Oil and Gas in Alabama

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1 Oil and Gas in Alabama State Oil and Gas Board Spring 2018 Update Trends & Revenue Impact of Alabama s Oil and Gas Industry Nick Tew, State Geologist and Oil and Gas Supervisor State Oil and Gas Board of Alabama Geological Survey of Alabama Tuscaloosa, Alabama 2018 CMAA Annual Meeting May 31, 2018

2 Areas of Activity Regions Black Warrior Basin gas (conventional & CBM), oil Appalachian Fold & Fault CBM, shale gas SW Alabama onshore: oil, condensate, gas offshore: gas Notable Activity Chicken Swamp Branch Oil Field, Pickens County, Black Warrior Basin Little Cedar Creek and Brooklyn Fields, Conecuh and Escambia Counties, SW AL

3 Chicken Swamp Branch Oil Field Black Warrior Basin, Pickens Co. ~5,000 feet deep, 58 wells Ave. test 40 BOPD/well in Pottsville A Sand Cum production since 2011: ~2,300,000 BO & 1,034,000 Mcfg (sales) thru 2/18 Avg 37,000 BO & 18,000 Mcfg per well, Unitized April 2017 for Enhanced Oil Recovery (EOR) Injecting water & gas

4 Little Cedar Creek and Brooklyn Fields: Conecuh & Escambia Counties, ~11,500 feet deep, 165 wells, 400 BOPD/well allowable in Smackover Fm, Cum production since 1994 ~42,000,000 BO & 21,000,000 Mcfg (sales) thru 2/18, Avg 241,000 BO & 113,000 Mcfg per well, most of LCC is unitized (in 4 units) for EOR, injecting water & gas.

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8 Permits State of Alabama Oil and Gas Drilling Permits South Conventional North Conventional Coalbed Methane Fiscal Year

9 Oil & Condensate Production (Million Bbl). Gas Production (BCF) State of Alabama Oil & Gas Production Condensate Oil Gas Fiscal Year 0

10 Billion Cubic Feet. 500 State of Alabama Natural Gas Production by Well Type Other Coalbed Offshore Fiscal Year

11 Production (Billion Cubic Feet) Alabama State Waters Gas Historical & Forecasted Production 1, Historical Forecasted: 8.36% Decline Revenue Year

12 Price per Barrel Price per MCF State of Alabama Oil and Gas Prices Oil & Condensate Price Natural Gas Price Fiscal Year 0

13 Million Dollars State of Alabama Oil & Gas Severance Tax 200 Production Tax 150 Privilege Tax

14 Million Dollars. Avg Gas Price ($ / MCF) Revenues Generated From Alabama Offshore Production Sev. Tax Fed. Royalty State Royalty Investment Income Avg. Gas Price Fiscal Year 0

15 Investment Income & Oil & Gas Proceeds (Million $). Trust Fund Balance (Million $). State of Alabama Oil & Gas Trust Fund Investment Income Oil & Gas Proceeds Trust Fund Balance 3,500 3, ,500 2,000 1,500 1, Fiscal Year 0

16 Near-Term Outlook Further oil field development by unitization and enhanced oil recovery (EOR) operations Southwest Alabama (Brooklyn Field unitization) Black Warrior Basin Resulting in level to slightly increasing oil production & revenues Minimal CBM and natural gas development due to low prices Decreasing gas production & revenues Should see increased oil exploration in wildcat or frontier areas due to better oil price environment Horizontal drilling Potential Development Exploration for analogs of Little Cedar Creek, Brooklyn and Chicken Swamp Branch Fields

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20 Water Resources Drilling rig at the Ozark Utilities Tuscaloosa Group aquifer test in Dale County, Alabama

21 Major Water Issues in Alabama Public water supply Industrial water supply Agricultural water supply Wastewater treatment Ground- and surface-water quality Biological habitat protection Interstate water demand Drought Flood Aquifer Recharge Map The availability of water resources will either enable or limit future growth and development in our State.

22 Understanding Water Resources Ground water hydrogeology Ground water geochemistry Aquifer recharge areas Ground water recharge rates Ground water use and demand Climate impacts Landscape characteristics Surface water geochemistry Surface water biology Surface water use and demand Surface/ground water interactions

23 Statewide Water Assessment Program Coordinated effort of complimentary elements Focused on tangible outcomes and deliverables that provide critical information to inform water policy and management needs Efficient use of available funding Leverage resources where possible, and as appropriate, through cooperative and collaborative initiatives

24 Assessments: surface, ground, low-flow Water Management and Policy

25 Additional Groundwater Assessment Work and Future Research Plans RBDMS Database Groundwater Level Monitoring Local and Regional Hydrogeologic Investigations Statewide Aquifer Water Quality Investigations Groundwater budgets

26 Questions?

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