FERC

1

APGA Annual Conference Halifax, Nova Scotia

FERC Priorities in an Evolving Natural Gas Market

Suedeen G. KellyCommissioner, FERC

August 2, 2005

FERC

2

How Much Natural GasIs Out There?

Middle East42%

North America4%

Western Europe3%

Central & South America

4%

Asia & Oceania7%

Africa7%

Eastern Europe & Former U.S.S.R.

33%

Total World Gas Reserves as of 1/1/04: 6,079 Trillion Cubic Feet

Source: EIA, Oil and Gas Journal

FERC

3

Alan GreenspanChairman of the Board of Governors

of the Federal Reserve System.

July 20, 2005“...the current and prospective expansion of U.S. capability to import liquefied natural gas will help ease longer-term natural gas stringencies and perhaps bring natural gas prices in the United States down to world levels.”

June 10, 2003“...we cannot, on the one hand, encourage the use of environmentally desirable natural gas in this country while being conflicted on larger imports of LNG.”

Economic Oversight – Access to LNG Terminal

AOpen Access At

Delivery of Liquid to Terminal

LNGSuppliers

LNGBuyers

AB

BOpen Access At

Delivery of Vapor into Interstate Pipeline

System

Liquid to Vapor Flow

FERC

4

FERC

23

25

A

3 4

44

17

8

2715

29

28

4546

54

14

52

53

B

37

35

1

19

47

3012

55

US Jurisdiction

FERC US Coast Guard

4948

* US pipeline approved; LNG terminal pending in Bahamas** These projects have been approved by the Mexican and Canadian authorities

50

21

1036204116

24

42

7C

2D

1811

31

3213

5,269

6

40

3334

2239

E

CONSTRUCTEDA. 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 : 1.0 Bcfd (Southern Union -

Trunkline LNG)E. Gulf of Mexico: 0.5 Bcfd (Gulf Gateway Energy

Bridge - Excelerate Energy)

APPROVED BY FERC1. Lake Charles, LA: 1.1 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 GUARD13. Port Pelican: 1.6 Bcfd (Chevron Texaco)14. Louisiana Offshore : 1.0 Bcfd (Gulf Landing -

Shell)

PROPOSED TO FERC15. 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)

PROPOSED TO MARAD/COAST GUARD27. California Offshore: 1.5 Bcfd (Cabrillo Port - BHP

Billiton)28. So. California Offshore : 0.5 Bcfd (Crystal

Energy)29. Louisiana Offshore : 1.0 Bcfd (Main Pass

McMoRan Exp.)30. Gulf of Mexico: 1.0 Bcfd (Compass Port -

ConocoPhillips)31. Gulf of Mexico: 2.8 Bcfd (Pearl Crossing -

ExxonMobil)32. Gulf of Mexico: 1.5 Bcfd (Beacon Port Clean

Energy Terminal - ConocoPhillips)33. Offshore Boston, MA: 0.4 Bcfd (Neptune LNG -

Tractebel)34. Offshore Boston, MA: 0.8 Bcfd (Northeast

Gateway- Excelerate Energy)

POTENTIAL SITES IDENTIFIED BY PROJECT SPONSORS

35. Coos Bay, OR: 0.13 Bcfd (Energy Projects Development)

36. Somerset, MA: 0.65 Bcfd (Somerset LNG)37. California - Offshore: 0.75 Bcfd (Chevron

Texaco)38. Pleasant Point, ME : 0.5 Bcf/d (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)

CANADIAN APPROVED AND POTENTIAL TERMINALS

44. St. John, NB : 1.0 Bcfd (Canaport - Irving Oil)**45. Point Tupper, NS 1.0 Bcf/d (Bear Head LNG -

Anadarko)**46. Quebec City, QC : 0.5 Bcfd (Project Rabaska -

Enbridge/Gaz Met/Gaz de France)47. Rivière-du- Loup, QC: 0.5 Bcfd (Cacouna

Energy - TransCanada/PetroCanada)48. Kitimat, BC: 0.61 Bcfd (Galveston LNG)49. Prince Rupert, BC: 0.30 Bcfd (WestPac

Terminals)50. Goldboro, NS 1.0 Bcfd (Keltic Petrochemicals)

MEXICAN APPROVED AND POTENTIAL TERMINALS51. Altamira, Tamulipas : 0.7 Bcfd

(Shell/Total/Mitsui)**52. Baja California, MX : 1.0 Bcfd (Sempra)** 53. Baja California - Offshore : 1.4 Bcfd (Chevron

Texaco)**54. Lázaro Cárdenas, MX : 0.5 Bcfd

(Tractebel/Repsol)55. Puerto Libertad, MX: 1.3 Bcfd (Sonora Pacific

LNG)56. Offshore Gulf, MX: 1.0 Bcfd (Dorado -

Tidelands)57. Manzanillo, MX: 0.5 Bcfd58. Topolobampo, MX: 0.5 Bcfd

Existing, Proposed and Potential North American LNG Terminals

Office of Energy Projects

56

As of July 21, 2005

51

57

58

4338

FERC

6

05

10152025

303540455055

Bcf

per

Day

Potential

Proposed - FERC &Coast Guard

Approved byMARAD/CoastGuard Approved by FERC

Constructed

Maximum LNGDeliverability Growth

+ + + +

FERC

7

US Natural Gas Balance

-10

0

10

20

30

40

50

60

70

80

90

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Years (beginning in 2000)

Volu

me (

Bcf per

day)

Total Production Canadian ImportsNet Imports from Mexico LNG ImportsAlaska (to Lower 48) Demand - US

FERC

8

Recent LNG Approval:Ingleside Energy

• Continues FERC’s LNG Policy

• Siting and Facilities are Optimal

• Will Operate Like a Cogeneration

Facility

FERC

9

Challenges Presentedby LNG

• Gas Quality & Interchangeability

• Safety and Security

FERC

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Challenges PresentedGas Quality and

Interchangeability

• Definitions

• Examples

• Current Events

– Evolving Standards

– Cove Point and Washington Gas

FERC

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Challenges PresentedSafety and Security

• Major challenge in LNG program• Onshore and offshore reviews of

LNG proposals• Oversee construction• Monitoring and periodic

inspections of LNG facility for its life

FERC

12

Northwest(113)

ANR(107,143)

Ocean Express(842)

CheyennePlains (560,170)

Calypso(832)

Discovery (150)

Transwestern(375)

Trunkline(1,500)

Cheniere Sabine (2,600)

Trunkline (200)

Questar (102)

Petal (600)

Major Pipeline Projects Certificated (MMcf/d)

January 2004 to July 2005

17.7 BCF/D Total975 Miles Cheniere Corpus Christi

(2,600)

CIG (118)

TransColorado (125, 300)

WIC (116)

Algonquin (140)

Transcontinental (105)

CenterPoint(113)

CIG (105)

Vista Del Sol(1,100)

Golden Pass (2,000)

El Paso(502)

Mill River(800)

San Patricio(1,000)

Rendezvous(300)

FERC

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McMoRan (1,500)

Compass Pass(1,000)

Algonquin(800)

Pearl Crossing (2,000)

GoldenPass

(2,000)

Entrega(EnCana)

(1,500) Logan Lateral

(Texas Eastern)(900)

WIC (350)

Seafarer Pipeline(El Paso) (800)

Dominion Southern(200)

Northern Border(Chicago III)

(130)

Major Pipeline ProjectsPending (MMcf/d)

July 2005

16.6 BCF/D Total1,277 Miles

Dominion(700)

Cameron(1,500)

Columbia (172)

Cheniere Creole Trail (3,300)

ANR(168)

Midwestern(120)

Point Comfort(1,000)

Cypress Pipeline(Southern Natural) (500)

FERC

Major Pipeline Projects On The Horizon (MMcf/d)

July 2005

15.6 BCF/D Total6,195 Miles

Maritimes Phase IV (1,563)Northwinds Pipeline

(NFG) (500)Freedom Trail (Tennessee)

(150)Dracut Interconnect

(Tennessee) (250)Brookhaven Lateral

(Iroquois)(50)Potomac Expansion

(Transco)(150)

Coronado (500)Phoenix Lateral (Transwestern) (500)

Piceance to Cheyenne (KM Interstate) (500)Advantage Southern (KM Interstate) (330)

Silver Canyon Project (KM Interstate) (750)KM West Texas (KM Interstate) (300)

Wheatland Expansion (KM Interstate) (80)Western Frontier (So. Star)(540)

Kern River California Expansion (200)Kern River Expansion (500)Questar Expansion (160,100)

Trailblazer (100)Panhandle Eastern (500)Vector Expansion (500)

Trunkline (400)KM LNG (1,000)

Carthage Pipeline(KMInterstate)(700)

CenterPoint (500)Natural (232)

Alaska (4,000)

FERC

15

Caledonia (11.7)

Falcon MoBay (20.0)

County Line (6.0)Copper Eagle

(3.2)EnCana (8.0)

Bluewater(27.0)

Saltville(5.8)

Columbia (12.4)

Pine Prairie (24.0)

Natural (10.0)

Dominion (9.4)

Texas Gas (8.2)

Freebird (6.1)CenterPoint (15.0)

Starks (19.2)Falcon Hill-Lake (10.4)

Liberty (17.0) Petal (5.0)

Port Barre (10.5)

SemGas (5.5)

Certificated Since 1/1/04

On The HorizonCurrently Pending

Sabine(40.0)

Storage Projects(Capacity in Bcf)

July 2005

Falcon Worsham-Steed (20.0)

Unocal Windy Hill(6.0)