Western Oklahoma Residue Takeaway Impact of Growing SCOOP/STACK Supply

Transcription

1 Western Oklahoma Residue Takeaway Impact of Growing SCOOP/STACK Supply Craig Harris Executive Vice President & Chief Commercial Officer October 28, 2016

2 Forward-looking Statements This presentation and the oral statements made in connection herewith may contain forward-looking statements within the meaning of the securities laws. All statements, other than statements of historical fact, regarding Enable Midstream Partners ( Enable ) strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements often include the words could, believe, anticipate, intend, estimate, expect, project, forecast and similar expressions and are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on Enable s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Enable assumes no obligation to and does not intend to update any forward-looking statements included herein. When considering forward-looking statements, which include statements regarding future commodity prices, future capital expenditures and our financial and operational outlook for 2016, among others, you should keep in mind the risk factors and other cautionary statements described under the heading Risk Factors and elsewhere in our SEC filings. Enable cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond its control, incident to the ownership, operation and development of natural gas and crude oil infrastructure assets. These risks include, but are not limited to, contract renewal risk, commodity price risk, environmental risks, operating risks, regulatory changes and the other risks described in our SEC filings. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Enable s actual results and plans could differ materially from those expressed in any forward-looking statements. 2

3 Key Topics Enable Midstream assets Supply and demand projections Existing takeaway capacity Forecasted constraints Future takeaway solutions and associated markets 3

4 Enable System Map Enable s Gathering and Processing (G&P) and Transportation and Storage (T&S) Assets Enable provides operating reach and scale with complementary capabilities managing gas gathering and processing services, intrastate and interstate transmission and storage services and crude oil gathering services in the Bakken Enable s assets are well-positioned to support the long-term supply and demand dynamics in the Mid-Continent, Gulf Coast and Southeast regions Note: Map as of August 10,

5 Market-Leading SCOOP and STACK Position Enable s SCOOP and STACK Position SCOOP and STACK Map 4 #1 in Processing Capacity 1 Market-Leading Active Rig Count 2 Super-header System Interconnects ~1.7 Bcf/d Of Processing Capacity 3 ~1.9 Million Dedicated Gross Acres 3 ~240,000 Horsepower Of Field Compression 3 We expect that the SCOOP/STACK to provide the highest oil production CAGR for the rest of the decade among all major oil basins. Goldman Sachs Upstream Equity Research, June 2016 We believe that the STACK play has the potential to be the next franchise asset in the U.S. E&P. J.P. Morgan Upstream Equity Research, May Note: SCOOP designated as Caddo, Carter, Garvin, Grady, McClain and Stephens counties of Oklahoma; STACK designated as Blaine, Canadian, Custer, Dewey, Kingfisher, Major and Woodward counties of Oklahoma 1. Bentek processing capacity in associated SCOOP and STACK counties as of June 30, Drillinginfo rig count in associated SCOOP and STACK counties as of July 26, As of June 30, Rig data per Drillinginfo as of July 26, 2016, and Enable assets on map are as of August 10, 2016

6 Transportation and Storage Segment Transportation and Storage Highlights Transportation System Map 3 Significant firm, fee-based margin with high-quality customers across 9 states 99% of segment gross margins derived from fee-based contracts 1 Over 45% of Enable s gross margin derived from T&S segment 1 Over 65% of revenues derived from investment-grade customers 2 Enable Oklahoma Intrastate Transmission (EOIT), Mississippi River Transmission (MRT) and Southeast Supply Header (SESH) all have significant interconnectivity with Enable Gas Transmission (EGT) Shippers have the ability to access almost every major consuming market east of the Mississippi River through Perryville Hub and associated trading points Well-situated to facilitate natural gas demand growth in the Mid-Continent, Gulf Coast and Southeast regions EOIT EGT Perryville Hub 6 1. Year-to-date for the period ended June 30, Customers as of June 30, 2016; Standard and Poor s and Moody s credit rating from Bloomberg as of July 29, 2016 customers with split credit ratings are included as investment-grade entities 3. Map as of August 10, 2016

7 Central & Western Oklahoma Supply Projections Western Oklahoma Drilling Basins Cana Woodford SCOOP STACK Greater Granite Wash Mississippi Lime The majority of growth in Oklahoma is expected in the SCOOP and STACK basins. Source: Wood Mackenzie Summer 2016 NAGS Tool 7

8 Jan-2011 May-2011 Sep-2011 Jan-2012 May-2012 Sep-2012 Jan-2013 May-2013 Sep-2013 Jan-2014 May-2014 Sep-2014 Jan-2015 May-2015 Sep-2015 Jan-2016 May-2016 MMcf/d MMcf/d Local Demand Impact Oklahoma demand has averaged ~1.5 Bcf/d over past 5 years Average natural gas demand has been historically consistent and is not expected to grow significantly over near term Variations in demand largely driven by power generation Gas fired demand growth from coal conversion is happening, but largely in eastern Oklahoma Oklahoma Gas Consumption by Month Oklahoma Gas Consumption by Sector 2,500 2,000 1,500 1, ,800 1,600 1,400 1,200 1, Total Annual Average Res/Comm Industrial Power Gen Source: Source: 8

9 Current Western Oklahoma Takeaway Options Midcon Markets ~2.9 Bcf/d Takeaway Pipes ANR NGPL Northern Natural Pandhandle Southern Star Southwest Markets ~0.5 Bcf/d Takeaway Pipes El Paso NGPL Northern Natural Transwestern 9 Not factored into capacity above. Ability to reach takeaway pipes Gas on gas competition Lack of market to fill capacity Operational constraints Southeast Markets ~ 1.2 Bcf/d Takeaway Pipes EGT MEP (via lease) NGPL

10 MMcf/d Western and Central Oklahoma Supply Forecast vs. Interstate Takeaway Capacity + Oklahoma s Demand 12,000 10,000 8,000 6,000 4,000 2, Western Oklahoma Supply Forecast 90% of Supply Forecast 110% of Supply Forecast Oklahoma Capacity and Demand Low Range Oklahoma Capacity and Demand High Range Source: Wood Mackenzie Supply Forecast, EIA Oklahoma Demand 10

11 Future Takeaway Alternatives Large scale projects Greenfield projects (1.0 to 1.4 Bcf/d) delivering to: North Texas market that is being impacted by declining supply from the Barnett Shale and growing Mexican demand Existing downstream pipelines at Bennington that serve Southeast markets that are underutilized as a result of decreasing Barnett Shale production Smaller scale expansions Smaller scale projects developing from existing infrastructure Wet line development Projects designed to take advantage of under-utilized processing assets in the Barnett Shale 11

12 Bcf/d MMcf/d Expansion to Growing Markets Texas Declining Barnett Shale production will impact the supply source for existing and growing power generation market, as well as local LDC s Major interconnects with several TX intrastate pipes and storage providing access to Mexican and LNG exports 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Mexico Exports from West TX and New Mexico Source: Wood Mackenzie West Texas New Mexico Barnett Production Forecast Mexico Exports: Power generation accounts for 63% of gas demand growth in Mexico U.S. exports to Mexico projected to reach 5.5 Bcf/d by 2021 Western markets will now have to compete with Mexico for supply West Texas and NM Supply will account for almost 60% of total Mexico Exports by Source: Wood Mackenzie 12

13 MMCFD AVG Expansion to Growing Markets Southeast Bennington provides access to growing SE and Gulf markets via: Gulf Crossing Midcontinent Express NGPL Barnett Shale decline has created space on downstream pipes that can be filled by growing OK production 6,000 5,000 4,000 3,000 2,000 1, Source: ICFI 2Q 2016 forecast Gas Demand by Sector Florida Total Residential Commercial Industrial Plant/Pipeline Fuel Power SE Region Export Demand Florida Growth: South FL power demand projected to grow by 44% over the next 10 years Power generation accounts for 86% of FL gas demand Export and Industrial Growth: LNG and Mexico Demand will add 8 Bcf/d of incremental capacity to the Gulf region by 2021 TX/LA alone expected to add 1.2+Bcf/d of industrial demand over the next 5 years LNG Exports Mexico Exports Source: Bentek 13

14 Residue Takeaway Projects Large Scale - (30 ) 14

15 Residue Takeaway Projects Smaller Scale 15

16 Key Conclusions SCOOP/STACK development continues to be defined, with increasingly greater expectations Access to existing takeaway capacity will depend on location and will become progressively more limited Broad consensus is building around the need for new takeaway capacity and timing to meet projected production growth is becoming more critical 16