1. El Paso Corporation
Fiji C. George
Manager, Corporate Strategy & Development
Road to Climate Action Leader™
Western Climate Policy Forum
February 26, 2009
Denver, CO
2. Cautionary Statement
Regarding Forward-looking Statements
This presentation includes certain forward-looking statements and projections. The company has made
every reasonable effort to ensure that the information and assumptions on which these statements and
projections are based are current, reasonable, and complete. However, a variety of factors could cause
actual results to differ materially from the projections, anticipated results or other expectations expressed
in this presentation, including, without limitation, our ability to implement and achieve our objectives in the
2008 plan, including earnings and cash flow targets; our ability to meet production volume targets in our
E&P segment; uncertainties and potential consequences associated with the outcome of governmental
investigations; outcome of litigation; our ability to comply with the covenants in our various financing
documents; our ability to obtain necessary governmental approvals for proposed pipeline projects and our
ability to successfully construct and operate such projects; the risks associated with recontracting of
transportation commitments by our pipelines; regulatory uncertainties associated with pipeline rate cases;
actions by the credit rating agencies; the successful close of our financing transactions; our ability to
successfully exit the energy trading business; our ability to close our announced asset sales on a timely
basis; changes in commodity prices and basis differentials for oil, natural gas, and power and relevant
basis spreads; inability to realize anticipated synergies and cost savings associated with restructurings and
divestitures on a timely basis; general economic and weather conditions in geographic regions or markets
served by the company and its affiliates, or where operations of the company and its affiliates are located;
the uncertainties associated with governmental regulation; political and currency risks associated with
international operations of the company and its affiliates; competition; and other factors described in the
company’s (and its affiliates’) Securities and Exchange Commission filings. While the company makes
these statements and projections in good faith, neither the company nor its management can guarantee that
anticipated future results will be achieved. Reference must be made to those filings for additional important
factors that may affect actual results. The company assumes no obligation to publicly update or revise any
forward-looking statements made herein or any other forward-looking statements made by the company,
whether as a result of new information, future events, or otherwise.
2
3. Overview of El Paso Corporation
Wyoming
Colorado
Tennessee
Interstate
Interstate Gas
Gas Pipeline
Cheyenne
Mojave Plains Pipeline
Pipeline
Southern
Natural Gas
El Paso Elba Island
Natural Gas LNG
Gulf LNG (50%) Florida Gas
2011 Transmission (50%)
Premier Pipeline Franchise Top 10 independent E&P
$1.3 billion of 2007 EBIT 2.8 Tcfe YE 2007 proved reserves
42,000 miles of interstate pipeline
Top 10 independent domestic
with unmatched connectivity
gas producer
17 Bcf/d throughput (28% of gas
delivered to U.S. consumers)
Nearly $8 billion of organic
projects with firm customer commitment
3
4. Our Greenhouse Gas Commitment
Assess, engage and act”
Commitment statement http://elpaso.com/profile/mainneighbor.shtm
Board level oversight on climate matters
Carbon Disclosure Project (CDP) 5 & 6
http://www.cdproject.net/
Issued first CSR in June 2008
http://elpaso.com/CSR/index.html
California Climate Action Registry (CCAR)
First company in CCAR history to certify without significant errors
First company to achieve Climate Action Leader™ for 2007
First natural gas company to join CCAR
First natural gas company to report and verify all applicable GHGs
to CCAR
4
5. Our Greenhouse Gas Commitment
EP Serves on Advisory Committee—The Climate
Registry (TCR)
El Paso Natural Gas and Colorado Interstate Gas are
TCR “Founding Reporters”
Coalition for Emission Reduction Projects (CERP)
2008 Southern Gas Association (SGA) Environmental
Excellence Award for leadership on GHG matters
EPA Star Partner of the Year—2008
Committed to developing the $3 billion proposed
Ruby Pipeline as a carbon-neutral project
5
6. Ruby Pipeline’s Goal of Approaching
Carbon Neutrality
http://www.rubypipeline.com/
Our goal to achieve a
carbon-neutral project
Mitigate construction and
operational Scope I emissions
relative to a “business as usual”
design
“Portfolio” approach
Electric compression
Best (methane) management
practices
Internal pipe coating
LEED designed stations
VERs, re-forestation, and
allowances
6
7. 2005 Emissions Profile
for the Natural Gas Sector
U.S. GHG Emissions by (Million tonnes of CO2e) Total
Other
Fuel/Source—2005
CO2 CO2e
Gases
CH4
83.0
–
35.2
47.8
Production
Oil
1% (Power)
53.0
–
11.9
41.1
Processing
68.8
–
36.8
32.0
Transmission and Storage
27.4
–
27.4
–
Distribution
232.2
–
111.1
120.9
Gas Industry Total
CO2 from
Coal
Transportation 7260.4
631.6
539.3
6,089.5
U.S. Total
28% (Power)
26%
3.2%
0.0%
2.0% 20.6%
Gas Industry Share of U.S.
CO2 from
Gas (Power)
Industrial
4%
Combustion
12%
Relative to total U.S. CO2eq emissions
HFC, PFC, SF6
2%
Natural Gas combustion ~ 17%
N20 (Soil Mgmt,
CO2 from
Combustion)
Commercial Natural Gas Industry Share ~ 3%
7%
Combustion
3% Methane (Landfill, Methane emissions ~ 1.5%
CO2 from
Mining, Ag, Gas)
Residential CO2 from 8%
Combustion Process and
Non-Energy Use
5%
4%
Methane emissions from the gas sector are
a small fraction of the total U.S. emissions
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9. Broad Implications for Natural Gas in a
carbon constrained environment
Switching to natural gas will reduce CO2 emissions now
Lowest capital cost, low carbon, high efficiency power
generation available today
Electricity from natural gas has lifecycle GHG emissions
far below other fossil fuels
Proven, highly efficient technology
Effective backstop resource for intermittent renewable
power
Natural gas the “versatile bridge” to a low carbon economy
9
10. 2007 El Paso’s Certified Emissions
Total Emissions by Emission Category* Total Emissions by Gas*
Emissions
Emissions
GHG GWP Contribution
Emission Category Contribution
MMT CO2e
MMT CO2e
Significant Stationary Combustion 6.30 42.3% CH4 21 8.04 54.0%
Significant Fugitive 5.05 33.9% CO2 1 6.76 45.4%
Significant Process 2.21 14.8% N2O 310 0.09 0.6%
Indirects 0.81 5.5%
HFCs 1,300 0.001 0.01%
De Minimis 0.52 3.5%
Total 14.90 100%
Total 14.90 100%
N2O
De Minimis
HFCs
0.52 0.09
Indirects
0.001
3.5%
0.81 0.6%
0.01%
5.5%
Significant
Significant Stationary
CO2
Process Combustion
CH4
6.76
2.21 6.30
8.04
14.8% 45.4%
42.3%
54.0%
Significant
Fugitives
5.05
33.9%
*As reported to CCAR, for CY 2007.
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11. GHG Emission Categories and Sources:
Natural Gas Transmission
Vast number of discrete but “small sources”
Direct Emissions
Stationary Combustion Fugitive
Reciprocating IC engines Transmission and Gathering Pipelines
Transmission & Storage Station/Gas
Turbines
Plant/LNG Terminal Piping components
Process heaters & boilers
Reciprocal and Centrifugal Compressor
LNG vaporizers
components
Flares/Thermal Oxidizers
M&R Stations
Mobile combustion
Storage Wells
Vehicle fleet
Vehicle Fleet A/C Systems
Aviation fleet
Process Plant piping & components
Process/Vented
NG blowdowns
Indirect Emissions
Dehydrators
Generation of electricity used by:
Amine units
Stations/office buildings
Pneumatic devices
Electric driven compressors
Gas-assisted pumps
Electric driven pumps (pump-jacks)
Work-over & Completion Venting
Storage Tanks
11
12. Inventory Effort
GHG Inventory Hours
Registry Questions and Response
5,000
Final Opinion
4,500
273
Initial Verification Findings and Response
4,000 350
248 Site Visits and Follow-up
3,500
220
CRIS Data Entry and QA/QC
3,000 356
RFP for Verification, Verifier Selection,
2,500 Contract
1,303
2,000 Internal Review and Revisions
1,500 Prepare Report
1,000 Calculations
1,357
500 Data Gathering and Analysis
0 Planning
Total Hrs.
About 4500 hours for 326 facilities
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13. Road to Climate Action Leader™:
Inventory Management Milestones
Establishment of GHG Teams (2005)
2004 GHG Inventory—U.S. Operations (2005)
Gap Analysis (2005)
Corporate GHG Inventory Goals (2006)
“Pre-certified” 2005 GHG Inventory—1605(b) Standards(2006)
Corporate Inventory Management Plan/Technical Manual (2007)
“Certified” 2006 GHG Inventory—CA Operations (2007)
Climate Action Leader™—CA (2007)
GHG IMS (2007)
“Verified” 2006 GHG Inventory—U.S. Operations (Dec. 2007)
“Verified” 2007 GHG Inventory—U.S. Operations (2008)
Climate Action Leader™—U.S. Operations (2008)
Established a process focused on continuous improvement
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14. Seven tips for a successful emission
inventory submittal
Senior Management support—vital
Inventory Teams and dedicated budget
This is not just an EH&S issue
Communicate: inventory goals, data needs
Inventory Management Plan (IMP) and a
Technical Manual (TM)
Information Management System (IMS)
Use Industry Specific Guidelines for fugitive/vented sources
Manage the verification process
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15. Emission Factor Improvements:
Policy Recommendations—Natural Gas Systems
Emission Factors are outdated and needs improvement for voluntary or
mandatory reporting
There are thousands of fugitive components even for a single company
80/20 rule
Fugitive Emissions Reported are not cap & trade quality
WCI regulations should consider phased in regulations for fugitives
Incentivize companies by providing “offsets” for fugitive sources
Focus on 20% of components contributing to 80% of the emissions
Offsets demand high quality component level measurements
Provides a statistical basis to provide comprehensive factors for entity wide reporting for
cap and trade
CCAR/TCR to be the offset protocol development entity and registry for offset data
Funding for industry-government partnership to conduct multi-year surveys to improve
emission factors
Innovation
Market demand will drive innovation for new and improved components
Offsets and industry-government partnerships are two policy instruments required
if fugitives are to be regulated under a mandatory program
15
16. Emission Factor Improvements:
Policy Recommendations—General
Single, Consistent Reporting Standard
Point of Regulation (PoR)
“Downstream”—point of emissions with a 25,000
tons/year threshold
Definition of a facility
Oil & gas facilities
Reporting of Fugitive & Process/Vented Emissions
Reporting vs. Regulation
Compliance & Enforcement
CAA-type compliance and enforcement program is
unwarranted
16
17. Emission Factor Improvements:
Policy Recommendations—General
General administrative obligations outlined in the
WCI January 2009 should be encouraged but not
mandated
Verification
Multi-year verification
Full scale verification once in 3–5 years
Internal audit or desktop verification in between
$100k+ for <1% reported vs. verified estimates
Significant portion of the difference identified by
El Paso’s internal audit
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18. Conclusions
Natural Gas is the “versatile bridge” to a low
carbon economy
A consistent single reporting framework is
needed
Emissions accounting from natural gas
sector is complex and time consuming
Offsets policy instrument should be afforded
for natural gas fugitives and process/vented
sources
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19. El Paso Corporation
Fiji C. George
Manager, Corporate Strategy & Development
Road to Climate Action Leader™
Western Climate Policy Forum
February 26, 2009
Denver, CO