Albany, NY December 1, 2010 Natural Gas Outlook Presentation to: Northeast Power Coordinating Council (NPCC) General Meeting Stephen Leahy Northeast Gas Association
Topics Gas Market Conditions Gas Supply Task Force & Electric Coordination Supply & Infrastructure Developments
NGA Members Non-profit trade association Local gas utilities (LDCs) serving New England, New York, and New Jersey Several interstate pipeline companies LNG importers (Distrigas; Repsol) and LNG trucking companies Over 250 associate member companies, from industry suppliers and contractors to electric grid operators www.northeastgas.org NY VT NH MA RI CT NJ ME
Winter Outlook Storage levels in positive position U.S. gas production up ~2.5% this year Impact of shale gas output Regional supply & delivery additions since last year Additional storage capacity at LNG facility in New Brunswick (Canaport) Pipeline system upgrades Commodity price higher than last year but still in $4/Mcf range L ki h d th l i th bi t i bl i Looking ahead, weather, as always, is the biggest variable in supply/price dynamic
Storage & Production Up U.S. natural gas storage levels as of November 12 were 3.843 Tcf, 9% above the 5-year average U.S. gas production levels up about 2.5% in 2010 Source: U.S. EIA, data released 11-18-10 Source: U.S. EIA, data released 10-29-10, through Aug. 2010
Price: Recent History, EIA Short-Term Forecast Natural Gas Prices 25 20 Henry Hub spot price Composite wellhead price Forecast 15 10 5 0 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Source: U.S. EIA, 11-9-10
Natural Gas to Oil Price Trend Source: U.S. EIA, data released 11-17-10
Recently-Added Supply / Delivery Points Canaport LNG, June 2009 Rockies Express East Pipeline, Nov. 2009 Millennium Pipeline, Dec. 2008 Northeast Gateway LNG, May 2008 Marcellus Shale Devl t, 2008 - Neptune LNG, Summer 2010
FERC: Northeast Basis Improving Thanks to New Infrastructure Source: U.S. FERC In May, staff of the Federal Energy Regulatory Commission (FERC) released the Summer 2010 Energy Market and Reliability Assessment. One of the charts in the presentation is shown here, demonstrating the year-to-year change in natural gas basis among U.S. regions, relative to the Henry Hub. As can be seen, the Northeast has seen a positive change in its price differential. The FERC cites this improving position to the arrival of Rockies Express East and the rising production from the Marcellus Shale in Appalachia.
Gas & Power Generation Source: U.S. FERC
Industry Coordination: NGA with ISOs
NGA Gas Supply Task Force Members: LDCs in region, interstate pipelines (including TransCanada), LNG transporters Purpose: to help deal with meeting winter supply needs and deliverability within the Northeast region Tasks: Monitor regional deliverability of its members gas supplies during periods of peak demand or supply curtailment; Advise region s energy, regulatory and policy officials; also Updatep ISOs in region of meetings, outcomes
NGA Interface with ISOs Electric & Gas Operations Committee (EGOC), NGA and ISO- NE/NY ISO/PJM Meets periodically, provides updates on system issues (only publicly available information discussed transparency requirements) Next discussion scheduled for 12-8-10 ISOs invited to participate p at NGA winter supply ppy outlook briefing for state government officials in region, 11-9-10 Several committee calls this summer to monitor conditions on both electric and gas side NGA on behalf of its NE Gas Supply Task Force will notify ISO- NE, NY ISO, PJM when Task Force meets, summary of any actions or status
Infrastructure Enhancements: Completed Since Last Winter
Canaport LNG Photos: Repsol In-service, June 2009. Can deliver 1 Bcf/d into market. 3 rd storage tank completed this spring. Approx. 10 Bcf of storage in 3 tanks. Developers: Repsol and Irving Oil.
Value of LNG This Past Winter in New England LNG sendout into the New England market increased this recent winter with the input of supplies from Repsol s Canaport LNG in New Brunswick (gold) and Excelerate Energy s Northeast Gateway offshore Gloucester, MA (red), in addition to Distrigas in Everett, MA (aqua). A major increase over previous winter (Source: U.S. FERC) Source: Federal Energy Regulatory Commission, 2-10
Neptune Deepwater Port Completed This Summer Source: GDF SUEZ
Other System Upgrades Spectra: East to West Project Provides customers with access to East end LNG supply; 281.5 MMcf/d Source: Spectra Energy
Efficiency Investments Continue In 2009, almost $1 billion was invested in natural gas efficiency programs nationwide, according to a March 2010 report by the Consortium for Energy Efficiency (CEE). Of that, $192 million or one-fifth of the national total - was slated to be invested in several Northeast states (CT, MA, NH, NJ, NY, RI and VT). Budgets for U.S. natural gas efficiency investments have nearly quadrupled since 2006. Source: Consortium for Energy Efficiency
Shale Gas Developments
MIT Study: Gas is the Bridge Natural gas truly is a bridge to a low-carbon future The Future of Natural Gas report released by MIT on June 25, 2010. The United States has a significant natural gas resource base, enough to equal about 92 years worth at present domestic consumption rates. Much of this is from unconventional sources, including gas shales. While there is substantial uncertainty surrounding the producibility of this gas, there is a significant amount of shale gas that can be affordably produced. Environmental issues associated with producing unconventional gas resources are manageable but challenging. Source: MIT Energy Initiative, June 2010
The Game-Changer : North American Shale Gas Basins Map: National Energy Board 25.
Changing Supply Sources U.S. Supply Source Volumes in Bcf/d upply Su 61% 75% 84% Source: Tennessee Gas Pipeline, El Paso June 2010 Macro Forecast
Marcellus Receipts on Tennessee Gas Pipeline Average Monthly Prod duction (M Dth/day) 800 Peak day reached 857 MDth on 8/19 and 8/26 700 600 500 400 300 200 100 0 Jul 08 Sep 08 Nov 08 Jan 09 Mar 09May 09 Jul 09 Sep 09 Nov 09 Jan 10 Mar 10May 10 Jul 10 Source: Tennessee Gas Pipeline/El Paso, 9-10
Proposed Northeast Pipeline Projects: Focusing on Appalachian Connections Prepared by NGA, based on publicly available information. Project locations approximate. Iroquois, NYMarc Iroquois, WTC Project NiSource & Empire, Tioga UGI Project Expansion VERMONT National Fuel Gas, Northern Access Project Tennessee, Northeast Upgrade Tennessee, 300 Line Expansion Tennessee, Northeast Supply Diversification Spectra, NJ / NY Expansion Spectra/Texas Eastern, TEMAX and TIME III Williams, Northeast Supply Project Dominion, Ellisburg to Craigs Dominion, Appalachian Gateway Spectra/Texas Eastern, TEAM
Drilling and Environmental Review U.S. EPA review of fracking Source: Binghamton Press Current review in New York State of horizontal drilling process
NY State t Review Gov. Paterson called for review of potential Marcellus shale drilling in July 2008, initiating moratorium Public comment period closed in late 2009 on Draft Generic Environmental Impact Statement (GEIS) NY DEC reviewing comments and preparing GEIS now April 09: DEC announces exclusions from horizontal drilling for Syracuse and NYC watersheds Source: NY Dept. of Environmental Conservation
NY DEC: Environmental Issues Associated with Marcellus High volume hydraulic fracturing Water consumption & transportation Chemical additives Fluid handling, disposal, treatment Local impacts to infrastructure Horizontal drilling from multi-well ll pads Duration of impacts Source: NY Dept. of Environmental Conservation presentation, 6-10
Potential Northeast Output t bcfd 13 12 11 10 9 8 7 6 5 4 3 2 1 0 2010 2012 2014 2016 Source: Wood Mackenzie presentation to NGA, 9-10 2018 2020 2022 2024 2026 2028 2030 Northeast Gulf Coast Rockies/MidCon LNG Canada Alaska
New Flow Dynamics from Appalachia
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