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1 GAS DAILY News Headlines First ethane export sails from Marcus Hook Cargo marks the beginning of large-scale US ethane exports Shipment destined for Norway (continued on page 3) FERC tosses intervention, backs Maritimes Late intervention seen deterring settlements Questions could be raised in certificate docket: FERC (continued on page 3) Storage rocketing to end-of-season high Slightly cooler weather grew demand in East, Midwest regions NOAA ranks winter as warmest on record (continued on page 4) Futures up, cash mixed on weather THE MARKET The NYMEX April natural gas futures contract continued to rise during trading Wednesday, settling 4 cents higher at $1.752/MMBtu on the eve of the weekly storage report from the Energy Information Administration. The contract moved Wednesday in a range between $1.715/MMBtu (continued on page 2) SPOT PRICE AND BASIS CHANGES ($/MMBtu) AECO-C (NW) Source: Platts Sumas (NW) SoCal Gas (SW) PG&E CG (SW) CIG (NW) Gas Daily Supplements Panhandle TX-OK (Mid C) Daily spot price change Daily cash basis change Daily spot price change from bidweek To access the latest issue of the Gas Daily supplements, click below. Gas Daily Market Fundamentals (pdf) Gas Daily Market Fundamentals Data (xls) Gas Daily Monthly Price Guide (pdf) *Links require PMC login. For login help, contact [email protected]. Waha (SW) Houston Ship (ETX) Henry Hub (SE) Chicago (Mid C) Dominion S Pt (Appal) TX Eastern M-3 (NE) Daily price survey ($/MMBtu) NATIONAL AVERAGE PRICE: Trans. date: 3/09 Flow date(s): 3/10 midpoint +/- Absolute Common Vol. Deals Northeast Algonquin, city-gates IGBEE Algonquin, receipts IGBDK Dracut, Mass. IGBDW Iroquois, receipts IGBCR Iroquois, zone 2 IGBEJ Niagara IGBCS Tennessee, z6 (300 leg) del. IGBJC Tennessee, zone 6 del. IGBEI Tx. Eastern, M-3 IGBEK Transco, zone 5 del. IGBEN Transco, zone 6 N.Y. IGBEM Transco, zone 6 non-n.y. IGBEL Transco, zone 6 non-n.y. North IGBJS Transco, zone 6-non-N.Y. South IGBJT Northeast regional average IGCAA Appalachia Columbia Gas, App. IGBDE Columbia Gas, App. non-ipp IGBJU Dominion, North Point IGBDB Dominion, South Point IGBDC Lebanon Hub IGBFJ Leidy Hub IGBDD Millennium, East receipts IGBIW REX, Clarington Ohio IGBGO Tennessee, zone leg IGBJN Tennessee, zone leg IGBFL Tennessee, zone pool IGCFL Tennessee, zone 4-Ohio IGBHO Texas Eastern, M-2 receipts IGBJE Transco, Leidy Line receipts IGBIS Appalachia regional average IGDAA Midcontinent ANR, Okla. IGBBY Enable Gas, East IGBCA NGPL, Amarillo receipt IGBDR NGPL, Midcontinent IGBBZ Oneok, Okla. IGBCD Panhandle, Tx.-Okla. IGBCE Southern Star IGBCF Tx. Eastern, M-1 24-in. IGBET Midcontinent regional average IGEAA Upper Midwest Alliance, into interstates IGBDP ANR, ML 7 IGBDQ Chicago city-gates IGBDX Chicago-Nicor IGBEX Chicago-NIPSCO IGBFX Chicago-Peoples IGBGX Consumers city-gate IGBDY Dawn, Ontario IGBCX Emerson, Viking GL IGBCW Mich Con city-gate IGBDZ Northern Bdr., Ventura TP IGBGH Northern, demarc IGBDV Northern, Ventura IGBDU REX, Zone 3 delivered IGBRO Upper Midwest regional average IGFAA NATURAL GAS

2 and $1.784/MMBtu and traded about 37 cents below the 100-day moving average of the front-month NYMEX close of $2.12/MMBtu during the day s session. Citi Futures Perspective analyst Tim Evans attributed the rise to the natural gas market staging a recovery from a very low level in what we see as primarily a technical correction to an oversold condition. With weather expected to remain above seasonal averages for most of the continental US in the coming few weeks, analysts are eager to see Thursday s storage data from the EIA. A consensus of analysts Platts surveyed expects the storage estimate for the week ended March 4 to show a natural gas storage pull between 55 Bcf and 59 Bcf. Jay Levine, principal analyst with enerjay, discussed the rising NYMEX April gas contract and inferred that the market was already looking ahead rather than behind. He added that, regardless of the storage number, unless it is a complete miss the market has probably already discounted and factored in the high storage volumes currently in the ground. The National Weather Service s six- to 10-day forecast was for a high probability of above-average temperatures across the eastern two-thirds of the continental US, with the entire West Coast and Southwest enveloped in an area of below-average temperatures. The eight- to 14-day forecast shows the area of below-average temperatures remaining intact but moving eastward, with above-average temperatures ahead of it to the East and behind it on the West Coast. Northeast spot down on demand According to data from Bentek Energy, a unit of Platts, total Northeast demand was forecast to fall to 14.6 Bcf/d Thursday, nearly 1 Bcf below Wednesday s level and 8.5 Bcf below the prior seven-day average. In New England, Tennessee Gas Pipeline Zone Line and Algonquin Gas Transmission city-gates gave up around 5 cents each. Prices inched up toward the Northeast producing regions as Dominion Transmission South Point prices rose 2 cents. Prices at Transco-Leidy prices were up 1 cent. Northeast production was expected to reach 22 Bcf/d Thursday, flat with Wednesday but 300 MMcf/d below the prior seven-day average, Bentek data showed. Along the Gulf Coast, prices continued to trade higher, spurred on by stronger downstream demand and rising futures prices. Total Southeast demand was forecast around 16.4 Bcf/d Thursday, relatively flat from Wednesday. Stronger demand was expected from downstream markets in the Midcontinent Thursday. Downstream demand was expected to continue rising later in the week from markets in the Southwest and Northeast. Assessment Rationale Platts Gas Daily indices are based upon trade data reported to Platts by market participants. The indices are calculated using detailed transaction level data from these providers. Platts editors screen the data for outliers that may be further examined and potentially removed. A volume weighted average is then calculated from the remaining set of data. For more details on this methodology please see our North American Natural Gas Methodology and Specifications Guide on Platts.com, located at IM.Platts.Content/MethodologyReferences/MethodologySpecs/na_gas_methodology.pdf Questions may be directed to Patrick Badgley at or [email protected] Daily price survey ($/MMBtu) Trans. date: 3/09 Flow date(s): 3/10 East Texas Midpoint +/- Absolute Common Vol. Deals Agua Dulce Hub IGBAV Carthage Hub IGBAF Florida Gas, zone 1 IGBAW Houston Ship Channel IGBAP Katy IGBAQ NGPL, STX IGBAZ NGPL, Texok zone IGBAL Tennessee, zone 0 IGBBA Tx. Eastern, ETX IGBAN Tx. Eastern, STX IGBBB Transco, zone 1 IGBBC Transco, zone 2 IGBBU East Texas regional average IGGAA Louisiana/Southeast ANR, La. IGBBF Columbia Gulf, La. IGBBG Columbia Gulf, mainline IGBBH Florida city-gates IGBED Florida Gas, zone 2 IGBBJ Florida Gas, zone 3 IGBBK Henry Hub IGBBL Southern Natural, La. IGBBO Tennessee, 500 Leg IGBBP Tennessee, 800 Leg IGBBQ Tx. Eastern, ELA IGBBS Tx. Eastern, M-1 30-in. IGBDI Tx. Eastern, WLA IGBBR Tx. Gas, zone 1 IGBAO Tx. Gas, zone SL IGBBT Transco, zone 3 IGBBV Transco, zone 4 IGBDJ Trunkline, ELA IGBBX Trunkline, WLA IGBBW Trunkline, zone 1A IGBGF Louisian/Southeast regional average IGHAA Rockies/Northwest Cheyenne Hub IGBCO CIG, Rockies IGBCK GTN, Kingsgate IGBCY Kern River, Opal IGBCL NW, Can. bdr. (Sumas) IGBCT NW, s. of Green River IGBCQ NW, Wyo. Pool IGBCP PG&E, Malin IGBDO Questar, Rockies IGBCN Stanfield, Ore. IGBCM TCPL Alberta, AECO-C* IGBCU Westcoast, station 2* IGBCZ White River Hub IGBGL Rockies/Northwest regional average IGIAA Southwest El Paso, Bondad IGBCG El Paso, Permian IGBAB El Paso, San Juan IGBCH El Paso, South Mainline IGBFR Kern River, delivered IGBES PG&E city-gate IGBEB PG&E, South IGBDM SoCal Gas IGBDL SoCal Gas, city-gate IGBGG Transwestern, Permian IGBAE Transwestern, San Juan IGBGK Waha IGBAD Southwest regional average IGJAA *Price in C$ per gj; C$1=US$0.7555; Volume in 000 MMBtu/day. Symbols represent gas flow date. 2

3 In Louisiana, prices at benchmark Henry Hub were up about 2 cents. In Texas, spot prices were also trading higher as Houston Ship Channel and Katy Hub tacked on about 5 cents and 8 cents, respectively. Midcon price up despite warmer weather Increasing next-day demand helped to bolster spot prices in the Upper Midwest. Market area demand is predicted to increase by 1 Bcf on Thursday to 10.6 Bcf. Coupled with the demand data said temperatures will fall slightly in Detroit, Chicago and Minneapolis. However, all three will still be above their seasonal norms by an average of 12 degrees. The data aided in supporting price increases across the region. Prices at the Chicago city-gates added on 10 cents at NIPSCO, 9 cents at Nicor and 5 cents at Peoples. The forecast calls for Chicago high temperatures to approach 53 degrees on Thursday, which is well above the seasonal average high of 43. Closer to the producing areas, prices also rose as total demand in the region shows short-term strengthening. Prices at Oklahoma Gas Transmission s Oneok point rose 8 cents. On its heels were prices at Southern Star Central Gas Pipeline and Natural Gas Pipeline Co. of America s Midcontinent zone, which both rose more than 6 cents. Enable Gas Transmission has revised its force majeure notice on Line OM-1, notifying all parties that it was reducing operating pressure on the line in northwestern Arkansas to continue to operate the line safely after significant soil movement was detected around the line. Enable will continue to operate the line at a lower operating pressure until it remedies the soil movement issue. The Enable cash price climbed a few cents. Northwest prices up on downstream demand Rockies temperatures were forecast to rise, with Denver expecting a high of 68 degrees and a low of 38, well above the seasonal norm. In Western Canada, AECO-Alberta was up 2 cents. Downstream at Gas Transmission Northwest-Kingsgate, prices were flat. Stanfield, Oregon, was also flat. Southwest prices were up a couple of cents despite expectations for decreasing regional demand. Bentek projected Southwest demand would fall about 470 MMcf/d to 7.3 Bcf/d on Thursday. Heavier demand in the Upper Midwest, however, could draw more supply from the Rockies, putting some upward pressure on upstream prices. At the Southern California Gas city-gate, prices were up 1 cent. SoCal Gas border points were up 2 cents. The Pacific Gas & Electric city-gate saw prices rise 2 cents. At Malin, Oregon, prices increased 3 cents. Market Staff Reports First ethane export sails from Marcus Hook The JS INEOS Intrepid, one of the largest ethane carriers in the world, made NGL history Wednesday when it disembarked from the Marcus Hook terminal in Pennsylvania. Loaded with approximately 260 Mbbls of ethane originating from the Marcellus Shale, it represents the first time large quantities of US ethane have been exported to Europe. It will take nine to 10 days for the Dragon class ethane carrier to travel 3,800 miles and reach its destination in Rafnes, Norway. This is an important day for INEOS and Europe, said Jim Ratcliffe, chairman and founder of INEOS, in a statement. We know that shale gas economics revitalized US manufacturing and for the first time Europe can access this important energy and raw material source too. The first shipment of Marcus Hook ethane exports was originally scheduled for December but was first delayed to February and then March. This cargo marks the beginning of large-scale US ethane exports, a monumental event in the NGL market. INEOS is one of the five customers contracted to take US ethane overseas and is the only one to have taken delivery of ethane vessels. This is the second historical milestone for US shale exports in less than a month. Just two weeks ago the vessel Asia Vision departed from Sabine Pass and became the first large-scale commercial LNG export from the Lower 48. It was carrying 3.44 Bcf of LNG from the Gulf Coast to Brazil. And the INEOS Intrepid is only one of the four of the eight INEOS Dragon class ethane-capable ships, currently in service. Another ethane ship, JS INEOS Ingenuity, is docked at the Marcus Hook terminal. Enterprise s 200 Mb/d Morgan s Point Terminal in the Houston Ship Channel will be the second ethane terminal, slated to come online in the third quarter of this year. Total waterborne and pipeline ethane exports are expected to average 150 Mb/d in 2016 and 283 Mb/d in 2017, according to Platts Bentek, an analytical arm of Platts. That s a substantial jump from the 69 Mb/d in Export demand, in addition to domestic cracker demand, will serve to tighten the US ethane market, putting upward pressure on prices beginning in Brandon Evans, Prachi Mehta FERC tosses intervention, backs Maritimes The US Federal Energy Regulatory Commission has backed Maritimes & Northeast s settlement to lower rates on its mainline and laterals, and dismissed a late intervention that raised concern that the pipeline company was masking efforts to provide backhaul services to benefit an affiliated expansion project. Maritimes proposed settlement had been strongly backed by FERC trial staff, who argued it included a considerable reduction to Maritimes maximum recourse rates, fairly resolved multiple complex issues and enjoyed widespread support from shippers, a state commission and state public advocate. Maritimes largest shipper, Repsol Energy, had also asked FERC to adopt the settlement without delay to give shippers the full benefit of the rate cut, pointing out the settlement is either supported or not opposed by more than 30 parties. Yet the administrative law judge in the case agreed to allow intervention by Liberty Utilities (Pipeline & Transmission) and its affiliate Algonquin Tinker Gen Co. The Liberty affiliates said their interest was to preserve open access rights for shippers to firm primary path backhaul service (FPPBH) and to existing mainline capacity on Maritimes and to prevent undue preference to Maritimes affiliates. The Liberty affiliates believe Maritimes may be deliberately 3

4 confusing both market participants and federal and state regulators, disguising the true availability of such mainline capacity in the interest of preserving future preferred access to Maritimes FPPBH service to favor Maritimes affiliated pipeline, Algonquin Gas Transmission..., particularly through service on filed or announced expansion facilities, they wrote. That intervention raised objections and Maritimes and trial staff, who filed interlocutory appeals asking FERC to deny the intervention. Late intervention seen deterring settlements FERC, in a March 9 order, agreed to do so, affirming its prior holding that after a settlement in principle has been reached, FERC applies the strictest possible scrutiny for any request for late intervention. While the affiliates emphasize that their interest in the case is as investors in Tennessee s Northeast Energy Direct project, which they say would compete with the Algonquin and the Algonquin-Maritimes Atlantic Bridge Project, they provided no reason why they could not have been aware of any potential impact of this rate case on their interests in June 2015 when timely interventions were due, FERC said. Questions could be raised in certificate docket: FERC It called concerns Liberty raised about affiliate preferences speculative at this stage and said they were better addressed in certificate proceedings for the expansions. The affiliates also could file a complaint alleging a violation under the commission s rules, FERC said. Moreover, FERC was unconvinced by arguments that the Liberty affiliates were prompted to intervene by a Maine regulatory proceeding that aroused suspicion that Maritimes may have an incentive to give undue preference to its own affiliates. [L]iberty Affiliates do not explain why they could not have intervened here at the commission when this proceeding began rather than waiting for another entity to raise concerns about Maritimes behavior, FERC said. Instead, the commission was convinced that the late intervention would disrupt the proceeding and that each day of delay would prevent settling parties from receiving the substantial and tangible benefits of the settlement. FERC trial staff had noted that the agreement would involve a sixcent cut from the $0.555 Dt/d mainline rate in effect when Maritimes Section 4 rate case began. The settlement cuts rates for all services and would maintain those rates until at least November 1, 2019 and obligate Maritimes to make a new filing by July 1, It would also cut rates a second time when the Atlantic Bridge Project enters service, among other benefits, FERC said. Maya Weber Storage rocketing to end-of-season high Analysts are predicting yet another bearish withdrawal from gas in underground storage, which all but ensures stocks will peak at an alltime high when entering injection season later this month. A consensus of analysts surveyed by Platts expects the US Energy Information Administration will estimate a gas storage withdrawal of between 55 Bcf and 59 Bcf for the reporting week that ended March 4. A withdrawal within expectations would be substantially less than the 174-Bcf withdrawal reported at this time in 2015 and less than the 118-Bcf five-year average withdrawal, according to EIA data. The wider range of analysts expectations for this week called for a withdrawal of 35 Bcf to 62 Bcf. Last week, the EIA reported a 48-Bcf drawdown that decreased inventories to Tcf, which was 794 Bcf, or 45.6%, more than the year-ago inventory of Tcf, and 666 Bcf, or 35.6%, more than the five-year average of Tcf. PLATTS GAS STORAGE SURVEY VS. EIA ESTIMATE 150 (Bcf) EIA actual Survey midpoint -200 Difference from analyst consensus (right axis) Apr 26-Jun 28-Aug 30-Oct Source: Platts, US Energy Information Administration 01-Jan (Bcf) Mar Slightly cooler weather grew demand in East, Midwest regions All net withdrawal activity is expected to have occurred in the East, Midwest and South Central regions as the Mountain and Pacific regions likely experienced net injections. Week-over-week, the largest change in storage activity is expected to have occurred in the East region, where sample activity increased by nearly 11 Bcf compared to the previous week s average, and the combined Dominion Transmission and Columbia Gas Transmission withdrawal totaled over 8-Bcf higher than the previous week at 20.4 Bcf, said Mitch DeRubis, a quantitative modeling analyst with Platts Bentek, an analytical division of Platts. The increase in activity came as average temperatures in the Northeast cell region decreased by an average 3.7 degrees compared to the previous week and demand estimates averaged 1.9 Bcf/d higher. The Midwest region likely posted the second highest withdrawal as temperatures declined by 5 degrees in the regions and demand jumped by 1.9 Bcf/d, according to Platts Bentek. South Central is expected to post a small drawdown as the salt domes experienced a net injection of about 3 Bcf. NOAA ranks winter as warmest on record This is expected to be the sixth consecutive drawdown coming in below the five-year average. And it s all due to unseasonably warm weather. In fact, this winter has ranked as the hottest ever recorded in the contiguous US, according to a report released Tuesday by the National Oceanic and Atmospheric Administration. December through February was 4.6 degrees above the 20th-century average, a new record according to NOAA scientists, whose data dates back 122 years. And forecasts show the remained of March to continue the same pattern, at least in the eastern half of the US

5 Record storage likely to perpetuate lower prices throughout 2016 A withdrawal within analysts expectations of 57 Bcf would bring inventories to Tcf or 725 Bcf more than five-year average inventories and more than 900 Bcf above last year s level of Tcf in the corresponding week. What s more, most storage analysts are only predicting one more very light drawdown before the season switches from net withdrawals to net injections. If that holds true, it will almost assuredly break the record-high end to storage season. The all-time high to the end of storage season was Tcf, which occurred in March 2012, according to EIA data. However, today s production is more than 10 Bcf higher than it was then. For example, total gas production this March has averaged 72.8 Bcf/d, according to Platts Bentek. In March 2012, total production averaged 62.6 Bcf/d. This will likely lead to record another record high in late fall when the next withdrawal season begins. Early in 2016, people thought we would enter the injection season with 2 or 2.1 Tcf remaining underground, said Gene McGillian, an analyst with Tradition Energy, in an interview Wednesday morning. That has since been revised to anywhere from 2.3 to 2.5 Tcf, meaning we could end at higher than 2012 levels. Even if we have a really hot summer, and demand is high, we ll still end up with 4 Tcf or more in storage to begin the next heating season. Because of this I m pretty confident we are going to see sub-$2 prices until the end of the year. Spot price at Henry Hub hit an 18-year low of $1.57/MMBtu this week. Prices haven t been that low since March 1, And frontmonth futures settled at $1.71/MMBtu on Tuesday, just several pennies above lows not seen since February The EIA plans to release its weekly storage report at 10:30 am EST (1530 GMT) Thursday. Brandon Evans Sabine ruling seen increasing counterparty risks Pipeline companies, which have been viewed as insulated from the negative effects of declining energy prices, now may be more susceptible to lower prices and counterparty risks thanks to a ruling Tuesday in a US bankruptcy court. In US Bankruptcy Court in New York, Judge Shelley Chapman issued a non-binding ruling that Sabine Oil and Gas can reject gathering contracts valued at up to $115 million that it holds with Nordheim Eagle Ford Gathering and HPIP Gonzales Holdings. We view this as a sentiment headwind as most midstream companies/investors were operating under the assumption that contracts that had run with the land provisions associated with their [minimum volume commitments] would hold up in court, said Kristina Kazarian, Deutsche Bank MLP research analyst. The ruling came down on the side of Sabine s attorneys, who had argued that the contract covenants do not run with the land under Texas law, under which the agreements were written, and that Sabine was exercising sound business judgment in seeking to escape from the contracts in an attempt to emerge from bankruptcy court. Midstream industry players are keeping a close watch on the ultimate outcome of the Sabine bankruptcy case as it may set a precedent for other cases, notably the Quicksilver bankruptcy case in which the company is seeking to reject its gathering contracts with Crestwood Midstream Partners. Ruling gives E&Ps more leverage in negotiation The impact on contract renegotiations should be seen as the more important takeaway, Kazarian said. This ruling should give E&Ps significantly more leverage in these discussions, as the threat of filing and canceling these contracts is now likely more legitimate. This [ruling] certainly highlights the need to understand who your counterparties are, said Peter Molica, Fitch Ratings senior director of midstream energy and pipelines. In addition, midstream companies need to know what your contracts look like, how far out of the market are your current contracts, and what would it mean if you need to renegotiate them, he added. Contract structures vary significantly, so it is hard to gauge the overall impact of the Sabine ruling on the sector, Kazarian stressed. Gathering and processing still will be needed unless the producers are willing to shut in wells, which is not what they want, she said. In addition, longer-haul pipeline transportation contracts are generally viewed to be at more market-competitive rates, she added. There are practical limitations as well since those kinds of systems are hard to replicate, said Molica. If you have to reject the contract, you still have to use the midstream provider s system because you want your product to reach the market. Contract rejection raises confusion Everybody is still studying the decision, said Mary Lyman, executive director of the Master Limited Partnership Association. I know this is one that the MLP community has been following because everybody wants their contracts to stay intact. Advertisement INTERCONTINENTAL EXCHANGE LEADING GLOBAL ENERGY MARKETS THEICE.COM 5

6 My understanding is, this applies mainly to the gathering and processing part of the midstream MLPs, so we re not sure if it would affect the other types of pipelines and other types of contracts, Lyman said. My contacts at the larger midstream companies said the impact of the Sabine decision would be fairly limited, she said. However, certainly we don t want to jump into conclusion about this case. As people focus on what the judge said, there may be as much confusion as clarity about how that [ruling] is supposed to work, offered James Mann, an industry expert from the Texas Pipeline Association When contracts are rejected, there should be some agreements or some other determinations about the terms and conditions for the continuation of those pipeline services. Gathering and processing is complicated. There are operating procedures that need to be followed. There are nomination procedures and other things that are involved in moving oil and gas production, so it is not just the price, Mann added. Syarifa Galeb Use gas in power generation, not vehicles: study Using natural gas as a fuel to replace coal in power generation would be a much more effective way to battle climate change than using gas as a vehicle fuel in cars and buses, according to a Rice University study released this week. The Rice study, conducted by environmental engineer Daniel Cohan and Rice graduate Shayak Sengupta, compared the net greenhouse gas-emission savings that could be realized by using gas to replace other fuels in vehicles, home heating and power plants. It found that gas-fired power plants achieved the greatest reduction more than 50% in net emissions when replacing old coal-fired power plants. The use of compressed natural gas in vehicles yielded the least benefit, essentially matching the emissions of modern gasoline or diesel engines. It s really a question of how is natural gas used, because natural gas is the most flexibly used fuel of any fossil fuel, Cohan said in an interview Tuesday. It s used across more sectors than coal, which is mostly electricity, or oil, which is mostly for transportation. Natural gas is really the jack of all trades fuel, he said. The study, which appears in the International Journal of Global Warming, compares the various uses of gas to determine the net reduction of CO2 equivalents per megajoule (1 cf) of gas consumed. Greatest emission reductions can be achieved by replacing existing coal-fired power plants (78gCO2-e/MJ of natural gas) or fuel oil furnaces (66gCO2e/MJ). Compressed natural gas in vehicles yields no significant reductions, the study finds. The Rice study is one of the first to examine the benefits of the various uses of natural gas from the perspective of climate change, rather from a purely economic standpoint as most previous studies have done, Cohan said. Study focuses on fuels greenhouse gas emissions We just looked at it from the lens of greenhouse gas emissions, he said. You can assume the end-users are going to be thinking of costs in making their decisions anyway. The CO2 emissions are more of a societal cost, something that isn t just borne by the producers or consumers, he added. What s unique about this study is that we looked at more possible substitutions of natural gas for any fossil fuels than any paper had done before. The researchers calculations considered emissions throughout the lifecycle of the fuel, from production and transport of each fuel through combustion, including leaks of methane. The report makes comparisons within the five sectors studied power plants, furnaces, exports for electricity generation overseas, buses and cars. A number of factors come into play, all of which lead power generation to be more climate-friendly use of natural gas than vehicles, Cohan said. One factor concerns the number of steps in transporting gas to be used in compressed natural gas vehicles, he said. You have to distribute the natural gas to a local fueling station; the fueling station has to compress the natural gas; the natural gas has to be pumped into the car, he said. All those give you the opportunity to leak methane, an extremely potent greenhouse gas. On the other hand, when a power plant burns natural gas, it accesses the gas at an industrial scale off an interstate pipeline. It doesn t go through the local distribution network, which studies differ on how leaky those networks are. It doesn t go through the compression to CNG. It doesn t have vehicle leaks, Cohen said. In addition, converting a coal-fired power plant to one fueled by gas results in large gains in energy efficiency. A modern combinedcycle gas-fired plant operates at a level of above 50% thermodynamic efficiency, whereas a coal plant operates in the 30% efficiency range. CNG less efficient as motor fuel than gasoline, diesel This compares with the use of gas in CNG vehicles, which are less efficient than vehicles powered by traditional gasoline or diesel engines, Cohan said. There s talk that some engine manufacturers think they can get that penalty down to 5% or 10%, while other studies have suggested that in buses natural gas is 20% less efficient than diesel. But wherever you are with vehicles, the bottom line that natural gas is less efficient, he said. CNG-fueled automobiles are not as environmentally friendly as hybrid vehicles, such as the Prius or Fusion, which run on a combination of gasoline and battery power. There s a lot of myth out there of clean, green natural gas vehicles that s totally unwarranted. You really don t save anything from a climate perspective by switching to natural gas, Cohan said. A well-to-wheel analysis of transportation fuel conducted by the Rice researchers showed natural gas-burning and gasoline-burning vehicles were nearly identical in emissions impact. The calculations were modeled on Honda Civics, which are sold in both configurations as well as a gas-electric hybrid. In the latter case, the hybrid had a 27% lower emissions impact than the natural gas version, due to its better fuel economy. A comparison of natural gas-burning versus diesel-burning buses gave the emissions edge to diesel, which accounted for 12% fewer emissions, within the range of uncertainty, according to a Rice University statement. When you replace coal you replace the most carbon-intensive, dirtiest fuel. When you replace oil, you re replacing a carbon-intensive, dirty fuel but not as much so, Cohan said. Jim Magill 6

7 Forward basis prices fairly steady as NYMEX April rises again April financial basis swaps saw limited movements Wednesday as the NYMEX rose again but analysts are expecting another storage report showing a below-average withdrawal. The NYMEX April natural gas futures contract settled at $1.752/ MMBtu Wednesday, up 4 cents, marking the fourth straight session with a higher settlement, as the oil complex strengthened. Algonquin Gas Transmission city-gates April basis was steady at plus 57 cents/mmbtu, but Algonquin summer basis was down 1.5 cents to plus 45.5 cents/mmbtu. Transcontinental Gas Pipe Line, Zone 6 New York April slipped 0.75 cent to minus 43 cents/mmbtu. Market assessments are considered preliminary and based on market activity on the IntercontinentalExchange at 2:25 pm Eastern. In Appalachia, Dominion Transmission South April fell 0.75 cent to minus 72.5 cents/mmbtu. A consensus of analysts surveyed by Platts expects the US Energy Information Administration will estimate a natural gas storage withdrawal of between 55 Bcf and 59 Bcf for the reporting week ended March 4. A withdrawal within those expectations would be substantially less than the 174-Bcf withdrawal reported at this time in 2015 and less than the 118-Bcf five-year average withdrawal, according to EIA data. Along the Gulf Coast, Houston Ship Channel April basis inched up 0.25 cent to minus 3 cents/mmbtu. Gulf Coast prices could receive some additional upward pressure as demand for feed gas used in LNG exports from the region picks up again. After falling to an average of 21 MMcf/d for the 10 days following the first export, Sabine Pass feed gas deliveries have ramped up to average 178 MMcf/d over the past two days, according to Bentek Energy, a unit of Platts. The increase in volumes has been on Creole Trail and Natural Gas Pipeline, Bentek said, adding that the jump in deliveries is likely a result of a new ship, the Gaslog Salem, heading to the facility. Cheniere has said Sabine Pass could see as many as eight to 10 cargoes over the next few months. In the Upper Midwest, Chicago city-gates April basis rose 1.75 cents to plus 6 cents/mmbtu. Michigan Consolidated April was up a half-cent to plus 11.5 cents/mmbtu. Prices in the Upper Midwest could feel some downward pressure further out the curve as more REX east-to-west capacity comes online. FERC has approved Rockies Express Pipeline s request to proceed with construction of its 800 MMcf/d Zone 3 capacity enhancement project. The project is designed to increase east-to-west capacity within Zone 3. The startup stage is expected to begin in late November and finish in early January, with the project entering service in December In the West, Northwest Pipeline-Rockies April basis fell 1.75 cents to minus 25 cents/mmbtu. AECO-Alberta April fell 2 cents to minus cents/mmbtu. Ashish Kothari Platts M2MS Forward Curve Natural Gas, Mar 9 ($/MMBtu) Prompt month: Apr 16 Algonquin, city-gates Transco, zone 6-NY Texas Eastern, M Columbia Gas, Appalachia Dominion, South Point Transco, zone Transco, zone Southern Natural, LA Tennessee, 500 Leg Florida Gas, zone Columbia Gulf, mainline Houston Ship Channel NGPL, Texok Chicago city-gates MichCon city-gate Dawn, Ontario Panhandle, TX-Okla Northern, Ventura Northern, demarc Waha El Paso, Permian Basin El Paso, San Juan Basin PG&E city-gate PG&E, Malin SoCal Gas Northwest, Rockies Northwest, Sumas AECO, Alberta Summer season is April-October. Winter is November-March. *Balance-of-season. Waha: Key packages, last 30 days ($/MMBtu) April 16 Winter Jan 03-Feb Waha: Basis market vs NYMEX ($/MMBtu) Jan 03-Feb Summer 16 Cal Feb 11-Feb 22-Feb Prompt month NYMEX Prompt month basis 22-Feb 01-Mar 01-Mar 09-Mar 09-Mar Waha: Forward curve 3.5 ($/MMBtu) Spot price, last 30 days April 16 May 16 June 16 July 16 August 16 Septembe 16 Summer 16 Winter Summer 17 Winter Summer 18 Winter Cal 17 Cal 18 Cal 19 Table and graphs are created using Platts M2MS-Gas data. Forward assessments as basis to the Henry Hub and full values are available for periods spanning 10 years. To see a sample and find information on how to subscribe to the full data set go to For more information on Platts services, please call PLATTS8. For editorial questions, call Mark Callahan

8 Riverkeeper files second segmentation lawsuit Delaware Riverkeeper Network Tuesday filed a lawsuit alleging the US Federal Energy Regulatory Commission violated the National Environmental Policy Act by illegally segmenting review of the Leidy Southeast Expansion project from other closely related pipeline projects. The suit marks the second lawsuit by the group involving allegations that FERC allowed a unified natural gas infrastructure project to be reviewed piecemeal, undermining proper environmental review. Riverkeeper had previously prevailed in an appeals court case raising similar arguments involving FERC s review of projects along Tennessee Gas Pipeline s 300 line. At issue in this case is FERC s December 2014 approval (CP13-551) of Transcontinental Pipe Line s $607 million project to ship an additional 525,000 Dt/d of gas from Pennsylvania to Alabama by adding 30 miles of new pipeline loop and four new compressor stations in Pennsylvania and New Jersey. The project was placed into service in December and full service January 5, according to a company spokesman. In its request for rehearing filed last January, the environmental group had argued that FERC erred in unlawfully segmenting consideration of the project s environmental impacts from interrelated projects on Transco s Leidy system. It listed Transco applications for the Leidy Southeast Upgrade Project, the Northeast Supply Diversification Project and the Atlantic Sunrise Project, as well as a fourth planned project dubbed the Diamond East Project. The projects are part of a unified whole with functional independence, common timing and geographical proximity, the group said in its rehearing request. Shale Value Chain assessments, Mar 9 $/MMBtu +/- Gulf Coast ethane fractionation spread Gulf Coast E/P mix fractionation spread E/P mix Midcontinent to Rockies fractionation spread E/P mix Midcontinent fractionation spread National raw NGL basket price National composite fractionation spread The methodology for these assessments is available at: Natural gas hub flow, Mar 9 Hub Name scheduled +/- % Daily 31 Day Average Flow Change Price Flow Price ANR, La Florida city-gates 1, , Iroquois, receipts Kern River, Opal plant Northern, Ventura 1, , Northern, demarc , Northwest, Can. bdr. (Sumas) 1, , PG&E, Malin 1, , Stanfield, Ore Transco, zone , Transco, zone 6 N.Y. 1, , Volumes in 000 MMBtu; prices in $/MMBtu. For more information, contact Bill Murphy at Source: Platts data NYMEX Henry Hub gas futures contract, Mar 9 settlement High Low +/- Volume Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Contract data for Tuesday Volume of contracts traded: 372,536 Front-months open interest: Apr, 247,165; May, 232,624; Jun, Total open interest: 1,072,608 Data is provided by a third-party vendor and is accurate as of 5:30 pm Eastern time. HENRY HUB/NYMEX SPREAD ($/MMBtu) Mar 04-Mar Platts oil prices, Mar 9 07-Mar 08-Mar ($/b) ($/MMBtu) Gulf Coast spot 1% Resid (1) % Resid (1) Crude spot WTI (Apr) (2) New York spot No.2 (1) % Resid LP (3) % Resid HP (3) % Resid (3) % Resid (3) = barge delivery; 2= pipeline delivery; 3= cargo delivery Henry Hub cash price NYMEX front month close 09-Mar 8

9 FERC, in its March 3 denial of rehearing, over a year later, disputed the assertion that the projects present the same circumstances, share timing or are similar actions. The projects were not pending as proposals at the commission at the same time, it said. FERC also argued that the Northeast Supply Project has a substantial independent utility from Leidy Southeast Project, with the former shipping Western Pennsylvania gas to New Jersey and New York City, and the latter aimed at shipping gas from Western Pennsylvania southbound to different East Coast and southern markets. Suit questions timing of Clean Water Act signoffs In addition to raising segmentation concerns, Riverkeeper s March 8 suit filed in the US District Court for the District Columbia, will also allege that FERC violated NEPA by approving the pipeline before the state of Pennsylvania had signed off on its Clean Water Act review of the project, the environmental group said. Maya van Rossum, whose title is the Delaware Riverkeeper, in an interview said the Clean Water Act portion of the case targets a chronic problem of FERC disempowering states and communities by giving its approval out of turn, undermining states legal right to rule before a project advances. On the segmentation issue, she contended the fact pattern is almost identical to that found in the group s prior, successful suit, making it ludicrous that the group needs to return to court. In that case, the DC Circuit Court of Appeals ruled June 6, 2014 that FERC violated that NEPA by failing to consider the Northeast Upgrade Project in conjunction with three other closely related projects and failing to provide a meaningful analysis that the cumulative impacts of the projects would not be significant. The case involved four upgrade projects on the eastern leg of the Tennessee Gas Pipeline s 300 line (Delaware Riverkeeper Network v FERC, 753 F.3d 1304, 1313). Rehearing order a day after lawsuit cites long lag time The new lawsuit follows FERC action late last week to deny Riverkeepers rehearing of the certificate approval for the project, a procedural development that allows parties to take their cases to court. FERC s denial of rehearing came one day after Riverkeeper, in a separate suit in the DC Circuit Court of Appeals over FERC s funding, highlighted that it had taken FERC over a year to act on rehearing on the case, even as it acted on 21 letter orders allowing Transco to proceed with various forms of construction activity. (Delaware Riverkeeper Network v. FERC; ). Separately, FERC Tuesday denied a request for rehearing and stay of its approval of National Fuel Gas Supply s West Side Expansion and Modernization Project filed by another environmental group, Allegheny Defense Project (CP14-70). The order approving that project was also issued a year earlier. The project, adding 175,000 Dt/d of capacity to National Fuel s existing system, involves replacement of 23 miles of 20-inchdiameter pipe built in Pennsylvania in 1947 with new 24-inchdiameter pipeline, as well as adding 3,550 hp of compression and other valve and piping modifications. Maya Weber GAS DAILY Volume 33 / Issue 47 / ISSN: Gas Daily Questions? 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10 Register by May 6, 2016 and SAVE UP TO $500 BENPOSIUM 2016 Energy Markets After Capitulation What s North America s New Role? June 13-15, 2016 Royal Sonesta Houston Houston, Texas KEY QUESTIONS TO BE ANSWERED AT PLATTS BENPOSIUM 2016: Production How do historical O&G flows drive future models? Get the right data for the right analysis Transportation and storage How do you best leverage basis pricing positions? Electric power What are the impacts of El Nino in the West and capacity market reforms in the East? Emerging gas demand What s hindering China s appetite? What are Mexico s demand drivers? Global LNG How will markets evolve and what s the role of the US? What are the anchors for global gas pricing? US exports Will arbitrage opportunities exist for NGL cargos? What does the lifting of the crude export ban really mean? How to weather the storm and profit from the lower-forlonger price world KEYNOTE ADDRESS: NORTH AMERICAN E&P WHEN IS THE NEXT INFLECTION POINT? Scott Sheffield Chairman and CEO Pioneer Natural Resources Company PLATTS BENPOSIUM 2016 HIGHLIGHTS: Two detailed breakout sessions featuring deep-dive analysis into natural gas, crude, and NGL prices and markets Review Bentek methodology Learn how to best use data, models, tools, and forecasts to your advantage Presentations from more than fifteen Bentek analysts Meet the people behind the reports, analytics, and data SUPPORTED BY: GAS DAILY OILGRAM NEWS REGISTER NOW [email protected] (toll free) (outside USA & Canada) Registration Code: PD604NLI