Timothy R Carr Department of Geology & Geography West Virginia University

1. Gas Shale in the Appalachian Basin Technical and Societal Challenges and Opportunities Timothy R Carr Department of Geology & Geography West Virginia University

2. Out on the Edge - My Observations Worked in Energy Industry Pro-Energy Energy is the Basis of ALL Civilization Disclaimers Pro-Bono No Support or Guidance From Anyone! Students Employed in Energy Industry

3. Shale-Gas in the Appalachian Basin • Extremely Large Resource • 1.6 TCF in 2002  500-1,300 Tcf, today • Large Area – 16-32 Million Acres in the Core Area • Adjacent to the Market • Challenges • Terrain • Infrastructure • Public Perception-Tension / Regulations • History • 1821, Fredonia, New York • 2003 Well - Range Resources • Approximately 6,933 Wells • Pennsylvania - 4,168 • West Virginia – 2,744 • New York – 21 Wells Located in downtown Fredonia, the boulder proudly displays the site of the first commercial gas well in the US, dedicated in 1925 on the 100th anniversary by the Daughters of the American Revolution. Picture source - http://www.fredonia.edu/shaleinstitute/facts.asp

4. North America Shale Gas Basins

5. Marcellus Wells Through 2005 Range Resources 100 Wells & Locations

6. Marcellus Wells Through 2006 465 Wells & Locations

7. Marcellus Wells Through 2007 1,105 Wells & Locations

8. Marcellus Wells Through 2008 1,947 Wells & Locations

9. Marcellus Wells Through 2009 4,073 Wells & Locations

10. Marcellus Wells Through 2010 4,583 Wells & Locations

11. Marcellus Wells Through 2011 6,912 Wells & Locations Through July

12. West Virginia – Marcellus Permits Horizontal Well Average Length – 5,313 Longest Length – 12,959 Fracture Stages Average – 6-7 Maximum – 22 West Virginia Division Environmental Protection - February 9, 2011

13. Marcellus Wells Through 2011 3,697 Horizontal Wells & Locations

14. Marcellus Shale • Organic-Rich Marcellus Deposited at Edge of Onondaga Shelf • Low detrital input • High Productivity • Low Removal/Degradation • Relatively Shallow Depths • The areas of high organic content are identified by their relation to the underlying structure at the time of deposition and not by the gross unit thickness of the shale • Local thick areas located in Onondaga thins (Boyce, 2010; Yanni, 2010)

15. Pennsylvania Marcellus Production Source – Pennsylvania Department of Environmental Protection

16. Marcellus Production Rates January-June 2010

17. Impact on West VirginiaDirect Industrial Sector Employment Industrial Sector Average Wage $1,296/week Avg. WV $725/wk Last Five Years - 2,000+ Jobs WV 6,686 Decrease Source: Workforce West Virginia, http://www.workforcewv.org/LMI/cntyform2.cfm?SelectCnty=West%20Virginia

18. Impact on West VirginiaSeverance Tax

19. Paradox of the General Public Demand Abundant & Inexpensive Energy Welcome Economic Benefits Distrusts the Intrusion of the Industry Fearful of Issues Perceived to Accompany Development

20. Meeting Societal ChallengesNatural Gas Development Transparent Communication with All Stakeholders Informational & Educational Programs Engage in Partnerships

21. Shale-Gas in West Virginia • Increased Production – Increased Consumption • 500 Bcf/year to 5,000 Bcf/year • Approximately 20% of US Consumption • Heavy Drilling Activity Will Persist for a Decade • Infrastructure Demands • Roads, Housing, Pipelines, Downstream Activities • Tension with the Public Will Decrease • Economic Activity Will Increase • Tax Revenue Will Accelerate • Severance $60 million in 2010 to $240 million in 2020 • Property Taxes – Wells, Transportation, Processing • Example - Johnson Co., Texas $0 in 1998 to ~$64.5 million in 2008 • $16.5 Million County, $12.4 Million Cities, $35.6 Million Schools • Induced Taxes Will Accelerate • Wells Will Persist for 50+ years, but will Production will Decrease.

22. Questions • Timothy R Carr • Department of Geology & Geography • 304.293.9660 • tim.carr@mail.wvu.edu