1. THANK YOU
Carnegie Mellon University
February 19, 2014
Natural Gas
An Inside Perspective
Courtesy: IPS Engineering EPC

2. THANK YOU
James M. Bright, P.E.
Senior Engineer
• BS in Civil Engineering
West Virginia University
• Life long connection with
the natural gas industry
• Career experience includes:
– Facility planning and design
– Hydraulic flow modeling
– Structural analysis and design
– Surveying
– Construction inspection
– Project management
“Effective communication is the
key to excellence in Engineering” Courtesy: IPS Engineering EPC

3. THANK YOU
IPS Engineering EPC
• A preferred provider of value-added, safety first
Engineering, Procurement, and Construction
services for the hydrocarbon industry.
• Privately owned and based in Tulsa, OK
• Formed in June 2009.
• Venture capitol provided by the PLH Group
• 2013 annual revenues totaled $89 million
• Proud member of the Marcellus Shale Coalition
Courtesy: IPS Engineering EPC

4. Clean, Abundant, and Versatile
Natural Gas - Premier fuel for our century
• Electricity generation, heating, domestic use
• Combined heat and power applications (COGEN)
• Light and heavy duty transportation fuel
• Feedstock for industries (NGL)
• Exports (LNG)
Courtesy: IPS Engineering EPC

5. Environmental Impact
Methane + 2 Oxygen = 2 (Water) + Carbon Dioxide
CH4 + 2 (O2) = 2 ( H2O ) + CO2
Natural Gas – 97% to 99% methane
• Methane (C1) - The simplest, cleanest hydrocarbon
• Has the least carbon footprint of any fossil fuel
Courtesy: IPS Engineering EPC

6. THANK YOU
Shale Gas 101
Courtesy: IPS Engineering EPC

7. Shale Gas – A Global Energy Opportunity
North America
1,931 trillion cubic feet
South America
1,300 trillion cubic feet
Africa
1,100 trillion cubic feet
Europe
700 trillion
cubic feet

8. Shale Gas Revolution Across the U.S.
Source: Energy Information Administration

9. The Marcellus Shale: An Introduction
Marcellus Shale outcrop along State Route 174,
south of Slate Hill Rd in Marcellus, NY
What is the Marcellus Shale?
- Geological formation formed by the accumulation of
sediment on a sea floor about 400 million years ago.
- Pressure and heat, over geologic time, have produced
an organic-rich, black shale.
- Begins in the Catskill Mountains, stretches west toward
Marcellus, NY, and then southwest across PA, WV, and
OH.
Why is it Important?
- Success of other shale plays has allowed companies to
transfer horizontal drilling and technology to other areas.
- Proximity to high-demand markets along the East Coast
make it an attractive target for energy development.

10. Marcellus Shale Geographic Footprint

11. The Utica Shale: Companion to Marcellus
• Lies below the Marcellus
• Bigger, deeper, and denser shale
• One of the newest U.S.
unconventional energy sources
• Rich in natural gas liquids (NGL)
• Particularly accessible in OH
• Success in the Marcellus has led to
success in the Utica
• Devonian Shale is yet another
Northeastern play

12. PA Well Count

13. OH Well Count

14. WV Well Count

15. Legend
Marcellus Shale Formation
Wet Gas Region
“Wet” and “Dry” Gas Regions
Sources: Pace Global; Equitable Resources, MarkWest, Atlas Energy, Range Resources, and Caiman Energy.

16. THANK YOUThe Economics of Shale Gas
Courtesy: IPS Engineering EPC

17. “Decoupling” of Oil and Gas Prices

18. Natural Gas Industry Segments
Exploration and
Production
• Gas Field Exploration
• Well Drilling and
Hydraulic Fracturing
• Gas Production and
Liquids Recovery
Gathering and
Processing
• Gas Collection Systems
• Gas Processing
- Separation
- Dehydration
- Fractionation ( NGL)
• Compression
Transportation and
Distribution
• Gas Conditioning
• Transmission Pipelines
• Measurement and Regulation
• Odorization
• Distribution Pipelines
UPSTREAM MIDSTREAM DOWNSTREAM

19. Upstream Segment

20. Steps in Drilling
Horizontal Drilling on a Well Pad
• More efficient production, smaller
footprint.
• Conductor, surface casing protect
well water source.
• Well is drilled vertically and
horizontally as much as 6,000 feet.
• Wellbore is approximately 20 inches
in diameter at its widest.
• 5 ac vs. 24 ac = 1 acre when done

21. Hydraulic Fracturing
• Industrial process - properly cased well
along with proper containment at the
surface is critical
• Permits from state regulatory agencies
required for water withdrawal.
• New technologies allow producers to
recycle most water
• 30 State and federal agencies monitor
hydraulic fracturing
Steps in Completion

22. Environmental Protection
Well Casing
• Multiple layers of steel and cement
ensure redundant protection
• Conductor and Surface casing
extend through water table
• Cementing to surface for each layer
provides stability, protection, and
prevents cross flow of hydrocarbons
• 25 PA Code, Chapter 78 Oil and Gas
Rules, contains strengthened
standards

23. Environmental Protection
Hydraulic Fracturing
• Used for more than 65 years; Over
1 million wells in 27 states since 1947
• Well stimulation began in the 1860’s
when nitroglycerin torpedoes were used
• 90 percent of oil and gas wells use HF
technology today
• 99.5 percent water/sand mix
• 3 to 5 million gallons of water fractures
the shale.
• Well casing protects water supply
• Revisions to 25 PA Code, Chapter 78
reflect the best practices in well casing

24. Gallons per million BTU
Range Mid-point
Deep shale natural gas 0.60 – 5.80 3
Nuclear 8 – 14 11
Conventional oil 8 – 20 14
Coal 13 – 32 23
Fuel ethanol from corn 2,510 – 29,100 15,800
Biodiesel from soy 14,000 – 75,000 44,500
Source: Ground Water Protection Council, U.S. Department of Energy
Environmental Protection
Less Reliance on Water Resources

25. Site Restoration
The Well Site
• The property is contoured and
landscaped as closely as possible
to return to pre-drilling conditions.
• Property owners generally see:
‒ Short wellheads on a level pad
‒ Minimal equipment
‒ Two to three water storage tanks
‒ Measurement system to monitor
gas production
Courtesy: Range Resources

26. Midstream Segment
Courtesy: IPS Engineering EPC

27. Focus on Midstream
• A Gathering Line - defined by PA state law as
a pipeline used to transport natural gas from a
production facility to a transmission line
• Gathering lines generally buried to a depth of
36” or more
• Location of pipeline negotiated by property
owner and pipeline company
• Right of Way agreements
– Legally binding documents
– Pipeline operator has access to the right
of way for construction, operation,
maintenance, and repairs
• A Right of Way may contain multiple pipelines
and is typically 50-75 feet wide
• Subject to Pennsylvania PUC regulation
Source: MarkWest Energy Partners Courtesy: IPS Engineering EPC

28. Gas Processing
Gas Separation, Dehydration, and
Fractionation
• NE Marcellus gas is “dry”
SW Marcellus and Utica gas is ‘wet”
• Gas processing turns production gas into
“pipeline quality gas” for end users
• Filter / Separator removes dirt and free liquids
• Dehydration removes water entrained in
the production stream ( <7 lbs/MMcf )
• Cryogenic processing separates NGL
from production gas and lowers
heating value (980 – 1100 BTU/cf)
• Fractionation separates NGL
into heavier products
(ethane, propane, butane)
Courtesy: IPS Engineering EPC

29. Compression Systems
Compressor Stations
• State of the art sound attenuation
• Highest standards for welding,
fabrication, and material
• 24/7 monitoring and control
• Automatic safety systems
• Annual inspections by regulating
entities
Compressor Units
• High tech integrated control systems
• Monitoring and control 24/7
• Made in the USA
• Operated and maintained by local
workers

30. Downstream Segment

31. Focus on Downstream
Transmission Pipelines
• Critical link between production and
consumers
• Statistically, pipelines are the safest
transportation mode for natural gas and
liquid hydrocarbons
Oil transport by truck results in 87 X more
deaths and 35 X more fires / explosions than
oil pipeline accidents
• Designed and built to industry standards
• HDD technology minimizes enviro. impact
• GIS technology allows for efficient layout
and accurate tracking
• Interstate pipelines are subject to federal
regulation and inspection:
DOT PHMSA Source: Pipeline Association for Public Awareness

32. Intra-state Pipelines
State Regulation of Pipeline Safety
• Just as with midstream pipelines, downstream
transmission lines are subject to state regulation
– Pennsylvania PUC
– Pennsylvania Act 13 – Strengthens
environmental and safety laws for
oil and gas industry
– Pennsylvania Underground Utility Line
Protection Law – The One Call System
• Third party damage is the greatest threat
to pipeline safety
– “One Call” participation in PA is mandatory

33. Gas Conditioning
Pipeline Quality Gas
• Gas Conditioning usually occurs at
the compressor station discharge
• Removal of residual liquids by
coalesors
- Glycol Alcohol used in the
dehydration process
- Compressor lubricating oil
• Final polishing before transportation
by downstream facilities

34. Measurement and Regulation (M&R)
Accuracy is critical
• Measurement is the company
cash register
• Gas quality and composition is
recorded at “custody transfer”
points by a chromatograph
• Regulation can be based on
pressure or flow control
• Distribution piping is typically
low pressure: 25 – 150 psig
Courtesy: Valtronics, Inc.

35. Odorization
Leak detection
• Odorization gives Natural Gas
its distinctive smell
• Mercaptans are a family of
sulfur containing hydrocarbons
• Methanethiol - CH4S
• 49 CFR Part 192.625
mandates odorization
• Prepares gas for
distribution systems
Courtesy: IPS Engineering EPC
Courtesy: Valtronics, Inc.

36. THANK YOUEconomic Impact
Courtesy: Ecobag

37. Economic Impact for Our Region
Income to Local Landowners
and Businesses
• More than 4,500 wells drilled from
2010 through 2012
• Investment of approximately
$32.0 billion
• 2013 projection: $13.5 billion
- Leasing and bonuses
- Exploration
- Drilling and completion
- Pipelines and processing
- Royalties
Source: Survey of Marcellus Shale Coalition Board Member Companies

38. Natural Gas Job Phase
Pre-drilling
(Exploration)
• Geologic studies, permitting, water
management, engineering/design,
site preparation, environmental
and safety compliance
Drilling
(Extraction)
• Pipeline, compressor, well facilities
construction, Hydraulic Fracturing &
completions, water management,
environmental and safety
compliance
Production/
Reclamation
• Engineering, site
reclamation, environmental
and safety compliance
Delivery to Market
(transport, storage,
marketing)
• NG Marketers, commodity
traders, logistics, storage,
accounting, risk management

39. Diverse Job Opportunities
Professional Functions Identified in MSC Survey
Source: MSC Membership Survey, May 2013
Fast Fact
 400+ individuals within nearly 150 different occupations
needed to complete and produce gas from a Marcellus Shale
well (MSETC, 2010)
30%
20%
13%
11%
8%
4%
4%
3% 3%
2% 1% 1%
Equipment Operations
Operations and Maintenance
Commercial
Engineering and Construction
Administration
Environmental Health & Safety
Land
Well Services
Other
Water Management
Geology
Purchasing

40. Marcellus Shale Coalition
Courtesy: IPS Engineering EPC

41. Benefits for All
• We are committed to being
responsible members of the
communities in which we work.
• We strive to attract and retain a
talented and engaged local
workforce.
• We conduct our business in a
manner that will provide sustainable
and broad-based economic,
environmentally sensitive, and
energy-security benefits for all.
Marcellus Shale Coalition
Pennsylvania based trade association
Courtesy: IPS Engineering EPC

42. Dialogue & Education
• Coalition meetings with legislative and executive officials:
‒ PA Department of Environmental Protection
‒ PA Department of Community and Economic Development
‒ Members of U.S. Congress, PA General Assembly
• Public speaking engagements and presentations:
‒ Chambers of Commerce
‒ West Virginia University
‒ Federal Reserve Bank
‒ Sierra Club
‒ Pennsylvania Environmental Council
• Outreach to:
‒ Agriculture community
‒ Organized labor
‒ Small and mid-sized businesses
‒ Sportsmen’s groups
‒ Local government

43. Research Collaborative
Industry
• Nationally recognized
technical experts
from trade
associations
Academia • Leaders from
university research
centers
Public
Sector
• Research institutions
at state and federal
agencies
National
• Research leaders
such as RAND,
Brookings, and
funders of charitable
foundations
Research
CollaborativeResearch
Collaborative

44. THANK YOU !
J.M.Bright, P.E.