U.S. Liquefied Natural Gas Exports: America’s Opportunity and Advantage 1

2002 to 2012 A Decade Makes a Difference ThenNow #  60-year supply and falling  Shale known but uneconomic to develop  Underground gas storage primarily traditional reservoir, operationally not very flexible  Pipeline capacity growing incrementally  Rising prices with several spikes  100+ years supply and growing  Flourishing production, vast shale resources now accessible  Storage boom with more flexible salt- cavern facilities and additional market area storage  16,000+ miles of interstate pipeline added since 2000  Plentiful supplies moderate prices and provide supply diversity

1220 L Street, NW Washington, DC Horizontal Drilling = Access + Lower Impact

1220 L Street, NW Washington, DC Hydraulic Fracturing = Access + Lower Impact

Industry is Committed to Doing it Right: Safety and Environmental Protections Are Keys to Success

1220 L Street, NW Washington, DC An Abundant Resource Endowment

Energy Revolution = Abundant Resources 2003: U.S. Natural Gas = 1,100 Tcf 2011: U.S. Natural Gas = 1,900 – 3,500 Tcf [U.S. Consumes About 24 Tcf Per Year] 1220 L Street, NW Washington, DC

U.S. Natural Gas Marketed Production 1220 L Street, NW Washington, DC

Top Natural Gas Producing Countries, 2011 Source: BP Statistical Review of World Energy June 2012

Top Gas Exporting Countries, 2011

What is LNG? LNG is clean, odorless, noncorrosive, nontoxic liquid LNG is formed when natural gas is cooled to -260 F In liquid state, the volume shrinks by about 600 times, making it easy to store and transport via vessel LNG has been safely handled for decades LNG is not stored under pressure and is not flammable in its liquid state LNG vessels have made more than 135,000 voyages without major accidents or safety problems LNG is highly regulated: FERC, DOT, USCG, DHS… 1220 L Street, NW Washington, DC

What is the issue? Various applications to export LNG are pending before DOE 1220 L Street, NW Washington, DC

What is the solution? DOE should confirm that LNG exports are in the public interest and expeditiously approve pending LNG export applications In 1938, Congress passed the Natural Gas Act, which established a rebuttable presumption that all natural gas exports, including LNG, are in the public interest and shall be permitted. In the Energy Policy Act of 2005, Congress revisited the issue of LNG imports and exports – and confirmed that LNG exports are presumed to be in the public interest. LNG exports to countries with which the United States has signed a Free Trade Agreement are automatically deemed to be in the public interest and applications “shall be granted without modification or delay.” 1220 L Street, NW Washington, DC

Estimates of U.S. Total Natural Gas Resource Base vs Total U.S. LNG Exports and Consumption *20 years of 6 bcf/d of LNG exports phased in between 2015 and 2020 reaching 6 bcf/d in 2020 and thereafter. Source: EIA AEO 2013ER 567 Tcf 2,303 Tcf (EIA) 3,505 Tcf (ICF) 41 Tcf Current U.S. Natural Gas Resource Base Estimates LNG Exports (2015 to 2035) Consumption (2015 to 2035) The U.S. will only export 1 to 2% of the total resource base

Exports will: Create and support thousands of jobs all over the U.S. Each additional Bcf of shale gas production supports 32,000 total jobs throughout the economy (IHS Global Insight, 2010) Generate billions of dollars in government revenues Reduce our trade deficit Enhance U.S. energy security and provide support to strategic allies in Europe and Asia 1220 L Street, NW Washington, DC The Benefits of Exporting LNG

Exports will: Increase domestic production of natural gas  An additional 2 Tcf of U.S. NG production predicted if exports are fully permitted (EIA, 2012). Increase domestic production of associated natural gas liquids (NGLs), putting downward pressure on prices of chemical manufacturing feedstocks including ethane. Exports will not: Stymie the manufacturing sector. This is not a zero sum game. In fact, as NG is exported, more NG will be produced, enhancing the manufacturing revolution, not hindering it L Street, NW Washington, DC

Competition to Export is Steep Not every project currently proposed in the U.S. will be built.  In fact, when the U.S. was looking to import LNG, only 7 of the 25 projects proposed were built. Siting and construction of an LNG export facility is capital intensive and requires extensive financing.  A single project can cost $5 - $45 billion The U.S. is competing with other countries, some of which have already started building export facilities. Timing is everything – the longer the U.S. waits, the less competitive our projects will be in the global market L Street, NW Washington, DC

Competition for Worldwide LNG Demand will be Steep The proposed U.S. capacity is greater than projected global demand * ICF estimate for year end **FTA Applications to DOE as of Nov. 29, ***Dec 2012 ICF estimate based on current worldwide project list. ~Poten, BG Group, Credit Suisse, Facts Global

Oil & Gas Operators Oil & Gas Service Companies Law Firms Engineering Firms Construction Contractors Electrical Contractors Land Service Providers Pipeline Contractors Laborers Truck Drivers Equipment Operators Welders Surveyors Lawyers Accountants Engineers Environmental Scientists Archeologists Botanists Electricians Mechanics Direct EmployersDirect or Contracted Jobs Economic Impacts: Jobs, Jobs, Jobs

NERA Study: Macroeconomic Impacts of LNG from the United States (December 2012) “Across all scenarios, the U.S. [is] projected to gain net economic benefits from allowing LNG exports. Moreover, for every one of the market scenarios examined, net economic benefits increase[] as the level of LNG exports increase[s]. In particular, scenarios with unlimited exports always ha[ve] higher net economic benefits than corresponding cases with limited exports.” (page 1) 1220 L Street, NW Washington, DC

NERA Study: Macroeconomic Impacts of LNG from the United States (December 2012) “Natural gas price changes attributable to LNG exports remain in a relatively narrow range across the entire range of scenarios.” (page 2) 1220 L Street, NW Washington, DC

NERA Study is Available for Public Comment (77 Federal Register 238, December 11, 2012) DOE Initial Comment Period: January 24, 2013 DOE Reply Comment Period: February 25, 2013 Comments are intended to help inform DOE in its public interest determinations 1220 L Street, NW Washington, DC