1. Gas in North America & the Potential Impact on the International Energy Trade

2. Analysis of Production History Remaining Reserves Cumulative Production Reserve Adds Initial Production & Decline Rates Field Size Distribution => Yet To Find (YTF) All Content  2003 IHS Energy

3. North American Gas Reserves - 2000 1200 OriginalRemainingYTFYTF >300 BCF 600 USA Can Mex 200 400 800 1000 TCF All Content  2003 IHS Energy

4. Gas Reserves vs. Production RemainingProductionRemaining Reserves RateR/P RatioYTF (tcf)(tcf/yr)(yrs)(tcf) Canada 71.37.59.5 169.5 USA 197.9 24.1 8.0 401.2 Mexico 50.01.7 29.458.2 Note: combined USA & Canada R/P is 7.4 without Alaska and Canadian Frontier All Content  2003 IHS Energy

5. Natural Gas Reserves Added to the System 25 USA & Canada by Region (Avg. Prod. = 31.5 TCF/Y) 1990 2001 30 20 15 10 5 35 Avg. Prod. TCF All Content  2003 IHS Energy

6. North American Gas in 2000 USA, Canada & Mexico combined 67 BCFD Gas Delivered to Consumers 91 BCFD Raw Gas Production 120 BCFD Pipeline System 3 BCFD LNG Re-gas Capacity 4 TCF Storage (78 BCFD in/out) 14 BCFD Fuel & Extr. Losses 10 BCFD Alaska All Content  2003 IHS Energy

7. Existing Interstate Pipeline Network Largely Unconstrained Year to Year All Content  2003 IHS Energy

8. Total US Gas Storage Little Growth since 1980, Except in Swing Volume 8,241 BCF Total Capacity

9. Monthly Demand is Variable Annual Swing can be 40 BCFD All Content  2003 IHS Energy

10. US Raw Gas Demand Sensitivity 5 10 15202530 BCFD Power Industrial Residential Severe Weather Mild Weather Low Gas Price High Gas Price Low Gas Price (relative to Fuel Oil) High Gas Price (relative to Fuel Oil) 4.0 BCFD 3.3 BCFD 6.0 BCFD Delta All Content  2003 IHS Energy

11. US Power & Alt. Fuels Coal 37.2 % Gas 27.2 % Nuclear 11.6 % Hydro 10.6 % Oil 8.0 % Other 5.4 % About 50% of Gas can shift to Oil – for a 150% increase in oil requirements, while 10% of Coal and 40% of Oil can shift to Gas – for a 25% increase in Gas. All Content  2003 IHS Energy

12. Gas Balance by Region BCFDPacific (9+12) Mtn. (8+11) CanadaMexicoW. Cent. (4+7) GOM On+Off E. Cent. (3+6) Atlantic (1+2+5+10) Supply+ 1.0+ 11.1+ 20.6+ 4.7+ 16.7+ 26.1+2.7+ 0.0 Demand- 9.5- 3.9- 9.4- 5.6- 23.0- 0.0-15.2-15.7 Net- 8.5+ 7.2+11.2-0.9- 6.3+ 26.1- 12.5-15.7 Canada Mexico Data for 2001 – some numbers are rounded All Content  2003 IHS Energy

13. Raw Gas Demand All Content  2003 IHS Energy

14. Gas Supply – Current Activity Level (Note: Alaska gas production shown as pipeline only) 120 100 80 19902020 BCFD All Content  2003 IHS Energy

15. Gas Supply – Maximum Activity Level (Note: Alaska gas production shown as pipeline only) 120 100 80 1990 2020 BCFD All Content  2003 IHS Energy

16. SupplyDemand All Content  2003 IHS Energy

17. Frontier Canada Gas Reserves (Discovered Undeveloped) 8.9 tcf in NWT – Mackenzie Delta 17.7 tcf in East Coast Canada Labrador, Grand Banks, & Scotian Basins Depends upon Pipelines for Development Expect 1-2 BCFD from NWT – Mackenzie Delta Expect 2-3 BCFD from East Coast Canada Economic to Develop in $3 - $4.5 Price Range Consistently Robust Price is Key to Investment Expected Timing – Late in this Decade at Best All Content  2003 IHS Energy

18. Canadian Export Potential All Content  2003 IHS Energy

19. Alaska Gas Potential 44.1 TCF Remaining Reserves (41.4 on N. Slope) Almost all Production Currently Re-injected Gas in Cook Inlet Exported as LNG to Asia Gas Pipelines must Traverse Canada 26.6 TCF Competing Reserves Closer to Market Long Term Contracts & Gov’t Support before Investment Free Trade Issues are Rising Between US & Canada Expected Volume & Timing – 2 to 4 BCFD post 2010 All Content  2003 IHS Energy

20. Mexican Gas All Content  2003 IHS Energy

21. LNG Import Potential 20012010 9 BCFD 5 BCFD LNG valid in $3.50 - $5.00 Price Range New Existing Convert Expand 1 BCFD 3 BCFD 7 BCFD All Content  2003 IHS Energy

22. World Gas Situation 7% of the World’s Population Consumes 31% of the World’s Gas Production PopulationConsumption ReservesProduction 5% of the World’s Gas Reserves Produce 32% of the World’s Gas Production All Content  2003 IHS Energy

23. Gas Price Forecast Continental gas supply will be marginally adequate with sustained gas prices @ $3.50/ mcf High decline rates make the system unstable at gas prices below $3.00/mcf Large supplies of LNG are available at gas prices around $4.50-$5.00/mcf, but normally require longer term agreements All Content  2003 IHS Energy

24. Conclusions US-Canadian trade relations are critical to continued gas exports to the USA and future development of frontier gas reserves in Alaska, NWT and the East Coast of Canada Mexico must re-invent itself soon or face rising costs for gas imports from either the USA or via LNG or both LNG import volumes to the USA will cause a shift in both the world gas trade and the way gas is contracted in the USA (long term contracts similar to European markets) Logistical constraints of alternative fuels and steep domestic gas decline rates will strain the traditional gas to oil price linkage All Content  2003 IHS Energy

25. Gas in North America & the Potential Impact on the International Energy Trade