1

,

Most consumption in the US is produced in the US via on/off shore productionSome Canadian ImportationImportation of foreign Liquefied Natural Gas (LNG) 

2

Offshore Platform

Source: Shell 3

Onshore Wellhead

Source: U.S. Department of Energy

4

Shale Gas Wellheads

Source: Chesapeake Energy Source: Devon Energy

5

Source: Schlumberger

On Shore Unconventional Production

6

- US shale basins.Ma/oF

HOlr1onBh.lff

Floyd ,andC0lJ18Saug,a\l '. eal

r~~~-IMlarce,lIIus

Antrim35-16 tcf

Utic c;!1

F y,etteville

Caney a dWoodford

~~~------..;t::-..,_.CIhattanrooga

Barnett25-252 tcf

Pilerf,e

P'a 10 D'uro .

Sa nett andWo,odford

Pears

Niobr,alrra

G ,een ~i _eli"

M0 merey

Cane Cre'ekHovenweepLe'w~s andMSIIilC C'S

91'1;cl'

MigratingHydrocarbons Shale

FrackPorous & PermeableReservoir Layer

Hydrocarbon Trap

ImpermeableSealing Layer

Organic RichSource Layer

Fracture stimulation 5,000’ – 15,000’ below the surface

Hydraulic Fracturing Technology

Source: Devon Energy 7

Liquefied Natural Gas, or LNG, is natural gas in its liquid form. When natural gas is cooled to minus 260 degrees Fahrenheit (‐162 degrees Celsius), it becomes a clear, colorless, odorless liquidLiquefaction reduces the space natural gas occupies by more than 600 times, making it easier to store and transport

8

Liquefied atural Gas (L G)

Source: Southern LNG

Source: United States Coast Guard 9

LNG Tankers

Source: Southern LNG10

Existing Requirements

Proposed Requirements

Maximum Btu/scf 1075 1100

Maximum Wobbe Index None 1396

Maximum CO2 or N2 3% aggregate 1% CO2

2% N2

Maximum O21% 0.2%

http://elibrary.ferc.gov:0/idmws/file_list.asp?document_id=13823367Source:

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12

Potential Supply Expanlsion

Elba IslandLNG Terminal

Elba ExpressPipeline

13

Gas from the Ground Up

Elba IslandOn-Shore

Off-Shore

Transcontinental

Gas Wells

Gathering SystemsSouthern Natural

Carolina Gas Transmission

SCE&G

Interstate Storage

14

A place to store natural gas supplies for use at a later time. Can be an old gas field, developed salt dome or liquefied natural gas tank. Advantages including having gas closer to end-use markets, ability to offset supply disruptions during cold weather, and avoidance of pipeline bottlenecks during peak usage.

STORAGE FIELDS

Source: U.S. Department of Energy

Natural gas can be stored underground in:(A) salt caverns(B) mines (C) aquifers (D) depleted oil/gas reservoirs(E) hard rock mines.

15

16

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

1949

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

MMcf

Source: Energy Information Administration

17

U.S. Natural Gas Production

0

5

10

15

20

25

Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10

Bcf

/d

Texas Federal GOM Wyoming OklahomaNew Mexico Louisiana Other States

Source: Energy Information Administration18

• 100+ years of natural gas supply – and growing with technology

• New shale gas resources:• Near‐term supply impact 

Short well drilling timesVery high initial production rates

• Long‐term supply stabilityWells produce for 40 ‐ 50 years or more

• New resources onshore are easier and less expensive to develop 

19