ohio, the region, and licking county’s future a charlotte batson march 22, 2012
TRANSCRIPT
Charlotte Batson• Expertise in Economic Development and Shale Oil/Gas• Petroleum Engineer with expertise in oil and gas field operations,
lease sale evaluations, and oil/gas price analysis• Project work on the Shale Gas Supply Chain for the Pittsburgh
Regional Alliance• Author of articles on Shale Oil and Gas, including “How Shale Gas
is Redefining the Energy Landscape” in the January, 2012 Site Selection
• Appointed to the Mississippi Energy Policy Institute (MEPI) in 2009 by Gov. Haley Barbour
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Agenda
• Perspective on Current Situation
• Opportunities for Licking County
• Workforce
• Local Impacts
• What’s Next?© Batson & Company 2012
US Oil Production Reverses Decline
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19001904
19081912
19161920
19241928
19321936
19401944
19481952
19561960
19641968
19721976
19801984
19881992
19962000
20042008
0
2000
4000
6000
8000
10000
12000
AlaskaOffshore GOM (Fed + State)Onshore US
Source: EIA
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Upstream Drivers• Leasing– “Use it or lose it”– Oil plays drawing attention from low-priced gas– Industry much less “boom and bust”
• Oil Price: Instability in the Middle East– Another Arab Oil Embargo?– Development plans likely being accelerated
© Batson & Company 2012
Hold on to Your Hat!• Operators: Chesapeake/Total, Enervest, Anadarko,
Chevron, others
• Chesapeake: 25,000 wells over 20 years
• 2012 Drilling: +40% in Ohio over 2011
• Rigs: +300% over 5 years (Ohio O&G EEA)
• Potential for 200,000 b/d by 2020 (pass La.)
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Variety in the Supply Chain
Gathering and Transportation
•Pipelines•Compressors•Tanks•Meters and Control Stations
•Inspection Tools
Processing
•Heaters•Scrubbers•Separators•Fractionation Equip•Fischer Tropsch•Catalysts•Vessels
Environmental Mitigation
•On-site Mobile Water Treatment
• Filters•Local Water and Wastewater Treatment
Marketing and Sales
•National integrated marketers
•Producer marketers•Aggregators, Brokers•Petrochemicals•Gas-to-Liquids
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Exploration
• Seismology• 3D or 4D
Computer Imagery
• Logging• Data Interp.
Drilling
• Rig and other equipment
• Casing and tubing• Mud, cement and
chemicals
Hydraulic Fracturing
• Pumps• Proppants• Chemicals and
other additives• Water
Completion
• Valves• Screens and
Filters• Perforating
Equipment• Packers
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Central Ohio Existing Industries
• Aerospace
• Polymers and Plastics
• Chemicals
• Steel
• R&D
• Auto
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Upstream Opportunities• Supply Chain
– Resource-limited– Includes logistics and transportation, especially frac sand and water– Drilling rigs, OCTG, equipment, mud, cement, chemicals, crew
supplies, etc.
• Local Business: 18 month contracts
• Access to the Resource– Nucor– Shell
© Batson & Company 2012
Midstream In Flux• Asian LNG demand exploding• Available capacity in existing lines• Gathering lines• Chesapeake– $900M NGL processing, pipeline (M3 Mid., EV En.
Ptnrs.)– $500 million, 70 miles of pipeline (AEP, Spectra)
• Enterprise Products Partners: prop. ethane pipeline from OH/PA to the Texas ethane hub
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Opportunities for Utilities• Electric Utilities– EPA regs – conversion of 28 GW coal-burning
generation to gas– Ohio – 80% of its electricity from coal– AEP’s pipeline announcement
• Gas Utilities– Customers switching from heating oil and propane– Columbia Gas rates 19% lower than last year– PA gas utility cut rates by 52%
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Downstream: Refined Products• Stimulated by crack spreads and abundant supply
• Asia: Demand for refined products exploding
• 2011: US was a net exporter of refined products for the first time since 1949
• Polymers: important part of the shale supply chain expected to benefit from oversupply
© Batson & Company 2012
Oversupply and New Products• Stimulated by natural gas oversupply• LNG– Cheniere: $6B Sabine liquefaction facility for export
to Asia– Have $8B+ in contracts for 7 mtpa (2 trains of 4
approved)• New Products– Sasol: $10B LA facility to convert natural gas to diesel
• Exports to Asia– South Korea, Japan, China, India
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Chemicals and Fertilizers• Stimulated by low natural gas price (feedstock)• Chemicals◦ US overtaking Middle East as global low-cost leader◦ Ethylene crackers: Shell, Dow, Sasol studying ($4.5B)◦ Reviving nitrogen based products
“Prices are rising amid tight supplies for the building blocks of everything from diapers and packaging to autos and consumer electronics”, said Andrew Liveris, Chairman/CEO, Dow Chemical
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And Let’s Don’t Forget.. Vehicles!!• Effective cost < $2/gal• Fleets converting to natural gas• Chesapeake and GE partnership– Natural gas and hybrid vehicle mfg.– Fueling infrastructure
• Companies incl. UPS testing LNG vehicles (ships)
• Jet fuel
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Workforce• Full Employment
• Competition for Workers
• Construction Jobs
• “Boom vs Bust”
• Workforce Training & Housing
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Impacts to Licking County• Roads
• Other: noise, dust, hours of operation, etc.
• Municipal Budgets
• First Responders
• Information to the Community
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What’s Next?• “Perfect Storm” of Opportunities– Upstream– Midstream– Downstream
• Job Creation
• Management of Impacts
© Batson & Company 2012