2017 Natural Gas Outlook Natural Gas Prices are Low What Could Change That? Randy Friedman Senior Director, Gas Supply July 13, 2017

Henry Hub Prices Remain Low 2

And Closer to Home the Same First-of-the-month index prices through July 2017 3

Storage inventories are strong All-time peak storage inventory level was set last November (week ending 11/11/2016) at 4,047 Bcf, beating the record set just one year earlier. 4

Importance of Storage Gas consumption is highly seasonal Gas well production is not U.S. natural gas monthly data through April 2017 Source: EIA website at https://www.eia.gov/naturalgas/monthly/pdf/figure_01.pdf 5

Speaking of Seasonality… The U.S. just had its 2nd Warmest Winter on record (warm everywhere EXCEPT here!) October 2015-March 2016 was the Warmest Winter on record 6

Trumponomics – Supply Side Drill Baby Drill Interior Dept. to review hundreds of millions of acres of Federal Lands and Waters that were protected from development under previous executive orders Issued permits for Keystone XL and Dakota Access pipelines Regulatory Freeze/Review Vow to cut federal regulations by 75% FERC lacks a quorum, $20 billion in energy infrastructure projects are stalled PHMSA safety rulemakings drag on Mandate to use U.S. produced materials Commerce Dept. directed to develop plan Could hinder new pipeline projects 7

Trumponomics – Demand Side Coal resurgence? Rescinding the Clean Power Plan More coal means less natural gas for power generation… LNG Exports a top Priority White House support for Jordan Cove (Coos Bay) project Tax Code Overhaul Trickle down economics to boost demand Border Adjustment Tax could hit Pacific Northwest hard but not part of plan unveiled in late April No Depreciation for foreign made materials? “Even if natural gas prices doubled, those high prices would have to hold steady for a long period of time before capital markets started getting re-interested in coal…“ - Tom Sanzillo, Institute for Energy Economics and Financial Analysis, in Bloomberg BNA, April 26, 2017 8

Gas taking Market Share from Coal Source: Macquarie Natural Gas Weekly Report issued April 27, 2017 9

Trumponomics – Other International trade International tensions The Wall and its effect on trade with Mexico Renegotiation of NAFTA Withdrawal from the Trans-Pacific Partnership Backed off from naming China a currency manipulator New import tariffs International tensions Immigration bans…Healthcare reform… which of your favorites did I miss? 10

Which Changes will affect the Big Picture? Source: EIA website at https://www.eia.gov/totalenergy/data/monthly/pdf/flow/natural_gas.pdf 11

NW Natural Update Load Growth fairly flat Resource Plan Review Last two winters gave us more “cold” days (< 38OF) for recalibrating our peak load modeling Customer growth offset by declining usage per customer Resource Plan Review Segmented capacity from Sumas was used last winter and worked as anticipated Mist recall decisions are made in the summer for a May 1st effective date  No new Mist recall is the decision this summer T-South Expansion Project in British Columbia No impact until 2020 Details forthcoming in our 2016 IRP Update filing 12

The Plan for this Winter… will look like last Winter 13

Whither WACOG? 14