Usage Guidelines Slide Description: Cover Slide Usage: Introductory slide. Try to keep the slide title and subtitle short and clear. Optionally include name, company role, and presentation date. The default title format is Verdana 26pt with shadow. The default subtitle format is Verdana 17pt Italic with shadow. These defaults are already built in, so you are free to just replace the text that is currently shown. If you paste text in from another presentation, be sure it is formatted correctly. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” Examining Natural Gas for the Winter Heating Season Christopher B. McGill Managing Director Policy Analysis October 14, 2008 Christopher B. McGill Managing Director Policy Analysis October 14, 2008

NATURAL GAS FUTURES PRICES – On December 26, 2007 futures for January through April 2008 ranged from $7.05 to $7.23 per MMBtu – Six months later June 23, 2008 settlement prices for July 2008 through March 2009 ranged from $13.20 to $14.22 per MMBtu – a 90% increase Usage Guidelines Slide Description: Standard Text Usage: Plain slides are used for messages best conveyed with bulleted lists of text. Try to keep the slide title short and clear. Text bullets should contain one or two sentences. Feel free to place a graphic on the slide. However, the graphic should (at least minimally) echo the content of the slide. For larger graphics, use the “Graphic and Text” slide. The default slide title format is Verdana 22pt. The default bullet styles are shown here. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.”

NATURAL GAS FUTURES PRICES Will the roller coaster ride ever end? – One month later, July 21, August 2008 through March 2009 settlement prices had fallen to $10.51 to $11.60 per MMBtu – By August 14, the September 2008 through March 2009 NYMEX settlement prices ranged from $8.46 to $9.56– a 35 % decrease from the June 23 midpoint Usage Guidelines Slide Description: Standard Text Usage: Plain slides are used for messages best conveyed with bulleted lists of text. Try to keep the slide title short and clear. Text bullets should contain one or two sentences. Feel free to place a graphic on the slide. However, the graphic should (at least minimally) echo the content of the slide. For larger graphics, use the “Graphic and Text” slide. The default slide title format is Verdana 22pt. The default bullet styles are shown here. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.”

FACTORS INFLUENCING NATURAL GAS MARKET PRICES FACTORS INFLUENCING NATURAL GAS MARKET PRICES – High Oil Prices – Year over Year Storage Deficit – Low LNG Imports – Sector Consumption Shifts – Uneven Energy Policy Initiatives – Infrastructure Timing – Supply Disruption Potential Usage Guidelines Slide Description: Standard Text Usage: Plain slides are used for messages best conveyed with bulleted lists of text. Try to keep the slide title short and clear. Text bullets should contain one or two sentences. Feel free to place a graphic on the slide. However, the graphic should (at least minimally) echo the content of the slide. For larger graphics, use the “Graphic and Text” slide. The default slide title format is Verdana 22pt. The default bullet styles are shown here. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.”

Winter Heating Season Source: American Gas Association

Winter Heating Season Source: American Gas Association

85 % of Companies Sampled Used Financial Tools to Hedge Gas Supply During the WHS Compared to 88 % One Year Ago Source: American Gas Association

7 U.S. Natural Gas Storage Source: Energy Information Administration, U.S. DOE.

Natural Gas Supply Sources (January 1-September 15, 2008) Source: Bentek Energy LLC, Energy Market Fundamentals, September 15, 2008.

Shale Basins and the U.S. Pipeline Grid Source: American Clean Skies Foundation.

SHALE GAS RESOURCE ESTIMATES SHALE GAS RESOURCE ESTIMATES Potential Gas Committee added about 200 Tcf to U.S. resource assessment between 2004 and 2006 – almost all attributed to new shale-related data Navigant Consulting, Inc. (2008) estimates Tcf from 17 U.S. shale plays Usage Guidelines Slide Description: Standard Text Usage: Plain slides are used for messages best conveyed with bulleted lists of text. Try to keep the slide title short and clear. Text bullets should contain one or two sentences. Feel free to place a graphic on the slide. However, the graphic should (at least minimally) echo the content of the slide. For larger graphics, use the “Graphic and Text” slide. The default slide title format is Verdana 22pt. The default bullet styles are shown here. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.”

SHALE GAS PRODUCTION ESTIMATES SHALE GAS PRODUCTION ESTIMATES Depending on the source, some analysts estimate that shale production now at about 5 Bcf per day will grow to Bcf per day by the end of the next decade Will this be additive to current production rates or will it only replace other declining production capability? Usage Guidelines Slide Description: Standard Text Usage: Plain slides are used for messages best conveyed with bulleted lists of text. Try to keep the slide title short and clear. Text bullets should contain one or two sentences. Feel free to place a graphic on the slide. However, the graphic should (at least minimally) echo the content of the slide. For larger graphics, use the “Graphic and Text” slide. The default slide title format is Verdana 22pt. The default bullet styles are shown here. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.”

U.S. LNG IMPORT CAPACITY 2008 Source: Federal Energy Regulatory Commission Everett, MA1.035 Bcfd Cove Point, MD1.000 Bcfd Elba Island, GA1.200 Bcfd Lake Charles, LA2.100 Bcfd Gulf Gateway, LA0.500 Bcfd Northeast Gateway, MA0.800 Bcfd Freeport, TX1.500 Bcfd Sabine, LA2.600 Bcfd Total Bcfd

Alaskan Gas is Ready and Waiting Reprint permitted by: BP Source: Alaska Department of Natural Resources, May 2006.

Daily Natural Gas Consumption by Sector January 1-December 31, 2007 Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Power Generation Average Daily Natural Gas Consumption January 1-December 31, 2007 Source: Bentek Energy LLC, Energy Market Fundamentals, December 31, Dec

Power Generation Average Daily Natural Gas Consumption January 1-September 15, 2008 Source: Bentek Energy LLC, Energy Market Fundamentals, September 15, 2008.

FACTORS INFLUENCING NATURAL GAS DURING THE WINTER FACTORS INFLUENCING NATURAL GAS DURING THE WINTER – Relative Movement of Oil Prices – Storage Inventories – Attracting Supplies of Gas other Than Domestic Production if Necessary – Recovery from Supply Disruptions – Weather-Based Demand Usage Guidelines Slide Description: Standard Text Usage: Plain slides are used for messages best conveyed with bulleted lists of text. Try to keep the slide title short and clear. Text bullets should contain one or two sentences. Feel free to place a graphic on the slide. However, the graphic should (at least minimally) echo the content of the slide. For larger graphics, use the “Graphic and Text” slide. The default slide title format is Verdana 22pt. The default bullet styles are shown here. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.”

Usage Guidelines Slide Description: Contact Info Usage: Last slide of presentation. Insert name, role, contact number and address. To remove this box, simply click on the edge of the box (to select the whole box) and then press “delete.” Thank You! Christopher B. McGill Managing Director Policy Analysis Christopher B. McGill Managing Director Policy Analysis