Transcript Goal 3 - Foster Increased Supply

Natural Gas Makes the
Future Work
Jenny Fordham
Director of Energy Markets & Government Affairs
Natural Gas Supply Association
Presented to the Interstate Municipal Gas Agency
April 28, 2009
Outline
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2
Natural Gas in Relation to Other Commodities
Today’s Market Fundamentals
Natural Gas: Jobs, Revenue & Environment
Natural gas at low end of rising
Same story, different commodities
commodity tide
Commodity Price Changes Since January 2007
250%
200%
150%
100%
50%
Coal
Coal
Crude
CrudeOil
Oil
Soybeans
Soybeans
Wheat
Wheat
Corn
Corn
Copper
Copper
Gold
Gold
Natural
NaturalGas
Gas
Silver
Silver
0%
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88
-50%
Source: CME Group, A CME/Chicago Board of Trade Company
Major U.S. Shale Basins Hold
Potential for 30 Bcf/d; Roughly Half of
U.S. Production
Source: North American Natural Gas Supply
Assessment Navigant Consulting, Inc. & EIA
6
Natural Gas, Oil E&P Provides Billions
Annually in Government Revenue
 U.S. Treasury:
–$6.6 Billion in 2007
–$17.1 Billion in 2008
 States:
–$1.6 Billion in 2007
–$2.2 Billion in 2008
U.S. LNG Import Capacity Growing;
Imports Lag Due to World Competition
Bcf/day
20
18
16
14
12
10
8
6
4
2
0
U.S. Import Capacity
U.S. Imports
2006
2007
Source: EIA Annual Energy Outlook 2008 & EVA
8
2008
2009
2010
http://www.ferc.gov/market-oversight/othr-mkts/lng/othr-lng-wld-pr.pdf
http://www.ferc.gov/market-oversight/othr-mkts/lng/othr-lng-wld-pr.pdf
9 9
Canadian Imports Slowing
Bcf/day
10
9.2
9
8.9
8.7
8.9
7.5
8
7
6
5
4
3
2
1
0
2006
Source: EVA
10
2007
2008
2009
2010
Rig Count Decline Demonstrates
Supply Following Demand
1,600
1,400
1,200
1,000
800
600
400
200
0
50%
Source: EIA Monthly Energy Review, December
2008 & EIA Natural Gas Weekly Update (4/9/09)
11
20
09
20
08
20
07
20
06
20
05
790
Industrial Sector Demand Rebounded
in 2008; Industrial Sector Most Elastic
Tcf
8
8
7
7
7
7
7
6
6
6
6
6
7.52
7.15
7.23
6.61
2002
2003
2004
Source: EVA & Annual U.S. Natural
Gas Industrial Consumption, EIA
12
2005
6.64
6.68
6.50
2006
2007
2008
6.31
6.35
2009
2010
5.8 Million Blue Jobs

Natural gas and oil industry provides 5.8
Million Blue Jobs
– 1.8 Million Direct
– 4 Million Indirect

E&P Jobs Pay More Than 2x National
Average

Natural gas and oil industry provides nearly
$300 Billion annually in labor income
(API PWC Study, 2007)
Natural Gas Is Key Ingredient in
Everyday Products
 Manufacturers Consume
One-third of Natural Gas to
Make Products

Additional Jobs Associated
with Those Products

Oil & Natural Gas Industry
Contributes $570 Billion to
Economy Annually
(Source: API PWC Study, 2007)
Natural Gas Has a Long-term Role to
Play
Source: EIA 2009 Energy Outlook
15
Market Chooses Natural Gas for
Variety of Reasons: Emissions
Tons annually per 1,000 households
Market Chooses Natural Gas for
Variety of Reasons: Reliability
Market Chooses Natural Gas for
Variety of Reasons: Cost
$ millions per 1,000 households (2007)
Partnership Necessary to Achieve
Climate Goals