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Preparing for Downstream Opportunities in the Marcellus and Utica Plays November 21, 2014 1
Preparing for Downstream
Opportunities in the
Marcellus and Utica Plays
November 21, 2014
1
Objectives
The initiative seeks to:
• Educate, inform, “make ready”
• Address the barriers to growing jobs and
investment, including:
– Workforce
– Pipeline and storage infrastructure
– Pad-ready development sites
– Downstream Derivative Chemicals & Plastics
• Promote opportunities
2
Partners
Team NEO is a regional, private-sector organization that markets
Northeast Ohio to the world and collaborates with its partners and
others to attract new businesses and help existing businesses grow.
A subsidiary of the Ohio Appalachian Business Council, the
Appalachian Partnership for Economic Growth (APEG) is committed to
accelerating sustainable business growth, job creation and advancing
the economy of Southeast Ohio.
The Pittsburgh Regional Alliance, the marketing affiliate of the Allegheny
Conference on Community Development, markets the benefits of
conducting business in southwestern Pennsylvania to companies all
over the world that are growing, relocating or expanding.
Vision Shared’s mission is to strengthen the economy, transform
communities, promote progressive government and improve the quality
of life for West Virginians.
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We have the Resource:
2nd Largest Unconventional
Gas Play in the World
1. North Field/South Pars (Qatar/Iran)
2. Marcellus (U.S.)
3. Urengoy (Russia)
4. Haynesville (U.S.)
5. Yamburg (Russia)
6. South Yolotan (Turkmenistan)
7. Ordos basin CBM (China)
8. Bovanenkovskoye (Russia)
9. Ghawar (Saudi Arabia)
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And We are a Key Wet Gas Region
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Infrastructure:
Continuous Investment
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Supplier Networks
Our region’s shale opportunity comes from plentiful,
sustainable, low-cost feedstocks to make this
manufacturing value chain more globally competitive
Opportunity exists beyond
exploration and production
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Supplier Networks:
Markets to Serve & Grow
Solid growth potential for Domestic & Global Markets
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Support Services and
Other Businesses that Will Grow
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Other Key Stakeholders Need
to Come Together to Help
Make it Work!
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A Resurgence in U.S. Chemical Industry:
We Want to Capture Our Fair Share
Increase in CAPEX estimates from March ’13 to Feb ’14: >$28B incremental
Source: American Chemistry Council
148 projects and $100 billion
in potential capital investment
as of February 2014
…up from 97 projects and $72
billion as of March 2013
53% is by firms based outside
the U.S.
Chemical
Investment
Increase in CAPEX estimates from Feb ’14 to Sep ‘14: >$25B incremental
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New Chemical Industry Capital
Investment from Shale (2010-2020), by Region
“Ohio Valley”=OH, PA, WV
Source: American Chemistry Council
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New Chemical Industry Capital
Investment from Shale (2010-2020), by
Chemical Segment
Source: American Chemistry Council
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New Chemical Industry Capital
Investment from Shale (2010-2020), by Asset Type
Source: American Chemistry Council
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Proposed and Prospective Locations
for World-Scale Petrochemical Facilities
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Derivatives of Natural Gas
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Ethylene Chain
Source: American Chemistry Council
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Derivatives of Natural Gas
• Global ethylene market
– Global ethylene production on Jan. 1, 2013, factoring in 2012 additions, was
more than 143 million tpy, following capacity at the same point last year of almost
141 million tpy.
• United States ethylene market
– U.S. Ethylene production averaged 149.2 million lb/day in first-quarter 2014 and
142.9 million lb/day in the following quarter.
• Global polyethylene market
– Global polyethylene demand is forecast to rise by approximately 3.7% per
annum between 2013 and 2018, at a slightly higher level than its growth during
the 2003 to 2013 period.
• United States polyethylene market
– Total US sales of PE were 38.6 billion pounds, a 2.1 percent increase over 2012
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Petrochemical & Downstream Manufacturers
within 400 Miles: 17,477 Companies
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Chemical Manufacturers:
6,371 Companies
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Plastic Converters:
8,147 Companies
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Rubber Manufacturers & Converters:
1,812 Companies
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Plastic Manufacturers:
1,147 Companies
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Experienced Talent Pool
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
United States Tech Belt (OH,PA, WV)
PhiladelphiaMSA
Houston MSA
Percent of Workforce Employed in Chemical Manufacturing
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
Houston MSA PhiladelphiaMSA
United States Tech Belt (OH,PA, WV)
Percent of Workforce Employed in Plastics and Rubber Product
Manufacturing
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Philadelphia MSA United States Houston MSA Tech Belt (OH, PA,WV)
Percent of Workforce Employed in Fabricated Metal Product Manufacturing
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*TechBelt data includes degrees from Ohio State University and Penn State University **Houston data includes degrees from University of Texas – Austin
Source: College Navigator
Associate, bachelors, masters, and doctorate degrees awarded in 2012-2013 within 100 miles:
Ample Pipeline of Talent
from 51 Colleges & Universities
0
100
200
300
400
500
600
700
800
TechBelt (OH, PA, WV)*
Houston Region**
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Concentration of Corporate,
Government & University R&D
Corporate
• Bayer Material Science
• Bridgestone Americas
• Braskem
• First Energy
• Goodyear Tire & Rubber
• Koppers Industries
• LANXESS
• Omnova Solutions
• PPG Industries, Inc.
• Sherwin Williams
Government
• America Makes
• NASA Glenn Research Center
• National Center for Defense
Manufacturing and Machining
National Energy Technology
Laboratory
University
• Carnegie Mellon University’s Scott Institute
for Energy Innovation
• Case Western Reserve’s Great Lakes
Energy Institute & Institute for Advanced
Materials
• University of Akron’s Institute of Polymer
Science and Polymer Engineering
• University of Pittsburgh’s Center for Energy,
Manufacturing Assistance Center
• West Virginia University’s National Center
for Coal and Energy
• Youngstown State’s Center of Excellence in
Materials Science and Engineering
And more, including • MATRIC
• PRISM
• MAGNET
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Our Region has a robust “Innovation Ecosystem
to fuel growth in this Sector
We’ve Got Capacity
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…and Reliability PJM Interconnection coordinates the movement of wholesale electricity through all or parts of
Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio,
Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
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First Energy Future Investments
• Transmission system is in the midst of a building boom, with more than $1.3 billion in investment planned for 2014 alone
– Projects include new or rebuilt high voltage power lines, new substations; installation of specialized voltage regulating equipment; and reinforcing substation facilities with advanced surveillance technologies and no-cut/no-climb fencing
• “Energizing the Future” initiative is expected to total $4.2 billion in 2014 through 2017 and involves upgrading and modernizing their transmission system
– Initial construction effort will be transmission power lines and substations in the Ohio Edison, Cleveland Electric Illuminating Company, Toledo Edison and Penn Power areas, and expand east over time
• Currently building a new 138-kilovolt (kV) substation and an 18-mile transmission project near Clarksville, WV to support load growth related to shale gas development
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Freight Flow
Source: Research and Innovative Technology Administration, 2010
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Foreign Trade Gateways
Source: Research and Innovative Technology Administration, 2011
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Opportunity:
Export to Global Markets
Largest merchandise export categories:
Transportation Equipment: $258.3 billion (8.1% of U.S. total)
Computer & Electronic Products: $204.7 billion (5.8%)
Chemicals: $199.4 billion (7.1%)
Machinery, Except Electrical: $150.2 billion (4.7%)
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Safe Location, Extremely
Low Risk of Natural Disasters
Source: Core Logic 2014
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Shale & Downstream Wealth Creation & Jobs Requires Shared Vision, Commitment, and
Partnerships
We have a well-established Supply Chain, with:
-Close Proximity to Domestic Customers & Markets
-Great Logistics and Export capabilities in place
-Cost-effective & reliable utilities
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Shale & Downstream Wealth Creation & Jobs Requires Shared Vision, Commitment, and
Partnerships
We have strong Service & Support Capabilities:
-Great Talent Pool & Pipeline
-Innovation Ecosystem
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Shale & Downstream Wealth Creation & Jobs Requires Shared Vision, Commitment, and
Partnerships
We have potential for developing:
-Shared Vision
-Partnerships and Commitment to act
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Shale & Downstream Wealth Creation & Jobs Requires Shared Vision, Commitment, and
Partnerships
“Use It or Lose It”
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THANK YOU!
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