1. Pennsylvania’s Shale Gas Industry – What’s Ahead?

2. PIOGA/Independent Oil and Gas Producers PIOGA: largest and most diverse association of oil and gas businesses, over 750 members Represent conventional and Marcellus/Utica shale producers Pennsylvania activity:  Conventional natural gas/coal-bed methane well  Shallow oil wells  Unconventional/Shale wells

3. Pennsylvania Oil and Natural Gas History Fueling Pennsylvania for more than 150 years 1859: Drake Oil Well near Titusville, “The start-up that changed the world” 1878: Haymaker Well in Murrysville, First commercial natural gas well in U.S. 350,000 vertical wells drilled 120,000 wells remain in production today 60 years of hydraulic fracturing

4. Marcellus Shale Formation Geological formation created about 380 million years ago in Middle Devonian age As formation aged and decayed, natural gas trapped in the shale Formation rests a mile or more below surface, thickness between 50-200 feet Approximately size of 95,000 square miles Reserves estimated at approximately 500 trillion cubic feet

5. Jobs, Jobs, Jobs  Over 250,000 jobs added in PA  According to Raymond James analysts 90% of PA jobs added from 2005-2012 come from this industry  Among the highest paying jobs in the state Impact of Shale Gas on Pennsylvania

6.  In 2008, an Allegheny Conference on Community Development study found 26,500 jobs relating to the legacy oil and gas industry in Pennsylvania.  Several groups are claiming under 30,000 jobs exist from the shale industry today!  Seriously???!!! Whose Numbers to Believe Jobs Controversy?

7.  One PA city has added 85 new companies just to service the Marcellus Shale industry in Pennsylvania.  Not to mention the existing hotels, restaurants, fuel dealers and other service and supply businesses that have benefitted and in many instances added employees to meet the needs of the industry. New Business?

8.  In 2007 Pennsylvania producers supplied 25% of the Commonwealth’s natural gas needs.  In 2014 thanks to shale gas, Marcellus and Utica production account for 18% of the US natural gas supply! Increased Natural Gas Production

9.  In May 2008 natural gas prices were at $13.70 per MCF (thousand cubic feet).  Today prices are at 2.71 per MCF, with PA shale producers receiving far less at the wellhead.  Translates to lower gas prices delivered to residential, commercial and residential consumers. Decreased Natural Gas Costs

10.  Consumers have more discretionary dollars to spend  Businesses and manufacturers have lower overall energy costs  Chemical and Fertilizer Industries have cheaper feedstock.  Reduced carbon footprint Business and Consumers Benefit Benefits to the Commonwealth

11.  Income taxes  Sales taxes  Local Impact Tax State, Local and Federal Higher Tax Revenues

12.  Decreased energy costs encourage manufacturing rebirth  Natural Gas Liquids bring opportunity for Northeastern US chemical and plastics industry  Adds to Pennsylvania’s ability to attract new business development. New Business Opportunities

13.  Activists determined to stop fossil fuel development  Low commodity prices  Regulatory overreach  Taxation  Infrastructure Challenges to the Future

14.  The oil and gas industry has been targeted by anti-fossil fuel activists determined to destroy the industry.  They have mounted an effective disinformation campaign and galvanized a protest movement to undermine every effort to develop our resource base. Anti-Fossil Fuel Activism

15.  Can we run our economy on windmills and solar panels? No environmental impact on those energy forms – right?  How about biomass? We can convert more land to growing switch grass or just convert food plots instead –right?  No feedstock for chemical and plastics industry. We don’t need those for everyday uses or medical supplies or medicines nor anything else – right? Then What?

16.  Elected leaders buy into the misinformation, draft legislation, enable regulation and discourage the industry in fear the public will cost them their jobs.  Hysteria rules instead of common sense regulation and legislation and development is discouraged. The Result

17.  Decreased Activity Means Fewer Oil and Gas Jobs  Means Less Support Jobs  Increased unemployment in related jobs  Less development discourages investment in manufacturing further damaging the job market. Oil and Gas Impacts Jobs Decreased Activity

18. Lower Tax Collections  Fewer Dollars Spent – Less Tax  Decreased activity – Lower Impact Fees  Less Investment in PA

19.  Excessive taxation kills investment  Excessive regulation increases costs, lowers investment  Excessive delays discourages investment Government Policies Affect the Economy

20.  The ultimate sound bite logic.  How does that square with the taxes other states have?  What is the overall tax structure in each state differ?  What else is different in PA? What other costs of business are in PA? Every State has a Severance Tax

21.  Setting a floor price far above what producers are getting for their product is patently ridiculous.  If you earn $40,000 per year should you be taxed at $100,000? How about the Floor for Severance Tax

22. Shale plays across the nation have added production nationally which has created an oversupply of natural gas. Natural Gas producers are receiving prices lower than those that would justify further drilling. Then why drill? Victims of our own Success

23. Please explain to me the fairness in taxing one extraction business different from any other. Please explain to me how taxing any business in PA differently than any other is fairness. Tax Fairness

24.  Challenges to Pipeline and Facilities Construction is Major Impediment  Local Concerns - NIMBY  Anti fossil fuel activists Infrastructure

25.  The future could and should be bright.  PA should be able to attract jobs and manufacturing to the Commonwealth  Government could act as a partner rather than a hindrance to developing this resource  Natural gas should be the foundation of economic rebirth to the Commonwealth So What is the Future?

26.  To change the should and could to will means PA must be competitive with other states  That will take cooperation between business and government  We must deal with the social license issue Competitiveness

27.  Pennsylvania has a future that should be the envy of any state – and many nations  Wonderful opportunity for jobs in industry and manufacturing  Stable Economy  Keep our kids at home! If We Get This Right…