Americas Natural Gas Market Challenge

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Americas Natural GasMarket Challenge

• American Gas Association
• 2005

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2005-2006Peak Month
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Estimated Peak Month Gas Supplies2005-2006

• Source Bcf
• Conventional Prod. 1,600 57.3
• Underground Storage 840 30.1
• Supplementals 6 0.3
  
• Net Canadian Imports 300 10.8
• LNG Imports 50 1.8
• Subtotal 2,796 100.0
• Mexico Exports 33
• Total Gas Supplies 2,763
• (Do not add due to rounding)

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AGA 2004-05 Winter Heating Season Survey
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Working Gas in Underground Storage Compared With
5-Year Range (EIA)
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AGA 2004-05 Winter Heating Season Survey
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Lower-48 Dry Gas Production vs.Dry Gas
Productive CapacitySource Energy and
Environmental Analysis, Inc.
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STATUS OF U.S. UNCONVENTIONAL GAS PRODUCTION
In the past three years, unconventional gas has
helped maintain U.S. production and now accounts
for 35 of U.S. natural gas supplies.
JAF2004074.XLS
19.4
19.2
20.0
2000 2003
15.0
35 of U.S. total
10.0
U.S. Natural Gas Production (Tcf)
6.8
5.8
5.4
5.5
5.0
3.1
2.8
0.0
Associated Gas
Total Domestic Production
Onshore Conventional
Unconventional Gas

• Source
• Conventional/Offshore EIA Annual Reserve
  Reports.
• Unconventional Advanced Resources International
  data base.

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AGA 2004-05 Winter Heating Season Survey
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AGA 2004-05 Winter Heating Season Survey
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Estimated Peak MonthJanuary 2006

• Estimated Total Gas Supplies
• 2,763 Bcf
• Estimated Peak Consumption
• 2,716 Bcf
• (January 2003)

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U.S. Natural Gas Spot PricesEIA (August 2005)
The confidence intervals show /- 2 standard
errors based on the properties of the model. The
ranges do not include the effects of major supply
disruptions.
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West Texas Intermediate Crude Oil PriceEIA (Aug
2005)
The confidence intervals show /- 2 standard
errors based on the properties of the model. The
ranges do not include the effects of major supply
disruptions.
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Natural Gas Supply2005-2010
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Gas Demand Outlook
Source Energy and Environmental Analysis (EEA)
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Lower-48 Annual Gas ProductionBy Region 2000-2010
Source Lippman Consulting, Inc.
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(No Transcript)
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Western Canada Natural Gas Production
Production increased by more than 200 mmcf/d in
the first quarter 2005 over last year
2005
2004
2003
Source FirstEnergy Capital
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Canadian Marketed Production And Net Exports to
US 2000-2009
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LNG Imports and Import Capacity2000-2009
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(No Transcript)
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(No Transcript)
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IS LNG ECONOMIC?
Source Freeport LNG
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Natural Gas Pipeline Capacity Additions2003-2007
(EIA, June 2005)
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Cost of Pipeline Additions 2003-2007(EIA, June
2005)
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Total Lower-48 Gas SupplyBy Source 2000-2009
Sources Lippman Consulting, Inc., AGA, EEA, CAPP
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Natural Gas Market2011-2020
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Northern Gas Market Options
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Alaska
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SOURCES OF CURRENT U.S. NATURAL GAS SUPPLY
2003 22.5 Quads
Canada 3.3
LNG O.5
Lower-48 18.7
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SOURCES OF PROJECTEDU.S. NATURAL GAS SUPPLY
2020 30.7 Quads
ALASKA 2.7
LNG 6.8
CANADA 2.3
LOWER-48 19.0
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COMPARISON OF LONG-TERM SCENARIOS2003 2020
FORECAST - 2020
PRICE (/MMBtu, Henry Hub)
Actual 2003
Expected
Expanded
Existing
Nominal 5.49 8.15 5.47
13.76 Nom. Avg. (2004-2020)
6.72 5.50 9.43
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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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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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What Can We Do?

• Promote energy efficiency and conservation
• Encourage the development of storage
• Encourage balance between economic and
  environmental values
• Diversify sources of power generation
• Encourage Alaskan supply
• Encourage LNG supply

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Thank You!