1

Commissioner Bob AnthonyChairman, Oklahoma Corporation

CommissionOklahoma City, Oklahoma USA

August 2014Beijing, China

Energy Policy, Regulation, and Technology

NATURAL GAS

Top two producers and consumers of energy in the world are China (#1) and United States (#2).*

Global benefits can accrue when these two prominent countries communicate and compare their energy strategies regarding environmental, water, safety, efficiency, conservation, and fuel selection issues.

*The Economist Magazine, Country Profiles, 2014 Edition

2

Shale Gas Revolution

“Game Changer ”

USA: It’s Reality!China: Behind

schedule

WHY?What explains the

difference?

Other topics: 200 MPH trains; nuclear plants 3

4

The Oklahoma Experience:March 26, 1930 - Wild Mary Sudik well blow out

20,000 barrels oil & 200 million CF gas dailyOklahoma City subsequently imposed safety and spacing

regulations

5

6

Pipeline SAFETYGathering, Transmission, and

DistributionPipe Replacement

• Cast Iron• Bare Steel

Damage Prevention• 3rd Party Construction• Call before Excavation

 Integrity Management

• Transmission: Risk Assessment o Threats: Corrosion, Nature, Excavation, Welds

• Distribution: Leak Reports and Inspectionso 2 million miles in service USA

7

8

EPA Investigation and Town Hall Hearing, Pavilion, Wyoming

Still image from the August 27 broadcast of the PBS Program Need to Know covering the EPA Investigation and

Town Hall Meeting in Pavilion, Wyoming.

http://www.pbs.org/wnet/need-to-know/environment/the-price-of-gas-a-need-to-know-

investigation/3170/

9

www.earthjustice.org/ny(Founded in 1971 as the Sierra Club Legal Defense Fund)

10

Hydraulic Fracturing Installation

Source: Halliburton Presentation to OCC – March 2010

11

12

13

Oklahoma Oil and Gas Industry• Active wells(drilled, not plugged)

65,500 Natural Gas117,000 Oil 11,200 Injection/Disposal193,700 Total Active Wells

• ~310,000 Plugged and Abandoned wells• ~500,000 Wells drilled in Oklahoma History• 107,700+ Hydraulically Fractured Oil and Gas Wells• 3,088 Active Operators of Oil and Gas wells• ~41,000 Miles of pipeline under commission jurisdiction

(Well Data is as of year end 2011;updated 7/08/2014, as supplied by OCC Oil and Gas Division)

• $182 Billion Oklahoma Gross State Product for 2013(Source: St. Louis Federal Reserve Bank, updated 6/11/2014)

Oklahoma Oil Production Oklahoma Gas Production Total O&GYear Quantity (bbls) $ (billions) Quantity (MMcf) $ (billions) $ (billions)2007 62,539,878 4.3 1,704,414 $11.1 $15.42008 67,590,259 6.5 1,817,938 $13.8 $20.32009 66,675,538 3.7 1,794,008 $6.6 $10.32010 58,053,348 4.3 1,598,435 $8.5 $12.82011 76,803,714 6.9 1,554,452 $8.3 $15.22012 83,000,000 7.5 1,720,000 $4.9 $12.42013 107,000,000 10.1 1,800,400 $6.8 $16.9

(Source: Oklahoma Tax Commission)

14

Natural Gas for Transportation

• DOE EIA AEO 2014 projects a linear growth trend over next ten years

• Followed by an accelerated growth rate starting around 2024

Note: DOE’s current NGV data

understate today’s market size.

15

NARUC President rides in CNG

car

“Shale Gas Revolution”efforts/risks by independents/entrepreneurs[oil developed by the majors/multi-nationals]“new” technology: hydraulic fracturing, horizontal

drillingHF stages, public data, ownership of minerals, risk

capital

USA regulation of exploration, development, productionState or Federal government (EPA, FERC)

Geopolitical “Game Changer,” LNG exports, price, bridge fuelHydraulic fracturing: water, chemicals, disposal wells, flaring Environmental issues: fugitive methane, CO2, earthquakes

Usage trends: residential, industrial, transportation (CNG/LNG)

Electric generation: gas-electric harmonization, wind power, solar power

Pipeline safety and Infrastructure

16

17

18