el paso 05_16Wright_Wachovia


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el paso 05_16Wright_Wachovia

  1. 1. Byron Wright Vice President, Strategy and Rates El Paso Eastern Pipeline Group How Many is Too Many: Terminal Approval to Regasification Wachovia Securities LNG Conference May 16, 2006
  2. 2. Cautionary Statement Regarding Forward-looking Statements This presentation includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 successfully contract, build and operate the pipeline projects described in this presentation; changes in supply of natural gas; general economic and weather conditions in geographic regions or markets served by El Paso Corporation and its affiliates, or where operations of the company and its affiliates are located; the uncertainties associated with governmental regulation; 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. 3. El Paso’s Natural Gas Pipelines ► 26% total U.S. interstate pipeline mileage ► 36 Bcf/d capacity (25% of total U.S.) ► Best market connectivity Great Lakes Gas ► Best supply access Transmission (50%) Wyoming ► Leading pipeline integrity program Interstate Cheyenne Colorado Plains Pipeline Interstate Gas Tennessee Mojave Gas Pipeline Pipeline ANR Pipeline Southern Natural Gas El Paso Natural Gas Elba Island LNG Cypress Pipeline Mexico Ventures Florida Gas Transmission (50%) 3
  4. 4. LNG Threats and Opportunities for El Paso Bo th Th re at Op at po re r tun Th it y ty Op ni po rtu Op r tun o po pp it y r tun O it y Threat 4
  5. 5. LNG Imports: The Gulf Coast Advantage LNG Quality Pipeline Market Market Prospects Siting Constraints Access Liquidity Basis Gulf Coast A A A A+ D East Coast C- C B- B- A West Coast D- C D C C Mexico B B B N/A B Maritimes A B- C+ C C Proposed terminals Certificated terminal Existing terminals Project by 2012 5
  6. 6. NA Terminal Capacity Growth Bcf/d Existing, Contracted Expansions, New Construction 16 Canaport Costa Azul 14 Altamira Cameron 12 Sabine Pass Freeport 10 Gulf Gateway 8 Cove Point Exp Cove Point 6 Lake Charles Exp Lake Charles 4 Elba Expansion Elba Isl 2 Everett LNG Imports 0 2006 2007 2008 2009 2010 6
  7. 7. LNG Terminal Utilization Rates 100% 80% Utilization Rate 60% 40% 20% 0% 2000 2001 2002 2003 2004 Asia Europe NA Total Source: PIRA 7
  8. 8. Will the Tail Wag the Dog? In Billions +50%? Capit al req Supply ($1.0–$1.5) uirem ents decre Liquefaction ($0.8–$1.5) a se d o wnst ream Transportation ($0.7–$2.0) Regas ($0.35–$1.0) 2 to 3 years 3 ½ to 4 years 2 years Entire LNG chain requires ► investment of $2.8 to $6 billion 3 to 3 ½ years Pipeline ($0.03–$0.2) per 1 Bcf/d capability Regas and pipelines are the ► smallest components ½ year Source: CERA 8
  9. 9. El Paso’s Role in LNG Development Strategy is to develop, construct, own, and operate ► infrastructure Contract terminal developer ► Will accept some balanced risks as appropriate and ► necessary to get contracts for the project: – Permitting risk – Timeline risk – Capital cost risk – Contract term risk 9
  10. 10. Current Elba Island Facility Reactivation Expansion Combined In-service date Nov. 2001 Feb. 2006 Storage capacity 4.0 Bcf 3.33 Bcf 7.33 Bcf Firm sendout 0.446 Bcf/d 0.360 Bcf/d 0.806 Bcf/d Peak sendout 0.675 Bcf/d 0.540 Bcf/d 1.215 Bcf/d 10
  11. 11. Elba’s Customers and Capabilities Reactivation Phase II Total Phase III 2010/2012 Start-up Dec-2001 – Feb 2006 Long-term Contract term 22 yrs. – 30 yrs. Storage capacity (Bcf) 4.0 3.3 15.7 8.4 Sendout (MMcf/d) 675 540 2,115 900 Capex ($MM) – $155 $505 $350 11
  12. 12. SNG’s Cypress Project Will Improve Supply to Southern GA and FL Supported by 20-year Agreements with BG & Progress Elba Island Cypress Project (Phase I) ► 165 miles 24quot; pipe JEA ► Capacity: 220 MMcf/d ► Capex: $241 MM ► Pipe ordered FGT Phase VII ► FERC certificate expected 2Q ‘06 ► Capacity: 100 MMcf/d ► In-service May 2007 ► Capex: $63 MM ► In-service May 2007 Progress FL 12
  13. 13. Elba Express Pipeline Will Improve Supply to Georgia and the East Coast Charlotte Elba Express Pipeline Transco ► Pipe dia: 42quot;/36quot;; 191 miles ► Capacity: 1,175 MMcf/d Atlanta ► Capex: $510 MM ► In-service: 2010/2012 Elba Island Supported by long- term agreements with Shell & BG 13
  14. 14. Byron Wright Vice President, Strategy and Rates El Paso Eastern Pipeline Group How Many is Too Many: Terminal Approval to Regasification Wachovia Securities LNG Conference May 16, 2006