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Natural Gas: America’s Abundant Resource

- Heating our homes- Generating more electricity

- Reviving U.S. manufacturing - Fueling transportation- Creating American jobs

Natural Gas RoundtableCongressional Briefing – September 18, 2013

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Scott Morrison - APGAGovernment Affairs

Manager smorrison@apga.org

Erik Milito – APIDirector,

Upstream and Industry Operations

militoe@api.org

Randall Luthi - NOIAPresident rluthi@noia.org

Don Santa INGAA

President dsanta@ingaa.org

Jeff Schrade - NGSADirector, Government Affairsjschrade@ngsa.org

David SweetWADEExecutive Directordsweet@localpower.org

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Natural Gas Has Many Uses

Natural gas heats homes - 177 million Americans use it at home - 71 million U.S. homes and businesses use natural gas

Natural gas increasingly used to generate electricity In 2002, natural gas provided 16 percent of U.S. electric generation In 2011, natural gas provided 31 percent

Natural gas is also used in the manufacturing, chemical and fertilizer industries

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Natural Gas: Good news for U.S. Manufacturing

New projects 2012-2019

LNG Exports

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Natural gas becomes liquid when chilled to -260ºF Chilling shrinks it 600 times

– making it easier to transport LNG is…- Cold, clear, and colorless- Non-toxic, non-corrosive and non-explosive

22 export facilities have been proposed to export LNG to non-free trade countries- 4 LNG export facilities have been approved so far

Natural gas: Good news for the Environment

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“Greater use of natural gas in early 2012 resulted in the lowest U.S. carbon emissions since 1992” U.S. Energy Information Administration, August 1, 2012

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Shale Changed the Game Improvements in

technology brought down production costs

Shale gas production quadrupled between 2006 – 2012 and is poised to comprise more than 40% of U.S. gas production in 2020

Diversity of supply complements strong and growing pipeline system, reduces vulnerability to hurricanes, brings natural gas closer to consumers

Gas Production by Type Through 2040Source: EIA Annual Energy Outlook 2013

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Technology Makes It Possible Drilling technology improvements

and efficiencies in shale have emerged

Longer horizontal laterals Multiple-stage hydraulic fractures

per lateral

Small surface footprint for multiple, extended wells

Ground water separated by thousands of feet and tons of impermeable rock and protected by state and federal regulation

Significant amount of water is recycled

“Micro-seismic” technology evolving and enabling even greater precision in fracturing wells

Source: American Petroleum Institute

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Abundant shale widespread across U.S. U.S. Gas Reserves Increased 22% between 2006 – 2009 Primarily Due to Shale Development

Source: Energy Information Administration based on data from published studiesUpdated: May 2011

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Natural gas production has shifted

Part of the reason

Federal drilling permit 2005 – 154 days

Federal drilling permit 2011 – 307 days

State drilling permit average – 12 to 15 days

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Positive News for the Economy

America’s New Energy Future: The Unconventional Revolution and

the Economy, IHS, October 23, 2012

Total Supported Employment• 2.1 million jobs supported in 2012• 3.9 million jobs supported in 2025

Including 515,000 manufacturing jobs- Jobs tend to high quality and high paying

$35/hr vs. $23/hr in general economyCapital Expenditures• $121 billion in 2012, rising to $240 billion by 2025

- $2.75 trillion cumulative between 2012 and 2025Gross Domestic Product Impact• $284 billion in value added contributions in 2012

- Increases to $533 billion / year in 2025Federal and State Government Revenues• $74 billion in 2012

- Increases to $240 billion in 2025Average Increased Disposable Household Income viaLower Energy Prices$1,200 in 2012, rising to $3,500 in 2025

Natural Gas Industry: Highly Regulated

Regulated by state and federal agencies Clean Water Act – surface water discharge, storm water runoff Clean Air Act – air emissions throughout production to usage Safe Drinking Water Act – underground injection disposal/reuse of produced water and

flowback fluids Federal Land Policy and Management Act – permitting for federal onshore resources Outer Continental Shelf Lands Act – permitting for federal offshore resources National Environmental Policy Act – permits and environmental impact statements Occupational Safety and Health Act – requires information about chemicals used at

every site Emergency Planning and Community Right-to-Know Act – annual reporting to

emergency responders of chemicals stored and used above certain quantities Extensive State Oversight – implement federal laws and regulate drilling fluids and

produced water management Detailed state regulatory information available at www.STRONGERInc.org

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Natural gas estimates keep growing Estimates have grown

significantly with improvements in technology

If the 1966 estimate of 600 trillion cubic feet (Tcf) had remained static, the U.S. would have run out of natural gas about 10 years ago

Estimates have been conservative – history shows there is more to be discovered

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Pipeline System Extensive and Expanding at Record Pace

Between 2000 and 2010, FERC approved more than 16,000 miles of new interstate pipeline- Capacity to move an additional 113 bcf per day

Pipeline system connects U.S. with Canada and Mexico

Storage capacity grew 22% from 2006 - 2010

Half of new storage is flexible high-turnover salt domes closer to customers

U.S. Natural Gas Infrastructure: Anticipated Investment Through 2035

Source: INGAA Foundation’s North American Natural Gas Midstream Infrastructure Through 2035

$205B in midstream infrastructure investments

125,000 jobs every year for 20 years

$57B in federal, state & local tax revenue

since 2005, pipeline avg. cap/ex:

$8.8 Billion/yr15

Off Limits Under Federal Law or Moratorium

Available for Energy Exploration but closed to leasing due to current Federal Policy

Available for Production & Exploration

Offshore access is the key

Estimated Offshore ResourcesWe still have a lot out there

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Natural Gas Vehicles

A growing NGV market addresses a number of America’s priorities:

• Foreign oil displacement• Urban pollution reduction • Jobs• Balance of trade

20-25% of transit buses on US roads are natural gas powered, and last year over 50% of

trash trucks purchased were NGVs

The biggest driver is… cost savings 18

Propane – from natural gas processing - is also used to fuel vehicles

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Tax-exempt financing is the primary method by which cities and towns finance infrastructure

Potential Efforts to alter the current system:

Eliminate Tax-exempt financing

Reduce benefits to wealthy individuals of purchasing municipal bonds

Tax exempt financing

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To Continue to Make Good things happen… Industry is Committed to Good Stewardship

Listening to and addressing community concerns

Use of stringent industry and government standards on land reclamation, well construction, water management and pipeline safety

Responsible hydraulic fracturing practices

Minimizing surface effects on land and infrastructure

Offshore safety and spill containment

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… And Government Must Do Its Part As Well

Fair access to onshore and offshore resources

Continued strong and effective state regulation of hydraulic fracturing

Level playing field: avoid picking winners and losers through mandates

Tax policy must be fair, not burdensome, and compatible with resource development and job creation

Financial regulations must not create “economic drain” on investment

Provide regulatory environment compatible with pipeline infrastructure investment and safe, reliable operation

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American Petroleum Institute (API)1220 L Street, NWWashington, DC 20005-4070202-682-8000 www.api.org

American Public Gas Association (APGA)201 Massachusetts Avenue, NE, Ste C-4 Washington DC 20002 202-464-2742 www.apga.org

Interstate Natural Gas Association of America (INGAA)20 F Street, NW, Suite 450 Washington, D.C. 20001202-216-5900www.ingaa.org

National Ocean Industries Association (NOIA)

1120 G Street, NW • Suite 900Washington, DC 20005202-347-6900www.noia.org

Natural Gas Supply Association (NGSA)1620 I Street, NW, Suite 700Washington, DC 20006202-326-9300www.ngsa.org

World Alliance for Decentralized Energy(WADE)1513 16th Street, NW Washington, DC, 20036(202) 667 5600www.localpower.org