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The Florida Natural Gas Association

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Presentation on theme: "The Florida Natural Gas Association"— Presentation transcript:

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 FL
TX 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

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