CNG Fueling Infrastructure Implementation

Transcription

1 CNG Fueling Infrastructure Implementation State policy and infrastructure investments for CNG vehicles Matthew Most Vice President of Environmental Policy, Encana Natural Gas, Inc. Wisconsin Public Utility Institute Seminar Madison, WI July 14, 2011

2 Future Oriented Information In the interests of providing Encana shareholders and potential investors with information regarding Encana, including management s assessment of Encana s and its subsidiaries future plans and operations, certain statements contained in this presentation are forward-looking statements or information within the meaning of applicable securities legislation, collectively referred to herein as forward-looking statements. Forward-looking statements in this presentation include, but are not limited to: projected increase in demand opportunities for natural gas in power generation and transportation; estimated years of supply of natural gas in North America; estimated average costs for plants by 2016; supply potential for natural gas from 2010 to 2010; projected natural gas highways; and future natural gas consumers. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause the company s actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These assumptions, risks and uncertainties include, among other things: the risk that the company may not conclude potential joint venture arrangements with others; volatility of and assumptions regarding commodity prices; assumptions based upon the company s current guidance; fluctuations in currency and interest rates; product supply and demand; market competition; risks inherent in the company s and its subsidiaries marketing operations, including credit risks; imprecision of reserves and resources estimates and estimates of recoverable quantities of natural gas and liquids from resource plays and other sources not currently classified as proved, probable or possible reserves or economic contingent resources; marketing margins; potential disruption or unexpected technical difficulties in developing new facilities; unexpected cost increases or technical difficulties in constructing or modifying processing facilities; risks associated with technology; the company s ability to replace and expand gas reserves; its ability to generate sufficient cash flow from operations to meet its current and future obligations; its ability to access external sources of debt and equity capital; the timing and the costs of well and pipeline construction; the company s ability to secure adequate product transportation; changes in royalty, tax, environmental, greenhouse gas, carbon, accounting and other laws or regulations or the interpretations of such laws or regulations; political and economic conditions in the countries in which the company operates; terrorist threats; risks associated with existing and potential future lawsuits and regulatory actions made against the company; and other risks and uncertainties described from time to time in the reports and filings made with securities regulatory authorities by Encana. Although Encana believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the foregoing list of important factors is not exhaustive. Forward-looking statements with respect to anticipated production, reserves and production growth, including over the next five years, are based upon numerous facts and assumptions which are discussed in further detail in this presentation, including a projected capital program averaging approximately $6 billion per year from 2011 to 2014, achieving an average rate of approximately 2,500 net wells per year from 2011 to 2014, Encana s current net drilling location inventory, natural gas price expectations over the next few years, production expectations made in light of advancements in horizontal drilling, multi-stage fracture stimulation and multi-well pad drilling, the current and expected productive characteristics of various existing and emerging resource plays, Encana s estimates of proved, probable and possible reserves and economic contingent resources, expectations for rates of return which may be available at various prices for natural gas and current and expected cost trends. In addition, assumptions relating to such forward-looking statements generally include Encana s current expectations and projections made in light of, and generally consistent with, its historical experience and its perception of historical trends, including the conversion of resources into reserves and production as well as expectations regarding rates of advancement and innovation, generally consistent with and informed by its past experience, all of which are subject to the risk factors identified elsewhere in this presentation. Furthermore, the forward-looking statements contained in this presentation are made as of the date of this presentation, and, except as required by law, Encana does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. 2

3 Who is Encana? A leading North American energy company with offices in Calgary, Alberta Denver, Colorado Dallas, Texas 100% production and reserves located in North America One of the largest producers of North American natural gas 23,000 net drilling locations $24.9B market capitalization (May 2011) Leading by example for NGVs Converting fleet to bi-fuel & dedicated NGVs (160 converted to date) 6 CNG stations operating; 6 LNG mobile fueling stations; 1 LNG station under construction 16 rigs running on natural gas 3

4 Leading North American Natural Gas Company Q North American Natural Gas Production MMcf/d Encana 2010 annual growth per share: 12% 4,500 4,000 3,500 US Production Cdn Production 3,000 2,500 2,000 1,50 0 1, XOM ECA CHK COP DVN APC BP RDS APA Chevron Source: Company Data, Energy etrack Estimates 4

5 Changing the Game 30 Natural Gas Producers 23 LDCs/Utilities Partnering together to grow the market for natural gas as a transportation fuel CNG Fueling Station Count 1,600 1,400 1,200 1, Out of Service Planned Existing YTD

6 Canada & U.S.- Fuel Displacement Potential Light Duty CNG 57 Bcf/D Medium to Heavy Duty CNG 4 Bcf/D Heavy Duty On Road LNG 13 Bcf/D Heavy Duty Off Road LNG 16 Bcf/D 6

7 Natural Gas for Transportation Market Segmentation CNG GREEN CITIES Municipal government fleets, light duty and medium duty vehicles Commercial fleets and personal light and medium duty vehicles Airport and port authorities GREEN CORRIDORS Heavy duty vehicle freight and goods transportation Home base and mid-point fueling patterns Transient and varied fueling patterns LNG GREEN GAS OPERATIONS Drilling rigs and frac equipment Service company light duty vehicle fleets Field storage and fuel deployment solutions required GREEN COMMERCIAL Extra heavy duty off-road vehicles Rail, mining, marine, military, and construction services Heavy duty engine solutions required 7

8 U.S. Interstate Highway System Green Corridors Link up regional corridors as part of expansion phase ICTC RMC I-75 TT I-75 Interstate 75 Corridor TT Texas Triangle RMC Rocky Mountain Corridor ICTC Interstate Clean Transportation Corridor 8

9 CO Example of potential NG Station Buildout 18 CNG Growth Stations in Metro Area Anchor Growth Satellite Total CNG LCNG Total

10 NGV Incentive Comparisons Leading States Federal Texas West Virginia Oklahoma Oregon Colorado Louisiana Natural Gas Vehicle Count Natural Gas Stations (E/P) 117,074 11,454 2,319 2,719 1, / / / 6 12 / 0 29 / 5 9 / 10 Infrastructure / Home fuel 30% up to $30,000 cap/ $1,000 Expires: 12/31/11 50% of the construction costs up to $250,000 ($312,500 if allows public access) Expires: 01/01/21 75% of infrastructure Expires: 01/01/14 25% of the incremental cost or $750 for residents / 35% for businesses 50% of the cost of constructing an alternative fueling station No expiration Vehicle Incentives $2,000 rebate for the purchase of a NGV / $3,000 for the conversion 35% of the purchase price or 50% of the conversion cost up to $7,500 for < 26,000 GVWR and up to $25,000 for > 26,000 GVWR Expires: 01/01/21 50% of the incremental cost Expires: 01/01/14 25% of the incremental cost or $750 for residents / 35% for businesses 75% of incremental cost in 2011 Decreases: 55% : % : % : 2014 and % of the incremental cost, or 10% of the cost of the motor vehicle or up to $3,000 No expiration Fuel Credits $0.50 GGE Excise tax Credit Expires: 12/31/11 Preferential NG Fuel rates Deregulation of CNG as a Motor Fuel Mandates Acquisition Requirements Acquisition Requirements Acquisition Requirements Acquisition Requirements Acquisition Requirements Acquisition Requirements CNG highway /stations every 100 miles Funding Grants / Loans Grants / Loans Grants / Loans Infrastructure Loans Loans Grants Loans 10

11 USA Natural Gas Fueling Infrastructure What are the catalysts for change? As of June 15, Total 905 CNG stations (386 public access) 44 LNG stations (14 public access) 107 Planned stations (103 CNG) Air Quality & Fleet Acquisition Regulation as Catalysts (Air Quality as Motivation) California New York Economic Factors as Catalyst (Lowered fuel cost and air quality as motivation) Utah (State and LDC joint effort) NGV Incentives as Catalyst (Air quality, revenues to state, lowered fuel costs as motivation) Oklahoma Texas Louisiana, Colorado, Oregon New Legislation West Virginia 1,200 1, Top States with NG Infrastructure California: 256 New York: 100 Utah: 77 Oklahoma; 62 Texas: 39 Planned 103 Private 519 Public 386 CNG Planned 4 Private 30 Public 14 LNG Economic Factors for LDCs Natural gas usage in homes is decreasing 1 home uses 75 decatherms per year 3 Honda Civic NGVs = 1 home 1 Bi-fuel Pickup NGV = 1.5 homes 1 Ton NGV = 5 homes

12 Natural Gas For Transportation We need the Chicken and the Egg! (Vehicles and Stations) Engage natural gas value chain to assist infrastructure buildout Target metropolitan areas and along corridors for connectivity and fill in the gap approach Increase natural gas vehicle options for North America in all market segments Encourage bi-fuel and dual fuel vehicle development and adoption Pursue policy that incents NGV adoption through legislation, regulation and rate tariffs for CNG, LNG and electricity used in CNG and LNG stations Create a level playing field for all alternative fuels Develop a National Vision to Achieve What Others Believe to Be Impossible 12

13 Natural Gas as a Transportation Fuel Abundant Affordable Clean Reliable Domestic Solution 13

14 Additional Information

15 Proposed NAT GAS Act for 2011 Sponsors House Reps. John Sullivan (R-OK), Dan Boren (D-OK), John Larsen (D-CT) Senate Majority Leader Harry Reid (D-NV), Sens. Robert Menendez (D-NJ) and Orrin Hatch (R-UT) 180+ Co-signers of the Bill Components Restoring and expanding the natural gas fueled vehicle credit Make all dedicated natural gas-fueled vehicles eligible for a credit equal to 80% of the vehicle s incremental cost (up to a cap based on the vehicle s weight class, ranging from $7,500 to $64,000) Make all bi-fuel and dual-fuel natural gas-fueled vehicles eligible for a credit equal to 50% of the above cap 15

16 Proposed NAT GAS Act for 2011, cont. Components, cont. Extending the alternative fuel credit for purchase of natural gas which is set to expire December 31, 2011 Extending the natural gas vehicle refueling property credit which is set to expire December 31, 2011 Increase to the fueling infrastructure credit from 30% or $30,000 to 50% or $100,000 per CNG or LNG station and from $1,000 to $2,000 for a home refueling unit All tax credits would be extended for 5 years Exempting the NGV and fueling infrastructure tax credits from the AMT restrictions and making the credits transferrable (thus facilitating the use of these credits by the public sector) Providing incentives for OEMs to produce NGVs in the United States (Includes facility modernization/expansion, vehicle production incentives, and local bond issuing authority) Indian tribes eligible for the incentives 16

17 Natural Gas Fast Facts Did you know? CNG is stored in a gas state at 3,600 psi LNG is stored in a liquid state at -260 F Vehicle performance using natural gas is the same as gasoline and diesel Conversions CNG LNG 1 Gallon of Gasoline = 116,000 Btu/gallon (LHV) 1cf of Natural Gas = ~960 Btu 1 Gallon Gasoline = ~120 cf Natural Gas 1 mcf = ~8 Gallon Gasoline Equivalents (gge) 1 gge = lb of CNG Ratio of storage volume of gasoline to CNG is ~4:1 1 Gallon of Diesel = 74,720 Btu/gallon (LHV) 1cf of Natural Gas = ~1,000 Btu 1 Diesel Gasoline = ~129 cf Natural Gas 1 mcf = Diesel Gasoline Equivalents (dge) 1 DGE = 6.04 lb Ratio of storage volume of gasoline to LNG is ~7:1 17

18 Resources American Natural Gas Alliance (ANGA) Alternative Fuel Stations and Prices Clean Vehicle Foundation Natural Gas Vehicle Institute Natural Gas Vehicles for America US DOE Alternative Fuels & Advanced Vehicles Data Center Weld County Smart Energy 18