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Haynesville Global Access Pipeline (HGAP) Natural Gas Market Analysis

2© Copyright 2018 RBN Energy

Haynesville Global Access Pipeline (HGAP)

Haynesville Shale

TellurianHaynesville Global

Access Pipeline (HGAP) 2.0 Bcf/d

Driftwood

» Inflows into Perryville from Marcellus/Utica supplies will increase from 1.8 Bcf/d in 2017 to 4.0 Bcf/d in 2019.

» Haynesville production is projected to increase from 4.8 Bcf/d in 2017 to 7.9 Bcf/d in 2023.

» Louisiana North-to-South pipeline flows, which were running only about 3.0 Bcf/d in 2014 increased to almost 5.0 Bcf/d in 2017.

» With additional supplies from Marcellus/Utica and Haynesville, Louisiana North-to-South pipeline capacity will max out between 2019-2021 at about 8.0 Bcf/d unless new pipeline capacity is added.

» Additional gas supplies are needed on the Louisiana Gulf Coast, where gas demand for LNG exports will increase from 3.0 Bcf/d in 2018 up to as much as 9.0 Bcf/d from Sabine Pass, Cameron and Driftwood. Sabine Pass

TellurianDriftwood

Pipeline4.0 Bcf/d

Gillis

Cameron

Inflows from Marcellus/Utica

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Most Marcellus/Utica Gas Headed to Gulf Coast

05

1015202530354045

Bcf/

d

» Natural gas production in the Marcellus/Utica region is expected to increase from about 27 Bcf/d in 2018 to 40 Bcf/d in 2023.

» Most of these supplies will move to Gulf Coast markets for export, either via LNG or pipeline to Mexico.

» The Gulf-via-Ohio corridor will move 2.5 Bcf/d, the South-via-Atlantic corridor will move an additional 5.2 Bcf/d.

» 4.8 Bcf/d will move to the Midwest-via-Ohio, with most of these supplies displacing gas which previously moved to the Midwest from the Gulf Coast.

Northeast Pipeline Capacity Expansion

Corridors (Bcf/d)

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Louisiana Regional Natural Gas Inflows/Outflows

0.0

1.0

2.0

3.0

4.0

0.0

2.0

4.0

6.0

8.0

10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

-6.0

-4.0

-2.0

0.0

2.0

-3.0

-1.0

1.0

3.0

5.0

7.0» UW inflows decline due to increasing

Marcellus/Utica receipts and Haynesville Production.

» UE outflows to Station 85, etc. max out at about 5.5 Bcf/d.

» North outflows flipped to inflows due to increasing Marcellus/Utica receipts.

» Declining offshore production creates need for Gulf Coast supplies for LNG exports.

» LW inflows constrained due to pipeline capacity bottlenecks at Texas/Louisiana Border.

Upper East (UE)

Lower East (LE)

Upper West (UW)

Lower West (LW)

0.0

1.0

2.0

3.0

4.0

North (N)

Offshore (OF)

Inflows (positive)Outflows (negative)

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Red River

tine

Greater Louisiana Haynesville* Natural Gas Production

Haynesville

Cotton Valley

Haynesville Core

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

Bcf

/d

» During 2017, natural gas production from the Greater Haynesville* in Louisiana increased from less than 4.0 Bcf/d to almost 5.5 Bcf/d.

» At current natural gas forward curve pricing, production growth in the region will increase up to 8.0 Bcf/d by year-end 2023.

* Haynesville, Bossier, Cotton Valley

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Louisiana North-to-South Pipeline Capacity Utilization

0.01.02.03.04.05.06.07.08.09.0

Bcf

/d

NW LA/HaynesvilleNE LA/PerryvilleSouth LA

» Net flows move along North-to-South pipeline corridors including ANR, Gulf South, TGP, Texas Gas, Trunkline, LIG, Acadian and Columbia Gas Transmission.

» Flows in these corridors were running only about 3.0 Bcf/d in 2014, but increased to almost 5.0 Bcf/d in 2017.

» With additional supplies from Marcellus/Utica inflows and Haynesville production, Louisiana North-South pipeline capacity will max out between 2019-2021 at about 8.0 Bcf/d unless new pipeline capacity is added.

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NW LA/HaynesvilleNE LA/PerryvilleSouth LA

Perryville, LA Basis Outlook

-$0.30

-$0.25

-$0.20

-$0.15

-$0.10

-$0.05

$0.00

$/M

Mb

tu

» As increasing supplies flow into North Louisiana with constrained pipeline capacity into South Louisiana, basis at all points to the North will be under pressure.

» Perryville basis is expected to widen from about 10 cents/MMbtu in 2017 to more than 25 cents/MMbtu by 2020.