1. RB:UMT 2-04 1 Arizona Corporation Commission Workshop on Natural Gas Infrastructure NOI February 13, 2004 Phoenix, Arizona

2. RB:UMT 2-04 2 Focus on Southwestern US Market

3. RB:UMT 2-04 3 Phoenix Keystone Gas Storage EPNG System Natural Gas Infrastructure To Serve Arizona Unocal’s Keystone Gas Storage Facility Keystone Gas Storage Located on the suction side of the EPNG Keystone Compressor Station Access to San Juan and Permian Supply Access to EPNG Southern Mainline Markets Keystone is well positioned to serve the growing Arizona Market.

4. RB:UMT 2-04 4 Keystone Gas Storage Facility Current 2005 Storage Caverns 2 5 Working Gas Capacity 2 BCF 5 BCF Injection (MMCFD) 100 167 Deliverability (MMCFD) 200 333 Pipeline Interconnects: El Paso Northern Natural Transwestern

5. RB:UMT 2-04 5 Keystone Gas Storage Benefits To Arizona Customers Security of supply –Supply Diversity Manage daily and intraday load swings Optimize pipeline capacity utilization Manage Price Volatility Meet Seasonal needs

6. RB:UMT 2-04 6 Keystone Gas Storage Services Offered Firm Storage –Customer has firm injection, withdrawal and capacity rights and access to all three interconnects Park and Loan –Customer and Keystone agree to a specific injection and withdrawal schedule, receipt and delivery points, and fee schedule – can be firm or interruptible Examples: cash to next month, weekend to next week, and intra- day to next trading day Wheeling –Customer can make use of the Keystone interconnects on an interruptible basis to move gas between El Paso, NNG and TW

7. RB:UMT 2-04 7 Keystone Gas Storage Firm Storage Service Rate Structure Demand Charges –Capacity$0.05/mmbtu –Injection$1.50/mmbtu/d –Withdrawal$0.75/mmbtu/d Commodity Charges –Injection $0.01/mmbtu plus 1.5% fuel retention –Withdrawal$0.01/mmbtu Overrun Charges* (Maximum Rates) –Injection $0.10/mmbtu –Withdrawal$0.10/mmbtu Typical 60 day cycle service capability $1.50/MMBTU of Capacity per year * Overrun Charges are in addition to the applicable commodity charges

8. RB:UMT 2-04 8 Does Arizona need Market Area Storage? Yes! –Keystone can meet much of Arizona’s needs –Market area storage gives Arizona greater security of supply and real time load following capability –Arizona needs a mix of market area and production area storage options

9. RB:UMT 2-04 9 Provide 3-6 BCF of high deliverability storage capacity to serve the Phoenix-Tucson market Serve Load following requirements of power generators, peaking requirements of LDC’s and provide market supply security Focus is Picacho Basin Significant potential for pipeline interconnects and potential direct connections In Service 2006-2007 Unocal’s Storage Development Activities in Arizona