Volume 3: Power Generations and LNG Export & Application Opportunities

www.acadianconsulting.com

David E. Dismukes, Ph.D. Acadian Consulting Group

Beyond the Energy Roadmap: Starting Mississippi’s Energy-Based Economic Development Venture. Volume 3: Power Generation and LNG Export & Application Opportunities

Prepared for the Mississippi Energy Institute

### DATE ###

Power generation development may prove to be another energy-based manufacturing opportunity for Mississippi. The State is well-positioned for power generation development given its linkages to two different reliability regions, and three different control areas, that can facilitate the movement of generation into the mid-continent region, the Tennessee Valley, or the southeast. In fact, Mississippi experienced a 50 percent increase in generation capacity development during the 1998-2003 merchant power development era.

Power generation could become increasingly more attractive for Mississippi given: (a) its proximity to affordable and abundant natural gas supplies; (b) Entergy’s recent announcement to join a large mid-western power transmission and market coordinating area that greatly expands the market reach for power plants located in Mississippi; and (c) recent EPA regulations preferencing natural gas-fired generation over coal-fired generation.

Executive Summary (Volume 3): Power Generation

Executive Summary

2

Prolific natural gas supplies in the U.S. are creating new opportunities for the export of natural gas to countries with limited domestic natural gas resources. Liquefied natural gas, or LNG, is natural gas that is cooled to -260°F and loaded onto ocean-going vessels for export to other regions. The exportation of natural gas from the U.S. is a dramatic change from as recently as eight years ago when most forecasts were anticipating the need to import between 14 and 30 percent of U.S. natural gas requirements.

The factors stimulating interest in LNG exports include: (a) low cost domestic natural gas supplies; (b) large global/domestic natural gas/crude oil price differentials; (c) growing world energy and natural gas demand; and (d) the need for lower-cost/low-emissions fuels. In fact, Mississippi already has one export project planned. There are also a number of domestic uses for LNG that Mississippi could leverage, including the use of the fuel in transportation applications and in particular marine applications along the Mississippi River and Gulf Coast.

Executive Summary (Volume 3): LNG Export & Applications

Executive Summary

3

Table of Contents (Volume 3)

Electric Power Generation

2 LNG Export & Applications

1

4

5

1.0 Electric Power Generation

6

Typical Economic Footprint

Overview and Industry Description

Recent Industry Trends

Strategic Factors Renewing Sector Interest

Market Outlook & Forecast

Available Market Potentials

Major Players & Venues

Power generation is an industry of daily

necessity, providing electricity to most all

homes, businesses and industries.

Power generation

facilities are run by fossil, nuclear, and

renewable fuels. An increasing share of

power generation over the past decade has been associated with

natural gas.

1.0 Electric Power

Electric Power Value Chain

7

The electric power industry is comprised of three primary components: generation; transmission; and distribution. Wholesale generation is a competitive business. Only

regulated electric utilities can sell to end users if retail end-user competition is not allowed.

1.0 Electric Power

Source: Author’s construct from U.S.-Canada Power System Outage Task Force, 2004.

Generating Station Generator Step-Up

Transfomer

Transmission Lines (765, 500, 345, 320 and 138 kV)

Transmission Customer

(136 kV or 230 kV)

Substation Step-Down Transformer

Sub-transmission Customer

(28 kV and 69 kV)

Primary Customer (13 kV and 4 kV)

Secondary Customer (120 V and 240 V)

Elements of the Electric Power Grid

Residential Commercial

Industrial

Wholesale – Competitive Market Retail – Regulated Market

Utility

Utility

IPP

Marketer

Market

The competitive wholesale market is “upstream” of the transmission and distribution system and is where various market participants generate and trade electricity.

IPP

Utility

Marketer

1.0 Electric Power

8

Composition of the Electric Power Industry, 2011

9

1.0 Electric Power

Source: Energy Information Administration, U.S. Department of Energy.

Utilities own less than half of the 6,600 electric generating plants but slightly more than half of the generation capacity in the U.S.

0 1,000 2,000 3,000 4,000

Commercial and Industrial

Independent Power Producers (CHP)

Independent Power Producers

Electric Utilities

Commercial and

Industrial, 3% Independent

Power Producers (CHP), 3%

Independent Power

Producers, 36% Electric Utilities,

58%

Number of Electric Power Industry Power Plants

Capacity of Electric Power Industry Power Plants

10








Mississippi is well-positioned for power

generation development. Its proximity to three

different control areas in the southeast has

resulted in consistent capacity growth.

A significant level of competitive, highly-

efficient natural gas fired generation was

developed in Mississippi in the late 1990s and

early 2000s.

1.0 Electric Power

Mississippi Power Plants

11

There are 69 generating facilities in Mississippi. Of these, the non-utility, independent generators (CHP and IPP) account for 45 percent of total capacity.

Electric Utility

Non-Utility

Power Plants by Owner Type

Power Plants by Size (MW) 0-49 MW 50 – 299 MW 300 – 799 MW 800+ MW

1.0 Electric Power

Mississippi Power Generation Trends

12 Source: Energy Information Administration, U.S. Department of Energy.

Natural gas-fueled generation has been increasing at an average annual rate of 18 percent (since 2004), and currently accounts for 80 percent of Mississippi’s electric generation. Coal-fired generation has decreased 60 percent in the last five years.

0

10

20

30

40

50

60

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Renewable Petroleum Nuclear Natural Gas Coal

Gen

erat

ion

(Mill

ion

MW

h)

1.0 Electric Power

Mississippi Generation Capacity Trends

13

Significant amounts of natural gas-fueled capacity was added in 2000 through 2003, more than doubling Mississippi’s generating capacity. Coal-fired generating capacity

has stayed the constant.


0

2

4

6

8

10

12

14

16

18

20

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Renewable Petroleum Nuclear Natural Gas Coal

Cap

acity

(Tho

usan

d M

W)

1.0 Electric Power

Prior merchant power capacity development in

Mississippi.

Regional Reliability Areas

14

Southeastern Electric Reliability Council (“SERC”)

Mississippi is well-positioned, from a power delivery perspective, since

it straddles two different NERC regions (SERC, SPP). Within the

SERC region, Mississippi is covers three different control areas (Entergy, Southern and TVA).

Power plants in Mississippi can

send power west into SPP and the mid-continent region of the U.S.,

north into the Tennessee Valley, or east in to the growing

southeastern markets including Florida.

1.0 Electric Power

SERC Generation Capacity Trends

15

Electric generation capacity in SERC has increased steadily at an average annual rate of 4.4 percent from 1990 through 2009. Capacity dropped 19 percent in 2010.

0

50

100

150

200

250

300

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Cap

acity

(Tho

usan

d M

W)


1.0 Electric Power

Entergy On Peak Wholesale Power Prices

16 Source: Intercontinental Exchange.

0

20

40

60

80

100

120

140

160

180

Apr-01 Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 Apr-13

Peak electric wholesale power prices traded in regional markets, while down considerably from historic highs around the time of Hurricane Katrina, are relatively

stable.

Fall 2005; Post-Katrina

$/M

Wh

1.0 Electric Power

17







Power generation in Mississippi could become

attractive for three important reasons:

(1) Low-cost and abundant regional natural gas

supplies.

(2) Entergy’s recent announcement to join a very large mid-western

regional transmission and power market

coordinating group.

(3) New environmental rules being promulgated by the EPA discouraging power

plant coal use.


1.0 Electric Power

Natural Gas Price Outlook – Annual Energy Outlook (“AEO”)

18

Nat

ural

Gas

Pric

e (2

010

$/M

MB

tu)


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0

2

4

6

8

10

12

1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030

Actual Henry Hub AEO 2007 AEO 2008 AEO 2009

AEO 2010 AEO 2011 AEO 2012 AEO 2013

Anticipated price outlook today.

Anticipated price outlook in 2009.

Current natural gas price forecasts are considerably lower than prior years, indicating a good opportunity for natural gas fired power generation.

Power Generation Markets: Market Clearing Heat Rate

19 Source: Intercontinental Exchange.

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Apr-01 Apr-03 Apr-05 Apr-07 Apr-09 Apr-11 Apr-13

Market clearing heat rates, or the estimated efficiency of the “marginal” unit dispatched into regional markets is starting to climb indicating increased profitability opportunities

for high-efficiency natural gas generators.

Increasing profit opportunities for high-efficiency natural gas generation relative to reported market

conditions.

1.0 Electric Power B

tu/k

Wh

Entergy’s Move to MISO

20

MISO currently operates across 11 states and one Canadian Province. With the addition of Entergy Operating Companies to its membership, MISO will stretch from

Canada to the Gulf of Mexico.

Source: Entergy.

• In 2011, Entergy announced it would join the Midwest Independent System Operator or “MISO.” • Entergy has cited cost-savings benefits as an important benefit of joining MISO creating a large wholesale market saving customers up to $1 billion in power production costs by 2022. • Organized competitive markets create greater efficiencies than one that relies upon bilateral trading, particularly in electricity markets where some congestion is always present. • Entergy and MISO have received approval from NERC; FERC; and the regulatory commissions of Louisiana, Texas, Arkansas and Mississippi; and the New Orleans City Council.

1.0 Electric Power

Competitive Wholesale Market Benefits

21 Source: Entergy.

There are a number of wholesale market benefits that can arise from the expansion of MISO to the Gulf Coast that include: • Greater power generation market

efficiencies. • The ability to move highly-efficient and

environmentally-friendly natural gas fired generation into an area historically dominated by coal-fired generation.

• Greater market scope opportunities by providing lower-cost, highly efficient natural gas generators easier access to quickly growing mid-western electric power markets.

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EPA Regulatory Rulemakings Discouraging Coal Generation

• Over the past several years, the EPA has entered into a number of rulemaking proceedings that will have the net effect of discouraging coal-fired generation.

• These new EPA regulations are in addition to a series of regulatory changes that arose during the 1990s that discouraged coal fired generation by increasing a number of acid rain-based regulations.

• Collectively, these new regulations, governing air emissions, water emissions, and waste materials, will impact both new and existing coal-fired power generation.

• More recently, EPA has proposed a series of new rules on carbon emissions that will likely eliminate traditional coal-fired power generation as a future resource to meet utility electricity requirements.

22

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U.S. Power Generation – Fuel Mix

23

Coal 52%

Nuclear 20%

Natural Gas 16%

Other 3%

Coal 42%

Natural Gas 25%

Nuclear 19%

Other 1%

Renewables 9% Renewables 13%

2000 2011


Over 250,000 MWs of natural gas and renewable power generation capacity has been added over the past decade at the expense of coal-fired power generation.

1.0 Electric Power

Electric Industry Environmental Regulations Create Uncertainty for Coal

24

Ozone

PM2.5

Beginning CAIR Phase I Seasonal NOx Cap

HAPs MACT proposed

rule

Revised Ozone NAAQS

Begin CAIR

Phase I Annual

SO2 Cap

Next PM-2.5

NAAQS Revision

Next Ozone NAAQS Revision

SO2 Primary NAAQS

SO2/NO2 Secondary

NAAQS NO2 Primary NAAQS

SO2/NOx

New PM-2.5 NAAQS

Designations

Hg/HAPS

Final EPA Nonattainment Designations

PM-2.5 SIPs due (‘06)

Proposed Transport Rule

HAPS MACT final rule expected

CAIR Vacated

HAPS MACT Compliance 3 yrs

after final rule

CAIR Remanded

CAIR/CSAPR

Begin CAIR

Phase I Annual

NOx Cap

PM-2.5 SIPs due (‘97)

316(b) proposed rule

316(b) final rule 316(b) Compliance < 8 yrs after final rule

Effluent Guidelines

Proposed Rule

Water

Effluent Guidelines Final rule expected Effluent Guidelines

Compliance 3-5 yrs after final rule

Begin Compliance Requirements under Final CCR Rule (ground water

monitoring, double monitors, closure, dry ash conversion)

Ash

Proposed Rule for CCRs

Management

Final Rule for CCRs Mgmt

Final Transport Rule Issued

Compliance with CSAPR

CO2

CO2 Regulation

Reconsidered Ozone NAAQS

Source: Updated from Wegman (EPA 2003)

CAMR & Delisting Rule vacated

2008 2011 2012 2013 2015 2016 2009 2010 2017 2014

Transport rule (CSAPR) vacated

EPA has made a number of rulemaking and rule changes that will dramatically change power generation and shift generation preferences away from coal. Natural gas and

renewables will benefit from these changes.

1.0 Electric Power

U.S. Confirmed Retirements by Fuel Type

25

Note: 1Confirmed retirements are those that have been announced or included in a planning coordinator’s resource plans. An additional 26 GW of unconfirmed capacity is expected to retire by 2022. Source: NERC.

Approximately 44 GW of fossil-fueled capacity is confirmed to retire in the next 10 years.1 Of this capacity, coal-fired generation accounts for 66 percent (29 GW).

5

10

15

20

25

30

35

40

45

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Natural Gas Petroleum Coal

Cap

acity

(GW

) 1.0 Electric Power

Coal power plant retirements.

26








There are a number of important factors that will

likely drive the market outlook for natural gas-

fired generation in Mississippi that includes:

1. The national economic recovery.

2. The planned retirement of existing generation.

3. The premature retirement of coal generation due to

EPA regulations.

1.0 Electric Power

U.S. Electricity Demand Growth

27

The Energy Information Administration anticipates electricity demand growth of 0.90 percent per year through 2040, from current usage of 3.8 trillion kWh to 4.9 trillion kWh.

The high growth case increases at a rate of 1.2 percent, to about 5.5 kWh.


3.0

3.5

4.0

4.5

5.0

5.5

6.0

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040

Reference Case High Growth Low Growth

Ele

ctric

Dem

and

(trill

ion

kWh)

1.0 Electric Power

Regional Electricity Demand Growth: SERC


1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040

Ele

ctric

Dem

and

(trill

ion

kWh)

The Energy Information Administration anticipates electricity demand in SERC to grow from current usage of 1.05 billion kWh to 1.35 billion kWh in 2040. This is an increase

of almost 30 percent, at an average annual rate of about one percent.

1.0 Electric Power

Capacity – Reserve Margins

29

A regional reserve margin is the capacity held in reserve to meet unexpected surges in peak demand. For instance, a reserve margin of 15 percent means that an electric system has excess capacity of 15 percent of

expected peak demand. NERC requires a 15 percent target reserve margin for the SERC region, and a 13.6 percent target reserve margin for SPP. Both of these targets are lower than margins of 15 percent to

18 percent historically used during high electricity growth periods.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

SERC-E SERC-N SERC-SE SERC-W SPPActual (2011, 2012, 2013) Projected (2014-2022)

SERC regions are projected to start falling towards or below targets in the next five years.

SPP is expected to move closer to its targets within 10 years.

1.0 Electric Power E

lect

ric D

eman

d (tr

illio

n kW

h)

Source: NERC.

MISO Retirements by Resource Type and Supply Category

30

Source: NERC.

A recent MISO survey indicated coal capacity retirements of 4,300 MW with another 6,300 MW undecided. Of the 4,300 MW of announcements, 1,700 MW of coal capacity

has already retired leaving 2,600 MW yet to be retired.

Number Existing Existing Future Futureof Units Other Planned Other Planned Other Total

CoalAlready Retired 27 1,706 - - - - 1,706 Retired 19 - 1,022 564 106 394 2,086 TBD for Retire 49 - 6,502 176 - - 6,678 No Action Required 42 - 14,719 3,351 - - 18,070 No Response to Survey 15 - 482 37 - - 519

GasAlready Retired - - - - - - - Retired 1 - 158 156 - - 314 TBD for Retire 4 - 295 - - - 295 No Action Required 4 - 372 4 - - 376 No Response to Survey - - - - - - -

OilAlready Retired - - - - - - - Retired - - - - - - - TBD for Retire 4 - 55 - - - 55 No Action Required - - - - - - - No Response to Survey 1 - - 24 - - 24

TotalAlready Retired 27 1,706 - - - - 1,706 Retired 20 - 1,180 720 106 394 2,400 TBD for Retire 57 - 6,852 176 - - 7,028 No Action Required 46 - 15,091 3,355 - - 18,446 No Response to Survey 16 - 482 61 - - 543

Grand Total 166 1,706 23,605 4,312 106 394 30,123

Summer Rating (MW)

1.0 Electric Power

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040

Other Renewable Nuclear Other Fossil Fuel (Oil, Natural Gas) Coal

SERC Regional Capacity Additions & Retirements – 2013-2017

31

SERC will likely see a considerable number of coal-fired power generation facilities retire over the next four years creating new power generation opportunities for highly

efficiency combined cycle natural gas fired generators.

1.0 Electric Power P

erce

nt o

f Tot

al C

apac

ity (%

)

Coal-fired capacity is projected to fall 12.6 percent in the next 10 years (by 2022).


32








Mississippi is well-positioned to strengthen

its role as a regional power hour to both the

southeast and increasingly the Midwest.

Changing environmental

regulations and Entergy’s integration

with MISO opens up new power markets for existing and future Mississippi power

generators.

1.0 Electric Power

Summary of Mississippi’s Power Generation Market Potentials

Mississippi has the potential to become home to a new

era of highly-efficient natural gas fired generation

development.

Mississippi could facilitate a new wave of generation capacity development

comparable to that experienced in the state

during the 1998-2003 time period.

33

0

2

4

6

8

10

12

14

16

18

20

1998 2000 2002 2004 2006

Renewable Petroleum NuclearNatural Gas Coal

Cap

acity

(Tho

usan

d M

W)

1.0 Electric Power


Mississippi’s Prior Power Development Experience

The southeast and in particular, Mississippi, was

home to a significant level of highly-efficient merchant

power development between 1998 and 2003. This resulted

in a glut of low-cost power that, to this day, still exists in

many places of the southeast.

However, that outlook, as experienced in the past, could

change relatively quick.

34

Res

erve

Mar

gin

(%)

0%

5%

10%

15%

20%

25%

30%

1998 2003 2008 2013

Projected

1.0 Electric Power

Prior Rapid Decreases in Reserve Margins


Factors Potentially Leading to a Renaissance in Power Development

1. Environmental regulations will prejudice non-controlled coal and legacy natural gas-fired steam generation even in the SERC region. There are 4,600 MW of coal generation in SERC that will need new controls in order to comply with new EPA regulations.

2. Continued regional wholesale power competition and economic growth could “burn-off” excess capacity in short order much like the excess nuclear and solid fuel capacity development of the early 1990s was burned off by that decade’s end.

3. Entergy’s integration into MISO is fortuitous since it will likely open up a new power transmission highway into the upper Midwest that will have the effect of:

a) Expanding new markets for the glut of highly efficient power already in the region.

b) Allow highly efficient natural gas generation to displace Midwestern coal generation prejudiced by EPA regulations.

35

1.0 Electric Power

NERC-Wide Confirmed and Projected Fossil-Fueled Capacity Retirements (10-Year)

36 Source: NERC.

While retirements are anticipated throughout the U.S., some reliability areas will be impacted more than others. PJM, MISO and SERC are projecting the highest amount of

retirements over the next ten years (over 10 GW) as well as significant percentages relative to total capacity resources.

5.10% 5.50%

11.00%

13.10%

6.20%

11.90%

1.60% 1.70%

6.00% 4.80%

0%

2%

4%

6%

8%

10%

12%

14%

0

5

10

15

20

25

30

35

40

45

SERC SPP MISO MRO FRCC PJM ERCOT NPCC -New

England

NPCC -New York

WECC

2022 Unconfirmed 2022 Confirmed Percentage of 2013 Anticipated Resources

Cap

acity

(GW


Mississippi’s Prior Power Development Experience

Reserve margins in MISO are much tighter than SERC, creating an opportunity for excess merchant generation to meet new MISO load

requirements and potentially displace less efficient generation in that region.

37

Res

erve

Mar

gin

(%)

0%

5%

10%

15%

20%

25%

30%

2011 2012 2013

SERC MISO

1.0 Electric Power

Source: NERC.

NERC-Wide Confirmed and Unconfirmed (Projected) Outages for Environmental Retrofit

38 Source: NERC.

NERC estimates that 160 MWs (339 units) will need retrofits by 2016. NERC also estimates that MISO will need to control over 33 GW of fossil-fueled generation to

comply with new EPA regulations.

59.3

33.7

21.1 19.9

8.0 5.6

4.6 4.0 1.1 1.1

10

20

30

40

50

60

Cap

acity

(GW


Almost 60 GW of potential coal-fired capacity requirements in MISP, SPP and SERC alone.

U.S. Generation Capacity by Fuel Type – 2011, 2025 and 2040

39

Bottom line: EIA estimates the growth in new generation to come primarily from natural gas (~170 GW) and Mississippi will be well-positioned to take advantage of these

opportunities provided transmission markets become more integrated.

0

50

100

150

200

250

300

350

Coal Oil/gassteam

Natural gascombined

cycle

Natural gascombustion

turbine

Nuclear Renewable/other

2011 2025 2040

Cap

acity

(GW

)

Down Up Flat Up Up Down


1.0 Electric Power

40








Electric power generation facilities,

particularly natural gas-fired facilities, can be

relatively small but need access to abundant,

flexible, and affordably-priced natural gas

supplies. Water access is important for cooling

purposes and power transmission is

important to move electricity within

Mississippi and to other regions.

1.0 Electric Power


41

1.0 Electric Power

Capital investments from recent project announcement range from $900/kW to $1,250/kW.

Note: Base estimates are based upon the Energy Information Administration's 2013 capital cost estimates for utility scale generation projects; low and high costs are based on recently completed and/or announced projects. All expenditure, employment and wage estimates are direct impacts only; and in-state only. In-state purchases, wages and non-energy expenditures are estimated using IMPLAN. 1Assumes a heat rate of 7,050 Btu/kWh and capacity factor of 65 percent. 2Assumes water usage of 180 gallons per MWh.

Characteristic Low Base High

Plant Capacity (MW) 950.0 620.0 625.0 Capital Investment (million $) 866.7$ 568.5$ 783.0$ Average Investment Cost ($/kW) 912.3$ 917.0$ 1,252.8$

Typical Construction Duration (years) 2.25 n.a. 2.50

Estimated In-State Purchases (million $) 208.0$ n.a. 219.2$ Estimated Direct Construction Employment (jobs) 600 n.a. 750 Estimated Wages (million $) 29.3$ n.a. 36.7$

Estimated Natural Gas Use (Bcf)1 38.1 24.9 25.1 Estimated Annual Water Use (million gallons)2 973.7 635.5 640.6

Estimated Annual Non-Energy Expenditures (million $) 13.3$ n.a. 14.4$ Estimated Annual Direct Employment (jobs) 24 n.a. 26 Estimated Annual Direct Wages (million $) 2.9$ n.a. 3.1$

Typical Transportation Requirements Inputs Pipeline Pipeline Pipeline Outputs Transmission Line Transmission Line Transmission Line

Conventional Combined Cycle

42








There are a number of major players, trade events, and

publications specific to the electric power generation industry.

1.0 Electric Power

Major Players

43

1.0 Electric Power

Company Website U.S. Headquarters Contact

Entergy Mississippi http://entergy-mississippi3-px.rtrk.com/ Headquarters: New Orleans, LA

Mississippi Primary Office: Jackson, MS

Investor Relations Vice President: Paula WatersPhone: (504) 576-4380Email: [email protected]

Investor Relations Director: Anne KulakowskiPhone: (504) 576-6674Email: [email protected]

Mississippi Power / Southern Company

http://www.mississippipower.com/ Gulfport, MS Southern Company Contact InfoShareholder Services: 800-554-7626Media Assistance: 404-506-5000Mississippi Power Business Service Center: 877-656-1836

Tennessee Valley Authority

http://www.tva.gov/ Knoxville, TN Investor Relations: Ann StorbergPhone: (888) 882-4975Email: [email protected]

South Mississippi Electric Power Association

http://www.smepa.coop/ Hattiesburg, MS Corporate Communications Manager: Sara PetersonPhone: (601) 705-6614Email: [email protected]

Duke Energy (Electric) http://www.duke-energy.com/ Charlotte, NC Investor Relations General Inquiry: 1-800-488-3853

NRG Energy http://www.nrgenergy.com/ Princeton, NJHouston, TX

Investor Relations Vice President: Chad PlotkinPhone: (609) 524-4526Corporate Communications: Karen CleevePhone: (609) 524-4608

Cogentrix http://www.cogentrix.com/ Charlotte, NC Cogentrix General Contacts: Phone: (704) 525-3800Email: [email protected] Company (Carlyle Group) Investor relations:Phone: (202) 729-5800Email: [email protected]

Major Players (continued)

44

1.0 Electric Power


AES http://www.aes.com/ Arlington, VA VP, Investor Relations: Ahmed PashaPhone: (703) 682-6451Email: [email protected], Investor Relations: Kristina LundPhone: (703) 682-6676Email: [email protected]

Dynegy http://www.dynegy.com/ Houston, TX Investor Relations General Contact:Phone: (713) 507-6466Email: [email protected] Relations General Contact: Phone: (713) 767-5800

Exelon Power http://www.exeloncorp.com/Pages/home.aspx

Chicago, IL Investor Relations General Contact:Phone: (312) 394-2345Media Relations Managers: Paul Elsberg and Paul AdamsPhone: (312) 394-7417

U S Power Generating Company LLC

http://www.uspowergen.com/overview/ Stamford, CT Office Manager: Sheilah SpagnoliPhone: (212) 792-0800

WM Renewable Energy LLC

http://www.wm.com/index.jsp Houston, TX Director, Investor Relations: Ed EglPhone: (713) 265-1656Email: [email protected]

Major Trade Events

45

1.0 Electric Power

Number ofHost: Conference Sponsors Time of Year Attendees Website Point of Contact

Power Magazine: Electric Power EATON, Metso, Mitsubishi, Sumitomo, Taggart, United Rentals, Zachry, Martin, Salsbury, NAES

April 5,000 http://www.electricpowerexpo.com/# Jill DeanPhone: (713) 343-1876 Email: [email protected]

Energy, Utility, & Environment Conference

American Electric Power, Edison Electric Institute, Electric Power Research Institute, U.S. Department of Energy, E.P.A

February 2,000 http://www.euec.com/index.aspx Phone: (520) 615-3535 Email: [email protected]

Platts: Global Power Conference PWC, Winston & Strawn LLP, leidos, Direct Energy, Nodal Exchange, Siemens, BMO Capital Markets

April 800 http://www.platts.com/conferencedetail/2014/pc412/index

James Gillies Phone: (781) 430-2110 Email: [email protected]

SNL: Fundamentals of Electric Power Industry

PGS Energy Training December 20-30 http://center.snl.com/Programs/liveevent.aspx?id=4294971749

Nancy BerlinPhone: (703) 373-0164Email: [email protected]

Edison Electric Institute Accenture, Booz&Co., GE, Microsoft, Oracle, IBM, Quanta Services, URS, SNC Lavalin

June 1,200 http://www.eei.org/about/meetings/meeting.aspx?EEIEventId=07F08B46-2182-46C4-BB01-35AE55B6923E

Becky CorneliaPhone: (202) 508-5000 Email: [email protected]

IHS Energy: CERA Week BP, Centrica, Direct Energy, ERM, ExxonMobil, First Solar, Honeywell, Schlumberger, Siemens, Statoil, Vinson & Elkins, Spectra

March 2,500 http://ceraweek.com/2014/about/ Email: [email protected]

Major Trade Publications

46

1.0 Electric Power

Company Publication Key Subjects Website Frequency

Platts Megawatt Daily Daily on-peak and off-peak ISO prices, marginal heat rates, power demand, load forecasts by fuel type.

http://www.platts.com/products/megawatt-daily Daily

Platts Platts - ICE Forward Curve Daily editorial assessments of forward prices for commonly traded packages across 20 trading hubs.

http://www.platts.com/products/forward-curve-electricity

Daily

Platts Energy Trader News and price coverage of both the natural gas and electricity markets in North America.

http://www.platts.com/products/energy-trader Daily

Platts Energy Economist Monthly insight into the global coal, gas, oil, and power markets with emphasis on the cross-sectoral and long-term implications of current events and energy policy.

http://www.platts.com/products/energy-economist Monthly

SNL Power Daily Daily newsletter on the North American power business.

http://www.snl.com/Sectors/Energy/EnergyNewsletters.aspx

Daily

SNL Electric Utility Report Comprehensive electric utility intelligence. http://www.snl.com/Sectors/Energy/EnergyNewsletters.aspx

Weekly

SNL FERC Power Report Big picture" electric power developments, regulatory activity before FERC, federal agencies, Congress and the courts, and precedent setting regional and local developments affecting the power industry.


Weekly

SNL Generation Market Weeks Generation market intelligence and data. http://www.snl.com/Sectors/Energy/EnergyNewsletters.aspx

Weekly

SNL Electric Transmission Week Weekly review and updates on the North American power grid.


Weekly

Major Trade Publications (continued)

47

1.0 Electric Power


Electric Power POWER Magazine Industry news, technology fundamentals, and analysis of industry operations and trends.

http://www.powermag.com/ Monthly

Elsevier Science Inc.

The Electricity Journal Policy journal for the U.S. electric power industry

http://www.journals.elsevier.com/the-electricity-journal/

Monthly

Argus North American Electricity Forward Curves

ERCOT, PJM, NEPOOL, NYSO, WSPP, MISO

http://www.argusmedia.com/Power/Argus-North-American-Electricity-Forward-Curves

Daily

IHS CERA North American Power Regional Market Briefings, price, supply, demand, production capacity

http://www.ihs.com/products/cera/energy-research/north-america-power-industry.aspx

Daily

Jaguar Media Electric Energy T&D IOU's, municipal electric utilities, cooperatitves, wholesalers

http://www.electricenergyonline.com/?page=magazine

Bi-Monthly

Energy Central Electricity Daily Electric restructuring issues, interface between the industry and government

http://www.energycentral.com/reference/directories/publications/632/Electricity-Daily-The

Daily

48

2.0 Liquefied Natural Gas (“LNG”)

49








The origins of the LNG industry date back

many decades. LNG has been used

domestically for peak shaving purposes in regions with limited

delivery infrastructure. In addition, there were

four facilities developed during the energy crisis

of the 1970s that are still operational.

2.0 LNG & Applications

What Is LNG?

50

• The use of “liquefied natural gas” (“LNG”) dates back to the 19th century as a means of distributing natural gas to locations without natural gas.

• Transporting LNG via marine vessels dates to the late 1950s and early 1960s when Western Europe and Asia began importing LNG in large quantities.

• LNG is simply natural gas that has been turned into a liquid by cooling it to a temperature of -256°F.

• LNG is odorless, colorless, non-corrosive and non-toxic.

• Liquefying natural gas reduces its volume by a factor of 610.

• The weight of LNG is 45 percent that of water.


The LNG “Value Chain”

51

Exploration and Production World natural gas reserves are abundant, estimated at about 5,500 Tcf. Much of this gas is considered “stranded” because it is located in regions distant from consuming

markets.

Liquefaction Gas from the production field is delivered to the liquefaction plant. Contaminants are removed

and the gas is cooled to a temperature of -256°F. By liquefying the gas, its volume is

reduced by a factor of 610.

Shipping A typical LNG carrier can transport120,000 to 140,000 cubic meters of LNG, which will provide about 2.6 to 2.8 Bcf of natural gas. The typical carrier measures 900 feet in length, 140 feet in width and 36 feet in water draft, and costs about $160 to $200 million.

Regasification and Delivery LNG is pumped from the ship into insulated storage tanks at a specially

designed terminal. It is then fed into a regasification plant to return the LNG to a gaseous state. The LNG is fed through heated pipes and various

terminal components and the re-vaporized gas is then regulated for pressure and enters the pipeline system to be transported to end users.

Source: Energy Information Administration; Federal Energy Regulatory Commission; IELE, University of Houston; and Statoil.com.

Storage LNG is stored at atmospheric pressure in double-walled, insulated tanks that are

designed to prevent any leaks. A dike around the tank that is capable of containing the entire

volume in the unlikely event of a spill.


The LNG “Value Chain”

52

One LNG Tanker Carries Enough Fuel

To fuel over 12 percent of Mississippi’s residential

customers for 1 year (over 440,00 customers)

To fuel 26 industrial plants for 1 year

OR OR

Note: Assumes one LNG tanker carries an average of 3 Bcf; average monthly power usage of 1,163 MMcf; total annual residential usage of 24 Bcf; and average annual industrial usage of 115 MMcf. Source: Energy Information Administration; Federal Energy Regulatory Commission; IELE, University of Houston; and Statoil.com.

To fuel Entergy Mississippi’s Attala

plant (455 MW) for three months.


Pre-2005 U.S. LNG Facilities

53

Note: A stranded utility system is typically very small and too far from the pipeline grid to be economically connected; and a nitrogen rejection unit, or “NRU,” is a facility where a natural gas stream is liquefied to remove impurities then regasified and sent on as pipeline-quality gas. Source: Energy Information Administration, U.S. Department of Energy.

Prior to 2005, there were a variety of small-scale LNG facilities as well as four large-scale import facilities.


Pre-2005 U.S. LNG Regasification Facilities

54

The first “test” cargo of LNG was exported

from Lake Charles, LA in the late 1950s to

prove the concept of large scale and long distance natural gas

transportation opportunities.

Four different U.S. regasification (import)

facilities were developed in the early

1970s and the late 1970s/early 1980s.

Lake Charles, Louisiana Built 1981 Capacity: 630 MMcf/d

Elba Island, Georgia Built 1978 Capacity: 600 MMcf/d

Cove Point, MD Built 1974 Capacity: 430 MMcf/d

Everett, MA Built 1971 Capacity: 435 MMcf/d


55








The energy crisis of the past decade,

characterized by high and volatile natural gas prices, particularly after the tropical season of

2005, led to widespread LNG import

(regasification) terminal development.

Conventional wisdom at the time suggested that

the U.S. would likely import at least 14 percent of its annual natural gas requirements with LNG.


$0

$2

$4

$6

$8

$10

$12

$14

$16

$0

$20

$40

$60

$80

$100

$120

$140

$160

Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

Crude Oil (WTI) Natural Gas (Henry Hub)

Historic Natural Gas Prices (1999-2008)

56 Source: Federal Reserve Bank of St. Louis.

Natural gas prices initially increased during the winter of 2000-2001 but saw their greatest increases in the fall and winter after Hurricane Katrina.

Cru

de O

il ($

/Bbl

) N

atural Gas ($/M

cf) 2.0 LNG & Applications

Post Katrina price run-up

First energy price crisis

U.S. Annual Energy Outlook: Natural Gas Price Forecast (2009)

57

As late as 2008, the Department of Energy anticipated very high natural gas prices all the way through 2035.

Nat

ural

Gas

Pric

e (2

010

$/M

MB

tu)


$0

$2

$4

$6

$8

$10

$12

1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 2027 2030

AEO 2009 Forecast Period Natural gas prices anticipated to rise to an

annual average of $10 per MMBtu


NPC Natural Gas Disposition Forecast

58

In 2005, the National Petroleum Council, the advisory group to the U.S. Secretary of Energy, forecast that U.S. natural gas requirements would become increasingly

depending upon imports.

Source: National Petroleum Council

LNG anticipated to supply 14 percent of total U.S. natural gas supply by 2025.


LNG Regasification Project Announcements (2005)

59 Source: Federal Energy Regulatory Commission..

By 2005, there over 40 LNG regasification projects announced for U.S. development.


Post Recession Natural Gas Price Decreases

60 Source: Federal Reserve Bank of St. Louis.

Natural gas prices have tumbled in the aftermath of the 2008-2009 recession, in large part due to the considerable increase in unconventional production relative to tepid

demand.

$0

$2

$4

$6

$8

$10

$12

$14

Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 Apr-13

Natural gas prices have fallen 72 percent since June

2008.

Nat

ural

Gas

($/M

cf)


Cancelled LNG Regasification Projects

61

At least 25 projects, representing 22 Bcf/d of import capabilities were ultimately cancelled as market conditions for natural gas in the U.S. changed.

Company, Project Location Capacity(Bcf/d)

Chevron Texaco, Port Pelican Gulf of Mexico 1.60 Gulf Coast LNG, Port Lavaca LNG Port Lavaca/Point Comfort, TX 1.00 Exxon Mobil, Vista del Sol Corpus Christi, TX 1.00 Shell, Gulf Landing Gulf of Mexico 1.00 Exxon Mobil Mobile Bay, AL 1.00 Cheniere LNG Mobile Bay, AL 1.00 Chevron, Cassotte Landing Jackson, MS 1.30 ConocoPhillips, Compass Port LNG Offshore Alabama 1.00 Oxy, Ingleside LNG Ingleside, TX 1.00 El Paso Global Gulf of Mexico 0.50

AES, Sparrows Point Baltimore, MD 1.50 BP, Crown Landing LNG Logan Township, NJ 1.20 Shell/Transcanada, Broadwater LNG Long Island, NY 1.00 Hess, Weaver's Cove Energy Fall River, MA 0.80 Somerset LNG, Brayton Point Somerset, MA 0.65 ConocoPhillips/TransCanada, Fairwinds LNG Harpswell, ME 0.50 Keypan and BG LNG Providence, RI 0.50 El Paso Global Belmar, NJ n.a.

BHP Billiton Cabrillo Port, CA 1.50 Northern Star Natural Gas Astoria, OR 1.30 Sempra Energy Long Beach, CA 0.70 Crystal Energy Southern California 0.50 Calpine Humboldt Bay, CA 0.50 Chevron Texaco California, Offshore 0.50 Cherry Point Energy Cherry Point, WA 0.50

Total 22.05

Source: Federal Energy Regulatory Commission; recent tradepress.


Completed LNG Regasification Facilities (2013)

62 Note: 1The Gulf Gateway facility was closed in 2011 due to poor market conditions. Source: Federal Energy Regulatory Commission; and Energy Information Administration, U.S. Department of Energy.

Only 12 LNG regasification projects were developed (as well as expansions at all four existing facilities), leading to an increase in 19 Bcf/d increase in import capacity.

YearCompany Location Online Capacity

(Bcf/d)

GDF Suez - DOMAC Everett, MA 1971 1.0 Dominion - Cove Point LNG Cove Point, MD 1974 1.8 El Paso - Southern LNG Elba Island, GA 1978 1.6 Southern Union - Trunkline LNG Lake Charles, LA 1981 2.1 Excelerate Energy Limited - Gulf Gateway1 Offshore Louisiana 2005 0.5 Excelerate Energy - Northeast Gateway Offshore Boston, MA 2008 0.8 Cheniere - Freeport LNG Freeport, TX 2008 1.5 Cheniere - Sabine Pass LNG Sabine, LA 2008 4.0 Sempra - Cameron LNG Hackberry, LA 2009 1.8 GDF Suez - Neptune LNG Offshore Boston, MA 2010 0.4 ExxonMobil - Golden Pass Sabine Pass, TX 2010 2.0 Kinder Morgan/GE - Gulf LNG Energy Pascagoula, MS 2011 1.5

Total 19.0


Mississippi LNG Regasification Facilities

63 Source: Kinder Morgan.

Mississippi has one LNG active regasification facility located in Pascagoula.

• The Gulf LNG Terminal is located in Jackson County, Mississippi, near the City of Pascagoula.

• Gulf LNG has 6.6 Bcf of storage capacity and 1.3 Bcf per day of peak vaporization send-out capacity.

• The terminal also has five miles of 36-inch pipeline, connecting to the Gulfstream, Destin, Florida Gas Transmission and Transco pipelines.

• The facility is owned by Kinder Morgan Inc. (50 percent); GE Energy Financial Services (46 percent) and other investors (four percent). Kinder Morgan operates the terminal.

• The terminal began service on October 1, 2012.


64







LNG exports are becoming attractive for four

important reasons:

(1) Low-cost and abundant regional natural gas

supplies.

(2) Large global natural gas/crude oil price

differentials.

(3) Growing world energy and natural gas demand.

(4) The need for low-cost/low-emissions fuels.



U.S. Natural Gas Resource Estimates

There is a range of estimates for unconventional shale gas reserve that are as low as 436 Tcf and as high as 2,750 Tcf. This represents between 18 years and over 100 years

of available natural gas resources based upon current consumption levels.1

0

500

1,000

1,500

2,000

2,500

3,000

EIA AEO 2012 MIT ITG InvestmentResearch

IHS Energy

Est

imat

ed R

eser

ves

- Tcf

Note: 1Assumes an annual consumption level of 24.3 Tcf. The MIT study reached a mean estimate of technically recoverable resources of 631 Tcf with an 80 percent confidence interval of 418 to 871 Tcf. The ITG estimates of recoverable resources is for 10 overlapping plays, totaling 900 Tcf. These are the same 10 plays as estimated by the EIA’s AEO (resulting in 426 Tcf). IHS Energy estimates show that total recoverable shale in the U.S. could be as high as 2,750 Tcf, significantly higher than their estimate of 1,268 in 2010.


65

U.S./European/Asian Natural Gas Price Differentials

66

There are substantial differences between natural gas prices in the U.S. versus those in Western Europe and Asia

Source: Marathon.

0

2

4

6

8

10

12

14

16

18

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

$/m

mbt

uJapan LNG U.K. NBP U.S. Henry Hub FSU @ German Border

• Excess U.S. shale production.

• Growing global energy demand.

• Climate change issues.

• Global natural gas price differentials.


Global Pricing Differentials

67 Source: Cheniere. Note: *uses a BOE conversion of 5.8 Mcf/BOE.

Feedstock (production) costs will be critical in determining the location of basin-specific production along the global LNG supply curve.

Europe: Low High Asia: Low High

Feedgas 56%

($/MMBtu)

$4.00 $6.50

$4.00 $6.50

Liquefaction 11%-17%

($/MMBtu)

$1.25 $1.25

$1.25 $1.25

Shipping & Fuel 20%-29% ($/MMBtu)

$1.40 $1.65

$2.90 $3.45

Regas 4%-7%

($/MMBtu)

$0.50 $0.50

$0.50 $0.50

Delivered Cost

($/MMBtu)

$7.15 $9.90

$8.95 $11.70

Equivalent Oil Price* ($/BOE)

$41.47 $57.42

$51.91 $67.86

Henry Hub: $4.50 $5.00

WTI: $97.00 $100.00

Delivered prices at between $41/BOE to $67/BOE compare well to current market prices.


Worldwide Natural Gas Demand

68 Source: BP Statistical Review of World Energy.

Global natural gas demand has been increasing at an average annual rate of 2.5 percent over the last 20 years.

0

50

100

150

200

250

300

350

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Asia Pacific Africa Middle East

Europe & Eurasia South & Central America North America

Nat

ural

Gas

Dem

and

(Bcf

/d)


Kyoto Protocol to the United Nations Framework Convention on Climate Change

69 Source: United Nations Framework Convention on Climate Change.

As part of the Kyoto Protocol, many countries have agreed to legally binding limitations/reductions in their emissions of greenhouse gases likely increasing the

demand for relatively clean-burning natural gas.

Parties; Annex I & II countries with binding targets Parties; Developing countries without binding targets States not Party to the Protocol Signatory country with no intention to ratify the treaty, with no binding targets Countries that have denounced the Protocol, with no binding targets Parties with no binding targets in the second period, which previously had targets


Existing and Proposed U.S. LNG Export Facilities

70 Source: Office of Fossil Energy, U.S. Department of Energy.

Currently, 23 facilities, with a total of 38 Bcf/d of export capabilities have applied to the Department of Energy for export authorization. Of these, 18 facilities, totaling 31 Bcf/d

have been approved.

1 2 3

4

5

6 7

8 10

11-23


9

Approved Export Applications Capacity(Bcf/d)

1 Sabine Pass Liquefacation 3.58 2 Freeport LNG 2.80 3 Lake Charles Exports 2.00 4 Dominion - Cove Point LNG 1.00 5 Jordan Cove Energy Project 1.20 6 Sempra - Cameron LNG 1.70 7 Gulf Coast LNG 2.80 8 Gulf LNG 1.50 9 Oregon LNG 1.25

10 Southern LNG Company 0.50 11 Excelerate Liquefaction Solutions 1.38 12 Golden Pass 2.60 13 Cheniere 2.10 14 Main Pass Energy Hub 3.22 15 CE FLNG 1.07 16 Pangea LNG 1.09 17 Magnolia LNG 0.54 18 Venture Global LNG 0.67

Pending Approval19 EOS LNG 1.60 20 Barca LNG 1.60 21 Delfin LNG 1.80 22 Magnolia LNG 1.08 23 Annova LNG 0.94

71








U.S. natural gas export opportunities will be

limited by a number of important factors that

include: 1. U.S. supplies relative to

other global producing basins.

2. Conventional and unconventional

development in other places of the world.


Global Natural Gas Supply Curve

72

0.0 0.

4 0.7

0.7 1.

1 1.4 1.5

1.5 1.7

1.7

1.7 1.8 2.0

2.0

2.0 2.1 2.2 2.4 2.6 2.7 2.9

2.9 3.

2 3.4 3.5 3.6

5.7 6.

0 6.1 6.

6

7.5 7.7

8.8

11.2

0

2

4

6

8

10

12

AD

GAS

Qat

arga

s-4

Aru

nLi

quid

Niu

gini

Gas

Alta

ntic

LN

GB

onta

ngQ

atar

gas

Alta

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LN

G 2

&3

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hat L

NG

Atla

ntic

LN

G 4

EG

LN

GE

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amie

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LNG

1D

arw

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rune

i LN

GO

LNG

MLN

G T

iga

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Bra

ss L

NG

MLN

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emen

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GM

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Dua

Per

u LN

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orth

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t She

lfA

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a LN

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asS

nohv

itQ

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NG

LN

GP

luto

Gor

gon

Sak

halin

2

$/M

MB

tu

Source: Pacific LNG.

While natural gas prices are cheap by U.S. standards, they are not relative to the production costs of other conventional production opportunities around the globe.


Global Unconventional Natural Gas Reserves

73 Source: MIT Energy Initiative.

China 1,275 Tcf

Australia 396 Tcf South

Africa 485 Tcf

Argentina 774 Tcf

Brazil 226 Tcf

Mexico 681 Tcf

Canada 388 Tcf

U.S. 862 Tcf

France 180 Tcf

Poland 187 Tcf

Algeria 231 Tcf

Libya 290 Tcf

There is close to 6,000 Tcf of shale gas opportunities around the world. This, coupled with 9,000 Tcf in conventional supply, suggests a solid resource base for many

decades.


74








Mississippi is well-positioned to secure

additional LNG export capacity primarily

through expansions at the one location in the

state.

Mississippi can also increase its development

and use of LNG for a domestic fuel for marine applications along the

coast and the Mississippi River.


Gulf LNG Export Application

75 Source: Office of Fossil Energy, U.S. Department of Energy; picture from GulfLive.com.

• Gulf LNG Liquefaction Company filed an application with the Department of Energy’s Office of Fossil Energy (OFE) on May 2, 2012 for authorization to export LNG in an amount of up to 11.5 million tons per year, or 1.5 Bcf per day (natural gas equivalent).

• OFE approved the application on June 15, 2012.

• The facility will add natural gas pre-treatment, liquefaction and export facilities, plus enhancements to existing equipment to the existing facility.

• This will allow for gas to be received by pipeline at the terminal, liquefied and loaded on from the terminal’s storage tanks onto vessels berthed at the existing marine facility.

• The facility is expected to be in service by the end of 2019.


LNG Export Proposed Capacity

76 Source: Office of Fossil Energy, U.S. Department of Energy; and recent tradepress.

Almost 40 Bcf per day of export capacity has been proposed to the Department of Energy. The majority of this capacity (40 percent) is expected to come online in 2018.

Much of this capacity (about 31 Bcf/d) has been approved for export to free-trade agreement (FTA) countries, while just 8 Bcf/d has been approved for non-FTA export.

0

5

10

15

20

25

30

35

40

2015 2016 2017 2018 2019 2020Current Capacity New Capacity Currently Approved

LNG

Exp

ort C

apac

ity (B

cf/d

) 2.0 LNG & Applications

LNG: Natural Gas Vehicles

77

• Natural gas vehicles (“NGVs”) use compressed natural gas (“CNG”) or liquefied natural gas (“LNG”) as a clean alternative to other automobile fuels.

• Most larger heavy duty vehicles use LNG as opposed to CNG, since less fuel storage space is needed with LNG.

• CNG produces nearly 40 percent less CO2 than refined products.

• Currently in the U.S., about 12 to 15 percent of public transit buses in run on natural gas (either CNG or LNG).

• States with the highest consumption of natural gas for transportation are California, New York, Texas, Georgia, Massachusetts and D.C.


Natural Gas Displacement Volumes

78 Source: Data and forecast from EIA, Encana, 2010 Displacement opportunities exclude Air, International Shipping, Military, Pipeline Fuel.

0

5

10

15

20

25

30

35

40

45

Light Duty Heavy Duty Medium Duty Marine Rail Upstream

Nat

ural

Gas

Con

sum

ptio

n (B

cf/d

)

The total potential market if all vehicles were converted to natural gas would be around 62 Bcf/d: almost double the size of the existing natural gas retail market.

NGV Use Categories

Market size for LNG applications likely around 18 Bcf/d assuming 100 percent market penetration.


Diesel-LNG Price Comparisons


Lower LNG prices relative to diesel, have played an important role in driving recent increases in LNG/natural gas use for heavy duty vehicles.

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Diesel Natural Gas (GGE)

$ pe

r Gal

lon


LNG Supply Options for Marine Vessels

80 Source: American Clean Skies Foundation.

Option Pros Cons

Build shore-side LNG production facility Secure, local fuel source; scales to potential demand

Economics require scale and sufficient demand; location could limit use of LNG for other purposes (e.g., long haul trucks)

Transport LNG (via barge) from new LNG production facility

LNG facility could be strategically located to serve both marine and road transportation markets and could be located near existing natural gas pipelines to reduce infrastructure needs

Fuel not produced on site; no dedicated source of LNG

Transport LNG (via barge) from existingLNG import terminal

Potentially valuable interim solution;takes advantage of existinginfrastructure

Fuel not produced on site; no dedicatedsource of LNG

Transport LNG from existing LNG peakstorage location (via barge or tankertruck)

Potentially valuable interim solution;takes advantage of existinginfrastructure

Fuel not produced on site; no dedicatedsource of LNG; opportunities may belimited depending on proximity ofstorage locations to ports; volumesof LNG available for marine sale maybe limited; tanker truck transport isexpensive due to necessary volumes


Recent Regional Announcements for Marine Applications

81 Source: The Advocate; and Gcaptain.com.

• Harvey Gulf International is constructing a LNG marine fueling facility in Port Fourchon, Louisiana.

o The facility will consist of two sites each having 270,000 gallons of LNG storage capacity and the ability to transfer 500 gallons of LNG per minute.

o The facility will also be capable of supporting over-the-road vehicles that operate on LNG.

o The first site is estimated to be completed by February 2014, with the second site following shortly thereafter.

• Royal Dutch Shell is installing a small-scale liquefaction unit at its Shell Geismar Chemicals facility in Geismar, Louisiana.

o The unit will have a capacity of 0.25 million tons per year, and will supply LNG along the Mississippi River, the Intra-Coastal Waterway and to the offshore Gulf of Mexico and the onshore oil and gas exploration areas of Texas and Louisiana.

o To service oil and gas and other industrial customers in Texas and Louisiana, Shell is expanding its existing relationship with fuels and lubricants re-seller Martin Energy Services, to provide terminalling, storage, transportation and distribution of LNG.


LNG in Mississippi

82 Source: VT Halter Marine; and Workboat.

• VT Halter Marine announced it has signed a $350 million contract with Crowley Maritime Corporation to build two Container Roll-On/Roll-Off (ConRo) ships at its Pascagoula facility.

o Construction starts in the first half of 2014, with deliveries for mid- and late-2017.

o The container-ships will measure 219.5 meters in length and 32.3 meters in width and can travel at speeds up to 22 knots.

o The vessels will be powered by LNG.

• TY Offshore, in Gulfport is building six 302'×64‘ offshore service vessels for Harvey Gulf.

o The vessels are duel fuel (LNG and diesel); and will be the first OSVs in the Gulf to have tankage for both LNG and diesel fuels.


83








LNG facilities are relatively large and take an number of years for

regulatory approval and construction.

Marine-based LNG

applications are supported by access to the coast and natural-

gas fueled vessels.



84

Note: Low estimates are smaller brownfield projects (at existing import terminals); base estimates are for large brownfield projects (at existing import terminals); and high estimates are based on new facilities (greenfield). All expenditure, employment and wage estimates are direct impacts only; and in-state only. In-state purchases, wages and non-energy expenditures are estimated using IMPLAN. 1Assumes consumption of 10% of the feed gas. 2Assumes 9,980 MWh per Bcf, based on industry reported averages.


Capital investments for LNG export facilities can range from $6.4 million/Bcf for smaller export capacities at existing import terminals to $13.5 million/Bcf for new greenfield

facilities. Characteristic Low Base High

Plant Capacity (Bcf/d) 1.6 2.1 1.1 Plant Capacity (Bcf/year) 567.0 769.8 383.3 Capital Investment (million $) 3,618.8$ 9,664.5$ 5,161.0$ Average Investment Cost (million $/Bcf) 6.4$ 12.6$ 13.5$

Typical Construction Duration (years) 2.50 5.00 4.00

Estimated In-State Purchases (million $) 651.4$ 1,932.9$ 1,238.6$ Estimated Direct Construction Employment (jobs) 2,500 3,000 4,200 Estimated Wages (million $) 122.2$ 146.6$ 205.3$

Estimated Natural Gas Use (Bcf)1 63.0 85.5 42.6 Estimated Annual Electricity Use (million MWh)2 5.7 7.7 3.8

Estimated Annual Non-Energy Expenditures (million $) 750.0$ 625.0$ 1,000.0$ Estimated Annual Direct Employment (jobs) 150 125 200 Estimated Annual Direct Wages (million $) 20.2$ 16.8$ 26.9$

Typical Transportation Requirements Inputs Pipeline Pipeline Pipeline Outputs Port Port Port

Cost Comparison – Marine and Onshore Transportation Fueling Infrastructure

85 Source: Recent tradepress; American Clean Skies; U.S. Department of Energy; and America’s Natural Gas Alliance.

For onshore transportation applications, the cost of an LNG fueling facility is highly correlated with size (capacity.)


MarineLow High

Capacity (gallons per day) 525,000 11,000 55,000 Cost (million $) 200.0$ 2.3$ 7.5$ Cost per gallon (annual) 1.05$ 0.56$ 0.38$

VehicleTypical Fueling Facility

86








There are a number of major players, trade

events, and publications specific to the LNG and

natural gas industry.


Major Players

87



Kinder Morgan http://www.kindermorgan.com/ Houston, TX Investor Relations General Contact:Phone: (713) 369-9490Email: [email protected]

East Region NG Pipeline Marketing: Janice ParkerPhone (205) 325-3509

Dominion Energy https://www.dom.com/ Richmond, VA Investor Relations General Contact:Phone: 1-800-552-4034Email: [email protected]

GDF Suez Energy http://www.suezenergyna.com/ Houston, TX North America General Contact:Phone: (713) 636-0000

Panhandle Energy http://www.panhandleenergy.com/ Houston, TX General Contact:Phone: (713) 989-7000

Excelerate Energy http://excelerateenergy.com/ Woodlands, TX General Contact:Phone (832) 813-7100Email: [email protected]

Cheniere Energy http://www.cheniere.com/default.shtml Houston, TX Investor Relations:Phone: (713) 375-5104Email: [email protected]

Media Relations: Diane HaggardPhone: (713) 375-5259

Sempra Energy http://www.sempra.com/ San Diego, CA Shareholder Services/Investor RelationsPhone: (877) 736-7727Email: [email protected]

Major Trade Events

88


Number ofHost: Conference Sponsors Time of Year Attendees Website Point of Contact

Platts: Annual Liquefied Natural Gas Conference

Poten & Partners, KPMG, World Oils, Locke Lord, Mayer Brown, Fulbright & Jaworski L.L.P.

February 400 http://www.platts.com/conferencedetail/2014/pc415/index

Cynthia RuggPhone: (781) 430-2105Email: [email protected]

American Gas Association: International Conference &Exhibition on Liquefied Natural Gas

Shell, Baker Botts, Chevron, ExxonMobil, Qatar Gas, Sonatrach

April n.a. http://www.aga.org/Events/2013Events/lng17/Pages/Default.aspx; or http://www.lng17.org/

Project Manager: Céline FinchEmail: [email protected]

Marketing & Communications Manager: Aldona LimaniEmail: [email protected]

Informa Maritime Events: LNG Fuel Forum North America Conference

TGE Marine Gas Engineering, LNG One World

March n.a. http://www.informamaritimeevents.com/event/LNGNA

Maritime Customer ServicesPO BOX 406 West Byfleet KT14 6WL UKPhone: +44 (0) 20 7017 5510Email: [email protected]

The CWC Group: World LNG Series: Americas Summit

ConocoPhilips, Emerson, Baker Botts, GTT, CRA International, GDF Suez, Repsol, King & Spalding, Sempra LNG, BG Group, Cheniere

June 800 http://lngamericas.cwclng.com/ Tyler Forbes: Phone: +44 20 7978 0061 Email: [email protected]

Zeus Development Corporations: World LNG Fuels

Cummins, Encana, Black & Veatch, Linde, DNV, KBR, ABS, VITA International

January 1600 http://www.worldlngfuels.com/ FehYee SiowPhone: (713) 952-9500Email: [email protected]

FC Business Intelligence: LNG for Marine Transportation USA

Worley Parsons, Encana, Conoco Phillips, Chesapeake, PGW, BAE Systems, CAT, GDF Suez

June 175 http://www.lngmarineevent.com/ Oliver SaundersPhone +44 (0)207 375 7178Email: [email protected]

WTG Corporate Linde, Mitsubishi, GTT, FTI October 500 http://www.lngsummit.com/ Dori DroriPhone: +44 (0)20 7202 7690 Email: [email protected]

Major Trade Publications

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ICIS LNG Daily Analysis Spot price assessments, FOB assessments, NBP, Henry Hub, Key oil and gas prices affecting the LNG market.

http://www.icis.com/energy/liquefied-natural-gas/lng-analysis/

Daily

Platts LNG Daily LNG supply dynamics, Henry Hub, new supply projects, details of contract pricing terms

http://www.platts.com/products/lng-daily Daily

Argus LNG Daily Daily global LNG news and analysis, Americas coverage, key shipping movements

http://www.argusmedia.com/Natural-Gas-LNG/Argus-LNG-Daily

Daily

LNG Journal LNG Unlimited Plant development and expansion, company and project profiles, liquefaction and regasification plants listed worldwide

http://www.lngjournal.com/lng/ Daily/Weekly/Monthly

Palladian Publication

LNG Industry LNG regional reporting, global industry overview, global technology trends

http://www.lngindustry.com/magazines/latestissue/LNG-industry.aspx

Every 2 Months

Volume 3: Power Generations and LNG Export & Application Opportunities

Documents

Transcript of Volume 3: Power Generations and LNG Export & Application Opportunities