The “Golden Age” of Natural GasACCA Presentation – Austin, TX October 2, 2012

What is a “Golden Age”?

• A “Golden age” is a period in a field of endeavor when great tasks were accomplished...

Familiar Golden Ages … The Golden age of Radio, 1920 to 1940’s The Golden Age of Television, 1950’s The Golden Age of Motion Pictures

The Golden Age of Oil , 1920’s and 1960 to 1970’s domestically. The NEW Golden Age of Oil, 1980’s to present.

.

“Golden Age” of Natural Gas -

The Golden Age of Natural Gas, 2007 to present– Abundant, 98% of the natural gas we use is domestic, estimated now well over 200 yrs supply

and growing– Cheap there is an abundant supply at lower cost

Decoupling of oil and gas prices 2008 price in the $13.00-$15.00/Mcf range, today $3.80- $5.50 Mcf

– Clean burning– Natural gas is driving change in transportation, currently 1,100 CNG stations nationwide

Texas Triangle Growth and Demand Impact

Texas Legislation Established Natural Gas Transportation Corridor in the 2010 Legislature.

• Senate Bill 20 establishes a natural gas transportation corridor in the rapidly expanding Texas Triangle, which encompasses Austin, Dallas/Fort Worth, Houston and San Antonio, by increasing the number of natural gas-refueling stations, supporting the use of natural gas-powered trucks across the state.

Texas Triangle Progress

•Develop a market growth plan including policy, regulatory, legislative and develop a fleet outreach program.

Process

• Advance the use of natural gas in transportation, develop a plan for public access stations, help transform the transportation industry by deploying NGV’s including heavy duty vehicles, and establish Texas as a leader on the development of the NGV market

Goals•Station growth since start of Texas Triangle work began has far exceeded initial recommendations (52 new, planned or recently awarded stations since 1/2010)

Results

Source: American Natural Gas Association (ANGA)

2010-2012 Growth: NGVs in Texas

Natural Gas Fuel Volume Demand Growth Since January 2010 (GGE/year)

Light Duty 1,762,600Medium Duty 15,400

Heavy Duty 17,575,000TOTAL 19,353,000

Number of CNG and LNG Vehicles Committed and/or Deployed Since January 2010

Light Duty 1,545Medium Duty 6

Heavy Duty 1,361TOTAL 2,932

Source: American Natural Gas Association (ANGA)

2010-2012 Station Progress in Texas

Number of Stations

Scoping Plan Goal

Existing Prior to 1/20101

Opened since 1/20101

Planned (as of 7/2012)

1

TCEQ-awarded in

8/2012

CNG

13

23 13 6 8

LNG 3 1 16 3

CNG & LNG 1 1 - 4TOTAL 27 15 22 15

1Source: AFDC Data, July 2012 Report

***As of September 16, 2012 there is a total of 1102 CNG stations nationwide with 59 existing LNG stations. Additional stations now planned 101 CNG stations and 96 LNG stations.

Stations: Scoping Plan and Progress Snapshot

2010 Scoping Plan August 2012 Progress

Next Steps: Near-Term Implementation

• Phase 3 Infrastructure Plans: Beyond the Triangle Connect West to El Paso, East to

Haynesville Shale, North to OKC (and onward to Canada), South through Laredo (and onward to Mexico City)

I-10 Connectivity from Houston to Los Angeles and Houston to Atlanta

Texas Fleets Turning to NGVs

Houston-based WM announced it will convert 100% of its nationwide fleet to CNG (18,342 trucks). It recently opened a public-access full retail station in Conroe, TX along the CTT.

Texas-based fleets such as Central Freight (Waco), Sysco (Houston), Frito Lay (Plano), Waste Management (Houston) and other Fortune 100 fleets like UPS are now investing in natural gas vehicle programs in Texas. ANGA’s efforts spurred increased coordination for public infrastructure sharing and directly led to grant submittals and NGV program growth. Texas fleets overall are becoming leaders in NGV program efforts.

UPS was awarded two natural gas stations in Texas (Houston and San Antonio) through SB 375 funding, and is coordinating with a partner for another station project in the Dallas area

Source: American Natural Gas Association (ANGA)

Small Business Conversions

Dealership uses

Emissions Reduction Incentive Grant - TCEQ

The Texas Commission on Environmental Quality (TCEQ) offers a variety grants periodically to help offset first dollar costs of conversion from gasoline or diesel fuels to CNG. One particularly of interest to this group is:

• Emissions Reduction Incentive Grant (ERIG) was released the first week in September. Under this program, the customer can submit any number of vehicles for replacement, there is no limit. Some of the requirements are that trucks must have a minimum gross vehicle weight rating of 8,500 lbs and could go as high as 80,000 lbs, i.e., haul trucks, dump trucks (registered up to 80,000 lbs), street sweepers, garbage trucks, delivery trucks, you name it! This program is not only limited to On-Road vehicles, but it includes Non-Road equipment, from agricultural tractors to heavy construction vehicles.

• Contact www.terpgrants.org for details.

Source: Texas Commission on Environmental Quality

Single Pump CNG StationClean Energy Station – Bush International - Houston

CNG Storage TanksClean Energy Station – Bush International - Houston

CNG CompressorClean Energy Station – Bush International - Houston

Bold 10 Year NGV Adoption Goals: Demand Growth Projection

TOTAL 2012-2022 Projected BCF Creation: 226.63

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20220

5

10

15

20

25

30

35

40

45

Annual BCF

Source: American Natural Gas Association (ANGA)

Local Financial Help

• Texas Gas Service– $3000.00 Rebate for a conversion– $2000.00 Rebate for an OEM like Honda Civic

Contact www.texasgasservice.com for more details.For qualified customers.

• Clean Energy has potential vehicle and conversion financing.

Texas Gas Service Payback Calculator

GASOLINE VEHICLE THE NUMBERSMake: Chevy Cost difference per gallon: 2.65$ Model: Express Van Times 220,000 miles driven per year @ 14 mpg: 4,164.29$ Capacity spec: 3/4 Ton Times 10 vehicles: 41,642.86$ Cost of replacement: $ 40,000 Rebate (per each): 3,000$ Fuel economy: 14 MPG Total rebate: 30,000$ Gasoline cost: $ 3.650 per gallonType of gasoline: Unleaded - 87Miles driven (1 vehicle): 22,000 per yearHow many of this vehicle are there? 10Operating days per week: 6Total miles driven (fleet): 220,000 miles per year

NATURAL GAS VEHICLENatural gas cost $ 1.000 per gallon equivalentWhat is the cost to upgrade? $ 10,500 conversion kitOther costs (fueling equipment): $ 60,000 fueling equipmentTotal investment: $ 165,000 10 vehicles + fuelstation

* Make and models provided solely for demonstration purposes. Texas Gas Service does not endorse any particular brand or model of equipment.

This calculator provides a simple payback period estimate. These calculations do NOT take into account inflation, interest on savings, or interest paid on loans.Service, maintenance, price fluctuations, and many other variables may affect actual savings.

10 NATURAL GAS POWERED CHEVY SYOUR INVESTMENT OF $135,000 IN

COULD PAY FOR ITSELF IN APPROXIMATELY3 YEARS AND 2 MONTHS.

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Simple Payback Period

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Texas Gas Service Payback Calculator

Questions?

Contact

Wayne SneadTexas Gas Service5613 Avenue F.Austin, TX 78751512-407-2014512-276-0215 Cellwsnead@txgas.com