1. www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis Status and outlook for shale gas and tight oil development in the U.S. for Platts – North American Crude Marketing Conference March 01, 2013 | Houston, TX by Adam Sieminski, Administrator

2. Annual Energy Outlook 2013 projections to 2040 Adam Sieminski, Platts, March 01, 2013 2 Growth in energy production outstrips consumption growth Crude oil production rises sharply over the next decade Motor gasoline consumption reflects more stringent fuel economy standards The U.S. becomes a net exporter of natural gas in the early 2020s U.S. energy-related carbon dioxide emissions remain below their 2005 level through 2040

3. U.S. energy use grows slowly over the projection reflecting improving energy efficiency and slow, extended economic recovery 3 U.S. primary energy consumption quadrillion Btu Adam Sieminski, Platts, March 01, 2013 HistoryProjections 2011 36% 20% 26% 8% 1% 32% 28% 19% 11% 9% 2% Shares of total U.S. energy Nuclear Oil and other liquids Liquid biofuels Natural gas Coal Renewables (excluding liquid biofuels) 2000 23% 39% 24% 6% 8% Source: EIA, Annual Energy Outlook 2013 Early Release

4. U.S. Shale Gas Adam Sieminski, Platts, March 01, 2013 4

5. Theory Experiment Practice These three drivers impact resource estimation metrics differently over time in an iterative process Adam Sieminski, Platts, March 01, 2013 5 Geology Technology Economics Resources in Place Technically Recoverable Resources (TRR) Economically Recoverable Resources (ERR) Well-level data, incl. estimated ultimate recovery (EUR) Thermal maturityPressureFormation depth Drilling costsRecompletions Price of gas P Q

6. Adam Sieminski, Platts, March 01, 2013 6 average initial production (IP) rate per well average decline curve (can vary by region and vintage) IP & decline curve define the Estimated Ultimate Recovery (EUR) per well Other parameters drilling and operating costs number of active rigs how many wells a rig can drill (rig efficiency) well spacing EIA’s focus is on the timing of production; the modeling focuses on these parameters

7. Technically recoverable natural gas resources reflect new information, a combination of assessments and EIA updates 7 U.S. dry gas resources trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release AEO Edition 2,327 304 543 1,479 *Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation. Unproved shale gas Unproved other gas (including Alaska* and offshore) Proved reserves (all types and locations) Benchmark to USGS 2011 Marcellus Assessment Adam Sieminski, Platts, March 01, 2013

8. U.S. wet natural gas proved reserves, 1980-2010 Adam Sieminski, Platts, March 01, 2013 8 trillion cubic feet Source: U.S. Energy Information Administration

9. Adam Sieminski, Platts, March 01, 2013 9 EIA fits well production data to hyperbolic decline curves to estimate EUR 1985 vertical well EUR=1.41 bcf 2004 vertical well EUR=0.46 bcf 2011 horizontal well EUR=1.76 bcf Classic hyperbolic decline curve (Arps 1945): Source: HPDI data from horizontal wells in the Newark East field in the Barnett Shale; EIA analysis

10. An average well in shale gas and other continuous resource plays can also have steep decline curves, which require continued drilling to grow production 10 million cubic feet per year Source: EIA, Annual Energy Outlook 2012 1 Adam Sieminski, Platts, March 01, 2013

11. For example: Oil production by monthly vintage of wells in the Williston Basin 11 Source: DrillingInfo history through August 2012, EIA Short-Term Energy Outlook, February 2013 forecast Adam Sieminski, Platts, March 01, 2013

12. Domestic production of shale gas has grown dramatically over the past few years 12 shale gas production (dry) billion cubic feet per day Sources: LCI Energy Insight gross withdrawal estimates as of January 2013 and converted to dry production estimates with EIA-calculated average gross-to-dry shrinkage factors by state and/or shale play. Adam Sieminski, Platts, March 01, 2013

13. Shale gas leads growth in total gas production through 2040 13 U.S. dry natural gas production trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release Associated with oil Coalbed methane Tight gas Shale gas Alaska Non-associated onshore Non-associated offshore ProjectionsHistory 2011 Adam Sieminski, Platts, March 01, 2013

14. 14 U.S. dry gas consumption trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release ProjectionsHistory Industrial* Electric power Commercial Residential Transportation ** 33% 14% 6% 32% 12% 33% 19% 3% 31% 13% *Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel. Gas to liquids 2% Natural gas consumption is quite dispersed with electric power, industrial, and transportation use driving future demand growth Adam Sieminski, Platts, March 01, 2013

15. Growth of natural gas in transportation led by heavy duty trucks (LNG) and gas to liquids (diesel)… marine and rail to come? 15 U.S. natural gas consumption quadrillion Btu Pipeline fuel Light-duty vehicles 2011 HistoryProjections 95% 3% 1% 28% 38% 3% 31% 1% Buses Freight trucks Gas to liquids Note: Gas to liquids includes heat, power, and losses. Source: EIA, Annual Energy Outlook 2013 Early Release Adam Sieminski, Platts, March 01, 2013

16. Total natural gas exports nearly quadruple by 2040 in the AEO2013 Reference case 16 U.S. natural gas exports trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release Alaska LNG exports Exports to Mexico Exports to Canada Lower 48 LNG exports Adam Sieminski, Platts, March 01, 2013

17. Domestic natural gas production grows faster than consumption and the U.S. becomes a net exporter of natural gas around 2020 17 U.S. dry gas trillion cubic feet Source: EIA, Annual Energy Outlook 2013 Early Release ProjectionsHistory 2011 Consumption Domestic supply Net imports Adam Sieminski, Platts, March 01, 2013

18. U.S. Tight Oil 18 Adam Sieminski, Platts, March 01, 2013

19. 19 U.S. crude oil and lease condensate resources in non-prohibited areas billion barrels (1)The USGS reduced NPR-A resource estimates, which is responsible for the lower AEO2013 Alaska resources. (2)Prior to AEO2009, resources in Pacific, Atlantic, and Eastern GOM OCS were under moratoria and not included. (3)Includes shale oil. Prior to AEO2011, tight oil is included in unproved other lower-48 onshore category. Multiple factors have contributed to U.S. crude oil resource estimate increases over the years, with tight oil contributing recently Source: EIA, Annual Energy Outlook 2013 Early Release 23.8 48.6 41.6 16.5 67.0 25.2 222.6 Adam Sieminski, Platts, March 01, 2013

20. U.S. crude oil plus condensate proved reserves, 1980-2010 Adam Sieminski, Platts, March 01, 2013 20 billion barrels Source: U.S. Energy Information Administration

21. Domestic production of tight oil has grown dramatically over the past few years 21 tight oil production for select plays million barrels per day Source: Drilling Info (formerly HPDI), Texas RRC, North Dakota department of mineral resources, and EIA, through October 2012. Adam Sieminski, Platts, March 01, 2013

22. U.S. tight oil production leads a growth in domestic production of 2.6 million barrels per day between 2008 and 2019 22 U.S. crude oil production million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release and Short-Term Energy Outlook, February 2013 ProjectionsHistory 2011 Alaska Tight oil Other lower 48 onshore Lower 48 offshore STEO Feb. 2013 U.S. crude oil projection Adam Sieminski, Platts, March 01, 2013

23. U.S. petroleum product exports exceeded imports in 2011 for first time in over six decades 23 annual U.S. net exports of total petroleum products, 1949 – 2011 million barrels per day Source: EIA, Petroleum Supply Monthly net product exporter Adam Sieminski, Platts, March 01, 2013

24. U.S. dependence on imported liquids depends on both supply and demand 24 U.S. liquid fuel supply million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release Consumption Domestic supply Net imports 45% 37% ProjectionsHistory 2011 60% 2005 Adam Sieminski, Platts, March 01, 2013

25. Light-duty vehicle liquids consumption is lower primarily due to more stringent CAFE standards Adam Sieminski, Platts, March 01, 2013 25 light-duty vehicle liquids consumption million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release AEO2012 AEO2013

26. Reference case oil price initially drops and then rises steadily, but there is uncertainty about the future trajectory 26 Annual average spot price of Brent crude oil 2011 dollars per barrel ProjectionsHistory 2011 High Oil Price Low Oil Price Reference Source: EIA, Annual Energy Outlook 2013 Early Release Adam Sieminski, Platts, March 01, 2013

27. Global liquids supply increases 26 percent with regional market shares relatively stable 27 Global liquids supply million barrels per day Source: EIA, Annual Energy Outlook 2013 Early Release ProjectionsHistory 2011 OPEC Other non-OECD OECD 44% 25% 31% 40% 26% 34% Adam Sieminski, Platts, March 01, 2013

28. Global tight oil production comparisons 28 Source: Preliminary International Energy Outlook 2013, BP Energy Outlook 2030 million barrels per day BP Energy Outlook 2030IEO2013 DRAFT Adam Sieminski, Platts, March 01, 2013

29. Uncertainties that could slow global growth of shale gas and tight oil Adam Sieminski, Platts, March 01, 2013 29 Resource quantities and distribution Surface vs. mineral rights Risk appetite of industry participants Infrastructure and technology Environmental constraints

30. Changing electricity generation mix in AEO2012 reference case and carbon fee allowance side cases 30 U.S. electricity net generation trillion kilowatthours Source: EIA, Annual Energy Outlook 2012 Natural gas 2012 Reference Case $15 Carbon Fee $25 Carbon Fee Renewables Nuclear Coal Natural gas Renewables Nuclear Coal 2010 24% 10% 20% 45% 28% 15% 18% 38% 34% 22% 27% 16% 34% 23% 38% 4% Adam Sieminski, Platts, March 01, 2013

31. For more information 31 U.S. Energy Information Administration home page | www.eia.govwww.eia.gov Annual Energy Outlook | www.eia.gov/forecasts/aeowww.eia.gov/forecasts/aeo Short-Term Energy Outlook | www.eia.gov/forecasts/steowww.eia.gov/forecasts/steo International Energy Outlook | www.eia.gov/forecasts/ieowww.eia.gov/forecasts/ieo Today In Energy | www.eia.gov/todayinenergywww.eia.gov/todayinenergy Monthly Energy Review | www.eia.gov/totalenergy/data/monthlywww.eia.gov/totalenergy/data/monthly Annual Energy Review | www.eia.gov/totalenergy/data/annualwww.eia.gov/totalenergy/data/annual Adam Sieminski, Platts, March 01, 2013