1. NW Natural Gas Market Outlook Dan Kirschner, Executive Director Northwest Gas Association

2. 5335 SW Meadows Rd., #220 Lake Oswego, OR 97035 (503) 624-2160 www.nwga.org NWGA Members: Avista Corporation Cascade Natural Gas Co. Intermountain Gas Co. NW Natural Puget Sound Energy Duke Energy Gas Transmission Terasen Gas TransCanada’s GTN System Williams NW Pipeline

3. 3 Gas a Vital Part of NW Energy Scene

4. 4 Recent Gas Demand *2005 BC estimated from preliminary StatCan data

5. 5 % Generating Capacity by Fuel

6. 6 Res: +2% Gen: +11% Ind: -12% Com: -1% 4.3% overall reduction in gas demand from 840 MMdth/year to 804 MMDth/year Source: EIA, StatCan Actual Load Composition

7. 7 Demand Forecast

8. 8 Gas Demand Forecast (2006-07 through 2010-11) Low Growth CaseBase (expected) CaseHigh Growth Case Average Annual CumulativeAverage Annual CumulativeAverage Annual Cumulative Total1.0%4.1%2.1%8.1%2.7%10.2% Residential1.9%7.3%3.2%11.9%4.2%15.2% Commercial1.3%4.9%2.5%9.3%3.1%11.5% Industrial0.0%0.1%0.5%2.0%0.6%2.4% Generation (2005 projection) 1.1% (5.5%) 4.1% (19.4%) 2.6% (5.9%) 9.7% (20.4%) 3.2% (10.2%) 11.9% (32.1%)

9. 9 Demand Forecast by Sector

10. 10 Projected Load Composition: 2010-2011 Change from 2005: Residential 3% Commercial 1% Industrial 4% Generation

11. 11 Northwest Gas Supply

12. 12 Supplies Flow to Demand

13. 13 Gas Production by Region Source: Lippman Consulting via AGA

14. 14 Production per U.S. Rig

15. Productive Capacity Source: Energy and Environmental Analysis, Inc. Bubble Tight Market

16. 16 Source: Platts Gas Daily and EIA Natural Gas Weekly Update Price Correlation Shut in Rockies production

17. 17 Growing Demand, Slowing Supply

18. 18  PortWestward LNG  Skipanon LNG  Jordan Cove LNG „Northern Star LNG …Tansy Point †Kitimat LNG ‡WestPac Terminal Why LNG? Vast reserves  no local market  pipelines not viable decreasing costs Challenges include: Local acceptance Regulatory/Permitting Commercial considerations: economics/financing takeaway infrastructure worldwide competition supplier commitment Northwest LNG Proposals

19. 19 Northwest Gas Infrastructure 100 Pipelines DEGT BC Pipeline Williams NWP TransCanada-GTN Terasen S. Crossing Storage Facilities Jackson Prairie Mist LNG Facilities Plymouth Newport Portland Tilbury Nampa Sumas 1306 Kingsgate 2796 Stanfield 638 Malin 2119 884 Kemmerer 653 Starr Road 165 305 Station 2 1995 440 62 60 120 154 Capacity at Major Interconnects & Storage Facilities (MDth/day) South Flow 160 North Flow 493

20. 20 Capacity to Serve NW Demand: Average Winter Day

21. 21 Capacity to Serve Demand: Region-wide Peak

22. 22 I-5 Extended Winter – Base/Cold

23. 23 I-5 Extended Winter – Base/Low

24. 24 I-5 Extended Winter – High/Cold

25. 25 I-5 Extended Winter – High/Low