The Ohio Shale Play: Downstream Opportunities.

The Ohio Shale Play: Downstream Opportunities.

18 Months Ago

©2013 NorTech 2

What is the BIG PICTURE today?

With a significant contribution from horizontal drilling and hydraulic fracturing in North Dakota to Texas to Ohio and Pennsylvania:The United States in 2013 met 87% of its energy needs according to the Energy Information Agency of the DOEIn fact, 90% of the need was met in December of 2013

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What about Ohio specifically?

• Natural gas production has doubled since 2012• Natural gas production at the ned of 2013 was 203

billion cu. ft.• Oil production has also doubled to 9.7 million barrels• Ohio issued 1000 permits in 2013 and drilled 553

new wells • Chesapeake Energy is the top driller with 159 new

wells

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But what’s beyond drilling and hydraulic fracturing?

• Upstream means everything that happens at the well site

• Midstream is the industry term to describe pipelines and facilities that take the well products to market

• Downstream is the term to describe the actual sale of the products to an endorser.

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Shale Gas Yields Many “Products”

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ion

Natural gas as a source of power

• Natural gas, CNG and LNG represent a growing source of low cost power

• Not that long ago these products were viewed from an environmental benefit perspective

• The cost of natural gas has decoupled from the cost of oil (related to the expanding shale plays)

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Natural gas as a source of power

• Vehicles running on CNG or LNG have lower carbon dioxide emissions and lower total greenhouse gas emissions than gasoline or diesel fuel

• Today CNG and LNG have significantly lower fuel cost compared to gasoline or diesel fuel ($1.08 to $2.40 per equivalent gallon for gasoline or diesel)

• CNG and LNG can result in a 73% cost reduction. • Natural gas-fired power plants emit almost half the

amount of greenhouse gasses coal-fired power plants do, according to a new study released by National Oceanic and Atmospheric Administration.

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Fuels from Shale Gas

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Ethane to Ethylene: the Downstream Value Chain

• Ethylene is the most significant single chemical in terms of volume and value

• Literally 1000s of products are in the ethane to ethylene value chain

• Abundant ethane form natural gas to produce ethylene provides US Ethylene a 3 to 1 dollar advantage against Europe and Asia

• Polyethylene is the number 1 plastic by volume and value

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Ethane to Ethylene: the Downstream Value Chain

• According to the ACC and a survey or 100 announced projects, the incremental investment in chemicals from the shale plays is over $72 billion

• Most projects are focused on expanding capacity for ethylene and ethylene derivatives

• The result will be a $67 billion out put for the industry

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New Chemical Industry Capital Investment from Shale, 2010-2020, By Region*

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Natureal Gas Liquids (NGLs)

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Examples of Other Derivative & Plastics Value Chain

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So What about Ohio?

• The region is well positioned to capture value from this chemical industry revolution

• The Ohio Polymer & Chemicals industry has a gross state product of $13.7 billion

• 1200 firms support 90,000 Ohio jobs• Ohio is a global leader and ranks 1st in polymer

industry output , 1st in rubber products output and 2nd in plastics output

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So What about Ohio?

• Minimum risk and lower cost• Easy access to supply chain and customes• Skilled Ohio workforce• Industry leaders and partners in Polymewrs and

chemicals

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Our Region is well-positioned to leverage resources from Shale Gas

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Energy & Fuel to Plastics & Derivatives

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Our Region’s opportunity in Downstream

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Thanks!Special Thanks to Team NEO

Questions?