Shale Gas Implications – New Opportunities, New
Challenges
Marcellus Center for Outreach and
ResearchResearch/Analysis
Down Hole Technical Issues
• Water quality
• induced seismicity
• NORM
– Methane migration• Well design
• Abandoned wells
– Emerging geology
– Well yield trends
– Decline curve analysis
– Regulatory
Above Ground Risk
– Fugitive methane
– Community impact(s)
• Socio-economic
– Agriculture --Tourism
• Environmental
• Water –lifecycle impacts
• Workforce
• Business Development
• Regulatory
• Governance
• Social license
Water Quality Research
• 15,000+ shale wells
• Pre-existing issues
• Few cases of well
bore integrity
• No fluid migration
• Limited methane
migration
• Primary concern
– Surface spillage
– Offsite spills w/trucks
Marcellus Center for Outreach and
ResearchOutreach
• Science-based information
• Rapid response
• Localized w/global reach
• Current materials
• Rapid evolution of info
• Broad range of views
• Access to regulators
• Positive link between
stakeholders, researchers,
industry, and elected officials
“Translational Outreach”
--Creating advocates of science
Global Interest –Local Impacts
• New geopolitical
opportunities
• New global energy
paradigm emphasis since
Paris
– More gas More
renewables
• Global gas resources
– Different economics to
extract and market
– Commercial predictability
NG --World Leader in Fuel Growth World energy consumption by energy sourcequadrillion Btu
Outlook
Source: EIA, International Energy Outlook 2017 Reference case
Shale Energy Trends
• Geopolitical -- 80% of shale gas is in locations with 30% of conventional gas resources– EU diversification, Russia “leaning east” w/China & Asia sales– Global interest in shale resources – Global interest in LNG due to FSRU units
• In U.S., increasing quantities of NGLs and “dry” nat gas– Substantial increase in reserves– New exports of NGLs --Propane/Ethane
• Large need for infrastructure–midstream/roads/people• U.S. now net “gas” exporter moving to net “energy” exporter• U.S. as world’s largest producer of nat gas and now crude oil
– 80+ Bcf/d --29+ Tcf/yr– Appalachian shale gas is 31+Bcf/d or 36% of U.S. total in ‘18– 12+ MMbbl/d
Drilling Trends in North America
• Shorter time to drill a well
– Months to weeks to days(currently) -30 to 50% increase in
efficiencies
• Costs decreasing
• Move to “walking” rigs built for purpose
• Longer wellbores – 20K foot laterals in OH, now more common
• More frac stages and move to target best rock(40% yields 80%)
– More proppant –almost doubled from recent past
– Every frac is a unique effort –matching pressures to rock
– Upgrades to subsurface technical expertise/technology
• Increased gas volumes per lateral
• Increased IPs/EURs/ROR –flatter declines
Key Gas Sourcing Trends
Natural gas productionbillion cubic feet per day
Source: EIA, International Energy Outlook 2017, Reference case
Shale gas
Coalbed methane
Tight gas
Other
Estimated U.S. Shale Gas Production -50.6 Bcf/d in
February 2018 -- 63% of Total U.S. Dry Gas (80 Bcf/d)
Source: EIA Natural Gas Monthly, STEO through February 2018 and Drillinginfo
Natural gas production (dry)billion cubic feet per day
Shale gas production as a percent of total gas production
Shale Gas Trends
Surging PA NG Production
Nat Gas Liquid Production
Petrochemical Trends
• $310B new U.S. investment??
– Shale gas driven
– Significant workforce additions
– New manufacturing capacities
– $105B/yr contribution to economy
– Competitive globally
– Shell for ethylene production in Marcellus/Utica region.
Large quantities of ethane/NGLs
• Ethane storage is newest infrastructure investment
• Three state Governor-led consortium to drive new
projects
US Electricity Generation by Energy Source
Power Generation Trends• Coal and NG trading spots for top U.S. power gen fuel
– permanent??
– 32% of U.S. total for power
– 25+ large new gas-fired projects w/over 20,000 MW in queue in eastern U.S.
– significant coal gen heading offline
– ½ of U.S. coal plants uneconomical
– Direct supply of gas to power plants
• 15+ yr low in CO2 emissions
– Nat Gas paired with renewables
• Concerns
– Pipeline constraints
– Bias towards single fuel
– Impacts to nuclear power
– Impacts to new renewables
• Greater onshore production
– Reduced price volatility?
– Weather-based moves Source: Panda Power
– Political shocks
Power Generation
• Strong trend towards
gas during transition
from coal
• Quick permitting and
construction
• “Small” footprint
• Rapid “On/Off”
• Supplement to
renewables during
buildout and prior to
storage technologies
Source: IMG Power
New Natural Gas Power Projects (as of 12.5.17)
*TBC - expected to be completed date
Applicant Twp. & CountyApprox
Cap MW
Project Phase App Rec'd Date Applicant Twp. & County
Approx Cap MW
Project Phase App Rec'd Date
Panda Liberty, LLC (Formerly Moxie
Liberty)
Asylum Twp. Bradford 900 In Commercial
Operation 9/26/2011 CPV Fairview Jackson Twp. Cambria 1050 Under Construction
TBC 2020 9/9/2015
Panda Patriot, LLC (Formerly Moxie
Patriot)
Clinton Twp. Lycoming 900 In Commercial
Operation 1/20/2012 Hilltop Energy Center, LLC
Cumberland Twp. Greene 620
Issued, Construction Not
Started3/13/2017
2/29/2012 Renovo Energy Center, LLC
Renovo Boro Clinton 950 Comment Period 8/20/2015
5/20/2014Gateway
Cogeneration 1, LLCTowanda Boro
Bradford 168Issued,
Construction Not Started
10/13/2015
1/20/2015Birdsboro Power, LLC (EmberClear)
Birdsboro Boro Berks 450 Under Construction
TBC 6.19 7/13/2015
9/27/2012 Robinson Power Co, LLC / Beech Hollow
Robinson Twp. Washington 950 Issued,
Construction Not 3/14/2016
12/23/2015Archbald Energy
Partners, LLC (EmberClear)
Archbald Boro Lackawanna 485
Issued, Construction Not
Started1/25/2016
Future Power PA, Inc. (EmberClear Good
Spring Project)
Porter Twp. Schuylkill 346
Issued, Construction Not
Started4/19/2013
Shamokin Dam Station, LLC
Shamokin Dam Boro Snyder 1200 Technical Review 7/19/2016
11/6/2013 APV Renaissance Partners OPCO, LLC
Monongahela Twp. Greene 1000 Completeness
Review 3/17/2017
12/10/2015 ESC Tioga County Power, LLC
Richmond Twp. Tioga 635 Completeness
Review 10/31/2017
760 6/6/2014UGI Development /
Hunlock Creek Energy Center
Hunlock Twp. Luzerne 119
Issued, Construction Not
Started10/15/2014
60 8/17/2015 Armstrong Power, LLC
S. Bend Twp. Armstrong 16 In Shakedown
Operation 2/23/2015
Moxie Freedom, LLC Salem Twp. Luzerne 900 Under Construction
TBC 5.18 10/31/2014 Ontelaunee Power Ontelaunee Twp. Berks 16 In Commercial
Operation 6/2/2015
6/11/2014
2/24/2016 Total MW Capacity 15,889
Lackawanna Energy Center, LLC (Invenergy)
Jessup Boro Lackawanna 1500 Under Construction
TBC Mid 2018
Tenaska Pennsylvania Partners, LLC
S. Huntingdon Westmoreland 900 Under Construction
TBC Late 2018
Calpine Mid Merit LLC/York Energy Center Expansion
Peach Botom Twp. York
Under Construction TBC 2018)
Panda Hummel Station, LLC
(Formerly Sunbury Generation)
Shamokin Dam Boro, Snyder 1064 Under Construction
TBC 3.18
Hickory Run Energy, LLC
N. Beaver Twp. Lawrence 900 Under Construction
TBC 4.20
Source: PA DEP Air Quality Monitoring
Economic Growth Projections /Potential Energy Demand—
Non-OECD Countries
OECD Non-OECD
Average annual percent change in real GDP by region, 2015-40
Source: EIA and Oxford Economic Model (March 2017)
Source: EIA https://www.eia.gov/naturalgas/monthly
Expanding Options for U.S. Shale
Gas• Increasing demand and increasing price• World LNG trade tripling, from 32 Bcf/d to 84 Bcf/d in 2040
U.S. LNG Trends
• Brownfield sites vs. greenfields– Lower environmental cost?– Existing social license?? – Key components already in place
• pipeline, storage, piers
• Numerous projects approved– All East and Gulf coasts– Some expanding– Additional 20+ in queue
• Panama Canal expansion– more LNG cargos transiting– 80% of LNG carriers – Expand markets in both Atlantic & Pacific basins– To 30 Mta in 2020 from 6 Mta in 2017
• Crude linked price versus newer “tolling” model based on U.S. Henry Hub price
• Canadian LNG facilities??
Evolving Ethane Markets
• Ethane exports to
Norway and Scotland
from
Pennsylvania/Ohio/We
st Virginia
• New eastern U.S.
markets for ethane and
propane including
truck terminal in Phila
• 25% of global NGL
supply and growing
New “Virtual” NG Technology
LNG/Diesel Rail
Source: GE
Steps to Build a Rail LNG Supply Chain
SHALE TRAINING & EDUCATION
CENTER (SHALETEC)
• Partnership between Penn College & Penn State - Extension
• Collaborative partnership on workforce assessments:▪ Northcentral PA 2009▪ Southwest PA 2010▪ PA Statewide 2011▪ PA Economic Impact Study 2011▪ WV Direct Job Creation Study 2011▪ OH Workforce 2015
• 14,000+ employees trained since 2009 in specific areas related to the oil & natural gas industry
Well Pad Construction
Land Surveyor
Engineer Crew to grade wellsite
Drivers to deliver stone for wellsite
Laborers to lay geotex mat to protect from spillages
Laborers to place concrete
Laborers to build storage tanks for fluids
Construction manager
Biologist
Materials
supplier
DIRECT WORKFORCE
Truck drivers for transport of materials
Equipmentsupplier
INDIRECT WORKFORCE
Jobs in businesses suppling services
to indirect workforce, i.e.
restaurant labor
INDUCED WORKFORCE
Construction equipment operators
Workers needed directly to construct the Well Pad
Public crews to maintain roads in
region -- accessibility to the wellsite
Workers created from goods and
services provided to the direct workforce
Workforce created due to the Well
Pad construction but not actually
associated with it
Source: Bethany Smith, Penn State
ShaleNET Initiative
• Collaboration of educational institutes, government, NGOs, and industry partners
– Assessment of emerging industries and workforce needs
– Assessment of workforce training capacities in multi-state region
– Development of workforce skill set requirements
– Common training curriculum vetted with industry
• $20M USD in two federal government grants
• Ongoing State of Pennsylvania funding
• Industry grants
▪ Scholarships to train workers
▪ 94% placement, 67% formerly unemployed
▪ 79% retention, 19% veterans, 35% underrepresented populations
• Overall goal is to train the right number of workers, with the right skills, in the appropriate timeframe-
Workforce and Business Trends
• “Localizing” the worker
• 75% blue collar/technical
• Front loaded on well’s
lifecycle
• Matching demand to
availability of labor
• Institutional capacity to
train and not
“overproduce”
• Housing requirements
and required infrastructure
• Key part of social license
Technical-related Degrees
• Automated Manufacturing
Technology - A.A.S.
• Civil Engineering Technology –
A.A.S. and B.S.
• Computer Aided Drafting
Technology – A.A.S.
• Computer Aided Product Design –
B.S.
• Construction Management – B.S.
• Diesel Technology- A.A.S.
• Electric Power Generation – A.A.S.
• Electrical Technology – A.A.S.
• Electronics & Computer
Engineering Technology – A.A.S.
• Heavy Construction Equipment
Technology – A.A.S.
• Machine Tool Technology - A.A.S.
• Mechatronics – A.A.S
• Welding - A.A.S.
• Welding & Fabrication Engineering
Technology – B.S.
SHALENET – TALENT MATCH SYSTEM
• Online resource to explore careers in oil & NG industry
• Short term training and credit career paths explained
• Self-evaluation of career fit
• Resource for accurate information about industry employment expectations
• Connects candidates to a ShaleNET career counselor to evaluate next steps
• Build career awareness
▪ http://careerguide.shalenet.org/#/
ENERGY TECHNOLOGY EDUCATION
CENTERProps Include:
Wellheads
Production Site w/Frac & Meter Runs
Drilling Rig Trainer
Courses Include:
Confined Space & Rescue
Incipient Fire Extinguisher
Fall Protection
Instrumentation
Haz Mat
High Angle Rescue
JLG AWP & RTFL
Hot Work Air Monitoring
What are key issues/concerns?
Water Ag/tourism
Labor Governance
Revenue generation Local credibility
Environmental Social license
Truck traffic Air emissions
Waste disposal Socio-economic impacts
Economic development Crime
Education Risk mitigation
CSR Climate
Induced seismicity Land development
www.marcellus.psu.eduwww.shaletec.org www.naturalgas.psu.edu