Orbital ATK Fracking Presentation

Energy:
The Next Great
Opportunity for Maryland
Steve Moore
Vice President,
Strategy & Business Development
12 March 2015
The Harvesting of the Marcellus Shale
Economic Impact of Gas Production in
Pennsylvania
Considine, T. J. (2010, July 14). The economic impacts of the Marcellus Shale: Implications for New York, Pennsylvania, and West Virginia.
Retrieved from http://www.api.org/~/media/Files/Policy/Exploration/API-Economic-Impacts-Marcellus-Shale.ashx
Economic Impact of Gas Production in
Pennsylvania
Dr. Mileah Kromer on Fracking in PA, NY, & MD
“Our northern friends have two very different perspectives on
fracking. Pennsylvania has embraced the practice, while New York
currently imposes a moratorium. To simplify the perspectives:
Pennsylvania debates how they should tax and collect economic
benefits from fracking; New York debates whether they should
permit, and if so, regulate it. The relationship between New York
and Pennsylvania in regard to perceptions of hydraulic fracturing is
of obvious interest to Maryland. To date, Maryland has taken policy
path on fracking similar to that of New York—one where concerns
about environmental degradation are currently outweighing
arguments for economic development.”
ATK briefed the Marcellus Drilling Commission
at the MD Department of Environment in Feb 2014
Alternatives to Fracking Moratorium in Maryland
Are there alternatives to HVHF
(High Volume Hydraulic Fracking)?
YES!
ATK is looking to bring Aerospace &
Defense technology to Oil & Gas
Who is the New
Orbital ATK?
Introducing the New Orbital ATK
Aerospace Systems
Defense Systems
Innovation… Delivered
The Partner You Can Count On

$4.4 Billion Global Aerospace and Defense Systems Company

Innovative, Affordable Products for Government and Commercial Customers
 Launch Vehicles, Propulsion Systems and Aerospace Structures
 Missile Products, Defense Electronics, Armament Systems and Ammunition
 Satellites, Space Components and Technical Services

12,500 Employees, Including 4,300 Engineers and Scientists

R&D, Production and Test Facilities in 17 States
8
Core Values and Guiding Principles
Safety, reliability and integrity are our highest priorities, the three absolutes in all our activities.
We are also intensely focused on affordability, achieved through continuing investment in
innovation and sustained commitment to execution excellence.
For our customers, we will always
act with integrity and responsiveness,
working to earn and maintain their
loyalty every day.
For our investors, we will
manage our business with
discipline and deploy its capital
to enhance long-term returns to
shareholders.
For our employees, we will
encourage the highest levels of
engagement, diligence and
creativity, and reward their
dedication and teamwork.
For our suppliers, we will be
honest and fair, seeking
opportunities for beneficial
collaboration in long-term
alliances.
For our country, we are proudly patriotic and deeply
grateful to those who defend our freedom. In addition, we
are an involved and responsible corporate citizen of the
communities where we live and work.
9
Major Customers and Market Segments
Commercial/
International
NASA/Civil
Government
$1.1 Billion
(24%)
$0.8 Billion
(18%)
$2.6 Billion
(58%)
National Security
Pro-Forma 2014 Revenue ~$4.4 Billion
10
Three Operating Groups and 12 Product Lines
Flight Systems Group
Defense Systems Group
Space Systems Group
•
•
•
•
•
•
•
•
•
•
•
•
Space Launch Vehicles
Rocket Propulsion Systems
Missile Defense Systems
Aerospace Structures
Tactical Missile Products
Defense Electronic Systems
Armament Systems
Ammunition and Energetics
Commercial Satellites
Government Satellites
Spacecraft Components
Space Technical Services
42%
31%
27%
11
Pro Forma 2014 Revenue ~$4.4 Billion
Extensive Human and Physical Resources

Over 12,500 Employees Dedicated to
Aerospace and Defense Customers
 4,300 Engineers and Scientists
 7,250 Manufacturing and Operations
Specialists
 1,100 Management and
Administration Personnel

Facilities in 17 States With Over 19
Million Sq. Ft. of R&D, Manufacturing,
Test, Operations and Office Space
 6.1 Million Sq. Ft. Owned
 5.3 Million Sq. Ft. Leased
 8.1 Million Sq. Ft. Government Owned
12
Flight Systems Group Overview
Small-Class Launch Vehicles
Medium-Class Launch Vehicles
Large-Class Launch Vehicle
Propulsion Systems
Strategic Missile
Propulsion Systems
Missile Defense Interceptors
Suborbital Targets
Commercial Aerostructures
Military Aerostructures
 Annual Sales of About $1.4 Billion
 Workforce of Approximately 4,500 People
 Major Operations in Arizona, Utah, Virginia,
Ohio, Alabama, and Mississippi
13
Space Systems Group Overview
Commercial Satellites
Scientific Spacecraft
Human Space Systems
National Security Satellites
Advanced Space Systems
Space Components
Space Engineering Services
Research Rocket and
Balloon Operations
 Annual Sales of About $1.2 Billion
 Workforce of Approximately 2,700 People
 Major Operations in Virginia, Maryland, California,
Arizona, Texas, and Utah
14
Defense Systems Group Overview
Advanced Tactical Missiles
Missile Propulsion Systems
Precision-Guided Munitions
Aircraft Protection Systems
Light Gunships
Advanced Gun Systems
Medium-Caliber Systems
Small-Caliber Ammunition
 Annual Sales of About $1.9 Billion
 Workforce of Approximately 4,900 People
 Major Operations in Maryland, West Virginia, Virginia,
Missouri, Minnesota, Arizona, Texas, Florida, and California
15
Orbital ATK Elkton Aerial View
ORDNANCE
MANUFACTURING
T200
PROPELLANT MANUFACTURING
SAFETY,
MAINTENANCE,
PROCUREMENT,
QUALITY
MOTOR
MANUFACTURING
TESTING
SHOP, RECEIVING,
INSPECTION
Aerial View 2008 [614]
MANAGEMENT / ENGINEERING
LABORATORY
• Founded in 1948 – rocket motor research, design, development, and production
• 550 acres, 150 buildings, and 380,000 ft2 of enclosed floor space – wholly-owned facility
• ISO 9001:2000 certified and AS9100 Rev C certified
ATK Experience with and
Advances in Propellant
Well Stimulation
Down-hole Fracturing Application
ATK and our partner, PPS, have developed a solid rocket
motor, propellant-based alternative/augmentation to the
current hydraulic fracturing process
• Solid propellant is ignited generating specified volume of gas
creating pressure that fractures the rock
• Propellant type, amount, and burning rate can be adjusted depending
on geological conditions
• Propellant solution is adaptive and can be readily modified,
fabricated, and demonstrated with new formulations based on
fracturing requirements
• Applicable for use in oil, gas, and geothermal wells
– Re-stimulation of existing wells
– In concert with hydro-fracking (e.g., reduce breakdown pressures)
– Substitution for hydro-fracking operations
Current Hydraulic Fracturing Process
Water usage nominally 3 to 5 million gallons per well
ATK’s Fracking Procedure
ATK’s propellant-based procedure requires:
– No change in current well drilling, casing, and perforation
– No specialized or modified tools
– Minimal equipment
– Short set-up and operations time
1st Generation Solid Propellant Stimulation
Tool
•
•
•
•
•
Environmentally sealed
ignition designed tool
Pre-machined fracturing
segments that ideally
provides equal flame
spreading and controllably
burns the propellant grain
completely
Flouroelastomer coating
provides both well-bore fluid
isolation and burn surface
control
Configuration design is
critical to the success of the
tool
Successfully demonstrated
in many applications and
down-hole conditions
Corollary Benefits
Beyond time and production advantages, ATK’s propellant-based
stimulation technology has the following attributes:
– Eases competing community demands for (often scarce) water
resources
– Reduces traffic congestion/usage and the need for associated
road repairs
– Smaller operating footprint is more acceptable to
environmentally conscious communities
– Reduction/elimination of chemicals viewed more favorably by
communities with concerns regarding impact to their land
– Reduced infrastructure required in remote or foreign locations
– Orbital ATK’s record of handling, transporting, and operating
safety provides additional assurance to hosting communities
Ukrainian Experience (1 May 2013)
• Subject well in Western Ukraine was
abandoned for more than 10 years
•
•
•
•
Vertical well depth was >10,000 feet
No infrastructure available
Demonstration of concept
Long-term production data unavailable
• Partnered with local company and
received a purchase order for stimulation
of 100 wells in Ukraine
• >3000 existing wells available
• In negotiation with one independent
• Other Ukrainian independents lining up
• Formation Type: Paleaogen shale
• Stimulated 3 Intervals
• 2083-2086m
• 2380-2386m
• 2394-2397m
• Video was shot during retrieval of tool after
second zone was stimulated
ATK’s 2nd Generation Propellant Stimulation Solution
Variable, Longer Action Time – Pressure Pulses
Features
• Cartridge-loaded or cast grain
• Monolithic or multiple formulations
• Inhibited on all exposed surfaces
• Opposing grains eliminates propulsive forces
• Excess throat area to prevent choked flow (subsonic)
• Imbedded, simultaneous ignition
• End-burner provides long action time
Gen 2
Gen 1
Propellant
Maryland has Choices to Make Regarding
Its Energy
Use Maryland’s resources to benefit the State and her people
– or –
Make excuses about harming the environment
• Marylanders need the benefits of Maryland’s natural
resources
• Maryland has technology available that can provide choices
instead of HVHF
• Orbital ATK is ready to help, but we need support in order to
allow us to use and perfect our technology
• Orbital ATK is seeking a development partner to help
Maryland exploit its Marcellus resources and optimize
propellant-based fracing