Wyoming Pipelines - The Territory Ahead October 31, 2008 October 15, 2013 1
$ per MMBtu Representative Wyoming Natural Gas Price by Month 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2010 2011 2012 2013 Price: CIG Monthly Index 2
Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Discount in $ per MMBtu 2008 - Pipeline expansions reduce the discount 1.00 0.00 Kern River Rockies Express (1.00) (2.00) (3.00) Pony Express (4.00) (5.00) Trailblazer (6.00) Cheyenne Plains (7.00) 3
Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Discount in $ per MMBtu 2008 - Pipeline expansions reduce the discount - Indeed 1.00 0.00 (1.00) (2.00) (3.00) (4.00) (5.00) (6.00) (7.00) 4
2008 - Proposed additions to capacity out of the Rockies 9 5 6 3 2 4 7 8 Name Sponsor Capacity 1 Kern Kern 145 2 Ruby El Paso 1500 3 Bronco Spectra 1000 1 4 Sunstone Williams /TCPL/Sempra 1200 5 Bison Northern Border 407 6 Pathfinder TCPL 1200 Not all of these projects will be built 7 Alliance/ Questar 8 Chicago Express Alliance/Questar 1300 Kinder Morgan 1200 9 Grasslands Williston Basin PL 40 5
Actual additions to capacity out of the Rockies 9 5 2 1 Name Sponsor Capacity 1 Kern Kern 145 2 Ruby El Paso 1500 3 Bronco Spectra 1000 4 Sunstone Williams /TCPL/Sempra 1200 5 Bison Northern Border 407 6 Pathfinder TCPL 1200 7 Alliance/ Questar 8 Chicago Express Alliance/Questar 1300 Kinder Morgan 1200 9 Grasslands Williston Basin PL 40 6
Gas flow out of central Rockies Sept 15, 2013 10.4 Bcf per day capacity Northwest PL 83 PRB Bison 25 Ruby 706 Opal Trailblazer 783 Cheyenne Hub Rockies Exp 1268 Salt Lake Unita/Piceance TransColorado 262 Kern 2311 Northwest PL 193 Denver Westbound Total = 3674 (56 % of total flow) Eastbound Total = 2917 (44 % of total flow) 7
Two relatively recent large pipeline projects gave Wyoming direct access to market locations CA/OR Border Marcellus/ Appalachia Henry Hub NYMEX 8
$ MMBtu 0.00-0.10-0.20-0.30-0.40-0.50-0.60-0.70-0.80-0.90-1.00 Wholesale price of natural gas delivered to the grid Differential to Appalachia Differential to CA/OR Border Differential to NYMEX 9
$ MMBtu 0.00-0.10-0.20-0.30-0.40-0.50-0.60-0.70-0.80-0.90-1.00 Wholesale price of natural gas delivered to the grid Differential to Appalachia Differential to NYMEX Linear (Differential to CA/OR Border) Differential to CA/OR Border Linear (Differential to Appalachia) Linear (Differential to NYMEX) 10
Understanding firm v. interruptible pipeline rates Firm pay every day whether used or not, pay some fuel and additional minor charges (like buying season tickets to sports) Interruptible pay only for what you use, pay the same fuel as firm along with minor charges (like buying game day tickets) 11
$ per MMBtu of Daily Firm Capacity Reservation rates on interstate pipelines moving gas out of Wyoming (widths of bars reflect relative pipeline capacity) $1.80 $1.60 REX Maximum allowed rates $1.40 $1.20 $1.00 RUBY Current negotiated rates $0.80 $0.60 $0.40 $0.20 TIGT ] Kern Legacy NWPL SSCGP WBI TBPL $0.00 Kern Expansion Bison Kern Apex Cheyenne Plains CIG TBPL Expansion
Bcf per day 12.0 Export capacity for natural gas out of central Rockies 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Current firm export capacity under contract from central Rockies 13
Bcf per day 12.0 11.0 10.0 9.0 8.0 Export capacity for natural gas out of central Rockies Need for export capacity out of central Rockies at current production levels 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Current firm export capacity under contract from central Rockies 14
Bcf per day 12.0 11.0 10.0 9.0 8.0 7.0 6.0 Export capacity for natural gas out of central Rockies Export capacity available for re-contracting over time, lowest cost pipelines at the bottom of the stack, highest cost pipelines at the top 5.0 4.0 3.0 2.0 1.0 0.0 15
Bcf per day 12.0 11.0 10.0 Export capacity for natural gas out of central Rockies Lowest cost pipelines on the bottom of the stack, progressing to highest cost pipelines at the top 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 In this scenario, the price differential will be determined by the cost of interruptible transportation on the last pipe(s) needed to export gas 16
Summer - 2018 Bcf per day 12.0 Export capacity for natural gas out of central Rockies 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 17
Bcf per day 12.0 11.0 Trailblazer Pipeline Cheyenne to the mid-continent Low cost, outcome of inerts could impact usefulness 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 18
Bcf per day 12.0 11.0 TransColorado Piceance to San Juan Basin to California Alternative to Questar and others to California via Kern and Ruby 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 19
Bcf per day 12.0 11.0 Colorado Interstate Gas (CIG) limited export beyond Colorado front range Exposure to expiring contracts for on system load in 2016 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 20
Bcf per day 12.0 11.0 Williston Basin Interstate (WBI) local in WY, MT and Dakotas, some export Alternative to Trailblazer for PRB gas if inerts an issue 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 21
Bcf per day 12.0 11.0 Cheyenne Plains Pipeline Cheyenne to the mid-continent A bullet pipeline with no on system loads 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 22
Bcf per day 12.0 11.0 10.0 This scenario suggests a differential of 30 50 cents based on last pipes used to meet the demand for export capacity 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 23
Bcf per day 12.0 11.0 10.0 This scenario suggests a differential of 30 50 cents based on last pipes used to meet the demand for export capacity 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Note, the actual level of production and consequently the level of export capacity to be used in the future may differ, which will change the scenario and potentially the amount of the differential 24
Summer- 2018 Winter 2019 Bcf per day 12.0 11.0 Next inflection point, end of 2019 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 25
Bcf per day 12.0 11.0 Southern Star Central Gas Pipeline local loads in mid-continent Cheap on system storage and local loads give last mile advantage 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 26
Bcf per day 12.0 11.0 Northwest Pipeline Company (northbound) Last mile advantage serving utility and industrial loads in Pac-NW 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 27
Bcf per day 12.0 11.0 Northwest Pipeline (southbound) Competes with TransColorado to move Piceance Basin gas to San Juan Basin 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 28
Bcf per day 12.0 11.0 Kern River Gas Transmission Company Access to NV, AZ, CA and direct to enhanced oil recovery in CA 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 29
Bcf per day 12.0 11.0 This scenario suggests a differential of 45 60 cents based on last pipes used to meet the demand for export capacity 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 30
Bcf per day 12.0 11.0 Tallgrass Interstate Gas Transmission mostly local loads in WY, NE, KS Originally Kansas Nebraska Pipeline Co. tells the story, last mile advantage 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 31
Bcf per day 12.0 11.0 Bison Pipeline PRB to mid-continent via Northern Border Could be benefit if TBPL inerts an issue, could expand farther into WY 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 32
Bcf per day 12.0 11.0 Ruby Pipeline LLC Opal to CA/OR border Competes with gas supplies from Canada and Southern CA, LNG export path? 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 33
Bcf per day 12.0 11.0 Rockies Express Pipeline LLC Rockies to mid-continent and Appalachia Growth in Marcellus and potential nearby plays in delivery area an obstacle 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 34
Final notes: The most significant variable in this outcome is the amount of production that needs export It is very important that REX and RUBY aren t owned by the same parent 35
About the Trailblazer inerts Issue Northwest PL 83 PRB Bison 25 Ruby 706 Opal Trailblazer 783 Salt Lake Unita/Piceance Cheyenne Hub Rockies Exp 1268 TransColorado 262 Kern 2311 Northwest PL 193 Denver 36
Simplified schematic of Trailblazer Pipeline in relationship to other locations (not all pipelines shown and not to scale) Powder River Basin Northern Natural Gas Pipeline to IA, MI, MN, ND, NE, SD, WI Natural Gas Pipeline Co. of America to Chicago Various pipelines Ruby Opal Hub Cheyenne Hub Trailblazer Various pipelines
Highlight the proposed TBPL limit on total inert gases Inert gases = Carbon Dioxide (CO 2 )+ Nitrogen (N 2 )+ Argon + Helium Current specification is 2% or CO 2 Proposed 3% total inert gas composition, retreated to 4% total inerts Gas in the PRB is being treated for CO 2 to meet 2% limit Gas in the PRB has N 2 The sum of CO 2 and N 2 for PRB gas has occasionally exceed 4% Treating to remove even more CO 2 has cost N 2 is not corrosive or a safety issue Treating to remove N 2 has cost Either treat more CO 2, treat for N 2 or use different pipelines at greater cost Outcome harms PRB production, costs the State and Counties revenues as netback price affected
Current status WPA became a party to the proceeding Went to technical conference convened by the FERC Filed written response last Friday Trailblazer has not provided sound technical support for proposal Trailblazer has not followed FERC policy in formulating proposal The proposal causes actual harm to Wyoming The proposal is inconsistent with FERC policy to minimize unnecessary restrictions on national supplies The WPA will remain active in the case
Wyoming Pipeline Corridor Initiative Wyoming Pipeline Authority Update to the Board Matt Fry October 15, 2013 October 2013
Overview Update on the Status of the Wyoming Pipeline Corridor Initiative Project Overview Milestone Schedule Where We Are Currently October 2013
MILESTONE SCHEDULE Write a Plan of Development Compile and Standardize Resource Data Complete and Submit SF-299 ROW Application for BLM Review Develop Contract Documents for Consultants/Contractors Hire Consultants/Contractors and Oversee Deliverables Compile Resource Reports Submit Reports to BLM for NEPA Document NEPA Process Record of Decision and ROW Grant October 2013
Current Progress We have made substantial progress on writing a Plan of Development (POD) Working on a project specific design Including a complete series of Appendices for resource impact avoidance, minimization, and mitigation measures Resource data has been located and either collected or requested We are currently developing a series of Alternatives for analysis to ensure a range in the NEPA document Once these steps are complete, we will finalize the SF-299 and begin the process with WY BLM October 2013
October 2013