2009 ICF International. All rights reserved.

Outlook for Natural Gas and CO

2
Infrastructure
Recent Studies and Analysis
Outlook for Natural Gas and CO
2
Infrastructure
Recent Studies and Analysis
Contact: Contact:
Geoffrey N. Brand PhD Geoffrey N. Brand PhD
Senior Project Manger, Gas Market Modeling Senior Project Manger, Gas Market Modeling
I CF I nternational I CF I nternational
703 703- -218 218- -2742 2742
gbrand@icfi.com gbrand@icfi.com
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
2
Recent INGAA Infrastructure Studies

Natural Gas
Availability, Economics, and Production Potential of
North American Unconventional Natural Gas Supplies
November 2008
Natural Gas Pipeline and Storage Infrastructure
Projections Through 2030 October 2009

CO
2
Developing a Pipeline Infrastructure for CO2 Capture
and Storage: Issues and Challenges February 2009
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
3
Unconventional Gas Supplies

Driver of future North American natural gas production.
Changes in production (location or volume) drive infrastructure
needs.

Definition
Relative to conventional supplies - Unconventional natural gas
resources are lower in resource concentration, are more dispersed,
and require well stimulation or other technologies to produce.

Most common types:
Tight (sandstone or carbonate)
Shale
Coal bed methane
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
4
Historical U.S. Unconventional Gas Production

0
1,000
2,000
3,000
4,000
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7,000
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B
c
f

p
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r

Y
e
a
r
Coalbed
Shale
Tight
Strong Production Growth since the Mid-1990s
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
5
Total U.S. Natural Gas Reserves / Resource
Trillion Cubic Feet
EIA Form-23 Reports
Net
Starting Reserve Ending
Year Reserves Production Additions Reserves
2000 158 19 29 168
2001 168 19 26 175
2002 175 19 22 178
2003 178 19 22 181
2004 181 19 22 184
2005 184 18 30 196
2006 196 18 23 201
2007 201 19 44 226
Total U.S. reserves are
increasing each year.
There is a lot of natural
gas remaining.
*Portion of total resource
Unproved
Plus Total
Proven Discovered Remaining Shale
Reserves Undeveloped Resources Assessment*
Alaska 8.2 294.4 302.6 0.0
West Coast Onshore 3.1 26.5 29.6 0.3
Great Basin 1.0 3.7 4.7 0.0
Rockies 59.5 235.0 294.5 15.7
West Texas 21.4 133.3 154.7 92.2
Gulf Coast Onshore 44.6 257.1 301.6 90.0
Mid-continent 28.3 234.2 262.5 168.2
Eastern Interior 19.7 331.6 351.2 262.4
Gulf of Mexico 17.7 299.7 317.4 0.0
U.S. Atlantic Offshore 0.0 39.0 39.0 0.0
U.S. Pacific Offshore 0.9 24.0 24.0 0.0
WCSB 56.9 316.0 372.9 166.2
Arctic Canada 0.0 71.0 71.0 0.0
Eastern Canada Onshore 0.5 12.8 13.3 7.0
Eastern Canada Offshore 0.5 83.0 83.5 0.0
Western British Columbia 0.0 10.9 10.9 0.0
US 204.4 1,878.4 2,082.8 628.8
Canada 57.9 493.6 551.5 173.2
North America 262.3 2,372.0 2,634.3 802.0
*Portion of total resource
Unproved
Plus Total
Proven Discovered Remaining Shale
Reserves Undeveloped Resources Assessment*
Alaska 8.2 294.4 302.6 0.0
West Coast Onshore 3.1 26.5 29.6 0.3
Great Basin 1.0 3.7 4.7 0.0
Rockies 59.5 235.0 294.5 15.7
West Texas 21.4 133.3 154.7 92.2
Gulf Coast Onshore 44.6 257.1 301.6 90.0
Mid-continent 28.3 234.2 262.5 168.2
Eastern Interior 19.7 331.6 351.2 262.4
Gulf of Mexico 17.7 299.7 317.4 0.0
U.S. Atlantic Offshore 0.0 39.0 39.0 0.0
U.S. Pacific Offshore 0.9 24.0 24.0 0.0
WCSB 56.9 316.0 372.9 166.2
Arctic Canada 0.0 71.0 71.0 0.0
Eastern Canada Onshore 0.5 12.8 13.3 7.0
Eastern Canada Offshore 0.5 83.0 83.5 0.0
Western British Columbia 0.0 10.9 10.9 0.0
US 204.4 1,878.4 2,082.8 628.8
Canada 57.9 493.6 551.5 173.2
North America 262.3 2,372.0 2,634.3 802.0
Unproved
Plus Total
Proven Discovered Remaining Shale
Reserves Undeveloped Resources Assessment*
Alaska 8.2 294.4 302.6 0.0
West Coast Onshore 3.1 26.5 29.6 0.3
Great Basin 1.0 3.7 4.7 0.0
Rockies 59.5 235.0 294.5 15.7
West Texas 21.4 133.3 154.7 92.2
Gulf Coast Onshore 44.6 257.1 301.6 90.0
Mid-continent 28.3 234.2 262.5 168.2
Eastern Interior 19.7 331.6 351.2 262.4
Gulf of Mexico 17.7 299.7 317.4 0.0
U.S. Atlantic Offshore 0.0 39.0 39.0 0.0
U.S. Pacific Offshore 0.9 24.0 24.0 0.0
WCSB 56.9 316.0 372.9 166.2
Arctic Canada 0.0 71.0 71.0 0.0
Eastern Canada Onshore 0.5 12.8 13.3 7.0
Eastern Canada Offshore 0.5 83.0 83.5 0.0
Western British Columbia 0.0 10.9 10.9 0.0
US 204.4 1,878.4 2,082.8 628.8
Canada 57.9 493.6 551.5 173.2
North America 262.3 2,372.0 2,634.3 802.0
100 years of current production
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
6
Unconventional Fraction of U.S. Gas Production
0
5
10
15
20
25
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019
T
c
f

p
e
r

Y
e
a
r
Conventional Tight Coalbed Shale
2007 Unconventional
9.1 Tcf
48% of total
2020
Unconventional
15.9 Tcf
69% of total
U.S. Lower-48
Growing Total
Production
Growing
Fraction of
Unconventional
Unconventional production
growth projected to continue
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
7
Unconventional Resources are Widespread
Haynesville
Marcellus
Eagleford
Major Coalbed Methane Areas
Shale Basins
Major Tight Sands
Areas
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
8
Increases in Interregional Flow, 2008 to 2030
INGAA Base Case Infrastructure Report
Increases in
interregional flow
mainly driven by
shifting gas
supply locations.
New pipeline
infrastructure will
be needed to
make the
incremental
transport
possible.
49
230
497
1398
669
(79)
1442
1277
306
893
211
1391
1905
1189
475
1683
1655
453
279
3
150
1542
2883
534
361
428
126
699
146
444
326

118
69
176
3872
860
264
40
68
264
192
Elba Island
Cove Point
Everett
Blue Lines indicate LNG
Gray Lines indicate an increase
Red Lines indicate a decrease
1554
< Freeport and
Golden Pass
55
1051 Gulf LNG
Energy
478
Costa
Azul
< Lake Charles, Gulf Gateway,
Sabine Pass and Cameron
Canaport
Altami ra
Florida
(Offshore)

749
2560
207
NE Gateway
453
228
Lazaro
Cardenas
Manzanillo
7149
Units: Million cubic feet per day
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
9
Base Case Miles of New Pipeline
Pipeline Mileage Added Each Year

From 2009 through 2030, about 1,700 miles of gas transmission pipeline will be added
each year. These additions are fairly consistent with recent levels.

Construction of laterals will likely account for a greater share of the incremental mileage in
the future. Much of the new pipeline in the future is likely to rely on and add to recently
built projects.

Arctic projects and associated downstream pipes account for 5,000 miles of new pipeline.
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P
i
p
e
Alaska / Arctic
New
Expansion
Lateral
MacKenzie
Project
Alaska Project
1
2
Pipeline added to new basins
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
10
Capital Expenditures for New Pipeline Capacity
Million Dollars (Nominal$) Spent Each Year, I ncluding the Cost of Compression

From 2009 through 2030, the annual expenditures will average about $6 billion.
Somewhat above recent expenditures that have averaged $4 to $5 billion per year.

Arctic pipeline projects will account for 30 to 40 percent of the total expenditures
over the period.
Without the Arctic projects, expenditures would only average $3 to $5 billion per year,
more closely aligning with recent averages.
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s
Alaska / Arctic
New
Expansion
Lateral
1
Includes cost of downstream expansions on existing corridors in the U.S. and Canada in addition to the cost of arctic Canada
and Alaska frontier projects.
2
Lateral is defined as a spur off the main transmission line, normally used to connect production, storage, power plants, LNG
terminals or isolated demand centers.
MacKenzie Project
Alaska Project
1
2
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
11
Summary of Pipeline and Storage Development
From 2009 Through 2030
U.S. and Canada Gas Market Growth
(Trillion Cubic Feet)
+4.9 (+18%)
Interregional Gas Transport Capability
(Billion Cubic Feet Per Day)
+25 (+20%)
Storage Working Gas Capacity (Billion
Cubic Feet)
+453 (+10%)
Added Pipeline Mileage
37,700 Total Miles
1,700 Miles Per Year
Added Horsepower of Compression for
Pipelines
8.1 Million HP
370,000 HP Per Year
Capital Expenditures for New Pipeline
and Storage Capacity
~ $135 Billion
~ $6 Billion Per Year
Base Case
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
12
Other Midstream Development
From 2009 Through 2030
Gathering Line Mileage
+18,200
miles
$13.8 Billion
Gas Processing Capacity
+15.6 Bcfd $10.1 Billion
LNG Import Capacity +3.0 Bcfd $1.5 Billion
Base Case
Capital Expenditures for All Midstream
Infrastructure Development for the INGAA Base
Case was $160 Billion from 2009 through 2030.
CO
2
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
14
Carbon Capture and Sequestration Steps and Costs
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
15
Potential CO
2
Pipeline Network
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
16
Pipeline Requirements are between 5,900 and 36,000 Miles
910
40
910
40
2,950
470
4,080
430
20,610
5,900
36,050
7,900
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
High CCS Case: Less
EOR
Low CCS Case: Less
EOR
High CCS Case:
Greater EOR
Low CCS Case:
Greater EOR
M
i
l
e
s
2015
2020
2030
By 2030 Annual CO
2
Sequestration Rates
High Case 1,000 million tonnes
Low Case 300 million tonnes
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
17
Costs Range between $8.5 and $65.6 billion
1,044
38
1,044
38
4,256
543
6,699
453
32,234
8,512
65,622
12,836
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
High CCS Case: Less
EOR
Low CCS Case: Less
EOR
High CCS Case:
Greater EOR
Low CCS Case:
Greater EOR
M
i
l
l
i
o
n

D
o
l
l
a
r
s
2015
2020
2030
Most Costs Post 2020
Information in this presentation is proprietary and confidential.
Do not distribute to third parties.
18
Key Issues Identified by Industry and Government Experts

Liability for performance of both the pipelines and the
sequestration reservoirs in short term and long term
ensuring pipeline deliverability and the permanence of storage

Financing of pipeline and sequestration facilities
corporate balance sheet financing, to project financing, to hybrid
approaches including some public financing

Siting and right-of-way acquisition
whether federal eminent domain is desirable
how to address overlapping federal, state, and local siting
authorities and processes
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Do not distribute to third parties.
19
Need for a National Approach

Future CO
2
, unlike in EOR applications, will have no
economic value outside what a GHG carbon policy (cap
and trade or tax) confers on it
Creates special challenges for financing

CO
2
transport and sequestration will be continent wide
Involving large investment
Requiring standard operating capabilities and rules, e.g., CO
2
quality standards
Ensure access and performance

Future pipelines will be in more heavily populated areas
with more siting and construction challenges