Energy and Pittsburgh:

A Long HistoryBill Flanagan

Executive Vice President-Corporate Relations

March 17, 2014

A Snapshot of the Pittsburgh Region

10 counties = 7,200 sq. mi

Population = 2.6 million

Gross Regional Product = $119 billion

“Pittsburgh stands as a bold example of how to create new jobs and industries while transitioning to a 21st century economy. As a city that has transformed itself from the city of steel to a center for high-tech innovation... Pittsburgh will provide both a beautiful backdrop and a powerful example for our work.”

-President Barack Obama, Pittsburgh (G-20) Summit

• “Hell with the lid

off.”

• Streetlights at noon

• Extra white shirts to

work

The Steel City (1870s-1970s)

Renaissance City 1940s-1970s

•Public-private partnership

•Smoke control

•Urban redevelopment

A Story of Transformation

The Renaissance began in the 1940s with the formation of the Allegheny Conference on Community Development, a non-profit organization designed to bring together private sector leadership to work in partnership with government to improve the region. Together they cleaned the skies and rivers and transformed the city itself with the first urban redevelopment programs in the United States.

The Steel Bust

•Foreign imports

•Industry restructuring

•National recession

•Regional depression

A Big Setback in the 1980s

1,050,000

1,100,000

1,150,000

1,200,000

1,250,000

1,300,000

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013*

* 12 month rolling average through June 2013.Source: US Bureau of Labor Statistics, Local Area Unemployment Statistics, 10-county region

1,082,300

1,285,400

A Great American ComebackTotal Employment Reaches Record High, 1970-June 2013

We’re Hiring!

24,000 Open Jobs!

The World is Paying Attention

What’s Ahead?

• Enormous Opportunity

• A portfolio approach

• Collaboration to innovate

• In a word:

Our Rich Energy History

Our Rich Energy History

A New Center of American Energy

Opportunities in Our Energy Economy

Energy Companies Growing in the

Pittsburgh Region

We Are an Energy Innovator

$1 billion +

Government Universities Corporate

NETL Bettis

Pitt

CMU CONSOL

Westing-house

Eaton

WVU

Penn State

Coal Nuclear Systems

Source: Allegheny Conference analysis

PPG

National Energy Technology Laboratory

• Full service DOE federal lab

• Dedicated to energy R&D, domestic

energy resources

– Fossil energy

– Support offices of electricity and energy

efficiency

• Fundamental science through

technology demonstration

• Unique industry-academia-government

collaboration

• Tech Transfer Program

– Transfer of research and patented

technologies to industry, entrepreneurs,

universities and other government

agencies

NETL Program Areas:

Strategic Center for Coal Carbon Capture, Carbon Storage, Advanced Energy Systems, Cross-Cutting Research

Strategic Center for Natural Gas Deep & Ultra Deep Water Oil, Unconventional Gas, Methane Hydrates, Enhanced Oil Recovery

Project Management Center Building Technologies, Distributed Energy, Vehicle Technologies, Weatherization

Marcellus Shale• The Marcellus Shale geological

formation is one of the largest

unconventional natural gas

reserves in the world:– Pittsburgh is the largest metro atop the

Marcellus Shale

– 95,000 square miles of approx. 60% of

Pennsylvania’s land mass

– Marcellus Shale contains 141 trillion

cubic feet of recoverable natural gas

– In the Marcellus Shale play alone, an

estimated 7,000+ wells will be drilled

between 2011-2014

– Prompted 150+ companies to expand

their exploration, drilling or service

operations in the Pittsburgh region

since 2007

Utica Shale –The Natural Gas Giant Below the Marcellus Shale

• The Utica Shale is located a few

thousand feet below the Marcellus

Shale

– Potential to become an enormous

natural gas resource

• More geographically extensive and

thicker than Marcellus Shale

• Already proven its ability to support

commercial production

– Liquids-rich play…oil

– Early testing indicates it will be a very

significant resource

• The Utica Shale has a much higher

carbonate content and a lower clay

mineral content than the Marcellus

Shale

150+ Natural Gas-Related Companies Have

Expanded into the Pittsburgh Region Since

2007Accelergy Corporation

Allied Technology

Allis-Chalmers Energy, Inc.

Baker Hughes Oilfield Operations

BJ Services Co.

Bowles Rice, LLP

Burleson Cooke, LLP

Cabot Oil & Gas Corp.

Calfrac Well Services

Carrizo Oil & Gas, Inc.

Chesapeake Energy

Complete Production Services, Inc.

Core Laboratories, LP

Crescent Directional Drilling

Cudd Energy Services

Direct Energy

EOG Resources, Inc.

Express Energy Services, LP

Exterran Holdings, Inc.

Fagen, Inc.

Flotek Industries, Inc.

Flow Data, Inc.

FMC Technologies, Inc.

FTS International

Fulbright & Jaworski

Green Field Energy Services

Halliburton Energy Services

Hunting Energy Service

Key Energy Services, Inc.

Kimzey Casing Service, LLC

Kinder Morgan Energy Partners

Marathon Oil Co.

McJunkin Red Man Corporation

National Oilwell Varco

Newfield Exploration

Royal Dutch Shell

Sadler Law

Schlumberger Limited

Seneca Resources

Smith International

Spectra Energy Corp.

Stallion Oilfield Services

Swift Worldwide Resources

Talisman Energy, Inc.

Tennessee Gas Pipeline Co.

Texas Eastern Transmission, LP

The Williams Companies

Thomas Petroleum

TSI Flow Products, Inc.

Universal Pegasus International

Valerus Compression Services

Weatherford U.S., LP

Wilbros International

WPX Energy

Center for Sustainable Shale Development

(CSSD)

• Safe, sustainable shale resource development

– Continuous improvement and innovative practices through 15 performance standards (air & climate and surface & groundwater) and third-party certification

• Unprecedented collaboration

– Serves as a forum for a diverse group of stakeholders (environmental organizations, foundations, energy companies) to share expertise with the common objective of developing solutions and serving as a center of excellence for shale gas development

STRATEGIC PARTNERSChevron

Citizens for Pennsylvania’s Future

Clean Air Task Force

CONSOL Energy

Environmental Defense Fund

EQT Corporation

Group Against Smog and Pollution

Heinz Endowments

Pennsylvania Environmental Council

Shell

William Penn Foundation

Wet Gas Geology

Marcellus gas around Greater Pittsburgh is rich in

ethane, propane, other liquids

• Supply of “wet gas” could lead to new petrochemical production capacity in Greater Pgh.

• Thousands of jobs, billions of $$ of investment.

Initiative: Wet Gas Development

Natural gas production & supply chain

•Target is feedstock for petrochemicals, plastics.•Creates high-value manufacturing jobs.

Upstream:

Exploration & Production

Midstream:

Storage & Transmission Pipelines

Downstream:

Uses including•Gas distribution•Fuel•Gas-to-Liquids•Feedstock for petrochemical, plastics industries

What’s Next: Petrochemicals

•Land option for Beaver County site

•Further evaluation underway:

•Environmental analysis

•Engineering design studies

•Evaluation of ethane supply

•Economic viability

Proposed Shell Petrochemical Complex

Shell’s Singapore Cracker

Chemistry in the Pittsburgh Region

• Regional strengths– 250+ chemistry firms

– HQs and/or corporate support

operations to industry leaders: • Almatis, Axiall, Bayer, Calgon Carbon,

INDSPEC, Koppers, LANXESS, NOVA

Chemicals and PPG Industries

– Significant manufacturing presence:• BASF, Eastman Chemical, Nalco

– Two dozen major chemistry research

facilities

– Chemicals represent the fourth largest

export from the Pittsburgh region –

more than $1 billion in 2011

Plastics in the Pittsburgh Region

• Regional strengths – Home to 112 establishments employing

5,100 workers directly and 10,200

indirectly

– Contributes $1.6 billion in economic

activity

– Cutting edge plastics technologies –

from companies like ATRP Solutions

and Plextronics (both CMU spinouts) –

are using plastics in a whole new way

Emerging Priority – Workforce

Comprehensive workforce program targeting the natural gas and oil industries

• Launched in 2010 with a $4.9 million Labor grant – 4 states, 71 counties

• Has since trained more than 5,047 people; 1,485 employed in the industry

• Received $14.96 million follow on grant in 2012 to expand curriculum nationally o Applies to upstream, midstream and downstream occupations

For more information

Bill Flanagan, Executive Vice President

Allegheny Conference on Community Development

11 Stanwix Street

Pittsburgh, PA 15222

412-281-1890

bflanagan@alleghenyconference.org

www.alleghenyconference.org