Ohio Department of NATURAL RESOURCES Slide 2 James Zehringer
Director, Ohio Department of Natural Resources STATE OF THE PLAY
Slide 3 2012 Shale Production Numbers Rick Simmers, Chief of Oil
and Gas David Mustine, JobsOhio Managing Director of Energy,
Chemicals, & Polymers STATE OF THE PLAY Slide 4 Slide 5 Slide 6
Sensible Regulations for Ohio SB 165SB 315JCARR Rule Changes Slide
7 Slide 8 Ohio is implementing lessons and best practices from
around the country, and is creating a rigorous and responsive
regulatory system for the new era of oil and gas development in the
state. -Daniel Yergin Slide 9 Historical Oil & Gas Production
in Ohio Ohios Historic Oil and Gas Plays 1860 to Present Slide 10
2012 Shale Production Numbers
http://oilandgas.ohiodnr.gov/production Slide 11 2012 Shale
Production Numbers OIL PRODUCTION NATURAL GAS PRODUCTION 635,896
BARRELS 12,836,662 MCF 93% Increase From 2011 80% Increase From
2011 Slide 12 Ohios Utica Production 12% OIL 16% GAS Slide 13 Utica
Compared to Conventional Production Slide 14 How Utica Activity
Compares to ODNR Projections In December 2011 ODNR Projected
200-250 Drilled Utica Wells By the End of 2012 215 Wells Were
Drilled In December 2011 ODNR Projected 50 Wells In Production By
the End of 2012 67 Utica Wells Were Producing Slide 15 Utica
Permits, Drilling and Production Slide 16 Liquid Natural Gases
(LNGs) Are Why the Industry is Here And Why They Are Staying Dry
vs. Wet Gas Natural GasNatural Gas Liquids Slide 17 Midstream
Processing Slide 18 Utica Production Compared with Conventional
production YearOilGas # wells (fulltime equivalent)Oil *Gas **#
wells 2011 46,326 2,561,5242 4,809,451 70,728,31450,192 2012
635,896 12,836,66222 4,665,167 65,777,33250,000 2013 2,439,024
49,236,51684 4,525,212 61,172,91949,700 2014 4,355,400
87,922,350150 4,389,456 56,890,81549,400 2015 7,259,000
146,537,250250 4,257,772 52,908,45849,100 * 3% decline rate ** 7%
decline rate Slide 19 Sensible Regulation Ohio Department of
Natural Resources Division of Oil and Gas Resources Management
Goal: Continue to Protect the Public and the Environment Without
Hindering Economic Growth Slide 20 Sensible Regulation Goal:
Continue to Protect the Public and the Environment TENORM and Brine
Slide 21 Sensible Regulation Goal: Continue to Protect the Public
and the Environment More Frequent Reporting Slide 22 Sensible
Regulation Goal: Without Hindering Economic Growth Sensible and
Fair Tax Policy Slide 23 Rick Simmers Chief, ODNR Division of Oil
& Gas Resources Management STATE OF THE PLAY Slide 24 2012
Utica Production Slide 25 Slide 26 Slide 27 Slide 28 Shale Permits
Issued Slide 29 Shale Wells Drilled Slide 30 Production by Company
Slide 31 Drill Rig Locations Slide 32 Slide 33 2012 Utica
Production Slide 34 Slide 35 Slide 36 Midstream Pipelines and
Processors Slide 37 Ohio Utica Shale Update ODNR Presentation 16
May 2013 David Mustine, Managing Director Energy; Polymers and
Chemicals Slide 38 Key Observations on State of Play Return
expectations are strong: CHK rate of return averaging in excess of
40%. Gulfport rate of return of 100% for Boy Scout and Wagner
wells. Midstream infrastructure has constrained production.
Bottleneck eliminated when 1 BCF of Utica processing is online by
YE 2013. More rigs active in Ohio Utica than WVa and western Pa.
Buyers market for shale acreage, even in most prolific plays
(Richard Zeitis) Many factors influence why companies buy or sell
acreage: Chesapeake selling only 10% of Utica holdings. Have also
sold acreage in Eagle Ford, Mississippi Lime, Permian, Marcellus
and Delaware basins. Reducing debt. EnerVest attempting to sell
Utica acreage. Strategy is to acquire, build up then sell onshore
properties. Also own 2% royalty in 880,000 Utica acres.
Multi-decade inventories or development acreage are in place for
many companies. Slide 39 Economic Impact of Shale Ohio Companies
Benefiting from Shale Activity V&M Star, Youngstown steel
tubing Miller Supply, Inc., Wooster oilfield supply and services
Pioneer Group, Marietta midstream fabrication and construction
Timken, Canton manufacturer and supplier of bearings Ariel
Corporation, Mt. Vernon gas compressors PotashCorp, Lima producer
of nitrogen-based products; large natural gas user Gorman-Rupp,
Mansfield pumps used in oilfield operations Kelchner, Springboro
construction DBA Mutual Tool, Tipp City fabricating Slide 40
CompanyLocationOperationsEstimated Investments MarkWestHarrison
& Noble counties G, P, & F$1.5 Billion M3 Midstream
Partnership Columbiana & Harrison counties G, P, & F$1.2
Billion NiSourceEastern OhioG&P$390 Million Dominion/Ca iman*
Eastern OhioG&P$800 Million Spectra*Northern & Eastern Ohio
Natural Gas Pipeline $430 Million - plus Enterprise*Eastern,
Central, & Southwestern Ohio Ethane Pipeline$1 Billion-plus
*Announced Gathering Processing Fractionation Pipeline &
Midstream Projects Ohio Utica Shale Slide 41 Investments in Ohio
Utica Shale CompanyCountyInvestment Chesapeake EnergyStark$7
million and 600 jobs HalliburtonMuskingum$150 Million and 300 jobs*
SchlumbergerTuscarawas$150 Million and 236 jobs* Baker
HughesStarkTBD* ExterranMahoning$13 Million and 100 jobs Six C
FabricationPortage$2 million and 250 jobs WeatherfordMahoningTBD*
Marathon PetroleumStarkNew Canton refinery truck rack, with ability
to process 18,000 bpd at Catlettsburg, which supplies products to
central and southern Ohio. *Over three years, dependent upon actual
rig activity Slide 42 Pursuing Downstream Opportunities: Global
polymer industry leader World class university-based research and
strong engineering programs Four refineries in Ohio Utica shale
provides low-cost and reliable supply of natural gas and natural
gas liquids Possible links to specialty chemicals Slide 43 Pursuing
Downstream Opportunities: Natural Gas Liquids Ethane/Propane/Butane
Ethylene/Propylene/Butadiene Plastics/Synthetic Rubber Slide 44
Ohio Department of NATURAL RESOURCES
