Americas Natural Gas Market Challenge 2006

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Americas Natural GasMarket Challenge 2006

• American Gas Association
• 2006

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Gas Demand Outlook
Source Energy and Environmental Analysis (EEA)
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Natural Gas Supply SourcesActuals and Prior
5-Yr. Avg. for January 2006 (Bcf/d)

• Supply Source Actuals
  5-Yr. Avg.
• L-48 Production 47.575 50.984
• Alaska Production 1.322 1.271
• Pipeline Imports Can. 9.067 10.142
• Pipeline Imports LNG 1.185 0.743
• Underground Storage 8.194 22.032
• Pipeline Exports Mex. -0.899 -0.514
• Total Supply 66.444 84.658

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Total Lower-48 Gas SupplyBy Source 2000-2010
Sources Lippman Consulting, Inc., AGA, EEA, CAPP
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U.S. Natural Gas-Directed Drilling Activity
Short-Term Energy Outlook, Oct. 2005
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Lower-48 Annual Gas ProductionBy Region 2000-2010
Source Lippman Consulting, Inc.
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Lower-48 Dry Gas Production vs.Dry Gas
Productive CapacitySource Energy and
Environmental Analysis, Inc.
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Natural Gas Resource EstimatesPotential Gas
Committee, 2004 (mean values)
Traditional Resources 950.0 Tcf Coalbed Gas
Resources 169.3 Tcf Proved Reserves (EIA) 189.0
Tcf Future Supply 1,308.3 Tcf
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Regional Resource Assessment(Potential Gas
Committee, 2004)
Data source Potential Gas Committee (2005)
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(No Transcript)
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Working Gas in Underground Storage Compared With
5-Year Range (EIA)
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CanadaDry Gas Production and U.S. Pipeline
Exports
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Northern Gas Market Options
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Mackenzie Gas Project

• Construction on 1.2 Bcf/d pipeline to begin in
  late 2007.
• Expected to recover 7 Tcf from three existing
  fields with future discoveries anticipated after
  infrastructure is in place.
• Begin flowing gas in 2011.
• NWT will need to import workers (current pop.
  48,000 over area the size of Texas)

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Alaska
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Alaska Natural Gas Pipeline

• Proposed 4.5 Bcf/d pipeline from North Slope to
  NA grid interconnect in Alberta.
• Agreement between state of Alaska and ExxonMobil,
  BP and ConocoPhillips must be approved by Alaska
  legislature.
• Adds 35-40 Tcf of reserves immediately to US
  total with expectations for more with development
  of trans infrastructure.

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Existing, Proposed and Potential North American
LNG Terminals
CONSTRUCTED A. Everettt, MA 1.035 Bcfd
(Tractebel - DOMAC) B. Cove Point, MD 1.0 Bcfd
(Dominion - Cove Point LNG) C. Elba Island, GA
0.68 Bcfd (El Paso - Southern LNG) D. Lake
Charles, LA 1.2 Bcfd (Southern Union -
Trunkline LNG) E. Gulf of Mexico 0.5 Bcfd (Gulf
Gateway Energy Bridge - Excelerate
Energy) APPROVED BY FERC 1. Lake Charles, LA
0.6 Bcfd (Southern Union - Trunkline LNG) 2.
Hackberry, LA 1.5 Bcfd (Sempra Energy) 3.
Bahamas 0.84 Bcfd (AES Ocean Express) 4.
Bahamas 0.83 Bcfd (Calypso Tractebel) 5.
Freeport, TX 1.5 Bcfd (Cheniere/Freeport LNG
Dev.) 6. Sabine, LA 2.6 Bcfd (Cheniere
LNG) 7. Elba Island, GA 0.54 Bcfd (El Paso -
Southern LNG) 8. Corpus Christi, TX 2.6 Bcfd
(Cheniere LNG) 9. Corpus Christi, TX 1.0 Bcfd
(Vista Del Sol ExxonMobil) 10. Fall
River, MA 0.8 Bcfd (Weaver's Cove Energy/Hess
LNG) 11. Sabine, TX 1.0 Bcfd (Golden Pass -
ExxonMobil) 12. Corpus Christi, TX 1.0 Bcfd
(Ingleside Energy - Occidental Energy
Ventures) APPROVED BY MARAD/COAST GUARD 13. Port
Pelican 1.6 Bcfd (Chevron Texaco) 14. Louisiana
Offshore 1.0 Bcfd (Gulf Landing -
Shell) PROPOSED TO FERC 15. Long Beach, CA 0.7
Bcfd (Mitsubishi/ConocoPhillips - Sound Energy
Solutions) 16. Logan Township, NJ 1.2 Bcfd
(Crown Landing LNG - BP) 17. Bahamas 0.5 Bcfd,
(Seafarer - El Paso/FPL ) 18. Port Arthur, TX
1.5 Bcfd (Sempra) 19. Cove Point, MD 0.8 Bcfd
(Dominion) 20. LI Sound, NY 1.0 Bcfd
(Broadwater Energy - TransCanada/Shell) 21.
Pascagoula, MS 1.0 Bcfd (Gulf LNG Energy
LLC) 22. Bradwood, OR 1.0 Bcfd (Northern Star
LNG - Northern Star Natural Gas LLC) 23.
Pascagoula, MS 1.3 Bcfd (Casotte Landing -
ChevronTexaco) 24. Cameron, LA 3.3 Bcfd
(Creole Trail LNG - Cheniere LNG) 25. Port
Lavaca, TX 1.0 Bcfd (Calhoun LNG - Gulf Coast
LNG Partners) 26. Freeport, TX 2.5 Bcfd
(Cheniere/Freeport LNG Dev. - Expansion) 27.
Sabine, LA 1.4 Bcfd (Cheniere LNG -
Expansion)
PROPOSED TO MARAD/COAST GUARD 28. California
Offshore 1.5 Bcfd (Cabrillo Port - BHP
Billiton) 29. So. California Offshore 0.5 Bcfd
(Crystal Energy) 30. Louisiana Offshore 1.0
Bcfd (Main Pass McMoRan Exp.) 31. Gulf of
Mexico 1.0 Bcfd (Compass Port
-ConocoPhillips) 32. Gulf of Mexico 2.8 Bcfd
(Pearl Crossing -ExxonMobil) 33. Gulf of Mexico
1.5 Bcfd (Beacon Port Clean Energy Terminal -
ConocoPhillips) 34. Offshore Boston, MA 0.4
Bcfd (Neptune LNG - Tractebel) 35. Offshore
Boston, MA 0.8 Bcfd (Northeast Gateway-
Excelerate Energy) POTENTIAL SITES IDENTIFIED BY
PROJECT SPONSORS 36. Coos Bay, OR 0.13 Bcfd
(Energy Projects Development) 37. California -
Offshore 0.75 Bcfd (Chevron Texaco) 38.
Pleasant Point, ME 0.5 Bcfd (Quoddy Bay,
LLC) 39. St. Helens, OR 0.7 Bcfd (Port
Westward LNG LLC) 40. Galveston, TX 1.2 Bcfd
(Pelican Island - BP) 41. Philadelphia, PA 0.6
Bcfd (Freedom Energy Center - PGW) 42. Astoria,
OR 1.0 Bcfd (Skipanon LNG - Calpine) 43.
Robbinston, ME 0.5 Bcfd (Downeast LNG - Kestrel
Energy/Dean Girdis) 44. Boston, MA 0.8 Bcfd
(AES Battery Rock LLC - AES Corp.) 45. Calais,
ME ? Bcfd (BP Consulting LLC) CANADIAN
APPROVED AND POTENTIAL TERMINALS 46. St. John, NB
1.0 Bcfd (Canaport - Irving Oil) 47. Point
Tupper, NS 1.0 Bcf/d (Bear Head LNG -
Anadarko) 48. Quebec City, QC 0.5 Bcfd
(Project Rabaska - Enbridge/Gaz Met/Gaz de
France) 49. Rivière-du- Loup, QC 0.5 Bcfd
(Cacouna Energy - TransCanada/PetroCanada) 50.
Kitimat, BC 0.61 Bcfd (Galveston LNG) 51.
Prince Rupert, BC 0.30 Bcfd (WestPac
Terminals) 52. Goldboro, NS 1.0 Bcfd (Keltic
Petrochemicals) MEXICAN APPROVED AND POTENTIAL
TERMINALS 53. Altamira, Tamulipas 0.7 Bcfd
(Shell/Total/Mitsui) 54. Baja California, MX
1.0 Bcfd (Sempra) 55. Baja California -
Offshore 1.4 Bcfd (Chevron Texaco) 56.
Lázaro Cárdenas, MX 0.5 Bcfd
(Tractebel/Repsol) 57. Puerto Libertad, MX 1.3
Bcfd (Sonora Pacific LNG) 58. Offshore Gulf, MX
1.0 Bcfd (Dorado - Tidelands) 59. Manzanillo,
MX 0.5 Bcfd 60. Topolobampo, MX 0.5 Bcfd
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50
49
48
47
52
46
45
43
38
42
34
A
22
44
35
39
10
36
20
16
41
B
19
28
15
29
C
7
37
54
17
21
55
6,27
2
D
24
23
3
4
5,26
57
11
1
8
32
31
30
18
9
12
E
33
25
14
40
60
13
58
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US Jurisdiction FERC US Coast Guard
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US pipeline approved LNG terminal pending
in Bahamas These projects have been approved
by the Mexican and Canadian authorities
As of November 30, 2005
Office of Energy Projects
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IS LNG ECONOMIC?
Source Freeport LNG
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Potential Incremental Gas Supply
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What Can We Do?Longer Term Options

• Natural gas is plentiful in America
• Encourage balance between economic and
  environmental values
• Encourage Alaskan supply
• Encourage LNG supply

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Natural Gas Henry Hub Spot Prices(Base Case and
95 Confidence Interval)
The confidence intervals show /- 2 standard
errors based on the properties of the model.
Source EIA, March 2006
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West Texas Intermediate Crude Oil Price(Base
Case and 95 Confidence Interval)



The confidence intervals show /- 2 standard
errors based on the properties of the model.
Source EIA, March 2006
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National Energy Legislation2005

• 15-year depreciation for new natural gas
  distribution lines placed in service after
  4/11/2005 and before 1/1/2011)
• Numerous provisions to maintain current domestic
  production and to bring forth new supplies of
  natural gas, including LNG.
• A substantial increase in the authorized level
  for LIHEAP funding to 5.1 Billion.
• Repeal of the Public Utility Holding Company Act.
• An energy efficiency title that does not
  discriminate against natural gas, as well as a
  National Academy of Sciences study on total
  energy efficiency.

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North American Gas Market

• North American supply/demand balance is and
  will remain tight.
• Gas consumption grows.
• New frontier gas supplies are necessary and
  take time.

• Gas prices remain relatively high.
• High levels of gas price volatility continue.
• LNG imports become an important player in natural
  gas pricing.

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Thank You!