Southeast LDC Gas Forum Infrastructure Updates… Expanding Your Distribution Network Beyond the Pipeline April 12, 2016 Atlanta, Georgia David Lavoie Vice President, Business Development NG Advantage LLC 1

What is a Virtual Pipeline? 2 Compressor site takes gas from transmission pipeline and gas loaded into tube trailers 40’ trailer hauls CNG housed in carbon-fiber cylinders to offloading station Industrial customer has offloading station installed onsite

What is a Gas Island? Isolated distribution network of pipeline routed to industrial, commercial, and residential users within a defined area Compressed natural gas is delivered to the offloading station via “virtual pipeline”  Compressed natural gas delivered by tractor trailers 24/7 Distribution network connects to offloading station that serves end user  Owned and operated by LDC 3

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Gas Island Partnership Virtual pipeline service provider not interested in being a regulated utility LDC constructs, owns, and operates the gas island distribution loop LDC maintains relationship with customer, including direct billing 5

Gas Island Partnership Virtual pipeline service provider constructs and operates the offloading station  LDC or virtual pipeline service provider may own offloading station Virtual pipeline partner provides service 24/7 When or if gas island is connected to the rest of the network, offloading station and associated equipment are removed 6

Why Build a Gas Island? Serve new customers in advance of planned pipeline extension Distribute to new customers not feasible to serve with traditional pipeline extension Encourage economic development and preserve jobs 7

Why Build a Gas Island? Generate revenue from customers in advance of pipeline construction Fast time to market Lower capital costs 8

First-in-the-Nation Gas Island Vermont Gas Systems (VGS) partnered with NG Advantage (NGA) to develop a local distribution network in advance of their planned pipeline extension Impetus to build remote network – feedback from potential, new customers VGS planned, obtained necessary permits, and built their network in less than a year Launched in Middlebury, Vermont in

First-in-the-Nation Gas Island NGA procures natural gas from VGS and transports it to offloading site VGS bills customers and maintains direct relationship with them Almost six miles of low pressure piping connect a large dairy processing cooperative, a hard cider producer, a college, and hospital 10

What are the Logistical Challenges? Capital investment  $ 5,000,000 - $10,000,000 per compressor station  $500,000 for carbon fiber trailer Optimizing trailer capacity when filling trailers in heat and cold Emptying trailers completely Managing just-in-time routing of trailers 11

What are the Technological Challenges? Sophisticated real-time data management requirements  SCADA tools for knowing when trailer is full or empty and when system needs to switch over to 2 nd trailer  Telemetry on trucks and compressors  Telemetry to monitor customer sites  Video to monitor and assist drivers 12

What are the Reliability Challenges? Guarantee of firm service Adequate storage to cover several days of operation  CNG, LNG Redundancy Backup supply contingent upon requirements of customer base 13

Thank You Southeast LDC Gas Forum PresenterDavid Lavoie Vice President, Business Development