Chris McGill

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Examining Natural Gas Markets 2007-2008

• Chris McGill
• Managing Director, Policy Analysis
• April 3, 2008

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Daily Natural Gas Consumption by Sector January
1-December 31, 2007
Nov
Dec
Oct
Feb
Mar
May
Apr
Jul
Jun
Sep
Aug
Source Bentek Energy LLC, Energy Market
Fundamentals, December 31, 2007.
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Power GenerationAverage Daily Natural Gas
ConsumptionJanuary 1-December 31, 2007
Dec
Source Bentek Energy LLC, Energy Market
Fundamentals, December 31, 2007.
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AVERAGE ANNUAL DECLINE IN WEATHER NORMAL GAS
USER PER CUSTOMER
2004 AGA Energy Analysis Patterns in
Residential Natural Gas Consumption, 1980-2001
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Natural Gas Supply Sources(January 1-December
31, 2007)
Source Bentek Energy LLC, Energy Market
Fundamentals, December 31, 2007.
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Daily Net Storage (Supply Source)January
1-December 31, 2007
Source Bentek Energy LLC, Energy Market
Fundamentals, December 31, 2007.
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NATURAL GAS PROVED RESERVES1991 2006
Source Energy Information Administration
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TOTAL GAS ADDITIONS AND GAS WELL
COMPLETIONS(1990-2006)
Source Energy Information Administration
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Major Portions of the Natural Gas Resource Base
Are Not Accessible
333 TCF 163 TCF Restricted
18 TCF
49
100
37 TCF
100
21 TCF 16 TCF Restricted
76
Resource estimates from Potential Gas Committee,
Colorado School of Mines, December 31, 2006 and
Minerals Management Service. Intermountain west
includes estimate of gas reserves from Energy
Information Administration, U.S. DOE. Of 163
trillion cubic feet (TCF) noted as restricted,
50 TCF closed to development and 113 TCF
available with seasonal and other restrictions.
January 2008
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Natural Gas Production Barnett Shale 1993-2006
Source Texas Railroad Commission.
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CANADADRY GAS PRODUCTION AND US PIPELINE EXPORTS
Sources Lippman Consulting, Inc. and Bentek
Energy, LLC.
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NEW NORTH AMERICAN IMPORT CAPACITYUNDER
CONSTRUCTION
Bcfd
Total Phase 1 Capacity 8.6 Bcfd Planned Phase 2
Capacity 7.6 Bcfd
Sources FERC, US Coast Guard, LNG Express, WGI,
LNG Observer, Cheniere, State of TX
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Natural Gas Prices
Source Energy Information Administration,
February 2008.

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NATURAL GAS MARKET 2007-2008 Winter Heating
Season

• Average 2007-2008 WHS Henry Hub price estimated
  to be slightly more than 2006-2007
• Underground storage position is strong compared
  to five-year average
• Domestic production up from 2006
• Influence of declining use per customer through
  efficiency and price-induced conservation

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NATURAL GAS MARKET Longer-Term

• Prolonged Tightness in Market Anticipated
• Consumers Have Responded to Higher Prices
• Technology, Legislation and Changing Rate
  Structures Will Enable and Promote More
  Efficiency
• Climate Change Will Continue Trends
• Ø   Greater Efficiency
• Ø Electricity Generation Demand

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SOURCES OF U.S. NATURAL GAS SUPPLY 2007
ALASKA 2.2
ALASKA 2.7
LNG0.8
Alaska 0.4
Canada3.2
22.8 Tcf
Lower-48 18.4
LOWER-48 19.0
Source Energy Information Administration.
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Less Traditional Sources Of Natural Gas Will
Satisfy Growing Demand (2020)
ALASKA 2.7
ALASKA 1.2
24.0 Tcf
LNG 2.9
LNG 6.8
CANADA 1.4
CANADA 2.3
LOWER-48 19.0
LOWER-48 18.5
Source Energy Information Administration, Annual
Energy Outlook 2008-2030.
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• Natural Gas Supplies Must be Increased to Meet
  the Demands of a Carbon
• Constrained Energy Economy

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Alaska
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• The Fuel Mix for New Electricity Generating
  Units Must be More Diversified

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GENERATION OPTIONS AFFECTED BY PUBLIC POLICY
Source Henwood Energy Consulting
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• The Direct Use of Natural Gas is the Most
  Efficient Use and the Best Use

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Long-Term SUMMARY

• Increase Supply
• Increase New Generation Diversity
• Increase Direct Use
• Increase Conservation Efficiency

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• THANK YOU!