Natural Gas Market Outlook WA Citizens Committee on Pipeline Safety - PowerPoint PPT Presentation

Natural Gas Market Outlook WA Citizens Committee on Pipeline Safety March 13, 2014

1914 Willamette Falls Dr., #255 West Linn, OR 97068 (503) 344-6637 www.nwga.org NWGA Members: Avista Corporation Cascade Natural Gas Co. FortisBC Energy Intermountain Gas Co. NW Natural Puget Sound Energy Kinder Morgan Ruby Pipeline Spectra Energy Transmission TransCanada GTN System Williams NW Pipeline

Conventional vs. Horizontal Drilling Traditional Wells Horizontal Drilling

Gas From Shale Has Profound Impact

Total Resource Estimates Increase 3,000 Traditional Coalbed Shale 2,384 2,500 Trillion Cubic Feet 2,000 Shale resource not assessed separately 1,073 687 1,500 616 1,119 158 ~200 1,003 163 159 169 166 169 1,000 155 146 141 147 147 147 1,153 1,057 500 1,052 958 955 936 950 921 897 881 856 854 0

Shale Dominates North American Production 130 Shale Non-Shale Net LNG Imports 110 90 70 Bcfd 50 30 10 -10 Source: Navigant Consulting, Fall 2012 Gas Market Outlook

Price Not Quantity is the Issue

How Much Is 900 Tcf? North America Supply and Demand 1800 With LNG Exports* Cumulative Gas Consumption, Tcf 1600 Canada Cumulative Consumption US Cumulative Consumption 1400 Supply Available at $5.00 or less 1200 Supply Available at $4.00 or less 1000 800 600 400 200 0 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 Source: US Energy Information Administration, Canada National Energy Board

“The Learning Curve” (source: EIA Annual Energy Outlook)

$/Dth $10 $12 $14 $0 $2 $4 $6 $8 Price Effect Jan-2008 Apr-2008 Source: U.S. EIA, NYMEX Jul-2008 Oct-2008 Jan-2009 Apr-2009 Jul-2009 Oct-2009 Jan-2010 Apr-2010 Jul-2010 Oct-2010 Jan-2011 Apr-2011 Jul-2011 Oct-2011 Jan-2012 Apr-2012 Historic HH Spot Jul-2012 Oct-2012 Jan-2013 Apr-2013 Jul-2013 Oct-2013 Jan-2014 Apr-2014 Jul-2014 Oct-2014 NYMEX Futures NYMEX: 03/10/2014 Jan-2015 Apr-2015 Jul-2015 Oct-2015 Jan-2016 Apr-2016 Jul-2016 Oct-2016

Price Forecasts $10.00 Historic HH Spot Price EIA 2014 AEO (ER) HH Forecast $9.00 NW Power & Conservation Council HH Forecast NWPCC AECO Forecast $8.00 NWPCC Sumas Forecast $7.00 2012$/Dth $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Source: EIA 2014 Annual Energy Outlook Early Release – December 2013

Recent Gas Demand PNW Gas Deliveries (source: US EIA, StatCan) Residential Commercial Industrial Generation 1,000 900 800 700 600 Million Dth 500 400 300 200 100 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20132014* * 2014 Outlook Year 1 Forecast

2014 Outlook Forecast 280 260 240 220 Million Dth/year 200 180 160 140 Residential Commercial Industrial Power Generation 120

Replace Existing Resources

Support Renewable Resources

Natural Gas Use Is Versatile Plastics Frozen french fries Panty hose Pool liners Paints Food Packaging Photographic film Metals and recycling Beer Glass and recycling Safety glass laminate Bricks Adhesives Lumber Solvents Paper Carpeting Cardboard Insulation Fertilizer Refrigerants Antifreeze Windshield washer fluid Medicines Particle board Aircraft parts Pigments and dyes Chewing gum

US Natural Gas and Crude Oil Prices Source: EIA Monthly Spot Prices through October, 2013

Natural Gas Transportation

Accelerated Demand Scenarios Annual Demand - Expected Case Accelerated Industrial Accelerated Generation 1,050 1,000 950 900 Million Decatherms 850 800 750 700 650 600 550 500 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

Capacity Projects Pipelines Kitimat LNG • Southern Crossing Expansion • Palomar • Sunstone • Blue Bridge (N-MAX) • Ruby • Pacific Connector • Pacific Trail • Oregon LNG • Washington Expansion LNG Terminals Bradwood Landing LNG Oregon LNG Kitimat LNG Bradwood Landing Oregon LNG Jordan Cove LNG Jordan Cove LNG Storage Facilities Mist Jackson Prairie 20

Questions ? Dan Kirschner, Executive Director Northwest Gas Association dkirschner@nwga.org (503) 344-6637