New England’sNatural Gas Market

New Hampshire Energy PlanningAdvisory Board

Stakeholder Forum

Tom Kiley, President & CEONortheast Gas Association

June 23, 2006Concord, NH

NGA Members

Non-profit trade associationLocal gas utilities (LDCs) serving New England, New York, and part of New JerseySeveral interstate pipeline companies LNG importer (Distrigas) and LNG trucking companiesOver 250 “associate member” companies, from industry suppliers and contractors to electric grid operatorswww.northeastgas.org

RIMA

CT

NJ

NY

VTNH

ME

Overview of national and regional gas systemsNational and regional projectionsSupply projects for regionEfficiencyRecommendations

Topics

Recommendations

New England needs to continue to diversify its sources of natural gas supplies.

New England needs to continue to increase its natural gas supply capacity and add new infrastructure – pipeline and LNG.

New England needs to continue to invest in natural gas efficiency programs.

The electric market needs to provide sufficient incentives to its gas-fired power generators to ensure supply security; gas is likely to remain a key part of future electric generation and the connection between contracts and infrastructure needs to be addressed. Generators need to step up and pay for pipeline delivery reliability!

National and RegionalSystems

Main Industry Sectors

Source: NGSA

AlbertaAlberta

Supply Systems forthe NortheastSupply Systems forthe Northeast

Map shows interstate pipelines serving Northeast U.S., as well as TransCanada system; not all lines shown

Western CanadaProductionArea

Gulf ProductionArea

LNG Imports

SableOffshore

Columbia (NiSource)DominionDuke EnergyEl PasoIroquoisNational FuelPNGTSTransCanadaWilliams

Mid-ContinentProductionArea

Expanded Gas Supply Routes into Region

Iroquois

Tennessee

Algonquin

Maritimes &Northeast

PNGTS

19911999

2000

DOMAC 2003

New England Gas Utility Companiesand Service Areas

NSTAR Gas

Bangor Gas CompanyBay State Gas CompanyBerkshire Gas CompanyBlackstone Gas CompanyHolyoke Gas & ElectricNorwich Public UtilitiesConnecticut Natural Gas Corp.KeySpanMaine Natural GasMiddleboro Gas & ElectricNew England Gas CompanyNew Hampshire Gas CompanyNorthern UtilitiesNSTAR GasSouthern Connecticut Gas Co. Unitil (Fitchburg Gas & Electric)Vermont Gas SystemsWakefield Municipal Gas & LightWestfield Gas & Electric LightYankee Gas Services Co.

New England Gas Market Snapshot:1980 to 2005

1980 2005

Gas Customers 1.7 million 2.4 millionAnnual Consumption (Billion cubic feet)

295 750

Interstate pipelines 2 5Pipeline capacity (Bcf/day)

1.5 3.6

LNG imports (Bcf/yr)

30 172

Gas as %, home heating fuels

24% 34%

Gas as %, electric power generation

<1% 40%

Sources: NGA, AGA, EIA, U.S. Census, ISO-NE

Projections

U.S. Natural Gas Production, Consumption, and Net Imports,1960-2030 (trillion cubic feet)

0

5

10

15

20

25

30

1960 1970 1980 1990 2000 2010 2020 2030

15%

21%Net ImportsConsumption

Production

Natural Gas Net Imports, 2004, 2025,and 2030 (trillion cubic feet)

2.8

0.6

2.3

1.2 1.2

4.4

6.4

4.1

0

1

2

3

4

5

6

7

Pipeline Liquefied Natural Gas

2004AEO2005AEO2006 - 2025AEO2006 - 2030

Source: US Annual Energy Outlook 2005 and 2006

History Projections

Major Sources of Incremental U.S. Natural Gas Supply,2004-2030 (trillion cubic feet)

16

18

20

22

24

26

28

2005 2010 2015 2020 2025 2030

Growth in Alaskan Production

Growth inNon-Associated Unconventional

Growth in LNG Imports

Base Production (all sources)

U.S. EIA, Annual Energy Outlook 2006

-1

0

1

2

3

4

5

1960 1970 1980 1990 2000 2010 2020 2030

Canada

Liquefied Natural Gas

Mexico

U.S. Net Imports of Natural Gas, 1960-2030 (trillion cubic feet)

U.S. EIA, Annual Energy Outlook 2006

History Projections

0

1

2

3

4

5

6

7

8

1970 1980 1990 2000 2010 2020 2030

HistoryAEO2005AEO2006

U.S. Natural Gas Wellhead Price, 1970-2030 (2004 dollars per thousand cubic feet)

U.S. EIA, Annual Energy Outlook 2005 and 2006

History Projections

0

10

20

30

40

50

60

1960 1970 1980 1990 2000 2010 2020 2030

U.S. Primary Energy Consumption by Fuel, 1960-2030(quadrillion Btu)

History Projections Petroleum

Natural Gas

Coal

Nuclear

Renewables

Source: U.S. EIA, Annual Energy Outlook 2006

Source: U.S. Energy Information Administration, “2006 Annual Energy Outlook,” 1/06

Projected Demand Growth by Sector, New England

Power generation remains the leading projected growth sector. Possible constraint: Will price volatility/supply concerns dampen market growth? Possible spur: If not gas in the next few years, what significant generating source will emerge?

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

2005 2010 2015 2020 2025

Qua

drill

ion

Btu Residential

CommercialIndustrialElectric Gen.

A Changing Fuel Mix: New England’s Electric Generation, 1980-2005

Source: ISO New England

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Perc

enta

ge

Gas/Oil

Other

NaturalGasPurchases

Hydro

Oil

Nuclear

Coal

2005: Gas was 28% of mix, with Gas/Oil another 12%

ME

NHVT

MA

CT RI

Androscoggin Energy, Jay,

38 MWs Maine Independence,

Veazie, 470 MWs

Bucksport Energy, 33 MWs

Rumford Power,

266 MWs

Berkshire Power,

Agawam, 276 MWs

Tiverton, 500 MWs

Bridgeport, 465 MWs

Calpine, Dighton, 144 MWs

Millennium, Charlton, 331 MWs

Westbrook Power, 520

MWs

Wallingford Power, 250

MWs

Gas Power Plants Added toNew England Grid Since 1998

Hope Energy, Johnston, 500 MWs

AES Granite Ridge,

678 MWs

ANP Bellingham,

576 MWs

Lake Road, 810 MWs

West Springfield,

80 MWsExelon

Mystic 8 &9, 1600 MWs

Kendall Repowering,

172 MWs

Newington, 520 MWs

ANP, Blackstone,

570 MWs

Exelon, Weymouth,

800 MWs

Milford,272 MWs

Proposed Supply Projects

Proposed Terminals1. Rabaska, Levis-Beaumont, QU: 0.5 Bcf/d (Gaz Métro, Gaz de France,

Enbridge)2. Gros Cacouna Energy, QU: 0.5 Bcf/d (TransCanada, Petro-Canada)3. Canaport LNG, St. John, NB: 0.75 to 1 Bcf/d (Irving Oil, Repsol)4. Bear Head LNG, Point Tupper, NS: 0.75 to 1 Bcf/d (Anadarko)5. Maple LNG, Goldboro, NS: 1.0 to 2.0 Bcf/d (Keltic Petrochemicals,

4Gas, Suntera)6. Downeast LNG, Robbinston, ME: 0.5 Bcf/d (Kestrel Energy Partners)7. Quoddy LNG, Pleasant Point, ME: 0.5 Bcf/d (Quoddy Bay LLC)8. BP Consulting LNG, near Calais, ME: (BP Consulting LLC)9. Northeast Gateway Project, Off Cape Ann, MA: 0.4 Bcf/d (Excelerate

Energy)10. Neptune LNG, Off Cape Ann, MA: 0.4 Bcf/d (SUEZ Energy Resources)11. AES Battery Rock, Outer Brewster Island, Boston Harbor: (AES Corp.)12. Weaver’s Cove LNG, Fall River, MA: 0.4 to 0.8 Bcf/d (Hess LNG)13. KeySpan LNG, Providence, RI: 0.5 Bcf/d (KeySpan & BG LNG)14. Broadwater Energy, offshore Long Island, NY: 1 Bcf/d (TransCanada

and Shell US Gas & Power)15. Safe Harbor Energy, off south shore, Long Island, NY: 1 Bcf/d (Atlantic

Sea Island Group)16. Crown Landing LNG, Logan Township, NJ: 1.2 Bcf/d (BP)

3 57

2

9

1213

16

Existing & Proposed LNG Import Terminals, Northeast

NEWFOUNDLAND

QUEBEC

Map source: U.S. FERC; Updated by NGA based on public information as of 6-06. Locations approximate. Not all pipeline systems shown.

MARYLAND

Blue = In-service [Distrigas]Yellow = Approved by FERCOrange = Approved by Canadian regulatorsGreen = Proposed

4

1

14

10

68

11

15

QUEBEC

ONTARIO

Prepared by NGA, 6-06, based on publicly available information. Project locations approximate.

Proposed Northeast Pipeline Projects

Williams, “Sentinel Expansion Project”

M&NE, “Phase IV

Expansion”

Duke/KeySpan, “Islander East”

Tennessee, “Atlantic Supply Expansion”

Columbia, DTE Energy,

KeySpan, “Millennium”

National Fuel Gas, “Empire

Connector Project”

Tennessee, “Northeast ConneXion

NE”

Tennessee, “Northeast ConneXion

NY/NJ”

PNGTS, “Recent Open

Season”

Iroquois, “MarketAccess

Expansion”

Tennessee, “Essex –Middlesex Project”

VERMONT

Williams, “Leidy toLong Island”

Algonquin, “Ramapo Expansion”

Iroquois, “Brookhaven

Lateral”

Duke/Algonquin, “Cape Cod Lateral”

Efficiency

NPC: “Continued Energy Efficiencyis Critical: Innovation, Technology, Markets”

2003 2010 2020 202520150

5

10

15

20

25

30

35TCF

U.S. Demand Outlook, Reactive Path

Projected Demand without Efficiency Gains

5-6 TCF

• Efficiency gains key to NPC outlooks

– industrial boiler and process technology

– power generation technology, including cogeneration

– demand response in power markets

– commercial/residential demand responses

• Public policy can facilitate greater efficiency gains

Source: National Petroleum Council

GasNetworks® is a nationally-recognized and award-winning collaborative consisting of local natural gas companies serving residential and commercial & industrial customers throughout New England. It has been promoting energy efficiency and the use of high efficiency natural gas technologies since 1997. Through its contractor training and education programs, GasNetworks has provided expert training to over 4,000 contractors and publishes GasNetworks News®, a quarterly newsletter distributed to over 20,000 subscribers.

Current Members:Bay State GasBerkshire GasKeySpan Energy Delivery (New England)New England Gas (MA)Northern Utilities (NH and ME)NSTAR GasUnitil (MA)

Example:GasNetworks®

Concluding Points

Natural gas demand continues to grow…– But are all market participants stepping forward to support system

growth and infrastructure investment?– Infrastructure requires long-term commitments, but power

generators face short-term financial pressures– Who pays for reliability?

Natural gas infrastructure projects are timed to meet market need…– But will siting issues continue delays that add to consumer cost and

impact system reliability?

A balanced portfolio remains the best policy…– Fuel diversity, yes, but also supply source diversity– New England’s done well in diversifying its gas sources, and 2005

Gulf hurricanes remind us of need for greater diversity of infrastructure system locations – closer to market centers

– Efficiency needs to play an increasing role

Recommendations

New England needs to continue to diversify its sources of natural gas supplies.

New England needs to continue to increase its natural gas supply capacity and add new infrastructure – pipeline and LNG.

New England needs to continue to invest in natural gas efficiency programs.

The electric market needs to provide sufficient incentives to its gas-fired power generators to ensure supply security; gas is likely to remain a key part of future electric generation and the connection between contracts and infrastructure needs to be addressed. Generators need to step up and pay for pipeline delivery reliability!