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Available Capacity to Serve AZ

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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 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

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