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Emerging Opportunities Ohio River Valley Conference Upstream Outlook

Emerging Opportunities Ohio River Valley Conference Upstream Outlook. Erik Milito, Group Director, Upstream & Industry Operations American Petroleum Institute February 22, 2018. Our Energy Reality. Future US Energy Demand.

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Emerging Opportunities Ohio River Valley Conference Upstream Outlook

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  1. Emerging OpportunitiesOhio River Valley ConferenceUpstream Outlook Erik Milito, Group Director, Upstream & Industry Operations American Petroleum Institute February 22, 2018

  2. Our Energy Reality • Future US Energy Demand The U.S. will require 8 percent more energy in 2040 and more than 65 percent of it will be met by oil and natural gas • * • 31.9% • Source: EIA AEO 2018 • *Renewables defined as other renewables in AEO

  3. Our Energy Reality • Future World Energy Demand Most energy analysts agree that sustaining even modest economic growth worldwide for the next several decadeswill require massive new investments in oil and natural gas • 2040 • 2015* • 17.4% • 5.2% • 12.5% • 4.5% • 1990 • 21.8% • 27.5% • 9.5% • 5.7% • 25.0% • 22.4% • 25.1% • 21.1% • 30.7% • 33.1% • 38.5% • Source: EIA IEO 2017 • *Most recent data

  4. 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  5. US Natural • Gas Marketed Production • Source: EIA Monthly Production Feb 2018

  6. World Dry Gas Production in 2015 was 124 Tcf. The US accounts for over 20% of World natural gas production. Top 10 Natural Gas Producers - 2015 • Source: EIA IEO 2017

  7. Nov 2010 to Nov 2017 • +4.7 million barrels per day • +80% U.S. Crude Oil Production Has Skyrocketed • Peaked in 1970 • 2017 • Source: EIA Monthly Production Feb 2018 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  8. National Security 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  9. America’s New Energy Future: The Unconventional Oil and Gas Revolution and the US Economy; Volume 3: A Manufacturing Renaissance – IHS, September 2013Key Findings: • Total Supported Employment: • 2.1 million jobs supported in 2012 • 3.9 million jobs supported in 2025 • Including 515,000 manufacturing jobs • Jobs tend to high quality and high paying ($35/hr vs. $23/hr in general economy) • Capital Expenditures: • $121 billion in 2012, rising to $240 billion by 2025 • $2.75 trillion in capex cumulative between 2012 and 2025 • Gross Domestic Product Impact • $284 billion in value added contributions in 2012 • Increases to $533 billion / year in 2025 • Federal and State Government Revenues • $74 billion in 2012 • $138 billion in 2025 • Average Increased disposable household income due to lower energy prices • $1,200 in 2012, rising to $3,500 in 2025 Economic Impacts of Oil and Gas Development 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  10. Safety and the Environment 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  11. Below Ground…. 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  12. Chemical Disclosure • FracFocus: • A searchable, online database for the contents of fracturing fluids. Currently there are 15 states that allow companies to use FracFocus as the disclosure method to meet state requirements. • As of May 5, 2014 – 3 years in operation • Companies: • 853 participating • 643 reporting • over 72,000 wells

  13. Drilling Operations 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  14. Hydraulic Fracturing 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  15. Production Site 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  16. Surface Impact Before After 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  17. The Environmental Partnership • Built on three principles - Taking Action, Learning, and Collaborating • Mission: To continuously improve the industry’s environmental performance by taking action, learning about best practices and technologies, and fostering collaboration in order to responsibly develop our nation’s essential natural gas and oil resources.

  18. Three Program Principles

  19. Key Milestones / Planning • December 5, 2017, the program was publicly announced • Starting January 1, 2018, participating companies began implementing program • Going forward, continue outreach to oil and gas production companies to become program participants

  20. Natural Gas System Emissions • Current focus of the program is on production because it represents a majority of emissions from the sector • Field Production = 106.6 MMT CO2 Eq. • Processing = 11.1 MMT CO2 Eq. • Transmission and Storage = 33.7 MMT CO2 Eq. • Distribution = 11.0 MMT CO2 Eq.

  21. Emission Sources of Interest

  22. Environmental Performance Programs To address these sources, participating companies will implement the following environmental performance programs in a manner that best suits their unique operations: Detection and timely repair of leaking equipment Installation or retrofitting of high-bleed pneumatic controllers with lower- or zero-bleed methane emissions Implementation of a best practice to minimize emissions during manual liquids unloading events.

  23. Current Participating Companies (30) • Alta Resources • Anadarko • Apache • BHP • BP • Cabot Oil and Gas • Chesapeake • Chevron • Cimarex • ConocoPhillips • Crownquest • Devon • Encana • EOG Resources • Hess • Marathon Oil • Murphy Oil • Newfield • Noble Energy • Occidental Petroleum • Pioneer Natural Resources • Repsol • Seneca Resources • Shell • Southwestern • Statoil • Total • Trinity Operating • Western Gas • XTO

  24. Contact • For additional information, please contact Matthew Todd for information on how to get signed up for the program • Contact: • Matthew Todd • (ToddM@TheEnvironmentalPartnership.org) • 202-682-8319 • www.TheEnvironmentalPartnership.org

  25. Key state regulations include: • Review and approval of permits • Well design, location and spacing • Drilling operations • Stimulation • Water management and disposal • Air emissions • Wildlife impacts • Surface disturbance • Worker health and safety • Inspection and enforcement of day-to-day oil and gas operations State Regulations are Tailored to Geological & Regional Needs

  26. Strong permitting is paramount. • SOME of the permits required for a well in Pennsylvania are: • Well drilling permit (w/ well location plat, casing and cementing plan, PNDI for threatened or endangered species, landowner/water well owner notifications, coal owner or operator notification and gas storage field owner notification) • Water management plan for Marcellus Shale wells • Proposed alternate method of casing, plugging, venting or equipping a well • Bond for Oil and Gas Well(s) (individual or blanket, various bond types allowed) • Waiver of distance requirements from spring, stream, body of water, or wetland (to put the well closer than 200 feet) • Variance from distance restriction from existing building or water supply (to put the well closer than 100 feet) • Proposed alternate method or material for casing, plugging, venting or equipping a well • Approval for alternative waste management practices • Approval of a pit for control, handling or storage of production fluids • Use of alternate pit liner • NPDES GP-1 for discharges from stripper oil wells • Water Quality Management Permit for treatment facilities • Alternative pit liners • Inactive status • Roadspreading plan approval • Transfer of well permit or registration • Orphan well classification • Off-site solids disposal • Residual waste transfer stations and processing facilities • Transportation of residual waste • Road use permit – construction of access to state roadway • Road use bond (PennDOT or municipality) • Surface use permit (if in the Allegheny National Forest) • PASPGP-3 or PASPGP-4 for pipelines crossing streams (if < 1 acre) • Water Obstruction – Encroachment – US Army Corps of Engineers Section 404 Joint Permit • Dam permit for a centralized impoundment dam for Marcellus Shale gas wells • GP-11 for non-road engine air emissions • GP-05 for natural gas compression facilities emissions • Earth disturbance permit (if ˃ 5 acres) • Erosion and sedimentation control permit (if ˃ 25 acres) • NPDES storm water for construction activities • Water allocation (SRBC, DRBC or DEP for Ohio River basin) • GP-3 for bank rehabilitation, bank protection, and gravel bar removal • GP-4 for intake and outfall structures • GP-5 for utility line stream crossings • GP-7 for minor road crossings • GP-8 for temporary road crossings • GP-11 Maintenance, Testing, Repair, Rehabilitation or Replacement of Water Obstructions and Encroachments 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  27. Federal Regulations • Key federal regulations governing shale development include: • Clean Water Act • Clean Air Act • Safe Drinking Water Act • National Environmental Policy Act • Resource Conservation and Recovery Act • Emergency Planning and Community Right to Know Act • Endangered Species Act • Occupational Safety and Health Act • 28

  28. More Information • To learn more about the oil and natural gas industry, from policy and regulation to the science behind our operations, visit us online, engage with us via social media and ask us questions. • Stay informed by following Energy Tomorrow on Twitter and Facebook: • https://www.facebook.com/Energy.Tomorrow • https://twitter.com/energytomorrow • The Energy Tomorrow e-newsletter provides the latest in American energy development, regulatory, legislative and industry news. Sign up to be in-the-know. • www.EnergyTomorrow.org/Stay-Informed • www.api.org

  29. 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

  30. Good well construction and careful operations protect groundwater. • API RP 100-1 (Well Construction) and Standard 65-2 (Zonal Isolation) • Well construction: material selection, performance, evaluation • Well integrity: isolate internal conduit of well from surface & subsurface environment • Protect groundwater through a combination of redundant steel casing and cement sheaths, mechanical isolation devices • Well logging and other testing: data gathering tools for formation evaluation, well design and construction 1220 L Street, NW • Washington, DC 20005-4070 • www.api.org

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