New York Shale Gas Potential

L. W. Allstadt Ithaca October 30,2013
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What Drives The Oil and Gas Industry

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Maximize Share Price
• Higher Share Price =
Increased borrowing ability for expansion Still higher share prices Higher executive compensation

• RESERVES
Add Reserves: Increase share price
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What Wall Street Looks For
• Reserves
• oil/gas in the ground that can be extracted with existing technology at current prices.

• Increase production • Replace more reserves than what is produced • Miss targets and Wall Street hits share price
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Shale Wells Lack Staying Power

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The Economic Realities
• Financial resources –allocated to best prospects among many plays

• Historical Price relationship –Oil $$$ >> Wet Gas $$ >> Dry Gas $ • Dry Gas needs very high volumes to compete for capital

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Companies Value Well Data
• Proprietary (limited reporting) • Includes information on formations the well encounters • Archived
• Needed to evaluate future drilling • Needed for sale of wells or company
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< Marcellus

< Utica < Black River
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< Oatka Creek
Grey Shale – low TOC

< Union Springs
Black Shale – high TOC

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NY DEC Well Data Base
• Searchable Public Data
– By Operator, County, Target Formation, etc. – Well location, production, formation depths, type well – Company input not checked by DEC

• Following Charts
– Show completed wells that targeted or passed through Marcellus. Many through Utica. – Show active permit applications – Exclude wells not completed
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What does all this mean for NY?
• Central NY Drilling Boom • Intensive Drilling • Test Wells - near PA
- elsewhere
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Highly Unlikely Possible near PA border
Unlikely to be wide spread

Very Likely
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Probably

• Infrastructure impacts

“Centralizer” ponds Compression stations Gathering/ Transmission lines Flow-back fluids Disposal Wells “Brine” spreading on roads Cuttings to landfills

Likely (proportional to
development)

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