The EIA’s Long-Term Outlook for U.S. Natural Gas Markets, AEO2012 Early Release Overview

1. The EIA’s Long-Term Outlook for U.S. Natural Gas Markets, AEO2012 Early Release Overview American Gas Association Legislative Forum May 1, 2012| Miami, FL Amy Sweeney, Office of Oil, Gas, and Coal Supply Statistics, Team Leader Office of Energy Statistics amy.sweeney@eia.gov

2. What is the Energy Information Administration? • EIA is the statistical and analytical agency within the U.S. Department of Energy. • The agency collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment. • EIA data, analyses and forecasts are independent of approval by any other officer or employee of the U.S. Government. Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

3. Natural gas data available from EIA • EIA publishes data on gas production and consumption on a monthly and annual basis and storage on a weekly, monthly, and annual basis. • Data on the same topics are forecasted on a short-term (through 2013) and long-term (through 2035) basis. Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

4. AEO Early Release 2012: What is included (and excluded) in developing EIA’s “Reference case” projections? • Generally assumes current laws and regulations • excludes potential future laws and regulations • provisions generally sunset as specified in law • Some adjustments • adds a premium to the capital cost of CO2-intensive technologies • assumes implementation of existing regulations that enable the building of new energy infrastructure and resource extraction • Includes technologies that are commercial or reasonably expected to become commercial over next decade or so • includes projected technology cost and efficiency improvements, as well as cost reductions linked to cumulative deployment levels • does not assume revolutionary or breakthrough technologies Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

5. Domestic natural gas production grows faster than consumption U.S. dry gas trillion cubic feet per year Source: EIA, Annual Energy Outlook 2012 Early Release History Projections 2010 Consumption Domestic supply Net imports Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

6. Natural gas consumption is quite dispersed; electric power use drives much of the future demand growth U.S. dry gas consumption trillion cubic feet per year *Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel. Source: EIA, Annual Energy Outlook 2012 Early Release History Projections Electric power 34% 31% 32% Industrial* 33% 13% 13% Commercial 3% 3% Transportation** 18% 21% Residential Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

7. U.S. energy use grows slowly over the projection in response to a slow and extended economic recovery and improving energy efficiency U.S. primary energy consumption quadrillion Btu per year Source: EIA, Annual Energy Outlook 2012 Early Release Shares of total U.S. energy History 2010 Projections Renewables (excluding liquid biofuels) 7% 11% 4% 1% Liquid biofuels 25% 25% Natural gas 9% 9% Nuclear 21% 20% Coal 37% 32% Oil and other liquids Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

8. Technically recoverable natural gas resources reflect updated assessments U.S. dry gas resources trillion cubic feet *Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation. Source: EIA, Annual Energy Outlook Unproved shale gas Unproved other gas (including Alaska* and offshore) Proved reserves (all types and locations) 2,214 482 1,460 273 AEO Edition Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

9. Shale gas growth offsets declines in other U.S. natural gas production sources U.S. dry gas production trillion cubic feet per year Source: EIA, Annual Energy Outlook 2012 Early Release History Projections 2010 49% Shale gas 23% 26% Tight gas 21% 9% Non-associated offshore 9% 7% Coalbed methane 10% 7% Associated with oil 7% 21% Non-associated onshore 1% 2% 9% Alaska Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

10. Since 2000, U.S. shale gas production has increased 18-fold and now comprises over 30 percent of total U.S. dry production annual shale gas production (dry) trillion cubic feet Sources: Lippman Consulting, Inc. gross withdrawal estimates as of March 2012 and converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play. Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

11. Natural gas price projections are lower than in AEO2011, consistent with recent market developments natural gas spot price (Henry Hub) 2010 dollars per million Btu Sources: EIA, Annual Energy Outlook 2012 Early Release and EIA, Annual Energy Outlook 2011 History Projections 2010 AEO2011 AEO2012 Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012

12. For more information U.S. Energy Information Administration home page | www.eia.gov Annual Energy Outlook | www.eia.gov/forecasts/aeo Short-Term Energy Outlook | www.eia.gov/forecasts/steo International Energy Outlook | www.eia.gov/forecasts/ieo Monthly Energy Review | www.eia.gov/totalenergy/data/monthly Annual Energy Review | www.eia.gov/totalenergy/data/annual Amy Sweeney AGA Legislative Session Miami, FL May 1, 2012