This document discusses the Marcellus Shale formation and the potential economic benefits of natural gas production from it. It notes that Marcellus Shale underlies a small portion of Maryland but a larger portion of neighboring states. It outlines estimates of job creation and increased tax revenue for Maryland if natural gas production expanded in the state. It also summarizes studies finding that increased U.S. natural gas production has led to lower energy costs and increased industrial activity and competitiveness.

1. MARCELLUS SHALE
and
MARYLAND
Drew P. Cobbs
Maryland Petroleum Council
Hagerstown-Washington County
Chamber of Commerce
July 11, 2012

3. State Distribution of the Marcellus Shale Play
Marcellus Shale in Maryland
State Areal % of Marcellus
Maryland 1.09
New York 20.06
Ohio 18.19
Pennsylvania 35.35
Virginia 3.85
West Virginia 21.33
Sources: U.S. Energy Information Administration, “Review of Emerging
Resources: U.S. Shale Gas and Shale Oil Plays,” July 2011.
Marcellus Shale Formation

6. Shale Gas Offsets Declines in Other U.S. Natural Gas
Production Sources

7. 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

8. Electricity generation capacity additions
by fuel type, 2010-2035

9. 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

10. Example of Shale Gas Benefits
Potential benefits of shale gas, according to a recent study of the American
Chemistry 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

11. “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 Shale
Education and Training Center, it requires approximately 420 individuals across 150 occupations to
bring a single Marcellus well online.
•In 2025 – the peak year of drilling activity – 1,814 Marylanders will enjoy employment opportunities
related to well drilling and maintenance, royalty payments and expanded state and local government
spending.
•Western Maryland could produce $300 million annually in natural gas output in constant $2011 by
the year 2025.
•The State of Maryland would collect $214 million in revenue over the course of developing the
Marcellus 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 experienced
over the course of the Western Maryland Marcellus Shale development.

12. 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 day
Source: Timothy J. Considine, Robert Watson, Seth Blumsack, “The Pennsylvania Marcellus Natural Gas Industry: Status,
Economic Impacts and Future Potential,” Penn State, July 20,2011

13. Potential Jobs Related to Natural Gas
Construction Industry Drilling Industry Chemical Industry
Trucking Industry Hospitality Industry Steel Industry

14. 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

15. 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-
institute.org/pdf/eper_09.pdf
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Washington, DC 20005-4070 • 15
www.api.org

16. Proper well construction provides groundwater protection

17. 1220 L Street, NW •
Washington, DC 20005-4070 • 17
www.api.org

19. Water Usage By Industry
5,930
6,000
Millions 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

20. 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

21. 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.
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Washington, DC 20005-4070 •
www.api.org

22. THANK YOU
For more information visit
www.api.org
www.strongerinc.org
www.fracfocus.org

23. 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

24. 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