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Current State of the Oil and Natural Gas Industry in West Virginia
A Special Presentation for:
GOVERNOR’S ENERGY SUMMIT
STONEWALL RESORTOctober 7, 2016
Charlie Burd, Executive Director
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Independent Oil and Gas Association of West Virginia, Inc.
• Formed in 1959
• Largest West Virginia based trade association of oil and gas producers and those that serve them, at over 600 members
• Serve conventional and horizontal oil and gas producers
• Serve EVERY ASPECT of the industry: Exploration, Drilling, Production, Transmission, Marketing, and Service Providers
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MARCELLUS
&
UTICA SHALE
FORMATIONS
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Marcellus Shale Impact in West Virginia
• First Marcellus well: Marshall County by Chesapeake Energy in 2007;
• 53 of 55 West Virginia counties have some type of oil or natural gas operation and all 55 counties benefit from state severance and property taxes paid by the industry;
• In the last three years, over $728 million paid in severance and Ad Velorem property taxes;
• Beginning in 2006: over $255 million in special severance paid to retire an unfunded Workers’ Compensation Fund debt (Retired June 2016)
• Marcellus/Utica combined production peaked at 23.4Bcf/day in February, 2016. (RBN Energy, Inc.)
Source: WV Department of Revenue
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COMPLETED MARCELLUS
WELLS
2015
Source: WVGES
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http://www.marcellus.psu.edu/images/TriState%20Animated%20Spud%2020151231.gif
i
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Total Natural Gas Production (MCF)Source: WVDEP
259,665,182 257,177,563 287,237,781
394,125,240
539,481,159
741,852,986
1,001,969,992
1,290,758,001
2008 2009 2010 2011 2012 2013 2014 2015
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Total Horizontal Natural Gas Production (MCF)
Source: WVDEP
6,008,649 21,998,819 66,659,325
185,814,452
336,570,385
552,910,519
832,741,473
1,133,972,939
2008 2009 2010 2011 2012 2013 2014 2015
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Number of Horizontal Wells Reporting Production
Source: WVDEP
168370
516
765
1,050
1,383
1,753
2,235
2008 2009 2010 2011 2012 2013 2014 2015
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Total Conventional Gas Well Production (MCF)
Source: WVDEP
253,656,533235,178,744
220,578,456208,310,788 202,910,774
188,942,467169,228,519
156,785,062
2008 2009 2010 2011 2012 2013 2014 2015
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Number of Conventional Wells Reporting productionSource: WVDEP
52,35048,237
51,834
56,81460,002 58,490
54,81452,762
2008 2009 2010 2011 2012 2013 2014 2015
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HENRY HUB SPOT
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Negative Basis Differential
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WV Oil and Natural Gas Severance Tax Contributions (Millions)
Source: WV Department of Revenue
$87.6 $81.4 $61.2 $59.0
$78.4 $87.8
$186.8
$156.8
$72.3
$9.2 $10.6
$10.8 $14.0
$20.8 $27.3
$42.7
$57.7
$62.4
$-
$50.0
$100.0
$150.0
$200.0
$250.0
08 09 10 11 12 13 14 15 16Natural Gas and Oil Severance Tax Assessments (Millions) Special WC Assessment (Millions)
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Oil and Natural Gas Property Tax Contributions (Millions)
Source: WV Department of Revenue
$84.0
$110.6 $106.0
$77.5 $80.0
$91.3
$71.7
$105.4
$134.9
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
08 09 10 11 12 13 14 15 16
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2015 Top Natural Gas Producing Counties Source: WVDEP (Through May)
1. Doddridge (364.0 Bcf) 2014: Doddridge (225.0 Bcf)2. Wetzel (200.4 Bcf) 2014: Harrison (173.6 Bcf)3. Harrison (143.5 Bcf) 2014: Wetzel (151.7 Bcf)4. Marshall (138.1Bcf) 2014: Marshall (90.2 Bcf)5. Ritchie (84.3 Bcf) 2014: Tyler (40.0 Bcf)6. Tyler (62.1 Bcf) 2014: Ritchie (33.0 Bcf)7. Ohio (39.1 Bcf) 2014: Ohio (32.1 Bcf)8. Taylor (29.8 Bcf) 2014: Taylor ( 23.9 Bcf)9. Barbour (29.7 Bcf) 2014: Marion (19.9 Bcf)10. Marion (25.7 Bcf) 2014: Barbour (17.4 Bcf)
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2015 Top Natural Gas Producers Source: WVDEP (Through May )
1. Antero Resources Corp (440.9 Bcf) 2014: Antero Resources Corp (344.2 Bcf) 2. EQT Production (211.6 Bcf) 2014: EQT Production (128.6 Bcf) 3. Southwestern Production (119.2 Bcf) 2014: Chesapeake Appalachia (112.7 Bcf)4. Noble Energy Inc. (100.3 Bcf) 2014: Noble Energy Inc (43.4 Bcf)5. Ascent resources (42.5 BCF) 2014: Stone Energy (41.0 Bcf)6. Stone Energy (41.0 Bcf) 2014: CNX Gas/Consol Gas (30.5 Bcf)7. CNX Gas/Consol Gas (35.3 Bcf) 2014: Jay‐Bee Oil & Gas (27.9 Bcf)8. Jay‐Bee Oil & Gas (34.4 Bcf) 2014: HG Energy LLC (27.2 Bcf)9. Gastar Exploration (24.5 Bcf) 2014: PDC Mountaineer (19.0 Bcf)10. Trans-Energy (23.6 Bcf) 2014: Gastar Exploration (18.6 Bcf)
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Pipeline Projects / Impact
Project Name Operator Miles Cost Bcf/d In Service
Atlantic Coast PL Dominion 600 $5 B 2.0 Fall 2018
Spring Ridge Constructors, LLC (Contracted 9/21/16)
17,000+ Projected Construction Jobs; 2,200 Projected Jobs After Completion
$2.7B Total Economic Activity and $4.2M Average Annual LOCAL Tax Revenue
$65M Total Economic Activity; $28M Average Annual LOCAL Tax Revenue
Pending FERC approval; first draft of the EIS expected to be realeased December 2016
Mountain Valley EQT / JV 300 $3 B 2.0 4th Q 2018
In WV, 2015-18 Planned Spending is $811M
That Level of Spending Equates to $594 Cumulative Gross Regional Product
Over 4,500 Jobs At peak Construction in 2017-18 (Of which 2,800+ Would be Direct Jobs)
65 Permanent Jobs Once Completed With An Annual Salary Estimated at $65K
Generate over $47M in Severance, Property, Sales, Income and other taxes
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Pipeline Projects / Impact
Project Name Operator Miles Cost Bcf/d In Service
ROVER PL Energy Transfer 713 $4.2 B 3.25 Mid to Later 2017
DUAL 42-inch diameter underground pipelines (with Various 24-inch, 30- inch, 36-inch take-offs) delivering Westward from WV to Defiance, Ohio, and on north to the Vector/Dawn Hub in Canada
10,000 Temporary Employees
Estimated $147 M in Property Tax Revenue
MXP (MOUNTAINEER EXPRESS) Columbia 165 $1.5 B 2.7 Fall 2018
165 miles of various diameter pipeline, three new compressor stations, modifications to three existing compressor stations and one regulating station (Marshall County to Wayne County West Virginia)
9,000 jobs will be created during the length of this project
Initiating construction in the fall of 2017
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Pipeline Projects / Impact
Project Name Operator Miles Cost Bcf/d In Service
LEACH EXPRESS Columbia 160 $1.4 B 1.5 Fall 2017
160 Miles of 30 and 36 inch Running From Majorsville, WV to Oak Hill, (Vinton County) Ohio
Estimated to Create 5,700 Jobs through 2016-17
$2.3B Total Economic Impact
WB EXPRESS Columbia 26 $1.0 B 1.3 Summer 2018
Replacement of approximately 26 miles of 26 inch diameter pipeline in Randolph and Pendleton Counties
New pipeline installations of approximately 1,500 feet of 36-inch pipeline from Panther Mountain Regulator Station to the new Kanawha County compressor station, and 3,300 feet of 36-inch pipeline from the new Kanawha County compressor station to Point of Delivery
Modifications to the existing: Frametown Compressor Station, Cleveland Compressor Station, Files Creek Compressor Station, Seneca Compressor Station, and Lost River Compressor Station
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Barbour
Brooke
Doddridge
Hancock
Harrison
Marion
Marshall
Monongalia
Ohio
Pleasants
Preston
Ritchie
Taylor
Tyler
Wetzel
Wood
Belmont
Carroll
Columbiana
Coshocton
Guernsey
Harrison
Holmes
Mahoning
Medina
Monroe
Morgan
Muskingum
Noble
Portage
Stark
Summit
Trumbull
Tuscarawas
Washington
Wayne
Allegheny
Armstrong
Beaver
Butler
Clarion
Crawford
Fayette
Greene
Lawrence
Mercer
Venango
Washington
Westmoreland
West Virginia
Ohio
Jefferson
Marcellus and Utica Expansion ProjectsMarkWest over 20 Major projects
Rich Utica
Rich Marcellus
MOBLEY COMPLEX
HOUSTON COMPLEX
SHERWOOD COMPLEX
HOPEDALE FRACTIONATOR
KEYSTONE COMPLEX
SENECA COMPLEX
MAJORSVILLE COMPLEX
CADIZ COMPLEX
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Recent Industry Investments
• MarkWest Energy Partners Processing Facilities• Sherwood (Doddridge County)—1,200MMCF/d; plus 40,000BBL/d De-ethanization;
• Majorsville (Marshall County )—1,170MMCF/d plus 40,000BBL/d De-ethanization;
• Mobley (Wetzel County )—920MMCF/d plus 41,000BBL/d De-ethanization;
• Williams Ohio Valley Midstream: $4.5B Investment
Oak Grove Gas Processing Plant
Fort Beeler Processing Plant
Moundsville Fractionation Plant
Provides 2.5 Bcf/d natural gas gathering, processing, fractionation and natural gas liquid (NGL) processing capacity;
The Ohio Valley Ethane Pipeline runs from Oak Grove Gas Plant to the ethane hub in Houston, Pa., via a
50-mile, 12-inch pipeline;
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Recent Industry Investments
• ANTERO RESOURCES
Doddridge County Water Treatment Facility $275 million state-of-the-art, 60,000 barrel per day water treatment complex;
Designed to treat and reuse flowback and produced water rather than permanently dispose of the water in injection wells thus saving approximately $150,000 per well on future completion costs;
Will be used in combination with Antero's existing freshwater pipeline distribution system, to place Antero at the forefront of environmentally conscious water management in U.S. shale plays;
Ohio River Water Pipeline Project 80-mile, $525M pipeline from the Ohio River to supply water to Tyler and Ritchie Counties;
Estimated to draw about 4.8 million gallons a day; Expected to lessen water-handling costs and decrease water truck traffic on local roadways and reduce completion costs by up to $600,000 per horizontal well
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Face Of Future Natural Gas Usage
• NATURAL GAS POWER GENERATION • IN WEST VIRGINIA: Quantum Utility Generation and Energy Solutions Consortium (ESC) to
invest at total of over $2 Billion.
Quantum Utility Generation’s: MOUNDSVILLE POWER, LLC (Marshall County, WV)
$615M, 549 MW Natural Gas/Ethane fired Base-load Plant, On-line: Summer 2019
400 Skilled construction jobs, up to 60 Full time jobs once operational, $8B total economic impact;
ESC HARRISON COUNTY POWER: $600M investment; 650 MW
BROOKE COUNTY POWER: $800M investment, 700 MW
All await approval from the PJM Interconnection. PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
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Face Of Future Natural Gas Usage
• NATURAL GAS FUELED VEHICLES IGS Energy/CNG Services has built 3 new NG fueling stations in Charleston, Jane Lew, Bridgeport
• LNG EXPORTS—Dominion Cove Point October 2014—Construction of the $3.4-$3.8B project began. It will create thousands of skilled
construction jobs, 75 permanent jobs;
Operations are projected to begin in late 2017 and will produce about 5.25 million metric tons of liquefied natural gas annually, and LNG shipments from Cove Point are projected to reduce the U.S. trade imbalance by at least $2.8 billion, and possibly as much as $7.1 billion, annually.
• INDUSTRIAL EXPANSION Plastics manufacturing, chemical manufacturing, glass, fertilizer, auto parts, etc.;
Ethane crackers,
$4B, Appalachian Shale Cracker Enterprise (ASCENT may be developed by Odebrect subsidiary Braskem,
near Parkersburg, WV. A site location that once housed SABIC and previous to that, GE Plastics;
Other crackers: Royal Dutch Shell, in Beaver County, PA and PTT Global Chemical, Belmont County, Ohio.
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That's All I Have To Say About That
Forrest Gump, 1994