Rockies Natural Gas Resources Northwest Pipeline Customer Meeting - PowerPoint PPT Presentation

Rockies Natural Gas Resources Northwest Pipeline Customer Meeting Seattle, WA May 13, 2008 Brian Jeffries Executive Director Wyoming Pipeline Authority 1

Wyoming Pipeline Authority • Mission – support infrastructure development to enhance value of oil & gas resources of state • Five Member Board Appointed by Governor • $3 billion bond issuing capability • Not a regulatory or rate setting body 2

Natural Gas Critical Component of State Revenue Mineral related Natural gas and sales and use tax Coal Lease related products 0.2 Bonus 0.2 compromise 50- 55% of State’s total Other 1.5 revenue Minerals 3.1 Severance 0.9 Mineral Property 1.0 Federal Royalties 0.8 3 Source: WyEAD and State Lands

Wyoming Production – Areas to Watch Powder River Basin Jonah/Pinedale Washakie Basin 4

Wyoming – Top Five Producing Counties 1,200 1,000 800 Bcf per Year 600 400 200 0 Sublette Sweetwater Campell Fremont Uinta 2003 2004 2005 2006 2007 5

Uinta Basin Utah Production

Utah – Top Five Producing Counties 250 200 Bcf per Year 150 100 50 ‐ Uintah Carbon Duchesne Emery San Juan 2003 2004 2005 2006 2007 7

8 DJ Basin Colorado Production Piceance Basin

Colorado – Top Five Producing Counties 500 400 Bcf per Year 300 200 100 0 LA PLATA GARFIELD WELD LAS ANIMAS YUMA 2003 2004 2005 2006 2007 9

Williams Five Well Pad – Piceance Basin 10

Ten Largest Producers in WY/UT/CO (2007) 1.40 1.20 1.00 Bcf per Day 0.80 0.60 0.40 0.20 0.00 11

Probable and Possible Natural Gas Resource Base in Selected Rockies Areas Basin Bcf Uinta ‐ Piceance 62,037 Wind River 47,118 Greater Green River, Hannah, Laramie 20,819 Powder River Coal Bed Methane 18,507 Big Horn 3,994 Powder River Conventional 3,912 Denver 2,803 Paradox 1,725 Total 160,915 Percent of Total Onshore Lower 48 States 29% Source: Potential Supply of Natural Gas in the United States, Report of the Potential Gas Committee, Potential Gas Agency, Colorado School of Mines, November 2007 12

Production Growing 12.0 10.0 8.0 6.0 Bcf/d 4.0 2.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 Utah Colorado Wyoming 13

Rate of Growth Changing? 0.65 9% 0.60 8% 0.55 7% Bcf per Day Annual Change Percent Annual Change 0.50 6% 0.45 5% 0.40 4% 0.35 3% 0.30 2% 0.25 1% 0.20 0% 2001 2002 2003 2004 2005 2006 2007 Annual Bcf/d Growth Annual % Growth Linear (Annual Bcf/d Growth) Linear (Annual % Growth) 14

Factors at Play • Land use conflicts – Split estate – Housing development – Local growth concerns • Changing regulatory climate • Seasonal restrictions on drilling 15

NGPL PEPL NNG ANR M D C O N N N T E T I I NE DJ CHY DEN CO PRB Rockies Flow Paths Piceance/Uinta WY Opal SLC UT

Export Out of the Rockies ‐ Who Owns the Space? • Analyzed public data for ten pipelines • Examined twelve pathways • Reviewed receipt and delivery points in over 900 individual contracts • Identified 300+ contracts fitting export criteria • Assigned “class” status based upon primary business 17

Twenty Largest Capacity Holders 0.80 0.70 0.60 0.50 Bcf per Day 0.40 0.30 0.20 0.10 0.00 18

Capacity Ownership by Class 7% 1% 20% 18% EGEN INDU MRKT PROD UTIL 54% 19

Capacity by Pipeline 2% 2% 5% 5% 23% 6% 6% 9% 18% 11% 13% KERN REX CHEY TB NWPL ‐ N KMI TC NWPL ‐ S CIG SSGP WBI 20

Pipelines Dominated by Utilities 2% 6%4% 13% 24% 57% 6% 88% INDU MRKT PROD UTIL EGEN INDU PROD UTIL Northwest Pipeline Kinder Morgan Interstate 2% 31% 67% EGEN INDU MRKT PROD UTIL 21 Southern Star

Pipelines Dominated by Producers 6% 12% 23% 26% 68% 65% MRKT PROD UTIL MRKT PROD UTIL Colorado Interstate Cheyenne Plains 3% 12% 14% 88% 83% MRKT PROD MRKT PROD UTIL Rockies Express Trailblazer 22

Kern is a mixed bag 20% 36% 30% 14% EGEN MRKT PROD UTIL 23

And the rest 4% 30% 70% 96% MRKT PROD MRKT PROD Northwest Pipeline - South TransColorado 8% 3% 89% MRKT PROD UTIL Williston Basin Interstate 24

Majority of Capacity is to the East 10% 33% 57% East West South 25

Support for expansion has differed by direction 3% 12% 20% 4% 14% 70% 77% EGEN MRKT PROD UTIL MRKT PROD UTIL West - Kern East – REX, Trailblazer, Cheyenne Plains 26

Who paid for expansions? 5% 18% 60% EGEN MRKT PROD UTIL 27

The 20 largest expansion supporters since 2001 Total $ commitment to expansion by all shippers since 2001 > $9 Billion 28

Three Different Growth Profiles to Test 18.0 16.0 14.0 Bcf/d 12.0 10.0 8.0 6.0 2000 2002 2004 2006 2008 2010 2012 2014 6% 4% 2% 29

Export Requirement vs. Export Capacity 14 12 10 Bcf Per Day 100% of Export Capacity 8 6 100% of Export Capacity 4 2 2000 2002 2004 2006 2008 2010 2012 2014 2016 6% Production Growth 4% Production Growth 2% Production Growth 30

High capacity utilization widens basis differential $2.00 100% $1.00 90% Percent of Export Capacity Utilized $0.00 80% ($1.00) Rockies Basis ($2.00) 70% ($3.00) 60% ($4.00) A $1.00 drop in the annual price for natural gas 50% ($5.00) produced in Wyoming lowers per capita combined Wyoming state and county tax revenue by over $500. ($6.00) 40% Basis Percent Capacity Utilization 31

Rockies Export Expansions Rockies Express Kinder Morgan 1.4 Bcf per day current 0.4 Bcf per day expansion 32

33 0.15 Bcf per Day Kern River Rockies Export Expansions - Planned

34 Williams/TransCanada 1.2 Bcf per Day Sunstone Rockies Export Expansions - Planned

35 1.2 Bcf per Day El Paso Ruby Rockies Export Expansions - Planned

36 1.0 Bcf per Day Spectra Bronco Rockies Export Expansions - Planned

37 TransCanada/ONEOK 0.45 Bcf per day Bison Rockies Export Expansions - Planned

38 Alliance/Questar 1.2 Bcf per day Rockies Export Expansions - Planned

39 TransCanada/ONEOK 1.2 Bcf per day Pathfinder Rockies Export Expansions - Planned

40 Kinder Morgan 1.2 Bcf per day Rockies Export Expansions - Planned

Proposed Projects to Export Rockies Production Project Origin Destination Capacity Kern Opal CA/NV 145 Sunstone Opal Stanfield 1200 Bronco Opal Malin 1000 Ruby Opal Malin 1200 Bison Powder River NBPL 450 Pathfinder SW Wyoming NBPL/TCPL 1200 Alliance/Questar SW Wyoming Alliance 1200 Kinder Morgan Central WY Chicago 1200 41

Producers have favored eastward expansion 16% 14% 70% East West South Based on producer commitments in pipeline expansions since 2001 42

We usually find gas in new places with old ideas. Some times, also, we find gas in an old place with a new idea, but we seldom find much gas in an old place with an old idea. Several times in the past we have thought that we were running out of gas, where actually we were only running out of ideas. Adapted from Parke A. Dickey, as printed on the closing page of the Potential Supply of Natural Gas in the United States, Potential Gas Agency, Colorado School of Mines, November 2007. 43

Brian Jeffries Executive Director Wyoming Pipeline Authority 303.619.3906 b57.jeffries@comcast.net 44