Natural Gas Makes the Future Work

1
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

2
Outline

• Natural Gas in Relation to Other Commodities
• Todays Market Fundamentals
• Natural Gas Jobs, Revenue Environment

3
Commodity Price Changes Since January 2007
Source CME Group, A CME/Chicago Board of Trade
Company
4
Same Story, Different Commodities
Commodity Price Changes Since January 2007
Coal Crude Oil Soybeans Wheat Corn Copper Gold
Natural Gas Silver
Source CME Group, A CME/Chicago Board of Trade
Company
5
Natural Gas at Low End of Rising Commodity Tide
Commodity Price Changes Since January 2007
Coal Crude Oil Soybeans Wheat Corn Copper Gold
Natural Gas Silver
Source CME Group, A CME/Chicago Board of Trade
Company
6
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
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7
Natural Gas, Oil EP 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

8
U.S. LNG Import Capacity Growing Imports Lag Due
to World Competition
Bcf/day
U.S. Import Capacity
U.S. Imports
Source EIA Annual Energy Outlook 2008 EVA
9
http//www.ferc.gov/market-oversight/othr-mkts/lng
/othr-lng-wld-pr.pdf
9
9
http//www.ferc.gov/market-oversight/othr-mkts/lng
/othr-lng-wld-pr.pdf
10
Canadian Imports Slowing
Bcf/day
Source EVA
10
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Rig Count Decline Demonstrates Supply Following
Demand
50
Source EIA Monthly Energy Review, December 2008
EIA Natural Gas Weekly Update (4/9/09)
12
Industrial Sector Demand Rebounded in 2008
Industrial Sector Most Elastic
Tcf
Source EVA Annual U.S. Natural Gas Industrial
Consumption, EIA
13
5.8 Million Blue Jobs

• Natural gas and oil industry provides 5.8 Million
  Blue Jobs
• 1.8 Million Direct
• 4 Million Indirect
• EP Jobs Pay More Than 2x National Average
• Natural gas and oil industry provides nearly 300
  Billion annually in labor income
  (API PWC Study, 2007)

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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)

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Natural Gas Has a Long-term Role to Play
Source EIA 2009 Energy Outlook
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Market Chooses Natural Gas for Variety of
Reasons Emissions
Tons annually per 1,000 households
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Market Chooses Natural Gas for Variety of
Reasons Reliability
18
Market Chooses Natural Gas for Variety of
Reasons Cost
millions per 1,000 households (2007)
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Partnership Necessary to Achieve Climate Goals