Shale s Potential: The Next Phase. September 12, 2013

Transcription

1 Shale s Potential: The Next Phase September 12, 2013

2 Today s Panelists Ryan Fischer Assistant Vice President, Emerging Markets Genesee & Wyoming Railroad Services, Inc.

3 Genesee & Wyoming Inc. Nine North American Regions

4 Ohio Valley Region

5 Genesee & Wyoming Industrial Development: UEO Midstream LLC Press Release: UEO Midstream to build natural gas fractionation hub in Utica Shale - $900-million plant will be located on a 600-acre tract in Harrison County, Ohio New facility to be served by the Columbus & Ohio River Railroad (CUOH) Business opportunity: Support Utica East Ohio Midstream LLC in developing the largest integrated natural gas midstream service complex in the Utica Shale, served by a shortline railroad with multiple Class-1 rail connections.. Case Study Exhibit Columbus & Ohio River Railroad

6 Genesee & Wyoming Industrial Development: UEO Midstream LLC Press Release: UEO Midstream to build natural gas fractionation hub in Utica Shale - $900-million plant will be located on a 600-acre tract in Harrison County, Ohio New facility to be served by the Columbus & Ohio River Railroad (CUOH) Key Industrial Development actions: (summary) Helped identify key parcel in Harrison County, Ohio, to satisfy UEO s acreage, logistics and utility requirements. Defined capital and infrastructure requirements for a rail-loading terminal. Constructed new one-mile siding and rehabilitated a three-mile storage track to handle rail traffic to/from the plant. Case Study Exhibit Columbus & Ohio River Railroad

7 Genesee & Wyoming Industrial Development: UEO Midstream LLC Press Release: UEO Midstream to build natural gas fractionation hub in Utica Shale - $900-million plant will be located on a 600-acre tract in Harrison County, Ohio New facility to be served by the Columbus & Ohio River Railroad (CUOH) Key Industrial Development actions: (summary) Invested $2 million through a publicprivate partnership to expand CUOH s yard in Newark, Ohio, to further support UEO and other Utica Shale traffic. Designed rate / logistics package with our Class-1 rail partners. Total CUOH investment was ~ $2.1 million (excluding state rail funds). Case Study Exhibit Columbus & Ohio River Railroad

8 Genesee & Wyoming Industrial Development: UEO Midstream LLC Press Release: UEO Midstream to build natural gas fractionation hub in Utica Shale - $900-million plant will be located on a 600-acre tract in Harrison County, Ohio New facility to be served by the Columbus & Ohio River Railroad (CUOH) Final product: Midstream complex was constructed and began rail shipments in July Project impact: (estimated) Private investment of ~$1 billion (includes connected gas processing plant). A projected 10,000 annual outbound carloads of natural gas liquids. Close to 100 long-term, full-time jobs in the local community of Scio, Ohio, in addition to ~1,700 short-term construction positions. Case Study Exhibit Columbus & Ohio River Railroad

9 Today s Panelists Kevin Hyatt V.P., Commercial and Business Development Crosstex Energy, LP.

10 Crosstex Today: Delivering Diversified Midstream Solutions The Midstream Value Chain A critical part of energy infrastructure responsible for moving product from well-head to consumption 10

11 The Right Platform: Diverse Base of Assets 11 Oklahoma Arkansas Ohio Pennsylvania West Virginia Louisiana Texas

12 Ohio River Valley Assets: A Great Platform for Growth 12 Ohio Pennsylvania West Virginia

13 Today s Panelists Penny Seipel Vice President of Public Affairs The Ohio Oil and Gas Association

14 The Ohio Oil and Gas Association The Ohio Oil & Gas Association (OOGA) is a trade association with over 3,300 members involved in all aspects of the exploration, production and development of crude oil and natural gas resources within the State of Ohio.

15 The Ohio Oil and Gas Association OOGA represents the people and companies directly responsible for the production of crude oil, natural gas, and associated products in Ohio.

16 The Ohio Oil and Gas Association The Ohio oil and natural gas industry: Provides more than 4,490 indirect jobs Provides 12,950 jobs due to the leasing, royalties, exploration, drilling, production, and pipeline construction activities

17 The Ohio Oil and Gas Association The Ohio oil and natural gas industry: Was responsible for $793 million in annual salaries and personal income during 2010 Kept $718 million in Ohio by buying locallyproduced natural gas and crude oil

18 The Ohio Oil and Gas Association Additionally, the Utica Shale play is projected to: Help create and support over 204,500 jobs due to the leasing, royalties, exploration, drilling, production, and pipeline construction activities Create $12 billion in annual salaries and income to Ohioans by 2015

19 The Ohio Oil and Gas Association Additionally, the Utica Shale play is projected to: Lead to $14 billion in reinvestment on new exploration and development in 2015 Generate $12.3 billion in gross state product in 2015

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21 Production Concerns The Production Itself - As more wells have access to infrastructure it will give a clearer picture of Shale s potential Producers continue to crack the code on completion and production techniques which will result in improvement of volumes produced

22 Production Concerns Lack of timely production data from State of Ohio does not give a clear picture of the Utica s potential, slows reaction time and limits resources Producers have the data, OH needs to require it and publish

23 Production Concerns Local refining market can only absorb about 55,000 bpd of Utica condensate production along with the condensate being produced from the western Marcellus Anything produced in the region beyond that has to be moved outside of these local markets Long-term consumptive market for purity NGL s is in the Gulf Coast region

24 Production Concerns Pipeline exports via Mariner East and West (NW Europe and Sarnia) However, over the next 6-12 months a significant amount processing and takeaway capacity will come online from new projects

25 Production Concerns Further development of northeast of Utica play (Youngstown, OH/PA border area) Eventual role of pipelines in Utica/Marcellus What will be long-term demand for condensate? driven in part by pipelines and other developments in western Canada

26 Logistics Concerns Lack of long-term transportation solutions Railways and trucking companies will be in huge demand: Transport inputs necessary for production and Haul away initial Utica volumes long-term infrastructure solutions such as pipelines are needed to move product to market

27 Logistics Concerns Railways and trucking companies will be in huge demand: The average shale well requires millions of pounds of sand, thousands of barrels of water and thousands of truck trips to bring inputs and move product out Workforce needs - The trucking industry is short drivers, and the existing pool of drivers is aging

28 Logistics Concerns Evolution of rail frac-sand logistics will unit trains play larger role? Rail site selection many of the easy sites have been taken, requiring companies to get creative, and perhaps make larger initial investments

29 Logistics Concerns Impacts to local roadway system many State and local routes not built to carry the repeated loadings resulting from Fracking-related trucking

30 Regulatory/Policy Concerns Water usage in production and wastewater disposal Injection well regulation impact on permitting new wells Timely permitting process improves infrastructure and production schedules Slow process forces alternatives outside the State, lost opportunity, jobs, revenue

31 Regulatory/Policy Concerns Tax Legislation impact on investments in the region lack of clear signals stymies investment Permitting challenges through wetlands and environmentally sensitive areas

32 Regulatory/Policy Concerns Tougher air permits for transload sites? Further implications of Quebec crudetrain derailment?

33 Panelist Contact Information Ryan Fischer Assistant Vice President, Emerging Markets Genesee & Wyoming Railroad Services, Inc. (412) (Mobile)

34 Panelist Contact Information Kevin Hyatt V.P., Commercial and Business Development Crosstex Energy, LP. (214)

35 Panelist Contact Information Penny Seipel Vice President of Public Affairs The Ohio Oil and Gas Association (614)