This document from Walden Associates discusses opportunities in the natural gas industry from increased shale gas production through hydraulic fracturing. It notes that the US is on track to become a net exporter of natural gas by 2020 due to production from shale gas formations. Increased shale gas production has led to economic growth, with projections of over 1 million new jobs and $231 billion in annual GDP contribution by 2035. Substantial investments totaling over $1.9 trillion are also expected from 2010 to 2035 across the natural gas supply chain, including exploration and production, transportation and processing. The document outlines various technical and regulatory considerations around shale gas development.

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Technical, Regulatory and Public Policy Issues
Hydrofracking Shale for New Energy
Economics and Opportunities

2. Walden Associates
*Henry Hub trading price set by NY Mercantile Exchange (NYMEX)
Global gas market still many years away
Game Changer
Source: YCHARTS.com

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Price comparison
normalized to power output
will lead to conversion to
NGVs and fueling station
construction.
Diesel Price Compared to
Natural Gas
Diesel Spread over Natural Gas
(dollars per gallon equivalent)

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Figure indicates the
change in the way we
generate electricity in
the United States
where this graph will
only accelerate in the
future with the
conversion – this
spells Opportunities.
Source: EIA
Power Generation

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Natural Gas leads the way into the future
Source: EIA
Projected New Power Projects

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Current
production trends
for natural gas
indicate the
United States will
become a new
exporter of gas by
2020, if not
sooner.
Source: EIA
Shale Gas Makes Us Net Energy
Export in 10 Years
U.S. Dry Natural Gas Production by source, 1990-2050
*trillion cubic feet

7. Walden Associates
2010 2015 2035
Jobs 600,000 870,000 1,600,000
GDP Contribution 1 $76 billion $118 billion $231 billion
% of GDP 0.5% 0.7% 0.8%
CapEx/year 1 $33 billion $49 billion $127 billion
Production (Qcf) 5.8 9.9 18.9
% of natural gas
production
27% 43% 60%
Notes: 1 – constant 2010 dollars
Source: HIS, EIA and EP estimates
Sector poised to grow well into the future
Massive Positive Economic Impact

8. Walden Associates
2010 2015 2035
Drilling $ 9,937 $ 15,875 $ 46,722
Completion 12,421 19,844 58,402
Facilities 2,484 3,969 11,680
Infrastruction 8,419 9,019 9,786
TOTAL $ 33,260 $ 48,706 $ 126,591
Annual Capital Expenditures by Type (Millions of 2010 Dollars)
Note: Shell announced on March 13, 2013 building a $2 billion ethane
cracker in Beaver County, PA. Total investment $4 - $6 billion.
Source: HIS, EIA and EP estimates
1.9 Trillion in Cumulative Investments
from 2010 - 2035

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• Upstream – Exploration and Production
• Midstream – Transportation, Pipelines, Compressor Stations and
Storage
• Downstream – Processing and purifying of raw gas, petrochemical
plants – marketing and distribution
Where is the Money Spent?

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• Drilling play mapping – plot streams/surface waters
• Locate wells – potable, irrigation, oil/gas
• Pre-drilling groundwater assessment
• Ecological and wetlands assessment
• Site planning and access road layout
• GIS mapping to aid in well layout/spacing and royalty allocation
Pre-Drilling Work Consideration

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• Development of SWPPP and SPDES permit
• Development of SPCC plan for drilling pad
• Prepare water management and flowback handling plan
• Prepare BUD if applicable for cutting handling
• Erosion control and anti-sedimentation plans
• Site restoration plan
• File the drilling permit and supporting drawing set
• Wetlands mitigation plans
Pre-Drilling Permitting Activities

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• Construction design bidding and bid award
• Project management and construction oversight
• Monitor effectiveness of stormwater BMPs – install and update
• Development of site restoration plans and monitoring
Pad Development and Monitoring