1. The interconnected North American gas market: Where do we go from here?
Orlando Alvarez, President & CEO, BP Energy Company

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3. Natural gas prices in U.S.: A journey
Source: NYMEX, ICE 5/1/2018
Cold weather leads to a record storage withdrawal
Cold weather sets in, storage dips below 5-year average
Warm winter, end of March storage levels at 5-year high
Mild winter weather, storage levels near capacity
Warmer summer increased power demand

4. Commodities are more interconnected than ever before…
Biogas
Nat gas
Power C2 C3
nC4
iC4 C5
NGLs
Oil
LNG
Naphtha
Chemicals

5. … and regulatory and political landscape is evolving
Methane restrictions roll-back
Oklahoma earthquakes
Water disposal
Severance taxes
Frac sand mining
Offshore access
FERC quorum
Pipeline permits
PHMSA regulations
Tax reform
Free trade agreements
Solar panel / steel / aluminum tariffs
EPA rollbacks (CPP, O3, coal ash, etc.)
Paris rollback
ITC/PTC
Nuclear ZECs
DOE NOPR on grid resiliency
RGGI Tightening (+NJ?)
Rising RPSs (CA, MA, WA, etc.)
Net metering
Renewable Fuel Standard (i.e. RINs)
And don’t forget the financial sector…
CFTC Commissioners
Volcker rule
Dodd Frank
Federal reserve restrictions

6. Oil production growth important for gas, NGL
Sources: EIA Drilling Productivity Report – April 2018, EIA February 2018

7. Billions of dollars invested in infrastructure: Unprecedented shift across all regions
Demand
NGLs
LNG?
Tariff structure
Gas
Rail
Gas C2
LPG?
Tariff structure
Potential shift in balances with export terminals
~12 Bcfd pipe expansions proposed out of NE
Impact on regional balances
Cochin reversal (2014)
LNG?
Expansions east
New y-grade C2
Demand C2
Rox
Marcellus/Utica
LPG
Expansions west
Demand
Midcon
Demand EG
LNG
Long haul C2
Y-grade to GC
Y-grade to GC
Gas pipe expansions
LPG pipe or rail?
Demand
Demand To
MEX
Permian To
MEX
LPG
Strong regional demand growth
Project timing, delays are key risks
LNG C2

8. More than 13% of coal capacity has retired since 2013…
Source: Energy Velocity, April 2018

9. U.S. is shifting towards a net gas exporter
Source: EIA Monthly, December 2016; AEO 2018

10. Mexican exports: Pipe expansions have facilitated more U. S
Mexican exports: Pipe expansions have facilitated more U.S. exports; more infrastructure on the way
Source: Sener, EIA, February 2018 3 2 1 4 5
Brownsville to Tuxpan : Bcf/d – Nov 2018
Nueva Era: Bcf/d: Q3 2018
Comanche Trail: Bcf/d – Jan 2017
Trans-Pecos:
1.4 Bcf/d – April 2017
NET Mexico / Los Ramones: Bcf/d – Dec 2014 1 2 3 4 5
Trans-Pecos:
1.4 Bcf/d – April 2017
Comanche Trail: Bcf/d – Jan 2017
Brownsville to Tuxpan : Bcf/d – Nov 2018
Nueva Era: Bcf/d: Q3 2018
NET Mexico / Los Ramones: Bcf/d – Dec 2014 1 2 3 4 5
Brownsville to Tuxpan : Bcf/d – Nov 2018
Nueva Era: Bcf/d: Q3 2018
Comanche Trail: Bcf/d – Jan 2017
Trans-Pecos:
1.4 Bcf/d – April 2017
NET Mexico / Los Ramones: Bcf/d – Dec 2014 1 2 3 4 5
Operating Pipelines
Pipelines completed in
Pipelines under construction
Awarded Pipelines
CFE Planned Pipelines
Compression Station

11. Long-term Henry Hub spot price outlooks
Source: NYMEX, Various External Consultants, 5/1/2018
View of crude oil prices, competing fuels, supply costs, production growth, structural demand trends and global trade flows will influence gas price outlook

12. Key insights
North American market works: price works to balance supply and demand
Commodities more interconnected: many more variables to consider
Evolving regulatory & policy landscape could impact investment risk across value chain
Structural demand changes are here: significant investment in new industrial plants, generation capacity & export facilities
Volatility is not dead: Risk management is critical