Federal Process for Siting Natural Gas Infrastructure 17th IPEC Conference

FERC Organization Chart Chairman Jon Wellinghoff Commissioner John R. Norris Commissioner Philip D. Moeller Commissioner Marc Spitzer Commissioner Cheryl A. LaFleur Energy Projects Electric Reliability External Affairs Energy Market Regulation Enforcement Energy Policy & Innovation Administrative Litigation Administrative Law Judges Executive Director General Counsel Secretary Federal Energy Regulatory Commission

How the Commission is Appointed The Federal Energy Regulatory Commission (FERC or Commission) is composed of up to five Commissioners who are appointed by the President of the United States with the advice and consent of the Senate. Commissioners serve five-year terms, and have an equal vote on regulatory matters. To avoid any undue political influence or pressure, no more than three Commissioners may belong to the same political party. There is no review of FERC decisions by the President or Congress, maintaining FERC's independence as a regulatory agency, and providing for fair and unbiased decisions. The Commission is funded through costs recovered by the fees and annual charges from the industries it regulates. One member of the Commission is designated by the President to serve as Chair and FERC's administrative head. Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Natural Gas Act The Natural Gas Act is the law that sets out FERC’s areas of responsibilities: Section 1 – Identifies projects exempt from FERC jurisdiction Section 3 – Allows FERC to authorize import / export projects Section 7 – Allows FERC to authorize interstate pipeline projects (including storage) and grant eminent domain Federal Energy Regulatory Commission

Projects Exempt from FERC Jurisdiction Local Distribution Company facilities (e.g., Baltimore Gas and Electric, Washington Gas Light, etc.) Intrastate pipelines (where gas is produced, transported and consumed within a single state) Hinshaw pipelines (gas is produced in one state, but is transported and consumed within another) Gathering facilities Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Gas Pipeline Program Evaluate applications for facilities to import, export, transport, store or exchange natural gas Authorize the construction and operation of facilities for such services Approve abandonment of such facilities Conduct environmental reviews of proposals involving construction, modification, or abandonment Implement the “Pre-Filing Process” Conduct inspections of LNG facilities and pipeline construction Federal Energy Regulatory Commission

Office of Energy Projects - Functions OEP has the engineering and environmental expertise to: certificate new gas pipeline projects, Authorize LNG import / export projects authorize and monitor hydroelectric projects, provide “backstop authority” to site electric transmission facilities, and analyze energy infrastructure needs and policies. OEP focuses on: project siting and development, balancing environmental and other concerns, ensuring compliance, safeguarding the public, and providing infrastructure capacity information. Other FERC Offices OGC has corresponding hydro and pipeline legal responsibilities Other offices also have input to our products Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Project Evaluation How Does FERC Evaluate All Of These Major Projects? What Are The Criteria Used in This Evaluation? Federal Energy Regulatory Commission

Federal Energy Regulatory Commission In the United States, there are approximately 217,300 miles of interstate natural gas transmission pipeline. Source: Based on data from Ventyx Global Energy Decisions, Inc., Velocity Suite, January 2010, and EIA’s Natural Gas Pipelines. Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Balancing Interests Federal Energy Regulatory Commission

Certificate Process Overview Federal Energy Regulatory Commission Non-Environmental Review and Analysis Engineering – GQI, storage, hydraulic flow Tariff – rates, terms & conditions of service Policy – precedents, rules, regulations Accounting Order Issued Application Filed Parallel Processing Paths Environmental Review and Analysis Biological – fish, wildlife, vegetation Cultural – historic preservation Land use – recreation, aesthetics Soils and geologic Air and noise – quality, loudness Socioeconomic impacts System alternatives Federal Energy Regulatory Commission

Timeline for Project Review Start PF Review 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Review Draft Resource Reports & Prepare Preliminary DEIS Issue Draft EIS File At FERC Order Prepare Draft Resource Reports Final Applicant’s Activities FERC’s Activities Determine Application Complete (months) Submit letter 11 Federal Energy Regulatory Commission

Certificate Policy Statement Goals Foster Competition Consider Captive Customers Avoid Unnecessary Physical Impacts Achieve Optimal Amount of Facilities Encourage Complete Record Expedite Review Time Federal Energy Regulatory Commission

Certificate Policy Statement Develop Record Adverse Impacts on Existing Customers and Pipelines Landowners Communities Specific Benefits (meet new demand, eliminate bottlenecks, access new supplies, lower cost to consumers, new interconnects to improve grid, provide competitive alternatives, increase electric reliability, clean air objectives, etc) Need and Market (precedent agreements, demand projections, etc) Condemnation Impact Federal Energy Regulatory Commission

Federal Energy Regulatory Commission FERC Process FERC’s process is a model of efficiency Pre-filing Application Analysis Post-authorization This process works for all stakeholders Project sponsors Federal, state, and local agencies NGOs Landowners Other concerned entities Federal Energy Regulatory Commission

Overview of Shale Play Development Natural gas production from hydrocarbon rich shale formations is one of the most rapidly expanding trends in domestic production. As traditional sources of natural gas continue to be depleted, new sources of supply, such as shale gas, must be developed in order to continue to meet the energy demands. Hydraulic fracturing and horizontal drilling have allowed previously unrecoverable sources of gas to be developed in an economical and environmental safe manner. Because it is located in both traditional and non-traditional production locations, shale gas development presents unique economic opportunities to maximize each state’s resources in a manner that is environmentally safe. The development of natural resources expands the economy of local communities by creating jobs and providing residents increased capital through royalty payments. State governments benefit from increased natural gas production through increased tax revenues. Because of its role in alternative energy strategies and reducing greenhouse gas emissions, natural gas use is expedited to continue to rise. Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Future U.S. Gas Supply Alaska LNG Imports Net Pipeline Imports Gas Shales Coalbed Methane Conventional Offshore Source: EIA Annual Energy Outlook 2010 and EIA spreadsheets. Federal Energy Regulatory Commission

PGC Resource Assessments, 1990-2008 The growing importance of shale gas is substantiated by the fact that, of the 1,836 Tcf of total potential resources, shale gas accounts for 616 Tcf (33%). PGC Resource Assessments, 1990-2008 Total Potential Gas Resources (mean values) Source: Report of the Potential Gas Committee (December 31, 2008) “Potential Supply of Natural Gas in the United States” June 18, 2009 Federal Energy Regulatory Commission 17

Regional Resource Assessment Traditional 1,673.4 Tcf Coalbed 163.0 Tcf Total U.S. 1,836.4 Tcf 374.4 51.9 51.3 2.6 24.0 16.6 353.5 17.3 274.9 7.5 455.2 3.4 193.8 57.0 Source: Report of the Potential Gas Committee (December 31, 2008) “Potential Supply of Natural Gas in the United States” June 18, 2009 Federal Energy Regulatory Commission

United States Shale Basins Maximum Reported Gas-in-Place (in Tcf) Woodford Shale (101) Lewis Shale (61) Cane Creek Shale Niobrara Shale (13) Baxter/Lewis/Mowry Shale (265) Palo Duro (42) Monterrey/McClure Marcellus (1,500) Bakken (15) Barnett (168) Haynesville (717) Fayetteville Shale (52) Antrim Shale(76) New Albany Shale (160) Floyd/Chattanooga Shale (22) Barnett and Woodford Caney Pearsall Shale Huron Shale Devonian Shale (244) Total Shale Gas 3,700 Tcf Note: While some shale basins have been identified with reserve estimates, others have no reserve data available. Source: Energy Velocity and Navigant Consulting’s North American Natural Gas Supply Assessment – July 4, 2008 Federal Energy Regulatory Commission 19

Federal Energy Regulatory Commission Shale Gas Estimates Source: ICF International Data Base and Compass Report April 2010 Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Summary of FERC Related Projects and Potential Projects Impacting the Shale Basins Source: FERC Federal Energy Regulatory Commission

Major Projects to move shale gas out of East Texas and Arkansas. Barnett Shale Fayetteville Woodford Haynesville Kinder Morgan Energy Fayetteville Express 2,000 MMcf/d** Tiger Pipeline 1,250 MMcf/d ** & 400 MMcf/d*** LaCrosse (Enbridge) (1,800 MMcf/d) *** Boardwalk Gulf Crossing 1,732 MMcf/d Southeast Supply Header 1,140 MMcf/d & 175 MMcf/d & 360 MMcf/d** Texas Gas Transmission Fayetteville/Greenville & Compression 1,609 MMcf/d & 2,300 MMcf/d Midcontinent 1,500 MMcf/d & 300 MMcf/d Gulf South Pipeline Haynesville/Perryville Expansion 556 MMcf/d** ** Approved *** Pending/ Pre-filing MarkWest 638 MMcf/d CenterPoint Carthage to Perryville 1,237 MMcf/d & 280 MMcf/d & 274 MMcf/d Trunkline Gas North Texas Expansion 510 MMcf/d** Source: Based on data from Ventyx Velocity Suite, July 2010 & FERC applications Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Summary of Natural Gas Facilities Impacting the Barnett, Woodford, Fayetteville, and Haynesville Shale Basins Source: FERC Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Marcellus Shale Projects Source: FERC Federal Energy Regulatory Commission

Summary of Natural Gas Facilities Impacting the Marcellus Shale Basin Source: FERC Federal Energy Regulatory Commission

Major Pipeline Projects Certificated (MMcf/d) January 2000 to July 2010 Transco (204,236,323,309) Southern (336,330, 375) Kern River (135,886,145) 6 North Baja (500, 81 2,700) Tuscarora (96) Northwest (162,113) Kern River (282) TETCO (250) Northwest (224) NFS/DTI (150) SCG Pipeline (190) 1 2 3 4 Northwest(191) East Tenn. (225) Tennessee (320) TETCO (197) El Paso (230,320,620,150) WBI (80) ANR (194,220, 107,143,168, 98) 26 (223) Cove Point (445,800) Ocean Express(842) 23 Cheyenne Plains (560,170) 25 8 Calypso (832) Discovery (200) Transwestern (150,375,500) 5 Trunkline(1,500) Trunkline (200) Questar (272,102,175) Petal (700,600) Horizon(380) GTN (207) Otay Mesa (110) Florida Gas (239,270,100, 820) East Tenn. (170) 7 9 Millennium (525) 10 11 Northern Border (544,130) Trans Union (430) Southern Trails (120) Gulfstream (1,130, 345, 155) 12 Guardian (750, 537) Trailblazer (324) 22 24 El Paso (502) Center Point (113,132) Vista del Sol (1,100) Golden Pass (2,500) 13 27 28 San Patricio (1,000) Dominion South (200) Columbia (172, 100) East Tenn. (86) Tennessee (400,200,100) Cheniere Corpus Christi (2,600) East Tenn. (276) Midwestern (120) 14 Dominion (700) Cameron (1,500,850) Cheniere Creole Trail (2,000) Port Arthur (3,000) 15 29 Questar Overthrust (550, 750, 300) Center Point (1,237, 280, 274) Vector (245,105) Equitrans (130) 16 Empire(250) Gulf LNG (1,500) Natural (374) 17 Transco (165) 30 Trunkline (510) TETCO (150, 150, 455) Gulf South(1,475, 560, 556) Kinder Morgan (3,395) Natural (200,300) Sonora (1,000) KM (360) Elba Express (1,175) Point Comfort (1,000) Southeast Supply(1,140,175, 360) TETCO (360) 18 Gulf Crossing (1,732) Texas Gas (1,609, 2,300) Rockies Express East (1,800) Midcontinent (1500, 300) Southern/Magolia (82) Cypress (Southern) (500) 31 Dominion (200, 244) NorthernStar (1,300) MarkWest (638) 19 20 22. CIG (282,92) 23. CIG (85,133,118,105,899,130) 24. TransColorado (125,300,250) 25. WIC (120,116,675,350,556,330,230,285) 26. El Paso (140) 27. Rendezvous (300) 28. Entrega (1,500) 29. Northwest (450) 30. Rockies Express West (1,800) 31. White River Hub (2,565) 32. Northwest (582) 33. Rockies Express (200) 34. Sundance Trail (Northwest) (150) 35. Diamond Mountain (WIC) (180) 1. Algonquin (285, 131) 2. Islander East (285) 3. Iroquois (230,85, 100, 200) 4. Columbia (135,270) 5. Algonquin (140) 6. Transcontinental (105) 7. Transcontinental (130) 8. Transcontinental (100,142, 250) 9. Columbia (94) 10. Maritimes (80,360,418) 11. Algonquin (301) 12. Tennessee (500) 13. Mill River (800) 14. Tennessee (136) 15. Texas Eastern (900) 16. Algonquin (325) 17. Algonquin (800) 18. Broadwater (1,000) 19. Mid-Atlantic (1,500) 20. Algonquin (140, 281) 21. Tennessee (350) McMoRan (1,500) 32 Transco (253, 810, 380) (136) Oasis Pipeline (600) 33 (209) 34 Port Dolphin (1,200) Pacific Connector (1,000) Fayetteville Express (2,000) 35 Ruby Pipeline (1,456) Tiger (2,000) Bison Pipeline (477) 21 Florida Gas (343) 112.54 BCF/D Total 16,021 Miles Federal Energy Regulatory Commission

All Storage Projects (Capacity in Bcf) Falcon MoBay (50.0, 9.6) County Line (6.0) Bluewater (29.2) Columbia (12.4) Natural (10.0) Dominion (9.4) Texas Gas (8.2, 4.1) Freebird (6.1) CenterPoint (3.0) Starks (19.2) Liberty (17.6, 18.9) Petal (4.0) SemGas (5.5) Unocal Windy Hill (6.0) Bobcat (12.0,1.5, 24.0) Dominion (18.0) Caledonia (11.7, 5.2) Arizona Natural Gas (3.5) ANR Pipeline (14.7) Mississippi Hub (12.0, 15.0) Leaf River Energy (32.0) Central NY (13.0) Dominion (4.4) Floridian Natural (8.0) SG Resources (12.0) Northern Natural (8.5, 2.1, 2.0) Petal (2.8) ANR Pipeline (17.0) Texas Gas (11.3) Texas Eastern (3.0) Egan Hub (8.0) Enstor-Waha Storage (7.2) Four Mile Creek (8.0) ANR Pipeline (70.0) Tres Palacios (36.0) Black Bayou (15.0) CIG (7.0) Copiah (12.2) Enterprise (10.0) PetroLogistics (6.0, 5.3, 4.6) AGL (16.0) Enstor (30.0) Steckman Ridge (12.0) Columbia (6.7) Tenasda (17.5) Northern Natural (6.0) Texas Gas (8.25) Monroe Gas (12.0) Columbia (5.7) Pine Prairie (24.0) Chestnut Ridge (25.0) Orbit (5.0) Tarpon Whitetail (8.6) Bobcat (2.1, 9.3) EnergySouth (12.0) Petal (10.0) Atmos (15.0) SourceGas (10.4) Spectra Energy (6.5) Southeast Gas Storage (24.7) SG Resources (16.0) Arlington Storage (7.0,1.4) NFG (8.5) Mississippi Hub (3.0) Sempra Energy (2.5) Cadeville (16.4) Perryville (15.0) East Cheyenne (18.9) Blue Sky (4.4) Magnum Gas (11.2) Tricor Ten 22.4) UGI LNG (0.2, 1.0) Magnum Gas(42.0) KM (1.0) Dominion (0.1) ANGS/El Paso (20.0) Turtle Bayou (12.0) Southern Star (2.6,1.4) UGI (14.7) BCR (15.0) Petal (5.0) Multifuels (8.0) Leader One (7.5) Ryckman Creek (25.0) CIG (1.0) Sawgrass (25.0) Certificated Since 1/1/2005 On The Horizon Currently Pending Pre-Filing Federal Energy Regulatory Commission

North American LNG Import Terminals Existing U.S. A. Everett, MA : 1.035 Bcfd (GDF SUEZ - DOMAC) B. Cove Point, MD : 1.0 Bcfd (Dominion - Cove Point LNG) C. Elba Island, GA : 1.2 Bcfd (El Paso - Southern LNG) D. Lake Charles, LA : 2.1 Bcfd (Southern Union - Trunkline LNG) E. Gulf of Mexico: 0.5 Bcfd, (Excelerate Energy - Gulf Gateway Energy Bridge) F. Offshore Boston: 0.8 Bcfd, (Excelerate Energy – Northeast Gateway) G. Freeport, TX: 1.5 Bcfd, (Cheniere/Freeport LNG Dev.) H. Sabine, LA: 2.6 Bcfd (Cheniere/Sabine Pass LNG) I. Cove Point, MD : 0.8 Bcfd (Dominion – Cove Point LNG - Expansion)* J. Hackberry, LA: 1.8 Bcfd (Sempra - Cameron LNG) K. Sabine, LA: 1.4 Bcfd (Cheniere/Sabine Pass LNG – Expansion)* L. Elba Island, GA: 0.4 Bcfd (El Paso – Southern LNG –Phase A Expansion)* Canada M. Saint John, NB: 1.0 Bcfd, (Repsol/Fort Reliance - Canaport LNG) Mexico N. Altamira, Tamulipas: 0.7 Bcfd, (Shell/Total/Mitsui – Altamira LNG) O. Baja California, MX: 1.0 Bcfd, (Sempra – Energia Costa Azul) M A F B, I C, L O H,K J D G E N US Jurisdiction FERC MARAD/USCG As of August 3, 2010 * Expansion of an existing facility 28 Federal Energy Regulatory Commission

Federal Energy Regulatory Commission North American LNG Import Terminals Approved APPROVED - UNDER CONSTRUCTION U.S. 1. Sabine, TX: 2.0 Bcfd (ExxonMobil - Golden Pass) 2. Elba Island, GA: 0.5 Bcfd (El Paso - Southern LNG Expansion)* 3. Pascagoula, MS: 1.5 Bcfd (El Paso/Crest/Sonangol - Gulf LNG Energy LLC) 4. Offshore Boston, MA: 0.4 Bcfd (GDF SUEZ- Neptune LNG) Mexico 5. Manzanillo, MX: 0.5 Bcfd (KMS GNL de Manzanillo) APPROVED - NOT UNDER CONSTRUCTION U.S. - FERC 6. Corpus Christi, TX: 1.0 Bcfd (Occidental Energy Ventures – Ingleside Energy) 7. Corpus Christi, TX: 2.6 Bcfd, (Cheniere – Corpus Christi LNG) 8. Corpus Christi, TX : 1.1 Bcfd (4Gas - Vista Del Sol) 9. Fall River, MA : 0.8 Bcfd, (Hess LNG/Weaver's Cove Energy) 10. Port Arthur, TX: 3.0 Bcfd (Sempra) 11. Logan Township, NJ : 1.2 Bcfd (Hess LNG - Crown Landing LNG) 12. Cameron, LA: 3.3 Bcfd (Cheniere - Creole Trail LNG) 13. Freeport, TX: 2.5 Bcfd (Cheniere/Freeport LNG Dev. - Expansion)* 14. Hackberry, LA: 0.85 Bcfd (Sempra - Cameron LNG - Expansion)* 15. Port Lavaca, TX: 1.0 Bcfd (Gulf Coast LNG Partners – Calhoun LNG) 16. Bradwood, OR: 1.0 Bcfd (Northern Star Natural Gas LLC – Northern Star LNG) 17. Baltimore, MD: 1.5 Bcfd (AES Corporation – AES Sparrows Point) 18. Coos Bay, OR: 1.0 Bcfd (Jordan Cove Energy Project) U.S. - MARAD/Coast Guard 19. Gulf of Mexico: 1.0 Bcfd (Main Pass McMoRan Exp.) 20. Offshore Florida: 1.2 Bcfd (Port Dolphin Energy - Hoëgh LNG) Canada 21. Rivière-du- Loup, QC: 0.5 Bcfd (Cacouna Energy - TransCanada/PetroCanada) 22. Quebec City, QC : 0.5 Bcfd (Project Rabaska - Enbridge/Gaz Met/Gaz de France) 23. Baja California, MX : 1.5 Bcfd (Sempra - Energia Costa Azul - Expansion) 21 22 4 16 18 9 11 17 2 23 10 3 12 1 13 14 7 8 20 6 15 19 US Jurisdiction FERC MARAD/USCG 5 As of August 3, 2010 * Expansion of an existing facility 29 Federal Energy Regulatory Commission

North American LNG Import Terminals Proposed 3 1 2 PROPOSED TO FERC 1. Robbinston, ME: 0.5 Bcfd (Kestrel Energy - Downeast LNG) 2. Astoria, OR: 1.5 Bcfd (Oregon LNG) 3. Calais, ME: 1.2 Bcfd (BP Consulting LLC) PROPOSED TO MARAD/COAST GUARD 4. Gulf of Mexico: 1.4 Bcfd (TORP Technology - Bienville LNG) 5. Offshore Florida: 1.9 Bcfd (GDF SUEZ - Calypso LNG) 5 4 US Jurisdiction FERC MARAD/USCG As of August 3, 2010 30 Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Market Knows Best FERC is not the market FERC will present a “menu” of infrastructure solutions that are: In the public interest Will cause the least environmental impact Will be safe The market is in the best position to select the infrastructure projects that get built Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Conclusions The Commission process has benefited all stakeholders in natural gas projects More needs to be done Turn opposition into understanding Continue to refine the siting process More infrastructure is coming Alaska Pipes from non-traditional sources Hydrokinetics Electric transmission Federal Energy Regulatory Commission

Federal Energy Regulatory Commission Contact Info: Michael J. McGehee Director, Division of Pipeline Certificates Office of Energy Projects Federal Energy Regulatory Commission michael.mcgehee@ferc.gov 202-502-8962 Federal Energy Regulatory Commission