NFGSC & Empire 2018 Customer Event

Transcription

1 NFGSC & Empire 2018 Customer Event John Pustulka Chief Operating Officer National Fuel Gas Company 1

2 Safe Harbor For Forward Looking Statements This presentation may contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including statements regarding future prospects, plans, objectives, goals, projections, estimates of oil and gas quantities, strategies, future events or performance and underlying assumptions, capital structure, anticipated capital expenditures, completion of construction projects, projections for pension and other post-retirement benefit obligations, impacts of the adoption of new accounting rules, and possible outcomes of litigation or regulatory proceedings, as well as statements that are identified by the use of the words anticipates, estimates, expects, forecasts, intends, plans, predicts, projects, believes, seeks, will, may, and similar expressions. Forward-looking statements involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company s expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, but there can be no assurance that management s expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: delays or changes in costs or plans with respect to Company projects or related projects of other companies, including difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; changes in the price of natural gas or oil; impairments under the SEC s full cost ceiling test for natural gas and oil reserves; financial and economic conditions, including the availability of credit, and occurrences affecting the Company s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company s credit ratings and changes in interest rates and other capital market conditions; factors affecting the Company s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; uncertainty of oil and gas reserve estimates; significant differences between the Company s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers ability to pay for, the Company s products and services; the creditworthiness or performance of the Company s key suppliers, customers and counterparties; the impact of potential information technology, cybersecurity or data security breaches; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. Forward-looking statements include estimates of oil and gas quantities. Proved oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible under existing economic conditions, operating methods and government regulations. Other estimates of oil and gas quantities, including estimates of probable reserves, possible reserves, and resource potential, are by their nature more speculative than estimates of proved reserves. Accordingly, estimates other than proved reserves are subject to substantially greater risk of being actually realized. Investors are urged to consider closely the disclosure in our Form 10-K available at You can also obtain this form on the SEC s website at For a discussion of the risks set forth above and other factors that could cause actual results to differ materially from results referred to in the forward-looking statements, see Risk Factors in the Company s Form 10-K for the fiscal year ended September 30, 2017 and the Forms 10-Q for the quarter ended December 31, 2017 and March 31, The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof or to reflect the occurrence of unanticipated events. 2

3 NFG: A Diversified, Integrated Natural Gas Company Upstream E&P Developing our large, high quality acreage position in Marcellus & Utica shales 785,000 Net acres in Appalachia ~550 MMcf /day Gross Appalachian natural gas production Midstream Gathering Pipeline & Storage Expanding and modernizing pipeline infrastructure to provide access to Appalachian supplies $1.4 Billion Investments since MMDth Daily interstate pipeline capacity under contract Downstream Utility Energy Marketing Providing safe, reliable and affordable service to customers in WNY and NW Pa. 743,500 Utility Customers 133 Bcf Utility system natural gas throughput in FY17 3

4 Pre-Marcellus Shale Era Pipeline Flows 2008 Northeast U.S. Natural Gas Market (1) (Bcf per Day) 25.0 TCPL TGP TETCO 0.0 Regional Demand 2.0 In-Basin Production Pipeline Net Inflows (1) Source: Bentek (Platts / S&P Global). Reflects 12-month average for calendar year. The Northeast U.S. includes ME, NH, VT, MA, RI, CT, NY, NJ, PA, DE, MD, VA, WV, OH, KY and DC. Net pipeline flows include changes in regional storage volumes. 4

5 Current Pipeline Flows in the Shale Era 2016 Northeast U.S. Natural Gas Market (1) (Bcf per Day) (4.0) 15.0 TGP TETCO Regional Demand In-Basin Production Pipeline Net Outflows (1) Source: Bentek (Platts / S&P Global). Reflects 12-month average for calendar year. The Northeast U.S. includes ME, NH, VT, MA, RI, CT, NY, NJ, PA, DE, MD, VA, WV, OH, KY and DC. Net pipeline flows include changes in regional storage volumes. 5

6 Natural Gas Demand Leads the Way 45 Total U.S. Energy Consumption by Source Reference Case Quadrillion Btu Petroleum Natural Gas Renewables Coal Nuclear 0 Source: EIA 2018 Annual Energy Outlook (Slide #13) Table 2 Energy Consumption by Sector and Source 6

7 Carbon sequestration is seen in rocks in Oman. Scientists say that if this natural process, called carbon mineralization, could be harnessed, accelerated and applied inexpensively on a huge scale it could help fight climate change. Rocks in Oman could help save the planet by capturing carbon from atmosphere Source: The Buffalo News April 28,

8 Thank You John Pustulka Chief Operating Officer National Fuel Gas Company 8

9 System Trends and 2018 Integrity Work Tony Conte Superintendent Scheduling, Gas Control, Measurement, Gas Accounting National Fuel Gas Supply Corp. & Empire Pipeline, Inc. 9

10 Pipeline & Storage Footprint 10

11 Annual Lookback NFGSC Throughput by Month Peak Days Key Segment Throughput Line X Line N YM53/YM52 Storage Inventory 2018 System Work Empire Throughput by Month Peak Days Connector Throughput 2018 System Work 11

12 2,300 2,200 2,100 2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 NFGSC Average Daily Throughput by Month (MDth) 12

13 NFGSC Observed Peak Days (MDth) 3,000 2,500 2,000 1,500 Off-System On-System 1, /24/ /07/ /07/ /12/ /08/ /05/

14 NFGSC Line X South to North Niagara NFG Concord East Aurora Independence Tuscarora Ellisburg Mercer Leidy Holbrook 14

15 NFGSC Line X South to North Average Daily Scheduled by Month (MDth) 15

16 NFGSC Line N South to North Niagara NFG Concord East Aurora Independence Tuscarora Ellisburg Mercer Leidy Holbrook 16

17 NFGSC Line N South to North Average Daily Scheduled by Month (MDth) 17

18 NFGSC YM53/YM52 South to North Niagara NFG Mercer East Aurora Concord Independence Tuscarora Ellisburg Wharton Leidy Holbrook 18

19 700 NFGSC YM53/YM52 South to North Average Daily Scheduled by Month (MDth) 19

20 NFGSC Top Gas Storage Inventory MDth (BOM) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, / / / / / /2018 November 1st April 1st 20

21 Empire Average Daily Throughput by Month (MDth)

22 Empire Observed Peak Days (MDth) Generation Off-System On-System /24/ /07/ /19/ /13/ /09/ /05/

23 Empire Connector South to North Chippawa Mendon Lysander Hopewell Phoenix Corning Jackson 23

24 Empire Connector South to North Average Daily Scheduled by Month (MDth) 24

25 System Work - Dash Board Locations 25

26 2018 System Work: Key Construction Jobs 2018 Supply & Empire "Major" Pipeline and Compression Projects w/ Potential Service Interruptions - 01/24/18 Shut Down of "Major" Facilities Section to be Shut Project Company Description State Start Date End Date Down Empire Connector and Mainline ILI Empire 83 mi. ECP, & 86 mi. EMP01 West Assessments NY 05/01/18 05/22/18 Multiple pig runs at set volume Empire EMP01E Empire 64 mi. EMP01 East Assessment NY 07/24/18 08/07/18 Multiple pig runs at set volume Oakfield Dehy System & MLV on EMP01 Empire Install dehydration system for TCPL delivery NY 08/28/18 08/31/18 Oakfield Station to Alabama ALG0-2 Line KNY Uprate Project Supply Uprate Line KNY from NY/PA Stateline to Salamanca NY 09/03/18 10/31/18 Station FOM2544 to Salamanca CSC

27 Empire Phoenix Station: Install Isolation Valves Phoenix Station Outage: One to two day outage in May. Date(s) to be determined. Deliveries to Phoenix Line 63 Sithe and Phoenix Line 39 - Ni Mo will be unavailable. Chippawa Oakfield Lysander Hopewell Phoenix Corning Jackson 27

28 Empire Connector: Cleaning and ILI Empire Connector Between Corning and Mendon Cleaning Run May 15 th Empire Connector constraint limited to 200,000 Dth/d. Chippawa Mendon Lysander Phoenix Hopewell ILI Assessment May 17 th Empire Connector constraint limited to 135,000 Dth/d. Corning Jackson Primary service will be curtailed on a pro-rata basis. 28

29 Empire Mainline: Cleaning and ILI Empire Mainline Between Mendon and Chippawa Cleaning Run May 8 th and 10 th Empire Connector constraint limited to 443,000 Dth/d. Chippawa Mendon Lysander Phoenix Hopewell ILI Assessment May 22 nd Empire Connector constraint limited to 459,000 Dth/d. Corning Jackson Curtailment not expected for volumes from Hopewell to Chippawa. 29

30 Empire East: Cleaning and ILI Empire East Between New Victor and Phoenix Cleaning Run July 24th Empire Connector constraint limited to 443,000 Dth/d. Delivery rate to Phoenix between 100,000 Dth/d and 150,000 Dth/d will be required. ILI Assessment August 7th Empire Connector constraint limited to 459,000 Dth/d. Delivery rate to Phoenix between 100,000 Dth/d and 110,000 Dth/d will be required. Chippawa Phoenix New Victor Lysander Hopewell Corning Jackson 30

31 Empire Oakfield: Dehydration and MLV Installation Empire Oakfield Station Oakfield Station shut down August 28 th to August 30 th Dehydration facility installed July 24 th Isolated section East and West of the Oakfield scheduling point. Chippawa Oakfield Lysander Phoenix Hopewell Receipts and deliveries will be unavailable. Corning Jackson 31

32 NFGSC Line KNY Uprate Project Line KNY Uprate Project Uprate Line KNY from NY/PA Stateline to Salamanca Work will begin September 3 rd and go through October 31 st. Niagara NFG Concord East Aurora Independence Tuscarora Ellisburg Mercer Leidy Holbrook 32

33 Recent Supply and Empire Initiatives Incorporated Central Delivery Point and Central Receipt Point language into both tariffs. Provides opportunity for reduced nomination effort. Modified Appalachian Zones on Supply. Allows more defined access of Appalachian receipts to Market Pooling Points and through path constraints. Implemented Security Administrator Upgrade Allows shippers to directly manage user access to the NFG business systems. Enhanced Communication among Commercial, Scheduling, Gas Accounting and Gas Control groups. Regular review of system and business operation to provide clear and consistent communication to shippers. 33

34 Thank You Tony Conte Superintendent Scheduling, Gas Control, Measurement, Gas Accounting National Fuel Gas Supply Corp. & Empire Pipeline, Inc. 34

35 NFGSC/ Empire Infrastructure Plans Kevin Cotter Assistant General Manager Interstate Marketing National Fuel Gas Supply Corp. & Empire Pipeline, Inc. 35

36 Pipeline & Storage Segment Overview National Fuel Gas Supply Corporation (NFGSC) Contracted Capacity (1) : Firm Transportation: 3,157 MDth per day Firm Storage: 68,042 MDth (fully subscribed) 2,300 mile pipeline network, 31 storage areas Extends from Niagara to Ellisburg/ Leidy and west through the Appalachian Basin. Interconnects with TransCanada, TGP, Transco, Columbia, TETCO, Dominion and Empire. Empire Pipeline, Inc. Contracted Capacity (1) : Firm Transportation: 954 MDth per day Firm Storage: 3,753 Mdth (fully subscribed) 250 mile pipeline Extends from Canada though New York into Pennsylvania. Interconnects with TransCanada, TGP, Millennium, Dominion and NFGSC. NFGSC Empire Pipeline (1) As of September 30, 2017 as disclosed in the Company s fiscal 2017 form 10-K. 36

37 Pipeline & Storage Customer Mix 2007 vs Outside Pipeline 7% November 1, 2007 End User 2% Producer 1% Outside Pipeline 6% November 1, 2017 End User 2% Marketer 21% Marketer 9% Producer 35% LDC 69% LDC 48% Contracted Firm Transportation by Shipper Type 37

38 Northern Access Project Status National Fuel Remains Committed to Building the Northern Access Pipeline Project Northern Access 2016 (Delayed) In-Service: TBD Systems: NFG Supply Corp. & Empire Pipeline Capacity: 490,000 Dth per day Regulatory / Appeal Status To Dawn Niagara Chippawa US Court of Appeals for the 2 nd Circuit: On April 21, 2017, NFG filed appeal of NY DEC notice of denial of the Clean Water Act Section 401 Water Quality Certification (WQC). East Aurora Decision from the Court is pending. Federal Energy Regulatory Commission: On March 3, 2017, NFG filed petition for rehearing with FERC seeking waiver of NYS DEC Clean Water Act Section 401 WQC and preemption of state level permits. Decision from FERC is pending. 38

39 New Infrastructure Line D Expansion Capacity: 77,500 Dth/d Market: Increased On-System Demand Fully contracted long term FT Service Transportation Path: TGP Lamont to Erie, PA region Facilities: 4,140 HP New Keelor Compressor Station Lamont M&R Upgrade Bowen & Roystone Station Modifications In-service: November

40 New Infrastructure Colden Storage Acquisition Transaction: Purchased Storage asset from TGP Capacity: 3,895,800 MSQ 41,280 Dth/day Withdrawal Capability 25,800 Dth/day Injection Capability Market; TGP to contract for full MSQ for the 1 st year Lease of 200 Line Capacity In-service: May 1, 2018 Upcoming Additional Services: Transport Capacity to TGP Mercer (219 Pool) See Open Season 233 Remarketing of Storage (2019 and beyond) 40

41 Filed Projects Line K Expansion Line K Expansion #1 Capacity: 2,600 Dth/d Market: NFG Distribution (NY) Facilities: In conjunction with Modernization Project In-service: December 2017 Line K Expansion #2 Capacity: 15,000 Dth/d Market: NFG Distribution (NY) Facilities: Reg Station and Line Uprate Target In-service: November 2018 Shippers: Long Term FT service PAs executed NATIONAL FUEL GAS SUPPLY CORP. LINE K EXPANSION PROJECT 41

42 Filed Projects Capacity: 133,000 Dth/d Market: New ethylene cracker facility being built by Shell Chemical Appalachia PA executed Facilities: Line N to Monaca 4-mile lateral of 12 pipe off Line N Other minor Line N enhancements Target in-service: July 2019 FERC Prior Notice Filing: March 2018 Utilization of New Market Area Pooling Point at Aliquippa 42

43 Filed Projects Empire System Expansion Target In-Service: November 2019 Receipt Point: Jackson (Tioga Co., Pa.) Design Capacity and Delivery Points: 174,000 Dth/d to Chippawa (TCPL interconnect) 31,000 Dth/d to Hopewell (TGP 200 interconnect) Customers: Fully subscribed - precedent agreements in place for 205,000 Mdth/d Major Facilities: Empire North Expansion 2 new compressor stations in NY (1) & Pa. (1) No new pipeline construction Regulatory Process: Filed for FERC 7(c) certificate February

44 Future Expansion Plans Line N Expansion Opportunities Capacity: 235,000 Dth/d to 500,000 Dth/d Series of OS s to gauge market interest Expand or develop new interconnections with other pipelines (Columbia, DTI, NEXUS, Rover, TETCO, TGP) Facilities: Potential Ohio River crossing Replacement of older-vintage pipe Increasing System Maximum Operating Pressure Lateral pipeline builds OS221: Foundation Shipper 165,000 Dth/d capacity awarded S-to-N Holbrook to Ohio River Currently Negotiating PA 44

45 System Modernization NFG plans to increase investments in the modernization of its Supply Corp system over the next 5 years Modernization Program Objectives: Retire pre-1970 vintage pipelines Replace portions of Supply s existing system to enhance service for distribution, storage and local production customers. Upgrade compressor station facilities to employ best available technologies and environmental controls. Expected Impact: Improved system safety and service reliability Operational flexibility Lower greenhouse gas emissions Investment in rate base Opportunity for companion expansions 45

46 Thank You Kevin Cotter Assistant General Manager Interstate Marketing National Fuel Gas Supply Corp. & Empire Pipeline, Inc. 46