Natural Gas in a Low Carb(on) Diet Energy NewsData Symposium: NW Electric System and GHG Reduction October 25, 2016

NWGA Members: 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 Spectra Energy Transmission TransCanada GTN System Williams NW Pipeline

Historical Energy Production

Recent Gas Demand

2016 Outlook Forecast (0.8% CAGR)

Demand Scenarios Explore impact of plausible potential loads not included in Outlook data set: Industrial Loads Coal retirement 120 MDth/day (800 MW) in 2 tranches 600 MW in 2019-20 (Centralia) 200 MW in 2020-21 (Boardman) Heat rate = 7000 Btu/kilowatt-hour 75% utilization rate

16 Outlook Gen Forecast + Scenario (1.8%; 3.6% CAGR)

A LESS FAMILIAR STORY: DIRECT USE “Direct Use” means space conditioning, water heating, cooking & clothes drying Before we jump in further, lets define what exactly we mean by the “Direct Use of Natural Gas” Direct-Use refers to natural gas consumed – combusted – directly, used in appliances for space heating, water heating, cooking, and clothes-drying. By contrast, some consumers use natural gas indirectly by consuming electricity generated with natural gas. Through this presentation and in the report, we are concerned primarily with these end uses in the residential and commercial sector. Much of the analysis presented is focused more on the residential sector, and for two reasons: 1) Generally there is better and more up-to-date data available for the residential sector; and 2) The residential sector is easier to describe; the commercial sector is heterogeneous, comprised of buildings from small businesses to schools and hospitals, fast food to warehouses – natural gas usage varies considerably from customer to customer. Much of what we describe in terms of benefits and advantages in the residential sector apply also to the commercial sector.   8

Why Direct Use? The Northwest has a great natural gas infrastructure base that serves 3.5 million households and businesses. The production, delivery and use of natural gas to buildings is highly efficient: more than 90% of available energy makes it to the burner tip. Natural gas is a low-carbon fuel with the promise of delivering significant emissions reductions when used directly in a variety of applications. Natural gas is an affordable energy resource. The full potential of natural gas as a tool for greenhouse gas emissions reduction is unrealized. THIS IS THE MONEY SLIDE

Average household consumption of natural gas has dropped by half since 1970. Natural gas use during the past forty years has been relatively flat, even though he natural gas market has grown substantially during this time. Since 1970, more than 30 million more customers have been added onto the natural gas system. While the system has grown, the use of natural gas by individual customers has declined. The result is that the average household today uses 50 percent less natural gas than in 1970. This decline in use per customer results from steady improvements to appliance efficiencies, tighter building shells, behavioral changes in gas consumption, and the effectiveness of gas utility efficiency programs. Source: Energy Information Administration, AGA Calculations

OR/WA GHG Emissions, 2012

Natural Gas Transportation

Production vs. Natural Gas Vehicle Adoption Dry Natural Gas Production (BCF/Yr) Top 30 Countries Natural Gas Vehicles Top 30 Countries #1 United States Iran Russia Pakistan Argentina Brazil China India Italy Colombia Uzbekistan Thailand Ukranie Bolivia Iran #4 Canada Qatar China Norway Saudi Arabia Algeria Netherlands Indonesia Turkmenistan Uzbekistan Malaysia Egypt Australia #13 United States Armenia Bangladesh Eygpt Peru Germany Venezuela Russia Bulgaria Malaysia Sweden Japon South Korea United Arab Emirates Mexico India United Kingdom Trinidad and Tobago Pakistan Argentina Thailand Nigeria Oman Venezuela Bangladesh Ukraine Azerbaijan #27 Burma Canada Switerzland France Dominican Republic 25000 20000 15000 10000 5000 0.0 M 1.0 M 2.0 M 3.0 M 4.0 M 10

Projected Fuel Price Differentials Source: EIA 2016 AEO