Ohio Gas Association

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Ohio Gas Association September 19, 2005 Lima,
Ohio  
James Crews Manager of Gas Control Columbia Gas
Transmission
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Market Trends and Storage Services  
James Crews Manager of Gas Control Columbia Gas
Transmission
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NiSource Inc.

• Strategic Location
• 30 Population / 40 of U.S. Energy Consumption
• Gas Distribution
• 3.3 Million Customers
• 879 Mdth Throughput
• 9 States
• Gas Transmission
• 16,000 Miles of Pipeline
• 1.2 Tcf Annual Throughput
• Gas Storage
• 246 Bcf Working Gas
• 4.4 Bcf peak day deliverability
• Electric
• Over 440,000 Customers
• 3,392 MW Generating

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Industry Faces Change

• Increased storage demand in todays market
• Evaluating storage customers needs
• Developing new storage capacity and services

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Industry Faces Change

• Supply Changes
• Demand Changes
• Pipeline Storage Changes

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Change in Supply

• Volume -- Gulf decline and reduced seasonal
  capacity
• Location -- Demand market LNG imports
• Variability --LNG more variable than
  traditional production
• New Supply Sources -- Very limited next few
  years

Change in Supply
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Gulf Flows Stable Day-to-Day
Change in Supply
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LNG Supply Increases
Change in Supply
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Longer Supply Chain for LNG
Change in Supply
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Pipelines Designed for Gulf Coast Gas
Gas Storage Facilities
Increased Flow of variable LNG from within
Market Areas
Reduced flow of stable production from GOM
Change in Supply
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And Sendout Disruptions Common at Cove Point
Pipeline Maintenance
Trinidad Port Strike
Hurricanes
Ship Delay
Trinidad Fire
Hurricane
Change in Supply
Source Dominion Cove Point Informational
Postings Capacity Operationally Available by
Receipt/Delivery Point
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Price Forecast
Source GPCM ModelBase 5/13/2005
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Change in Demand

• Volume
• Market Area Peak Day Growth
• Base Load Reduction
• Variability Increases
• Industrials demand share decreases
• Power demand share increases
• Wild card Expanded demand response to high
  prices

Change in Demand
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Customer Mix Changing Composition More Peaks
Power
LDC
Industrial
Change in Demand
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National Petroleum Council Peak Day Forecast
Change in Demand
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NE Mid Atlantic LDCs Setting Peak Day Records

• Washington Gas Light Sendout records last
  three winters
• South Jersey Gas Sendout record this winter
• Central Hudson Sendout records last two
  winters
• Key Span - Sendout records last two winters
• PECO - Sendout record this winter
• ConEd Sendout record this winter

Change in Demand
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(No Transcript)
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Katrina and Prices
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Katrina and Storage
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Will Storage be Adequate?

• In the near term--
• Little LNG terminal expansion, and world LNG
  supply remains limited
• Ability to complete storage expansion
  proposals limited
• Continued power residential peak day growth
• Wildcard is weather domestic production
  reliability
• Post 2008--
• Sufficient LNG terminal supply capacity
  probable
• Storage development underway
• Infrastructure redesigned for market demand
  new supply

Change in Demand
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Pipeline and Storage Changes Underway

• Recognition of the challenge
• Third party forecasts call for storage
• Peak day records set in Eastern markets
• Market Response
• Positive response to storage development
  initiatives

Pipeline Storage Changes
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Current Storage Response
Pipeline Storage Changes
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Meeting Storage Demand Today

• 12 Bcf of new market-area storage (176,000 Dth/d)
• Filed in April, 2005
• In-service November 2007
• Fully subscribed, long-term contracts
• NiSource partnership with Piedmont Natural Gas

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Eastern Market Expansion
Storage Expansion
Target Market
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Eastern Market Expansion

• Opportunity to acquire production field and
  convert to storage asset
• Capacity
• 10 Bcf working gas
• 175 225 Mdth daily deliverability
• Pipeline expansion required to deliver storage
  volumes to target markets
• Market support encouraging Large East Coast
  LDCs have indicated interest
• In-service April 2009

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Summary

• Need for additional seasonal storage has been
  clearly established
• We see a viable market for this type of
  storage
• LDCs have been key participants underwriting
  current projects
• Other participants and types of storage may
  yet emerge.

Pipeline Storage Changes
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Conclusions

• To meet these challenges by 2008, development
  decisions must be made now
• LDCs have continued to support projects so
  farwho will underwrite future expansions?
• NiSource actively pursuing future storage
  projects

Pipeline Storage Changes