1. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Association for Energy Economics October 26, 2015 David Spigelmyer President Marcellus Shale Coalition

2. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Marcellus – the largest unconventional shale gas play in U.S. 489 tcf of technically recoverable gas (T. Engelder ‘09) 16 bcf/day – 40% of all U.S. shale gas production 7 x increase in production (2010-2014) PA – 2 nd largest natural gas producer in U.S. Shale Gas Revolution 2

3. MARCELLUSCOALITION.ORG | @MARCELLUSGAS STATE OF THE INDUSTRY 3

4. MARCELLUSCOALITION.ORG | @MARCELLUSGAS 8858 unconventional wells Drilled or in process of being completed 6326 unconventional wells producing natural gas 360 billion cubic feet/month 4 trillion+ cubic feet/year 20%+ of total U.S. production Drilling Activity in PA Drilling Activity in PA 4

5. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Drilling Activity in PA Drilling Activity in PA Source: PA Department of Environmental Protection 5

6. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Source: Baker Hughes Drilling Activity in PA

7. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Appalachian Price Collapse 7

8. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Governor Wolf - Latest Severance Tax Proposal Voted Oct. 7 th - included in amendment to HB 283 Key components: Maintain existing impact fee 3.5% additional severance tax based on value 4.7 cents/mcf volume tax Equivalent to over 14% total severance tax Generate $97 million in FY ‘15-’16 (not $1 billion) Also increase Personal Income Tax from 3.07% to 3.57% Defeated 73 - 127 8

9. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Overview of Impact Fee Authorized by Act 13 of 2012 Adopted by counties Annual assessment per unconventional shale well (15+ years) Collected & distributed by PA Public Utility Commission Over $856 million collected since 2012 Revenue allocated between host communities & statewide environmental priorities Benefiting Your Community 9

10. MARCELLUSCOALITION.ORG | @MARCELLUSGAS 10 Benefiting PA Communities Year DistributedAmount 2012$204.2 m 2013$202.5 m 2014$225.8 m 2015$223.5 m TOTAL:$856 m Impact Fee Revenues to Date

11. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Benefiting Pennsylvania Consumers Electric prices down 40% since 2008 Natural gas prices for end-use customers down 46% - 64% since 2008 Average annual savings > $1,200 per household 11

12. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Lower Purchased Gas Costs *1 st Quarter 2008 & PUC-approved rate for 2012 *Residential heating customer using 15 mcf/month UtilityPGC Rate / mcf% ChangeCustomer Savings 2008*2012*2008-2012Monthly PECO$11.10$5.4951%$84.15 NFG$10.34$4.8253%$82.80 PGW$10.58$4.7156%$88.05 Columbia$10.25$4.1560%$91.50 Equitable$11.81$5.5653%$93.75 UGI$11.79$6.3846%$81.15 UGI Penn$10.66$5.2251%$81.60 Peoples$9.53$3.3964%$92.10 Reduced Energy Costs

13. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Market Opportunities Electricity generation, heating Combined heat and power applications Light and heavy duty transportation applications Feedstock for industries and other liquids use − Rebirth of manufacturing Exports

14. MARCELLUSCOALITION.ORG | @MARCELLUSGAS The Ethane Factor

15. MARCELLUSCOALITION.ORG | @MARCELLUSGAS Thank you! Marcelluscoalition.org 15