NEWS Embargoed for Release: June 9, 2010 Contact: (202)

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1 NEWS Embargoed for Release: June 9, 2010 Contact: (202) Steady and Reliable Summer Outlook for Natural Gas, NGSA Says Summer re-run with hurricanes, stronger industrial demand new trends to watch (Washington, D.C.) The U.S. wholesale natural gas market this summer is likely to look a lot like it did last year, according to a seasonal outlook released today by the Natural Gas Supply Association (NGSA). The NGSA analysis examined individual demand and supply factors and projected their combined impact on natural gas prices for the coming summer, then further identified emerging trends to watch. This summer is shaping up to be a repeat of last summer, which is good news for natural gas consumers, said R. Skip Horvath, president and CEO of NGSA. Assessing the key factors of economy, weather, customer demand, storage and production, NGSA said that improvement in the economy is the single factor it expects to place upward pressure on natural gas prices compared to last summer, with all other factors expected to yield the same pressure as last summer. The association said that when combined, the five key factors will have an overall neutral impact on natural gas prices this summer compared to the summer of We expect the improving economy and rebounding industrial sector to boost demand for natural gas this summer, but that boost will be offset by more production, similar weather and comparable storage inventories, said Horvath. NGSA pointed to a slightly warmer than the 30-year average summer weather forecast from the National Oceanic and Atmospheric Administration (NOAA), which is similar to last summer. NGSA also looked at expected demand from electric, industrial, commercial and residential customers this summer and predicted that overall levels of demand would be 2 percent higher than last summer, a welcome sign of economic recovery, but not quite sufficient to place pressure on prices. Horvath said, We expect industrial demand to continue to steadily strengthen this summer, spurred on by growth in the chemical and metal manufacturing sectors, which traditionally are leading indicators of natural gas demand. Industrial demand for natural gas is nearing its pre-recession levels. Although it won t impact overall demand by a significant amount, NGSA said one sector to watch is power generation, where it predicts that power generators will switch to

2 dispatching natural gas rather than coal due to low natural gas prices, in a summer repeat of 2009 s coal-to-gas switching. Switching from coal to natural gas averaged about 2.25 billion cubic feet (Bcf) per day during the summer of 2009 and is projected to average 1.6 Bcf/day this summer. NGSA said more natural gas is expected to go into storage this summer in contrast to last, however the amounts are roughly comparable and overall should place flat price pressure on natural gas markets. Horvath said, As we can see from the continued growth in natural gas storage capacity, storage is big and getting bigger in its ability to boost market responsiveness. Between 2006 and 2010, a record amount of storage capacity was added and more than half of that was high deliverability salt cavern storage. Horvath added, Storage is not just growing in volumes, newer storage facilities are being sited nearer to customers, enhancing the ability of suppliers to efficiently respond to changes in demand from the key electric and industrial growth markets. NGSA relied on Energy Ventures Analysis and the Energy Information Administration s projections of natural gas production, estimating that overall production would be 58.1 Bcf/day this summer, slightly more than last summer s average daily production of 57.2 Bcf/day, but not enough to influence prices. Natural gas rig counts have increased to almost 970 and LNG imports are up because of good LNG storage capacity in the U.S., said Horvath. He said, Our wild cards are summer hurricane activity and the strength of the manufacturing sector s rally. Horvath concluded, The industry s supply response continues to be strong. Looking beyond this summer, there are encouraging signs for the natural gas industry, with growing demand and expanding natural gas infrastructure and production. The NGSA analysis is based on publicly reported data; the association does not project actual cost figures for wholesale or retail markets. #### NGSA represents integrated and independent companies that supply natural gas. Established in 1965, NGSA encourages the use of natural gas within a balanced national energy policy, and promotes the benefits of competitive markets to ensure reliable and efficient transportation and delivery of natural gas and to increase the supply of natural gas to U.S. customers. For more information, please visit and Clean Natural Gas: Smart, Secure and Essential

3 2010 Natural Gas Summer Outlook Executive Summary The Natural Gas Supply Association s (NGSA) 2010 Summer Outlook summarizes the association s view of existing natural gas market conditions and fundamentals. NGSA s analysis covers the key points that can affect supply and demand, which ultimately impact industrial and consumer users. NGSA analyzes the fundamentals that put pressure on natural gas prices, but does not forecast actual prices. For the 2010 summer cooling season, the association expects overall flat pressure on natural gas market prices relative to last summer. Our expectation is based on an improved economy, similar summer weather conditions, level demand for natural gas, high natural gas storage levels and continued robust natural gas production. The major pressure points include:»»economy As evidenced by the Great Recession of 2009, economic conditions play a significant role in natural gas market conditions and will continue to do so in This summer, NGSA anticipates improvement in the economy relative to last summer. Public data indicate economic growth will place upward summer-over-summer pressure on natural gas prices this summer cooling season, when compared to last summer.»»weather The National Oceanic and Atmospheric Administration (NOAA) predicts that the continental United States will see weather that is slightly warmer than the 30-year average, with the hottest temperatures likely to occur in the Southeast and West, and cooler weather occurring in the Midwest. Temperatures are expected to be very similar to last summer, placing flat pressure on demand and prices. The severity of drought in the Pacific Northwest and potential for significant hurricane activity are factors to watch.»»demand Industrial demand is expected to increase as the manufacturing sector rebounds, residential demand to remain flat, commercial demand to increase slightly and electric demand to decrease slightly. When combined, these indicators point to flat demand, bordering on upward demand if the economy recovers more quickly than currently predicted.»»storage The natural gas industry is projected to enter the summer cooling season with storage inventories at a high level that is similar to last summer, placing level pressure on prices. An increase in high-turnover storage capacity in recent years underscores the ability of storage to provide flexible and quick response to changes in customer load.»»production Overall production is expected to be similar to last summer, resulting in flat pressure on the natural gas market for the summer cooling season. Of note is the rising rig count, which reflects the improving economy. The near-term impact of the freeze on offshore drilling is not yet known. All of these projected pressure points are interrelated. Any deviation from this forecast is likely to affect the other assumptions in this equation. The pace of the economic recovery, rebounding industrial sector and weather will be the most significant factors impacting the market. Clean Natural Gas Smart, Secure and Essential 1620 Eye Street, NW» Suite 700» Washington, D.C » » Steven P. Kirchhoff, Chairman» R. Skip Horvath, President and CEO

4 Economy/Demand This summer, NGSA expects the economy to demonstrate significant improvement compared to last summer s deep recession. cooling degree days is defined as the difference between 65 degrees Fahrenheit and the average outside temperature for that day. The number of CDDs for summer 2009 and 2010 are nearly identical. Overall similar weather will put level pressure on natural gas prices. As always, a significantly warmer than expected weather pattern could lead to upward price pressure. The opposite would be true if the summer turns out to be milder than normal. Other trends to watch are the severity of the drought in the Pacific Northwest, which could influence some switching from hydroelectricity to gas-fired electricity, and the level of hurricane activity this summer. The Gross Domestic Product (GDP) is projected to improve considerably relative to last summer. According to IHS Global Insight, a nationally recognized economic forecasting firm, the GDP is forecast to increase 4 percent compared to last summer s decline of -3.2 percent. However the unemployment rate is expected to remain high at 9.7 percent. Manufacturing, an important component of natural gas demand, is projected to continue to show spirited growth, improving 7.7 percent compared to last summer s steep decline of percent. Finally, inflation is forecast to increase 1.8 percent. Based on all these economic indicators, NGSA anticipates the economy will place upward summer-over-summer pressure on the natural gas market. Weather/Demand The National Oceanic and Atmospheric Administration (NOAA) predicts that the continental United States will see weather that is 1.5 percent warmer than the 30-year average, with the hottest zones likely to occur in the Southeast and West, and cooler weather predicted in the Midwest. The firm Energy Ventures Analysis, Inc. (EVA) is forecasting 1,175 cooling degree days (CDD) this summer, compared to 1,174 CDD last summer. The number of Overall Natural Gas Demand An independent demand analysis performed by EVA notes that summer-to-summer natural gas demand will be minimally higher by about 1 billion cubic feet per day (Bcf/d) than last summer, with 54.4 Bcf/d projected this summer compared to 53.3 Bcf/d last year. EVA s forecast shows the most positive factor affecting natural gas demand this summer to be the strengthening industrial sector, which is expected to grow by 7 percent, nearing pre-recession levels. The chemical industry is the single largest industrial consumer of natural gas and a leading indicator of natural gas demand. The chemical and primary metals industries are expected to continue their improvement relative to last summer.

5 This year, weekly injections are projected to follow the robust pattern exhibited last year. In 2010, we enter the traditional injection season with storage at its third highest level on record 1,669 Bcf. It is surpassed only by 2009 and 2006, which were the 2nd and 1st highest levels, respectively. EVA expects average weekly injections to be slightly higher than last year, bringing end-of-season storage levels to 100 Bcf more than last summer. Although more natural gas is expected to go into storage than last year, the amounts are close in size and overall are forecast to place flat pressure on wholesale natural gas prices. While industrial sector demand for natural gas is forecast to grow, electric sector demand is expected to decline by 1.4 percent, according to EVA. Coal to gas displacement will once again be a significant amount this summer, although not to the extent of last summer. Demand in the commercial sector is predicted to increase slightly, while residential sector demand will remain flat. EVA expects overall demand to be slightly higher than last summer, placing flat pressure on natural gas price. However only a small additional increase in demand could change this to upward pressure. Storage/Demand Companies typically purchase and inject natural gas into storage during the spring and summer for use in the winter when demand is at its peak. During the traditionally-defined injection season of April through September, natural gas storage is a part of overall demand. From 2006 through September 2010, the industry has added at least 660 Bcf of new working gas storage capacity, half of which is high-turnover salt cavern storage that can be cycled multiple times per year. Salt cavern storage enables fast response to shifts in demand from electric and industrial customers. Storage also is being built closer to customer load centers. Production/Supply Lower-48 natural gas production this summer is projected by the Energy Information Administration to be similar to last summer s cooling season. Domestic natural gas production this summer is forecast to be approximately 58.1 Bcf/d compared to 57.2 Bcf/d last winter. The natural gas rig count has risen from 711 last summer to over 950 at present, an indicator that natural gas is viewed as a good growth market. Overall production is close to that

6 dependent Pacific Northwest and the degree to which natural gas generation will replace coal generation this summer. In addition, it is not yet known if the halt on offshore drilling permits will have near-term effects on the natural gas market. Conclusions NGSA analysis of the data indicates flat overall pressure on natural gas prices this summer compared with last summer, primarily due to the following estimates affecting market pressure points: of summer 2009, resulting in flat pressure on the natural gas market this summer. EVA is forecasting that imports from Canada will average 6.9 Bcf/d, the same amount of imports as seen in summer Liquefied natural gas (LNG) imports are expected to increase from 1.7 Bcf/d to 2.1 Bcf/d due to an increase in liquefaction capacity Similar robust production should result in level summer-tosummer price pressure on the natural gas market. However adding even a few million cubic feet of production per day would be statistically significant enough to move the level indicator to a down arrow. Wild Card Market Factors Other factors that are difficult to predict could play a role in the natural gas market this summer. A stronger-thanexpected rally by the manufacturing sector could influence demand as manufacturers and businesses increase their natural gas requirements. Other factors that may play a role in the market are predictions for an unusually active hurricane season this summer, the impact of the drought in the hydroelectric-»»improved economy»»projected similar summer weather»»projected flat demand - but rising»»comparable storage inventory levels»»continued strong production The improving economy will continue to play a leading role on natural gas demand this summer, while other factors such as weather, customer demand, storage and production will be similar to last summer. However customer demand is bordering on an up arrow, while natural gas production is bordering on a down arrow. Storage operators are demonstrating their confidence in the long-term future of natural gas through the construction of record amounts of new natural gas storage capacity that is located closer to customer load centers and much of which is high-deliverability salt cavern storage. Because of its clean-burning characteristics, natural gas will continue to be a critical component of our nation s energy portfolio. For more information, please visit our Web sites or contact us directly. Clean Natural Gas Smart, Secure and Essential 1620 Eye Street, NW» Suite 700» Washington, D.C » » Steven P. Kirchhoff, Chairman» R. Skip Horvath, President and CEO