1. Natural Gas: Remaining Relevant In the Low Carbon Future Darrell Johnson, Manager of Environmental Programs Southern California Gas Company California Desert Air Working Group 1

2. W HO W E A RE P EOPLE A ND P OLICIES L OW -C ARBON F UTURE S TRATEGY P REVIEW 2

3. Largest natural gas distribution utility in the US An active part of the community for more than 140 years Serve 12 counties (over 500 communities) and more than 21 million people Over 5.8 million gas meters More than 8,000 employed W HO WE ARE … SoCalGas & SDG&E Service Territory 3

4. 49,010 SOCALGAS 6,590 SDG&E 5% Transmission System 3, 742 combined miles 3.9 BILLION CUBIC FEET/DAY Receipt Capacity Annual Deliveries Four Storage Fields of U.S. Deliveries 1 TRILLION CUBIC FEET 3% of U.S. Storage Capacity 136 BILLION CUBIC FEET 3,508 SOCALGAS 234 SDG&E 49,953 SOCALGAS 7,977 SDG&E Distribution Network 57, 930 miles of mains 205,662 Cumulative Horsepower 1,969 REGULATOR STATIONS PRESSURES 55, 600 miles of services 13 COMPRESSOR STATIONS OF LBS/SQ INCH OR LESS ~60 S EMPRA C ALIFORNIA U TILITIES S O C AL G AS AND SDGE S ERVICE T ERRITORY S TATS 4

5. P EOPLE & P OLICIES 5

6. P EOPLE AND P OLICIES D RIVING L OW -C ARBON F UTURE

7. P EOPLE AND P OLICIES D RIVING L OW -C ARBON F UTURE 7

8. L OW -C ARBON F UTURE S TRATEGY 8

9. Proposed accelerating replacement of pipe and eliminating non-hazardous leaks backlog over 5 years in general rate case filing Investing in pipeline safety enhancements: ~$1.5B over next five years Funding Research, Development & Demonstration (RD&D) for new technologies, and greater efficiencies Collaborating with the CPUC to cost- effectively enhance infrastructure safety while yielding environmental benefits S EMPRA U TILITIES L OW -C ARBON S TRATEGY W ORKING COLLABORATIVELY AND INDEPENDENTLY TO REDUCE METHANE EMISSIONS Partnering with academia, regulators and industry on studies and programs: Being Part of the Solution 9

10. P ARTNERING : N ATURAL G AS V ALUE C HAIN S TUDIES AND M APPING P ROJECT Mapping Four Cities in SoCalGas Service Territory Local Distribution With Washington State University Pump to Wheels With West Virginia University Pasadena Chino Inglewood Orange 10

11. EAST ~34% of the total US methane from pipeline leaks ~70% of emissions in the east and almost half of total US emissions coming from cast iron & unprotected steel pipe WEST < 20% of total US methane from pipeline leaks < 5% of total US methane coming from cast iron & unprotected steel pipe 2014 Washington State University-Distribution Study K NOW Y OUR E MISSIONS N OT A LL S YSTEMS A RE C REATED E QUAL 11

12. 2013 samples that generated new emission factors 20+ year old GRI/EPA emission factors K NOW Y OUR E MISSIONS E MISSION F ACTORS C OUNT 12

13. SoCalGasSDG&E K NOW Y OUR E MISSIONS S EMPRA E NERGY U TILITIES E MISSIONS 13

14. SMART GAS DRIVES EARLY DETECTION with hourly reads from advanced meters 14

15. Locomotives Short/Long Haul Transit/Fleet Vehicles Cargo Handling Equipment Marine Vessels Heavy-Duty Trucks Short/Long Haul CNGLNG T ECHNOLOGY T RANSFER & T RANSPORTATION P ATHWAYS Current FocusExpanding Focus 15

16. The move toward “near-zero” emission technology focuses on:  Power Generation with Carbon Capture  Small-scale Generation Matched with Renewables  Distributed Generation 0 D E -C ARBONIZING E LECTRICITY : N ATURAL G AS S TATIONARY U SE P ATHWAYS Not just Solar… Fuel Cells Micro-turbines Combined Heat & Power 16

17. *Source: California Air Resources Board (CARB) 2014 Greenhouse Gases Emissions Inventory CA 2013 METHANE EMISSIONS * 17 O PPORTUNITY E XISTS FOR THE C APTURE OF R ENEWABLE S OURCES OF M ETHANE 17

18. RENEWABLE Convert waste from dairies, farms and landfills into biogas using anaerobic digestion extract the methane put in the pipeline for future use N ATURAL G AS SOURCE: Bioenergy Association of California, CARB May 2014 Look-Up Table30 POWER 2-3 million homes WHAT’S POSSIBLE REPLACE 75% of all diesel used by CA vehicles When used for transportation, Biogas from food and green waste can actually REMOVE GHGs from the atmosphere 18

19. Algae consume CO2 and NOx emissions from natural gas combustion and convert it into biomethane PARTNERING WITH SCRIPPS INSTITUTION OF OCEANOGRAPHY AT UC SAN DIEGO 19 E XPLORING OPPORTUNITIES FOR FURTHER INNOVATION 19

20. 20 N ATURAL G AS S YSTEMS C AN S TORE E NERGY B ATTERIES A RE N OT THE O NLY W AY TO S TORE E NERGY … 20

21. addresses the storage challenge POWER-TO-GAS excess renewable energy goes through electrolysis which splits the molecule hydrogen & carbon combine through methanization carbon captured from factories and plants methane can be stored in the pipeline for future use hydrogen can also be stored directly in the pipeline 21

22. Power-to-Gas FALKENHAGEN, GERMANY August 2013: First plant to convert electricity into H 2 and inject into the gas grid STUTTGART, GERMANY Plant uses an electrolyzer to produce H 2 from water. Combines with CO 2 from a biogas plant to produce CH 4 22 Learning from the EU’s EXPERIENCE 22

23. We need to think bigger to remain relevant in the Low- Carbon Future 23