11 hagerstown part 2

  1. 1. MARCELLUS SHALE and MARYLAND Drew P. Cobbs Maryland Petroleum Council Hagerstown-Washington County Chamber of Commerce July 11, 2012
  2. 2. State Distribution of the Marcellus Shale Play Marcellus Shale in MarylandState Areal % of MarcellusMaryland 1.09New York 20.06Ohio 18.19Pennsylvania 35.35Virginia 3.85West Virginia 21.33Sources: U.S. Energy Information Administration, “Review of EmergingResources: U.S. Shale Gas and Shale Oil Plays,” July 2011. Marcellus Shale Formation
  3. 3. Shale Gas Offsets Declines in Other U.S. Natural Gas Production Sources
  4. 4. Natural Gas Facts and Usage• Cleanest-Burning Fossil Fuel – 30 percent less CO2 than oil – 45 percent less CO2 than coal – Virtually no SO2, Mercury or Particulates Residential Use: 22 percent Heat, hot water, ovens/stoves Industrial/Commercial Use: 44 percent Electrical Generation Use: 32 percent Transportation Use: 3 percent
  5. 5. Electricity generation capacity additions by fuel type, 2010-2035
  6. 6. Adequate natural gas supply at competitive prices helps grow the U.S. economy U.S. Industrial Demand for Natural Gas Lower gas prices have helped U.S. industry 23 Chemical and fertilizer 22 facilities are seeing increased 21 utilization with lower gas 20 bcfd prices 19 18 Energy-intensive industry can 17 be more competitive in the 16 global market 15 2000 2005 2010 2015 2020 2025 2030 Additional potential demand from natural gas vehicles Source: Wood Mackenzie
  7. 7. Example of Shale Gas BenefitsPotential benefits of shale gas, according to a recent study of the AmericanChemistry Council:- 17,000 new high-paying jobs in the U.S. chemical industry- 395,000 additional jobs outside the chemical industry- $4.4 billion more in federal, state, and local tax revenue, annually- A $32.8 billion increase in U.S. chemical production- $16.2 billion in capital investment by the chemical industry to build new petrochemical and derivatives capacity- $132.4 billion in U.S. economic output
  8. 8. “The Potential Economic & Fiscal Impacts of Natural Gas Production in Western Maryland,” study issued 3/1/12 for the Maryland Petroleum Council finds that:•Approximately 365 wells would be operating over that period and, according to the Marcellus ShaleEducation and Training Center, it requires approximately 420 individuals across 150 occupations tobring a single Marcellus well online.•In 2025 – the peak year of drilling activity – 1,814 Marylanders will enjoy employment opportunitiesrelated to well drilling and maintenance, royalty payments and expanded state and local governmentspending.•Western Maryland could produce $300 million annually in natural gas output in constant $2011 bythe year 2025.•The State of Maryland would collect $214 million in revenue over the course of developing theMarcellus Shale play.•Garrett County would collect approximately $162 million and Allegany County $65 million in revenue.•Roughly $441 million in 2011 constant dollars of total positive fiscal impact would be experiencedover the course of the Western Maryland Marcellus Shale development.
  9. 9. Economic Impact of Marcellus Shale on Pennsylvania 2009 2010 2011 2012 2015 2020 Employmen 60,168 139,889 156,695 181,335 215,979 256,420 t Value Added (millions $) 4,703 11,161 12,844 14,531 17,195 20,246 State & Local Taxes (millions $) 573 1,085 1,231 1,402 1,677 2,003 Output Bcfe*/day 0.3 1.3 3.5 6.7 12.0 17.5*bcfe is billion cubic feet of natural gas equivalents per daySource: Timothy J. Considine, Robert Watson, Seth Blumsack, “The Pennsylvania Marcellus Natural Gas Industry: Status,Economic Impacts and Future Potential,” Penn State, July 20,2011
  10. 10. Potential Jobs Related to Natural GasConstruction Industry Drilling Industry Chemical Industry Trucking Industry Hospitality Industry Steel Industry
  11. 11. Employment Opportunities Direct Employers • Direct or Contracted Jobs• Oil & Gas Operators Laborers • Truck Drivers• Oil & Gas Service • Equipment Operators Companies • Welders • Surveyors• Law Firms • Lawyers• Engineering Firms • Accountants • Engineers• Construction Contractors • Environmental Scientists• Electrical Contractors • Archeologists • Botanists• Land Service Providers • Electricians • Mechanics• Pipeline Contractors
  12. 12. Costs of Shale Gas Production Records of the Pennsylvania Department of Environmental Protection show that from 2008 to 2010, the typical Marcellus shale gas well generates about: $14,000 in mainly reversible environmental impacts $4 million in economic benefits http://www.manhattan- L Street, NW •Washington, DC 20005-4070 •
  13. 13. Proper well construction provides groundwater protection
  14. 14. 1220 L Street, NW •Washington, DC 20005-4070 •
  15. 15. Water Usage By Industry 5,930 6,000Millions of Gallons per Day 5,000 4,000 3,000 2,000 1,680 1,550 1,000 268 182 30 0 Power Industrial Public Other Mining Marcellus generation water systems Shale Drilling Source: USGS, Pennsylvania Water Consumption
  16. 16. Industry Best Practices API HF1, Hydraulic Fracturing Operations—Well Construction and Integrity API HF2, Water Management Associated with Hydraulic Fracturing Guidance API HF3, Practices for Mitigating Surface Impacts RP51R, Environmental Protection for Onshore Oil and Gas Production Operations and Leases RP65-Part2, Isolating Potential Flow Zones During Well Construction
  17. 17. The Shale Gas End Game ENVIRONMENTAL IMPACTS ECONOMY Smaller production U.S. energy security. footprints. Domestic jobs. Lower lifecycle emissions Revitalize chemical and for electricity generation manufacturing sector Lower lifecycle water use Cheaper natural gas for for electricity generation. consumers.1220 L Street, NW •Washington, DC 20005-4070 •
  18. 18. THANK YOUFor more information
  19. 19. The growth of shale gas is leading to lower natural gas and electric power prices and increased productivity • Without shale gas production, US natural gas prices would be at least 100% higher than they are • Reduction of 10% in electricity costs nationwide over the forecast period • By 2017, lower prices will result in an initial impact of 2.9% higher industrial production. By 2035, industrial production will be 4.7% higher. • By 2025 inexpensive natural gas could save U.S. manufacturers $11.6 billion a year in costs and create more than 500,000 jobs. (PricewaterhouseCoopers) • Chemicals production in particular stands to benefit from an extended period of low natural gas prices. • Savings from lower gas prices will add an annual average of $926 per year in disposable household income between 2012 and 2015. In 2035, this would increase to just over $2,000 per household.Source: IHS Global Insight
  20. 20. Growth in the shale gas industry contributes to the broader economy, tax revenues, and jobs • The shale gas contribution to GDP was more than $76 billion in 2010. This will increase to $118 billion by 2015 and will triple to $231 billion in 2035. • In 2010 shale gas production contributed $18.6 billion in federal, state and local government tax and federal royalty revenues. By 2035, these receipts will more than triple to just over $57 billion. On a cumulative basis, the shale industry will generate more than $933 billion in federal, state, and local tax and royalty revenues over the next 25 years. • In 2010, the shale gas industry supported 600,000 jobs; this will grow to nearly 870,000 in 2015 and to over 1.6 million by 2035.Source: IHS Global Insight