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EP4_25_08ClearyPlattsRockiesConf
- 1. Jim Cleary President, El Paso Western Pipelines Platts Conference, Rockies Gas & Oil April 25, 2008
- 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. Outline • Why Ruby? • Why Now? • Progress Update • Conclusion 3
- 4. El Paso Western Pipelines Big Horn Powder River Wind River Green River Denver-Julesburg Uinta Piceance Anadarko Raton San Juan Permian WIC CIG EPNG Mojave Cheyenne Plains Note: Includes El Paso Corporation and El Paso Pipeline Partners, L.P. 4
- 5. • 680 miles of 42-inch Opal to Malin • 1.2 Bcf/d expandable to 2.0 Bcf/d • 1,440 psig MAOP Ruby Pipeline Map • Compression: Head Station (76,500 hp) & Mid Point (30,000 hp) (possibly 3rd location) • Measurement – 9 Locations • 64% +/- Public Land • 2 National Forests: Cache and Fremont-Winema • 5 BLM Offices OREGON GTN • Mostly Remote / Unpopulated Fremont- Wenima National Malin IDAHO Forest WYOMING PG&E RUBY Opal Hub Tuscarora Cache CIG WIC National Forest CALIF. Paiute Cheyenne U TA H Plains NEVADA Kern River COLORADO 5
- 6. Why Ruby? 6
- 7. Rockies versus Western Canada Long-Term Production Trends Bcf/d Canadian Peak - 2001 Peak 18 - 17 Bcfd El Paso High Case 16 Best fit of Current Trend: 14 - 2033 Peak - 15 Bcfd Production 12 El Paso Base Case 10 8 6 Best Fit Curves Assumes: 4 - Gaussian Curve - 340 EUR 2 - Few environmental constraints Forecast - 1970 1990 2010 2030 2050 2070 2090 7
- 8. Ziff Forecasted Canadian Exports 8 Source: Ziff Energy
- 9. Historical and Forecasted Gas Demand (Northern CA and the Pacific Northwest) MMcf/d 3,000 2,500 2,000 Forecast: (2008–2016) PG&E Planning Area CAGR = .39% Growth Volume = 42 MMcf/d *Source: California Energy Commission 2008-2018 California Energy Demand 1,500 (Staff Revised Forecast Nov. 2007) 1,000 Forecast: (2008–2016) Pacific Northwest CAGR = 2.24% 500 *Source: EL Paso Macro Model (Oregon & Washington) Growth Volume = 195 MMcf/d 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9
- 10. Northern/Central California Market Detail • The northern/central California North to South flow market is served by PG&E OREGON utilization typically GTN below 70% due to – PG&E system is supplied from reduced Canadian Malin Canada and US (Rockies, San imports Juan and Permian Basins) 2.0 Bcf/d /40 e 400 E Lin – Reduced imports have resulted in 1 Tuscarora PG&E Lines 400/401 (north to & PG south flow) being underutilized NEVADA s Sacramento s • Current California pipeline s s s infrastructure allows for limited San Francisco gas deliveries from southern to CALIFORNIA Kern northern California ARIZONA 1.1 Bcf/d Topock • SoCal system has limited PG&E Line 300 physical ability to flow LNG from SoCal Blythe Los Angeles Mexico or Southern California North into PG&E SDG&E Baja San Diego Baja Norte Costa Azul LNG 10
- 11. Why Now? 11
- 12. Rocky Mountain Production (Volumes are Wellhead – Measured in MMcfd) 14,000 Big Horn Wind River Forecast 12,000 Green River Overthrust Powder River Uinta 3.28 Bcf/d of 10,000 growth 2006-2016 Piceance Denver 8,000 6,000 Forecast by 2016: 4,000 High Case 13,278 Mid Case 11,860 2,000 Low Case 10,442 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 IHS database 2007-2015: El Paso forecast 12
- 13. Cheyenne Basis to Henry Hub vs. Export Load Factors Jan 1995 – Feb 2008 3.50 3.00 Historical Relationship 2.50 Load Factor ~84% Dollars per MMBtu HH Hub Basis ~ $0.61 2.00 1.50 1.00 0.50 0.00 60.0% 65.0% 70.0% 75.0% 80.0% 85.0% 90.0% 95.0% 100.0% -0.50 13
- 14. Rockies Gas Balance Annual Average Wellhead Production Forecast (MMcf/d) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Dry Production 6,325 6,694 7,288 7,875 8,324 8,683 8,979 9,232 9,451 9,641 9,807 Local Consumption* 1,591 1,637 1,613 1,695 1,625 1,637 1,652 1,657 1,690 1,721 1,750 Available for Export 4,734 5,057 5,675 6,180 6,699 7,046 7,328 7,575 7,760 7,920 8,057 Total Export Capacity 5,397 6,030 6,200 6,200 8,070 8,070 8,070 9,270 9,270 9,270 9,270 Capacity Surplus 663 973 525 20 1,371 1,024 742 1,695 1,510 1,350 1,213 % Surplus Capacity 12.3% 16.1% 8.5% 0.3% 17.0% 12.7% 9.2% 18.3% 16.3% 14.6% 13.1% - Expansions (Includes Ruby) Need for Additional Export Capacity Possible Need for Another Expansion by 2013-2014 *Source – El Paso supply Forecast 14
- 15. Rockies Supply vs. Regional Export Capacity MMcf/d 10,000 Ruby REX West High Case 1200 expansion 1800 expansion 9,000 Cheyenne Plains 100% LF 170 expansion 8,000 Cheyenne Plains 560 expansion 7,000 Expansion needed: 6,000 85% LF Base Case 2009-2010 if 85% LF 5,000 2013-2014 if 85% LF Supply Available for Export 4,000 Base Case 3,000 2,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *Source – El Paso supply Forecast 15
- 16. Project Progress 16
- 17. Development • In development for over a year • Analyzed 3 major routes & 4 variations of the preferred route • Route selected after extensive agency/stakeholder discussions • BLM application filed: November 2007 • Precedent agreement (PA) signed with PG&E (anchor shipper) and two others for 650 Mdth/d: December 2007 • CPUC filing for approval of PG&E PA: December 2007 • FERC Pre-filing process began: January 2008 • Binding Open Season began: February 2008 17
- 18. Boots On the Ground • Centerline and detailed surveys underway • Survey permission received from Land-owners and the BLM for 75% of the route • 25% of ROW is already surveyed • 10 Open Houses covering the entire route from Opal, Wyoming to Malin, Oregon • 6 Scoping meetings with BLM 18
- 19. Looking Forward • CPUC Ruling Expected: October 2008 • FERC Filing: January 2009 • In Service Target: March 2011 19
- 20. Conclusion • Canadian export decline suggests the Western Markets require supply diversity • Rockies Supply push requires additional infrastructure in the next few years • Considerable progress has already been made on Ruby Pipeline development • Ruby is the project that can meet the market’s timeline and needs 20