Tulsa Pipeline Expo Fourth Annual Meeting Fourth Annual Meeting August 28, 2012 Berne L. Mosley, Energy Projects Consulting, LLC

Infrastructure Trends -- Shale Gas as a Driver and the Associated Ripple Effects… Pipeline / Storage Impacts Flow Changes Rate Proceedings Infrastructure Status LNG Exports FERC Export Terminals – Status DOE /FE Commodity Export Authorizations Economic Impacts

Changes in Historic Patterns Traditional southwest to northeast pipeline flow is changing… Marcellus shale is closer to the traditional market areas, thus displacing gulf / southwest production…cheaper transportation costs, quicker access Pipelines are getting FERC approval to reverse pipeline flow to provide the ability to export shale gas to Canada Pipelines are experiencing low load factors in the central parts of their systems, and many are seeking to reverse flow and take ethane rich shale supplies to the natural gas liquids markets in the gulf

Rate Proceedings With low load factors in the central parts of their systems, some pipelines are responding with rate / tariff changes: Columbia Gulf Transmission Tennessee Gas Pipeline Corporation Both revised mileage-based transportation rates to postage stamp rates to offset lost / diminished transportation services on their systems owing to shale gas development. This trend is likely to continue…

Infrastructure Status Approved Pipeline Projects Source -- Total 2, ,490

Infrastructure Status Pending Pipeline Projects Source -- Total 2, ,725

Infrastructure Status

DOE / Fossil Energy Commodity Exports Applications Received by DOE/FE to Export Domestically Produced LNG from the Lower-48 States (as of June 15, 2012) Source: Office of Oil and Gas Global Security and Supply, Office of Fossil Energy, U.S. Department of Energy (1) FTA – Applications to export to free trade agreement (FTA) countries. The Natural Gas Act, as amended, has deemed FTA exports to be in the public interest and applications shall be authorized without modification or delay. (2) Non-FTA applications require DOE to post a notice of application in the Federal Register for comments, protests and motions to intervene, and to evaluate the application to make a public interest consistency determination.

Economic Impacts - EIA Study January 2012* * DOE/FE provided four scenarios of export- related increases in natural gas demand (Figure 1) to be considered: 6 billion cubic feet per day (Bcf/d), phased in at a rate of 1 Bcf/d per year (low/slow scenario), 6 Bcf/d phased in at a rate of 3 Bcf/d per year (low/rapid scenario), 12 Bcf/d phased in at a rate of 1 Bcf/d per year (high/slow scenario), and 12 Bcf/d phased in at a rate of 3 Bcf/d per year (high/rapid scenario).

EIA Study - Summary of Results Increased natural gas exports lead to: higher domestic natural gas prices increased domestic natural gas production reduced domestic natural gas consumption increased natural gas imports from Canada via pipeline.

Questions???

Contact Information: Berne L. Mosley, President Energy Projects Consulting, LLC

Appendix

Applications Received by DOE/FE to Export Domestically Produced LNG from the Lower-48 States (as of June 15, 2012) Source: Office of Oil and Gas Global Security and Supply, Office of Fossil Energy, U.S. Department of Energy

Applications Received by DOE/FE to Export Domestically Produced LNG from the Lower-48 States (as of June 15, 2012) -- Footnotes Source: Office of Oil and Gas Global Security and Supply, Office of Fossil Energy, U.S. Department of Energy