U.S. Natural Gas Pipeline Network

FUTURE NATURAL GAS DEMAND

( 2010-2030)

30 25 20 15 10 5 0 2010 Power Generation Industrial Commercial Residential Other 2015 2020 2025 2030 Source:

Energy Information Administration, Annual Energy Outlook 2009-2030

.

1

FUTURE NATURAL GAS SUPPLY (2010-2030)

30,00 25,00 20,00 15,00 10,00 5,00 0,00 2010 2015 2020 2025 2030 LNG Canadian Imports Domestic Production Source:

Energy Information Administration

,

Annual Energy Outlook 2009-2030

.

2

35.00

North American Supply

Projected US Supply/Demand Balance

(EIA Annual Energy Outlook 2005) 30.00

25.00

20.00

Initial Alaskan gas reaches lower 48 15.00

10.00

5.00

LNG Canada Domestic Total US Demand 0.00

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year

3

80,0 70,0 60,0 50,0 40,0 30,0 20,0 10,0 0,0

NATURAL GAS SUPPLY

(JANUARY 1-DECEMBER 31, 2008)

LNG Canadian Imports Domestic Production Source

: Bentek Energy LLC

,

Energy Market Fundamentals

, December 31, 2008.

4

Shale Basins and the U.S. Pipeline Grid

Source: American Clean Skies Foundation.

U

NCONVENTIONAL

R

ESOURCE

D

EVELOPMENT

Traditional Natural Gas Production Unconventional Gas Resources Shales, Tight Sands, Coal Seams

Natural Gas Production Barnett Shale 1993-2006

Source: Texas Railroad Commission

General Characteristics of Productive Shales

Source: William Grieser, Halliburton Company.

SHALE GAS RESOURCE ESTIMATES

Potential Gas Committee added about 200 Tcf to U.S. resource assessment between 2004 and 2006 – almost all attributed to new shale-related data Navigant Consulting, Inc. (2008) estimates 275-842 Tcf from 17 U.S. shale plays

SELECTED SHALE GAS RESOURCE ESTIMATES

Shale Play

Antrim Appalachian Marcellus Haynesville Fayetteville Barnett Lewis (New Mexico) Lewis (Wyoming)

Estimate (Tcf) Max Gas In-Place (Tcf)

13 70 34 34 76 1744 1500 717 26 52 26 10 14 168 61 98 Mean estimate for U.S. shale resources, 274 Tcf Gas in-place estimates as high as 3,765 Tcf (Navigant Consulting, Inc.)

SHALE GAS PRODUCTION ESTIMATES

Depending on the source, some analysts estimate that shale production now at about 5 Bcf per day will grow to 27-35 Bcf per day by the end of the next decade Will this be additive to current production rates or will it only replace other declining production capability?

Daily Natural Gas Consumption by Sector

January 1-December 31, 2008

100,0 40,0 30,0 20,0 10,0 0,0 90,0 80,0 70,0 60,0 50,0 Pwr Gen Industrial Res/Com Source: Bentek Energy LLC,

Energy Market Fundamentals

, December 31, 2008.

NATURAL GAS IS BY FAR THE CLEANEST OF ALL FOSSIL FUELS 250 200 150 100 50 0 N ATURAL G AS P ROPANE G ASOLINE R ESIDUAL O IL W OOD

Source

: U.S. Energy Information Administration.

C OAL

13

CONSUMPTION PER RESIDENTIAL NATURAL GAS CUSTOMER 32% Efficiency Improvement

Source: NOTE:

U.S. Energy Information Administration

and

American Gas Association

.

Data is “weather normalized” or adjusted to reduce the impact of abnormally warm or cold weather.

14

70 RESIDENTIAL NATURAL GAS CUSTOMERS ARE GROWING, BUT THEIR GREENHOUSE GAS EMISSIONS HAVE DECLINED 300 GREENHOUSE GAS EMISSIONS NUMBER OF CUSTOMERS 60 250 50 200 40 150 30 100 20 50 10 0 1970 0 2007 1970-1979 2000-2006

Source:

U.S. Environmental Protection Agency, U.S. Energy Information Administration

and

American Gas Association

.

15

TOTAL ENERGY EFFICIENCY (SOURCE ENERGY REQUIRED TO DELIVER 100 MMBtu TO END-USE CUSTOMER) 400 350 300 250 200 150 100 50 0 E LECTRICITY N ATURAL G AS

NOTE: National average electricity generation mix.

16

DIRECT NATURAL GAS USE REDUCES GREENHOUSE GAS EMISSIONS

17

30 20 10 0 70 60 50 40 NUMBER OF NATURAL GAS CUSTOMERS INCREASING 1970 2007

18

OUR INDUSTRY’S FUTURE LOOKS BRIGHT

Abundant domestic supply resource base to meet demand growth at reasonable costs Innovative rate designs to align interests of utility and customers Increased direct use of natural gas can reduce energy consumption and costs, lower carbon emissions and enhance national energy security Gas utility industry is a solid, safe, responsible investment 19

Utility Operations Technologies on the Horizon • Smart Meters • Expanded Use of Mapping and Other Informational Systems • Enhanced Locating Technologies • Improved Leak Detection (Vehicles and Handheld) • Improved Design, Construction and Materials • Enhanced Pipeline Repair/Rehabilitation 20