Presentation on theme: "Available Capacity to Serve AZ"— Presentation transcript:
0 Transwestern Pipeline Company Status of San Juan Expansion & Sun Devil Lateral February 2004
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 inCurrent 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.TexasOklahomaColoradoNew MexicoArizonaUtahNevadaCaliforniaIgnacioBlanco HubNeedlesTopockStation9SAN JUANROCKIESPERMIANANADARKOThoreauSan JuanAreaWest of ThoreauEast ofSupply BasinsRate AreasPanhandle NorthWest Texas NorthPhoenix
2 Transwestern Supply Basin Analysis Gas Supply AccessSince 1998, total reserves in the four major supply basins served by TW have risen dramatically.Source: Lippman ConsultingTranswestern Supply Basin Analysis20406080100120199119921993199419951996199719981999200020012002Trillion Cubic FeetPermian ReservesSan Juan ReservesRocky Mountain ReservesMid-Continent Reserves
3 San Juan Basin Reserves San Juan Basin - Reliable Resource BaseSan 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, & XTOSan Juan Basin Reserves0x5x10x15x20x25x19921993199419951996199719981999200020012002Reserve Life Index510152025Year End Reserves TCFSan Juan Basin Year-End ReservesSource: Lippman Consulting
4 Monthly Gas Index Prices Since the Kern River Expansion San Juan Basin – Economically AttractiveSan 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$6.50May-03Jun-03Jul-03Aug-03Sep-03Oct-03Nov-03Dec-03Dollar per MMbtuSan JuanPermianRockiesMalinHenry 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 UtilizationAll pipeline capacity for the San Juan Basin is fully contracted.TW’s San Juan lateral is 100% utilized.Total Regional Export Capacity5001,0001,5002,0002,5003,0003,5004,0004,5005,000Jan-01Feb-01Mar-01Apr-01May-01Jun-01Jul-01Aug-01Sep-01Oct-01Nov-01Dec-01Jan-02Feb-02Mar-02Apr-02May-02Jun-02Jul-02Aug-02Sep-02Oct-02Nov-02Dec-02Jan-03Feb-03Mar-03Apr-03May-03Jun-03Jul-03Aug-03Sep-03Oct-03MMcf per dayActual ExportExport CapacityTRANSWESTERN SAN JUAN EXPORTSSource: Lippman Consulting
6 Impact of Rockies Imports + San Juan Production Growth on Export Capacity 5001,0001,5002,0002,5003,0003,5004,0004,50020002001200220032004200520062007MMCF/DCapacity = 4,050 MMcf/dCapacity = 3,960 MMcf/dAssumptions:Rockies imports, plus Bondad expansion, plus 1% San Juan production increaseSource: 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 CS15,000 Hp Add72 milesOf 36” loopBisti CS1,500 Hp Add
9 Sun Devil Lateral - 500+ MMcf/d Existing TW systemSun Devil LateralSan Juan ExpansionEl Paso Natural GasSan JuanIgnacioBlancoAnadarkoCaliforniaThoreauTW Sun Devil LateralMMcf/d- 170 miles of 36” line, no compression- Deliveries to industrials, power generators, LDC’s and El Paso south systemPhoenixPermian
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-Morgan170 miles vs 455 milesLower project cost = lower execution risk = lower cost to AZ ratepayersLeveraging 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 alternativeCompetitive pricingAccess to multiple gas supply sourcesPromotes gas-on-gas competition
12 ACC Action ItemsSupport the efforts of your customer base to access lower cost gas suppliesArizona electric utilitiesArizona gas utilitiesLarge industrial usersMerchant power generation model is deadTECO / Gila BendPromote development of utility infrastructure corridors using existing highway, railroad, and power line ROWMinimizes environmental damageMinimizes private landowner involvementPromote and support ROW Quick-take legislationIowaUtility establishes eminent domain condemnation rights via court petition, posts bondJudge appoints 3-person independent commission to hear caseRight-of-way costs established and landowner compensated within 30 daysProvides surety of construction timeline and avoids litigation delays