TGP DART Update Meeting. New York, NY May 18, 2017

Transcription

1 TGP DART Update Meeting New York, NY May 18,

2 Agenda Welcome and Introductions Erin Mortimer Regulatory Update KM Update Operations/Scheduling Update Gene Nowak Sherri Glazebrook Cathy Soape Hutton Brian Merchant Commercial Update DART Contract Updates Nominations Discussion and Feedback Coralie Sculley Sherry Noack Debbie Vasquez All 2

3 TRANSPORTATION SERVICES ORGANIZATIONAL STRUCTURE DSRs WEARs 3

4 NAESB / KM Update Passport EPNG/Mojave October 1, 2017 Last of 4 major system conversions 5 ½ years Ongoing upgrades to DART Limited resources due to focus on conversions and related regression testing 2018 will be a year of various improvements that have been backlogged over the years NAESB GEH (Gas Electric Harmonization) FERC Order 809 requested NAESB to continue looking for way to have faster scheduling and confirmation processes KM actively participated in a series of GEH forums and NAESB standards meetings Default level of confirmations was narrowly defeated NAESB Version 3.1 will be published in 3 rd Quarter 2017 no major changes INGAA Educational Seminar to FERC Staff Feb 2017 Scheduling and Moving Gas Through a Pipeline Design, Scheduling and Flexibility 4

5 Winter Look Back Summary Peak Day was ~10.1 Bcfd on Jan 7, Deliveries Peak Day was ~1.7 Bcfd on Jan 8, 2017 Storage (withdrawal) Peak Day was ~1.8 Bcfd on Jan 7, 2017 Power Plant Load Winter OFO count 2016/2017 Zones 5 & 6-28 vs 21 in 2015/ OFO s were directed at power plants (Dec/Jan) vs 8 in 2015/ /2017 All other zones - 16 vs 6 in 2015/2016 Storage Inventories down from 2015/16 44% lower than the levels for 2015/16 2% higher than 2014/15 System Challenges Less supply coming in from Dracut/Distrigas Short Term Unit/Pipeline Issues Managed without cutting In-Path Services at Timely Continuous communication between Commercial, Scheduling and Gas Control Groups 5

6 Winter Days - (%) Restricted Restriction Point Highly Utilized TGP Paths Percentage Days Restricted (November - March) Percentage Days Restricted (November - March) Percentage Days Restricted (November - March) Percentage Days Restricted (November - March) 2013/ / / /2017 Sta. 200/ % 22.52% 64.47% 68.87% Sta % 100% % 99.33% Sta % 32.45% 68.42% 27.81% Sta % 5.29% 30.92% 55.63% MLV % 0.00% 0.00% 17.22% Sta. 315 BH 100% 100% 76.32% 96.69% Sta % 94.71% 86.18% 92.72% MLV % 73.51% 57.24% 30.46% MLV 355 BH 70.20% 5.96% 9.21% 5.30% Sta. 1 BH 50.99% 11.26% 84.21% 0.00% Sta. 9 BH 0.00% 0.00% 0.00% 43.71% Mahwah 49.67% 64.24% 92.76% 88.08% Rivervale 80.79% 80.79% 66.45% 80.79%

7 Summer Preview Demand to remain strong across the system Capacity Utilization on the 200/300 Line in Northeast should remain high Marcellus and Utica Production to remain at High Levels Southbound Flows Volumes through Station 87 should remain in the Bcf/d as maintenance activities are completed Exports to Mexico and Canada to remain strong Storage Field Levels Northern Storage levels down from last year; better able to manage maintenance activities and handle market area supply swings Bear Creek Storage levels higher than last year; better able to handle higher power demand in the South High level of system maintenance, repair, rebuild activity GETTING READY FOR WINTER 7

8 DART SCHEDULING TOOLS No delivery nominations allowed to Dracut No receipt nominations allowed at Mendon until ID1 (compared to EPSQ volumes) No delivery nominations allowed at Wright/Shelton until ID1 (compared to EPSQ volumes) Invalid nominations not allowed Limitations of Storage Services/Linepack Services No meter bounces allowed at power plants downstream (may be invoked) New restriction locations as needed Imbalance Warnings Monthly OFOs Daily OFOs Hourly OFOs new screens coming Additional segment capacities posted to the EBB 8

9 Forward-Looking Statements / Non-GAAP Financial Measures This presentation includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 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 timing and extent of changes in the supply of and demand for the products we transport and handle; national, international, regional and local economic, competitive and regulatory conditions and developments; the timing and success of business development efforts; technological developments; condition of capital and credit markets; inflation rates; interest rates; the political and economic stability of oil producing nations; energy markets; weather conditions; environmental conditions; business, regulatory and legal decisions; terrorism, including cyber-attacks; 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. These non-gaap measures should not be considered as alternatives to GAAP financial measures. 9

10 Natural Gas Pipelines Segment Outlook Growing Footprint: Well-positioned connecting key natural gas resources with major demand centers Own or operate largest natural gas network in North America ~70,000 miles of pipeline ~70 Bcf/d of capacity ~690 Bcf of storage capacity Moving ~40% of U.S. natural gas consumption Connected to every important natural gas resources play in the U.S. Project Backlog: $3.4 billion of identified growth projects over next four years ( ) (a), including: LNG liquefaction (Elba Island, GA) Transport projects supporting LNG liquefaction Expansions to Mexico border TGP North-South projects (a) Includes KM share of non-wholly owned projects. Includes projects currently under construction. 10

11 Natural Gas Transportation & Storage Growth and Demand Natural gas transport & storage is KMI s largest business Pipeline Capacity Growth Drivers: Industrial demand Power generation demand Coal plant retirements Compliment wind and solar LNG Demand Liquefaction facilities Pipeline infrastructure Mexico Demand Shale gas production Storage Capacity Growth / Value Drivers: Variable load characteristics of LNG and Power Manage infrastructure constraints (a) Wood Mackenzie, Fall 2016 North America Natural Gas Long-Term Outlook, December 2016 U.S. Natural Gas Supply/Demand Outlook (a) (Bcf/d) Demand LNG Mexico Power Industrial Other Total U.S. demand Increase from % 35% Supply Marcellus/Utica Haynesville Eagle Ford All other Total U.S. supply Greater U.S. volumes = increased value of KMI assets 11

12 Drivers of Future Growth Marcellus/Utica Northeast shale production expected to double by 2026 (a) 40% of all U.S. natural gas production North to South transport continues to grow, even with higher costs KM Opportunity TGP: First mover in the Marcellus/Utica ~ 4.5 Bcf/d combined Northeast receipts ~ 11 Bcf/d of Northeast receipt capacity ~ 2 Bcf/d transported from North-to-South 938 MDth/d of expansion projects in development to support NE supply growth Total program capital ~ $1.2 Billion KM Asset KM Project/Transportation Contracted Capacity (MDth/d) In-Service Date TGP Broad Run Flexibility 590 In-Service TGP Broad Run Expansion 200 6/2018 KM Capital ($MM) $736.1 TGP Susquehanna West /2017 $143 TGP Orion 135 6/2018 $129.3 NGPL Gulf Coast Southbound (via REX) /2018 $212 Forecast (a) ICF Gas Transport in a Changing Market Environment 4/20/17 and KM analysis. 12

13 Development Project Updates Supply-Push Dth/d In-Service Broad Run Expansion 200,000 Jun-2018 Susquehanna West 145,000 Nov-2017 Orion 135,000 Jun-2018 Sta 219 Sta 313 Sta 87 Sta 47 Sta 17 Sta 40 Sta 534 Market-Pull Dth/d In-Service SW Louisiana Supply 900,000 Q Lone Star 300,000 Jan-2019 Connecticut Expansion 72,100 Nov-2017 Triad 180,000 Jun

14 Connecticut Expansion Project Market-Driven Project o Demand growth in Connecticut Capacity: 72,100 Dth/d Customers: Southern Connecticut, Connecticut Natural, Yankee Projected In-service: November 2017 Project Scope: o miles of pipeline loop o Acquisition of Thompsonville Lateral Project Status: o FERC certificate received March 11, 201 o FERC issued Notice to Proceed for tree clearing & full construction April 12, 2017 o MA 401 Permit final and unappeable as of April 24,

15 The Importance of Fossil Fuels and the Recent, Modest Growth of Renewable Energy Fossil Fuels Have accounted for >80% of total U.S. energy consumption over the last 100+ years (a) Generating ~67% of U.S. electricity (Q3-2016) (b) Over 99% of U.S. light vehicles today run on gasoline or diesel (>250 million cars and trucks) (c) Approximately 66% of global textile production comes from synthetic fibers derived from fossil fuels (d) Renewables Accounted for only ~15% of U.S. generation i(q3-2016) (a) About half is hydropower which is not expected to grow Renewable energy cannot be stored effectively at scale Wind and Solar are intermittent and require reliable complimentary sources for balancing and backup Natural gas has primarily fulfilled this role 100% 80% Share of U.S. Energy Consumption by Major Energy Source, Nuclear Natural Gas Other Renewable Hydroelectric 60% Wood Petroleum 40% Coal 20% 0% (a) EIA, Monthly Energy Review, April 2016 (b) EIA, Monthly Energy Review, December 2016 (c) Goldman Sachs, Start Me Up v2.0 (d) Textile Exchange, Preferred Fiber and Materials Market Report, July

16 Natural Gas Critical to Climate Goals Opposition to Natural Gas is Misplaced Natural gas is the cleanest burning fossil fuel with significantly lower emissions than coal or fuel oil Switching from coal to natural gas has driven a reduction in the nation s power sector CO 2 emissions U.S. methane emissions decreased 6% from 1990 to 2014 (b) despite a 46% increase in natural gas production (a) over the same period Monthly Energy Review (a) U.S. Population ~260 million ~301 million ~321 million Real GDP ~$9.5 trillion ~$14.9 trillion ~$16.3 trillion Power sector CO 2 emissions 1.92 GT 2.42 GT 1.91 GT Power generation (GWh) 3,197,191 4,156,745 4,077,601 Coal 53% 49% 33% Natural Gas 13% 22% 33% Nuclear 19% 19% 20% Solar/Wind <1% <1% 5% (a) EIA, Monthly Energy Review, December (b) EPA, U.S. Greenhouse Gas Inventory Report, April

17 Pipeline Development Environment Attack on Fossil Fuels Focused on Pipelines NGO Opposition Well funded and organized National, regional and local Challenging every step in process Refining tactics Widespread misinformation Consistently linked to production and exports Delaying construction Focus on state resource agencies State Permitting Challenges Interdependency of permits and delegation of authority Agency concern with second guessing Requirements vary significantly by state Impacts Costly and time consuming Uncertainty and delays in obtaining permits More stringent requirements 17

18 It s Changing How We Develop Projects Project Planning Extended timelines from filing to in-service Thorough risk identification & planning Early Stakeholder engagement Safety and security Relationship with Customers Stronger partnerships Earlier engagement Setting expectations Combined outreach and communication Contracting Recognition of risks Risk allocation Account for potential schedule impacts 18

19 DART Modifications - Contracts In Progress/Upcoming Request Description Re-release Indicator Capacity Release Offer Upload Other Upcoming Capacity Release Enhancements Ability to release 100% of primary available quantity with the click of a button Ability to copy an offer with one click instead of two Automatically delete the zero when clicking in the Max Offer Quantity box instead of manually deleting Add more filters to the All Offers/Awards screen Offer an un-editable format for the Capacity Release Award Audit Report in addition to the Excel format Status Testing planned implementation in June In discussion plan to start working on this in 3 rd or 4 th quarter 19

20 DART Modifications Noms/Confs In Progress/Upcoming Request Description Fixing nomination validation and MDQ Utilization screen for specific overlapping nomination scenario Confirmations for subsequent cycles Ability to edit/modify submitted nomination batch Contract Path Tab Add row # Enhance Subscription to Critical Notices for subcategory options Status In progress - 3 rd Quarter In progress - 3 rd Quarter Submitted Submitted Upcoming 20

21 DART Nominations 21

22 UDP Level Confirmation Auto Match On/Off Denotes confirmation party 22

23 Tips for Buy/Sell transactions between UDPs at the same meter Nominations may duplicate if UDPs at a single meter use different confirmation methods (Auto match function on/off) AND buy and sell from each other. Auto match - OFF Auto match - ON UDP A Sell 1,000 Buy 1,000 Sell 1,000 Buy 1,000 *Possible duplicate nominations UDP B (as shipper) Auto match - ON UDP C Sell 1,000 Buy 1,000 Auto match - ON UDP B (as shipper) Blue manually entered Red auto generated 23

24 Discussion And Feedback