Advances in American technology have opened the door to efficient, affordable, and responsible extraction of natural gas in North America.You can see here the current and prospective plays in the lower 48—and you can see the tremendous resource we have under our feet. Natural gas production from unconventional sources, such as shale, has grown considerably in recent years. Dry natural gas production averaged 53.3 Bcf per day from 2000 to 2010. In 2012 it will likely total 64 Bcf per day, or one third of domestic gas produced in 2012. Proven reserves and yet to be developed resources are enormous, giving credence to expectations that natural gas can meet and sustain a significant share of our domestic energy needs over the next ten years and beyond.AGA acknowledges the potential for more than 80 Bcf per day of domestic dry gas production by 2022 if demand requirements develop sufficientlyThe natural gas industry is committed to responsible and sustainable development of this North American energy endowment so that the full benefits of this clean energy source can be realized for all Americans.
Here you see the corresponding role between natural gas demand and our abundant supply.For the next decade and beyond, domestic natural gas supplies are expectedto be sufficiently robust to meet growth in demand across all sectors.There is additional room for wise and efficient growth of natural gas consumption intoday’s domestic energy market, including significant potential for demand inresidential, commercial and transportation sectors over the long-term.New market dynamics created by abundant supply resources will spur the development of additional technology to enhance natural gas utilization.
There is room to grow natural gas demand at reasonable and relatively stable prices. Domestic natural gas demand growth during 2012-2022 is needed to establish price levels that elicit and sustain a production response from gas producers. Many of the identified shale gas resource plays and more traditional production models become economically available to the market at a projected development cost of $5–6 per MMBtu.This is precisely the foundation that accounts for the possibility of an additional 11 to 34% increase in domestic natural gas production during the next ten years and is supported by many gas energy outlooks.These strong natural gas supply fundamentals along with a robust and reliable natural gas delivery infrastructure suggest that over the next decade, a range of demand scenarios can be met by a diverse and responsive supply market within an estimated price band of $4.00 to $6.50 per MMBtu— a level well below the peak market prices of the preceding decade.Clearly, there is a new market environment for natural gas in the United States today. Creating opportunities to better optimize our nation’s energy resources supported by prudent regulation and policy making informed by science and facts should be the goal of all stakeholders.
Natural gas is the foundation fuel that will heat our homes, run our vehicles,generate electricity, and partner with renewable energy sources for decades to come. America’s natural gas utilities operate the 21st century infrastructure necessary fordelivering the benefits of natural gas to American homes and businesses safely, reliably and at an affordable price. Our energy future will be built upon the foundation of the 2.4 million miles ofpipelines operated by America’s natural gas industry.Affordable prices and a future of market stability provide an opportunity to make long-term investments in our communities throughout the natural gas value chain. Greater recognition of the benefits of natural gas in federal and state regulation, legislation, building energy codes, appliance standards and energy policy initiatives will open new doors to increased energy efficiency and energy security.
Tim Johnston - Summit Utilities
GrowSmart Summit October, 2012 1
Summit Utilities, Inc. (SUI) is a leader in the natural gas utility industry through its strategy of expanding natural gas distribution service to un-served areas. SUI currently manages approximately $260M in assets through its subsidiaries in Colorado, Missouri and Maine. SUI is wholly-owned by the Infrastructure Investments Fund, a private equity fund advised by JP Morgan Asset Management Infrastructure Investment Fund (IIF) Summit Utilities, Inc. (Holdings Company) Summit Natural Gas of Maine, Summit Natural Gas of Summit Utilities ManagementColorado Natural Gas, Inc. Summit Gas Transmission, Inc. Wolf Creek Energy, LLC. Inc. Missouri, Inc. Services, LLC (Distribution) (Transmission) (Gas Supply) (Distribution) (Distribution) (Contract Services) 2
SUI Key Facts Summit Utilities, Inc. was formed in 2004 to be the holding company for the operating utilities and related companies. Colorado Natural Gas, Inc. (CNG) was founded in 1997 to provide natural gas service to the mountain communities west of Denver and Colorado Springs. 2012 customer count is 19,000 2012 natural gas throughput is over 1.7 billion cubic feet (BCF) Over 890 miles of natural gas mains installed since 1997 Summit Natural Gas of Missouri, Inc. was founded in 2004 when the municipal- owned gas systems in Gallatin and Hamilton, Missouri were purchased. 2012 customer count is approximately 15,000 2012 natural gas throughput is over 2.6 BCF in 2012 Over 400 miles of natural gas mains installed since 2004 Acquired the Southern Missouri Natural Gas system on January 1, 2012 Wolf Creek Energy, LLC, founded in 1997 provide gas procurement and supply services to the large transportation customers of Colorado Natural Gas, Inc. 3
Summit Natural Gas of Maine Summit Natural Gas of Maine, Inc. was founded in 2012 in order to pursue the opportunities we have identified in Maine: The Kennebec Valley: 15,000 homes and businesses on gas by the 4th year Savings to our customers of $40,000,000 per year The Penobscot Valley and Aroostook County 10,000 homes and businesses on gas by the 4th year Savings to our customers of $25,000,000 per year Rockland area and the Mid-Maine Coast Yarmouth, Falmouth, Cumberland 4
21st Century Infrastructure: Key decisionstoday will impact oureconomy, environment andcommunities. What’s ahead inbroadband, natural gas lines andtransmission lines for renewable electricitysources?Whats on the horizon at the intersection ofMaines economy, community, environment? 5
Maine’s Economy Natural Gas service will: Strengthen the competitive position of Maine companies in the world markets Save 40% of heating costs relative to #2 Fuel Oil Bring approximately $10,000 of investment in the utility for each customer Bring approximately $5,000 of additional work for the HVAC industry for conversions from oil to gas Create hundreds of new jobs Reduce our dependence on foreign oil 6
Maine’s Communities Natural Gas service will: Reduce required government assistance (LIHEAP) for heating assistance for low-income residents Reduce heavy truck traffic on our roads Increase local property tax revenues Lower operating costs for schools, hospitals, other community buildings 7
Maine’s Environment Natural Gas service will: Reduce the carbon footprint of all who convert from fuel oil or propane Fuel Kg CO2 /mmbtu Percent Reduction Residual Oil (#6) 78.80 33% Distillate Oil (#2 Heating Oil) 73.15 28% Kerosene 72.31 27% Propane 63.10 16% Reduce the potential for environmentally disastrous incidents from spills Provide the infrastructure support for the conversion to natural gas fueled vehicles Improve indoor air quality 8
American Gas AssociationThe Promise of Natural Gas 9
The Promise of Natural Gas• America has seen a fundamental shift in the natural gas marketplace• Technological advances, a newly accessible and abundant domestic resource, and an extensive delivery infrastructure make natural gas the foundation fuel for our economy• This abundance of home-grown natural gas provides an opportunity to satisfy significant new demand at affordable prices well into the future 10
Supporting Increases in Demand Natural Gas Supply Natural Gas Use 90.0 90.0 80.0 80.0 70.0 70.0 60.0 60.0 50.0 50.0 40.0 40.0 30.0 30.0 20.0 20.0 2012 2013 2012 2014 2013 10.0 10.0 2015 2014 2016 2015 20162017 2017 2018 2018 - 2019 0.0 2019 2020 2020 2021 2021 2022 2022Conventional Associated Residential CommercialCoal Bed Methane Tight Industrial PowerShale Pipeline Net Imports Other LNG Net Exports Source: Wood Mackenzie Spring 2012.
A Future of Market Stability Relative naturalHenry Hub Spot Price gas market $2011/MMBtu stability during the next ten years — 12 an outlook that Historical Prices supports 10 High and Low responsible Base Case Demand resource development and 8 reflects continued advancements in 6 extraction and impacts 4 technology 2 - 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Source: Wood Mackenzie Spring 2012. 13
Southern MissouriNatural Gas In 2011, SUMS took over management of the SMNG System Infill Project $13MM project completed on time and under budget Original Scope 1775 new customers, currently marketing has signed up 2086 new customers and 1800 new service lines have been installed 15