WA Citizens Committee on Pipeline Safety

March 13, 2014

Natural Gas Market Outlook

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

856 854 881 921 897 936 958 950 955 1,057 1,052

1,153

147 147 147 146 141 155 169 169 166 163 159

158

616 687

1,073

0

500

1,000

1,500

2,000

2,500

3,000

Trill

ion

Cu

bic

Fe

et

Traditional Coalbed Shale

Shale resource not assessed separately

2,384

1,119 1,003 ~200

Shale Dominates North American

Production

Source: Navigant Consulting, Fall 2012 Gas Market Outlook

-10

10

30

50

70

90

110

130

Bcfd

Shale Non-Shale Net LNG Imports

Price Not Quantity is the Issue

How Much Is 900 Tcf?

0

200

400

600

800

1000

1200

1400

1600

1800

20

12

20

14

20

16

20

18

20

20

20

22

20

24

20

26

20

28

20

30

20

32

20

34

20

36

20

38

20

40

20

42

20

44

20

46

20

48

20

50

20

52

Cu

mu

lati

ve G

as C

on

sum

pti

on

, Tc

f

North America Supply and Demand

With LNG Exports*

Canada Cumulative Consumption

US Cumulative Consumption

Supply Available at $5.00 or less

Supply Available at $4.00 or less

Source: US Energy Information Administration, Canada National Energy Board

“The Learning Curve”(source: EIA Annual Energy

Outlook)

Price Effect

$0

$2

$4

$6

$8

$10

$12

$14

Jan

-20

08

Ap

r-2

00

8

Jul-

20

08

Oct

-20

08

Jan

-20

09

Ap

r-2

00

9

Jul-

20

09

Oct

-20

09

Jan

-20

10

Ap

r-2

01

0

Jul-

20

10

Oct

-20

10

Jan

-20

11

Ap

r-2

01

1

Jul-

20

11

Oct

-20

11

Jan

-20

12

Ap

r-2

01

2

Jul-

20

12

Oct

-20

12

Jan

-20

13

Ap

r-2

01

3

Jul-

20

13

Oct

-20

13

Jan

-20

14

Ap

r-2

01

4

Jul-

20

14

Oct

-20

14

Jan

-20

15

Ap

r-2

01

5

Jul-

20

15

Oct

-20

15

Jan

-20

16

Ap

r-2

01

6

Jul-

20

16

Oct

-20

16

$/D

th

Historic HH Spot NYMEX Futures

Source: U.S. EIA, NYMEX

NYMEX: 03/10/2014

Price Forecasts

Source: EIA 2014 Annual Energy Outlook Early Release –

December 2013

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

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27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

12

$/D

th

Historic HH Spot Price

EIA 2014 AEO (ER) HH Forecast

NW Power & Conservation Council HH Forecast

NWPCC AECO Forecast

NWPCC Sumas Forecast

Recent Gas Demand

0

100

200

300

400

500

600

700

800

900

1,000

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014*

Mil

lio

n D

th

PNW Gas Deliveries (source: US EIA, StatCan)

Residential Commercial Industrial Generation

* 2014 Outlook Year 1 Forecast

2014 Outlook Forecast

120

140

160

180

200

220

240

260

280M

illio

n D

th/y

ear

Residential Commercial Industrial Power Generation

Replace Existing Resources

Support Renewable Resources

Natural Gas Use Is Versatile

Plastics

Panty hose

Paints

Photographic film

Beer

Safety glass laminate

Adhesives

Solvents

Carpeting

Insulation

Refrigerants

Windshield washer fluid

Particle board

Pigments and dyes

Frozen french fries

Pool liners

Food Packaging

Metals and recycling

Glass and recycling

Bricks

Lumber

Paper

Cardboard

Fertilizer

Antifreeze

Medicines

Aircraft parts

Chewing gum

US Natural Gas and Crude Oil Prices

Source: EIA Monthly Spot Prices through October, 2013

Natural Gas Transportation

Accelerated Demand Scenarios

500

550

600

650

700

750

800

850

900

950

1,000

1,050

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

Mill

ion

De

cath

erm

s

Annual Demand - Expected Case Accelerated Industrial Accelerated Generation

Capacity

Projects

20

Pipelines • Southern Crossing Expansion

• Palomar

• Sunstone

• Blue Bridge (N-MAX)

• Ruby

• Pacific Connector

• Pacific Trail

• Oregon LNG

• Washington Expansion

LNG Terminals

Kitimat LNG

Bradwood Landing

Oregon LNG

Jordan Cove LNG

Storage Facilities

Mist

Jackson Prairie

Oregon LNG Bradwood Landing LNG

Jordan Cove LNG

Kitimat LNG

Questions?

Dan Kirschner, Executive Director

Northwest Gas Association

dkirschner@nwga.org

(503) 344-6637