The State of Natural Gas Supply APPA/NGSA Joint Meeting September 30, 2010 Chicago, IL 1

A Decade Makes A Difference Then Shale known but uneconomic Storage rates regulated Four LNG ports, not all active “Associated” gas dominates 63-year supply Incomplete price transparency Limited means to respond to sudden demand changes Now Burgeoning production Market-based storage rates Eight-plus active LNG ports Shale gas replacing associated gas 100-year supply Most transparent fuel market in the world Highly market-responsive supply # 2

3 Decade of Growing Natural Gas Infrastructure

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Abundance of natural gas in shale underscores sustainability. 5 # 5

How Shale Produces Natural Gas # 6SouSource: Energy Tomorrow # 6

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Changes in price Source: CME Group, a CME/Chicago Board of Trade Company Ebb and Flow of Commodity Prices Natural Gas

Source: CME Group, a CME/Chicago Board of Trade Company Ebb and Flow of Commodity Prices Natural Gas compared to Crude Oil & Coal

Ebb and Flow of Commodity Prices Natural Gas compared to other Major Commodities Source: CME Group, a CME/Chicago Board of Trade Company

Natural Gas Myths MYTH #1 –”There’s not enough natural gas to meet demand from manufacturers and electrics” – U.S. supply up 40 percent since 2006 due to shale – 100-year supply with potential to grow MYTH #2 – “Offshore drilling ban will hurt natural gas customers” – Most GOM gas production located in shallow water and excluded from ban MYTH # 3 – “Heavy-handed regulation of shale could stop its production” – States are heavily invested in shale production – 50,000 jobs created in 2009 in Pennsylvania alone MYTH #4 – “Natural gas is vulnerable to Middle East policies” – Between 1 and 3 percent of U.S. demand is met by LNG imports – 75 percent of those imports are from Trinidad & Tobago, remainder from Norway, Algeria, Egypt, Nigeria and Qatar.

Final Thoughts 13 Entire gas industry significantly expanded since 2000 “Fracking” issue real, but manageable Competitive market has dampened price volatility “Dash to Gas” issue overstated U.S. enjoys most robust, transparent, and reliable natural gas industry in world