Ohio, the Region, and
Licking County’s Future
Charlotte Batson
a
March 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
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Agenda
• Perspective on Current Situation
• Opportunities for Licking County
• Workforce
• Local Impacts
• What’s Next?
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US Oil Production Reverses Decline
12000
10000
8000
Alaska
6000
Offshore GOM (Fed + State)
Onshore US
4000
2000
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1908
1904
1900
0
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
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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
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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
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Variety in the Supply Chain
Exploration
• Seismology
• 3D or 4D
Computer
Imagery
• Logging
• Data Interp.
Gathering and
Transportation
•Pipelines
•Compressors
•Tanks
•Meters and
Control Stations
•Inspection Tools
Drilling
• Rig and other
equipment
• Casing and
tubing
• Mud, cement
and chemicals
Processing
•Heaters
•Scrubbers
•Separators
•Fractionation
Equip
•Fischer Tropsch
•Catalysts
•Vessels
Hydraulic Fracturing
Completion
• Pumps
• Proppants
• Chemicals and
other additives
• Water
Environmental
Mitigation
• Valves
• Screens and
Filters
• Perforating
Equipment
• Packers
Marketing and Sales
•On-site Mobile
Water Treatment
• Filters
•Local Water and
Wastewater
Treatment
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•National integrated
marketers
•Producer
marketers
•Aggregators,
Brokers
•Petrochemicals
•Gas-to-Liquids
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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
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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
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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
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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
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Thank You
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