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Gas Market Dynamics – The Ups and Downs

Gas Market Dynamics – The Ups and Downs . March 11, 2009 Darcel L. Hulse President and CEO. Safe Harbor Statement.

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Gas Market Dynamics – The Ups and Downs

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  1. Gas Market Dynamics – The Ups and Downs March 11, 2009 Darcel L. Hulse President and CEO

  2. Safe Harbor Statement This presentation contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When the company uses words like "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "would," "could," "should" or similar expressions, or when the company discusses its strategy or plans, the company is making forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results may differ materially from those expressed in the forward-looking statements. Forward-looking statements are necessarily based upon various assumptions involving judgments with respect to the future and other risks, including, among others: local, regional, national and international economic, competitive, political, legislative and regulatory conditions and developments; actions by the California Public Utilities Commission, the California State Legislature, the California Department of Water Resources, the Federal Energy Regulatory Commission and other regulatory bodies in the United States and other countries; capital markets conditions, inflation rates, interest rates and exchange rates; energy and trading markets, including the timing and extent of changes in commodity prices; the availability of natural gas; weather conditions and conservation efforts; war and terrorist attacks; business, regulatory, environmental and legal decisions and requirements; the status of deregulation of retail natural gas and electricity delivery; the timing and success of business development efforts; the resolution of litigation; and other uncertainties, all of which are difficult to predict and many of which are beyond the control of the company. These risks and uncertainties are further discussed in the company's reports filed with the Securities and Exchange Commission that are available through the EDGAR system without charge at its Web site, www.sec.gov and on the company's Web site, www.sempra.com.

  3. Asia Industrial Production Indices S. Korea

  4. Asia Industrial Production Indices S. Korea Taiwan

  5. Asia Industrial Production Indices S. Korea Japan Taiwan

  6. Asia Industrial Production Indices Asia LNG Asia LNG seasonally adjusted.

  7. LNG Forecast AsiaDemand

  8. LNG Forecast AsiaDemand Recession

  9. Europe Industrial Production Indices Eurozone

  10. Europe Industrial Production Indices Eurozone Spain

  11. US Industrial Production Index

  12. Commodity Price History Recessions Indices adjusted by CPI.

  13. US Gas Rig Count Decline of 480 in 10 Months Decline of 640 in < 6 Months

  14. Japan LNG vs. U.S. Gas Prices Henry Hub Japan LNG

  15. Japan Cumulative LNG Cost at Actual and Henry Hub Prices Actual Japan Costs HH Prices

  16. Korea vs. U.S. Natural Gas Prices Henry Hub Korea LNG

  17. Korea Cumulative LNG Cost at Actual and Henry Hub Prices Actual Korea Costs HH Prices

  18. Platt’s Asia Daily Spot LNG Japan/Korea Marker (JKM) For April Forwards for March High Low

  19. Europe Pipeline Imports vs. U.S. Natural Gas Prices Henry Hub Europe Pipeline

  20. Europe Cumulative Actual Pipeline Cost and Henry Hub Prices HH Prices Europe Pipeline Costs

  21. Changes in Forward Prices and Forecasts for December 2009

  22. Current Price Forecasts

  23. Summary • The current economic crisis is leading to a significant reduction in LNG demand in Asia, which may fall below minimum contract quantities. • Few if any spot cargo sales will be made to Japan, South Korea, or Taiwan through 2009. • Europe gas demand will also fall, particularly in Spain, but lagging oil-based pipeline contract prices will continue to support LNG spot prices in Europe and the UK for a few more months. • New liquefaction capacity and lower global demand will sharply increase LNG flows to the U.S. this year. • Gas prices will be low in the US, but the unprecedented rate that drilling rigs are being laid down means that prices should not be low for long. • Absent another oil price bubble North America gas prices should return to the pre-2008 situation of being competitive with prices in Asia and Europe.

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