1. The Florida Natural Gas Association

2. Natural Gas Fueling Florida’s Future Florida Natural Gas Association presentation to the Florida Gas Utility Annual Convention June 11, 2008

3. Meeting Florida’s Energy and Climate Change Challenges
Recent State Policy Issues and Initiatives
The Role for Natural Gas in Florida’s Future
Natural Gas Expansion to Serve More Florida Consumers
Reliable Natural Gas Supply
Expanded Gas Delivery Capability
Environmental and Consumer Benefits of the Direct Use of Natural Gas
Gas Industry Policy Recommendations
Retail Use of Natural Gas: Part of the Solution –
Not Part of the Problem

4. Energy and Climate Change Policy Initiatives
Governor’s Executive Orders ( and )
Carbon emission reductions for electric generation: 2000 levels by 2017; 1990 levels by 2025.
15% increase in stringency for Florida Energy Code.
Governor’s Action Team on Energy and Climate Change proposed additional measures to Legislature.
2008 Florida Legislature (HB 7135)
Legislative Florida Energy Commission becomes the permanent Florida Energy and Climate Commission.
Carbon Emission reductions for Electric generators.
Electric Generation Carbon Emission Cap and Trade Program – DEP to develop rules.
Renewable Portfolio Standard for generators.
Increased Electric DSM programs.
50% increase in Energy Code stringency by 2019.

5. The Role for Natural Gas in Fueling Florida’s Future
Continued expansion to serve electric power generation.
Increased use of compressed natural gas (CNG) as a clean motor fuel.
Expand natural gas service to retail end-users: lower electric generation needs and reduce carbon emissions.
700,000 existing natural gas residential customers in Florida.
47% existing main saturation.
770,000 potential customers on main not using gas
Convert potential customers to gas tankless water heating.
2.1 Billion Pounds of Carbon per year eliminated.
571 MW of electric generating capacity avoided.
100K to 200K new homes constructed each year offer additional savings opportunities.

6. Reliable Production and Transmission
Drilling activity is at a 20 year high – (U.S. reserves are growing – but most new production areas are distant from the market in Florida).
No expansion of Gulf off-shore exploration areas.
Gulf Coast production is decreasing while Western and Mid-Continent production and LNG supply capability is increasing.
Increased quantities of Gulf Coast gas will be available for Florida as new Western supply moves to the Northeast and Mid-West.
Gas industry has a long history of investment and expansion in transmission and distribution systems to meet Florida consumer and power generation demand growth.

7. Reliable Production and Transmission
Several current Interstate pipeline expansion projects will deliver new gas supply into Florida.
Interstate pipelines are increasing on-shore supply interconnections to help mitigate storm impacts on supply deliveries.
Gas storage capacity is significantly increasing.
Florida gas distributors are supporting increased supply reliability by committing to supply, storage and transmission contracts.
Expanded production, term contracting and enhanced fuel risk management programs will help stabilize natural gas prices.

8. Reliable Natural Gas Supply

9. North American Production Basins
Production Increase
Production Decline

10. Regional Supply Mid Term Growth
U.S. supply growth offsets Canadian decline
Rocky Mountains, Mid Continent, Fort Worth,and Arkoma Basins represent high potential areas

11. Underground Storage Serving Florida
Petal
Bridgeline
Egan
Bay Gas
Duke
Bay Gas
1.2 Bcf/d
2008
Liberty
400 MM/d
In Service
Pine Prairie
400 MM/d
In Service
MoBay
600 MM/d
2009
Southern Pines
1.2 Bcf/d
2008
Existing Storage Connections
New / Expanded Storage Connections
Note: Direct Access Storage in AL & MS will have delivery capability > 2.15 Bcf/day

12. Gulf Coast LNG Projects
Kinder Morgan P/L
Cheniere Sabine Pass
2.6 Bcf/d
2008 -Construction
McMoran
Main Pass Energy Hub
1 Bcf/d
Elba/Cypress
.340Bcf/d/FLA
In-Service
Floridian
Indiantown
.8 Bcf/d
2012
Exxon
Golden Pass
1Bcf/d
2009
Lake Charles
3.0 Bcf/d
In Service
Gulf LNG
Pascagoula
1.5 Bcf/d
Sempra
Cameron
1.5 Bcf/d
2008
Suez
Calypso
1.0 Bcf/d
Port Dolphin
.8 Bcf/d
(Early Development)

13. Expanded Gas Delivery Capability into Florida

16. Enbridge
East Texas Expansion

17. SONAT Cypress Pipeline - Project
Phase I – In service May 2007
166 mile 24 in. pipeline
220,000 MMBtu/d
Phase II – In service May 2008
10,350 hp compression
336,000 MMBtu/d
FGT operational capacity at interconnect is 265,000 MMBtu/d
Phase III –
20,700 hp compression
500,000 MMBtu/d
SNG
FGT
SCANA
AGL
Phase III
Compression
Phase II
Compression
Notes:
Still on target for May 2007 in-service date
Cypress project adds significant pipeline infrastructure and gas supply in South GA and North FL
Phase II permitting complete; design, engineering and procurement underway; targeting May 2008 in-service date 17 17

18. Florida Gas Transmission
Initial In-Service – 1960
252 Delivery Points
156 LDC
30 Industrial
58 Electric
Generation
Contracted Capacity
Winter – 1.9 Bcf/d
Summer – 2.2 Bcf/d
FGT Phase I-VII System Expansion Projects (Capacity in Bcf/day)
0.5 1
1.5 2
2.5
1987
1991
1995
2001
2002
2003
Phase VII
Phase VI
Phase V
Phase IV
Phase III
Phase II
Phase I
2007
FTS-1
FTS-1

19. FGT Onshore Gas Supply SESH Enbridge GA AL MS Midcontinent Supply FLTX LA MS AL GA FL
Midcontinent
Supply
SESH
Bay Gas &
Southern Pines
Storage
Midcontinent
& West Texas
Supply
Enbridge
Onshore LA
Production
S. Texas
Production

20. FGT Onshore Gas Delivery Capability
Receipt Point
Volume Capability
(MMBtu/day)
Production Area
Start Date
Crosstex
75,000
South Texas Onshore & Black Warrior Basin (MS)
Pre-Katrina
HPL (Magnet Withers)
(Texoma)
100,000
120,000
South Texas Onshore , Permian & Mid-Continent
Tejas
60,000
South Texas Onshore
NGPL (Jefferson)
(Vermilion)
285,000
Mid-Continent &
Onshore Louisiana
Enbridge
200,000
Mid-Continent
August 2008
Gulf South (Boardwalk)
300,000
Post-Katrina
Southeast Supply Header (SESH)
1,200,000
Bay Gas Storage*
600,000
400,000
Mississippi Salt Dome
2008
Southern Pines Storage*
1,000,000
Total
4,700,000
* Max. Deliverability for 4-5 Days

21. Gulfstream Natural Gas System
Initial In-Service – 2002
20 Delivery Points
3 LDC
17 Electric
Generation
Contracted Capacity
Bcf/d
2008 – 1.1 Bcf/d
2009 – 1.25 Bcf/d

22. Gulfstream Onshore Gas Supply

23. Gulfstream Supply Interconnects Supply Growth (Bcf/d)
2006 Contracted Proposed
Destin 1.00
DIGP System 0.32
Mary Ann Plant 0.22
Gulf South 0.32
MBPP 0.63
Transco 0.40
Williams Plant 0.53
New Domestic Additions
Southeast Supply Header
MoBay Storage 1.00
Transco (includes SGR Storage attachment) 0.20
Potential LNG Additions
Gulf LNG or Chevron Cassotte Landing, Pascagoula, MS 1.30
Suez Calypso LNG, offshore Ft. Lauderdale 1.00
Hoegh LNG, Port Dolphin, offshore Tampa Bay 1.50
Total Supply Interconnect Capacity
Storage improves reliability for hurricane vulnerable offshore supply
SESH, Transco and other projects provide increased volume, liquidity, reliability
Future LNG terminals may provide incremental supplies 2010+

24. Energy Information Administration Annual Energy Outlook Natural Gas Supply and Consumption Forecast
2005
2010
2020
2030
Supply (Tcf)
21.75
23.30
23.28
22.68
Consumption
22.01
23.25
23.23
22.72

25. Environmental and Consumer Benefits of Expanding the Direct Use of Natural Gas

26. There’s no question: using a fuel at the source is the most efficient use of any fuel

27. Fuel Emission Levels Pounds per Billion Btu of Energy Output Pollutant
Natural Gas
Oil
Coal
Carbon Dioxide
117,000
164,000
208,000
Carbon Monoxide 40 33
208
Nitrogen Oxides 92
448
457
Sulfur Dioxide 1
1,122
2,591
Particulates 7 84
2,744
Mercury
0.000
0.007
0.016
Source: EIA – Natural Gas Issues and Trends

28. Residential Appliance CO2 Emissions

29. Direct Use of Natural Gas Implications for Power Generation, Energy Efficiency and Carbon Emissions
Black and Veatch Engineering study conducted for the American Gas Foundation.
Analyzed the increased use of natural gas for power generation and the resulting impact on the environment.
Analyzed the impact of increased direct use of natural gas for residential and commercial end uses.
 Space heating  Cooking
 Water heating  Clothes Drying
Quantified the direct use of natural gas on:
 Energy Consumption
 Total Energy Cost
 CO² Emissions

30. Impact on Energy Consumption in 2030
Increased Direct Use Of Natural Gas Reduces Total Energy Consumed
A 50% shift of the switchable electric load to natural gas end-use can produce:
Energy Savings = to 2.00 quadrillion Btu
Avoided Generation  126 to 160 fewer power capacity = 63 to 80 GW plants (500 Mw)
Avoided Investment costs = $49B to $122B
Analysis: switching from electricity to natural gas for 12% of overall electricity consumption
(Note: 12% is 50% of switchable load)
in all scenarios, produces a net decrease in overall gas consumption as well as energy costs because the decrease in gas demanded for power generation is higher than the increase demanded for direct use in residential and commercial applications
Energy Savings represents 6% of total energy consumption growth projected by AEO through (2 out of 31 quads)
Avoided Generation Capacity equates to 41% of total electric generating capacity growth projected by AEO through 2030 (80 out of 195 GW)
Avoided investment costs: compare to $400B investment EIA anticipates will be necessary to address climate change in the same time period
Source: Energy Information Administration (EIA), B&V Analysis 30

31. Impact on Energy Costs in 2030
Increased Direct Use Of Natural Gas Reduces
Total Energy Costs
In the most conservative scenario analyzed:
Energy Cost Savings = $18B to $29B.
Greater than the Gross National Product of 83 nations.
In all scenarios considered, a net decrease in energy costs is projected
In the gas constrained scenario where CO2 restrictions mirror those proposed in by Lieberman-Warner, energy costs are estimated to fall anywhere from $18 billion to $29 billion by 2030
AGA: Need to insert reference point: as % of ___?
Source: Energy Information Administration (EIA), B&V Analysis 31

32. Impact on CO2 Emissions in 2030
Increased Direct Use Of Natural Gas Reduces
CO2 Emissions
In all scenarios CO2 emissions decreased ranging from
60 million to 200 million tons.
Annual greenhouse gas emissions from million
passenger vehicles.
Carbon absorbed by million acres of pine or fir trees.
Annual CO2 emissions from million homes.
In all scenarios considered, a net decrease in CO2 emissions is anticipated from an increased use of natural gas for residential and commercial applications
CO2 emissions reduction potential represents 3-10% of CO2 emissions growth projected by AEO for the time period
Source: Energy Information Administration (EIA), B&V Analysis, EPA 32

33. FNGA Policy Recommendations
I. Strengthen Natural Gas Supply Reliability and Minimize Commodity Price Volatility.
State support for expanded exploration and production access to natural supplies.
Encourage FPSC support for LDCs seeking pre-approval to recover costs for long-term supply contracts, risk management hedging agreements and storage and transmission agreements.
Encourage the FPSC to develop a pre-approval process and LDC cost recovery mechanism for critical supply infrastructure, peaking facilities, gas storage facilities and Compressed Natural Gas (CNG) fuel facilities.

34. FNGA Policy Recommendations
II. Expand Reliable Natural Gas Transportation Infrastructure.
Support and expedite gas infrastructure in Florida including pipeline expansions, LNG terminals and gas storage projects.
Support alternative methods of funding gas distribution system expansion – economic development rates, area expansion rates, special taxing districts, state-wide gas expansion fund.

35. FNGA Policy Recommendations
III. Expand the Efficient End-Use of Natural Gas to Improve
Florida’s Energy Security and Reduce Greenhouse Gas
Emissions.
Tighten the compliance stringency of the Florida Energy Code.
Adopt performance standards for buildings in the Florida Energy Code that consider greenhouse gas emissions produced in the total energy supply chain.
Adopt innovative rate designs that decouple a LDCs recovery of its fixed operating costs from consumer gas usage.
Adopt FEECA Energy Conservation Programs that promote gas appliance installations and consider carbon emission reductions.
Encourage the FPSC to allow cost recovery of LDC funded installations combining renewable energy and natural gas technologies for domestic water and space heating.

36. Natural Gas Will Play an Important Role in Florida’s Energy Future
Diversity in electric generation fuel mix is critical – growth in Florida will require a mix of clean coal, nuclear and natural gas to ensure reliable and affordable electric generation.
Increasing natural gas use in multiple consumer applications can reduce demand for Florida’s peak electric generation and help mitigate the need for more power plants.
Natural Gas is the best alternative available to make a significant, positive and immediate impact on the Energy Efficiency and Carbon Reduction goals established by the Governor and Legislature.
Retail use of Natural Gas is part of the SOLUTION, not part of the problem

39. Questions and Comments