U.S. Natural Gas Pipeline Network

FUTURE NATURAL GAS DEMAND(2010-2030)

Source: Energy Information Administration, Annual Energy Outlook 2009-2030.2

FUTURE NATURAL GAS SUPPLY(2010-2030)

Source: Energy Information Administration, Annual Energy Outlook 2009-2030.3

4

North American SupplyProjected US Supply/Demand Balance

(EIA Annual Energy Outlook 2005)

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Year

Tcf

LNG

Canada

Domestic

Total US Demand

Initial Alaskan gas reaches lower 48

NATURAL GAS SUPPLYNATURAL GAS SUPPLY(JANUARY 1-DECEMBER 31, 2008)(JANUARY 1-DECEMBER 31, 2008)

Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, 2008.

Mar

Sep

5

Shale Basins and the U.S. Pipeline Grid

Source: American Clean Skies Foundation.

UNCONVENTIONAL RESOURCE UNCONVENTIONAL RESOURCE DEVELOPMENTDEVELOPMENT

Traditional Natural Gas Production

UnconventionalGas Resources

Shales, Tight Sands, Coal Seams

Natural Gas Production Barnett Shale 1993-2006

Source: Texas Railroad Commission

General Characteristics of Productive Shales

Source: William Grieser, Halliburton Company.

SHALE GAS RESOURCE ESTIMATESSHALE GAS RESOURCE ESTIMATES

Potential Gas Committee added about 200 Tcf to U.S. resource assessment between 2004 and 2006 – almost all attributed to

new shale-related data

Navigant Consulting, Inc. (2008) estimates 275-842 Tcf from 17 U.S. shale plays

SELECTED SHALE GAS RESOURCE ESTIMATESSELECTED SHALE GAS RESOURCE ESTIMATES

Shale Play Estimate (Tcf) Max Gas In-Place (Tcf)

Antrim 13 76Appalachian 70 1744

Marcellus 34 1500Haynesville 34 717Fayetteville 26 52Barnett 26 168Lewis (New Mexico) 10 61Lewis (Wyoming) 14 98

Mean estimate for U.S. shale resources, 274 TcfGas in-place estimates as high as 3,765 Tcf

(Navigant Consulting, Inc.)

SHALE GAS PRODUCTION ESTIMATESSHALE GAS PRODUCTION ESTIMATES

Depending on the source, some analysts estimate that shale production now at

about 5 Bcf per day will grow to 27-35 Bcf per day by the end of the next decade

Will this be additive to current production rates or will it only replace other

declining production capability?

Daily Natural Gas Consumption by Sector January 1-December 31, 2008

Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, 2008.

PO

UN

DS

OF

CO

2 P

ER

M

MB

TU

NATURAL GAS IS BY FAR THE CLEANEST

OF ALL FOSSIL FUELS

Source: U.S. Energy Information Administration..

14

CONSUMPTION PER RESIDENTIALNATURAL GAS CUSTOMER

Source: U.S. Energy Information Administration and American Gas Association. NOTE: Data is “weather normalized” or adjusted to reduce the impact of abnormally warm or cold weather.

32% EfficiencyImprovement

15

GREENHOUSE GAS EMISSIONSGREENHOUSE GAS EMISSIONS

RESIDENTIAL NATURAL GAS CUSTOMERSRESIDENTIAL NATURAL GAS CUSTOMERSARE GROWING, BUT THEIR GREENHOUSEARE GROWING, BUT THEIR GREENHOUSE

GAS EMISSIONS HAVE DECLINEDGAS EMISSIONS HAVE DECLINEDM

ILL

ION

S O

F T

ON

S/Y

R.

Source: U.S. Environmental Protection Agency, U.S. Energy Information Administration and American Gas Association.

16

MIL

LIO

N B

tu

TOTAL ENERGY EFFICIENCY(SOURCE ENERGY REQUIRED TO DELIVER 100 MMBtu

TO END-USE CUSTOMER)

NOTE: National average electricity generation mix.

17

DIRECT NATURAL GAS USE REDUCESGREENHOUSE GAS EMISSIONS

TO

NS

OF

CO

2 /Y

EA

R

18

NUMBER OF NATURAL GASNUMBER OF NATURAL GASCUSTOMERS INCREASINGCUSTOMERS INCREASING

19

20

OUR INDUSTRY’S FUTURE LOOKS BRIGHT

Abundant domestic supply resource base to meet demand growth at reasonable costs

Innovative rate designs to align interests of utility and customers

Increased direct use of natural gas can reduce energy consumption and costs, lower carbon emissions and enhance national energy security

Gas utility industry is a solid, safe, responsible investment

21

Utility Operations Technologies on the Horizon

• Smart Meters

• Expanded Use of Mapping and Other Informational Systems

• Enhanced Locating Technologies

• Improved Leak Detection (Vehicles and Handheld)

• Improved Design, Construction and Materials

• Enhanced Pipeline Repair/Rehabilitation