Energy Bar Association Panel Natural Gas Pipelines...Performance 9 Current policy and guidelines are...
Transcript of Energy Bar Association Panel Natural Gas Pipelines...Performance 9 Current policy and guidelines are...
Energy Bar Association PanelNatural Gas Pipelines
May 7, 2018
Legal DisclaimerThis presentation contains forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. In particular, statements, express or implied, concerning future actions, conditions or events, future operating results or the ability to generate revenues, income or cash flow or to make distributions or pay dividends are forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations of Tallgrass Energy Partners, LP, Tallgrass Energy GP, LP or Rockies Express Pipeline LLC and their respective affiliates may differ materially fromthose expressed in these forward-looking statements. Many of the factors that will determine these results are beyond Tallgrass Energy Partners, LP’s, Tallgrass Energy GP, LP’s and Rockies Express Pipeline LLC’s ability to control or predict and are necessarily based upon various assumptions involving judgements with respect to the future. Forward-looking statements contained in this presentation specifically include, without limitation, the stability of future cash flows at Tallgrass Energy Partners, LP, future liquidity at Tallgrass Energy Partners, LP and expectations regarding price and volume risk, the feasibility, cost, execution and in-service timing of capital and other growth projects at Rockies Express Pipeline LLC and Tallgrass Energy Partners, LP, and their respective affiliates, including, without limitation, the Cheyenne Connector pipeline, the Cheyenne Hub enhancements to be completed by Rockies Express Pipeline LLC, the Iron Horse Pipeline, the new pipeline and SWD projects related to the Buckhorn acquisition, the Platteville Extension on the Pony Express Pipeline System, and the Natoma Terminal, the repayment of the $550 million 2018 debt maturities via capital contributions from the members of Rockies Express PipelineLLC, the closing of the acquisition of a 51% membership interest in the Pawnee, Colorado Terminal, Tallgrass Energy 2018 guidance, the forecasted revenues for Rockies Express Pipeline LLC, the construction of new demand and supply interconnects related to the Pony Express Pipeline System, the availability of a fifth common stream of crude oil for transport on the PonyExpress Pipeline System, and the identified growth opportunities in the gathering, processing and terminalling segment. These statements also include, among others, Tallgrass Energy Partners, LP’s, Tallgrass Energy GP, LP’s and Rockies Express Pipeline LLC’s respective ability to complete and integrate acquisitions, implement their respective business plans and completeinternal growth projects; changes in general economic conditions; competitive conditions; actions taken by third-party operators, processors and transporters; demand for natural gas transportation, storage and processing services and crude oil transportationservices; price and availability of debt and equity financing; availability and price of natural gas and crude oil compared to alternative fuels; energy efficiency and technology trends; operating hazards and other risks incidental to the business; natural disasters, weather-related delays and casualty losses; interest rates; labor relations; customer defaults; changes in tax status; effects of existing and future laws and governmental regulations; effects of future litigation; and other uncertainties. There is no assurance that any of the actions, events or results of the forward-looking statements will occur, or if any of them do, what impact they will have on our results of operations or financial condition. Because of these uncertainties, you are cautioned not to put undue reliance on any forward-looking statement.
This presentation does not constitute an offer to sell any securities of Tallgrass Energy Partners, LP, Tallgrass Energy GP, LP or their respective affiliates or a solicitation of an offer to buy any securities of Tallgrass Energy Partners, LP, Tallgrass Energy GP, LP, or their respective affiliates.
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Tallgrass Energy Partners Overview
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Tallgrass Energy Overview
(1) REX leases capacity on Overthrust Pipeline, which is owned by Dominion and consists of 255 miles of pipeline.(2) Tallgrass Terminals owns a 51% interest in a joint venture, which owns the Pawnee, CO Terminal.(3) Tallgrass Terminals owns a 60% interest in a joint venture, which owns an oil terminal facility in Cushing, OK.
Consolidated Footprint
(3)
(2)
Natural Gas T&S
TIGT
Trailblazer
REX (75% ownership)
Lease of Overthrust(1)
Crude Oil Transportation
Pony
G&P and Terminalling
Processing Plant
Douglas System
BNN Pipeline
Oil Terminal
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Tallgrass Energy Key Accomplishments
Drop Down Acquisition
OtherProject Financing
2015 20162013 2014
Contract REX’s Seneca Lateral
20% interest in Cushing Terminal Acquisition
Pony Northeast Colorado Lateral Open Season
Contract Trailblazer’s Redtail Lateral
TEP IPO
TMID Casper Expansion
TMID Douglas Expansion
TIGT West End Expansion
TMID Keep WholeContract Conversion
REX Refinances Notes
File REX PDO For Zone 3 East-to-West
Transportation
2018
REX Repays $450mm 2015 Notes
Seneca Lateral Achieves Full Capacity
REX Zone 3 E2W Project placed into service
REX Settles with final MFN Shipper
33.3% Pony Acquisition
~$570mm TEP follow-on Equity Offering
TEGP IPO
Pony Expansion Project placed into service
Whiting Water Business Acquisition
TMID Redtail NGL Pipelineplaced into service
3rd Party Acquisition
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BNN Water Business Acquisition
Trailblazer Acquisition
~$330mm TEP follow-on Equity Offering
33.3% Pony Acquisition
Commence ATM Equity Program
REX Signs E2W PAs
REX Settles with 3 MFN Shippers
REX Signs Capacity Enhancement PAs
TMID POP Contract Conversion
Pony placed into service
Settle Trailblazer Rate Case
Sterling Terminal Constructed
Financing
Terminals and NatGas Operator Acquisition
REX reaches settlement with Ultra
REX Capacity Enhancement placed into
service
24.99% REX Acquisition
Successful Open Seasons for Cheyenne Connector &
Cheyenne Hub
PRB Gas Gathering System Acquisition
PRB & DJ Water Asset Acquisitions
North Sterling Water Pipeline placed into
service
PRB Oil Gathering System Acquisition
Successful Platteville Extension Open Seasons
Announced new Pony Refinery & Supply
Connections
Acquired additional 49% interest in Deeprock
Development
$350mm & $500mm TEP Senior Notes Offerings
31.3% Pony Acquisition
TEP increases Revolver to $1.75bn
25.0% REX Acquisition from Sempra
REX modifies Encana contract
$400mm TEP Senior Notes Offering
Buckingham Terminal Constructed
REX Capacity Enhancement Project
Fully Contracted
Settle TIGT Rate Case
2017
PXP modifies CLR contract
Announced Iron Horse Pipeline JV
Acquired 51% interest in Pawnee Terminal
Acquired 38% interest in Deeprock North Cushing
Terminal
Buckhorn BakkenWater Acquisition
Pipelines Are Not All the Same!
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Competition
Performance Risks
Customer Service
Transportation Rates
MarketsCorporate Structure
Tax Implications
Competition and Risks
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� Competitive transportation options are good for customers
� Policy changes bring financial and timing risks
� Predictability is KEY to project development
Commercialize
Market participants need early line of sight to take-away in order to make their core business decisions.
Project Development
Pipelines must deploy significant capital in advance of regulatory authorizations to meet customer needs.
Regulatory Authorizations
Required approval process must be efficient and predictable.
Markets and Rates
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� Market demand and supply areas have significantly changed and
pipelines must respond competitively
� Aging infrastructure brings new challenges for captive markets needing
enhanced reliability of service
� Rates on modern pipelines compete with legacy max rate pipelines
� Cost recovery mechanisms are challenged
Performance
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� Current policy and guidelines are effective (when pipelines follow them)
� Early public, landowner and agency outreach
� Thorough planning and applications are a necessity
� Proactive engagement when alternative approaches are needed
� Follow-through and communication are imperative
� Good actors are quickly forgotten when bad actors are in the spotlight
� Proper agency response to bad actors would mitigate all pipelines being
painted with the same brush
Customer Service
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� Develop partnerships with customers to bring value to both them and the
pipeline
� Provide full life cycle service
� Creativity and innovation necessary for success
� Respect pipeline tariffs but do not hide behind them
Northeast Shift from Net Demand to Production
UTICAUTICAUTICAUTICA
MichConChicago
Dawn
Gulf Coast
NE Markets
UTICA
SE Markets
Lower Midwest
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REX Response to Change
Original
2009 – 2013
2014 – 2019
Future
2019 and Beyond
� West-to-East – REX originated shipping solely West-to-East
� West-to-East – West-to-East transport continues to play an important function for REX
� Seneca Lateral and East-to-West Projects – Contracted base 1.8 bcf/d of East-to-West capacity in Zone 3
� Capacity Enhancement – Increased East-to-West capacity from 1.8 bcf/d to 2.6 bcf/d in Zone 3
� Direct Market Access (to be constructed) – REX is constructing interconnects for Vectren, NTE, and IPL in 2017
Rockies gas supply
Compression CompressionNE Market
1.8 bcf/d
Appalachiangas supply
Rockies gas supply
Compression Compression NE MarketChicago
City GatesMidwest
City GatesIndianapolis City GatesCompression
1.8 bcf/d2.6 bcf/d
Appalachiangas supply
Rockies gas supply
Compression Compression NE MarketFertilizerPlant
PowerPlant
Compression
Zone 1 Zone 2
1.8 bcf/d 2.6 bcf/d
1.8 bcf/d
Zone 3
� Northernmost Header System – Tallgrass’s vision is to make REX a fully bi-directional header system
across all zones creating superior supply and demand optionality for its customers
3.6 bcf/d 4.4 bcf/d
West-to-East
East-to-West
Total Capacity
1.8 bcf/d
4.4 bcf/d
6.2 bcf/d(1)
Potential marketable capacity
(1) Some additional capital expenditure may be required to make Zones 1 and 2 fully bidirectional.
ChicagoCity Gates
MidwestCity Gates
Indianapolis City Gates
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REX Throughput
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Tallgrass System – The Nation’s Northernmost Header
Midcon
Gulf Coast
Northeast
East Coast
West Coast
Mexico
• Optionality
• Flexibility
• Follow weather patterns
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In Summary…..
� Predictability is KEY
� Timing of regulatory authorizations must be reasonably predictable
� Policy changes must be well thought out and implemented
� Pipeline differences need to be realized
� Good actors versus bad actors
� Legacy versus new
� Competitive versus captive
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