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GUEST EXPERTS: DAVE YOXTHEIMER & JOHN HANGER APRIL 7, 2011 American Association of Blacks in Energy (AABE) Webinar on Natural Gas Development.

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Presentation on theme: "GUEST EXPERTS: DAVE YOXTHEIMER & JOHN HANGER APRIL 7, 2011 American Association of Blacks in Energy (AABE) Webinar on Natural Gas Development."— Presentation transcript:

1 GUEST EXPERTS: DAVE YOXTHEIMER & JOHN HANGER APRIL 7, 2011 American Association of Blacks in Energy (AABE) Webinar on Natural Gas Development

2 Slide 2 AGENDA David Owens  Introductions and Overview Dave Yoxtheimer  Intro Remarks  AABE Interview  Questions John Hanger  Intro Remarks  AABE Interview  Questions

3 Slide 3 Why is natural gas development important? DOMESTIC : A recent Rasmussen poll found that 76% of Americans believe the United States does not do enough to develop its own gas and oil resources. ENVIRONMENTAL: Natural gas is cleaner burning than traditional forms of energy such as oil and coal thus helping reduce GHG emissions. ABUNDANT: Natural gas could help power America’s homes, businesses and transportation for well over 100 years. ECONOMIC: A recent analysis projects the total value of Marcellus resources to reach $250 billion in Pennsylvania alone, and support more than 200,000 jobs.

4 Slide 4 Shale Gas Projections

5 Slide 5 Geological Expert Dave Yoxtheimer Hydrogeologist and associate with The Pennsylvania State University’s Marcellus Center for Outreach and Research B.S. in Earth Science from The Pennsylvania State Univ. Current Ph.D candidate in Geosciences

6 U.S. Shale Map

7 Slide 7 Depth of Marcellus Shale Base

8 Slide 8

9 Slide 9 Where are Wells Being Drilled

10 Slide 10

11 Slide 11 Multiple Wells Per Pad = Reduced Footprint

12 Hydraulic Fracturing Overview So what is Hydraulic Fracturing? Hydraulic fracturing (fracking) is a process used to extract natural gas by injecting sand, water and a small amount of additives deep below the earth’s surface. Typical volume of water ranges from 3 to 7 million gallons for each well. This process opens fractures in the rock allowing the natural gas deposits to escape. Fracking has been effectively utilized for years and is necessary for economical natural gas development.

13 Hydraulic Fracturing

14 Hydraulic Fracturing Safety Water Concerns There have been claims that hydraulic fracturing has contaminated water sources. Greatest risk is in managing flowback water at surface not from deep fluid migration from hydraulic fracturing. Increased state regulation and improved site management practices occurring to ensure the process minimizes potential adverse impacts. EPA Report EPA scientists are currently undertaking another study to further examine the relationship between hydraulic fracturing and groundwater. Initial research results are expected by the end of 2012 with a goal for a report in 2014.

15 Slide 15 Regulatory Expert John Hanger Special Counsel to Eckert Seamans Duke University, 1979 University of Pennsylvania School of Law, 1984

16 Slide 16 Pennsylvania’s Strategic Objective: 16 Produce The Gas and Protect The Environment

17 Slide 17 Goals 17 Economic Development/Jobs 2010 PA Ranked Second in New Job Creation Strong State Regulation To Encourage a World Class Industry Tax Revenues to Pay For Local Impacts, Environmental Programs and Vital State Services Like Schools Use More Gas and Less Coal and Oil to Reduce Pollution Energy Security

18 Slide 18 Producing Gas 18 First Marcellus Well Drilled in 2005 By 2008 Marcellus Industry Booming  Gas at $13/mcf By January 2011, 6,000 Marcellus Per mcfs Issued 2,500 Marcellus Wells Drilled  Gas at $4.50/mcf

19 Slide 19 Producing Gas cont’d 19 PA Marcellus Profitable at About $2.50/mcf and Up PA on the Way to 2 Trillion Cubic Feet/Year Production

20 Slide 20 Protecting the Environment – Issues for the Public 20 1. Impact on water from drilling /wastewater - Streams - Private water wells - Withdrawals 2.Operational Problems/Accidents - Spills - Leaks - Fires – Response time - Blow outs – Response time - 50 plus emergencies responses

21 Slide 21 Protecting the Environment – Issues for the Public 21 3. Truck Traffic Impact & Safety - Congestion - Road damage - Unsafe trucks 4. Gas Migration 5. Public Lands: State Forests & Parks

22 Slide 22 Protecting the Environment – Issues for the Public 22 6. Taxation - 63% support for drilling tax as of 1/1/2011 7. Staffing of Oil and Gas Program - Number of employees - Location 8. Air Impacts - Nox - HAPs

23 Slide 23 Protecting the Environment – Issues for the Public 23 9. No Clear Benefit for Public Health In Minds of Public from Gas Production - 100,000 megawatts nationally of 40 year old, poorly controlled gas - Just 120,000 natural gas vehicles in USA 10.Credibility of Regulation/Regulators

24 Slide 24 Media Environment 24 BP Oil Spill Gasland Media Seeking Dramatic Story Dimock/Gas Migration Highly Skeptical of Industry & Regulators

25 25

26 Slide 26 Review & Strengthen All Rules 26 1. Water Withdrawal Plan: August 2008 2. Waste Water Disposal/TDS Rule: August 2010 3. New, Strong Drilling Standards: January 2011 4.150 Feet Mandatory Buffer from All Development for 22,000 Miles of High Quality Steams: November 2010

27 Slide 27 Staffing 27 88 Positions in Oil Gas Program as of September 2008 Doubled Staff to 202 by December 2010 Raised Fee When Applying For a Permit from $100 to as much as $10,000 for Deep Wells

28 Slide 28 Active Enforcement 28 1,400 Violations from January 1, 2008 to June 30, 2010 Companies Pay for Clean Up of Spills, Leaks, Gas Migration

29 Slide 29 Some Conclusions 29 Shale gas is a game changer! It is an abundant domestic source which can reduce our dependency on foreign oil It can put downward pressure on the price of natural gas It can provide lots of jobs It can be procured with minimal impact on the environment

30 Slide 30 Future AABE Webinars 30 Potential budget cuts on the Low Income Home Energy Assistant Program Domestic on and offshore drilling of oil and natural gas Proposed EPA Regulations:  Hazardous Air Pollutants  Cooling Water Intake Structures  Greenhouse Gas Emissions Other

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