1. Winter Outlook
Markets Matter

2. Understanding the Symbols
Upward market pressure Flat market pressure Downward market pressure

3. Last Year’s Projection: How Did We Score?
Predicted
Actual
Score
Key Factor: Production
2.5 Bcf/day decrease in production compared to previous winter due to less drilling; pipeline delays
Last winter average Henry Hub price = $3.01 MMBtu
Previous winter average Henry Hub price = $1.98 MMBtu (Lowest winter average since 1990s)
Data Source: Energy Information Administration

4. 2017-2018 Winter Outlook: Outline
Looking ahead to Winter
Market pressure points:
Weather
Economy
Demand
Storage
Production
Wild card factors
Winter expectations
Summary

5. Demand: Winter Weather
Last Winter: Nov. – March
ACTUAL
This Winter
FORECAST
Actual winter heating season:
1% colder than previous winter but 13% warmer than 30-year average
3,074 Heating degree days (NOAA)
Forecast:
13% colder than last year, but still 1% warmer than 30-year average
3,468 Heating degree days
Winter-to-winter pressure
on natural gas prices
Maps: National Oceanic and Atmospheric Administration; Data: Energy Ventures Analysis

6. Demand: Economy Winter Season Period-to-period change Last Winter
ACTUAL
This Winter
FORECAST
Economy
Slow
Strengthening
GDP growth
1.9%
2.5%
Unemployment rate
4.7%
4.3%
Manufacturing
0.5%
1.8%
CPI
2.2%
1.4%
Consumer Sentiment Index
95.1
97.0
Winter-to-winter pressure
on natural gas prices
Data Source: IHS Economics

7. Demand: Customer Demand
Winter Season Period-to-period change
Last Winter
ACTUAL
This Winter
FORECAST
Customer Gas Demand*
Residential/Commercial
Electric
Industrial
Pipeline exports- Mexico
LNG exports (net)
89.5 Bcf/d
34.1 Bcf/d
21.1 Bcf/d
22.9 Bcf/d
4.0 Bcf/d
1.2 Bcf/d
96.8 Bcf/d
36.9 Bcf/d
22.7 Bcf/d
23.2 Bcf/d
4.4 Bcf/d
2.8 Bcf/d
Growth sector
Res/Comm+5% (1.6 Bcf/d)
Res/Comm +8%
Exports %
Winter-to-winter pressure
on natural gas prices
*Includes “Lease, Plant and Pipeline Fuel”
Data Source: Energy Information Administration

8. Big Increase in Exports, But Remain Small Share of All Natural Gas Demand
Natural Gas Demand Sectors Winter
Total demand 96.8 Bcf/d

9. Path to Building Baseload Path to Backstopping Renewables
Electric Capacity Additions: Two Paths, One Goal – Reliability Electric capacity additions by region,
Path to Building Baseload
Path to Backstopping Renewables
2017 and 2018 CCGTs
2017 and 2018 Peaking Units
Total = 27.3 GW
Total = 2.2 GW
Data Source: EIA and EVA

10. $135 Billion Investment to Build
Focus: Industrial Demand Peak Growth Phase
Natural Gas Spurring 70 Major Industrial Projects 2016–2022
$135 Billion Investment to Build
Increase of 4.3 Bcf/d by 2022
59 New Projects
47 Petrochemical
10 Fertilizer
1 Steel
1 Gas-to-Liquids
11 Expansions
8 Petrochemical
3 Fertilizer
In addition to 48
COMPLETED Projects for additional $28 Billion and 1.6 Bcf/d from
Photo courtesy: Chevron U.S.A. Inc., 2017 (Pascagoula)
Data Source: Energy Ventures Analysis, Sept. 2017

11. Supply: Winter Storage
Winter Season Period-to-period change
Last Winter
ACTUAL
This Winter
FORECAST
Start-of-winter inventory
3,986 Bcf
3,850 Bcf
Compared to 5-year average
(Percent of total storage inventory)
2% greater
1% lower
New storage capacity
31 Bcf
Est. 0 Bcf
Winter-to-winter pressure
on natural gas prices
Data Sources: Energy Information Administration and Energy Ventures Analysis

12. Supply: Winter Production and Imports
Winter Season Period-to-period change
Last Winter
ACTUAL
This Winter
FORECAST
Winter average production
(Lower 48)
70.7 Bcf/d
76.4 Bcf/d
Canadian imports (net)
5.5 Bcf/d
Winter-to-Winter pressure
on natural gas prices
Data Source: Energy Ventures Analysis

13. Diverse Winter Production Sources Bolster Flexibility and Reliability
U.S. Shale Production
Map source: U.S. Energy Information Administration
Projected Winter Production Sources
Data Sources: Energy Ventures Analysis, EIA, PointLogic

14. Comparison of Hurricane Impact on Daily Prices What a Difference a Decade Makes
Data Source: Gas Daily

15. Winter Outlook: Wild Cards

16. This Season’s Winter Outlook
Winter Season Period-to-period change
This Winter FORECAST
Weather
Economy
Overall demand
Storage
Winter supply
Winter-to-winter pressure
on natural gas prices

17. Natural Gas Outlook: Flexible, Stable Gas Market
Record demand to surpass Polar Vortex winter
Residential/commercial demand increases
Exports – LNG and pipeline – increase, but remain small slice of overall demand, provide stability in market demand
Slight growth in electric and industrial demand
Robust winter supply and storage ample to meet demand
Efficiencies in drilling and production continue to make wells productive at lower cost
Diverse supply sources contribute to greater flexibility and resilience evidenced by limited supply impact of Harvey and Irma
Storage to provide further flexibility

18. About NGSA
Represents major producers and suppliers of domestic natural gas
Integrated and independent companies: 14 members
Founded in 1965
Only national natural gas association representing producers and suppliers with a dedicated focus on downstream issues
Promotes benefits of competitive natural gas markets, resulting in reliable and efficient transportation and delivery, increased supply and demand
Combined with the Center for LNG

19. 2017-2018 Winter Outlook Markets Matter Contact: www.ngsa.org
Daphne Magnuson
@natgas_ngsa
Winter Outlook .
Markets Matter