Slide 1: Refined Products Infrastructure
Refined Products Infrastructure Tom Bannigan and Jeff Armstrong
Slide 2: Trends
Trends Increasing Demand in world’s largest market Total US Market 14.2 Million BPD 1.7% increase in gasoline demand = 1 million BPD increase every 6.5 years Increasing Dependence on US World-scale Refining and Major Import Centers with existing Infrastructure Gulf Coast New York Harbor S.
Slide 3: U.S. Petroleum Products Supply – Demand Balance
U.S. Petroleum Products Supply – Demand Balance 1999 2000 2001 20021 CAGR DEMAND Gasoline 8,431 8,472 8,610 8,833 1.6% Jet Fuel 1,673 1,725 1,655 1,607 -1.3% Distillate 3,572 3,722 3,847 3,756 1.7% Total Demand (gas, jet & dist) 13,676 13,919 14,112 14,196 1.3% Change in Demand 1.8% 1.4% 0.6% SUPPLY
Slide 4: U.S. Clean Products Supply / Demand Balance
U.S. Clean Products Supply / Demand Balance PADD V PADD II PADD IV PADD I PADD III Pipeline Routes: Kinder Morgan CALNEV, CFPL, PLANTATION KMP (WEST) Orion Seaway Colonial Phillips Explorer Kaneb & Chase TEPPCO Williams Centennial Eagle/Citgo 4
Slide 5: Pipeline & Marine Movements of Light Products Critical to Regional Supply
Pipeline & Marine Movements of Light Products Critical to Regional Supply 2001 Supply Sources as Percent of Demand 100% 13% 5% 90% 20% 24% 80% Imports 70% 60% 54% 50% 100% 93% Net Receipts 86% 40% 76% 30% 20% Production 26% 10% 0% PADD 1 PADD 2 PADD 3 PADD 4 PADD 5 Note: Light products are gasoline,
Slide 6: Primary Light Product Flows - East
Primary Light Product Flows - East 200* Gulf Coast supply to Northeast supplemented by Canadian and European Supply; Southeast represents New York growth outlet for GC product 1430 Philadelphia Refining Center 850 300 600* line Pipe Southeast 2,540 2685 3057 Tampa 620 210 * Does not include imports
Slide 7: Primary Light Product Flows - West
Primary Light Product Flows - West 10 459 Refining Center Pacific Rocky Northwest Mounta in s Western regions 20 growing increasingly 35 25 short on product. Will ultimately require increasing marine 115 690 60 supply into CA and/or Pacific increasing pipeline Southwest capacity from GC to Western m
Slide 8: Demand Drivers
Demand Drivers Operate in Growth Markets U.S. 2000 Census (1995-2015 Population Growth) > 30% (California, New Mexico, Arizona, Nevada) > 30% (Florida) > 20% (Georgia, North Carolina, Virginia) Operate in Large Markets New York California 8
Slide 9: Demand Drivers
Demand Drivers Vehicle Sales Preferences (Millions)* 1988 - 10.4M Cars/4.7M Light Trucks/Minivans/SUVs 1997 - 8.3M Cars/6.5M Light Trucks/Minivans/SUVs 2001 - For first time, Light Trucks/Minivans/SUVs outsell passenger cars cars 2002 – Sales of SUVs increase 6% over 2001, record high Ratio of Passe
Slide 10: Historical Demand Trend
Historical Demand Trend U.S. Petroleum Products Supplied per Day 18 1.7% CAGR 16 14 Million Barrels Per Day 12 Residual Fuel Oil 10 Jet Fuel Distillate 8 Gasoline 6 4 2 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Sources: EIA; U.S. Petroleum Products Supplied, 2000 to Present 2001. 10
Slide 11: Location of US Refineries 2002
Location of US Refineries 2002 Pacific Northwest 600MBPD Rocky Mountains Midwest/Midcon Northeast Midwest/Midcon 965 MBPD 3,020MBPD 3020 MBPD 1,500 MBPD Pacific Southwest 1,920 MBPD Southeast Seaboard 210 MBPD Gulf Coast 7,640 MBPD Virgin Islands 470 MBPD Note: Refers to total crude tower capacity o
Slide 12: Refinery Closures Continue
Refinery Closures Continue U.S. Refineries Closed & Capacity 15 2000 No. Thousand Barrels Per Calendar Day Cumulative Size Range Closures Capacity of MB/CD: 12 Closures 1600 Number of Closures 70-120 9 1200 40-70 6 800 20-40 3 400 0-20 0 0 1987 1989 1991 1993 1995 1997 1999 2001 Source: EIA 12
Slide 13: Total Gasoline & Blending Components Imports
Total Gasoline & Blending Components Imports Gasoline Imports to PADDs 1-3 800 700 Other Thousand Barrels Per Day 600 Western 500 Europe 400 Canada 300 Venezuela 200 100 Virgin 0 Islands 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Source: EIA 2001 13
Slide 14: 2007 U.S. Balance With MTBE
2007 U.S. Balance With MTBE Refining Gasoline Gasoline Gross Inputs Utilization Net Imports Capacity Demand Production (MB/D) (Percent) (MB/D) (MB/D) (MB/D) (MB/D) 2000 16,512 15,285 92.6 8,471 8,185 282 2007 18,532 17,175 92.7 9,564 9,168 396 Increase 2,020 1,890 0.1 1,093 983 114 Source: EIA 14
Slide 15: Meeting U.S. Gasoline Demand: 2000-2007 Input and Import Increases With & Without MTBE
Meeting U.S. Gasoline Demand: 2000-2007 Input and Import Increases With & Without MTBE Finished Utilization Blending Total Gross Inputs Gasoline (Percent Operating Stock Imports Imports Capacity) (MB/D) Imports (MB/D) (MB/D) (MB/D) With MTBE 0.1% 1,890 1 114 115 No MTBE 1.6% 2,170 299 -146 153 Sourc
Slide 16: Increases in Light Product Demand 2001-2007
Increases in Light Product Demand 2001-2007 700 600 Thousand Barrels Per Day 500 400 Jet 300 Distillate 200 100 Gasoline 0 PADD 1 PADD 2 PADD 3 PADD 4 PADD 5 Source: EIA 16
Slide 17: Kinder Morgan Assets Fit The Trends
Kinder Morgan Assets Fit The Trends Northern CA East Coast Imports Production + Imports 1,134 MBPD 690 MBPD KM NY Terminals Northern Pipelines 246 MBPD 484 MBPD Plantation Pipe Line 640 MBPD Southern Pipelines Southeast Texas Gulf Carson Terminal 520 MBPD Demand Coast 120 MBPD 2,295 MBPD Production
Slide 18: Pipeline Capacity/Utilization
Pipeline Capacity/Utilization Capacity (BPD) Utilization (2000) Years Until Full CALNEV 158,000 75% 5-7 yrs. PACIFIC Watson-Colton 540,000 71% 7-10 yrs. Colton-Phoenix 204,000 75% 6-8 yrs. Watson-San Diego 144,000 82% 5-7 yrs. North Line - Sacramento 152,000 81% 3-5 yrs. North Line – Reno 45,000 85%
Slide 19: Expansion Projects
Expansion Projects Carteret 2002: +400MB, 2003: +400MB, New 16” 16” Buckeye Line Perth Amboy 2003: +300MB Pasadena 2002: +830MB, 2003: +300MB, New Colonial- Colonial-Explorer Manifold Carson Two 80MB Tanks, Expand PL Capacity by 50% Permitting for Additional 16 Tanks (1280MB) North Line
Slide 20: Products Pipelines Segment Overview
Products Pipelines Segment Overview (a) Cypress Transmix 1% 5% Cochin 4% Terminals 19% CO 2 North System Products Plantation Pipelines 5% Pipelines 9% 15% Pacific 36% CFPL 51% 6% Natural West Coast Gas Terminals 9% CalNev Pipelines 10% 30% (a) 2003 budgeted distributable cash flow before allocation
Slide 21: 2002 Product Pipeline Results
2002 Product Pipeline Results Segment Distributable Cash Flow up $43 MM (12% with acquisitions, acquisitions, 9.2% without acquisitions) Pipeline Volumes MMBBL Pipeline Revenues $MM 2002 2001 Pct 2002 2001 Pct Pacific 415.3 413.4 0.5% 296.7 286.1 3.7% Calnev 44.2 44.3 -0.2% 51.7 48.7 6.2% Plantation
Slide 22: 2003 Product Pipeline Plan
2003 Product Pipeline Plan Segment Distributable Cash Flow up $19.6 MM (5%) with no acquisitions acquisitions Pipeline Volumes MMBBL Pipeline Revenues $MM 2003 2002 Pct 2003 2002 Pct Pacific 428.3 415.3 3.1% 307.9 296.7 3.8% Calnev 46.4 44.2 4.8% 54.4 51.7 5.3% Plantation 238.7 232.5 2.7% 168.9 160.
Slide 23: Earnings Breakdown
Earnings Breakdown 2001 EARNINGS 2002 EARNINGS Intrastate Intrastate Regulated Regulated 20% FERC 19% FERC Regulated Regulated 47% 47% Non Non Regulated Regulated 33% 34% 23
Slide 24: Regulatory Overview
Regulatory Overview Oil Pipeline Regulation pre-Energy Policy Act (EPACT) Valuation, 1941 Consent Decree, DOC, TOC, Opinions 154, A, B & C EPACT 1992 Provide rate certainty / reduce litigation Grandfathered existing rates as “just and reasonable” Simplified and generally applicable ratemakin
Slide 25: Regulatory Overview (continued)
Regulatory Overview (continued) Challenges to SFPP Rates - The test: “Substantial change after the enactment of EPACT in the economic circumstances underlying the rate” rate” Opinion 435 et seq. (1992 - ?) - 1999 Decision upheld Grandfathered rates “Global” Global” Complaint Case (1996 - ?) - Contin
Slide 26: Terminals Segment Overview
Terminals Segment Overview (a) CO 2 Pipelines Natural 15% Gas Bulk Pipelines 35% 30% Terminals 19% Liquid 65% Products Pipelines 36% (a) 2003 budgeted distributable cash flow before allocation of G&A G&A and interest 26
Slide 27: 2002 Terminals Results
2002 Terminals Results Segment Distributable Cash Flow Up $35 MM (23%) Distributable Cash Flow: 2001 2002 Change % Change Liquid Terminals 101,548 124,711 23,163 23% Bulk Terminals 51,162 63,219 12,057 24% Total Terminals Distributable Cash Flow 152,710 187,930 35,220 23% Internal Growth Pasadena +1
Slide 28: 2003 Terminals Plan
2003 Terminals Plan Segment Distributable Cash Flow up $23.8 MM ($212) (13%) Distributable Cash Flow: Flow: 2002 2003 Plan Change % Change Liquid Terminals 124,711 138,065 13,354 11% Bulk Terminals 63,217 73,634 10,415 16% Total Terminals Distributable Cash Flow 187,928 211,699 23,771 11% Internal G