ohio, the region, and licking county’s future a charlotte batson march 22, 2012

Ohio, the Region, andLicking County’s Future

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Charlotte BatsonMarch 22, 2012

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

© Batson & Company 2012 2

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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


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

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Where is the Utica Shale?


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Not Just in Eastern Ohio!


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The Map Can’t Keep Up


Source: ODNR

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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Current BHI Rig Count


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


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


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Licking County: Well-positioned


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


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


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



Thank You

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ohio, the region, and licking county’s future a charlotte batson march 22, 2012

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