News/ Press Release

Record Heat in Northeast Excites Gas-Fired Power Developers, Conference to Examine Opportunities Presented by Influx of LNG

HOUSTON, TX -- August 29, 2006 -- Three years after the world's most expensive blackout, the Northeast power grid received a surge test as temperatures in New York soared 10 degrees higher per day than normal in late July and early August.

For the first time in U.S. history, seven billion cubic feet more natural gas was withdrawn from storage during summer than was injected.

Likewise, in Boston, as the heat index for Aug. 1-3 exceeded 100 degrees, electric power consumption climbed to just under 30 gigawatts. Records upon records were set as temperatures climbed. New England consumes about 18 GW on an average day.

This has raised concerns among ISO New England officials that there may be insufficient electricity to meet demand next summer.

"It's a major concern," Kenneth McDonnell, an ISO New England spokesman, told The Providence Journal. "The long-term solution," he said, "is to build new power plants in the region."

Further south, PJM officials said the heat wave was like adding another Baltimore and its suburbs to the system. Power producers on the PJM grid delivered a peak of 144 gigawatts, up 10 GW from the record set in 2005.

"This is like a shot of adrenalin for power developers," J. Patrick LaStrapes, a Houston-based energy executive, confides. LaStrapes developed numerous gas-fired power projects in the 1980s and 1990s as the nation deregulated its natural gas and electricity industries.

"I suspect this summer's demand has spurred several development teams into high gear while spawning new ones. When demand exceeds supply, our industry bolts forward."

How these new power plants will be fueled is a major issue to be discussed Sept. 20-22nd at a major conference in Boston, entitled "LNG's Future Impact on U.S. Northeast & East-Canadian Gas Flows." Representatives will participate from the nation's largest gas and power companies and government agencies, including AES Corporation, Atlantic LNG, Canadian Gas Association, Chevron, Connecticut Light & Power, ConocoPhillips, Duke Energy, El Paso, the U.S. Department of Energy, Repsol YPF, Sempra Energy, Statoil, Suez, Tokyo Gas, TransCanada Pipelines, and The Williams Group.

Will Northeast Gas Consumers Dodge Winter Chill? Conference to Examine LNG Supply, Gas Storage, Market Issues

HOUSTON, TX -- June 27, 2006 -- With natural gas prices at all-time highs after hurricanes Katrina and Rita, the Northeast braced last November for cold-weather price shocks. Fortunately, the winter ranked as third mildest in recent memory. According to government statistics, only 1997/1998 and 2001/2002 were milder.

As a result, space-heating demand from Northeast residential and commercial customers, which normally consume three-quarters of winter natural gas supplies, fell 13% from previous-year levels. By March, Boston city-gate gas prices had dropped 40% to $10/MMBtu. The emergency passed.

Across the Atlantic, however, Northeasterners could view firsthand what might have happened. Plunging temperatures gripped consumers in the United Kingdom, driving up gas demand and tripling prices to $45/MMBtu.

"The U.K. and Japan experienced winters last year similar to what the Northeast experienced in 2002/2003," according to Bob Nimocks, president of Zeus Development Corp, an energy research firm. "Then, northeasterners consumed about 20% more natural gas than they did last year -- a whopping 1.5 billion cubic feet per day (Bcfd) or roughly twice the daily sendout at the Everett LNG terminal."

Preliminary forecasts for this winter predict temperatures to be 10% colder. Unfortunately, the gas market is growing more fragile with high heating-oil prices and declining industrial consumption. Currently, industrial consumption has fallen to less than 10% of the Northeast market.

"Industrial consumers act as a buffer," Nimocks said. "Utilities can limit their gas during severely cold weather to create more supply for residential and key-government services. With fewer industrials, the utilities will have fewer options.

In their place, electric-power demand has soared -- doubling gas-fired-power demand in five years. Power plants however cannot be curtailed as easily as industrials because they supply residences and essential government services.

More gas supply would help the situation, but new sources have been hard to come by. Production from U.S. and Canadian gas fields is flat. LNG import terminals have been blocked or stalled. The Northeast is faced with growing residential, commercial and electric-power demand, but limited supplies.

To discuss these issues and possible solutions, Zeus Development Corporation is hosting a three-day conference, entitled "LNG's Future Impact on U.S. Northeast & East-Canadian Gas Flows," in Boston, Sept. 20-22. For more information, visit www.LNGExpress.com/NE or contact Bob Nimocks, 713-952-9500.

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