el paso  Pipelines
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el paso  Pipelines el paso Pipelines Presentation Transcript

  • Pipeline Group
  • Strong and Growing Broad market presence: Growing demand regions, key supply basins, LNG terminals Excellent connections to markets and supply Almost $4 billion of committed growth projects with attractive risk/return profile 6%–8% long-term EBIT growth 29
  • El Paso Pipeline Group North America’s Leading Natural Gas Pipeline Franchise Tennessee Wyoming Gas Pipeline Colorado Interstate Interstate Gas Cheyenne Mojave Plains Pipeline Pipeline Southern Natural Gas Elba Island El Paso LNG Natural Gas Mexico Florida Gas Ventures Gulf LNG Transmission (50%) (50%) 19% of total U.S. interstate pipeline mileage 24 Bcf/d capacity (16% of total U.S.) 17 Bcf/d throughput (28% of gas delivered to U.S. consumers) Source: El Paso Corporation based on 2007 data Note: Includes El Paso Corporation and El Paso Pipeline Partners, L.P. 30
  • 2007 Highlights EBIT: 7% growth (YOY) Pipeline integrity program: 75% complete Organic growth: Six projects placed in-service, backlog increased from $2 billion to $4 billion Acquisitions (divestitures): Gulf LNG purchase, (closed ANR sale) Successful IPO: El Paso Pipeline Partners MLP 31
  • Our Pipelines Access Best Markets and Supply 2007–2016 Growth in Bcf/d Canada Canadian -3.5 LNG +1 Rockies Supply Northeast +2.9 Demand +2.0 Rockies & Southwest Demand +1.2 Elba Southeast LNG Demand +1.2 +3.6 Mexico Demand +1.8 Gulf of Mexico LNG Mexico +5.6 LNG +1.5 Source: El Paso Corporation 32
  • Continued Throughput Increase % Increase 2007 vs. 2005 TGP 10% SNG 18% Unchanged EPNG CIG 31% 14% overall increase Note: CIG includes Colorado Interstate Gas, Cheyenne Plains and Wyoming Interstate EPNG includes El Paso Natural Gas and Mojave 33
  • The High Value of “Last Mile” and “First Mile” Service Integrated with Point-to-Point Integrated with Suppliers Transportation Markets Pipeline LDC Citygate Storage Storage Market Supply LNG Wellheads Hub Hub Direct Connects (Industrial, Power Gen) Processing Pipelines Commodity High Value High Value Service 34
  • Excellent Connectivity in Markets ID VT SD NH WY NE Boston MA NY RI CT Denver UT CO NJ New York PA 66 supply meters in the Rockies 110 delivery meters along the Front Range 97 delivery meters into 26 LDCs UT SC NV Atlanta Birmingham CA AZ NM Phoenix GA AL FL 155 delivery meters into Alagasco and AGL 348 delivery meters in Arizona Also, FGT deep connectivity in Florida 35
  • Revenue Stability $ Millions $2,500 $2,250 2007 reservation revenue $2,000 Usage and other revenue $1,750 $1,500 $1,250 77% $1,000 $750 $500 86% 61% $250 86% 93% 86% $0 Total TGP SNG EPNG CIG FGT 1Q 4Q 2Q Projected effective dates 3Q 2009 2011 2010 for next rate case N/A 2009 Reservation as a % of total revenue increases over time Note: CIG includes Colorado Interstate Gas, Cheyenne Plains and Wyoming Interstate; EPNG includes El Paso Natural Gas and Mojave; SNG includes Elba Island 36
  • Contract Stability Thousands of Dth/d as of December 2007 40% 11,000 9,740 10,000 9,000 8,000 7,000 6,000 16% 5,000 14% 3,909 11% 4,000 3,388 11% 2,755 8% 2,539 3,000 1,836 2,000 1,000 0 2008 2009 2010 2011 2012 Beyond Average remaining contract term: 5.4 years 37
  • Northeast Focus Volume Change from 2007–2016 TGP Position Excellent connectivity in Canada -1 Bcf/d NE/upstate NY Excellent supply access to TGP Concord diverse sources $21 MM Nov 2009 LNG Organic expansions 30 MMcf/d +1 Bcf/d ConneXion NY/NJ (2006) ConneXion NE (2007) Well placed to bring new TGP supplies into region, especially NYC area Appalachia supply potential Region Demand NE Passage + 2 Bcf/d +2 Bcf/d Source: El Paso Corporation 38
  • Southeast Focus Volume Change from 2007–2016 + 4 Bcf/d Region Demand SNG/FGT Position + 3.5 Bcf/d Excellent connectivity TGP Elba a unique asset to SNG capture growth Elba Island Gulf LNG well-placed Numerous storage opportunities + 4 Bcf/d LNG + 1 Bcf/d Gulf LNG FGT LNG + 5.5 Bcf/d Source: El Paso Corporation 39
  • Coal Fired Power Generation Losing Favor Cancelled 5 GW Retired 1 Converted to gas 2 Total 8 GW Represents approx. 1 Bcf/d future gas demand Source: Global Energy Intelligence—Velocity Suite 40
  • Southeast Growth Projects SNG SESH—Phase I $150 MM SNG South System III/ July 2008 SESH Phase II 140 MMcf/d $285 MM / $35 MM Elba Expansion III & Elba Express 2010–2012 $1.1 Billion TGP Carthage Expansion 370 MMcf/d / 350 MMcf/d 2010–2013 $39 MM 8.4 Bcf / 0.9 Bcf/d & 1.2 Bcf/d May 2009 100 MMcf/d TGP Bluewater/800 Line Expansion $25 MM SNG Cypress November 2008 Phase II & III 340 MMcf/d $20 MM / $85 MM May 2008 / January 2011 Gulf LNG 115 MMcf/d / 160 MMcf/d $1.1 Billion (100%) October 2011 6.6 Bcf / 1.3 Bcf/d FGT Phase VIII Expansion $2+ Billion (100%) 2011 800 MMcf/d 41
  • Leveraging LNG Experience Elba Island LNG Gulf LNG Savannah, GA Pascagoula, MS $1.1 billion terminal expansion and $1.1 Billion (100%); 50% EP Elba Express Pipeline $870 MM non-recourse financing 8.4 Bcf incremental storage capacity completed 0.9 Bcf/d incremental send-out capacity 1.3 Bcf/d base sendout Fully contracted with Shell and BG Fully contracted with Angola LNG and ENI EPC with CBI EPC with Aker Kvaerner Current expansion will double facility 2011 In-service Investing more than $2 billion on LNG and related projects 42
  • FGT Phase VIII Added to Committed Backlog AL Proposed Pipeline Expansion GA FGT $2+ billion (100%) 50% EP, 50% SUG 500 miles FL 800 MMcf/d capacity PA with FPL for 400 MMcf/d for 25-year term 2011 in-service 43
  • Southwest Focus Volume Change from 2007–2016 +0.5 Bcf/d -0.2 Bcf/d Las Vegas Mojave EPNG EPNG Position Los Angeles Excellent connectivity to Phoenix market +0.5 Bcf/d Supply diversity; Region Phoenix excellent supply basin Demand connectivity + 0.8 Bcf/d Significant Mexico cross border opportunities Storage play Net from Mexico* +1 Bcf/d *Net change into/out of region Source: El Paso Corporation 44
  • Rockies Focus CIG WIC Big Horn Cheyenne Plains Green River CIG, WIC, CP Supply Position Powder River Attached to all growth basins Many solely connected Wind River supply sources WIC is lowest cost pipe Opal Cheyenne CIG Front Range Position Serves nearly the entire Front Range demand Denver Denver- Uinta Well connected to storage Piceance Julesburg facilities Strong customer linkage San Juan Raton Source: El Paso Corporation 45
  • Rockies Production Growth Wellhead Volumes in Bcf/d 14 Forecast Denver +3 Bcf/d 12 Piceance Uinta Powder River 10 Overthrust Green River 8 Wind River Big Horn 6 Forecast by 2016 (Bcf/d): 4 High Case 13.3 Mid Case 11.9 2 Low Case 10.4 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1990–2006: Wellhead total data from HIS database 2007–2016: El Paso forecast 46
  • Rockies Growth Projects Volume Change from 2007–2016 CIG WIC WIC Medicine Bow Cheyenne Plains Expansion $37 MM September 2008 330 MMcf/d Ruby PIpeline ~ 1.5 to 2.0 Opal Bcf/d Cheyenne ~ 1.0 to 1.5 Bcf/d CP Coral Expansion CIG High Plains Pipeline $23 MM $198 MM (100%) July 2008 November 2008 70 MMcf/d 900 MMcf/d CIG Totem Storage $139 MM (100%) WIC Piceance Lateral July 2009 $62 MM 200 MMcf/d 4Q 2009 220 MMcf/d Source: El Paso Corporation 47
  • El Paso Backlog: Large and Profitable Capex EBITDA (run rate)* Multiple $3.9 billion $0.6 billion 7x WIC Medicine Bow Expansion TGP Concord $37 MM $21 MM Sep 2008 Nov 2009 330 MMcf/d 30 MMcf/d CIG High Plains Pipeline WIC Piceance $198 MM (100%) Lateral November 2008 $62 MM Elba Expansion III & Elba 900 MMcf/d 4Q 2009 Express CP Coral Expansion 220 MMcf/d $1.1 Billion $23 MM CIG Totem Storage SNG SESH –Phase I 2010–2013 July 2008 $139 MM (100%) $150 MM 8.4 Bcf / 0.9 Bcf/d & 1.2 Bcf/d 70 MMcf/d July 2009 Jul 2008 200 MMcf/d 140 MMcf/d SNG Cypress Phase II & III $20 MM/$85 MM May 2008 / Jan 2011 115 MMcf/d / 160 MMcf/d TGP Bluewater / 800 Ln Exp $25 MM SNG South System III/ Nov 2008 TGP Carthage SESH Phase II 340 MMcf/d Expansion $285 MM / $35 MM $39 MM 2010–2012 May 2009 Gulf LNG 370 MMcf/d / 350 MMcf/d 100 MMcf/d $1.1 Billion (100%) Oct 2011 El Paso Pipeline Partners, LP 6.6 Bcf / 1.3 Bcf/d FGT Phase VIII Expansion El Paso Pipeline $2+ Billion (100%) 2011 800 MMcf/d *EBITDA based on pro-rata basis Note: As of March 31, 2008; El Paso Pipeline Partners owns 10% of SNG & CIG 48
  • De-risking of Backlog Capital Costs Typical Pipeline Capex Breakdown 30%–35% 35%–40% 25%–35% Pipe Contractor-related Right-of-way Other Primary Party $ Billion At-Risk for Capex $1.7 Contractor 0.8 Customer 1.4 El Paso $3.9 49
  • Managing Execution Backlog mostly lower risk organic projects Reasonable lead times EP’s size/scale alliances with pipe mills/contractors Experienced project managers (28 yrs. avg.) EVA-like “value creation” compensation Solid track record 50
  • Solid Track Record Projects Completed in 2005–2007 Actual Capex EBITDA (run rate)* Multiple $ 1.6 billion $220 million 7x 11% capex increase vs. original budget in challenging environment ConneXion NE Kanda Lateral Yuma County Sta 317 HP Piceance Lateral ConneXion NY/NJ Cheyenne Plains Raton Exp I Raton Exp II Elba II Cypress Phase I LPG Burgos Triple T LA Deepwater Link *Estimated EBITDA run rate based on pro rata basis 51
  • Large Projects in Development Northeast Passage $2+ billion (100%) 1.1 Bcf/d capacity 2012 In-service Joint development with Equitable Ruby Project $2+ billion (100%) 1.2 Bcf/d capacity 2011 In-service PAs with PGE & 2 others Joint ownership Potential $4+ billion capex (100%) Estimate $2+ billion El Paso’s share Several other organic projects under development Note: Not included in backlog 52
  • El Paso Pipeline Partners (EPB) Primary focus is natural gas transmission and storage assets Three FERC regulated interstate pipelines: 100% of WIC: 800 miles, 2.7 Bcf/d 10% of CIG: 4,000 miles, 3.0 Bcf/d 10% of SNG: 7,600 miles, 3.7 Bcf/d Demand-based revenues from high-quality customers with strong credit profiles Several organic expansions underway WIC SNG CIG Diverse, Growing Supply Regions High Connectivity to Growing Markets 53
  • EPB’s Importance to El Paso Strategic growth vehicle for El Paso Competitive cost of capital Growth Financial flexibility to optimize capital structure Highlight value of El Paso’s pipeline franchise Value Assets receive a higher value in MLP structure Provide strong cash flow EP and EPB’s interests are aligned Alignment EP retains 67% ownership (LP and 2.0% GP) General partnership ownership—IDRs 54
  • Commitment to MLP Growth Committed to grow El Paso Pipeline Partners Most pipeline assets suitable for MLP Organic $2.4 billion NOL Drop downs from El Paso Review on ongoing basis Third-party acquisition Proceeds available for reinvestment, share buy backs, debt reduction El Paso highly incentivized with unit ownership, GP interest and IDR 55
  • Leading Pipeline Franchise Broad market presence Excellent connectivity $4 billion backlog: attractive risk/return profile 6%–8% long-term EBIT growth EPB MLP highlighting value of pipes 56
  • Q&A