ECONOMIC IMPACT OF THE MARCELLUS SHALE

badwaterreflectiveUrban and Civil

Nov 29, 2013 (3 years and 9 months ago)

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Pennsylvania Northern Tier Region

ECONOMIC IMPACT OF THE


MARCELLUS SHALE

THE PROGRESS AUTHORITY



Established in 1993.


General Purpose Authority.


IDA/IDC.


20 member board of directors
-
key
.


Small staff.


Certified by the Commonwealth for
all Pennsylvania economic
development programs.


Contracted with Bradford and
Susquehanna Counties, as needed in
Sullivan and Wyoming.


Responsible to facilitate investment
and employment enhancement.


Local

Economic Development.


About
3

years ago we started to educate ourselves
adequately about the Natural Gas industry.


Unlike Western PA, not familiar
-

conventional
vs. unconventional.


Due to heritage, economic impacts are not
visible, as compared to impacts with 150 years of
development.

NATURAL GAS DEVELOPMENT
EDUCATION

CONTINUING EDUCATION; FROM
TEXAS TO CANADA


Traveled to Wise County, Texas
to Barnett Shale Play.


Similar demographics to our
counties.


Saw Every Aspect of Natural Gas
Drilling.



Community impacts.


Alberta, Calgary Canada
-
RIM.


GO EXPO Prospect Companies
.


Gained perspectives on US and
Canadian gas industry
development & impacts.




Critically important to realizing the
Marcellus impact vs. other gas plays.


The conversion focused on climate,
topography, demographics, governmental
structure, regulations and mineral rights.


Translate the industry to Northeast
Pennsylvania unlike Texas, Oklahoma, and
Arkansas. Critical Components include:


High rural population (People/ per sq
mile).


Many properties; Fragmentation.


Dependence on ground water for drinking.


Rural infrastructure to support
development.


Abundant water supply.


Characteristics of resources and market
proximity.


Geographic and political dynamics

UNDERSTANDING THE
DIFFERENCES

AVAILABILITY OF LOCAL
INFRASTRUCTURE


High Rural
Population


72%


Highly Fragmented


51 Municipalities


Few areas covered
by Municipal
Water and Sewer


High Dependency
on Private Water &
Sewerage Systems


Majority of Roads
maintained at local
municipal level


1,593 mi/2,495 mi.
= approx. 64%




Two Ways to Generate Revenues:


1: Business to Business spending.


2: Payments to land owners.
Community Giving


Differences in Economic Impacts vs. other plays:


Free hold minerals
-
#1 reason.
(PA vs. Texas/Canada)


Leasing frenzy
-

from $25 or less per acre, to $5,700+
(
Strategic value
)


Second largest gas play in the world, next to South
Pars/
Asalouyeh
, located between Iran and Qatar.
[1]


Now other plays


Eagleford
/Ohio/North Dakota/Israel


Thickest part is in the Northern Tier Region.


Thermal maturity: key to resource value.


Rig Counts as a measure.

ECONOMIC IMPACT DRIVERS

[1
]:PSU Update


PA MARCELLUS SHALE WELL PERMITS

BRADFORD COUNTY GAS ACTIVITY

Source: Bradford County Office of Planning and Grants

WELL FLARE WEST BURLINGTON TOWNSHIP,

HARRIS LEASE, BRADFORD COUNTY


98% methane no downstream processing; (sweet gas)
very little H2S.



Outstanding volumes (8mmcf) +/
-

average 2mmcf +



Pipeline infrastructure, Millennium, Stagecoach,
Tennessee (Project 300), Transco and others.


New Marc I project/hub creation


Proximity to largest natural gas market in the US the
east coast/megalopolis

ECONOMIC IMPACT DRIVERS
CONTINUED…

[1
]:PSU Update


2008:

3.2 Billion.
2009:
4.5 Billion.
2010
-
2011:
8.7
Bi l l i on, 100,000.
[ 1]


20 Bi l l i on 200,000 j obs by 2020.
[ 1]


Capi t al proj ect s
-
Texas use of revenues.


(
Taxat i on) Must be caut i ous wi t h revenues.


Empl oyment Swi ngs
-

“had j ob, l ost j ob” vol at i l e
empl oyment not as severe.


Wast e wat er
-

cont rol l i ng vari abl e.* ( recycl i ng vs.
i nj ect i on and f i l t rat i on)


Al bert a/Cal gary Pl an cal l ed f or di versi t y.


New York St at e Fact or


US ri g count s shi f t i ng t o oi l.


I NDUSTRY SWINGS; UPS, DOWNS AND
USE OF MONEY

[1
]:PSU Update


Oil company valuation.


Reserve and LHP.


XTO by Exxon


EAST by Shell
(next slide)


PSU Study recognizes other economic drivers,
not evaluation.
(pipeline, compression,
midstream)


Pipeline upgrades
-
transportation costs
-
critical.


Other formations above and below the
Marcellus (seismic testing to 20,000 to 25,000
ft
)


New Development, housing, commercial
industrial.


Understanding gas drillers business models
.



ADDITIONAL ECONOMIC MOTIVATORS

NEW YORK (AP)
--

Royal Dutch Shell PLC said Friday it will buy
East Resources Inc.,
a major owner of shale gas holdings in the
northeast United States, for
$4.7 billion
from private investors.

Europe's largest oil company said it will pay cash for East
Resources,
a Pennsylvania company that owns more than 2,500
oil and natural gas wells in the U.S. It also controls 1.25 million
acres of land, mostly in the energy rich Marcellus Shale region
that runs from New York to southwest Virginia.

Shell buys US company East Resources for
$4.7 billion

European oil giant buys US shale gas company East Resources
for $4.7B from private investors






Date of article:
May 29, 2010


Based on Penn College’s work
force model; 400 jobs/well/rig
count. Measures employment.


Progress Authority in
collaboration with Penn College.


Special Scope of work to attempt
to quantify and measure local
economic impact.


Model will utilize metrics such
as permit activity (January
2010=502 total permits, January
2011=1442 total permits), water
utilization, productive wells,
leasing activity, etc.


Six months (+/
-
) to complete.


LOCALIZED ANALYTICAL STUDY

BRADFORD COUNTY

2010 GAS ACTIVITY


I n 2010
-
2011, 25% of
Marcel l us Shal e Wel l s
dri lled i n Pennsylvani a,
are located i n Bradf ord
County.


1,990 Wel l s Permi tted
to Date


848 Wells Permitted in
2010


480 Wells Permitted in
2011


533 Total Wells Dri lled
to Date


355 Wells Drilled in 2010


299 Wells drilled in 2011


94.23 mi l es of
of

I nterstate Li nes


466.803 mi les of
Gatheri ng Li nes


532.558
mi les of
Temporary Water Li nes




BUSINESS TO BUSINESS EXPO


Second Annual Expo J une 25, 2011

ƒ
Troy Fairgrounds, Troy PA.

ƒ
200+ exhi bitors, i ndoor and out door i n 2010.

ƒ

Local i nt erface wi th businesses.

ƒ
Business t o business i mpacts t o dat e.





ƒ
Amazing catalyst f or ent repreneurs and new business activity.

ƒ
Break Out Sessions


Cent er Rock Drilling


Met adyne


WILCOX JEWELRY &
ENGRAVING


Harkness

Family Restaurant

Examples of Local


Business Impacted


by
the Marcellus
Shale

Chesapeake Energy in
an
empty dept. store


Simple production process:
from harvest to
exportation, much like
milk and timber


#1 concern for area
industries


2010 electric rate caps
removed


Completing feasibility for
generation


Taking the lead on
generation facility


Attracts new businesses
with stable, low rates


Industrial business
grafting.


Conversion to compressed
natural gas

VALUE ADDED UTILIZATION

Gas Fired Electrical
Generation


Attract gas
-
intensive industries:


Steel/Aluminum


Chemical


Metallurgical


Plastics


Fertilizer


Glass

VALUE OF NORTHEAST HUB
PRICING

Towanda
Metadyne
, Inc
.

Center Rock Drilling



Demand for commercial and industrial sites and
buildings, existing and new.


Impacts on housing, existing and new, residential
and northern training facility; hotel development.


Impacts on infrastructure.


Limited sites with infrastructure.


Resources for capital.


Local business buyouts.


Substantial demand for rail served sites


2,500 to 10,000+ cars in 2011

DEVELOPMENT IMPACTS


Valley Business Park, Athens Township, PA



Availability of
Minerals.


Quality of gas.


Quantity of gas.


Pipeline infrastructure.


Abundant water
supplies.


Proximity to Market.


Short and Long
-
term
business objectives.


Bradford County
unemployment from
10% to 7.4%
-

#1 in
new jobs created state
wide.

CONCLUSION; KEY TO UNIQUE
ECONOMIC IMPACTS


Local investment increased


land owners and
businesses.


Bank deposits up


positive and negative
.


Development/investment made


commercial
and
residential.


Real estate values up substantially.


Job creation
-

leading the state in new jobs.
(Hire Local
)


Non gas related investment being made.


Traffic increases


Road improvements ($20m)


Population increases


statistics not keeping up.


Railroad activity increased.


SUMMARY



Environmental impacts increased.



What is the cost to local government?


Services/first responders/police/fire/ambulance



How do we fund this?



State and federal governments see this region as an
economic engine to help the state and US


SUMMARY

QUESTIONS?

Cent ral Bradford Progress

Authority

1 Elizabeth Street, Suite 3

Towanda PA 18848

USA

Telephone 570
-
265
-
0937

Toll Free 888
-
263
-
0937

E
-
mail: cbpa@epix.net

Website:
www.cbprogress.org


Ant hony
Vent ello,
Executive Di rector
CBPA




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