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Walden Associates
Technical, Regulatory and Public Policy Issues
Hydrofracking Shale for New Energy
Economics and Opportunities
Walden Associates
*Henry Hub trading price set by NY Mercantile Exchange (NYMEX)
Global gas market still many years away
Game Changer
Source: YCHARTS.com
Walden Associates
Price comparison normalized to power output will lead to conversion to NGVs and fueling station construction.
Diesel Price Compared to Natural Gas
Diesel Spread over Natural Gas
(dollars per gallon equivalent)
Walden Associates
Figure indicates the change in the way we generate electricity in the United States where this graph will only accelerate in the future with the conversion – this spells Opportunities.
Source: EIA
Power Generation
Walden Associates
Natural Gas leads the way into the future Source: EIA
Projected New Power Projects
Walden Associates
Current production trends for natural gas indicate the United States will become a new exporter of gas by 2020, if not sooner.
Source: EIA
Shale Gas Makes Us Net Energy Export in 10 Years
U.S. Dry Natural Gas Production by source, 1990-2050 *trillion cubic feet
Walden Associates
2010 2015 2035
Jobs 600,000 870,000 1,600,000
GDP Contribution 1 $76 billion $118 billion $231 billion
% of GDP 0.5% 0.7% 0.8%
CapEx/year 1 $33 billion $49 billion $127 billion
Production (Qcf) 5.8 9.9 18.9
% of natural gas production
27% 43% 60%
Notes: 1 – constant 2010 dollars Source: HIS, EIA and EP estimates
Sector poised to grow well into the future
Massive Positive Economic Impact
Walden Associates
2010 2015 2035
Drilling $ 9,937 $ 15,875 $ 46,722
Completion 12,421 19,844 58,402
Facilities 2,484 3,969 11,680
Infrastruction 8,419 9,019 9,786
TOTAL $ 33,260 $ 48,706 $ 126,591
Annual Capital Expenditures by Type (Millions of 2010 Dollars)
Note: Shell announced on March 13, 2013 building a $2 billion ethane
cracker in Beaver County, PA. Total investment $4 - $6 billion. Source: HIS, EIA and EP estimates
1.9 Trillion in Cumulative Investments from 2010 - 2035
Walden Associates
• Upstream – Exploration and Production
• Midstream – Transportation, Pipelines, Compressor Stations and Storage
• Downstream – Processing and purifying of raw gas, petrochemical plants – marketing and distribution
Where is the Money Spent?
Walden Associates
• Drilling play mapping – plot streams/surface waters
• Locate wells – potable, irrigation, oil/gas
• Pre-drilling groundwater assessment
• Ecological and wetlands assessment
• Site planning and access road layout
• GIS mapping to aid in well layout/spacing and royalty allocation
Pre-Drilling Work Consideration
Walden Associates
• Development of SWPPP and SPDES permit
• Development of SPCC plan for drilling pad
• Prepare water management and flowback handling plan
• Prepare BUD if applicable for cutting handling
• Erosion control and anti-sedimentation plans
• Site restoration plan
• File the drilling permit and supporting drawing set
• Wetlands mitigation plans
Pre-Drilling Permitting Activities
Walden Associates
• Construction design bidding and bid award
• Project management and construction oversight
• Monitor effectiveness of stormwater BMPs – install and update
• Development of site restoration plans and monitoring
Pad Development and Monitoring