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Oil & Gas Business Educational Development Seminar June 15, 2012

Oilpatch Snapshot

Ohio Oil & Gas Industry Industry in Ohio for 152 years 275,774 oil and gas wells drilled 64,378 wells in production

Production Crude Oil

Natural Gas

2011 4,852,964 barrels

2011 73,289,838 mcf

Total 1,141,380,706 barrels

Total 8,593,388,085 mcf

Production numbers estimated based on available data, compiled by OOGA, oil reserve, gas reserve and the Department of Energy

2011 Wells Drilled by County

460 total wells 58 Utica Wells Drilled 7 Wells in Production As of March 15, 2012 161 Utica Wells Permitted ≼ 20 wells

< 20 wells

What does Shale mean to Ohio’s Economy?

Ohio Oil & Gas Energy Education Program

• • •

Economic Impact Study Released September 2011

2010 $988 million in gross state product $1.7 billion statewide output or sales 2011-2014 Oil and gas producers are projected to reinvest over $34 billion in exploration and development, midstream, royalty and lease expenditures. Could generate approximately $12.3 billion to the gross state product and have a statewide output or sales of $23 billion.


Distribute $1.6 billion in royalty payments

Itâ&#x20AC;&#x2122;s not the strongest of the species that survives, not the most intelligent, but the ones most responsive to change â&#x20AC;&#x201C; Charles Darwin

Predrilling Predrilling Supply Supply Chain Chain Access (Lease) Road

Fresh Water Impoundment

Well pad

Pipeline access

Source: Marcellus Shale Education and Training Center Š MSETC, 2012

Supply Supply Chain Chain Opportunities Opportunities Pre-Drilling

Drilling DrillingDown Down • • • •

Construction Aggregates Surveying Fencing

• Equipment Rental • Environmental • Engineering

Timeframe Up to 2 months

Drilling Drilling & & Well Well Construction Construction Crown Block


Monkey Board

Traveling Block/ Top Drive Triple Standing Drill Pipe Dog House

Source: Marcellus Shale Education and Training Center Š MSETC, 2012

Supply Supply Chain Chain Opportunities Opportunities Drilling DrillingDown Down

Drilling and Well • Fuel Trucks, Trucks Construction

• and more Trucks • Equipment rental • Water • Security

• Aggregates • Maintenance/ repair parts • Housing/ hospitality

Timeframe 2-4 months

Completion Supply Chain Courtesy: Range Resources Appalachia

Sand Storage

Water Impoundment Goat head

Acid Truck Staging Area

Blender Trucks Chemical Storage

Control Center

Pump Trucks Water Transfer Tanks High Pressure Water Transfer Manifold Lines Source: Marcellus Shale Education and Training Center Š MSETC, 2012

Sand Haulers

Supply Supply Chain Chain Opportunities Opportunities Drilling DrillingDown Down

Completion/Mid-stream • Water, Water and more Water • Meters/ monitoring • Refining • Product sales

• • • • •

Site Restoration Pipeline Welding supply Compressors ROW Work


Completion work: 2 months up Production: up to 60 Years

Recent Industrial Investments in Utica Shale V&M Star – Youngstown $650 Million + U.S. Steel, Lorain $240 Million Timken, Canton $225 Million Chesapeake Energy, M3 Midstream, & EV Energy Partners, Columbiana County $900 million Halliburton – Muskingum County $150 million and 300 jobs

MarkWest – Harrison & Monroe Counties $500 million and 700+ construction jobs Exterran – Columbiana County $13 million and about 100 jobs Baker Hughes – Stark County $64 million and 700 jobs Select Energy Services – Carroll County $10 million and 185 jobs

$2.75 BILLION and Counting – NOT Including Lease and Royalty Payments, Operations, etc. 15

Business Development Seminar Goals

• Overview of how the industry procurement process works • Opportunities within the supply chain • Tools to build a business plan to enter the oil and gas industry – – – –

Safety expectations Insurance requirements Contracts Marketing ideas

Ohio Oil and Gas Association Mission:

To protect, promote, foster and advance the common interests of those engaged in all aspects of the oil and gas production industry The Association advocates for the industry before the Ohio General Assembly, United States Congress, state and federal agencies and the general public.

Ohio Oil and Gas Association OOGA contributes to members business and professional growth by offering a wide range of services, programs, products and money saving opportunities. Activities are focused in four areas: • Advocacy on a state and national level • Information sharing through monthly newsletter, website, email alerts and report services • Educational opportunities through industry specific training and information sharing seminars • Economical programs to ensure compliance with state and federal regulations.

Ohio Oil and Gas Association The Ohio Oil & Gas Association (OOGA) is a trade association with over 2,600 members involved in the exploration, production and development of crude oil and natural gas resources within the State of Ohio.

Kristy Hawthorne Director of Membership Services and Small Business Development 740-587-0444

1 Oilpatch Snapshot OOGA