0. Transwestern Pipeline Company Status of San Juan Expansion & Sun Devil Lateral February

1. Available Capacity to Serve AZ
Mainline West Capacity of 1,210 MMcf/d 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.
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
East of
Supply Basins
Rate Areas
Panhandle North
West Texas North
Phoenix

2. Transwestern Supply Basin Analysis
Gas Supply Access
Since 1998, total reserves in the four major supply basins served by TW have risen dramatically.
Source: Lippman Consulting
Transwestern Supply Basin Analysis 20 40 60 80
100
120
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Trillion Cubic Feet
Permian Reserves
San Juan Reserves
Rocky Mountain Reserves
Mid-Continent Reserves

3. San Juan Basin Reserves
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
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Reserve Life Index 5 10 15 20 25
Year End Reserves TCF
San Juan Basin Year-End Reserves
Source: Lippman Consulting

4. Monthly Gas Index Prices Since the Kern River Expansion
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.
Monthly Gas Index Prices Since the Kern River Expansion
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
Dollar per MMbtu
San Juan
Permian
Rockies
Malin
Henry Hub
“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.

5. Total Regional Export Capacity
San Juan Basin - High Utilization
All pipeline capacity for the San Juan Basin is fully contracted.
TW’s San Juan lateral is 100% utilized.
Total Regional Export Capacity
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
Jul-01
Aug-01
Sep-01
Oct-01
Nov-01
Dec-01
Jan-02
Feb-02
Mar-02
Apr-02
May-02
Jun-02
Jul-02
Aug-02
Sep-02
Oct-02
Nov-02
Dec-02
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
MMcf per day
Actual Export
Export Capacity
TRANSWESTERN SAN JUAN EXPORTS
Source: Lippman Consulting

6. Impact of Rockies Imports + San Juan Production Growth on Export Capacity
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2000
2001
2002
2003
2004
2005
2006
2007
MMCF/D
Capacity = 4,050 MMcf/d
Capacity = 3,960 MMcf/d
Assumptions:
Rockies imports, plus Bondad expansion, plus 1% San Juan production increase
Source: Lippman Consulting

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.

8. Proposed San Juan Expansion
Bloomfield CS
15,000 Hp Add
72 miles
Of 36” loop
Bisti CS
1,500 Hp Add

9. Sun Devil Lateral - 500+ MMcf/d
Existing TW system
Sun Devil Lateral
San Juan Expansion
El Paso Natural Gas
San Juan
Ignacio
Blanco
Anadarko
California
Thoreau
TW Sun Devil Lateral
MMcf/d
- 170 miles of 36” line, no compression
- Deliveries to industrials, power generators, LDC’s and El Paso south system
Phoenix
Permian

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

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.
TW’s Sun Devil Lateral provides to Phoenix:
Experienced, safe, reliable pipeline alternative
Competitive pricing
Access to multiple gas supply sources
Promotes gas-on-gas competition

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