natural gas and the new american economy

8/12/2019 Natural Gas and the New American Economy

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Natural gas is a clean energy source and positions the United States

as an energy powerhouse. Natural gas extracted from dense shale rock

formations has become the fastest-growing source of gas in the

United States and could become a significant new global energy source.

Although the energy industry has long known about huge resources

trapped in shale rock formations in the United States, it is over the

past decade that energy companies have combined two established

technologies horizontal drilling and hydraulic fracturing to

successfully unlock crude oil and natural gas from shale.

The people of Chevron work every day to deliver on the promise

of natural gas from shale The Chevron Way safely, efficiently and

responsibly today and for decades to come. These principles allow

us to responsibly develop natural gas from shale.

Natural Gas From Shale


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Natural Gas and the New American Economy | 1

1.95Trillion barrels of oil-equivalent*reside in North America

1.95

1.86

1.82

1.18

0.89

0.58

0.34

North

AmericaMiddle

East/NorthAfrica

Former

SovietUnion

LatinAmerica

China/Asia-Pacific

Sub-SaharanAfrica

Europe

Unconventional ResourceConventional Resource

Data sources: USGS, EIA/DOE, BOEM, PGC, various other sources.

*Includes crude oil and natural gas.


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The United States is in the midst of an energy renaissance due to our

industrys ability to produce previously unreachable natural gas resources

in the United States, such as natural gas from shale. Due to U.S.-developed

technology, the nation has greater control over our energy destiny, more

jobs and greater energy affordability.

Meeting the Demand

Given a supportive policy framework, natural gas from shale could provide almost

50 percent of total U.S. natural gas production by 2035.1

Generating Jobs

Producing natural gas from shale and other tight-rock formations provided 150,000

direct jobs and 450,000 indirect and induced jobs in 2010. Total jobs in the natural

gas from shale industry are projected to grow to almost 870,000 jobs by 2015 andto over 1.6 million jobs by 2035.2

Making Energy More AffordableThe growth of natural gas from shale is leading to lower natural gas and electric

power prices. Lower gas prices would result in annual average net energy savings

of $926 per household between 2012 and 2015. In 2035, savings are projected to

increase to just over $2,000 per household.3

Increasing Government RevenuesAnnual federal, state and local government revenues from the natural gas from

shale sector and its supply chain and other supporting industries are projected to

grow over the next 25 years.

Shared Opportunity

$19Billion2010 2

$29Billion2015 2

$57Billion2035 2

Government revenues: Comprising federal royalty payments and federal, state and local taxes.

Data sources: 1EIA, 2IHS, 3IHS.Average natural gas price of $4.79/MM Btu (constant 2010 USD)

assumed from 2011 through 2035.


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870,000Jobs projected by 20152

1.6Million jobs projected

by 20352

50%Approximate total U.S. natural gas production

that could be provided from shale by 2035 1


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350 Average Maximum Depth of Groundwater

An example of our Marcellus Shale operations.

Scale of well site and well bore are increased for clarity.

700 Average Maximum Depth of Coal Deposits

7,500 - 8,500 Total Vertical Depth of Well Bore

Approximate Depths

Drilling Deep to Reach Shale

7,000+Typical distance fromgroundwater to shale


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Safe and ResponsibleDevelopmentSafe and responsible development of natural gas from shale is critical.

Chevron designs safety and environmental protection into each well we

drill. However, we are judged not only by what we do, but by what our

industry does as a whole. We, therefore, work with the industry and our

regulators to share best practices and encourage continual improvement

to earn the publics trust as we move forward.

Protecting the Environment

Natural gas from shale can be and is being developed safely today. Chevrons operating

practices reflect our commitment to protecting people and the environment. We design

our wells with multiple layers of steel and cement to protect groundwater for the life of the

well. We run pressure tests to ensure the wells integrity and conduct a combination of tests

over the life of the well to verify long-term integrity. We are working to capture and reuse100 percent of the fracturing fluids and water produced with the natural gas. This reduces

our freshwater consumption as well as our need for water trucking, transfer and disposal.

We also use water pipelines to reduce the need for transporting water over local roads.

Chevron has a long-standing commitment to protect air quality by reducing emissions

from all of our natural gas operations, including natural gas from shale. We design and

construct our wells to minimize emissions, and we proactively participate in voluntary

programs to limit our emissions.

Recommended Practices

Chevron participates in broad-based, active multistakeholder groups already engaged

in developing guidelines and programs and sharing best practices to ensure natural gas

from shale development remains safe. The industry maintains and updates periodically

a robust set of recommended practices that cover everything from well design and well

control to water management associated with hydraulic fracturing operations, providing

a strong foundation for safe development.

We support strong state regulation of crude oil and natural gas operations. The states,

through organizations such as the State Review of Oil & Natural Gas Environmental

Regulations (STRONGER) and the Ground Water Protection Council, actively work to

share best practices and perform peer reviews to help each state keep programs current.

Along with industry efforts to update and promote best practices, these programs

provide a proven mechanism to see programs strengthened over time as technology

evolves. Chevron actively supports these efforts.


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Our commitment to communities goes beyond immediate needs. As we

develop resources, we train, hire, and source jobs and materials locally to

increase capacity and sustainability of the local work force.

Benefiting the Local Economy

According to recent studies conducted by experts at Pennsylvania State University,

exploration and production in the Marcellus region is expected to generate more than

256,000 jobs and more than $20.2 billion in regional GDP equivalent by 2020.

Hiring Locally

Chevron supports hiring local workers and purchasing from qualified local suppliers. When

training is needed, we work directly with colleges, trade organizations, vocational-technical

schools and nonprofits to develop workforce training and supplier development programs.

Supporting Our CommunitiesOur company focuses on three areas of sustainable community engagement education,

basic human needs and economic development. We work within communities to direct

resources toward issues that are important to the people who live there and will provide

benefits for years to come.

Reducing Local Impacts

Chevron recognizes that natural gas development affects the communities in which

projects are located. We take a long-term view and look for ways to reduce impacts on

our communities, and we use a variety of practices and technologies to achieve that end.

We reduce the number of temporary pads we build by drilling multiple wells from one

pad, using longer laterals so we can reach more natural gas with less drilling, and sharing

infrastructure such as roads and pipelines. When we build a pad, we carefully assess

and plan the location, access roads and facilities so we can reduce any interference with

surface water, wildlife, scenic views and agriculture.

Partnership

256,000Jobs generated in theMarcellus by 2020

$20.2Billion in regionalGDP equivalent


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From the Community

We are in a generational partnership with the communities where we are

developing natural gas from shale. We are partners for the long term, with

a strategy to hire locally, provide assistance to address local impacts and

support initiatives of importance to our neighbors.


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Transparency and Engagement

Chevron supports the disclosure of chemicals used in

hydraulic fracturing. We disclose as required by state

regulations, and we voluntarily disclose to the public

through FracFocus.org, a joint website project of the

Groundwater Protection Council and the Interstate

Oil and Gas Compact Commission that provides

an inventory of additives used by operators in thehydraulic fracturing process in the United States.


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Public confidence in our operations is essential to our success.

Transparency and engagement are the key components to maintaining

and strengthening that confidence. In all of our operations, we promote

open communication with the communities where we live and operate.

Sharing InformationChevron supports meaningful disclosure of chemical use in our global operations

through mechanisms such as FracFocus.org. Water and sand constitute more than

99 percent of the fracturing fluid.

Engaging With Communities

Chevron builds long-term partnerships within the communities where we operate

to achieve mutual benefits that last for decades. We build these partnerships through

transparency in our operations, support of local causes and creation of jobs. We

understand that communities have concerns surrounding the development of

natural gas from shale, and we address these through frequent consultation with

local stakeholders.

Throughout all stages of development, we engage with communities to learn

about local concerns, share information and minimize any adverse effects. Thats

why we are creating Citizen Community Advisory Councils to inform and educate

our communities about Chevrons operations and to provide Chevron with local

feedback on the impact of our operations.

Chevrons Environmental, Social and Health Impact Assessment evaluates significant

potential environmental, social and health impacts of projects. It also identifies

opportunities to enhance potential benefits during the planning, construction,

operation and decommissioning of our projects.

Transparency

>99%

Portion of fracturingfluid composed ofwater and sand


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Path to a New Energy Future

1850sModern petroleum

industry is launched

with oil discovery in

Pennsylvania

1920s

Directional drilling, aprecursor to horizontal

drilling, is first utilized

1940sHydraulic fracturing

technology is first

developed

1980s 1990sHorizontal drilling is

combined with hydraulic

fracturing to access

natural gas deposits

1981First well drilled in the

Barnett Shale in Texas

2004First Marcellus Shale

well is drilled

2010FracFocus, the national

hydraulic fracturing

chemical registry, is

established

Natural gas reserves were declining in the United States

prior to the production of natural gas from shale. With

this reversal, this resource now is serving as a foundation

for growth in the manufacturing sector, creating jobs and

lowering costs across the nation. Proper development

of this resource is a critical building block in our

nations economy.

The development of natural gas will create jobs and

power trucks and factories that are cleaner and cheaper,

proving that we dont have to choose between our

environment and economy.

President Obama, State of the Union Address

January 24, 2012

The development of shale gas plays has become a

game changer for the U.S. natural gas market.

U.S. Energy Information Administration

More and more Americans are beginning to recognize

the enormous potential of shale gas. The impact of

increased shale gas development will ripple through our

economy, with manufacturers, in particular, seeing great

benefits. Shale gas development has the potential toboost manufacturing employment by 1 million jobs by

the middle of the next decade.

Jay Timmons, President and CEO

National Association of Manufacturers


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100 YearsApproximate supply ofnatural gas in the

United States*

*Data source: EIA*Data source: EIA.


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Using Our Available Resource

Data sources: 1IHS.Average natural gas price of $4.79/MM Btu (constant 2010 USD) assumed from 2011

through 2035. 2Shale Gas: A Renaissance in Manufacturing?PwC, December 2011. 3Wood Mackenzie (2012).

Excluded plays with estimates


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Data source: EIA, 2011.

There Are Many Usesfor Natural Gas

28%Industrial

13%Commercial

9%Other

natural gas and the new american economy

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