1 8/28/ National Petroleum Council North American Natural Gas and Oil Resources Study Draft Integrated Study Plan March 29, 2010

28/28/2015 Reassess North American resource production supply chain and infrastructure potential and the contribution that natural gas can make in a transition to a low-carbon fuel mix. Describe the operating practices and technologies that will be used to minimize environmental impacts. Describe the role of technology in expanding accessible resources. Advise on policy options that would allow prudent development consistent with government objectives of environmental protection, economic growth, and energy security. NPC Request from Energy Secretary Chu

38/28/2015 Use the NPC process to provide ideas and policy directions to: Create a shared vision with industry to reduce GHG emissions. Align interests between government and industry to reduce GHG emissions. Propose policies and incentives that will accelerate change. Develop realistic and viable solutions. Consider new business models. Engage and motivate the oil and gas industry to be solution providers at scale. Seize the technological and commercial opportunities for U.S. companies. Possible study structure Develop base case from solid numbers, i.e. business as usual, including optimistic/pessimistic scenarios. Alternative cases that attain administration goals with a discussion of realities, challenges, and needed policies. Secretary Chu Comments to NPC Study Leadership

48/28/2015 Proposed Resource Study Objectives Assess the North American natural gas and oil conventional and unconventional resource base. Assess the productive capacity of the resource base through 2035; and provide views to Explain the role of technology in making this resource producible. Describe demand for natural gas in the U.S. through 2035; and provide views to 2050 Identify how increased use of natural gas could result in lower GHG emissions in all sectors of the economy, including power generation and transportation Describe the operating practices of the industry and the technology used to minimize impacts on the environment. Develop policy options that will allow for the prudent development of these resources with the objectives of: –Protecting the environment –Sustaining economic growth and competitiveness –Promoting energy security

58/28/2015 Coordination with Transportation Fuel Study Oil demand for the U.S. economy is predominantly for transportation, which will be covered in the transportation fuels study. The resource study will provide a high level overview of oil demand for completeness. All conventional and unconventional North American natural gas and oil resources and production, including delivery infrastructure, will be addressed in the resource study. Conversion and use of natural gas and oil in transportation will be addressed in the fuels study. Natural gas use as a transportation fuel will be led by the transportation study. Natural gas transportation fuels demand (direct & indirect use) will be incorporated into the resource study.

68/28/2015 Important Considerations Diversity of thought – identify and involve a broad and diverse set of interests to participate in the study to maximize vision and acceptance. Consensus-based leadership will produce the best results. Provide a broad review of current research and conduct new studies only as needed. Policy recommendations should follow and derive from the development of facts. Develop clear objectives and detailed scope of work before work commences – protect schedule/prevent scope creep. Clear expectations for study participants – commitment level and duration. Communicate regularly with leadership, team members and external stakeholders.

7 8/28/ Resource Study Scope of Work Describe recent and current assessments of North America’s oil & gas resources, analyze and evaluate development pathways for productive capacity and associated infrastructure requirements. Describe the role of technological evolution in the development of the major components of N. America’s oil & gas resources. Describe the likely range of major drivers of future uses of natural gas in a carbon constrained world and the role that technology can play. Describe operating practices and technologies used to minimize environmental impacts from oil and gas development, and discuss future mitigation and enhancement options.

8 8/28/ Resource Study Deliverables Provide the Secretary of Energy with recommendations for the prudent development of N. America’s oil & gas resources that reflect the government’s objectives to: - Reduce green house gas emissions - Protect the environment - Sustain economic growth and competitiveness - Promote energy security Full report on the methodology of the study, sources used, participants involved and findings & conclusions. Report will contain detailed assessments to 2035 and a discussion of implications to 2050.

98/28/2015 Resource Study Core Committee Structure Study Committee Leadership ChairJim Hackett (Anadarko) Government CochairDan Poneman (DOE) Resource & Supply Vice ChairMarvin Odum (Shell) Gas Demand Vice ChairDan Yergin (IHS/CERA) Operations & Environment Vice ChairAubrey McClendon (Chesapeake) SecretaryMarshall Nichols (NPC) Demand Task Group Chair Yeasting (CERA) Govt. Cochair TBD (DOE) Alt. Govt. Cochair Kendall (DOE) Asst. Chair Osten( CERA) Secretary TBD (NPC) Ops & Environment Task Group Chair Hagemeir (CHK) Govt. Cochair Harvey (DOE) Alt. Govt. Cochair Easley (DOE) Asst. Chair Fowler (CHK) Secretary TBD (NPC) Resource & Supply Task Group Chair Slaughter (Shell) Govt. Cochair Freitas (DOE) Alt. Govt. Cochair Duda (DOE) Asst. ChairO’Donovan (Shell) Secretary TBD (NPC) Coordinating Subcommittee Leadership ChairClay Bretches (Anadarko) Government CochairJim Markowsky (DOE) Alternate Government CochairChris Smith (DOE) Assistant ChairScott Moore (Anadarko) Resource & Supply Task Group ChairAndrew Slaughter (Shell) Gas Demand Task Group ChairKen Yeasting (IHS/CERA) Operations & Environment Task Group ChairPaul Hagemeir (Chesapeake) SecretaryJohn Guy (NPC)

10 8/28/ Coordinating Sub-Committee Structure Resource Study Coordinating Sub- Committee Demand Task Group Resource Base and Supply Task Group Operations & Environment Task Group Policy subgroup Communication & Outreach subgroup End-use Emission and Carbon Regulation subgroup Report Writing subgroup Integration & Modeling subgroup Macroeconomic subgroup Transportation Study Coordinating Sub- Committee At Large Coordinating Sub-Committee Members

11 8/28/ At Large CSC Member Candidates Participant Type Major Integrated (2) Service Company (1) Small Cap Independent (1) Environmental (2) End User (1) Utility (1) Regulatory (1) Policy (1 + SG chair) Federal (3) Candidates* Exxon, Conoco Halliburton Southwestern, Noble EDF, NRDC, Pew Center Dow Xcel Energy NARUC CSIS EPA, DOI, FERC *not all confirmed

12 8/28/ Align Project Scope with Task Groups

13 8/28/ Supply Task Group Scope Item A – Describe recent and current assessments of North America’s oil & gas resources, analyze and evaluate development pathways for productive capacity and associated infrastructure requirements. - Three Main Categories Associated with Scope:  Oil & Gas Resources  Productive Capacity  Infrastructure to Market Scope Item B - Describe the role of technological evolution in the development of the major components of N. America’s oil & gas resources. - Specific technologies will be considered as appropriate for each component of NA production

14 8/28/ Supply Task Group Framing Questions Oil & Gas Resource: - What is the scope of technically recoverable conventional and unconventional oil and gas resources available in the US and Canada, according to most recent estimates? Productive Capacity: - How much of this oil and gas resource can be translated into productive capacity by 2050 under reasonable technical and economic assumptions? - What are the main drivers or assumptions behind existing NA oil and gas supply projections? - What factors could significantly increase or decrease the productive potential of these resources? (eg geology, geography, access, technology, non-environmental regulation…) - What could be the particular contribution of each of the major types of oil and gas resource considered in this study and what specific development challenges may they face? Infrastructure to Market: - How will sufficient infrastructure (gathering systems, gas processing plants, crude oil and gas pipelines) be developed to link these resources to the market?

15 8/28/ Supply Task Group Appendices The role of LNG in NA gas supply - Produce short paper and final report sidebar, covering range of forecasts, NA receiving infrastructure and how it fits into overall NA gas supply Gas hydrates - Review and update Hard Truths methane hydrates topic paper and include final report sidebar on potential scope and timing of NA hydrates development Mexico oil and gas - Produce short paper and final report sidebar, covering range of forecasts, contribution to US oil supply and gas issues

16 8/28/ Demand Task Group Scope Item C - Describe the likely range of major drivers of future uses of natural gas in a carbon constrained world and the role that technology can play. - Two Categories  Current demand and historical drivers  Future demand drivers

17 8/28/ Demand Task Group Framing Questions What are the “big” things that past forecasts have missed? What is the range of publicly available natural gas demand projections and what accounts for the differences between forecasts? What is the role of technology on energy efficiency and on future natural gas demand? What are the key drivers of demand for natural gas and electricity by sector (residential, commercial, industrial and transportation)?  Which demand drivers are the most important?  What is the future range for each demand driver?  How could a carbon constrained world affect major demand drivers?  How could technology effect demand drivers ?  What regulatory policy action may significantly affect natural gas demand?  Vehicle demand will be based upon and coordinated with the NPC Transportation Fuels Study. How might various generation capacity portfolio options and carbon policies affect natural gas demand?  What is the range of power generation natural gas demand?

18 8/28/ Operations & Environment Task Group Scope Item D – Describe operating practices and technologies used to minimize environmental impacts from oil and gas development, and discuss future mitigation and enhancement options. - Two Categories  Evolution of operating practices and technology  Future operating practices and technology

19 8/28/ Operations and Environment Task Group Framing Questions Evolution of operations and technology: - What is the evolution of environmental improvements in operating practices and technologies used across the range of resource plays and regional differences? - What is the environmental footprint of upstream and midstream natural gas and oil operations, compared to other energy sources? - What is the environmental and regulatory framework for growth and development of North American natural gas and oil resources? Future operations and technology: - What technological and operational advances are on the horizon to improve efficiency and environmental performance? - What sustainable development principles and practices will enhance and demonstrate North American environmental leadership into the future?

20 8/28/ End-use Emissions & Carbon Regulation Subgroup Scope Item E – Describe the emissions of CO2 and principal regulated air pollutants from U.S. energy primary demand sectors (residential, commercial, industrial, and transportation) and power generation. Identify how the use of natural gas could result in lower GHG emissions and regulated air pollutants in all sectors of the economy  Transportation – the NPC transportation study will assess transportation sector emission and the EECR subgroup will coordinate its analysis with this study.

21 8/28/ End Use Emissions and Carbon Regulation Subgroup Framing Questions What is the contribution of human use of energy to the global carbon cycle? What are the sources of energy related GHG emissions? What are projected GHG emissions to 2050? What are the different regulatory constructs operating or proposed to regulate GHG emissions, e.g. cap and trade, carbon tax, point source regulation, generation performance standards, low carbon portfolio standards, etc.? What technologies are available to reduce GHG emissions, e.g. carbon capture and sequestration? What levels of carbon pricing are necessary to justify the economics of these technologies? What are the primary drivers of potential reductions in GHG emissions? What role can natural gas play in reducing GHG emissions? What are the emissions of regulated air pollutants in the U.S. related to the consumption of energy? What are the opportunities for improvement in energy consumptive emissions of regulated pollutants in the U.S.?

22 8/28/ Policy Subgroup Scope Item F – Recommendations for prudent development of N. America’s oil & gas resources that reflect the government’s objectives to: - Reduce green house gas emissions. - Protect the environment. - Sustain economic growth and competitiveness. - Promote energy security.

23 8/28/ Policy Subgroup Framing Questions Policy framing questions will be developed further into the study process consistent with study guidance that policy recommendations should follow and derive from the development of facts.

24 8/28/ Macroeconomic Subgroup Framing Questions What are the current contributions to the domestic economy of the U.S. oil and gas industry? Specifically as to the following: - Employment - direct, indirect, and induced - Economic activity - Federal, state, and local tax revenues What are projections for future contributions? What factors drive variations in forecasted contributions? What are the effects of these impacts on energy security?

25 8/28/ Other Subgroups Scope Item G – Full study report with detailed assessments to 2030 and views to Operational execution: - Integration and modeling - Report writing - Communication and outreach

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