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Transwestern Pipeline Company Transwestern Pipeline Company Status of San Juan Expansion & Sun Devil Lateral February 2004 www.crosscountryenergy.com.

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Presentation on theme: "Transwestern Pipeline Company Transwestern Pipeline Company Status of San Juan Expansion & Sun Devil Lateral February 2004 www.crosscountryenergy.com."— Presentation transcript:

1 Transwestern Pipeline Company Transwestern Pipeline Company Status of San Juan Expansion & Sun Devil Lateral February 2004

2 Transwestern Pipeline Company 1 Available Capacity to Serve AZ Texas Oklahoma Colorado New Mexico Arizona Utah Nevada California Ignacio Blanco Hub Needles Topock Station 9 SAN JUAN ROCKIES PERMIAN ANADARKO Thoreau San Juan Area West of Thoreau Area East of Thoreau Area Supply Basins Rate Areas Panhandle North West Texas North Phoenix Mainline West Capacity of 1,210 MMcf/d. 700 MMcf/day of Mainline West capacity and 350 MMcf/day of San Juan capacity available, subject to ROFR in Current Expansions: TW preparing FERC certificate application to expand San Juan capacity by 375 MMcf/day with a mid-2005 in-service date. Proposed Expansion: TW is planning a 170 mile lateral from its mainline near Flagstaff to the Phoenix market, capable of flowing 500+ MMcf/day without compression and up to 1.2 Bcf/d with compression.

3 Transwestern Pipeline Company 2 Gas Supply Access Since 1998, total reserves in the four major supply basins served by TW have risen dramatically.

4 Transwestern Pipeline Company 3 San Juan Basin - Reliable Resource Base San Juan basin is one of the largest natural gas basins in the United States. San Juan total reserves and reserve life (15 years) continue to increase. Most active producers include: Devon, BP, Burlington, ConocoPhillips, & XTO San Juan Basin Reserves 0x 5x 10x 15x 20x 25x Reserve Life Index Year End Reserves TCF San Juan Basin Year-End ReservesReserve Life Index Source: Lippman Consulting

5 Transwestern Pipeline Company 4 San Juan Basin – Economically Attractive San Juan gas has been the most economical source of major natural gas supplies for Southwest markets. The San Juan gas price has remained more competitive vs. Permian & Rockies despite the Kern River expansion. Approximately 61% of gas shipped by TW in 2003 was from the San Juan Basin. Rockies" = Inside FERC Northwest Pipeline Rocky Mountain First of the Month Index (FOM Index), "San Juan" = Inside FERC San Juan FOM Index, "Permian" = Inside FERC Permian FOM Index, "Henry Hub" = Settlement Price on Last Day of trading for that month's NYMEX futures contract, "Malin" = Natural Gas Intelligence Malin FOM Index.

6 Transwestern Pipeline Company 5 San Juan Basin - High Utilization All pipeline capacity for the San Juan Basin is fully contracted. TWs San Juan lateral is 100% utilized. Source: Lippman Consulting

7 Transwestern Pipeline Company 6 Impact of Rockies Imports + San Juan Production Growth on Export Capacity ,000 1,500 2,000 2,500 3,000 3,500 4,000 4, MMCF/D Capacity = 4,050 MMcf/dCapacity = 3,960 MMcf/d Assumptions: Rockies imports, plus Bondad expansion, plus 1% San Juan production increase Source: Lippman Consulting

8 Transwestern Pipeline Company 7 TW San Juan Expansion is the Best Way to Relieve the Constraint at Blanco Existing infrastructure allows lower scale expansion (375 MMcf/d). Least cost expansion alternative. Can easily be scaled up to handle more volumes in the future by adding HP. Low execution risk: Experienced project manager. Certificate is ready for filing at FERC. Tentative Navajo ROW arrangements. Market flexibility – East and West markets.

9 Transwestern Pipeline Company 8 Proposed San Juan Expansion Bloomfield CS 15,000 Hp Add 72 miles Of 36 loop Bisti CS 1,500 Hp Add

10 Transwestern Pipeline Company 9 Sun Devil Lateral Ignacio Blanco Permian Anadarko Thoreau San Juan California Phoenix Existing TW system Sun Devil Lateral San Juan Expansion El Paso Natural Gas TW Sun Devil Lateral MMcf/d miles of 36 line, no compression - Deliveries to industrials, power generators, LDCs and El Paso south system

11 Transwestern Pipeline Company 10 Comparative Total Delivered Gas Cost 1) 1) Gas Costs based on 1/28/2004 quotes from trader/major customer.

12 Transwestern Pipeline Company 11 TW Sun Devil Lateral is the Best Way to Achieve Gas-on-Gas Competition for Phoenix Lowest Capital cost requirements $250mm vs $750mm for Kinder-Morgan 170 miles vs 455 miles Lower project cost = lower execution risk = lower cost to AZ ratepayers Leveraging existing infrastructure allows smaller scale expansion to get started (500 MMcf/d). No compression initially required. Able to utilize existing unsubscribed mainline capacity. TWs Sun Devil Lateral provides to Phoenix: Experienced, safe, reliable pipeline alternative Competitive pricing Access to multiple gas supply sources Promotes gas-on-gas competition

13 Transwestern Pipeline Company 12 ACC Action Items Support the efforts of your customer base to access lower cost gas supplies Arizona electric utilities Arizona gas utilities Large industrial users Merchant power generation model is dead TECO / Gila Bend Promote development of utility infrastructure corridors using existing highway, railroad, and power line ROW Minimizes environmental damage Minimizes private landowner involvement Promote and support ROW Quick-take legislation Iowa Utility establishes eminent domain condemnation rights via court petition, posts bond Judge appoints 3-person independent commission to hear case Right-of-way costs established and landowner compensated within 30 days Provides surety of construction timeline and avoids litigation delays


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