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Natural Gas Market Dynamics

Natural Gas Market Dynamics. Jeffrey A. Murphy Managing Director, Commercial Operations Dominion East Ohio June 5, 2009. Natural Gas Market Dynamics. Price Volatility Supply and Demand Fundamentals Dominion East Ohio Market. Natural Gas Market Dynamics. Price Volatility.

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Natural Gas Market Dynamics

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  1. Natural Gas Market Dynamics Jeffrey A. Murphy Managing Director, Commercial Operations Dominion East Ohio June 5, 2009

  2. Natural Gas Market Dynamics • Price Volatility • Supply and Demand Fundamentals • Dominion East Ohio Market

  3. Natural Gas Market Dynamics Price Volatility

  4. Historical Price Movement Source: www.hessenergy.com

  5. July ‘09 NYMEX Contract Pricing Source: www.hessenergy.com

  6. Forward NYMEX NG Prices Source: www.nymex.com

  7. June 2, 2009 Gas Daily Headlines • NYMEX leaps 41.4 cents, but cash prices weaken • “the NYMEX price soared ‘for no good reason’ given that fundamentals have not changed much from last week.” • Bears in control as new hurricane season begins • “nothing - save a catastrophic hurricane … - should prevent gas prices from falling even further this summer” • S&P: Outlook murky for North American gas sector • “the key for oil and gas is the development of demand, and demand right now is heading downhill…” See: www.platts.com

  8. Natural Gas Market Dynamics Key Drivers

  9. Key Drivers: Reduced Demand Weather-Normalized R&C Demand Is Less Source: www.eia.doe.gov

  10. Key Drivers: Reduced Demand Industrial and Power Generation Demand Is Much Less Source: www.eia.doe.gov

  11. Key Drivers: Drilling Activity Source: EIA Natural Gas Year In Review 2008

  12. Key Drivers: Drilling Activity Source: www.bakerhughesdirect.com

  13. Key Drivers: Domestic Production Source: www.eia.doe.gov

  14. Key Drivers: Domestic Production Source: EIA Annual Energy Outlook 2009

  15. Key Drivers: New Reserves Source: FERC Natural Gas Market Overview (12/5/08)

  16. Key Drivers: LNG Imports Source: www.eia.doe.gov

  17. Key Drivers: Storage Inventories Source: www.eia.doe.gov

  18. Key Drivers: Pipeline Capacity Source: rexpipeline.com

  19. Natural Gas Market Dynamics Dominion East Ohio Market

  20. Energy Choice Enrollments

  21. Pre-SSO (9/06) to Today (12/08)

  22. Energy Choice Market Shares – 12/08 Other 13 F E D Aggregation (36%) C B A Energy Choice Participation Rates: Residential Non-PIPP: 78% Nonresidential: 75%

  23. What is Dominion Doing Now? • Dominion is continuing its transition from traditional regulated natural gas sales to a more competitive market for its customers • Dominion will continue to focus on providing regulated distribution service to its 1.2 million customers • Dominion conducted its first Standard Service Offer auction in August 2006 to purchase natural gas for its sales customers • In February 2009, Dominion conducted two more auctions for Standard Service Offer (SSO) and Standard Choice Offer (SCO) commodity service • In April 2009, Dominion placed all Choice-eligible customers into a direct retail relationship with an Energy Choice supplier at the SCO rate established in the auction • SSO/SCO auction process will be repeated in 2010

  24. Resources: Residential/Small Commercial www.dominiongaschoice.com Larger Commercial/Industrial www.dom.com

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