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GE 2014 All rights Reserved

Unlocking the “Age of Gas”

GE Oil and Gas

IEA-IEF-OPEC SYMPOSIUM ON GAS

AND COAL MARKET OUTLOOKS

October 30, 2014

Markus Becker

Senior Director,

Government Affairs & Policy

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

Chin

a

ME Africa Lat.

Am

EU-

Eurasi

a

Asia US-Can

20

0

10

0

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

Gas to Power … understanding scale Large scale feeds thermal…small scale feeds DP and virtual pipeline

4 Source: GE Oil & Gas, GE Distributed Power; Bcfd/MMcfd: Billion/Million cubic feet per day; GWe/MWe: Giga-Megawatt equivalent

Gas to Power options

CNG in a Box

Small-scale LNG

MMcfd ~MWe

(DP) 40- 200 $50 - 300MM 8- 40

0.5- 5

BCFD ~GWe Typical project

$B CAPEX

Int’l Mega

Pipeline

LNG

Mega

Regional

Pipeline

3.5 (35 / 25)

Floating

LNG Regas

(Bcm /

MMTPA)

20

2.2 (22 /

16)

12 $10-30B

0.45 (4.5 / 3.3)

2.5

1.2 (12 / 8.5)

6.5

(CCGT)

$1-5B

2.5- 20

Large

Small

Mid

Sovereign

ownership

state to state

deals.

Long-term

commitments

on gas and

infrastructure

Mix of state

owned &

private players

Gas and

infrastructure

can be

separate

(tolling)

Modular, pre-

configured

designs

Single entity or

small JV

partnerships

Typical

Aspects

“Anchor

Systems”

“Satellite

Systems”

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

Dolla

rs p

er

MW

Hr

Lower

efficiency

Highly

efficient

US

EU

Asia

Price

competitiv

e 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

.0

2

.16

.1

4

Recent spot price 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

Natural gas-fired power share varies by region…

2%

7%

20%

24%

28%

31%

32%

35%

44%

60%

China

India

Europe

Latin America

North America

North Asia

Africa

Southeast Asia

Eurasia

Middle East

Source: GE Strategy and Analytics 2014.

Note: North Asia includes Japan, Chinese Taipei Korea

Southeast Asia excludes India

0.00

0.02

0.04

0.06

0.08

0.10

0.12

Coal ST@ 4.5

Coal St@ $3.5

IGCC CCGT@ $16

CCGT@ $14

CCGT@ $12

CCGT@ $10

Plant

Cost

Fuel

Cost

~800 MW – 36%

efficient

90% CF

$1,900 KW

30 year asset life

15% return

60/40 Debt Equity

No Carbon price

~770 MW – 61% efficient

90% CF

$790 KW

30 year asset life

15% return

60/40 Debt Equity

No carbon price

Share of gas fired generation

2013 estimated

Levelized cost of electricity LCOE

US Cents/Kwh - North Asia example

Competition versus coal … CAPEX vs Fuel contract

11

LNG industry evolution continues

12

+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

85% in

contract

or tolling