Natural Gas Makes the Future Work

2

Outline

• Natural Gas in Relation to Other Commodities

• Today’s Market Fundamentals

• Natural Gas: Jobs, Revenue & Environment

-50%

0%

50%

100%

150%

200%

250%

Same story, different commodities

Coal

Crude Oil

Soybeans

Wheat

Corn

Copper

Gold

Natural Gas

Silver

Commodity Price Changes Since January 2007

Source: CME Group, A CME/Chicago Board of Trade Company

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0%

50%

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Natural gas at low end of rising commodity tide

Coal

Crude Oil

Soybeans

Wheat

Corn

Copper

Gold

Natural Gas

Silver

6

Major U.S. Shale Basins Hold Potential for 30 Bcf/d; Roughly Half of U.S. Production

Source: North American Natural Gas Supply Assessment Navigant Consulting, Inc. & EIA

6

Natural Gas, Oil E&P Provides Billions Annually in Government Revenue

U.S. Treasury:

–$6.6 Billion in 2007

–$17.1 Billion in 2008

States:

–$1.6 Billion in 2007

–$2.2 Billion in 2008

8

U.S. LNG Import Capacity Growing; Imports Lag Due to World Competition

02468

101214161820

2006 2007 2008 2009 2010

U.S. Import Capacity

Source: EIA Annual Energy Outlook 2008 & EVA

Bcf/day

U.S. Imports

99

http://www.ferc.gov/market-oversight/othr-mkts/lng/othr-lng-wld-pr.pdfhttp://www.ferc.gov/market-oversight/othr-mkts/lng/othr-lng-wld-pr.pdf

10

Canadian Imports Slowing

9.2 8.9 8.7 8.9

7.5

0

1

2

3

4

5

6

7

8

9

10

2006 2007 2008 2009 2010

10

Source: EVA

Bcf/day

0

200

400

600

800

1,000

1,200

1,400

1,600

2005

2006

2007

2008

2009

790

Rig Count Decline Demonstrates Supply Following Demand

11

Source: EIA Monthly Energy Review, December 2008 & EIA Natural Gas Weekly Update (4/9/09)

50%

12

Industrial Sector Demand Rebounded in 2008; Industrial Sector Most Elastic

7.52

7.157.23

6.616.50

6.64 6.68

6.31 6.35

666667777788

2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: EVA & Annual U.S. Natural Gas Industrial Consumption, EIA

Tcf

5.8 Million Blue Jobs

Natural gas and oil industry provides 5.8 Million Blue Jobs– 1.8 Million Direct– 4 Million Indirect

E&P Jobs Pay More Than 2x National Average

Natural gas and oil industry provides nearly $300 Billion annually in labor income

(API PWC Study, 2007)

Natural Gas Is Key Ingredient in Everyday Products

Manufacturers Consume One-third of Natural Gas to Make Products

Additional Jobs Associated with Those Products

Oil & Natural Gas Industry Contributes $570 Billion to Economy Annually (Source: API PWC Study, 2007)

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Natural Gas Has a Long-term Role to Play

Source: EIA 2009 Energy Outlook

Market Chooses Natural Gas for Variety of Reasons: Emissions

Tons annually per 1,000 households

Market Chooses Natural Gas for Variety of Reasons: Reliability

$ millions per 1,000 households (2007)

Market Chooses Natural Gas for Variety of Reasons: Cost

Partnership Necessary to Achieve Climate Goals