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Natural Gas Winter Outlook

Natural Gas Winter Outlook Natural Gas Winter Outlook Winter Heating Season 2005-2006 2007-2008 DRAFT 9/26 Outline How Did We Do Last Winter? Winter 2007-2008 Market Pressure Points Winter Weather Other Market Factors Scorecard On Natural Gas Outlook Conclusions 2

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Natural Gas Winter Outlook

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  1. Natural Gas Winter Outlook Natural Gas Winter Outlook Winter Heating Season 2005-2006 2007-2008 DRAFT 9/26

  2. Outline • How Did We Do Last Winter? • Winter 2007-2008 • Market Pressure Points • Winter Weather • Other Market Factors • Scorecard On Natural Gas Outlook • Conclusions 2

  3. How Did We Do ? 2006 - 2007 Estimate 2006- 2007 Actual LAST WINTER’S Score WEATHER ECONOMY DEMAND STORAGE SUPPLY MARKET PRESSURE 3

  4. Market Pressure Points 4

  5. Weather / Demand ACTUAL FORECAST Winter Season Data Sources: NOAA, EVA Last Winter 2006-2007 This Year 2007-2008 7% warmer than normal 2% warmer than normal < ACTUAL SEASON WARMER THAN NORMAL NORMAL WARMER THAN NORMAL NORMAL NOAA’s PROJECTION > MUCH WARMER THAN NORMAL COOLER THAN NORMAL HEATING DEGREE DAYS 3,354 3,530 5

  6. Economy / Demand ACTUAL FORECAST Winter Season PERIOD TO PERIOD CHANGE Data Source: Global Insight Last Winter 2006-2007 This Year 2007-2008 Low Growth About the Same ECONOMY 2.1% 2.2% GDP GROWTH 4.5% 4.9% UNEMPLOYMENT RATE 2.8% 2.6% MANUFACTURING 2.2% 2.8% CPI 6

  7. Overall Demand ACTUAL FORECAST Winter Season — FIVE MONTHS — Data Source: EVA Last Winter 2006-2007 This Year 2007-2008 72.9 Bcf/d 74.2 Bcf/d DEMAND 1.8% 5.0% DEMAND CHANGE ANNUAL GENERATING CAPACITY ADDITIONS 6.2 GW 9.9 GW Residential Electric GROWTH SECTOR None None DECLINE SECTOR 7

  8. Storage / Supply Winter Season Data Sources: EIA, ICF Last Winter 2006-2007 This Year 2007-2008 END OFINJECTION SEASON 3,445 Bcf 3,520 Bcf PERCENT OF AVG. FILL ( FIVE-YEAR AVERAGE ) 105% 105% ADDITIONAL STORAGE CAPACITY 24 Bcf Est. 104 Bcf 8

  9. Production / Supply ACTUAL FORECAST Winter Season Data Source: ICF Last Winter 2006-2007 This Year 2007-2008 ANNUALWELL COMPLETIONS 29,000 30,500 ANNUAL AVG. RIG COUNT 1,372 1,485 WINTER AVG. PRODUCTION 50.7 Bcf/d 51.3 Bcf/d 8.5 Bcf/d 7.8 Bcf/d CANADIAN IMPORTS 1.9 Bcf/d 2.0 Bcf/d LNG IMPORTS 9

  10. Other Market Factors • Consumer Conservation • - Structural • - Behavioral • Weather Risks • - Hurricanes (Dust Storm Effects) • - Cold Snaps • • New Transportation Infrastructure Variables That Can Move TheMarket: 10

  11. Winter Outlook Last Winter 2006-2007 Winter Season This Year 2007-2008 Weather / Demand Economy / Demand Overall Demand Storage / Supply Production / Supply 11

  12. Conclusions • Tight Market Mindset Accepted • LNG – Potentially Moderating Influence • Producers Maintaining Heavy Investments in This Stable Price Environment • Federal Lawmakers Need to Make the Tough Decisions on Natural Gas Supply 12

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