Shale’s Potential: The Next PhaseToday’s Panelists Ryan Fischer
Assistant Vice President, Emerging Markets Genesee & Wyoming
Railroad Services, Inc.
Genesee & Wyoming Inc. Nine North American Regions
Ohio Valley Region
Business opportunity:
• Support Utica East Ohio Midstream LLC in developing the largest
integrated natural gas “midstream” service complex in the Utica
Shale, served by a shortline railroad with multiple Class-1 rail
connections..
Genesee & Wyoming Industrial Development: UEO Midstream
LLC
Press Release: UEO Midstream to build natural gas fractionation hub
in Utica Shale - $900-million plant will be located on a 600-acre
tract in Harrison County, Ohio New facility to be served by the
Columbus & Ohio River Railroad (CUOH)
Case Study Exhibit
Key Industrial Development actions: (summary)
• Helped identify key parcel in Harrison County, Ohio, to satisfy
UEO’s acreage, logistics and utility requirements.
• Defined capital and infrastructure requirements for a
rail-loading terminal.
• Constructed new one-mile siding and rehabilitated a three-mile
storage track to handle rail traffic to/from the plant.
Genesee & Wyoming Industrial Development: UEO Midstream
LLC
Press Release: UEO Midstream to build natural gas fractionation hub
in Utica Shale - $900-million plant will be located on a 600-acre
tract in Harrison County, Ohio New facility to be served by the
Columbus & Ohio River Railroad (CUOH)
Case Study Exhibit
Key Industrial Development actions: (summary)
• Invested $2 million through a public- private partnership to
expand CUOH’s yard in Newark, Ohio, to further support UEO and
other Utica Shale traffic.
• Designed rate / logistics package with our Class-1 rail
partners.
• Total CUOH investment was ~ $2.1 million (excluding state rail
funds).
Genesee & Wyoming Industrial Development: UEO Midstream
LLC
Press Release: UEO Midstream to build natural gas fractionation hub
in Utica Shale - $900-million plant will be located on a 600-acre
tract in Harrison County, Ohio New facility to be served by the
Columbus & Ohio River Railroad (CUOH)
Case Study Exhibit
• Midstream complex was constructed and began rail shipments in
July 2013.
Project impact: (estimated) • Private investment of ~$1 billion
(includes
connected gas processing plant). • A projected 10,000 annual
outbound
carloads of natural gas liquids. • Close to 100 long-term,
full-time jobs in
the local community of Scio, Ohio, in addition to ~1,700 short-term
construction positions.
Genesee & Wyoming Industrial Development: UEO Midstream
LLC
Press Release: UEO Midstream to build natural gas fractionation hub
in Utica Shale - $900-million plant will be located on a 600-acre
tract in Harrison County, Ohio New facility to be served by the
Columbus & Ohio River Railroad (CUOH)
Case Study Exhibit
Crosstex Today: Delivering Diversified Midstream Solutions
10
The Midstream Value Chain A critical part of energy infrastructure
responsible for moving product from well-head to consumption
Presenter
Presentation Notes
Provide full range of services for 3.2 billion cubic feet of
natural gas per day. Provide services for on-system producers,
off-system producers, and interstate pipelines. Services move gas
from where it’s produced to point of consumption. We can operate
well; have systems that can support bigger operations with little
investment; and we have internal engineering and commercial
expertise to develop opportunities and execute on them. Integrated
midstream natural gas solutions provider. We have rail, truck,
pipeline and barge facilities that allow our producer customers to
capitalize on current strong NGL and oil prices.
11
Presenter
Presentation Notes
Asset Overview 750 employees 3,500 miles of gathering/transmission
pipelines 10 gas processing plants 4 Fractionators (Eunice,
Riverside, Plaquemine, Mesquite) 440 miles of NGL pipelines 200
miles of oil/condensate pipelines 3.2 MM barrels of NGL storage in
Louisiana Brine logistics
Ohio River Valley Assets: A Great Platform for Growth
12
Presentation Notes
The Company- Clearfield Energy, Inc: - 125 years of history in
Ohio; formerly (prior to 1983) Buckeye Pipeline’s Mackburg
Division, created in 1886 - Fee-based crude and condensate services
in Ohio, West Virginia, and Kentucky Pipeline, rail, barge, and
trucks - Fee-based brine collection and disposal services in Ohio
and West Virginia Four wholly owned and two joint venture disposal
wells - Handles ~30% of all oil production in Ohio and Kentucky;
~55% in West Virginia Majority of new Utica Shale oil production -
Current Volumes ~10,000 Bbl/d of crude/condensate and ~5,700 Bbl/d
of brine Revenue mix: ~75% crude/condensate and ~25% brine WHY
CLEARFIELD ENERGY? Geographic diversification: - Entry into the
prolific production areas of Ohio, West Virginia, and Kentucky,
with a footprint in the rapidly developing Utica Shale and
opportunities for growth in the Marcellus Shale Service
diversification: - Business includes crude oil pipelines, a barge
loading terminal on the Ohio River, a rail loading terminal on the
Ohio Central Railroad network, a trucking fleet, and brine water
disposal wells - Expanded logistics capabilities to be leveraged
for use in other operating areas Platform for additional growth: -
Known and established business and customer relationships in Ohio
with first mover advantage in the area - Provides local presence,
existing workforce - Competitive advantage providing trucking for
“first barrels” and salt water disposal, followed by pipeline
gathering, gas gathering, and other services - Ability to provide
producers with market optionality - Opportunity to capitalize on
existing capacity: - Truck fleet has ~20,000 Bbl/d of available
capacity Existing pipeline system capacity can be quickly expanded
to ~27,000 Bbl/d with minimal capital investment The Transaction: -
Agreement to acquire privately held Clearfield Energy, Inc. for
$210 MM - 9X EBITDA multiple, expected to move to a 5X EBITDA
multiple within three years; $50 MM additional capital investment -
Closed early July 2012 - Financing through a combination of debt
and equity Closed on privately held Clearfield Energy, Inc. on July
2, 2012 The acquisition provides an entry into the Ohio River
Valley region with exposure to both the Utica and Marcellus Current
services include oil and condensate purchasing and salt water
collection and disposal Assets include a fleet of trucks and liquid
trailers, over 200 miles of pipeline, 7 salt water disposal wells
(5 - 100% owned, 2 - joint venture wells), rail loading terminal,
barge terminal, liquid storage facilities, and over 2,500 miles of
unused ROW Rig count in the area is consistent with acquisition
projections New wells have been taking a little longer than
originally expected due to shut-in time post-frac Overall, oil and
condensate volumes being purchased are consistent with initial
plans Brine disposal volumes are above initial projections due to
new well being placed into service West Virginia Marcellus activity
is providing new opportunities beyond acquisition model
expectations Assets include: 4,500 Bbl/hr barge terminal on the
Ohio River 20 car-28,000 Bbl/d (expanding to 40 car-56,000 Bbl/d by
end of 2012) rail loading terminal on the Ohio Central Railroad
~120 miles of 8” pipeline in Ohio (Current capacity 10,000Bbl/d)
~80 miles of 6” pipeline in West Virginia (Current capacity
7,000Bbl/d) Over 2,500 miles of unused ROW Over 500,000 Bbls of
above ground storage 4 wholly owned brine disposal wells, 2 joint
venture disposal wells, 1 additional well currently being completed
and 1 being permitted Extensive fleet of trucks (Current capacity
35,000 Bbl/d)
Today’s Panelists Penny Seipel Vice President of Public Affairs The
Ohio Oil and Gas Association
The Ohio Oil and Gas Association The Ohio Oil & Gas Association
(OOGA) is a trade association with over 3,300 members involved in
all aspects of the exploration, production and development of crude
oil and natural gas resources within the State of Ohio.
The Ohio Oil and Gas Association OOGA represents the people and
companies directly responsible for the production of crude oil,
natural gas, and associated products in Ohio.
The Ohio Oil and Gas Association The Ohio oil and natural gas
industry: Provides more than 4,490 indirect jobs Provides 12,950
jobs due to the leasing, royalties, exploration, drilling,
production, and pipeline construction activities
The Ohio Oil and Gas Association The Ohio oil and natural gas
industry: Was responsible for $793 million in annual salaries and
personal income during 2010 Kept $718 million in Ohio by buying
locally- produced natural gas and crude oil
The Ohio Oil and Gas Association Additionally, the Utica Shale play
is projected to: Help create and support over 204,500 jobs due to
the leasing, royalties, exploration, drilling, production, and
pipeline construction activities
Create $12 billion in annual salaries and income to Ohioans by
2015
The Ohio Oil and Gas Association Additionally, the Utica Shale play
is projected to: Lead to $14 billion in reinvestment on new
exploration and development in 2015
Generate $12.3 billion in gross state product in 2015
Production Concerns The Production Itself - As more wells have
access to infrastructure it will give a clearer picture of Shale’s
potential
Producers continue to “crack the code” on completion and production
techniques which will result in improvement of volumes
produced
Production Concerns Lack of timely production data from State of
Ohio does not give a clear picture of the Utica’s potential, slows
reaction time and limits resources
Producers have the data, OH needs to require it and publish
Production Concerns Local refining market can only absorb about
55,000 bpd of Utica condensate production along with the condensate
being produced from the western Marcellus Anything produced in the
region beyond that has to be moved outside of these local markets
Long-term consumptive market for purity NGL’s is in the Gulf Coast
region
Production Concerns Pipeline exports via Mariner East and West (NW
Europe and Sarnia)
However, over the next 6-12 months a significant amount processing
and takeaway capacity will come online from new projects
Production Concerns Further development of northeast of Utica play
(Youngstown, OH/PA border area) Eventual role of pipelines in
Utica/Marcellus What will be long-term demand for condensate? …
driven in part by pipelines and other developments in western
Canada
Logistics Concerns Lack of long-term transportation solutions
Railways and trucking companies will be in huge demand: Transport
inputs necessary for production and Haul away initial Utica volumes
long-term infrastructure solutions such as pipelines are needed to
move product to market
Logistics Concerns Railways and trucking companies will be in huge
demand: The average shale well requires millions of pounds of sand,
thousands of barrels of water and thousands of truck trips to bring
inputs and move product out Workforce needs - The trucking industry
is short drivers, and the existing pool of drivers is aging
Logistics Concerns Evolution of rail frac-sand logistics … will
unit trains play larger role?
Rail site selection … many of the “easy” sites have been taken,
requiring companies to get creative, and perhaps make larger
initial investments
Logistics Concerns Impacts to local roadway system – many State and
local routes not built to carry the repeated loadings resulting
from Fracking-related trucking
Regulatory/Policy Concerns Water usage in production and wastewater
disposal
Injection well regulation – impact on permitting new wells Timely
permitting process improves infrastructure and production schedules
Slow process forces alternatives outside the State, lost
opportunity, jobs, revenue
Regulatory/Policy Concerns Tax Legislation – impact on investments
in the region – lack of clear signals stymies investment
Permitting challenges through wetlands and environmentally
sensitive areas
Regulatory/Policy Concerns Tougher air permits for transload
sites?
Further implications of Quebec crude- train derailment?
Panelist Contact Information Ryan Fischer Assistant Vice President,
Emerging Markets Genesee & Wyoming Railroad Services, Inc.
(412) 310-6322 (Mobile)
[email protected]
Today’s Panelists
Ohio Valley Region
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Today’s Panelists
The Right Platform:Diverse Base of Assets
Ohio River Valley Assets: A Great Platform for Growth
Today’s Panelists
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