Natural Gas and the New American Economy

Natural Gas and the
New American Economy
Natural gas is a clean energy source and positions the United States
as an energy powerhouse. Natural gas extracted from dense shale rock
formations has become the fastest-growing source of gas in the
United States and could become a significant new global energy source.
Although the energy industry has long known about huge resources
trapped in shale rock formations in the United States, it is over the
past decade that energy companies have combined two established
technologies — horizontal drilling and hydraulic fracturing — to
successfully unlock crude oil and natural gas from shale.
The people of Chevron work every day to deliver on the promise
of natural gas from shale The Chevron Way — safely, efficiently and
responsibly — today and for decades to come. These principles allow
us to responsibly develop natural gas from shale.
Natural Gas From Shale
Natural Gas and the New American Economy | 1
1.95
Trillion barrels of oil-equivalent*
reside in North America
1.95
1.86
1.82
1.18
0.89
0.58
0.34
North
America
Middle
East/North
Africa
Former
Soviet
Union
Latin
America
China/
Asia-
Pacific
Sub-Saharan
Africa
Europe
Unconventional Resource
Conventional Resource
Data sources: USGS, EIA/DOE, BOEM, PGC, various other sources.
*Includes crude oil and natural gas.
The United States is in the midst of an energy renaissance due to our
industry’s ability to produce previously unreachable natural gas resources
in the United States, such as natural gas from shale. Due to U.S.-developed
technology, the nation has greater control over our energy destiny, more
jobs and greater energy affordability.
Meeting the Demand
Given a supportive policy framework, natural gas from shale could provide almost
50 percent of total U.S. natural gas production by 2035.
1
Generating Jobs
Producing natural gas from shale and other tight-rock formations provided 150,000
direct jobs and 450,000 indirect and induced jobs in 2010. Total jobs in the natural
gas from shale industry are projected to grow to almost 870,000 jobs by 2015 and
to over 1.6 million jobs by 2035.
2

Making Energy More Affordable
The growth of natural gas from shale is leading to lower natural gas and electric
power prices. Lower gas prices would result in annual average net energy savings
of $926 per household between 2012 and 2015. In 2035, savings are projected to
increase to just over $2,000 per household.
3
Increasing Government Revenues
Annual federal, state and local government revenues from the natural gas from
shale sector and its supply chain and other supporting industries are projected to
grow over the next 25 years.
Shared Opportunity
$
19
Billion
2010
2
$
29
Billion
2015
2
$
57
Billion
2035
2
2 | Natural Gas and the New American Economy
Government revenues: Comprising federal royalty payments and federal, state and local taxes.
Data sources:
1
EIA,
2
IHS,
3
IHS.

Average natural gas price of $4.79/MM Btu (constant 2010 USD)
assumed from 2011 through 2035.
870,000
Jobs projected by 2015
2
1.6
Million jobs projected
by 2035
2
50
%
Approximate total U.S. natural gas production
that could be provided from shale by 2035
1

350’ Average Maximum Depth of Groundwater
An example of our Marcellus Shale operations.
Scale of well site and well bore are increased for clarity.
700’ Average Maximum Depth of Coal Deposits
7,500’ - 8,500’ Total Vertical Depth of Well Bore
Approximate Depths
Drilling Deep to Reach Shale
7,000’+
Typical distance from
groundwater to shale
Natural Gas and the New American Economy | 5
Safe and Responsible
Development
Safe and responsible development of natural gas from shale is critical.
Chevron designs safety and environmental protection into each well we
drill. However, we are judged not only by what we do, but by what our
industry does as a whole. We, therefore, work with the industry and our
regulators to share best practices and encourage continual improvement
to earn the public’s trust as we move forward.
Protecting the Environment
Natural gas from shale can be and is being developed safely today. Chevron’s operating
practices reflect our commitment to protecting people and the environment. We design
our wells with multiple layers of steel and cement to protect groundwater for the life of the
well. We run pressure tests to ensure the well’s integrity and conduct a combination of tests
over the life of the well to verify long-term integrity. We are working to capture and reuse
100 percent of the fracturing fluids and water produced with the natural gas. This reduces
our freshwater consumption as well as our need for water trucking, transfer and disposal.
We also use water pipelines to reduce the need for transporting water over local roads.
Chevron has a long-standing commitment to protect air quality by reducing emissions
from all of our natural gas operations, including natural gas from shale. We design and
construct our wells to minimize emissions, and we proactively participate in voluntary
programs to limit our emissions.
Recommended Practices
Chevron participates in broad-based, active multistakeholder groups already engaged
in developing guidelines and programs and sharing best practices to ensure natural gas
from shale development remains safe. The industry maintains and updates periodically
a robust set of recommended practices that cover everything from well design and well
control to water management associated with hydraulic fracturing operations, providing
a strong foundation for safe development.
We support strong state regulation of crude oil and natural gas operations. The states,
through organizations such as the State Review of Oil & Natural Gas Environmental
Regulations (STRONGER) and the Ground Water Protection Council, actively work to
share best practices and perform peer reviews to help each state keep programs current.
Along with industry efforts to update and promote best practices, these programs
provide a proven mechanism to see programs strengthened over time as technology
evolves. Chevron actively supports these efforts.
Our commitment to communities goes beyond immediate needs. As we
develop resources, we train, hire, and source jobs and materials locally to
increase capacity and sustainability of the local work force.
Benefiting the Local Economy
According to recent studies conducted by experts at Pennsylvania State University,
exploration and production in the Marcellus region is expected to generate more than
256,000 jobs and more than $20.2 billion in regional GDP equivalent by 2020.
Hiring Locally
Chevron supports hiring local workers and purchasing from qualified local suppliers. When
training is needed, we work directly with colleges, trade organizations, vocational-technical
schools and nonprofits to develop workforce training and supplier development programs.
Supporting Our Communities
Our company focuses on three areas of sustainable community engagement — education,
basic human needs and economic development. We work within communities to direct
resources toward issues that are important to the people who live there and will provide
benefits for years to come.
Reducing Local Impacts
Chevron recognizes that natural gas development affects the communities in which
projects are located. We take a long-term view and look for ways to reduce impacts on
our communities, and we use a variety of practices and technologies to achieve that end.
We reduce the number of temporary pads we build by drilling multiple wells from one
pad, using longer laterals so we can reach more natural gas with less drilling, and sharing
infrastructure such as roads and pipelines. When we build a pad, we carefully assess
and plan the location, access roads and facilities so we can reduce any interference with
surface water, wildlife, scenic views and agriculture.
Partnership
6 | Natural Gas and the New American Economy
256,000
Jobs generated in the
Marcellus by 2020
$
20.2
Billion in regional
GDP equivalent
From the Community
We are in a generational partnership with the communities where we are
developing natural gas from shale. We are partners for the long term, with
a strategy to hire locally, provide assistance to address local impacts and
support initiatives of importance to our neighbors.
Transparency and Engagement
Chevron supports the disclosure of chemicals used in
hydraulic fracturing. We disclose as required by state
regulations, and we voluntarily disclose to the public
through FracFocus.org, a joint website project of the
Groundwater Protection Council and the Interstate
Oil and Gas Compact Commission that provides
an inventory of additives used by operators in the
hydraulic fracturing process in the United States.
Public confidence in our operations is essential to our success.
Transparency and engagement are the key components to maintaining
and strengthening that confidence. In all of our operations, we promote
open communication with the communities where we live and operate.
Sharing Information
Chevron supports meaningful disclosure of chemical use in our global operations
through mechanisms such as FracFocus.org. Water and sand constitute more than
99 percent of the fracturing fluid.
Engaging With Communities
Chevron builds long-term partnerships within the communities where we operate
to achieve mutual benefits that last for decades. We build these partnerships through
transparency in our operations, support of local causes and creation of jobs. We
understand that communities have concerns surrounding the development of
natural gas from shale, and we address these through frequent consultation with
local stakeholders.
Throughout all stages of development, we engage with communities to learn
about local concerns, share information and minimize any adverse effects. That’s
why we are creating Citizen Community Advisory Councils to inform and educate
our communities about Chevron’s operations and to provide Chevron with local
feedback on the impact of our operations.
Chevron’s Environmental, Social and Health Impact Assessment evaluates significant
potential environmental, social and health impacts of projects. It also identifies
opportunities to enhance potential benefits during the planning, construction,
operation and decommissioning of our projects.
Transparency
Natural Gas and the New American Economy | 9
>99
%
Portion of fracturing
fluid composed of
water and sand
Path to a New Energy Future
1850s
Modern petroleum
industry is launched
with oil discovery in
Pennsylvania
1920s
Directional drilling, a
precursor to horizontal
drilling, is first utilized
1940s
Hydraulic fracturing
technology is first
developed
1980s — 1990s
Horizontal drilling is
combined with hydraulic
fracturing to access
natural gas deposits
1981
First well drilled in the
Barnett Shale in Texas
2004
First Marcellus Shale
well is drilled
2010
FracFocus, the national
hydraulic fracturing
chemical registry, is
established
Natural gas reserves were declining in the United States
prior to the production of natural gas from shale. With
this reversal, this resource now is serving as a foundation
for growth in the manufacturing sector, creating jobs and
lowering costs across the nation. Proper development
of this resource is a critical building block in our
nation’s economy.
“The development of natural gas will create jobs and
power trucks and factories that are cleaner and cheaper,
proving that we don’t have to choose between our
environment and economy.”
President Obama, State of the Union Address
January 24, 2012
“The development of shale gas plays has become a
‘game changer’ for the U.S. natural gas market.”
U.S. Energy Information Administration
“More and more Americans are beginning to recognize
the enormous potential of shale gas. The impact of
increased shale gas development will ripple through our
economy, with manufacturers, in particular, seeing great
benefits. Shale gas development has the potential to
boost manufacturing employment by 1 million jobs by
the middle of the next decade.”
Jay Timmons, President and CEO
National Association of Manufacturers
10 | Natural Gas and the New American Economy
100 Years
Approximate supply of
natural gas in the
United States
*
*Data source: EIA *Data source: EIA.
12 | Natural Gas and the New American Economy
Using Our Available Resource
Data sources:
1
IHS.

Average natural gas price of $4.79/MM Btu (constant 2010 USD) assumed from 2011
through 2035.
2
Shale Gas: A Renaissance in Manufacturing? PwC, December 2011.
3
Wood Mackenzie (2012).
Excluded plays with estimates <7 TCF. Includes proved and probable reserves plus contingent resources.
440
19
Marcellus Haynesville/
Bossier
50
22
7
Fayetteville
Anadarko
Woodford
Mancos
11
New
Albany
8
Antrim
34
Utica
(U.S.)
Barnett-
Woodford
74
Barnett
69
Eagle
Ford
173
25
Arkoma
Woodford
9
Chattanooga
8
Pierre
$
2,000
Approximate annual savings per
household by 2035 if natural
gas prices remain low

1
Estimated Natural Gas From Shale Resource (Trillion Cubic Feet)
3
$
11.6
Billion in annual cost savings to U.S.
manufacturers through 2025 due
to additional natural gas production

2

1,000,000
U.S. manufacturing jobs by 2025 due to benefits from affordable energy
and demand for products used in the extraction of natural gas from shale

2
Data source: EIA, 2011.
There Are Many Uses
for Natural Gas
28
%
Industrial
13
%
Commercial
9
%
Other
<
1
%
Transportation
31
%
Electric
Power
19
%
Residential
© 2012 Chevron Corporation. All rights reserved.
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For more
information:
Chevron.com/shale