Downstream Development Potential

for Utica Shale

Paul Boulier
Team NEO
J une 3, 2014

Presented at YSUs 6
th
Annual Sustainable Energy Forum

Todays Objectives
Overview the many value chains that come from
shale (Power,Fuel,Downstream)
Show the tremendous scale and speed of investment
going on in the Downstream
Highlight Our Regional strengths and show potential
opportunities


Stimulate thinking, create readiness, drive dialogue
and hopefully spark ideas



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3
4
5
Opportunity:
6
Shale Gas Yields Many Products
7
Power
Ethane
Propane
Butane
Pentane
C5+
Fuel
(CNG, LPG,
LNG*)
*CNG, compressed Natural Gas (methane) , ~3,000psig
LNG, Liquified Natural Gas (methane), (-260F, liquid)
LPG, mix of gases (propane, butane, propylene, butylene, etc.)
NGLs
Chemicals
& Plastics
Injection Molding, Extrusion,
Blow Molding, etc.
Consumer Products
Medical Devices
Packaging
Further
Processing
Adhesives
Paints & Coatings
Household Cleaners
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Power from Shale Gas *
*Source: Barry Stevens
E&P Transmission Midstream Storage Derivatives Chemicals & Plastics End Products
Low-Cost
Power
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Fuels from Shale Gas*
*Source: Barry Stevens
E&P Transmission Midstream Storage Derivatives Chemicals & Plastics End Products
Low-Cost, Plentiful, Local, Efficient, Lower C-emissions
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Ethane
Propane
Butane
Pentane
C5+
NGLs
Chemicals & Plastics
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Ethane
Propane
Butane
Pentane
C5+
NGLs
Chemicals & Plastics
The value which is being unlocked from chemicals and
Plastics derived from shale gas has transformed our global competitive position
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Plus
these other value chains:
Methanol Fuel & Chem.
Ammonia Fertil. & Chem.
Propane Propylene
Butane Butenes
Pentane Various Chem.
C5+ Fuels, diluent
Chemicals and Plastics from Shale Gas to Finished Products
E&P Transmission Midstream Storage Derivatives Chemicals & Plastics End Products
Low energy costs, improved transportation & logistics, and
lower chemical feedstock improves our ability to compete globally
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Examples of
Other
Derivative & Plastics
Value Chains
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1. Energy & Fuel
Shale Development provides a solid Portfolio of Opportunity
-Plays to our Regions strengths in Advanced Materials
-Strong Proximity to Domestic Market and Converters
-Springboard on our established Export Capabilities
2. Derivatives & Plastics*
3. Infrastructure Opportunities:
Pipe, pumps, compressors, fittings, tanks, instruments & controls, consumables
Construction, housing, utilities, water & treatment, road & paving, support industries
*Plus Other Value Chains
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Source: American Chemistry Council, Shale Gas, Competitiveness,
And New US Chemical Industry Investment: An Analysis Based on Announced
Projects, May 2013.
ACC Shale Gas Study*
Survey of ~100 announced projects through the end of March, 2013

These Incremental Investments from Shale total $72B over the
2013-2020 period

Most projects geared to expand capacity for ethylene, ethylene
derivatives (PE, PVC, etc.), ammonia, methanol, propylene, and
chlorine
Much of this oriented towards products geared to export market

These investments could result in $67B in new chemical industry
output!


Incremental US CAPEX
through 2020 from
Shale Gas*
0
2
4
6
8
10
12
14
16
$B USD
Supply-side estimates only
(Demand-side effects excluded)

Assumptions Includes:
-New Greenfield Crackers
-Expanding capacity for
efficiencies
-New Product Capacity
-Replacement existing equipment
-Operational Improvements
-Energy Savings
-Health & Safety
-Environmental Production &
Other

(Pharmaceutical not included)

Source: American Chemistry Council
How will
Global Market
Dynamics influence
investment here?
Incremental US CAPEX
through 2020 from Shale
Gas*
0
2
4
6
8
10
12
14
16
$B USD
Source: American Chemistry Council
How will
Global Market
Dynamics influence
investment here?
Increase in CAPEX estimates
from March 13 to Feb 14:
>$28B incremental
New Chemical Industry Capital Investment from
Shale, 2010-2020, by Region*
Gulf Coast
78%
Ohio Valley
13%
Midwest
8%
Other
1%
*Source: American Chemistry Council
Ohio Valley=OH, PA, WV
Bulk
Petrochemicals
55%
Plastic Resins
22%
Other
5%
Inorganic
Chemicals
4%
Fertilizers
14%
New Chemical Industry Capital Investment from Shale,
2010-2020, by Chemical Segment*
*Source: American Chemistry Council
Other Non-
Residential
Construction
(erection of
equipment, piping,
etc.)
38%
Building
Construction
10%
Engineering
Services
9%
Major Process
Equipment
(pumps, pressure
vessels, heat
exchangers, etc.)
26%
Piping & Valves
5%
Process
Instrumentation
8%
Electrical
4%
New Chemical Industry Capital Investment from
Shale, 2010-2020, by Asset Type*
*Source: American Chemistry Council
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Ohio is all about Manufacturing
OH ranks 1,2,3 in almost all categories of manufacturing
Leading industries and annual shipments*:
Iron & Steel mills & Ferroalloy-$14.6B
Petroleum Refineries-$12.5B
Aircraft Engines & Parts-$8.8B
Plastics Products Manufacturing-$8.0B
Soap and Cleaning Compounds-$6.8B
Motor Vehicle Metal Stamping-$6.5B

OH ships >20% of all US production in the following categories*:
Rubber Products
Structural Clays
Glassware Manufacturing (pressed/blown)
Iron & Steel Pipe & Tube
Custom Metal Roll Forming & Rolling Mill Equipment
Machine Tools
Motor Vehicle Metal Stamping
Aircraft Engines and Parts
*Ohio Manufacturers Association, 2012
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Our Region is well-positioned to leverage resources from Shale Gas
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Our Region is well-positioned to leverage resources from Shale Gas
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Our Region is well-positioned to leverage resources from Shale Gas
So what does 2020 look like?
Midstream, Storage, Logistics, Barge/Rail/Road--Perpetual Expansion
Multiple CNG stations across the Region
LNG facility(ies) in evaluation/construction (Lake Erie ?)
Refineries expanding (much of the NGL output going North, East, South)
Fuels (Marathon, others)
Numerous Petchem/Plastics facilities in PA, TX (Chevron, $6B; XOM; Dow)
Derivative Chemical and Plastics plants running in our Regions
NOVA Chemicals (happening now; Utica ethane to Sarnia=polyethylene)
Odebrecht/Braskem (announced ethane cracker, 3 PE lines, WV; Antero ethane
supplies 50% of need)
Shell (still evaluating; in March local govt discussing roads, power, rail/dockage)
Aither (?; announced cracker and 2 PE units)
Advanced Materials companies expanding-to supply Domestic/Export
markets
Compounders expanding-Production & Innovation capabilities
Converters/Assemblers/Major Tier Players expanding


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Our Regions Opportunity in Downstream
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Proximity
To
Markets
Strong
Export
Potential
Improved
Manufacturing
Efficiency
Skilled Labor,
Higher Ed
OHIOs
Advantages
From
Shale
Logistics
&
Transport
Our Regions Opportunity in Downstream
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Proximity
To
Markets
Strong
Export
Potential
Improved
Manufacturing
Efficiency
Skilled Labor,
Higher Ed
OHIOs
Advantages
From
Shale
Logistics
&
Transport
50% of Consumers
Within 500 mi:
Auto
Aviation
Medical
Cons. Products
Industrial
Road
Rail
Sea
Air
Value Add
Innovation
IP Creation&
Protection
Cheap, plentiful electricity
Tight, aligned Supply Chain
Derivative Chemicals
Plastics, Rubbers, Metals
Converted Products
Established
Infrastructure
Our Growth Challenge
New Shale Resources = tremendous potential to fuel a
Manufacturing Renaissance
Manufacturing Efficiency
Labor Competitiveness
Competition for this resource-Regionally & Globally
Our Infrastructure foundation is sufficient to be Early
Mover (global perspective)
Gaps in pipelines and NGL processing being filled--in a big way
Derivative Chemicals and Plastics present great potential
rewards for our Regionalready an established major player
Substantial Change Management Initiative
For America and Our Region

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Our Growth Challenge
New Shale Resources = tremendous potential to fuel a
Manufacturing Renaissance
Manufacturing Efficiency
Labor Competitiveness
Competition for this resource-Regionally & Globally
Our Infrastructure foundation is sufficient to be Early
Mover (global perspective)
Gaps in pipelines and NGL processing being filled--in a big way
Derivative Chemicals and Plastics present great potential
rewards for our Region--an established major player
Substantial Change Management Initiative
For America and Our Region

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Use it or Lose it
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Fortune favors the prepared mind.
Louis Pasteur
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Fortune favors the prepared mind.
Louis Pasteur
The secret of success is to be
ready when your opportunity
comes.
Benjamin Disraeli
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Opportunity is missed by most
people because it is dressed in
overalls and looks like work.
Thomas A. Edison
Fortune favors the prepared mind.
Louis Pasteur
The secret of success is to be
ready when your opportunity
comes.
Benjamin Disraeli
Proximity
To
Markets
Strong
Export
Potential
Improved
Manufacturing
Efficiency
Skilled Labor,
Higher Ed
OHIOs
Advantages
From
Shale
Logistics
&
Transport
36
Our Regions Shale Opportunity
37
Or
Our Regions Shale Opportunity