Post on 01-Jan-2016
description
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Cheyenne Tuscola
Lebanon
Clarington
Meeker
WamsutterOpal
““Rockies Express Rockies Express Pipeline”Pipeline”
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Market Assessment
• Production of Rockies gas is expected to increase
• There is insufficient pipeline capacity to export this increasing supply
• Potential expansion projects for existing pipelines would deliver gas to low-price markets in the Southwest or Mid-Continent
• Increased LNG deliveries to the West Coast and Gulf Coast will compete with the Rockies
• The highest premium-priced market for gas is the Northeast
• Large basis differentials exist between the Rockies and the East Coast
• Producers seek the highest netback and greatest optionality on where to deliver gas
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Reserve Base Supports New Infrastructure
Huntsman
• 20 year supply requirement for existing pipes = 36 Tcf
• 20 year supply requirement for existing pipes + Rockies Express = 50 Tcf
• 20 year supply requirement for existing pipes + Rockies Express + 50% excess = 75 Tcf
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To support Rockies production, additional pipeline capacity must be built
Total Exports 4.9 Bcfd
Rocky Mountain Production Forecast*:
2004 – 5.8 Bcfd
2007 – 7.0 Bcfd
2009 – 7.6 Bcfd
2012 – 8.3 Bcfd
*Source: CE RA W et Gas Capacity Outlook.
To maximize basis there should be ~10% excess capacity
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Basis Spreads Support New Pipeline
•Basis differential versus Henry Hub
•Source: Historical Prices – GasDat, Forward Prices – Sempra Commodities Oct 05 Curve
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Project Overview
• Construction of 42 inch or larger, 1350 mile pipeline from Cheyenne Hub to Clarington, Ohio with 2 Bcfd transport capacity
• Purchase Entrega Pipeline - 330 miles of 36 and 42 inch from Meeker to Wamsutter to Cheyenne.
• 180 miles of 36 inch pipeline from Opal to Wamsutter
• Over 20 interconnections with interstate pipelines and multiple supply points
• Staged FERC Certificates will enable access to mid-continent delivery points in Dec. 2007; access to Tuscola or Lebanon delivery points in Dec. 2008 and access to eastern Ohio, delivery points in July 2009
• Final design based on Open Season binding bids
• Expected rates of about $1 plus fuel of about 2% to 3%
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• Route follows over 90% of existing pipeline or utility ROW corridors
• Detailed engineering, environmental, and ROW studies due Nov. 15th
• Proposing 3 certificate FERC filing process and construction schedule to maintain 4Q07 in-service date to mid-continent– Certificate I route follows Kinder´s Trailblazer and Terasen’s Platte
Valley pipelines
– Existing Trailblazer and Platte ROW and project records help accelerate permitting
• Discussions with FERC yielded positive feedback on staged development
• Project is in to hold Open Season later in Q405
Development Status
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Rockies Express Pipeline Proposed Route
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Significant Developments
• Kinder & Sempra Joint Development– Kinder 2/3 equity and Sempra 1/3 equity– Sempra Affiliate committing to 200,000 Dth/d
• EnCana & Entrega Support– 500,000 Dth/d of firm long haul commitment– Incorporation of Entrega into the project
• Wyoming Natural Gas Pipeline Authority Negotiations
• Exclusivity Agreements with End-Use Markets
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WNGPA
• Provides for 90 period of exclusive negotiations• Subjects of negotiations include:
– WNGPA providing competitive financing for Rockies Express
– WNGPA facilitating extension of Project to Opal Hub– A conditional capacity commitment of up to 200 mmcfd
under the proposed Aggregation Services– Potential interim financing through 2008 or beyond for
the Project’s acquisition and/or construction of assets upstream of Cheyenne
• Any transportation commitment will be subject to Board approval by January 31, 2006
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Aggregation Services
• Would allow for the WNGPA to serve as Aggregator:– Gas-in-kind – Small producers
• WNGPA would not need to hold title to gas• “Pool Members” could change over time• Relationship of Aggregator and Pool Members is
a private contractual relationship (not subject to FERC review or jurisdiction)
• Provide credit assurances for Pool Members
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Next Steps
• Negotiate and execute shipper precedent agreements
• Start NEPA Pre-filing in late October, 2005• Conduct binding open season in Nov. – Dec, 2005
- Long haul bids coordinated with completion of construction phases are conforming
• Shipper Board approval required by Jan. 31, 2006• A minimum of 1,500,000 Dth/d is needed• Determine economic viability by February, 2006
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Contact Information
• Kinder MorganJeff RawlsVice President Business DevelopmentWest Region Gas Pipelines303-914-4903jeff_rawls@kindermorgan.com
• Sempra Pipelines & StorageRyan O’NealVice President619-696-4585roneal@SempraPipelines.com