Tennessee Gas Pipeline Customer Meeting Business Session Thursday August 13,2015

Transcription

1 Tennessee Gas Pipeline 2015 Customer Meeting Business Session Thursday August 13,2015 1

2 Agenda Thursday, August 13 th, :30 a.m. Welcome Sital Mody 8:45 a.m. Pipeline Operations Update Ray Miller 9:05 a.m. Macro Overview and TGP flow changes Ernesto Ochoa 9:25 a.m. Break 9:45 a.m. Business Development Projects Paul Smith 10:05 a.m. Northeast Energy Direct Update Curtis Cole 10:25 a.m. Pipeline Expansion in New England Suedeen Kelly 11:20 a.m. Closing Remarks and Q&A TGP Team 11:45 a.m. Lunch Salt 11:50 to 5:30 p.m. Afternoon Activities (As Selected) 6:30 p.m. Social Solarium 7:45 p.m. Dinner Wentworth Ballroom 2

3 Forward-Looking Statements / Non-GAAP Financial Measures This 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 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 Kinder Morgan, Inc. may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond Kinder Morgan's ability to control or predict. These statements are necessarily based upon various assumptions involving judgments with respect to the future, including, among others, the ability to achieve synergies and revenue growth; national, international, regional and local economic, competitive and regulatory conditions and developments; technological developments; capital and credit markets conditions; inflation rates; interest rates; the political and economic stability of oil producing nations; energy markets; weather conditions; environmental conditions; business and regulatory or legal decisions; the pace of deregulation of retail natural gas and electricity and certain agricultural products; the timing and success of business development efforts; terrorism; 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. Please read "Risk Factors" and "Information Regarding Forward-Looking Statements" in our most recent Annual Report on Form 10-K and our subsequently filed Exchange Act reports, which are available through the SEC s EDGAR system at and on our website at We use non-generally accepted accounting principles ( non-gaap ) financial measures in this presentation. Our reconciliation of non- GAAP financial measures to comparable GAAP measures can be found in the Appendix to our Analyst Day presentation, dated 1/28/2015, on our website at These non-gaap measures should not be considered an alternative to GAAP financial measures. 3

4 Pipeline Operations Update Ray Miller 4

5 Marcellus /Utica SCOOP/ Stack 5

6 Agenda Past Winter This Summer Storage Pipeline Integrity Operational Expectations Pictures Scheduling NOPR 6

7 Winter Summary Record peak send out at 10.5 MMDTH on Feb 19th Record snow fall in Boston area. Cold temps in New England. Increased OFOs Zones 5 & 6, 40 days (35 days in 13/14) Zones, 4 days (9 days in 13/14) 17 Meter Specific OFO s for Power Plants (0 in 13/14) Increased Southbound flow Westbound into station 219 at.9+ bcf/d Southbound through station 200 at 1.2+ bcf/d Increased Utica receipts Southbound flow on 100 and 500 lines No significant mechanical issues in the Northeast Market Area! Increased volumes at Distrigas and Dracut 7

8 Winter Summary - System Deliveries % Change LDC 1,830 2,046 2,087 +2% Power 1,130 1,096 1, % Interconnects 3,924 4,841 5,014 +4% Other % TOTAL 7,455 8,044 8,417 +5% volumes are MDth/d 8

9 Winter Total System Power Deliveries 1,600 1, % 1, % -19% -3% +15% 1,000 Zone 6 Zone Zone 4 Zone Zone Zone volumes are MDth/d 9

10 HDDs Cold New England Weather Winter 2014/15 Winter 2013/14 Winter 2012/13 30 Year Average Nov Dec Jan Feb Mar 10

11 Winter New England Deliveries % Change LDC 1,324 1,467 1,511 +3% Power % Interconnects 468 1, % TOTAL 2,137 3,057 3,187 +4% volumes are MDth/d 11

12 Winter New England LDC Deliveries 2, YTD 1,800 1,600 1,400 1,200 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec All volumes are MDth/d 12

13 Winter North Supply Analysis 5,000 4,500 4,000 3,500 3,000 2,500 2,000 Total Marcellus supply was over 19 bcf/d this winter! +70% +15% +5% +38% +17% Dracut Distrigas Shelton Wright Niagara Marcellus 1,500 Utica 1,000 Rex Winter Period (Nov-Mar) Average MDth/d 13

14 Winter System Exports 1, % -1% -2% Canada Mexico volumes are MDth/d 14

15 Summer Summary Demand is up (vs previous summer) Overall system - 7% higher Power Generation - 15% higher Market Area Supply continues to increase Increase in both Utica and Marcellus Supply Increased Southbound Flows Station 200 (Ohio) 1.5 to 1.6 Bcf/d Station 860 (Tennessee) Bcf/d South Texas market remains strong Main drivers Heat and Storage fill High level of system maintenance, repair, rebuild activity GETTING READY FOR WINTER 15

16 Summer Total System Deliveries TD % Change LDC % Power 1,272 1,296 1, % Interconnects 3,589 4,445 4,619 +4% Other % TOTAL 6,137 6,671 7,121 +7% volumes are MDth/d 16

17 Summer New England Deliveries TD % Change LDC % Power % Interconnects 408 1,249 1,174-6% TOTAL 1,488 2,313 2, % volumes are MDth/d 17

18 Summer Total System Power Deliveries 1,800 1,600 1,400 1, % +9% +16% -22% +2% +15% Zone 6 1, Zone 5 Zone 4 Zone Zone 1 Zone TD volumes are MDth/d 18

19 Summer North Supply Analysis 4,500 4,000 3,500 3,000 2,500 2,000 Total Marcellus supply near 20 bcf/d this summer! +52% +13% +8% +36% +15% Dracut Distrigas Shelton Wright Niagara 1,500 Marcellus Utica 1,000 Rex TD volumes are MDth/d 19

20 BCF National EIA Storage Statistics Through Bcf Inj 535 Bcf > 2014; 64 Bcf > 5 Yr. Avg Tcf Current Inventory Year Range Year Average Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 20

21 Pipeline Integrity Pigging and internal line inspection (ILI) Planned for 1072 miles Approximately 775 are HCA miles Then anomaly remediation 100 Line (TX, MS, TN, KY) 200 Line ( OH, PA, NY, MA) 500 Line (MS, TN) 800 Line ( (MS, LA) And launcher/receiver modifications Required due to change in flow direction 23 modifications (STA 200 STA 219) ILI Projects Miles As of 7/31/ Miles w. HCAs Miles w/o HCAs Miles left to complete 21

22 Pipeline Integrity - Continued Hydrotest and Stress Corrosion Cracking (SCC) 7 projects remaining 121 miles 10 HCA miles 200 Line- valve sections 261 and Line, June - Nov 800 Line valve section 843, Sept Oct Class Changes 100 & 500 Line 17 miles of pipe to be replaced 50% complete Other Integrity Work 200 Line in Ohio Pipe Inspections Locational (IMU) Pig runs Pressure Test Projects - Miles Miles w. HCAs Miles left to complete Miles w/o HCAs As of 7/31/15 22

23 Question It seems like we are seeing more events and postings that are causing interruptible service to be interrupted, including a few with warnings about firm service being interrupted, why? 23

24 Answer TGP utilization is at historical highs Good news: TGP is serving more customer needs than ever before Bad news: Limited flexibility to perform maintenance or repairs without an interruption. 24

25 Answer continued Recent causes for limiting interruptible service Planned maintenance Unplanned maintenance Required class location upgrades Integrity work Installing/modifying pig launchers and receivers Managing speed of internal tools during pig runs Anomaly remediation (if required) Soil movement remediation program Expansion Project work Tie-ins for new construction Rebuilding of compressor stations New interconnections 25

26 Top Ten List Compressor Station Maintenance Top ten compressor station maintenance items Reciprocating power piston damaged Reciprocating power head cracked Metal detection in lubricating oil Turbocharger overhaul or replacement Centrifugal power turbine replacement Hardware or software automation issue Environmental compliance Valve not operating properly during start/stop Component vibration exceeding limit Complete rebuild of compressor station Emergency shut down (ESD) 26

27 Top Ten List Pipeline maintenance Top ten pipeline maintenance items ID/OD metal loss (magflux internal inspection tool) Diameter (dent) analysis (Caliper tool) Seam corrosion (AFD tool) Stress corrosion cracking (hydrotest or emat tool) Non piggable inspections (hydrotest or direct inspection) Construction records program (hydrotest) Wrinkle bend inspections Pressure weld inspections Soil movement monitoring program Third party damage to the pipe 27

28 Operational Expectations Continued high utilization driven by Marcellus and Utica supplies Both East and West from on TGP 300 Line South on TGP 200 Line South on TGP 500 Line South on TGP 100 Line Exports to Mexico & Canada increase Maintenance activities continue Scheduling of work on 100, 200, 300, 400, 500, 800 lines SOP, SIP, (maybe PIP) may be at risk depending on many factors including amount of integrity remediation, weather, permitting, etc. Available capacity is and will continue to be tight 28

29 FERC Ruling on Scheduling NOPR FERC Rule to modify regulations for the scheduling of transportation services on interstate natural gas pipelines to: (1) improve coordination of the gas and electric industries, and (2) provide additional liquidity and scheduling flexibility to all shippers INGAA collectively and KM individually participated during process Order effective April 1, 2016 for the entire gas industry No change to start of Gas Day remains 9 am CCT Timely Cycle nomination deadline; changed from 11:30am to 1pm CCT Additional intraday nomination cycle at 7 pm CCT Reduced cycle processing times by 1 hour, and Adjusted cycle timelines to minimize overlaps In addition NAESB 2.1 (now 3.0) modifications ordered DART and KM processes will be upgraded to be compliant by deadline date 29

30 Station 245 HP Replacement Compressor Building construction Main Line #1 Tie-in with coating removed for cut 30

31 Station 114 Rebuild View of Yard Piping New Header New Scrubber 31

32 Use of Hydrovac In the Yard At Compressor Building 32

33 Hydrotest Work Clearing and Grubbing Test Heads Pipe Replacement 33

34 Pigging Pig Launcher 34

35 Pigging Loading magflux tool into launcher Removing tool from receiver 35

36 Difficult Operations at Times Caliper Pig Pre-Launch Caliper Pig Received 36

37 Tennessee Gas Pipeline 24 Hour Contact List August 2015 Gas Control 24 hour and emergency Ganesh Venkateshan Mgr Cell Layne Sanders Director Cell Danny Ivy - VP Cell Ray Miller VP Cell Transport and Storage Services 24 hour Scheduling Hotline Cathy Soape Manager Cell Debbie Vasquez Manager Cell Sherri Glazebrook Director Cell Gene Nowak VP Cell Commercial/Marketing Ernesto Ochoa Director Cell Sital Mody VP Cell Norman Holmes - VP Cell Kim Watson President Cell Field Operations Ron Bessette Director (Northeast) Cell John Pannel Director (Central) Cell Cy Harper Director (South) Cell Tom Dender VP Cell Gary Buchler COO GAS Pipelines Cell Houston, TX Office Louisiana St Houston TX Downers Grove, IL Office Lacey Rd Suite 700 Downers Grove, IL Birmingham, AL Office Brookwood Village St Birmingham, AL Colorado Springs, CO Office Two North Nevada Ave Colorado Springs, Co

38 Macro Overview and TGP Flow Changes Ernesto Ochoa 38

39 The Macro View Trends continue Dramatic supply growth Growing long-term demand Changing trade balance New Infrastructure 39

40 Key Assumptions Bcfd Bcfd +5.7 Bcfd Bcfd +4.7 Bcfd 40

41 Supply 41

42 Gas Demand 42

43 Flows Change 43

44 Tennessee Gas Pipeline System Overview Proudly providing reliable service to New England for over 60 years 11,900 miles of pipeline 96 Bcf of storage capacity ~9.0 Bcf/d design capacity Delivered ~390 Bcf to New England customers in 2014 Abundant & Growing Supply Utica Shale Northeast Marcellus Shale Haynesville Shale Southeast EagleFord Shale 44

45 Marcellus and Utica Shale Production (Bcf/d) Marcellus Northeast Marcellus Southwest Ohio Utica SOURCE: Wood Mackenzie Long Term View, May

46 Market Area Supply 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Utica Marcellus Rex Dracut Distrigas Wright Shelton Niagara Winter Period (Nov Mar) Average Dth/d 46

47 TGP Demand System Wide ,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec All volumes are MDth/d 47

48 MDth/d TGP Increasing Annual Throughput 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 Z6 Z5 Z4 Z3 Z2 Z1 ZL Z0 1, YTD *2015 through July 48

49 System Flows 2014 TGP Operations Marcellus ~3.5 Bcf/d Utica ~.6 Bcf/d Increased Middle System utilization (in reverse) ~1 Bcf/d South flow at Sta Line 200 Line 300 Line Sta Line 100 Line 800 Line Long Haul to the south 49

50 System Flows 2015 TGP Operations Marcellus ~3.5 Bcf/d Bifurcated flows with long haul to the south Utica ~1 Bcf/d ~1.6 Bcf/d South flow at Sta 200 and ~1.5 Bcf/d at 87 Consistent exports to Mexico and Canada High system utilization- Maintenance performed at mutually agreeable times 200 Line 200 Line 300 Line Sta Line 100 Line 800 Line Long Haul to the south 50

51 System Flows 2016, 2017, Beyond TGP Operations 100/800 Legs catch up South flow expansions complete Increased Appalachian supply and North East deliveries driven by expansion Z1/0 Market driven by exports, Industrial, and South East demand 200 Line 200 Line 300 Line Sta Line 100 Line 800 Line Reversal/Bifurcation Continues 51 51

52 Business Development Projects Paul Smith

53 53 Current Projects Supply-Driven Dth/d In-Service Niagara Expansion 158,000 Nov-2015 Broad Run Flexibility Broad Run Expansion 590, ,000 Nov-2015 Nov-2017 Susquehanna West 145,000 Nov-2017 Orion 135,000 Jun-2018 Sta 87 Market-Driven Dth/d In-Service Cameron LNG 900, South System Flex 500,000 Dec-2016 Lone Star Project 300,000 Jul-2019 Connecticut Expansion 72,100 Nov-2016 Triad 180,000 Nov-2017 Northeast Energy Direct 1,300,000 Nov-2018

54 54 Interconnect Trends Increase in new and redundant taps to minimize the impact of outages on customers without FT Increased number of inquiries from power plants, LDCs, and related to pipeline expansions Fewer producer inquiries for new facilities; increased number for upgrades to existing facilities Projects in development Marcellus Production: 6 Projects, 2.2 Bcf Top Receipts: Access Midstream (1,000 MMscf/d); Columbia Gas Cobb upgrade (790 MMscf/d) Utica Production: 5 Projects, 658 MMscfd Top Receipts: M3 (290 MMscf/d) Deliveries: 10 Projects, 4.4 Bcf/d Top Deliveries: Columbia Gas Milford upgrade (349 MMcf/d), Iroquois Wright (950 MMcf/d), NET Mexico (500 MMcf/d), Cheniere Sinton (1,000 MMcf/d), Sempra (1,200 MMcf/d)

55 55 Development Trends Supply-Push Resolve remaining capacity constraints Address new supply growth Connect supply to liquid trading points Utica Canada New England Market-Pull LNG export Pipeline export (Mexico, Canada) Power generation Shifting receipt points to match with supply Supply diversification Haynesville Eagle Ford Southeast Marcellus Reviewing out of corridor expansions Mexico LNG Export

56 56 Connecting New Supply NE-PA Marcellus Relief coming from Atlantic Sunrise, Constitution and NED SW-PA, OH, WV Marcellus/Utica Significant volumes committed to Midwest markets Traditional long-haul pipes out of the region nearing completion of becoming bi-directional Bcf/d Canada New England Northeast supply still looking to connect with Gulf and Southeast markets 8+ Bcf/d of physical flow expected to reverse direction by 2024 Combination of filling existing projects and new development Mexico LNG Export Southeast

57 57 Connecting New Markets New England LDC & Power-Gen Active Pursuits Power Generation PJM NYISO Southeast ERCOT Utica Marcellus LNG Export Gulf MS Cameron LA Golden Pass TX Freeport TX Brownsville TX Haynesville Eagle Ford Pipeline Export Mexico Canada +4.7 Bcf/d +5.7 Bcf/d

58 58 BD Summary Thank you for keeping us busy New faces on the team Focus on execution for our current project backlog Ten major projects in development 4.5 Bcf/d of new capacity New project development transitioning from producer-push to market-pull Driven by lower commodity prices, LNG and Mexico export, and power generation growth Northeast supply keeps coming (with no end in sight) Significant projects carrying much of this supply out of the region to Gulf/Export, Southeast, Midwest NED targets the New England market directly

59 Northeast Energy Direct And Connecticut Expansion Update Curtis Cole 59 59

60 Northeast Energy Direct Project (NED) 1.3 Bcf/d - Enough Supply for 4.75 Million Households or 6,700MW 91% NE mainline along existing ROW Links incremental Marcellus supplies to New England Marcellus Existing TGP Flow NED Additional Flow 60

61 TGP Supply to New England Power Generation Currently averages 340,000 Dth/d to New England Power Plants Source: SNL, Ventyx, ICF 61

62 Northeast Energy Direct The Right Solution for EDCs TGP is an active participant in each of the New England State proceedings regarding the EDC solution for pipeline infrastructure Provides EDC or generators with rate certainty and benefits of scale Services designed for power generation No-Notice Hourly flexibility Park & Loan options 62

63 NED Bridges Critical Gaps Balanced approach to solving long-term energy needs includes: Large-scale renewables Enhanced Demand Reduction programs Expanding natural gas pipeline capacity to the region Opportunity for EDC to lower energy costs and increase reliability to gas and power grids Natural Gas-Fired Generation Supports Renewables Integrated response: Not either-or Environmentally cleanest fossil fuel allows conversion Provides necessary and flexible backup source of generation to support growth in wind and solar 63

64 Thanks to our committed project shippers Executed over 550,000 Dth/d of Anchor Shipper Precedent Agreements with key New England LDCs National Grid (MA) & (RI) Liberty Utilities (Energy North Natural Gas) Corp. (NH) Columbia Gas of Massachusetts (MA) The Berkshire Gas Company (MA) Connecticut Natural Gas Corporation (CT) Southern Connecticut Gas Corporation (CT) Westfield Gas & Electric (MA) and others 64

65 NED Timeline Milestone Date Conduct open houses (complete) January - April 2015 FERC holds scoping meetings July- August 2015 File ER Draft #1 (Resource Reports 1 through 12) (complete) March 13, 2015 File ER Draft #2 (Resource Reports 1 through 12) July 2015 File certificate application with FERC (includes final ER) October 2015 FERC reviews application, conducts public comment meetings, addresses comments, prepares and issues draft and final EIS October October 2016 Requested date for FERC certificate order October 2016 Accept certificate order November 2016 Commission issues permission to fell trees and start HDD s January 2017 Start remaining construction April 2017 Anticipated in-service date for NED project (mainline and certain laterals) November 1,

66 NED Benefits Critical component to any regional solution to address gas & electric reliability Transformative solution that will lower gas and electricity prices for all New England consumers Direct access to incremental supply from the most prolific shale play in the US Vital enabler of renewables growth efforts Provides incremental supply to all New England pipelines Directly replaces declining Canadian imports 66

67 Connecticut Expansion Project Capital: $85.7MM Commercial Benefit: Additional capacity to serve New England market Capacity: 72,100 Dth/d Customers: Yankee, Southern Connecticut, Connecticut Natural Estimated In-service: November 2016 Project Scope: miles of pipeline loop Acquisition of Thompsonville Lateral Project Status: Contracts executed Lateral acquired FERC certificate filed July 2014 Docket CP MEPA certificate received 6 7

68 Thank You 68 68