Living in a State of Energy

Formed by the Oil & Natural Gas community in 2007

Voice of Arkansas’s Oil & Natural Gas community

Seeks to build awareness of industry and its impact

Serves as a resource for the industry

• Formed by the Oil & Natural Gas community in 2007

• Voice of Arkansas’s Oil & Natural Gas community

• Seeks to build awareness of industry and its impact

• Serves as a resource for the industry

About AIPRO

• 1889 - Natural gas first produced in Arkansas

• 1921 - Oil discovered in Union County

• Today - Arkansas ranks as the 7th leading natural gas producing state & 17th among oil producing states

•25 Arkansas Counties - oil or natural gas production

Natural Gas Counties

Oil Counties

• Emerging technologies

• Economic expansion

• Environmental concerns

• Global unrest

The Search for Alternative Energy:A Convergence of Challenges

Resource Nationalism

98%

2% Investor-ownedCompanies

Government-ownedCompanies

OP

EC

Source: Energy Information Administration; BP; O&G Magazine

In July 2011, we imported 351 million barrels at a value of $37 billion. If we could cut our oil imports in half by converting to domestic energy

sources, we could pump $18.5 billion per month into the US economy.

The Case for Natural Gas

11Source: ANGA

Arkansas: Helping Address This Energy Challenge• Our Natural Gas and Oil is Abundant and accessible

• 10,869 billion cubic feet of gas reserves

• 28 million barrels of oil reserves• Clean burning• Produced for America…by Arkansans

Cycle of Natural Gas Well• Site selection and preparation • Drilling the well• Completing the well• Production• Site reclamation• Avoiding impact to wetlands, sensitive habitat, significant archeological

sites; Addressing/remediating any impact

Drilling Technology

Vertical Horizontal

The Energy of Employment

• Greater access to more of the shale gas reservoir

• Higher volumes of natural gas and greater recovery

• Less environmental impact

• More aesthetically pleasing

The Energy of Employment

Approximately 95,000 barrels of water are used to drill and fracture a well, equivalent to:

• Water consumed by a golf course in 22 days

• Water used on 6 acres of corn in a season

• Volume flowing past Little Rock in the AR River every 11 sec

Water Usage

Recycling and Reuse of Materials

• Liquid by-products of natural gas drilling as drilling fuel

• Solids by-products as road base and in construction pads

The Energy of Employment

Site Reclamation

• Restoration of easement and work space

• Repair damages, if any, due to construction

• Restore land to close-to-original, or improved condition

• Environmental Protection Agency• Bureau of Land Management• Federal Energy Regulatory Commission• U.S. Army Corps of Engineers• U.S. Forest Service• U.S. Fish & Wildlife Service

Working with Federal Agencies

Outreach to Decision Makers

• Arkansas Department of Environmental Quality (ADEQ)

• Arkansas Natural Resources Commission (ANRC)

• Arkansas Oil and Gas Commission (AOGC)

Working with State Regulatory Agencies

• City officials• County Quorum Courts• Community leaders

Working with Local Leadership

The Energy of Employment

Working for ArkansasWorking for Arkansas

• Estimated employment of over 12,000 total jobs supported by Fayetteville Shale production throughout the state; over 4,500 directly employed by natural gas companies

• Property assessments in the 25 oil and gas producing counties increased from $8.1 billion to $11.2 billion (2003-09), an increase of 38.5 percent

Natural Gas = Arkansas Jobs and Revenue

Better Jobs,Better Wages

• Average payroll 183% of state average (2004-2008)

• The average annual income in the Oil & Natural Gas community is $64,000…nearly $30,000 more than the state average.

564

industry-related new businesses have set up shop

in Arkansas since 2005.

All paying corporate,

payroll and sales taxes to the

state.

Increase in Arkansas’ Tax Revenue• $1.3 million in natural gas severance tax payments in 2008• $27.5 million in natural gas severance taxes paid in 2009• $54 million in natural gas severance tax payments in 2010• $15 million in oil severance tax payments in 2010

The Energy of Employment

• Mineral owners: bonus & royalty payments• Surface owners: drill sites & easements• Businesses: well services co’s, suppliers, service industries• Non-profit organizations: charitable giving• Counties, cities, schools, hospital districts: ad valorem taxes• Shareholders

Who Else Shares in the Revenue?

Energizing Education

The Case for Natural Gas

Approximate amount of natural gas we use in this country comes from right here in North America.

DomesticShale Gas Plays in North America

Source: ANGA

98%

The Case for Natural Gas

Source: ANGA

Abundant

100YEARS

Enough for more than

America has as much natural gas as Saudi Arabia has oil.

The U.S. has

2,552Trillioncubic feetof natural gas

Nat Gas vs. Conventional Gasoline

SeattleCNG - $1.75Gas - $3.78

Salt Lake City

CNG - $1.29Gas - $3.43

San FranciscoCNG - $2.39Gas - $4.08

Los AngelesCNG - $2.15Gas - $4.04

San DiegoCNG - $2.80Gas - $4.02 Dallas

CNG - $2.29Gas - $3.49

New YorkCNG - $2.63Gas - $3.80

Ft. LauderdaleCNG - $1.99Gas - $3.66

AtlantaCNG - $2.19Gas - $3.47

BismarckCNG - $1.95Gas - $3.51

DetroitCNG - $2.00Gas - $3.57

Wash., DCCNG - $2.40Gas - $3.74

DenverCNG - $2.30Gas - $3.37

NashvilleCNG - $1.65Gas - $3.46

Source: CNG prices captured in March 2011 by CNGPrices.comGas prices reflect city average on March 28 from GasBuddy.com

On average, CNG costs44% less than gasoline

The Energy of Employment

• Cleaner, more affordable energy for your home• More Compressed Natural Gas vehicles• Municipal transit systems, fleet vehicles, heavy duty trucks

running more efficiently – with 23% lower greenhouse gas emissions than diesel

What Will Increased Usage Mean For You?

The Impact of Natural Gas Abundance on Arkansas Consumers

Utility Savings by Class in 2010

Residential Commercial IndustrialPer customer $124 $1,682 $185,622

Percent 14% 28% 24%

Study by Navigant Consulting, September 28, 2011

The Energy of Employment

The Arkansas Energy Office (AEO) has applied for federal funds which would support the conversion to compressed natural gas (CNG) or liquefied natural gas (LNG) powered vehicle and also subsidize the building of fueling infrastructure.

The program provides:• $2 million fund for CNG vehicle conversion• $400k for incentivizing fuel station construction

Arkansas NGV Opportunity

The Energy of Employment

• Officially opened May 13, 2011, One of only four CNG fueling stations in the state

• One of two stations open to the public in Arkansas (joining Fort Smith) and the first in Central Arkansas

• Will help power SWN’s own fleet as well as those from CenterPoint Energy and Conway Corp

• Conway Honda dealership will carry consumer CNG models of cars

SWN’s New CNG Station - Damascus, AR

Transforming the State

$370

$420 $360-395

$320

$0

$0

$300.00

$75

Competing Shale PlaysSeverance Tax Comparisons

Revenue per $10,000 of taxable gas sales($1,000 of taxable sales each year for 10 years, assumes $4.00/mcf gas)

Competing Shale PlaysSeverance Tax Comparisons

Revenue per $10,000 of taxable gas sales($1,000 of taxable sales each year for 10 years, assumes $4.00/mcf gas)

$617.50

 

$370

$420 $805

$320

$0

$0

$300.00

$75

If Arkansas Passes 7% Flat Severance Tax

If Arkansas Passes 7% Flat Severance Tax

$617.50

 

The Energy of Employment

Let’s Keep Arkansas Open for Business:

Vote “NO” on increasing taxes

1401 W. Capitol Ave., Suite 440Little Rock, AR 72201Office (501)975-0565measter@aipro.org