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  1. 1. Doug Foshee President & Chief Executive Officer Bank of America Investment Conference September 19, 2006 the place to work the neighbor to have the company to own
  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, changes in unaudited and/or unreviewed financial information; our ability to implement and achieve our objectives in the 2006 plan, including achieving our debt-reduction, earnings and cash flow targets; the effects of any changes in accounting rules and guidance; our ability to meet production volume targets in our Exploration and Production segment despite delays in resuming production shut-in due to hurricanes Rita and Katrina; uncertainties and potential consequences associated with the outcome of governmental investigations, including, without limitation, those related to the reserve revisions and natural gas hedge transactions; the outcome of litigation, including shareholder derivative and class actions related to reserve revisions and restatements; 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; 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 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. Non-GAAP Financial Measures El Paso uses the non-GAAP financial measure “earnings before interest expense and income taxes” or “EBIT” to assess the operating results and effectiveness of the company and its business segments. The company defines EBIT as net income (loss) adjusted for (i) items that do not impact its income (loss) from continuing operations, such as extraordinary items, discontinued operations, and the impact of accounting changes; (ii) income taxes; (iii) interest and debt expense; and (iv) distributions on preferred interests of consolidated subsidiaries. The company defines EBITDA as EBIT plus Depreciation, Depletion and Amortization. 2
  3. 3. Our Purpose El Paso Corporation provides natural gas and related energy products in a safe, efficient, and dependable manner 3
  4. 4. Leading Natural Gas Pipelines Great Lakes Gas ► 26% total U.S. Transmission (50%) Wyoming interstate pipeline Interstate mileage Colorado Cheyenne Interstate Gas ► 1/3 of daily U.S. Plains Pipeline throughput Tennessee Mojave Gas Pipeline Pipeline ANR ► Best market Pipeline connectivity Southern Natural Gas ► Best supply access El Paso Elba Island Natural Gas ► Leading pipeline LNG integrity program Mexico Ventures Florida Gas Transmission (50%) 4
  5. 5. Overview ■ Pipelines having terrific year • EBIT up 13% for first six months • Despite positive items last year, hurricane costs this year ■ Expansion inventory continues to build ■ 4%–6% EBITDA growth over next 3–5 years ■ But, equally focused on safety, integrity of pipelines 5
  6. 6. El Paso Pipelines Total Integrity Management Program (TIM) ■ Developed TIM in 2001, before Pipeline Safety Act ■ Adopted best practices of El Paso, Sonat, and Coastal inspection and maintenance programs ■ Combined operations into one organization ■ Program approved by Board of Directors ■ Regular reviews by Health, Environmental, & Safety BOD committee Industry-leading program 6
  7. 7. Total Integrity Management Program As of August 2006 Total Integrity Category Mileage Management Program Onshore ≥ 6quot; 42,798 In-line Inspection Program Offshore 2,060 Offshore Integrity Program Storage 373 Storage Integrity Program < 6quot; 1,517 Area site-specific plans direct assessment New lines 613 Lines installed from 2003 forward are not counted in the mileage; they will be ILI’d within 10 years of in-service Total 47,361 7
  8. 8. In-line Inspection Program Status 42,798 ILI Program Miles 45,000 40,000 35,000 72% 66% 30,000 63% Miles 58% 25,000 52% 46% 20,000 42% 15,000 10,000 5,000 0 Pre-2001 2001 2002 2003 2004 2005 2006E Cumulative 1st ILI Annual 1st time ILI Cumulative repeat ILI Annual repeat ILI 8
  9. 9. In-Line Inspection Costs—O&M and Capital 160,000 140,000 $ Thousands 120,000 100,000 80,000 60,000 40,000 20,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Base—ILI Capital Capital—Repairs Capital—Supplemental O&M—ILI & Repairs 9
  10. 10. Pipeline Safety Improvement Act ■ Signed by President Bush December 17, 2002 ■ Key points: • Identify high consequences areas (HCAs) • Develop integrity management program (IMP for HCAs) • Perform ongoing assessments of pipeline integrity (ILI, hydro-testing, direct assessment) • Data integration and risk assessment • Implement additional preventive and mitigated action ■ Program completion Milestones • Top 50% HCAs: December 17, 2007 • Remaining 50%: December 12, 2012 10
  11. 11. Comparison of Rule and Total Integrity Management Program Rule TIM Scope Limited to HCA’s All facilities (1,902 sites and ILI >6quot; onshore (42,798 miles) approx. 1,234 miles) Timing 50%: December 2007 100%: December 2012 100%: December 2012 Assessments ILI, Hydro, Direct Assessment Primarily ILI and site specific plans ■ Threats Original focus internal and external External corrosion corrosion ■ Internal corrosion ■ Stress corrosion cracking ■ Manufacturing ■ Construction ■ Operator error ■ Third party damage ■ Weather and outside forces ■ Equipment 11
  12. 12. How Do We Perform the In-line Inspection? 12
  13. 13. In-line Inspection Program Year 1 Make piggable Year 2 In-line inspect Immediate repairs Year 3 and 4 Remediate Annual overlap: ■ Make piggable ■ ILI previous year make piggable ■ Address any immediate repairs from ILI run ■ Remediate scheduled anomalies 13
  14. 14. Make Piggable: Scope and Obstacles Scope ■ Install pig launchers and receivers ■ Replace main line valves as required • Generally plug or reduced size Address Obstacles ■ An area where the tool cannot pass through ■ Managing outages 14
  15. 15. Launcher/Receiver A launcher/receiver is installed to insert, launch, and/or receive pigs/tools 15
  16. 16. Valve Setting Most original valves will not allow pigs to pass—These must be replaced 16
  17. 17. Obstacles: What about Rivers? ■ Most river crossings were built with a header and multiple line crossings ■ These are replaced • Conventionally, or • Directional drill, or • Install traps at river 17
  18. 18. Obstacles: Gas Operations and Engineering ■ Some lines cannot be taken out of service • Important laterals and some mainlines Use Stopple—Bypass 18
  19. 19. High Resolution MFL Inspection Pig 19
  20. 20. Loading Inspection Pig into Pig Launcher 20
  21. 21. Magnetic Flux Leakage Principle Each MagneScan tool carries powerful permanent magnets which are coupled to the pipe wall by high-density brushes, to induce a magnetic field in the pipeline steel 21
  22. 22. Magnetic Flux Leakage Principle When the tool passes a location where the amount of metal in the pipe wall has been decreased—by a corrosion pit, for example—a leakage of magnetic flux takes place 22
  23. 23. Commitment to Integrity ■ Committed to industry-leading program ■ Established accountabilities and continuous improvement objectives ■ Developed aggressive and comprehensive strategy and programs to achieve our objectives ■ Committed the resources to implement the program through a continuous program 23
  24. 24. Appendix 24
  25. 25. Unprecedented Growth Growth project portfolio approximately $3 Billion TGP NE ConneXion TGP Essex- ANR Wisconsin 2006 New England Middlesex ANR STEP $47 MM WIC/CP Opal to $111 MM $38 MM $95 MM WIC Kanda Lateral November 2006 Cheyenne or Greensburg November 2007 November 2007 2007/08 Up to $137 MM 168 MMcf/d $39–$63 MM 136 MMcf/d 82 MMcf/d 27 Bcf / 412 MMcf/d January 2008 January 2008 Up to 333 MMcf/d 125 Mdth/d TGP NE ConneXion Front Range WIC Piceance Pipeline CPG Yuma Lateral NY/NJ Market Delivery $134MM $22 MM $26 MM Infrastructure March 2006 November 2006 November 2006 $148 MM 333 MMcf/d 49 MMcf/d 42 MMcf/d 2008/2009 CIG Raton Basin SNG Elba Expansion II Expansions $158 MM $91MM February 2006 2005-2008 360 MMcf/d 170 MMcf/d Continental EPNG Connector SNG Elba Expansion Arizona Storage $TBD III & Elba Express $115 MM 2008 $850 MM 2010 850MMcf/d 2010 - 2012 3.5Bcf / 350 MMcf/d 8.4 Bcf / 900 MMcfd Mexico JV- LPG SNG Cypress Phase I / II EPNG Sonora Lateral Reynosa $241 MM / $18 MM $91MM $53 MM (50%) May 2007 / Mid 2008 2009/10 July 2007 220 MMcf/d / 116 MMcf/d 800 MMcf/d 30,000 Bbl/d TGP/ANR Eugene Island 371 FGT Phase VII – Part I and II $16 MM Mexico JV - Sonora $63 MM / $0 MM Nov - Dec 2006 $406 MM (33%) May 2007 / May 2008 200 MMcf/d 2010 60 MMcf/d / 20 MMcf/d 1,000-1,250 MMcf/d TGP SNG Cypress LA Deepwater Link Phase III $31 MM $61 MM FERC Certificated/Under Construction April 2007 May 2010 850 MMcf/d 164 MMcf/d Signed PA’s Future Projects 25
  26. 26. Doug Foshee President & Chief Executive Officer Bank of America Investment Conference September 19, 2006 the place to work the neighbor to have the company to own