North American Energy Outlook - TN Chamber · 2018-11-05 · Constellation, Commodities Management Group October 20, 2018. 2 Constellation: Who We Are Delivering RECs for customers

North American Energy OutlookThe Transformative Role of Shale in the Global Hydrocarbons Market –

Why It Matters to Commercial, Institutional, and Industrial End Users

Brian A. Habacivch

Constellation, Commodities Management Group

October 20, 2018

2

Constellation:

Who We Are

Delivering RECs for customers

enabling them to avoid

1.2 million metric tons of

GHG in 2015

Constellation is

among the top 10 commercial

solar

developers

Headquarters:

Baltimore,

MD

Continually investing in

emerging

energy

technologies

#1 C&I

Power

provider in

the US

*2016 data

Approximately 2.2 million

customers served

Dedicated team of

Regulatory,

Market &

Wholesale

Experts

© 2017 Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy-Gas Division, LLC, Constellation NewEnergy, Inc., Constellation Energy Services - Natural Gas, LLC or

Constellation Energy Services, Inc., affiliates of each other and ultimate subsidiaries of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved.

Errors and omissions excepted.

3

Generation Energy Sales & Services Transmission & Delivery

Exelon Generation Constellation* Atlantic City Electric,

BGE, ComEd,

Delmarva Power,

PECO and Pepco

Service:

10 million electric and natural

gas customers

Generation Capacity:

32,720 MW

Competitive C&I Load Served:

150 Annualized TWH (power)

688 Annualized BCF (natural gas)

Competitive Energy Sales:

Over 213k business & public sector

customers

Over 2 million residential customers

Wholesale sales, dispatch, and delivery

from Exelon’s ~33 GW power

generation portfolio

Exelon’s family of companies represents every stage of the energy

value chain.

*Q4 2016 data

© 2017 Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy-Gas Division, LLC, Constellation NewEnergy, Inc., Constellation Energy Services - Natural Gas, LLC or

Constellation Energy Services, Inc., affiliates of each other and ultimate subsidiaries of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved.

Errors and omissions excepted.

Natural Gas Prices and Electricity Prices are tied at the HIP

Presentation Title4

84% Correlated

ERCOT IS CURRENTLY AN EXCEPTION TO HIGHLY

CORRELATED GAS AND POWER PRICES

THE BIG PICTURE

Shale Revolution Transformation: Has Made the U.S. Largest Natural Gas Producer in World

© 2018 Constellation Energy Resources, LLC. The offerings described herein are those of Constellation NewEnergy-Gas Division, LLC or Constellation NewEnergy, Inc., affiliates of each other and ultimate

subsidiaries of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.6

Source: EIA,

Shale Revolution Transformation -- U.S. Crude Oil Production –Growth Story



Data sources: EIA

U.S. Crude Oil Production – Global Rank in 2018



Data sources: EIA, Trading Economics.com/OPEC (Jan 2018) – NOTE – Crude Oil figures do not include OPEC condensate, OPEC NGL, Russian Condensate, Russian, NGL, or U.S. NGL, or bio fuels)

Shale Revolution has made the U.S. the largest NGL producer in the world. US NGL Production

Presentation Title9

The U.S. – The Emergent Hydrocarbon Superpower

Hydrocarbon Superpowers -- Export

Presentation Title10

EXPORTS – The Shale Revolution -- U.S. Is Rising Star in Crude Oil Exports



Source: Source: EIA Weekly U.S. Exports of Crude Oil 2/16/2018

U.S. Current Crude Oil Exports -- 2.044 million barrels per day

Current estimated rank order of crude oil exporting countries:

1. Saudi Arabia – 7.3 million bbls per day (CIA Factbook 2014 – Crude Oil Exports)

2. Russia – 5.1 million bbls per day (CIA Factbook 2016 – Crude Oil Exports)

3. Iraq – 2.8 million bbls per day (CIA Factbook 2014 – Crude Oil Exports)

4. Canada – 2.7 million bbls per day (CIA Factbook 2016 – Crude Oil Exports)

5. Nigeria – 2.3 million bbls per day (CIA Factbook 2014 – Crude Oil Exports)

6. Angola – 1.7 million bbls per day (CIA Factbook 2014 – Crude Oil Exports)

7. Kuwait – 1.7 million bbls per day (CIA Factbook 2014 – Crude Oil Exports)

EXPORTS -- The Shale Revolution: U.S. Is Largest Exporter of Refined Petroleum Products in the World



Data source: EIA

EXPORTS -- The Shale Revolution: NGL Exports Come of Age –U.S. World’s Largest Exporter of Propane



Data source: EIA

• March 2016: First U.S. ethane export terminal at Marcus Hook, PA begins exporting to Europe.

• September 2016: Second U.S. ethane export terminal begins exporting from Houston Ship

Channel.

• In the past five years, U.S. exports of propane have grown ten fold. The Asian petrochemical

sector is now the largest customer for U.S. exports.

EXPORTS – U.S. Rising Star in Global LNG Market



Source: Constellation, FERC, Bentek, EIA

The first cargo left

Sabine Pass on

February 24, 2016

bound for Brazil.

Cove Point, MD;

second U.S. LNG export

terminal commenced

deliveries March of

2018

Source: Bentek

U.S. LNG Export Capacity

10 Bcf/d by 2020 from

projects currently under

construction

EXPORTS -- Cove Point Sends Its First LNG Delivery



Data sources: EIA, Dominion, Platts, NPR

• The first cargo left Sabine Pass on

February 24, 2016 bound for Brazil.

Owner and operator for the Cove

Point LNG export facility, Dominion,

announced on March 2 that the first

vessel carrying US LNG has

departed their new facility.

– The terminal was originally

expected to come online late in

2017.

• The terminal consists of one train

with nameplate capacity of turning

0.75 Bcf/d of dry gas to liquid (0.66

Bcf/d after operations, losses, etc.)

with 7 tanks on-site to provide

storage totaling 14.6 Bcf.• Cove Point is the second ever US LNG export facility

to come on line since DOE approval was granted in

2017

− Sabine Pass currently liquifying ~3 Bcf/d in

Louisiana was the first

• Dominion has long-term contracts for the projects

capacity secured with Gail India and Japan’s

Sumitomo.

EXPORTS --- China Signs 20 Year Deal For U.S. LNG



Source: Cheniere Energy, EIA

• Asia is a key market for incremental LNG demand, where prices have historically been linked to

oil prices.

• Cheniere Energy signed its first long term contract (thru 2043) with China National Petroleum

Corp (CPNC) for off take from its Corpus Christi train #3 facility (0.6 Bcf/day)

• The U.S. will see Cove Point, Cameron 1, Elba Island and Freeport 1 come online by end of

2018 for ~2.0-2.25 Bcf/day. U.S. capacity will rise to 9 Bcf/day by 2019 but additional projects

will require offtake agreements.

Millions Tones

EXPORTS -- New Pipeline Capacity Supporting U.S. NG Export Growth to Mexico



Source: EIA,

NYMEX Natural Gas Forward Curve vs. Third Party Forecasts



Source: NYMEX, EIA

NYMEX Winter Strip Prices

19

Natural Gas

© 2017 Constellation Energy Resources, LLC. The offerings described herein are those of either Constellation NewEnergy-Gas Division, LLC, Constellation NewEnergy, Inc., Constellation

Energy Services - Natural Gas, LLC, Constellation Energy Services, Inc. or Constellation Energy Services of New York, Inc., affiliates of each other and ultimate subsidiaries of Exelon

Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

Source: NYMEX

Prices as of COB 10/25/2018Note: Winter defined as November through March.

$2.50

$2.75

$3.00

$3.25

$3.50

$3.75

$4.00

$4.25

$4.50

$/M

MBt

u

NYMEX Winter Strips - 3 Year History

Winter 18/19 Winter 19/20 Winter 20/21 Winter 21/22

$/MMBtu W18/19 W19/20 W20/21 W21/22

Current $3.17 $2.90 $2.76 $2.74

Y-o-Y -1% -4% -8% -10%

vs. 3-yr Avg 0% -9% -15% -18%

vs. All-time Max -75% -78% -79% -80%

vs. All-time Low 17% 4% 2% 2%

Summary

The U.S. is undergoing a fundamental energy transformation.

The U.S. is the emergent hydrocarbon superpower and global swing producer.

The U.S. is the emergent energy exporting power.

Natural Gas and Electric power prices are tied at the hip.

The U.S. natural gas market is changing and new risks are presenting– because of exports --

subject to global pricing forces – very similar to crude oil.

The potential for rising energy price volatility is back on the table.

Energy prices in the forward markets are very low in nominal and real terms.

Energy consumers should be very interested in forward energy prices and thinking more

strategically.

You cant be 100% Right – Don’t be 100% wrong

Presentation Title20

Thank you.

Brian A. Habacivch

Principal, Constellation Energy, Commodities Management Group

[email protected]

Connect on Linkedin

Cell Phone – 502-341-1648

mailto:[email protected]

Disclaimer

The information contained herein has been obtained from sources which Constellation NewEnergy, Inc. and/or Constellation

NewEnergy-Gas Division, LLC (collectively, “Constellation”) believes to be reliable. Constellation does not represent or warrant as

to its accuracy or completeness. All representations and estimates included herein constitute Constellation’s judgment as of the

date of the presentation and may be subject to change without notice. This material has been prepared solely for informational

purposes relating to our business as a physical energy provider. We are not providing advice regarding the value or advisability

of trading in “commodity interests” as defined in the Commodity Exchange Act, 7 U.S.C. §§ 1-25, et seq., as amended (the

“CEA”), including futures contracts, swaps or any other activity which would cause us or any of our affiliates to be considered a

commodity trading advisor under the CEA. Constellation does not make and expressly disclaims, any express or implied

guaranty, representation or warranty regarding any opinions or statements set forth herein. Constellation shall not be

responsible for any reliance upon any information, opinions, or statements contained herein or for any omission or error of

fact. All prices referenced herein are indicative and informational and do not connote the prices at which Constellation may be

willing to transact, and the possible performance results of any product discussed herein are not necessarily indicative of future

results. This material shall not be reproduced (in whole or in part) to any other person without the prior written approval of

Constellation.

© 2018 Constellation Energy Resources, LLC. The offerings described herein are those of Constellation NewEnergy-Gas Division,

LLC or Constellation NewEnergy, Inc., affiliates of each other and ultimate subsidiaries of Exelon Corporation. Brand names and

product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

22© 2018 Constellation Energy Resources, LLC. The offerings described herein are those of Constellation NewEnergy-Gas Division, LLC or Constellation NewEnergy, Inc., affiliates of each other and ultimate

subsidiaries of Exelon Corporation. Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

Documents

North American Energy Outlook - TN Chamber · 2018-11-05 · Constellation, Commodities Management Group October 20, 2018. 2 Constellation: Who We Are Delivering RECs for customers