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WALL, N.J. – New Jersey Natural Gas (NJNG), the principal subsidiary of New Jersey Resources (NYSE: NJR), has entered into an agreement with the U.S. Army to support the modernization of the heat and hot water systems at the Picatinny Arsenal in Rockaway Township, Morris County. Beginning in April 2004, NJNG will install natural gas lines for over 150 buildings to allow the Army to replace a steam distribution system with more efficient natural gas equipment.

“It is an honor and a privilege to support the Army’s goals for efficient and environmentally friendly operations at Picatinny,” said Laurence M. Downes, chairman and CEO of NJNG. “Picatinny plays a significant role in the economy of Morris County and our state, and is a vital part of our nation’s defense network. We are proud to contribute to such an important investment in the infrastructure of the base,” Mr. Downes said.

The project will replace a 1950s-era centralized steam distribution system with natural gas-heating equipment installed in individual buildings. NJNG will construct over 12 miles of new natural gas distribution main and 151 service lines and will be responsible for system maintenance. Heating equipment will be provided by Chevron Energy Solutions Company through an Energy Savings Performance Contract with Picatinny.

Picatinny will become a firm customer of NJNG through a 10-year agreement. The base currently uses a combination of natural gas and oil, requiring tanks and oil deliveries that will no longer be necessary once the new system is operational.

The increased efficiency of the new system is estimated to reduce Picatinny’s energy use by about half. The pipeline installation will require approximately eight months to complete.

New Jersey Natural Gas (NJNG) is the principal subsidiary of New Jersey Resources (NYSE: NJR), a Fortune 1000 company and a member of the Forbes Platinum 400. NJNG is one of the fastest-growing local distribution companies in the United States, serving nearly 450,000 customers in New Jersey’s Monmouth, Ocean, Middlesex and Morris counties. This service area’s demographics and quality of life contribute greatly to NJNG’s growth. NJNG has been recognized by the American Gas Association for Best Practices in Routine Leak Repair. NJNG’s progress is a tribute to the dedicated employees who have shared their expertise and focus on quality through more than 50 years of serving customers and the community to make the company a leader in the competitive energy marketplace. More information about NJNG can be found on our Web site at njliving.com.