Driving the Future with Natural Gas Vehicles

Driving the Future with Natural Gas Vehicles NGV Bridge Fleet Framework Summit Oklahoma City, OK March 26, 2013 Paul Smith Director, Business Development

Presentation Outline ANGA Overview and NGV Introduction Shale Gas Revolution and NGV Impacts Market Opportunity and Growth Vehicle Technology Overview Infrastructure Overview ANGA member NGV Case Studies Recent Policies and Public Market Drivers

America s Natural Gas Alliance ANGA is dedicated to increasing the understanding of the environmental, economic and national security benefits of clean, abundant, reliable and affordable North American natural gas. ANGA works to promote a policy environment that increases market-driven use of natural gas as a transportation fuel. Encourage natural gas vehicle and equipment (NGVE) conversions and original equipment manufacturer (OEM) production. Supports significant expansion of natural gas fueling infrastructure along key transportation corridors throughout North America. Aware of the current challenges in this economic climate and the responsibility at all levels of government to be conservative in expenditure of public funds. Efforts emphasize the importance to maintain parity among alternative transportation fuel policies.

ANGA Members

ANGA NGVE Committee Strategic Goals Advancing the natural gas industry s understanding and use of natural gas Light duty trucks and sedans Medium and heavy duty trucks Vehicles and equipment in our supply chain (drill rigs, pressure pumping services, heavyduty trucks)!"#$"%&"'"#()"*"#&+#+&,-&./0-(#'0%1"#&-#21*#23-# (*0-+&42-#(2#56789! :2+(#+0'&-,+# 8;("-<&-,#/2*=2*0("#+1+(0&-0$&%&(>#0-<# /*"<&$&%&(>!?!0%@&-,#()"#A0%@B#

NGVE Benefits Environmental Benefits Environmentally better fuel than diesel Positive impact on regional air quality Economic Benefits Lower cost fuel than diesel or gasoline Significant lifetime cost savings associated with NGVE Lower engine maintenance costs possible Energy Security Benefits Domestically produced energy

Proven Technology, Growing Market Proven Technology 15.2 million NGVs worldwide Global NGVs expected to have compound annual growth rate of 7.9%, with 19.9 million NGVs by 2016. NGVs are less than 0.1% of the total US market (~120,000 vehicles running) US NGVs projected to be ~0.57% of total US market, or ~300,000 vehicles, by 2025

Fleet Snapshot: AT&T In 2009, AT&T made a $565 million commitment to deploy approximately 15,000 AFVs over a ten-year period through 2018. By the end of 2011, they had 3,469 CNG vehicles in service and a new private CNG station 2012 CNG progress 1,200 Chevy Express vans (IMPCO), largest-ever CNG order for GM 672 CNG Ford Transit Connect vehicles (BAF) as of May 2012 and counting.

Fleet Snapshot: Waste Management Announced it will convert 100% of its nationwide fleet to CNG (18,342 trucks) The company will spend about $30,000 more than the sticker price for a comparable diesel truck. The company's CNG business model is profitable without government subsidies The economics and payback of natural gas are so strong that it dwarfs any other technology This goes right to the heart of the business and the margin. - Eric Woods, Vice President of Fleet and Logistics

The Shale Gas Revolution Cody Bakken Gammon Baxter-Mancos Mancos Mowry Niobrara Antrim Marcellus/ Devonian/Utica EIA: 2012 542 TCF shale Lewis Barnett- Woodford Pierre Woodford Barnett Eagle Ford Mulky New Albany Fayetteville Floyd-Neal Haynesville 2,203TCF total 38% INCREASE in just four years Source: EIA Annual Energy Outlook, 2008 to 2012

Fundamental Change in the Game Tcf U.S. Natural Gas Production (trillion cubic feet per year) 2011 Historic Projected Shale Gas 52% 35% 26% Tight Gas 23% 8% 16% 7% 2% 7% Coalbed Methane Non-associated Onshore Associated with Oil Alaska Non-associated Offshore 7% 6% 3% 4% 7% Note: Dry production (marketed production minus extraction losses) Source: EIA Annual Energy Outlook: 2013 Early Release

Long-Term Price Stability 2010$/ MMBtu Henry Hub Spot Natural Gas Price (2010$/ MMBtu) ")%$##! ")#$##! Historic Projected "($##! "'$##! "&$##! *+,-./+0! 123!%#)#! 123!%#))! 123!%#)%! 123!%#)4!526/789! "%$##! "#$##! Source: EIA Annual Energy Outlook: 2013 (Early Release), 2012, 2011, 2010, and 2009 Henry Hub Spot prices (EIA reported actual prices included 2000 to 2010)

Natural Gas And Oil Prices Have Decoupled Natural Gas v. Oil Price (1997 = 100) Historic Projected 1,301 Oil (Brent Spot FOB) Natural Gas (Henry Hub Spot) 466 1997 = 100 Source: Projected Prices: EIA Annual Energy Outlook: 2012 Historic Prices: EIA reported spot prices

Trends in Demand EIA s View in 2013 U.S. Natural Gas Demand (billion cubic feet per day) (#$##! ;#$##! Historic Projected LNG Exports '#$##! Transportation 3% =0>?@A!B/8! :#$##! &#$##! Electric Power 4#$##! Industrial %#$##! )#$##! #$##! Commercial Residential )<<;!)<<<!%##)!%##4!%##:!%##;!%##<!%#))!%#)4!%#):!%#);!%#)<!%#%)!%#%4!%#%:!%#%;!%#%<!%#4)!%#44!%#4:!%#4;!%#4<! Projected Data Source: EIA Annual Energy Outlook :2013, early release Historic Data Source: EIA Natural Gas Monthly, February 2013 14

Trends in Demand Growth Change in U.S. Natural Gas Demand by Sector (1997 = 100) 2011 Historic Projected Transportation Electric Power Commercial 1997 = 100 Industrial Residential Projected Data Source: EIA Annual Energy Outlook: 2013 Early Release Historic Data Source: EIA Natural Gas Monthly, January 2012

U.S. Transportation Sector Opportunity C"<&1D#(2#E"0'>#F1(>## G"H1+"I#J1$%&/#A*0-+&(I#K#J2*(+## L#M/HNF## E"0'>#F1(>#O-PG20<## E"0'>#F1(>#A*1/@+# QR#M/HNF## E"0'>#F1(>#OSPG20<## C&-&-,I#C0*&-"I#G0&%#K#:2-+(*1/42-# QT#M/HNF## U&,)(#F1(>#C0++# C0*@"(## TVT#7")&/%"#J%0W2*D#K#E2D"#G"H1"%&-,# XY#M/HNF##

2012 NGVE Deployments ANGA tracks publicly-announced NGVE deployments and long-term NGVE plans 5678#F"=%2>D"-(+#0-<#J%0--"<#F"=%2>D"-(+#Z--21-/"<#&-#[\Q[# CB!DEF+07E!! ):A)<4! GB!DEF+07E! ())! *B!DEF+07E! 3HIJ.6@?**K! L.-67# %4A44(! )#'! 4<A&&(# 17

Update on NGV Technology NGV market has grown at a brisk pace over the last five years Originally driven primarily by environmental policy; Now primarily driven by economics Expanding base of product offering in light, medium and heavy duty vehicle applications Not yet at capital cost parity with conventional fuels, but economies of scale are emerging Limited yet growing NGV fueling infrastructure

NGV Availability Today Ford Motor Co. sold a record 11,600 natural-gas vehicles in 2012, more than 4x the number it sold in 2010. Honda Motor Co. is seeing more interest in its natural-gas Civic with record U.S. sales of nearly 2,000 last year. Chrysler Group and General Motors recently added naturalgas pickup trucks to their lineups. Pike Research estimates that 20,381 NGVs were sold in the U.S. in 2012. This includes big truck-makers, with estimates of approximately 1,600 CNG buses and 1,500 CNG garbage trucks sold last year. Pike expects CNG vehicle sales to grow by 10 percent per year through 2019, forecasting sales of 39,864. Photos courtesy of NGV America

Light and Medium-Duty NGVs OEM Products and Partnerships Honda Civic Natural Gas Chrysler Bi-Fuel Ram 2500 General Motors Chevrolet Express & GMC Safari Vans Bi-Fuel Trucks Ford F-250 and F-350 Transit Connect

Light and Medium-Duty NGVs Conversion Product Manufacturers Altech-Eco BAF Technologies Landi Renzo (Baytech Corporation) FuelTek Conversion Corp IMPCO Technologies Natural Drive NGV Conversions/NGV Motori Westport Light-Duty

Heavy-Duty NGVs Heavy-Duty Engine OEMs Cummins-Westport (CWI) Westport Innovations Emission Solutions Inc. (ESI) Heavy-Duty Truck OEMs Freightliner (2) Kenworth (2) Peterbilt (3) International Volvo / Mack

Heavy-Duty OEM Product Offerings

Natural Gas Fueling Compressed Natural Gas (CNG) Source: Pipeline Compressed to 3,600 psi Supports light, medium and heavy-duty options Ideal for local consumers and return-to base fleets Time-fill and fast-fill capability / stored in pressurized tanks Liquefied Natural Gas (LNG) Source: Liquefaction Plant, transported to station Converted to liquid form for ease of storage and transport Cooled to -260 F and 40 psi Ideal for heavy duty fleets with long-haul needs and heavy equipment Fast-fill / stored in tanks (similar to diesel size)

LNG or CNG for Heavy-Duty? PRO: lower weight, greater range, lower tank costs, less truck real estate, lower fuel station costs (CAPEX & OPEX), can make LCNG from LNG CON: higher tank maintenance, higher fuel cost than CNG, limited fuel supply PRO: less tank maintenance, lower fuel cost than LNG, national fuel supply CON: higher weight and tank costs, more truck real estate, higher fuel station costs (esp. CAPEX), requires access to a pipeline, cannot make LNG from CNG But on-board CNG tanks are becoming lighter, bigger (capacity) and cheaper

Natural Gas Fueling Station Trends :56#]1"%&-,#^(042-#:21-(#!)A(##!!!)A'##!!!)A&##!!!)A%##!!!)A###!!!(##!!!'##!!!&##!!!%##!!!I!!!! 3M-!.>!NE/O+0E! K76PPE@! 2Q+,RPS! U56#]1"%&-,#^(042-#:21-(# )(#! )'#! )&#! )%#! )##! (#! '#! &#! %#! #! 3M-!.>!NE/O+0E! K76PPE@! 2Q+,RPS!

Retail Stations Growing NG Fueling

Case Study: Apache Corporation Apache is transitioning its truck fleet to CNG and implemented a CNG employee incentive program Vehicles and stations are treated as ambassadors in the communities where Apache works, helping demonstrate the American energy security and clean air benefits of domestic natural gas production. Station efforts include: Developing premier CNG retail fueling stations for itself AND the public Partnership with Stripes, a local convenience store, to provide initial CNG baseload for retail fueling. More importantly, Apache sees this as critical training so Stripes can develop new CNG fueling independently to build the market. Working with other local private fleets on commercial bulk fueling agreements in non-retail settings

Apache CNG Fleet Transition )%##! )###! (##! 4&(! &<;! '&:! '##! '<#! )<:! UVW! &##! %##! #! %&'! 4:#! &<(! '&;! (##! %#))! %#)%! %#)4! %#)&! %#):!!!!!!!!!!!!%'T!!!!!!4:T!!!!!!!!!!!!!!!!!!:#T!!!!!!!!!!':T!!(#T!

Apache CNG Fueling Apache uses and has actively developed a diverse network of fueling options throughout its operating territory. 13 Apache-developed or supported stations open and operating 3 fully public, including Houston IAH Airport 10 private 7 planned or under development

Apache Employee CNG Vehicle Program Program Elements: All full-time employees who purchase a new dedicated CNG vehicle or convert a new or used vehicle will receive free CNG for their next $5,000 of CNG fuel purchases. Louisiana and Oklahoma employees will also receive a state income tax credit for 50% of the additional cost of the CNG dedicated or converted vehicle. Texas and New Mexico employees will receive this 50% offset from Apache as these states offer no alternative fuel incentives.

Case Study: Pioneer Natural Resources NGV Purchases for E&P, pressure pumping, and sand fleets 225 Westport Ford F250 Bi-fuel-$44k each $10,000 incremental cost 17 Peterbilt - $203k for Truck and $100k for utility $45,000 incremental cost 45 Altech - $46k each truck and $10k for utility! $10,000 incremental cost 15 2008-2010 F250s $11,000 - $13,500 incremental costs Signed MSAs with contractors that use NGVs Fueling with a combination of existing stations and station partnerships Pioneer projected fuel cost savings 1,700 light duty trucks = $12M annual savings 400 heavy duty trucks = $19M annual savings

Pioneer Fueling Partnerships Working with station entrepreneur to develop retail fueling in Irving, TX Pioneer pledged fuel baseload to support private station investment Letters of support from other local fleets interested in CNG (Atmos Energy, Frito-Lay, and Chesapeake,) High end, full-amenity, well-branded station to help support CNG with onsite gasoline and CNG fueling, CNG conversion center, car wash and a convenience store Helps market CNG in the community with gasoline retail pumps Pioneer Benefits No Pioneer investment beyond the vehicle incremental cost Supports new CNG fleets in region Supports potential Pioneer employee incentive CNG program

Pioneer Trucks Westport Wing Bi-fuel F250 Fords with 24.5 GGE tanks with 325 Mile Range on CNG, additional 450 on gasoline for 775 total Range Peterbilt Dedicated CNG Trucks with 1,000 Mile Range

Case Study: Southwestern Energy Initiated NGV program in 2011 Added ~100 CNG pickup trucks to Arkansas Fayetteville-region operations Developed a public-access station in Damascus to support SWN fleet operations. The dispensed CNG comes directly from the Fayetteville Shale, the company s primary operating area. Cost was NOT the initial program driver it was corporate sustainability and an investment in local energy resources 2012 CNG program expansion Gave 21 employees brand-new CNG trucks and Tahoes, plus home refueling appliances, in an unprecedented employee gift lottery. Incentive program for an additional 100 employees who convert to CNG by reimbursing the costs of personal vehicle conversions and home refueling units Added an additional ~60 CNG vehicles to operating fleet Supported development of new public CNG station in Little Rock, AR Drove from Long Beach, CA to Conway, AR in CNG truck

SWN Community Impacts Damascus CNG station was developed with cost models that only relied on SWN fleet; Now, over 40% of usage comes from other local businesses and customers Station optimized for SWN light duty fleet, but many heavy-duty trucks converted to CNG and are fueling here for the cost savings SWN vendors converting to CNG on a cost-basis alone because the station is now available. No SWN incentives or CNG emphasis. Organic growth off CNG HD tractors, bobtails, water trucks and other vendor services Station ROI projections considerably reduced with these outside fuel customers SWN stations and vehicles are community ambassadors SWN Station and CNG vehicles say powered by clean burning American natural gas or powered by the Fayetteville Shale so the community understands sees the benefits of local production Station is a premier and well-branded station to help introduce CNG to the community When employees get out of personal CNG vehicles at Wal-Mart, they can have the most important conversations about CNG with our communities.

Policies and Public Market Drivers Multi-state joint purchasing MOU ARPA-E research Light-duty CAFE standards

23-State Joint Purchasing NGV MOU States joined together to create a market for NGVs and to cut upfront NGV costs and long-term fuel costs First of its kind public-led aggregate RFP for NGV OEM vehicle purchases Commitment to convert state fleets (county, municipal, and other government) Lead by OK Gov. Mary Fallin and CO Gov. John Hickenlooper with participation from AK, CT, HI, KY, LA, ME, MN, MI, MO, NV, NM, OH, PA, SC, TN, TX, UT, VT, VA, WV and WY 39

ARPA-E 2012 $30 Million in Department of Energy research funding for NGVs to help expand use of natural gas in vehicles 13 projects funded in 2012 Projects focus on Developing light-weight, affordable natural gas tanks for vehicles and Develop affordable home refueling options

CAFE and NGVs What is CAFE? Light duty vehicle fuel economy and greenhouse gas emissions standards Corporate Average Fuel Economy: averaged over a manufacturer s sales nationwide on a yearly basis. CAFE strongly influences automakers product planning. Auto manufacturers know that tax incentives are subject to change, but CAFE standards have staying power. New CAFE standards approved in 2012 Increasingly stringent fuel economy rules, increasing to 54.5 mpg by 2025. Previously auto manufacturers received extra credits for electric and plug in hybrid vehicles. The new rule extends these credits to NGVs for the first time. This is a major step toward a level playing field between the alternative fuel choices.

www.anga.us twitter @ANGAus Paul Smith Director, Business Development psmith@anga.us