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The Black & Veatch analysis of results from a summer 2012 survey of energy industry insiders on North American natural gas production, prices and consumption.
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4th
Novem
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4 NATURAL GAS REPORTKEY FINDINGS
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MANAGING DIRECTORBLACK & VEATCH MANAGEMENT CONSULTINGGREG HOPPER
ABOUT THE REPORTABOUT THE REPORT
• Black & Veatch conducted its inaugural natural gas industry survey from July 22 – August 6, 2012
• Survey responses are from 311 qualified industry• Survey responses are from 311 qualified industry participants, representing a cross section of the industry
• Statistical significance testing was conducted and represented results have a 95 percent confidence level
• Black & Veatch thought leaders provided insights and analysis of survey data
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OPTIMISM PREVAILS ACROSS INDUSTRYOPTIMISM PREVAILS ACROSS INDUSTRY
OUTLOOK ON INDUSTRY GROWTH IN NORTHOUTLOOK ON INDUSTRY GROWTH IN NORTH AMERICA BETWEEN NOW AND 2020
92% of respondents answered “optimistic” or “very optimistic” when asked
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pabout their outlook on the industry’s future growth.
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OPTIMISM FUELED BY CONFIDENCE INOPTIMISM FUELED BY CONFIDENCE IN SUPPLY AND FUTURE DEMAND GROWTH
PERSPECTIVE ON INDUSTRY
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Respondents were asked to indicate how strongly they agree or disagree with the listed statements on a scale of 1 to 5, where 1 indicates “Strongly Disagree” and 5 indicates “Strongly Agree.” The above chart shows the mean score of all responses.
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DRIVERS FOR GROWTH:DRIVERS FOR GROWTH: EMERGING MARKETS
OUTLOOK ON CONSUMPTION INCREASES IN EMERGING MARKETS BY 2020
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Respondents were asked which of the listed markets they expect material gas consumption increases in by 2020. This chart provides the top four emerging markets based on survey results.
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Slide 5
B&V5 Use figures 5& 6 for this slide.Black & Veatch, 11/5/2012
GAS PRICES WILL RISE
13 January 2012PowerPoint Sample
GAS PRICES WILL RISE
FORECASTED NATURAL GAS PRICES IN 2020 TOP 5 DRIVERS OF NATURAL GAS PRICE INCREASES
Increasing use of natural gas for power generation
Increased overall demandIncreased overall demand
More stringent environmental regulations on producers
LNG Exports
INCREASED E&P COSTS
Respondents were asked where they expected natural b $ $ /
Respondents were asked to identify the top three drivers for significant, long‐term increases in North American natural gas prices.
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gas prices to be in 2020. $4.50 ‐ $5.99/MMBtu was selected by a 3‐to‐1 margin
LNG EXPORTS: WILL WE OR WON’T WE?
13 January 2012PowerPoint Sample
LNG EXPORTS: WILL WE OR WON T WE?
VIEW ON U.S. EXPORTING INTO INTERNATIONAL LNG MARKET
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W Respondents were asked if U.S. producers should be permitted to export natural gas into the international LNG market. 67% of respondents believe producers should be permitted to do so at
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VE believe producers should be permitted to do so at
will or with moderate regulation. However there are significant differences in opinion from within the value chain.
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MOST IMPORTANT LONG‐TERM ISSUES
13 January 2012PowerPoint Sample
MOST IMPORTANT LONG TERM ISSUES
TOP 5 LONG‐TERM ISSUES
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Survey participants were asked to rate the importance of a variety of items and issues on a scale of 1 to 5, where 1 indicates “Very Unimportant” and 5 indicates “Very Important.” The chart above shows the top five long‐term issues based on the average responses of all respondents.
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FUEL PROCUREMENT
13 January 2012PowerPoint Sample
FUEL PROCUREMENTCONTRACT TERMS FOR NATURAL GAS PURCHASES AVERAGE TERM FOR TRANSPORTATION CONTRACTS
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Value chain respondents were asked what the average term is for firm transportation contracts. Among respondents aware of
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VE their organization’s contract terms, 61% indicated contract
terms were for three years or more
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Local Distribution Companies (LDCs) and consumer respondents were asked what percentage of their organization’s natural gas purchases or sales are contracted for the listed terms.
RATES & REGULATORY:
13 January 2012PowerPoint Sample
RATES & REGULATORY:IMPACT OF UNCERTAINTY
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Respondents were asked to rate the extent regulatory uncertainty (at both the federal and state levels) has an impact on each of the listed issues on a scale of 1 to 5, where 1 indicates “Very little impact” and 5 “Significant Impact.” The chart provides the average responses of all survey participants.
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Significant Impact. The chart provides the average responses of all survey participants.
RATES & REGULATORY: BALANCING
13 January 2012PowerPoint Sample
RATES & REGULATORY: BALANCING INVESTOR AND CONSUMER INTERESTS
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Respondents were asked to what extent the regulatory compact fairly balanced the interests of utility/pipeline shareholders and their customers. Organizations serving the Northeast, Midwest or serving populations over 1 million largely view regulations favoring consumers.
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