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NORTHWEST

Although natural gas is abundant in North America, the use of natural gas vehicles (NGVs) is not. But in Europe, Asia and South America, it's a different story. More than 11 million NGVs are currently in use worldwide and the number is expected to grow to 65 million by 2020. As a cleaner burning, low-carbon fuel, natural gas has many economical and environmental benefits for fleet operators. In addition to providing fuel cost savings of approximately 40 percent over diesel, NGVs also produce fewer GHG emissions than diesel (depending on the engine technology). "About 40 percent of emissions in B.C. come from the transportation sector. By switching to natural gas, return-to-base fleets like municipal, transit, refuse and heavy-hauling vehicles will be emitting 20 to 30 percent less greenhouse gases than their diesel counterparts, helping to improve B.C's air quality," said David Bennett, director, resource planning & market development, FortisBC. FortisBC is supporting growth of the NGV market in B.C. with a focus on fuelling large, return-to-base fleets like waste haulers and buses. They design, build, operate and maintain either CNG or LNG fuelling stations on the customers' operating sites, and bill them through a meter just as they would with a typical residential customer. The customer will receive a monthly bill that shows how much natural gas was used for transportation. "Our NGV programs not only benefit customers, they also stand to help British Columbians who may not even be our customers, because a large portion of the equipment and technology used in our NGV applications is manufactured in B.C., which supports job creation for the province," said Gary Lengle, manager energy, products & services, FortisBC.

2ND QUARTER 2011

Customer Spotlight: FortisBC ­ Clearing the Air

Compressed natural gas refueling station at Waste Management's site in Coquitlam, B.C.

Recently, FortisBC celebrated the milestone of 20 new Waste Management clean air natural gas trucks on the road, which are now collecting commercial recycling, food waste and garbage throughout the Lower Mainland and Metro Vancouver in B.C. Already, drivers have commented on how much quieter the vehicles are after being converted to natural gas. Fuelled overnight at a FortisBC station on Waste Management's site, the trucks are part of a long-term effort to convert 100 vehicles in all. FortisBC also is working with Vedder Transport Ltd., a transport company based in Abbotsford, B.C., that specializes in transporting food grade products in bulk-liquid or dry state, and offers freight services throughout Canada and between Canada and the U.S., on a similar program. They will be deploying 50 new low-carbon LNG trucks at the end of this year. FortisBC is currently in the process

of designing and building the LNG station on Vedder's site, which will be fully owned and operated by them, with completion slated for December of this year. They also recently hosted a successful event for Northwest Gas Association members to discuss the NGV market, and its potential in and outside of B.C. They hope to see similar programs implemented in other regions and at other utilities over the upcoming years. With continued adoption of natural gas for heavy duty vehicles, FortisBC expects to capture 6.5 percent of the total motor fuels market by 2030. When this goal is achieved, the switch from diesel to natural gas will save 865,000 tons of GHGs, which is the equivalent of taking 165,000 cars off the road. In addition, use of natural gas in vehicles will reduce other air contaminants, leading to cleaner air for all British Columbians.

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2nd Quarter 2011

Williams Responds to Report of Land Movement Near Kemmerer

Recently, Northwest was informed by a mining company adjacent to Northwest's right of way near Kemmerer, Wyo., that land movement attributable to mine operations had occured. Northwest responded promptly, following the three protocols listed below. While these efforts required a two-day outage of the pipeline near Kemmerer, Northwest was able to assess the situation and safely place one of the two pipelines back into service. Northwest anticipates rerouting its lines away from the affected area. Land movement is a significant threat to many natural gas pipelines. Northwest deals with this threat by taking a proactive role in: 1) monitoring land movement; 2) monitoring pipeline strain; and 3) mitigating the potential impacts. To monitor land movement, Northwest uses GPS, annual surface survey monitoring, aerial patrols and specialized geotechnical expertise to monitor areas around its pipeline rights of way. Land movement that could affect a buried pipeline, called "deep-seated landslide", is typically slow moving. Northwest has been collecting land movement data for so long in the Columbia Gorge that the U.S. Geologic Survey team utilizes Northwest's data to calibrate its models. To monitor pipeline strain, Northwest installs strain gauges on its pipeline facilities in known land-movement areas to monitor pipeline displacement. Currently, Northwest has about 130 strain-monitoring sites. To mitigate detected or suspected pipeline strain, Northwest excavates the pipeline, which relieves any strain placed on the pipeline by allowing it to reassume its original alignment.

Strain gauge being read before final phase of stress relief

Northwest Mutual Assistance Group ­

The Northwest Mutual Assistance (NMA) group met in Portland, Ore., on May 6, 2011, to redraft the governing agreement to encourage planning in advance of emergencies, update contact lists and discuss expanding membership. The NMA is currently planning a desktop emergency via a teleconference call in August 2011. The group is comprised of business entities that operate and/or control energy infrastructure in the Pacific Northwest. Each party has the responsibility to exercise due diligence in its operations through cooperation with other members in order to provide and maintain service during emergency conditions. The group plans to meet twice annually in conjunction with the Western Energy Institute's spring and fall Energy Management meetings. Teleconferencing is available. Membership and participation is voluntary. The NMA operates under the guidance of Clay Riding, director

A Step Ahead of the Game

natural gas resources for Puget Sound Energy, as chair; and Jan Caldwell, manager marketing services for Northwest Pipeline, as vice chair. "We want to avoid outages similar to those last February in Texas, New Mexico and other parts of the Southwest, says Jan Caldwell. FERC has a joint investigation under way with the North American Electric Reliability Corp. (NERC). A report should be out later in the summer and could lead to recommendations directed to FERC, NERC, state public utility commissions and state legislatures. We want to be ahead of the game." To be as effective as possible, it is important to have robust participation among the energy players in the region. If you are interested in joining the group or would like to review a copy of the agreement please notify either Clay at [email protected] or Jan at [email protected] williams.com.

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2nd Quarter 2011

Battle Ground District Raises Big Bucks for United Way at Fundraiser

When two Williams Northwest Pipeline employees decided to organize an ambitious 5K adventure run as a fundraiser for their local United Way in Longview, Wash., no one knew how crazy the course would be or how wildly successful.

The 5K adventure run was the brain child of Travis Wickham and Sadie Smith, both technicians for Northwest Pipeline's Battle Ground district. The two spent 14 months planning and organizing the extreme course in disaster preparedness, topped off with a lot of fun. Throughout the event, participants climbed steep hills, crawled through corrugated pipe, splashed into muddy water, maneuvered piles of ash, slid down steep slopes, ran through myriad obstacles and clambered over whatever was in their path to finish the course. The event was dubbed the Ash Kicker, in honor of the amount of ash still around from the major eruption of Mt. St. Helens in 1980. The event attracted more than 500 participants (a.k.a. survivors) and was appropriately held at the base of the volcano in Castle Rock, Wash. Participants competed individually or formed teams. Most were dressed in matching T-shirts, or wore amusing and outlandish costumes. There was even a sighting of Sasquatch. "What better way to prepare for an apocalypse and raise money than to dress up in wedding gowns with five other women, complete with veils and a few bouquets, and try to navigate 13 or more extreme obstacles," says Sadie. The money raised by this event will help support 23 local United Way agencies. And raise money they did! With participants' entry fees and sponsors giving donations from $500 to $5,000 each, the total came to $105,000. Add to that amount a matching grant from The Williams Foundation of $85,000, and the total raised for the United Way of Cowlitz/ Wahkiakum County was $190,000. It you want to learn more about this event, view more photos, or possibly participate next year, visit www.ashkicker.org.

The start of the 5K adventure run for United Way

A team of brides tackles the tires and ropes

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2nd Quarter 2011

FERC Issues NOPR for Affiliate Bidding

In April 2011, the Federal Energy Regulatory Commission issued a notice of proposed rulemaking dealing with bidding by multiple affiliates in an open season for pipeline capacity that may be allocated. FERC had discovered that some entities used multiple affiliates to defeat the pro rata tiebreaker mechanism to obtain a greater share of capacity. FERC also stated that such gaming of the pro rata allocation mechanism has a chilling effect on competition and denies a fair distribution to other bidders. The proposed regulation has two main objectives. It would prohibit multiple affiliates from bidding on pipeline capacity in an open season in which the pipeline may allocate the capacity pro rata unless the affiliates have an independent business reason for submitting bids. In addition, if more than one affiliate participates in an open season and there is a pro rata allocation, the affiliates cannot release or otherwise allow any other affiliate to use the capacity. In May, various parties filed numerous comments that the rule would be unnecessarily burdensome, requires certain clarifications and that, despite difficulties in drafting a workable rule, there is a need to deter manipulation. Interveners included the Natural Gas Supply Association, American Public Gas Association, American Gas Association, National Energy Management, Interstate Natural Gas Association of America and others. The NOPR and comments can be viewed through FERC's eLibrary at www.ferc.gov by doing a docket search under RM11-15.

Summer Market Outlook

The summer of 2011 is unlike any other in recent memory. With nearrecord hydro conditions in the Pacific Northwest and El Paso's Ruby Pipeline Project in-service in July, the Pacific Northwest has some interesting market fundamentals to digest. From a supply standpoint, Sumas is slightly discounted to Rockies for most of the injection season. In Alberta, the market is exerting downward price pressure on AECO supply, as WCSB producers seem willing to price their gas competitively to compete for western market share. All things considered, under current pricing dynamics, Northwest expects to see a continued migration to Canadian supply sources for the duration of the summer and a reduction of off-system deliveries on Northwest Pipeline. On the demand front, Northwest continues to see some market recovery in industrial load from recessionary lows of a few years ago. However, the massive hydro in the region has swamped our electric generation load; Northwest has seen a significant decrease in year-over-year gas demand for power. On the storage front, with the injection season beginning in earnest and both Jackson Prairie and Clay Basin being substantially lower this year than last, we anticipate that the negative hydro impact to throughputs should be partially offset by storage injections. To summarize, this summer Northwest's customers will continue to have access to diverse supply sources, and this access will be valuable in this tightly correlated market. We expect to see a continued migration to Canadian supply, particularly with the in-service of the Ruby Project. From a demand standpoint, the region's annual storage deficit should provide some demand support, and we look for increases from our on-system markets, excluding power generation demand, until the third quarter.

Northwest Supply Options

Futures as of June 7, 2010

5.4 5.2 5 4.8 4.6 4.4 4.2 4 3.8

$/Dth

AECO

Rockies

Sumas

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2nd Quarter 2011

WILLIAMS SPOTLIGHT

Justin Adams, Sumas District Manager

On April 23, Justin Adams became the newest district manager on Northwest Pipeline's system. Barry Orgill, director of operations, says, "Justin is a committed, bright, articulate, energetic and caring individual who was selected to both lead and learn from a high-performing field organization. His engineering background and upcoming operational experiences will undoubtedly enhance the district and overall organization." Originally from upstate New York, Justin moved with his family to Houston where he attended grade school. Justin came by his interest in science and energy naturally. His mother is a project coordinator for offshore infrastructure, and his father is in the chemical industry. He earned a Bachelor of Science degree from the University of Texas at Austin. Justin began with Williams Gas Pipeline in its Engineering Development Program at Transco. He started in the pipeline integrity group and transitioned to pipeline design and project management. He came to Salt Lake City in 2007 and spearheaded the looping of the Olympia Lateral for Puget Sound Energy. He interfaced with NW Natural on mainline facility modifications from Washougal to Eugene. He spent a summer in Rangeley, Colo., performing construction inspection in the difficult terrain of the Colorado Hub project. Justin is expert in analyzing smart pig data and also has served as a project manager for several pipeline integrity projects. As a district manager, Justin is focused on safe operations in Sumas and on lending his support to a crew of 17 technicians. He is responsible for community involvement; interfacing with customers, local technical colleges and emergency responders; DOT compliance; and gas custody transfer with Spectra and FortisBC. Above all, he is committed to his role as a safety leader for the district in support of Williams' commitment to a strong safety culture. Justin is a trail runner and self-taught skier. He has travelled all over the lower

Justin Adams at last year's Sizzler Utah Valley Half Marathon

Justin is a committed, bright, articulate, energetic and caring individual who was selected to both lead and learn from a highperforming field organization. His engineering background and upcoming operational experiences will undoubtedly enhance the district and overall organization." ­ Barry Orgill

Director of operations

48 and loves hanging out with friends and family watching pro football and basketball. He appreciates good food, especially the fresh seafood in the Pacific Northwest. Each weekday morning he sits in his office in Sumas, Wash., a town with fewer than 1,000 people, and looks out over the evergreens and the water into Canada. "There's nothing more beautiful," he says.

Williams Safety Corner: The All-Important `360'

Safety is something we believe in at Williams. Whether at work or at home, we are encouraged to take safety seriously. We've all heard or read in the news of tragic backing accidents. If you drive a car to work every day, chances are you will need to back your vehicle out of a driveway. Without a pair of eyes in the back of your head, you can't be sure that you won't hit something--or someone. In an attempt to eliminate problems while backing a car, you can perform what is called a "360." As the name suggests, a 360 is a walk completely around your car, checking for obstacles (rocks, poles, parked cars, tricycles, children, etc.) before you get in, turn the key and go. By performing this simple task, you've significantly reduced the chance of hitting something while backing. Remember to back slower than 3 mph in order to maintain control of your vehicle or have time to stop quickly.

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