Presentation by CNX Gas Company LLC

Transcription

1 Presentation by CNX Gas Company LLC FERC Technical Conference December 8, 2009 TETLP Docket No. RP Presented by: Roland J. Campanelli/William M. Hauck CNX Gas Bruce Craig, PhD - MetCorr

2 Who Is CNX Gas Company? 2 nd largest Appalachian producer 4.1 MM Net Acres, Net Production Sales 92 Bcf/2009 Safety driven - No lost-time accidents since 1994 Drilled and operate >2,600 wells with over 1,000 miles of pipeline Largest producer of CBM/CMM in Appalachia ~250,000 net Mcf/day Growing Marcellus shale producer ~15,000 net Mcf/day 230,000 net acres Long term sales commitments up to 125,000 Mcf/day on TETLP CNX is a leading Appalachian producer with large capital investments and future growth plans in the Appalachian basin. 12/8/2009 FERC Docket No. RP

3 CNX Location on TETLP System Source: TETLP Presentation to CNX on TEAM Project CNX s production is ~250 miles from the NE market area and downstream of Gulf and Rockies commingling supplies. 12/8/2009 FERC Docket No. RP

4 CNX s Position on TETLP s Proposed Tariff There is no need to: Lower the existing CO 2 or O 2 specs, or Establish a minimum Wobbe spec The proposed tariff will limit existing and future supply The existing H 2 O spec adequately addresses transmission line corrosion concerns Our concerns on ethane, nitrogen and sulphur will be addressed in our forthcoming comment filing TETLP s existing quality specs protect the pipeline while maximizing gas supply for energy independence. 12/8/2009 FERC Docket No. RP

5 Carbon Dioxide TETLP proposes to lower CO 2 spec from 3% to 2% 12/8/2009 FERC Docket No. RP

6 Some supply at Blessing TX would be excluded Yet with commingling, no other point even approaches 2% CO 2 NE Markets average about 1% CO 2 No historical CO 2 issues and the proposed 2% CO 2 spec will exclude supplies. Source: RP TETLP Filing Appendix A Presentations 12/8/2009 FERC Docket No. RP

7 TETLP s Blending Studies (1) TETPL s blending studies show NE Market area CO 2 levels projected to decline versus base cases Supply Source CO 2 LNG 0.003% Marcellus 0.08% REX 1.3% (2) (1) Source: RP TETLP Filing Blending Studies, Appendix A Presentations (2) The Rockies Express Tariff limits CO 2 to 2%. 10/10/09 through 11/10/09 EBB data from REX shows CO 2 averaged 0.9% TETLP s blending studies confirm no future CO 2 issues. 12/8/2009 FERC Docket No. RP

8 Internal Pipeline Corrosion Presented by: Bruce Craig, PhD - MetCorr On behalf of CNX Gas 12/8/2009 FERC Docket No. RP

9 Internal Pipeline Corrosion No liquid water phase = no corrosion (true for both CO 2 and O 2 ) Example: A steel pipe filled with methane and anywhere from 0% to 100% of either CO 2 or O 2 will not corrode regardless of the duration of the exposure as long as the moisture in the gas stays in the vapor phase Water in the liquid phase is the culprit, not CO 2 or O 2. 12/8/2009 FERC Docket No. RP

10 Internal Pipeline Corrosion At 7lbs of H 2 O/MMscf (TETLP spec) water in vapor phase will not condense into liquid phase even at extreme winter pipeline conditions (1500 psig & 48 o F) (1) (1) RP TETLP Filing Affidavit of John R. Hand, pg. 6, #18 (2) Source of Chart: McKetta-Wehe Chart for Estimating the Water Content of Sweet Natural Gas - GPSA Engineering Data Book, 11 th ed., lb H 2 O 48 o F At existing 7lb H 2 O/MMscf spec there is no corrosion problem, regardless of CO 2 or O 2 content. 12/8/2009 FERC Docket No. RP

11 Minimum Wobbe Spec TETLP proposes to create a minimum Wobbe spec of /8/2009 FERC Docket No. RP

12 System average is currently 1346 Deliveries to the NE Market rarely approach 1330 Wobbe Historically there has not been a minimum Wobbe interchangeability issue. Source: RP TETLP Filing Appendix A Presentations 12/8/2009 FERC Docket No. RP

13 TETLP s Blending Studies (1) TETPL s Blending Studies show NE Market area Wobbe levels projected to increase versus base cases Supply Source Wobbe LNG 1371 Marcellus 1436 REX 1343 (1) Source: RP TETLP Filing Blending Studies, Appendix A Presentations TETLP s blending studies confirm no future Wobbe interchangeability issues. 12/8/2009 FERC Docket No. RP

14 CNX s CBM Analysis Gas Analysis Sample processed to 3% CO 2 Mole % Methane: CH Ethane: C Propane: C Butane+: C Nitrogen: N CO Oxygen: O Btu/scf 976 WOBBE 1274 TETLP s skewed +4% (1400) to -2.4% (1314) proposed Wobbe range excludes certain supplies in favor of high Btu gases such as LNG. 12/8/2009 FERC Docket No. RP

15 Impact on Lean Gas Supplies TETLP proposes to lower CO 2 spec to 2% and create a minimum Wobbe spec of /8/2009 FERC Docket No. RP

16 NGC+: Minimum Wobbe (1) NGC+ Interim Guidelines are for delivery points NGC+ Work Group focused on maximum Wobbe NGC+ Work Group did not develop interchangeability calculations for minimum Wobbe; -4% guideline chosen for symmetry reasons NGC+ Work Group states that minimum Wobbe of -4% is conservative, not a prediction of flame instability (1) Source: NGC+ Interchangeability Work Group, White Paper on Natural Gas Interchangeability and Non Combustion End Use, February 2005, Appendix G at pages 6-7. The science to support the minimum Wobbe still needs to be performed. Gas below -4% is interchangeable. 12/8/2009 FERC Docket No. RP

17 Wobbe Relationship Between Wobbe, Total Inerts, And Btu/Scf In Lean Gases GAS EXCLUDED BY 4% TOTAL INERTS (970 Btu) Wobbe CH 4 = 96% CO 2 = 0% N 2 = 4% Btu = 970 Wobbe = 1284 Total Inerts = 4% 4% total inert & 967 lower Btu specs: - are consistent with one another, and - equate to a minimum Wobbe of ~1265 NGC+ specified 4% total inerts (970 Btu) CH 4 = 96% CO 2 = 3% N 2 = 1% Btu = 970 Wobbe = % 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Vol% CO 2 TETLP s 4% total inert spec establishes minimum Wobbe at ~ /8/2009 FERC Docket No. RP

18 GAS EXCLUDED BY 4% TOTAL INERTS Wobbe Acceptable Lean Gas -- Current Tariff CH 4 = 100% CO 2 = 0% N 2 = 0% Btu = 1010 Wobbe = 1357 (970 Btu) CH 4 = 97% CO 2 = 3% N 2 = 0% Btu = 980 Wobbe = Wobbe 1260 CH 4 = 96% CO 2 = 0% N 2 = 4% Total Inerts = 4% (970 Btu) Btu = 970 Wobbe = 1284 CH 4 = 96% CO 2 = 3% N 2 = 1% Btu = 970 Wobbe = % 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Vol% CO 2 Current tariff allows for a broad range of lean gases such as CBM. 12/8/2009 FERC Docket No. RP

19 GAS EXCLUDED BY 4% TOTAL INERTS Wobbe GAS EXCLUDED BY 1314 WOBBE GAS EXCLUDED BY 1292 WOBBE Acceptable Lean Gas -- Proposed Tariff (1010 Btu) (1000 Btu) 0% N 2 GAS EXCLUDED BY 2% CO 2 Limit 1340 (1000 Btu) 1320 (990 Btu) 1% N 2 (990 Btu) Wobbe = (980 Btu) 2% N 2 3% N 2 (980 Btu) (970 Btu) (990 Btu) (980 Btu) (970 Btu) Wobbe = 1292 (980 Btu) (970 Btu) Wobbe Proposed Wobbe & CO 2 specs: - Voids the current 967 Btu & total inert spec - Excludes historically usable gas Even a -4% lower limit (1292) excludes usable gas % 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Vol% CO 2 TETLP s proposed 1314 minimum Wobbe spec would exclude historically acceptable lean gases from the system. 12/8/2009 FERC Docket No. RP

20 CNX s Historical Production into TETLP Meter (73512) WOBBE PROPOSED GAS QUALITY 5.0 WOBBE EXCLUDED GAS QUALITY WOBBE 1300 Greenhill (73512) Vol% CO CO 2 Existing specs already strike the right balance between maximizing supply and end-use interchangeability Greenhill (73512) Wobbe and Btu/scf 2.0 CO 2 EXCLUDED GAS QUALITY Btu/scf 1000 CO 2 PROPOSED GAS QUALITY /20/09 2/20/09 3/20/09 4/20/09 5/20/09 6/20/09 7/20/09 8/20/09 9/20/09 10/20/09 11/20/09 12/8/2009 FERC Docket No. RP

21 Oxygen TETLP proposes to lower O 2 spec from 0.2% (2000 ppm) to 0.1% (1000 ppm) 12/8/2009 FERC Docket No. RP

22 Historical averages are well below both current and proposed specs No new supplies reported to be high in O 2 CNX already addressed corrosion issue O 2 is not a problem today, nor is there evidence it will be a future problem. Source: RP TETLP Filing Appendix A Presentations 12/8/2009 FERC Docket No. RP

23 CNX S Overall Conclusion TETLP has not demonstrated that CO 2, minimum Wobbe, and O 2 are problems today, nor that they will become problems in the future TETLP s proposed specs will definitely exclude existing and future supplies, particularly lower Btu (lean) unconventional supply such as CBM Lean gas is part of the solution Current total inerts, lower Btu and H 2 O tariff specs adequately protect the system TETLP s EXISTING SPECS strike the right balance between system integrity and safety, end-use interchangeability and maximizing supply. 12/8/2009 FERC Docket No. RP

24 CNX S Recommendation Maintain current quality specs for CO 2 and O 2 and do not set any minimum Wobbe spec TETLP should perform quality studies over the next 3-5 years to see the effects of the change in supply mix, before proposing any new specs TETLP s Proposed Specs Are Unnecessary! 12/8/2009 FERC Docket No. RP