LECET MARKET SUMMARY NATURAL GAS PIPELINE DEPLOYMENT

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2 LECET MARKET SUMMARY NATURAL GAS PIPELINE DEPLOYMENT MARKET FUNDAMENTALS The market for the construction of natural gas pipelines continues to be strong and promises significant growth in the United States and Canada. The apparently insatiable thirst for a relatively clean energy source, particularly for electric power production, insures an expanding demand for new and upgraded pipelines. These pipelines will include new large bore transportation lines which move the gas from the well head sources to the regional users such as utilities where the gas reaches customers via smaller distribution lines. Natural gas frequently provides several advantages over other fuels Environmentally acceptable Clean burning and less polluting Efficient burning-lower fuel costs Proven safe and sensible fuel Available in required quantities Low transportation costs Efficient distribution system Potential price stability (given adequate expansion) Laborers are traditionally involved in the deployment of gas pipelines of varying sizes Owners are typically publicly regulated (i.e., FERC) firms engaged in the transportation and/or distribution of natural gas. A sampling of firms engaged in interstate transportation include: El Paso (53,700 miles) Colorado Interstate Gas - Cypress Natural Gas Tennessee Gas Pipeline - Mojave Pipeline Southern Natural Gas - Gulf States Pipeline Co. ANR - Florida Gas Transmission 50%

3 Duke (11,931 miles) Texas Eastern (9,088 miles) - Alabama-Georgia Energy System Algonquin (1,064 miles) - Florida Gas Transmission-50% East Tennessee (1,129 miles) - Gulf Stream Natural Gas System-50% Maritimes & Northeast (650 miles) - West Coast Energy Williams (27,300 miles) Northwest Pipeline - Buccaneer Gas Pipeline-50% Transcontinental Gas Pipeline - Gulf Stream Nat. Gas-50% Texas Gas Transmission - MAPCO Pipeco (formerly Enron) (30,000 miles) Northern Natural Gas - Mid-western Gas Northern Border Pipeline - Calypso Pipeline Florida Gas Transmission Co. - Transwestern Pipeline PG&E (Pacific Gas & Electric) - Florida Gas Transmission-50% Buccaneer Gas Pipeline-50% Kinder Morgan (30,000 miles) Natural Gas Pipeline Co. of America - Horizon Pipeline Kinder Morgan Interstate Gas Trans. - Rocky Mountain Natural Gas Kinder Morgan Texas Pipeline - Northern Gas Company Trailblazer Pipeline Co. - KN Watternburg Red Cedar Gathering Company (owns 49% with S. Ute Indian Tribe) Transcolorado Gas Transmission Reliant Energy (56,020 miles) Reliant Energy ARKLA Reliant Energy Minnegasco Entex Ni Source, Inc. (12,750 miles) Bay State Gas Columbia Gas of KY Columbia Gas of MD Columbia Gas of OH Columbia Gas of PA Columbia Gas of VA Columbia Gas Trans. Co. Cross Roads Pipeline Co. Columbia Gulf Trans. Co. Note: The total for these top seven owners is 221,701 miles of pipelines or approximately 74% of the total existing interstate pipeline capacity in the U.S.A. Contractors: Murphy Bros., Sheehan Pipeline Co., HC Price Construction, Henkles & McCoy, ARB, Delta Gulf, Miller Pipeline, Michaels Pipeline Co., Welded Construction Skill/Training Requirements for Pipeline Deployment: Compaction Rigging Cutting & Burning Trenching & Shoring Safety Pressure Piping Techniques Hydrostatic Testing Gravity Flow Piping System Utility Line & Grade 2 Stringing & Tallying Pipe Road Boring Pipe Coating Pipe Repair

4 National Fuel Gas Company - Seneca Resources Corporation - Horizon Energy Development, Inc. - Empire State Pipeline (purchased from Duke Energy, October 3, 2003) (157 miles) - National Fuel Gas Distribution Corporation Enterprise Products Partners - Acadia Gas (purchased from Coral Energy April, 2001) (1042 miles) - Mapletree, LLC (purchased from Williams, August 1, 2002) - Oaktree, LLC (purchased from Williams August 1, 2002) - MidAmerica Pipeline (purchased from Williams July 31, 2002) (7,226 miles) - Seminole Pipeline (purchased from Williams July 31, 2002) (1,281 miles) Enbridge Energy Partners, L.P. - Enbridge Pipelines, (Lakehead) L.L.C. (3,300 miles) - Enbridge Pipelines (Alabama) L.L.C. (111 miles) - Enbridge Pipelines (East Texas) L.L.C. (2,251 miles) - Enbridge Pipelines (Texas) - Enbridge Pipelines (Louisiana) - Enbridge Pipelines (North Dakota) L.L.C. (950 miles) - Enbridge Pipelines (MidLA) - Enbridge Pipelines (AL/TN) L.L.C. (281 miles) - Enbridge Pipelines (KPC) L.L.C. (1,120 miles) - Pan Grande Pipeline, L.L.C - Mid LA Gas Transmission, L.L.C. - H&W Pipeline, L.L.C. - Texana Pipeline Company - Vector Pipeline (through Energy Transportation North) - Alliance Pipeline ( purchased from Williams, October 30, 2002) AIG Highstar Capital, L.P. - Southern Star Central Corporation - Southern Union Panhandle - Central National Gas Pipeline (purchased from Williams November 15, 2002) - CMS Panhandle Eastern Pipeline Corporation (purchased from CMS Energy 1 st quarter 2003) TransCanada Pipe Lines, Ltd (24,00 miles) - Northern Border Pipeline Co. - Tuscarora Gas Transmission Co. MidAmerican Energy Holdings Company - Northern Electric & Yorkshire Electricity (UK) - CalEnergy - Northern Natural Gas - Kern River Gas Transmission Company (purchased from Williams, March 27, 2002) (927 miles) (Updated 5/22/03) 3

5 SHORT TERM MARKET OUTLOOK Demand for natural gas in North America is accelerating rapidly. This will tax all resources and services related to bringing the product to users. In the years the average growth rate for demand is anticipated to be 3.4% per year, vs. 0.9% per year between (Source: Energy Information Administration, May 2001.) % Growth Rate for the years of and What s Driving the Market? 90% of new power plants being built today burn natural gas, because design, permitting and construction costs are extremely competitive relative to the alternatives. Proposed natural gas pipeline expansion projects for 2001 and 2002: Western - 15 projects Midwest - 15 projects Southwest - 9 projects Northeast - 21 projects Central - 11 projects Southeast - 16 projects Consumption of natural gas in the United States in 2001 will approximate 22.6 trillion cubic feet (tcf) with North American reserves currently recognized and estimated at 300 tcf. This represents a very tight Reserve Life Index (RLI) of less than 9.0 years supply. Recoverable resources are estimated to grow another 300 tcf over the next ten years. Prices are expected to remain high in the near term, averaging close to $4.00 to $5.00 / MMbtu in Concerns exist, however, that if prices remain at these levels, a form of re-regulation might be imposed upon the market price. While production and consumption growth is expected, current construction of transmission pipelines and storage facilities appears to be lagging. 4

6 LONG TERM MARKET OUTLOOK Over the next 15 to 20 years, new natural gas pipelines are estimated to involve about 301,000 additional miles representing approximately $150 billion in construction costs. This includes 38, 000 miles of new gas transportation lines and 263, 000 miles of new distribution lines. Growth in natural gas consumption is expected to continue, reaching a 62% increase by 2020 over the year Much of this growth is expected on the industrial side, particularly in power generation. Each $1 million of new natural gas pipeline construction represents approximately 2 person years of employment for laborers (4000 hours). Over the next 20 years, $150 billion of pipeline construction will generate approximately 600,000,000 person hours of employment in the laborer category or about 12% of the total expenditure. This works out to 15,000 laborers employed per year. Present employment hours for LIUNA members in all types of pipeline construction is approximately 6 million hours annually (2000). Market share is difficult to measure precisely in this industry, but assuming a market share of 50%, 7,500 LIUNA members per year would be required, in contrast to the approximately 3,000 currently employed. A relatively slow start in the initial years is anticipated as energy needs are further defined. Even an extremely cautious estimate of labor demand will more than double the need for LIUNA members in the future. Market share increases would obviously increase the employment opportunities significantly. Additionally, considerable maintenance and upgrading of existing natural gas pipelines will take place supplementing the above estimates. About 200,000 miles of interstate gas pipeline is currently operational. Maintenance is covered by operator Qualification Regulations. Similar growth is anticipated in Canada in new pipeline construction which has an existing base of over 347,000 miles of gas and oil pipelines. Significant new construction will be required to move supplies through and to the United States. Also, it should be noted that some of the figures mentioned here may include Canadian construction costs for pipelines originating in Canada. 5

7 MARKETING RECOMMENDATIONS All decisions relative to the construction and maintenance of pipelines are made by the owners who are making their decisions based on price and scheduling. Currently, we rely on union contractors to market their companies to owners who make presentations on the advantages of their individual companies and not necessarily on the advantages of using union labor. Whatever reputation unions have with the owners, can be largely attributed to signatory contractors and their experience with them. Since there are seven major owners who control approximately 74% of the U.S. pipeline capacity, it is recommended that LIUNA, in conjunction with other interested unions if necessary, develop a marketing campaign aimed directly at these firms. As part of this effort, we need to take the necessary steps to deliver a skilled productive workforce. This includes the ability to recruit and train the necessary workforce and to document the experience and qualifications of workers who are already involved in pipeline construction. 6