The Market Outlook for Natural Gas: The Wyoming Natural Gas Pipeline Authority’s Perspective

1. The Market Outlook for Natural Gas: The Wyoming Natural Gas Pipeline Authority’s Perspective

2. World Energy Consumption Solids (wood.coal) H/C Ratio Coal = 1 Oil = 2 Methane = 4 Liquids (oil) Gases (NG, H, N, Ren)

3. To produce 20Q/y (20% of US energy consumption) Biomass Wind Solar

6. Gas Facts and Observations • Wyoming and the Central Rockies have about a ten-year supply of natural gas for the U.S. (more than 250 Tcf). • Because of pipeline constraints, it would take about 150 years to bring this gas supply to market. • Wyoming and the Central Rockies have more than 20% of the remaining North American supply, but less than 7% of the U.S. market. • Based on the foregoing, Wyoming should export 12 Bcf/d, rather than the current rate of 4 Bcf/d. • Other gas supply provinces in North America are mature and are declining (Canada, Mid-Continent, Texas, & Louisiana). • Wyoming has the opportunity to gain market, ahead of the expansion of LNG terminals or development of Alaska pipelines.

7. Gas Facts and Observations (Continued) • There are many alliances and benefits to developing this gas resource: • Pipelines will increase their business with new facilities. • Producers can market the resources profitably. • Consumers will be assured a secure and competitive supply. • Wyoming has revenue to run the state. • The U.S. benefits from a currently underutilized energy supply. • The single-most important objective for Wyoming and the country’s foreseeable energy needs is to build more natural gas pipelines into Wyoming and the Central Rockies. • Wyoming legislation provides the tools to plan, finance, build, and operate natural gas pipelines. • Of the 11 “Giant Gas” discoveries made in the last 10 years in the U.S., 8 are in the Rockies and 5 are in Wyoming.

8. Wyoming Pipeline Authority ResolutionMay 2004 Resolution No. 1 By statue, (37-5-103 (a)(iv)), the Wyoming Natural Gas Pipeline Authority is authorized to “plan, finance, construct, develop, acquire, maintain and operate within or without the state of Wyoming, pipelines, pumps, storage, and other attendant facilities and equipment necessary therefore and all other property, structures, equipment, facilities and works of public improvement necessary or useful for the accomplishment of the purposes for which the Authority was created.” And By statue, (37-5-103 (a)(xiii)), the Wyoming Natural Gas Pipeline Authority is authorized to “Do any and all things necessary or proper for the development, regulation and accomplishment of the purpose of the authority within the limitations of authority granted by this act.” Hereby be it resolved that the Wyoming Natural Gas Pipeline Authority, shall involve itself or intervene as necessary in any and all matters it deems necessary related to the timely and reasonable development of natural gas in the state of Wyoming in order that the Authority accomplishes its goals and statutory responsibilities.

9. Wyoming LegislationEffective March 6, 2003 • Increase the bonding authority from $250 million to $1 billion and deletes the 50% cost of the project restriction. The bonds authorized are revenue bonds and thus no obligation of the state. • Expands the permissible projects (from natural gas) to include associated natural resources (carbon dioxide, etc.). • Expands the powers of the WPA to allow it to purchase and sell capacity in pipelines. • Expands the powers of the WPA to allow it to conduct hearings to obtain data, identify markets for Wyoming natural gas, and be an advocate before FERC for new pipeline capacity. • Specifies that the purpose of the WPA extends to all Wyoming production, including both the State and Federal mineral royalties.

10. Wyoming LegislationEffective March 6, 2003 (Continued) • Removes the restriction that bond proceeds not be expended until construction of a financed pipeline is completed. • Increases the bond maturity to maximum of 50 years. • Makes numerous other amendments suggested by bond firms to allow greater flexibility to the WPA. • Provides for permanent staffing of the WPA.

11. Where is Production Growing ……………….. ……………The Rockies!!!!!

14. Critical Success Factors For Resource Development • Access to Lands in a Timely Manner • Price • Timing of Regulatory Approvals • Gathering System Capacities and Pressures • Transportation Export Capacity • Capital Efficiency • Public Acceptance • Limiting factors are largely political and regulatory Not geologic, technical, or economic.

15. Wyoming Natural Gas Pipeline AuthorityProposed Pipeline Projects • El Paso - Cheyenne Plains Project • Kinder Morgan - Advantage Pipeline Project • Kinder Morgan-TransColorado Gas Transmission Company Expansion • Northern Border Partners, L.P.-Bison Pipeline Project • Williston Basin Interstate Pipeline-Grasslands Pipeline Expansion • Kern River Gas Transmission Company - Kern River Pipeline Expansion • Entrega Gas Pipeline, Inc.- Meeker Hub to Cheyenne Hub • Questar Pipeline – Greasewood Hub to Kanda Hub • Kinder Morgan – Greasewood Hub to Cheyenne Hub

18. The Wyoming Pipeline Authority Will • Promote industry sponsored and supported projects. • Promote infrastructure development within the state and the Rockies • Promote efficient utilization of existing infrastructure. • Promote development of Wyoming’s mineral resource base in a systematic, streamlined and environmentally responsible manner. • Utilize its bonding authority to build (or cause to be built) projects that will enhance netbacks and promote development of a resource base that is in the nation’s best interests.

19. Wyoming Natural Gas Pipeline AuthorityWork Plan Goals: • Reduce price differential for all Wyoming-produced gas to historic levels of $0.50 or less. • Increase markets for Wyoming-produced gas and increase exports from 4 to 6 Bcf/d within 5 years.

20. Cheyenne Plains Pipeline570 MMcf/d – 1700 MMcf/d Capacity