Marcellus Shale: Powering the Nation White House Briefing. January 9, 2018

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1 Marcellus Shale: Powering the Nation White House Briefing January 9,

2 About MSC Our Membership 200+ diverse members Producers, midstream and suppliers Our Focus Long-term development End use opportunities Addressing landowner and public issues Maximizing benefits to secure our region s energy future More than 95% of the natural gas in Pennsylvania is produced by MSC member companies. Associate Members are an integral part of the MSC and the industry's robust supply chain. The MSC Board of Directors consists of 34 major producer and midstream companies in the Appalachian Basin.

3 Feedstock: Wet Gas Region Wet Gas >1.2MMBtu+ per Mcf Dry Gas <1.2 MMBtu per Mcf Legend Marcellus /Utica Formation Wet Gas Region

4 Pennsylvania: A World-Class Player in Shale Gas Production 2 nd largest natural gas producer in U.S. 10,027 unconventional wells* 630 shut in 763 drilling not completed 666 inactive Nearly 7,917 producing wells 5.1 Trillion Cubic Feet (2016) 19.2% of total U.S. natural gas production 33 of 67 counties with at least 1 producing well 4

5 Drilling Activity in PA PA Rig Count Dec '11 June'12 Dec '12 June '13 Dec '13 June '14 Dec '14 June '15 Dec '15 June '16 Dec '16 June '17 Dec. '17 PA Rig Count Source: Baker Hughes

6 TRILLION CUBIC FEET Fueling the Nation PA Unconventional Shale Gas Production % 52% 31% 13% 11% 3.4% Source: Marcellus Shale Coalition & PA DEP 6

7 Drilling Activity in PA Unconventional Well Activity Spud Permitted 7

8 Vital need for Infrastructure 24 FERC projects (Tri-State Area) $12.9 Billion (PA) Challenges January 4, highest ever-recorded North American Natural Gas Price was Observed at Transco Zone 6 New York $175/MMBtu Policies that have discouraged or blocked pipeline development into the Northeast are having direct and significant financial impact to all levels of consumers 8

9 $ per MCF PA Price Differential Natural Gas Pricing PA vs NYMEX 2017 $4.50 $4.00 $3.93 $3.50 $3.00 $3.23 $3.07 $2.50 $ % 43% 65% $2.39 $1.50 $1.00 $0.50 $0.00 Jan Feb March April May June July Aug Sept Oct Nov Dec NYMEX Average PA Average Reduced monthly bidweek price received by PA producers & leaseholders Source: Platts Inside FERC 9

10 Proposed Pipeline Projects 10

11 Top Ten Producing Operators by Volume (2016) Fueling the Nation Operator Production (MCF) Chesapeake Energy 704,902,247 Cabot Oil & Gas 685,481,842 EQT 504,710,429 Range Resources 474,198,321 Southwestern Energy 425,883,323 Chief Oil & Gas 284,361,956 CNX/Consol 235,853,939 Rice Energy 207,165,444 Talisman/Repsol 192,225,939 Seneca Resources 182,971,613 11

12 Protecting Our Environment Unconventional Natural Gas Compliance ,192 16, , ,563 11,762 11,713 11, Source: PA Department of Environmental Protection Inspections Violations Enforcements 12

13 Benefiting Consumers Lower Prices = Customer Savings Wholesale electric prices down 41% since 2008 Natural gas prices for end-use customers down 57% - 81% since 2008 Average annual savings > $1,200 per household 13

14 Lower Prices = Customer Savings Utility PGC Rate / mcf % Change Benefiting Consumers Customer Savings 2008* 2016* Annual PECO $11.10 $ % $1,384 NFG $10.34 $ % $1,516 PGW $10.58 $ % $1,325 Columbia $10.25 $ % $1,190 Equitable $11.81 $ % $1,636 UGI $11.79 $ % $1,211 UGI Penn $10.66 $ % $1,249 Peoples $9.53 $ % $1,226 * 1st Quarter 2008 & PUC-approved rate for 2016 * Residential heating customer using 15 mcf/month 14

15 Market Opportunities Electricity generation, heating Combined heat and power applications Light and heavy duty transportation applications Feedstock for industries and other liquids use Rebirth of manufacturing Exports 15

16 Opportunities in Power Generation 16

17 The Ethane Factor 17

18 Polyethylene Grades High Density Low Density Linear Low Density 18

19 Use It Or Lose It Mariner East Pipeline Project Proposed ME2 Pipeline Existing Third Party Pipeline ME1 Pipeline SXL Terminal Facilities Third Party Facilities Propane Delivery Points Truck Intake Point Third Party Fractionation (for truck intake) Marcellus Shale Formation O H I O Berne Scio Hopedale Independence Twp. Houston Evans City Twin Oaks Marcus Hook Delmont Mechanicsburg Natrium Shaefferstown Montello Hastings D E L A W A R E Sinking Spring W E S T V I R G I N I A M A R Y L A N D 19

20 Follow The Gas 20

21 Thank you! David J. Spigelmyer, President Jim Welty, Vice President of Government Affairs Patrick Henderson, Director of Regulatory Affairs 21