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Natural Gas Market Dynamics

Explore the price volatility, supply-demand fundamentals, and key drivers shaping the Dominion East Ohio natural gas market. Learn about market trends, demand shifts, industrial impact, drilling activity, and more.

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Natural Gas Market Dynamics

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  1. Natural Gas Market Dynamics Jeffrey A. Murphy Managing Director, Commercial Operations Dominion East Ohio June 5, 2009

  2. Natural Gas Market Dynamics • Price Volatility • Supply and Demand Fundamentals • Dominion East Ohio Market

  3. Natural Gas Market Dynamics Price Volatility

  4. Historical Price Movement Source: www.hessenergy.com

  5. July ‘09 NYMEX Contract Pricing Source: www.hessenergy.com

  6. Forward NYMEX NG Prices Source: www.nymex.com

  7. June 2, 2009 Gas Daily Headlines • NYMEX leaps 41.4 cents, but cash prices weaken • “the NYMEX price soared ‘for no good reason’ given that fundamentals have not changed much from last week.” • Bears in control as new hurricane season begins • “nothing - save a catastrophic hurricane … - should prevent gas prices from falling even further this summer” • S&P: Outlook murky for North American gas sector • “the key for oil and gas is the development of demand, and demand right now is heading downhill…” See: www.platts.com

  8. Natural Gas Market Dynamics Key Drivers

  9. Key Drivers: Reduced Demand Weather-Normalized R&C Demand Is Less Source: www.eia.doe.gov

  10. Key Drivers: Reduced Demand Industrial and Power Generation Demand Is Much Less Source: www.eia.doe.gov

  11. Key Drivers: Drilling Activity Source: EIA Natural Gas Year In Review 2008

  12. Key Drivers: Drilling Activity Source: www.bakerhughesdirect.com

  13. Key Drivers: Domestic Production Source: www.eia.doe.gov

  14. Key Drivers: Domestic Production Source: EIA Annual Energy Outlook 2009

  15. Key Drivers: New Reserves Source: FERC Natural Gas Market Overview (12/5/08)

  16. Key Drivers: LNG Imports Source: www.eia.doe.gov

  17. Key Drivers: Storage Inventories Source: www.eia.doe.gov

  18. Key Drivers: Pipeline Capacity Source: rexpipeline.com

  19. Natural Gas Market Dynamics Dominion East Ohio Market

  20. Energy Choice Enrollments

  21. Pre-SSO (9/06) to Today (12/08)

  22. Energy Choice Market Shares – 12/08 Other 13 F E D Aggregation (36%) C B A Energy Choice Participation Rates: Residential Non-PIPP: 78% Nonresidential: 75%

  23. What is Dominion Doing Now? • Dominion is continuing its transition from traditional regulated natural gas sales to a more competitive market for its customers • Dominion will continue to focus on providing regulated distribution service to its 1.2 million customers • Dominion conducted its first Standard Service Offer auction in August 2006 to purchase natural gas for its sales customers • In February 2009, Dominion conducted two more auctions for Standard Service Offer (SSO) and Standard Choice Offer (SCO) commodity service • In April 2009, Dominion placed all Choice-eligible customers into a direct retail relationship with an Energy Choice supplier at the SCO rate established in the auction • SSO/SCO auction process will be repeated in 2010

  24. Resources: Residential/Small Commercial www.dominiongaschoice.com Larger Commercial/Industrial www.dom.com

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