Natural Gas – The Fuel of Choice for Clean,

Efficient Energy

September 26, 2012

MidAmerican Energy Holdings Company

28% of total generation capacity is

renewable and noncarbon

16,600 miles of pipeline transmission

(delivering 8% of all gas consumed in U.S.)

7 million customers

– 0.7 million natural gas

– 6.3 million electric

2

Northern’s System

NM

IL

IA

SD

MN

WI

MO

MI

AR

LATX

OK

NE

KS

FieldArea

MarketArea

Demarcation

Field Zone

ABC

D

EF

• Northern has a vast network of pipeline facilities

- Miles of pipe 14,900

- Compressor stations 48

- Number of shippers 325

- Receipt and delivery points 2,150

• Northern has five storage facilities

- Three underground storage fields

o Redfield, Iowa

o Cunningham, Kansas

o Lyons, Kansas

- Two liquefied natural gas facilities

o Wrenshall, Minnesota

o Garner, Iowa

• Peak day capacities

- Market Area 5.5 Bcf/Day

- Field Area 2.3 Bcf/Day

Numbers on pipeline miles, shippers and receipt and delivery

points are approximate.

3

Natural Gas – The Fuel of Choice for

Clean, Efficient Energy

4

Natural Gas Headlines from 2007

NYMEX Natural Gas Prices Escalate to $6.76 per MMBtu—

Producers Hedge at $7-$8 – Oil & Gas Journal

EIA Forecasts another wave of growth of U.S. LNG Imports Over Next 2 Years – Energy Information Administration

Impact of Higher Natural Gas Prices on Local Distribution Companies and Residential Customers - Energy Information Administration

Delays in building new LNG receiving terminals and failure to diversify gas procurement…are likely to lead to serious natural gas supply interruptions and prices hikes for gas consumers before 2020 – David Wood & Associates

Limits on the Response to Higher Energy Prices in the End-Use Sectors - Energy Information Administration

Shale Gas: Can It Deliver? – Wood Mackenzie

5

Natural Gas Headlines from 2012

NYMEX September natural gas futures contract to close at

$2.748 per MMBtu – Gas Daily, August 16, 2012

Six LNG export projects with capacity of 7.7 bcf/d of gas could be built in North america by 2020 – Gas Daily, September 13, 2012

Analyst: Natural gas will play increasing role in fueling fleet, heavy-duty vehicles – NGI’s Shale Daily

EIA reports that gas-fired generation matched coal-fired generation in April (2012) – Wood Mackenzie

“We have a supply of natural gas that can last America nearly 100 years…” President

Obama State of the Union Address

6

Change In Natural Gas Pricing and Production

Forecast

7

What Has Changed So Dramatically?

• Over the past decade, the combination of horizontal drilling and hydraulic fracturing has

allowed access to large volumes of shale gas that were previously uneconomic to produce

• Hydraulic fracturing, commonly called “fracing” is a technique in which water, sand and

chemicals are pumped into the well to unlock the hydrocarbons trapped in shale formations

by opening cracks (fractures) in the rock and allowing natural gas to flow from the shale

into the well

8

Natural Gas “Harvesting”

• Shale formation characteristics - Low permeability and porosity

- Deep: 6,000-12,000 feet typical

- Thin: 50-500 feet typical

- Large: Barnett 5,000 square miles; Marcellus 95,000 square miles

• Shale wells - High success rate: For large leaseholds, after drilling techniques are defined production

becomes harvesting

- Pad drilling: Single pad can produce from two square miles, replacing 32 vertical wells on 40

acre spacing versus traditional vertical well spacing of 32 padsites for 32 wells

9

Shale Production Forecast By Region

• In 2005 shale gas production represented less than 5% of the total gas produced in the United

States. By 2015 shale gas production is forecast to be 50% of the total gas production in the

United States.

• By 2015 the United States production will satisfy 96% of the market demand; by 2020 the

U.S. production is forecast to satisfy 100% of its market demand based on industry forecast

PIRA, New York Seminar Gas Presentation, Shale Gas Impact on Regional

North American Markets, October 2011

10

Gas Supply Outlook

Unconventional Gas Supply

11

Supply Additions to Northern’s Field Area

• Northern continues to expand

access to additional

unconventional supply from the

Granite Wash tight sands and

Wolfberry shale plays

• Incremental supplies of

1,320,000 Dth/day are being

attached from Granite Wash

tight sands and Wolfberry shale

plays

PVRBeaver Plant

100,000

PVRSpearman Plant

100,000

BPSunray Plant

190,000

BPHemphill Plant

50,000

EnbridgeElk City Plant

130,000

Eagle RockCargray Plant

30,000

EnbridgeHidetown Plant

140,000

SuperiorHemphill I Plant

50,000

Jun-2011

CrestwoodIndian Creek Plant

75,000

Aug-2011

OXYDenver CO2 Plant

25,000DCP

Hobbs Plant40,000

DCPLinam Ranch Plant

175,000

TargaMonument Plant

90,000

DCPEunice Plant

105,000

TargaEunice Plant

120,000

SUGSJal Plant100,000

DCPFullerton Plant

70,000

UmbriaGaines Plant

21,000

DCPSpraberry Plant

60,000

AtlasMidkiff Plant

150,000

WTGBenedum Plant

110,000

AtlasBenedum Plant

45,000

Kinder MorganYates CO2 Plant

210,000

SUGSTippett Plant

58,000

HooverMitchell CO2 Plant

110,000

MidMar I Plant 60,000

Jul-2011

WTGMartin County

Plants

170,000Jun-2012

MidMar II Plant100,0004Q-2012

AtlasDriver Plant

200,0004Q-2012

PVRHemphill #1 Plant

Expansion

to 40,000Dec-2011

Eagle RockCanadian I/C

Expansion

to 80,000Dec-2011

SuperiorHemphill II Plant

120,0004Q-2012

QuicksilverPlant

25,0004Q-2013

WTGPlymouth Plant

200,0003Q-2013

PVRAntelope Hills Plant

120,000

Jul-2012

EnbridgeCheyenne I/C

80,000

Sep-2012

12

Shale Gas Economics

• With the abundance of new shale production there continues to be downward

pressure on natural gas prices (NYMEX five-year strip is currently $4.04/Dth). As

a result producers are not drilling in many areas where prices do not cover their

breakeven price.

• Primarily gas rich in natural gas hydrocarbons are being actively drilled

Source: Enbridge Investor

Presentation August 22, 2012

13

Drilling Switch From Natural Gas to Oil

• In 2007 there were less than 100 horizontal drilling oil rigs or

approximately 5% of total active drilling rigs

• Today there are in excess of 650 horizontal drilling oil rigs or

approximately 40% of total active drilling rigs

14

Price Forecasts for Natural Gas

15

Natural Gas Reserves

16

Increases in Natural Gas Markets

17

Electric Generation Growth

• Coal-fired power plant retirements could drive 4 to 6 Bcf/day rise in demand from the

electric sector through 2016

• Future implementation of clean air regulation is expected to add to the demand for natural

gas

- December 2011 final Mercury and Air Toxics Standards rule reduces mercury and

other air toxic emission from more than 1,000 existing and new coal units, initial

deadline February 2015 with possible 1 or 2 year extensions (limited)

18

LNG

• DOE has been quick to approve exports to countries that have Free Trade Agreements

with the U.S., it can limit or reject non-FTA applications if it finds the exports are

not in the public interest

• DOE has received 18 applications to export LNG to FTA countries and 13 applications to

export to non-FTA countries. The department has approved Cheniere Energy’s Sabine

Pass terminal in Louisiana for non-FTA exports.

• DOE has delayed additional non-FTA approvals until it receives a study on the domestic

impact of exports. DOE on September 17, 2012 said the release of this study has been

pushed back until the end of the year.

19

Industrial

20

Natural Gas Vehicles

• Quick Facts (Per NGV America) - There are about 120,000 natural gas vehicles (NGVs) in the U.S. today and more than

14.8 million worldwide

- There are about 1,000 NGV fueling stations in the U.S., about half of which are open

to the public

- In the U.S., NGVs offset the use of nearly 360 million gallons of gasoline in 2011

- NGVs meet the strictest emission standards, including California’s AT-PZEV standard

21

Conclusions

• Producers have mastered the technologies required to access the vast shale gas reserves

• It appears that these relatively cheap supplies are ready to be harvested as demand grows and

prices support drilling

• Natural gas will continue to be drilled and produced where it is associated with oil or high in

liquids content

• The Midwest is positioned to benefit from access to continued growth in shale development