0. Federal Process for Siting Natural Gas Infrastructure 17th IPEC Conference

1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. Federal Energy Regulatory Commission
Balancing Interests
Federal Energy Regulatory Commission

10. 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

11. Timeline for Project Review
Start PF
Review
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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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,
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

18. Regional Resource Assessment
Traditional 1,673.4 Tcf
Coalbed 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

19. 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

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

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

22. 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

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

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

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

26. 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)
BCF/D Total
16,021 Miles
Federal Energy Regulatory Commission

27. 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

28. North American LNG Import Terminals Existing
U.S.
A. Everett, MA : 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

29. 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

30. North American LNG Import Terminals Proposed3 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

31. 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

32. 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

33. Federal Energy Regulatory Commission
Contact Info:
Michael J. McGehee
Director, Division of Pipeline Certificates
Office of Energy Projects
Federal Energy Regulatory Commission
Federal Energy Regulatory Commission