Ohio Department of NATURAL RESOURCES

Transcription

1 Ohio Department of NATURAL RESOURCES

2 STATE OF THE PLAY James Zehringer Director, Ohio Department of Natural Resources

3 STATE OF THE PLAY 2012 Shale Production Numbers Rick Simmers, Chief of Oil and Gas David Mustine, JobsOhio Managing Director of Energy, Chemicals, & Polymers

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6 Sensible Regulations for Ohio SB 165 SB 315 JCARR Rule Changes

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8 Ohio is implementing lessons and best practices from around the country, and is creating a rigorous and responsive regulatory system for the new era of oil and gas development in the state. -Daniel Yergin

9 Historical Oil & Gas Production in Ohio Ohio s Historic Oil and Gas Plays 1860 to Present

10 2012 Shale Production Numbers

11 2012 Shale Production Numbers OIL PRODUCTION 635,896 BARRELS NATURAL GAS PRODUCTION 12,836,662 MCF 93% Increase From % Increase From 2011

12 Ohio s Utica Production 12% OIL 16% GAS

13 Utica Compared to Conventional Production

14 How Utica Activity Compares to ODNR Projections In December 2011 ODNR Projected Drilled Utica Wells By the End of Wells Were Drilled In December 2011 ODNR Projected 50 Wells In Production By the End of Utica Wells Were Producing

15 Utica Permits, Drilling and Production

16 Dry vs. Wet Gas Liquid Natural Gas Natural Gases (LNGs) Natural Gas Liquids Are Why the Industry is Here And Why They Are Staying

17 Midstream Processing

18 Utica Production Compared with Conventional production Year Oil Gas # wells (fulltime equivalent) Oil * Gas ** # wells ,326 2,561, ,809,451 70,728,314 50, ,896 12,836, ,665,167 65,777,332 50, ,439,024 49,236, ,525,212 61,172,919 49, ,355,400 87,922, ,389,456 56,890,815 49, ,259, ,537, ,257,772 52,908,458 49,100 * 3% decline rate ** 7% decline rate

19 Sensible Regulation Ohio Department of Natural Resources Division of Oil and Gas Resources Management Goal: Continue to Protect the Public and the Environment Without Hindering Economic Growth

20 Sensible Regulation Goal: Continue to Protect the Public and the Environment TENORM and Brine

21 Sensible Regulation Goal: Continue to Protect the Public and the Environment More Frequent Reporting

22 Sensible Regulation Goal: Without Hindering Economic Growth Sensible and Fair Tax Policy

23 STATE OF THE PLAY Rick Simmers Chief, ODNR Division of Oil & Gas Resources Management

24 2012 Utica Production

25 2012 Utica Production

26 2012 Utica Production

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28 Shale Permits Issued

29 Shale Wells Drilled

30 Production by Company

31 Drill Rig Locations

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33 2012 Utica Production

34 2012 Utica Production

35 2012 Utica Production

36 Midstream Pipelines and Processors

37 Ohio U'ca Shale Update ODNR Presenta'on 16 May 2013 David Mus*ne, Managing Director Energy; Polymers and Chemicals

38 Key Observations on State of Play Return expectations are strong: CHK rate of return averaging in excess of 40%. Gulfport rate of return of 100% for Boy Scout and Wagner wells. Midstream infrastructure has constrained production. Bottleneck eliminated when 1 BCF of Utica processing is online by YE More rigs active in Ohio Utica than WVa and western Pa. Buyers market for shale acreage, even in most prolific plays (Richard Zeitis) Many factors influence why companies buy or sell acreage: Chesapeake selling only 10% of Utica holdings. Have also sold acreage in Eagle Ford, Mississippi Lime, Permian, Marcellus and Delaware basins. Reducing debt. EnerVest attempting to sell Utica acreage. Strategy is to acquire, build up then sell onshore properties. Also own 2% royalty in 880,000 Utica acres. Multi-decade inventories or development acreage are in place for many companies.

39 Economic Impact of Shale Ohio Companies Benefiting from Shale Activity V&M Star, Youngstown steel tubing Miller Supply, Inc., Wooster oilfield supply and services Pioneer Group, Marietta midstream fabrication and construction Timken, Canton manufacturer and supplier of bearings Ariel Corporation, Mt. Vernon gas compressors PotashCorp, Lima producer of nitrogen-based products; large natural gas user Gorman-Rupp, Mansfield pumps used in oilfield operations Kelchner, Springboro construction DBA Mutual Tool, Tipp City fabricating

40 Pipeline & Midstream Projects Ohio Utica Shale Company Loca*on Opera*ons Es*mated Investments MarkWest M3 Midstream Partnership Harrison & Noble coun'es Columbiana & Harrison coun'es G, P, & F $1.5 Billion G, P, & F $1.2 Billion NiSource Eastern Ohio G&P $390 Million Dominion/ Caiman* Spectra* Enterprise* Eastern Ohio G&P $800 Million Northern & Eastern Ohio Eastern, Central, & Southwestern Ohio Natural Gas Pipeline Ethane Pipeline $430 Million - plus $1 Billion- plus *Announced Gathering Processing Frac'ona'on

41 Investments in Ohio Utica Shale Company County Investment Chesapeake Energy Stark $7 million and 600 jobs Halliburton Muskingum $150 Million and 300 jobs* Schlumberger Tuscarawas $150 Million and 236 jobs* Baker Hughes Stark TBD* Exterran Mahoning $13 Million and 100 jobs Six C Fabrica'on Portage $2 million and 250 jobs Weatherford Mahoning TBD* Marathon Petroleum Stark New Canton refinery truck rack, with ability to process 18,000 bpd at Catle]sburg, which supplies products to central and southern Ohio. *Over three years, dependent upon actual rig activity

42 Pursuing Downstream Opportunities: Global polymer industry leader World class university-based research and strong engineering programs Four refineries in Ohio Utica shale provides low-cost and reliable supply of natural gas and natural gas liquids Possible links to specialty chemicals

43 Pursuing Downstream Opportunities: Natural Gas Liquids Ethane/Propane/Butane Ethylene/Propylene/Butadiene Plastics/Synthetic Rubber

44 Ohio Department of NATURAL RESOURCES