GE 2014 All rights Reserved

Unlocking the “Age of Gas”

GE Oil and Gas

International Energy Agency (IEA) Gas & Oil Technologies Implementing Agreement Colorado School of Mines | October 29 2014

Michael Farina Senior Manager, Strategy and Analytics GE Oil and Gas

175 176

131 126

60 56 61

0

100

200

Global Impact 2025:

What is the “Age of Gas”?

Source: IHS, Sept. 2013 2

Key Benefits

SUSTAINABILITY SECURITY - RESILIENCE COMPETITIVENESS

Global gas consumption growth ‘13-’20 Bcm per year

China ME Africa Lat. Am

EU-Eurasia

Asia US-Can

200

100

Primary Global Energy Production %

1990

20%

2025

26%

Natural gas has increasing role in global energy mix

www.ge.com/AgeofGas

Source: GE Age of Gas Outlook update June ‘14

“Age of gas” scorecard October 2014

International

connections Coordination between states on big LNG and pipelines

UCR

unleashed Shale development with technology & sustainable practice

Distributed

pathway Small scale gas solutions

Mega project

progress Cost control & execution

Network

focus Connectivity & investment

Pricing and

contracts Subsidy management & flexible contracts; new models

Australia & Deep-water

inflation

Russia – Ukraine

Crisis

North America &

China progress

Have signposts toward the “Age of Gas” strengthen or weakened?

Africa & South east

Asia, Upstream

North America

US gas cost remain low, Expanding

discussion on new pricing models for Pacific Basin LNG

Steady, but no major changes in

Gov’t policy or focus that would

accelerate NG (eg. EU, US, gas

master plans etc.)

Source: GE Oil and Gas Strategic Marketing

LNG industry evolution continues

4

+7-8% CAGR

‘20 ‘10

105

220

360

+40

‘00

Global LNG demand MTPA ’00 - ‘20

+11% CAGR

Source: GE, CERA

Industry poised to grow 60% over next 5-7 years … but will look very different

LNG designs evolve

Feedstock slate growing

Small-scale LNG

LNG Mega-trains

Floating LNG

Brownfield Regas plant Conversions

LNG 1st gen

Next gen onshore LNG

Stranded gas (big fields)

Offshore Sour Associated

CBM Shale &

tight gas

Arctic Stranded gas

(small fields)

Upside

potential

‘00 ’10 ‘20

LNG network expanding

Europe

China

India

Asia-Pac

LA

JKT

1GE Age of Gas

LNG

LNG demand growth MTPA ‘14-’20

+145

35

32

31

23

12

8

Strike zone for natural gas

0

20

40

60

80

100

120

140

160

180

2 4 5 7 8 10 11 13 14 16

Do

lla

rs p

er

MW

Hr

Lower efficiency

Highly efficient

US

EU

Asia

Price

competitive area

Gas Less competitive

Dollar per MMBtu

US Cts/KWH Variable cost basis

GE Global Strategy & Analytics, 2013

Note: Estimates of high efficiency natural gas are based on 10,000 heat rate, while lower

efficiency estimates are based on a 6000 heat rate.

Competitive landscape versus coal …

2 4 6 8 10 12 14 16

• Competitive landscape different

by region

• Recognize peaking and load following benefits of gas

• Recognize environmental benefits

• Pricing outside the strike zone will

limit market growth … particularly

in Asia

Key Issues

.18

.12

.10

08

.06

.04

.02

.16

.14

Recent spot prices have been in the “strike zone”

Distributed pathway … small gas-to-power

Oil substitution and energy access are drivers…

Key regions for small gas-to-power Key metrics: % oil generation ‘13 est . CAGR elec. dem. ‘14-’20

Indonesia

GCC

Australia- PNG (mining &

remote)

SSA (ex SA) Caribbean

65% +3% 35%

+4% 35% +5%

LatAm * 14% +4%

18% +9%

* Chile, Argen., Colum., Venz.

Sources: GE Oil and Gas , GE PW Feb ‘14 Outlook , IEA

North America (Upstream, mining &

remote)

Large growth opportunity with right structures …

6

Distributed gas … rail and small shipping solutions Cost of small LNG continue to fall … industrial fleets and power opportunities

NGV … Railroad opportunities

Integrating value chain to create comprehensive solution is key

Sources: GE Oil and Gas , GE Distributed Power

Global diesel use in Rail ~ 620K bbl/d

Sources: GE Oil and Gas , GE Distributed Power , IEA 2012, EIA

US Class 1 diesel use in Rail ~ 240K bbl/d ~ 7% US diesel Demand

Generation … Island power examples

US LNG/CNG

Trinidad

Indonesia

Caribbean & Cent. America

Gas to Power potential

2.5 GW

2.7 GW

LNG potential by ’20 *

3.5 MTPA

3.7 MTPA

* Assumes replacement of 30% installed oil capacity & gas captures 50% recip growth . 3-5

Year potential

Sources: EIA, Office of Oil & Gas and CSX,

2013

Example Integration:

Multi model hubs for LNG/CNG USA

Gas pipe existing

Gas Pipe proposed

Marine CNG/LNG

7

0.9 2.1 2.3 2.2

(0.5)

2.9 1.5

6.4 0.4 1.0

2.2

(1.4) (0.9) (0.6) (1.6)

2.5 6.4

11.6

0.2 0.7

4.8

8.1

5.0

US Gas demand trajectory uncertain Power sector use and exports will drive US gas demand

65.7

‘25 ‘20 ‘15 ‘14 ‘18

Total US Gas Demand*

73.5 84.8 ~92 ~100 72.9

Changes in demand by sector from 2013

Mexico Exports

LNG Exports

Canada Imports

Vehicle

Power

Industrial

Res/Com

Power sector gas demand has biggest growth potential … will be sensitive to price and policy

Demand side issues

1

2

3

LNG exports could be big US Gov’t policy and gas

prices will dictate how fast Transportation, Industrial sectors are all lining up for lower cost NG

Sources: GE Oil and Gas , Baseline case Aug ‘14. EIA, Excludes Alaska

* Includes Net Exports

Changes in US Gas Demand ‘14 to ‘25 Billion cubic feet per day

8

Lessons from North America

Upstream

9

Midstream & downstream

Unleash the innovators … build the networks … to unlock the Age of Gas

Source: GE Global Strategy & Analytics “Age of Gas” 2013

Innovation – exploration

Development

Standardization is difficult because

each basin/well is different

+ Fast scale up + Rapid investment - Coordination issues &

constraints

Competitive industry structure

Learning by doing … Integrating infrastructures

Gas with renewable energy

Gas for transportation

Multiple Networks

Hub-and-spoke

Point-to-point Developing

Phase:

Growth Phase:

Mature phase:

Gas network evolution + Pipeline + LNG + CNG