1. MARCELLUS SHALE AND HYDRAULIC FRACTURING Drew P. Cobbs Maryland Petroleum Council November, 2013

3. State Distribution of the Marcellus Shale Play StateAreal % of Marcellus Maryland1.09 New York20.06 Ohio18.19 Pennsylvania35.35 Virginia3.85 West Virginia21.33 Sources: U.S. Energy Information Administration, “Review of Emerging Resources: U.S. Shale Gas and Shale Oil Plays,” July 2011. Marcellus Shale Formation Marcellus Shale in Maryland

6. Shale Gas Offsets Declines in Other U.S. Natural Gas Production Sources

7. Natural gas is clean burning Most emissions Middle emissions Least emissions Source: R.W. Beck Tons per year per thousand households Biomass (Wood) CoalNatural Gas Nuclear & Renewables Carbon Monoxide (CO)515.81.50.0 Carbon Dioxide (CO2)Low9,3623,5580.0 Nitrogen Oxides (NOx)283.40.30.0 Particulate Matter2.70.90.0 Volatile Organic Compounds (VOC) 5.60.20.0 Sulfur Dioxide (SO2)2.85.00.20.0 Mercury0.00.00010.00000010.0 Natural gas generates cleaner power.

8. “The Potential Economic & Fiscal Impacts of Natural Gas Production in Western Maryland,” study issued 3/1/12 for the Maryland Petroleum Council finds that: Approximately 365 wells would be operating over that period and, according to the Marcellus Shale Education and Training Center, it requires approximately 420 individuals across 150 occupations to bring a single Marcellus well online. In 2025 – the peak year of drilling activity – 1,814 Marylanders will enjoy employment opportunities related to well drilling and maintenance, royalty payments and expanded state and local government spending. Western Maryland could produce $300 million annually in natural gas output in constant $2011 by the year 2025. The State of Maryland would collect $214 million in revenue over the course of developing the Marcellus Shale play. Garrett County would collect approximately $162 million and Allegany County $65 million in revenue. Roughly $441 million in 2011 constant dollars of total positive fiscal impact would be experienced over the course of the Western Maryland Marcellus Shale development.

9. Landowner Benefits – Signing Bonuses – Lease Payments – Royalties

10. Adequate natural gas supply at competitive prices helps grow the U.S. economy  Lower gas prices have helped U.S. industry  Chemical and fertilizer facilities are seeing increased utilization with lower gas prices  Energy-intensive industry can be more competitive in the global market  Additional potential demand from natural gas vehicles U.S. Industrial Demand for Natural Gas Source: Wood Mackenzie

11. Proper well construction provides groundwater protection

12. 1220 L Street, NW Washington, DC 20005-4070 www.api.org 12 Horizontal Drilling = Lower Impact

13. 1220 L Street, NW Washington, DC 20005-4070 www.api.org 13 Timeline of a Well HYDRAULIC FRACTURING 3 – 5 DAYS PLANNING 12 – 18 months EXPLORATION 3-5 years SITE & WELL CONSTRUCTION 2-3 months PRODUCTION 30 + Years

16. 1220 L Street, NW Washington, DC 20005-4070 www.api.org 16 Managing Risks Effectively Records of the Pennsylvania Department of Environmental Protection show that from 2008 to 2010, the typical Marcellus shale gas well generated: $14,000 in mainly reversible environmental impacts $4 million in economic benefits http://www.manhattan- institute.org/pdf/eper_09.pdf

17. 1220 L Street, NW Washington, DC 20005-4070 www.api.org 17 State laws are carefully tailored for unique local concerns. Geology Hydrology Property Rights Water Laws Communities

18. Former Environmental Protection Agency (EPA) Administrator: THERE IS NO “PROVEN CASE WHERE THE FRACKING PROCESS ITSELF HAS AFFECTED WATER.” --- Lisa Jackson +++ Environmental Protection Agency (EPA) Administrator: “I AM NOT AWARE OF ANY DEFINITIVE DETERMINATIONS THAT WOULD CONTRADICT THOSE STATEMENTS [BY LISA JACKSON, REFERENCED ABOVE].” --- Gina McCarthy +++ Former Secretary of the Interior: [HYDRAULIC FRACTURING] IS CREATING AN ENERGY REVOLUTION IN THE UNITED STATES ALONE … I WOULD SAY TO EVERYBODY THAT HYDRAULIC FRACTURING IS SAFE” --- Ken Salazar +++ WHAT THEY’VE SAID ABOUT HYDRAULIC FRACTURING

19. Secretary of Energy: “TO MY KNOWLEDGE, I STILL HAVE NOT SEEN ANY EVIDENCE OF FRACKING, PER SE, CONTAMINATING GROUNDWATER.” --- Ernest Moniz +++ Former U.S. Secretary of Energy: “DRILLING FOR SHALE GAS CAN BE DONE SAFELY, AND AT LEAST ONE PROMINENT STUDY ABOUT THE RISKS IS NOT CREDIBLE … THIS IS SOMETHING YOU CAN DO IN A SAFE WAY.” --- Steven Chu +++ Former Secretary of State and New York Senator: Regarding an EIA report that stated the U.S. is on track to surpass Russia in domestic oil and gas production by the end of 2013. “WHAT THAT MEANS FOR VIABLE MANUFACTURING AND INDUSTRIALIZATION IN THIS COUNTRY IS ENORMOUS.” --- Hillary Clinton

20. 1220 L Street, NW Washington, DC 20005-4070 www.api.org The Shale Gas End Game ENVIRONMENTAL IMPACTS Smaller production footprints. Lower lifecycle emissions for electricity generation Lower lifecycle water use for electricity generation. ECONOMY U.S. energy security. Domestic jobs. Revitalize chemical and manufacturing sector Cheaper natural gas for consumers.

21. For more information visit www.api.org www.strongerinc.org www.fracfocus.org www.energyfromshale.org To Learn More: Drilling Video http://www.youtube.com/watch? v=AYQcSz27Xp8&feature=relmfu Fracturing Video http://www.youtube.com/watch?v=7ned5L04o8w THANK YOU