Slide 1: Natural Gas Pipelines
Natural Gas Pipelines Deb Macdonald
Slide 2: Infrastructure Development
Infrastructure Development
Slide 3: Need for Natural Gas Infrastructure
Need for Natural Gas Infrastructure EIA predicts demand for natural gas to grow at 2% per year from 23 Tcf currently to 34 Tcf by 2020. Foster Associates indicates peak day requirements will grow from approximately 131 Bcf/d currently to over 170 Bcf/d in 2020. National Petroleum Council predicts th
Slide 4: Challenges for Infrastructure Development
Challenges for Infrastructure Development FERC’s review of its Negotiated Rate Policy Has allowed sponsors/shippers to negotiate project benefits/risks Majority of new projects have been done with Negotiated Rates Provides long-term certainty for sponsors and shippers Turmoil in the “Merchant
Slide 5: Kinder Morgan Advantages
Kinder Morgan Advantages Opportunity Large existing asset base leads to significant expansion and extension opportunities Access to Capital Best in class balance sheet ensures access to capital Efficient Structure MLP efficiently capitalizes long-lived pre-tax assets Low cost discipline 5
Slide 6: Infrastructure Development
Infrastructure Development Opal Wheatland Project Horizon Cheyenne Hub Advantage St. Louis Lateral Blanco TransColorado Blythe/ Extension Ehrenberg Silver Canyon NGPL Permian Expansion NGPL North Texas Pipeline KMTP / KM Tejas NGPL West North Lansing KMIGT Texas Waha Storage Trailblazer Pipeline Kat
Slide 7: Areas of Focus Going Forward
Areas of Focus Going Forward Incremental markets strategic to existing assets Mexico’s growing needs to import U.S. production Rocky Mountain/San Juan supply bottlenecks Southwest need for capacity 7
Slide 8: Incremental Markets Strategic to Existing Assets
Incremental Markets Strategic to Existing Assets NGPL Permian Expansion NGPL St. Louis Extension Horizon Pipeline NGPL North Lansing Storage Expansion North Texas 8
Slide 9: NGPL Permian Expansion
NGPL Permian Expansion 7,000 HP compression TW 60,500 Dth/day capacity 144 Eddy 167 $1.2 MM capex $1.5 MM annual lease payment January, 2002 in-service Indian NGPL Basin Plant TW NEW MEXICO Permian 139 TEXAS Expansion El El Paso Paso TW Winkler Waha Hub 9
Slide 10: NGPL St. Louis Lateral
50 miles of 24” pipe NGPL St. Louis Lateral 300,000 Dth/day capacity $37 MM capex 10 year contract life September, 2002 in-service Loudon Storage 206 St. Louis Lateral NGPL St. Louis 310 MISSOURI ILLINOIS 10
Slide 11: NGPL North Lansing Storage Expansion
NGPL North Lansing Storage Expansion 6,000 HP compression 17 new wells 10.7 Bcf additional capacity $35.6 MM capex 802 Fully contracted FERC approval received Projected Spring, 2003 in-service Dallas North Lansing NGPL Storage 388 Marshall Longview 304 11
Slide 12: Horizon Pipeline
Horizon Pipeline Joint venture with Nicor 28 miles of 36” pipe 42 miles of NGPL leased capacity 116 8,900 HP compression 380,000 Dth/day capacity 10 year average contract life Chicago $80 MM capex Horizon May, 2002 in-service Pipeline 113 110 202 201 ILLINOIS Herscher Storage 12
Slide 13: North Texas Pipeline
82 miles of 30” pipe North Texas Pipeline 325,000 Dth/day capacity 30 year contract life $70 MM capex September, 2002 in-service Station North Texas 802 Pipeline NGPL Dallas North Lansing Storage 388 304 13
Slide 14: Mexico
Mexico Monterrey Pipeline West Texas Pipeline 14
Slide 15: The National Challenge
The National Challenge SUPPLY DEMAND BALANCE 2002-2010 Imports (Bcfd) National Supply Demand 10 9.5 9 9.0 1.9 8.5 1.7 8.3 1.4 8 7.8 1.6 ••By By2010 2010 imports imports in in the the 7.3 1.9 amount amountofof 1.9 1.9Bcfd Bcfd will willbe be 6.8 7.3 7.6 7 1.8 7.1 required required 1.6 6.7 6.2 6 1.1 •
Slide 16: Demand Growth by Market Segment
Demand Growth by Market Segment DEMAND BY SECTOR 2000-2010 Transportation (Bcfd) Residential & Services Power Generation Industry 10 Oil Industry (Pemex self supply) 9 8 7 6 5 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Prospectiva del Mercado de Gas Natural 2001-2010, S
Slide 17: Monterrey Pipeline
Monterrey Pipeline Mexico Texas Corpus Christi Laredo U.S. scope-9 miles of 30” pipe Mexico scope-137.5 km of 30” pipe 375,000 Dth/day capacity $80 MM capex Monterrey Fully contracted for 15 years Pipeline Under Construction Projected April, 2003 in-service McAllen Iberdrola Power Plant Proposed Mon
Slide 18: Proposed West Texas Pipeline
Proposed West Texas Pipeline Proposed Texas Hinshaw pipeline Agreement in Principle with PEMEX 144 167 196 miles of 24” pipe 12,400 HP compression NGPL 300,000 Dth/day capacity TW NNG $149 MM capex Projected June, 2004 in-service NEW MEXICO EPNG 139 EPNG TEXAS El Hueco C.S. El Paso Paso NNG Proposed
Slide 19: Rocky Mountain/Southwest
Rocky Mountain/Southwest Trailblazer Expansion – Completed Trailblazer Expansion – Proposed CMC Storage Expansion Advantage Wheatland TransColorado Silver Canyon 19
Slide 20: Powder River Basin Coal Bed Methane
Powder River Basin Coal Bed Methane MMcfd: Total Reserves estimated at 25 Tcf -- >70 years of production at current rates 1000 900 800 700 600 MMcfd 500 400 300 200 100 0 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 20
Slide 21: Cheyenne to NGPL Basis
Cheyenne to NGPL Basis Since Inception of Cheyenne Posting 3.000 2.500 Approval/construction time for 2.000 new pipeline project 1.500 1.000 0.500 0.000 May-00 Nov-00 Feb-01 May-01 Nov-01 Feb-02 May-02 Nov-02 Feb-03 May-03 Nov-03 Feb-04 May-04 Nov-04 Feb-05 May-05 Nov-05 Aug-00 Aug-01 Aug-02 Aug-03
Slide 22: Kansas Hugoton Production Declining
Kansas Hugoton Production Declining 2000 757 MMcfd Loss since 1996 1800 1600 1400 ~10% annual decline 1200 MMcfd 1000 800 600 400 200 0 1995 1996 1997 1998 1999 2000 2001 2002 22
Slide 23: Trailblazer Pipeline
Trailblazer Pipeline 50,000 HP compression at 3 stations 324,000 Dth/day capacity $50 MM capex 10 year average contract life April, 2002 in-service Casper WYOMING NEBRASKA Cheyenne Omaha Cheyenne 196 NNG Hub WNG 601 602 CIG 603 106 Denver NGPL COLORADO 195 Trailblazer Pipeline Compressor Station NGP
Slide 24: Trailblazer Expansion Scenarios
Trailblazer Expansion Scenarios 50,000 /Dth day expansion 30 miles of looping $32.5 MM capex 75,000 /Dth day expansion Trailblazer Pipeline 58 miles of looping $64.3 MM capex 100,000 / Dth day expansion 87 miles of looping $94.1 MM capex Projected July 2004 In-service 601 Omaha CHEYENNE 602 HUB 196
Slide 25: Cheyenne Market Center
11,300 HP compression 10 new wells Cheyenne Market Center 6.0 Bcf additional capacity $28.4 MM capex Fully contracted for 10 years January 2002 FERC application Projected Summer, 2004 in-service Nebraska Wyoming Huntsman Storage CIG Cheyenne Cheyenne Hub Proposed Advantage Pipeline KMIGT Pipeline Tr
Slide 26: KMIGT's Proposed Advantage Pipeline
KMIGT’s Proposed Pursuing binding agreements Advantage Pipeline 411 miles of 24” pipe 26,700 HP compression 330,000 Dth/day capacity $287 MM capex Projected October, 2005 in-service Cheyenne Nebraska Omaha Cheyenne Hub Denver NGPL NNG Kansas Colorado City Proposed Advantage Pipeline PEPL Proposed Ad
Slide 27: KMIGT's Proposed Wheatland Expansion Project
KMIGT’s Proposed Wheatland Expansion Project Pursuing binding agreements 80,000 Dth/day capacity WYOMING Approx. 12,000 HP new compression $28 MM capex Projected October, 2005 in-service NEBRASKA Cheyenne Omaha WHEATLAND PROJECT Cheyenne Proposed Compression Hub NNG ANR Added Capacity from add’l Com
Slide 28: TransColorado-Silver Canyon
TransColorado-Silver Canyon Opal WYOMING Green River Cheyenne Washakie Salt Lake City Cheyenne Hub D-J Basin Piceance Uinta Greasewood Denver Grand Junction UTAH COLORADO Olathe C.S. Paradox Dolores C.S. Coyote Gulch Plant Farmington Blanco Las Vegas ARIZONA San Juan N E W M E X I C O Flagstaff Tran
Slide 29: TransColorado/Silver Canyon Strategy
TransColorado/Silver Canyon Strategy TransColorado Options: 150 MMcf/d incremental long-haul capability from mainline compression additions Potential extensions to supply sources Potential mainline looping for additional long-haul capability Potential 750 MMcf/d extension from Blanco to Gallup/Windo
Slide 30: TransColorado/Silver Canyon Strategy
TransColorado/Silver Canyon Strategy Silver Canyon Options: 750 MMCf/d capacity from Gallup/Window Rock Delivery options in New Mexico, Phoenix area, Blythe/Ehrenberg into SoCal Gas and North Baja Potential interconnects with proposed storage developments: Desert Crossing and Copper Eagle in Arizona
Slide 31: TransColorado/Silver Canyon Strategy
TransColorado/Silver Canyon Strategy Benefits: Outlet for Rocky Mountain production Relieves San Juan Triangle constraints Develops Gallup/Window Rock as hub interconnecting to Silver Canyon, Transwestern and El Paso Natural Gas – with downstream optionality on moving gas east or west Meets the need
Slide 32: TransColorado/Silver Canyon Strategy
TransColorado/Silver Canyon Strategy Estimated Capex: TransColorado - up to $250 million Silver Canyon - up to $740 million Potential in-service dates: From 2nd quarter 2004 to 2nd quarter 2006 depending on customer needs 32
Slide 33: Success to Date
Success to Date Internal Growth Projects at Kinder Morgan both at KMI and KMP $238.2 million completed in 2002, 5 projects* $293.6 million contracted/in process, 4 projects 5 additional projects proposed/open season Existing asset base provides platform for growth Expansions and new projects s
Slide 34: Overall Gas Pipeline Update
KINDER’ MORGAN Overall Gas Pipeline Update
Slide 35: KMP Natural Gas Pipelines Segment Overview
KMP Natural Gas Pipelines Segment Overview (a) Red Cedar/ Products Other Pipelines Rockies 36% 11% Trailblazer Natural 14% Texas Gas Intrastates Pipelines 51% 30% Terminals KMIGT 19% 24% CO2 Pipelines 15% (a) 2003 budgeted distributable cash flow before allocation of G&A G&A and interest 35
Slide 36: KMP Pipelines' Trend
KMP Pipelines’ Trend ’01 Actuals ’02 Budget ’02 Actuals ’03 Budget Income before DD&A $227 MM $347 MM $325 MM $365 MM Growth from ’01 to ’02 • Tejas acquisition • Trailblazer expansion/acquisition of Enron/CIG interests Deficit from ’02 budget of $22 MM • KMTP’ KMTP’s conversion to fee- fee-based st
Slide 37: NGPL Impact on KMI Earnings
NGPL Impact on KMI Earnings 2002 2003 Budget Power Trans- Power Trans- 2% Colorado and Other Colorado 2% 2% 5% Retail Retail 8% 8% KMP KMP 42% 45% NGPL NGPL 43% 43% $360 million $377 million (a) 2002 results and 2003 budgeted segment earnings before allocation allocation of G&A and interest expense.
Slide 38: Pipeline Update
Pipeline Update KMIGT Stable earnings base Long-term contracts (average 7(transport) to 8 (storage) years) Existing assets subject to limited competition Increase in Rocky Mountain production will drive growth Trailblazer Stable earnings base Long-term contracts (average 8 years) Incre
Slide 39: Pipeline Update
Pipeline Update Horizon Stable earnings base Long-term contracts (average 9 years) Platform for expansion to serve power generation growth in Northern Illinois, Indiana, and Wisconsin TransColorado Extraordinary earnings growth from 2001 to 2002 Substantial increase in production adjacent
Slide 40: NGPL Update
KINDER’ MORGAN NGPL Update
Slide 41: Rollover Negotiations Completed
Rollover Negotiations Completed NICOR 997,000 dt/d FTS 24.4 Bcf DSS 16.4 Bcf NSS Rolled for 3- 3-year term Sold incremental 84,500 dt/d FTS Dec. ‘02 – Feb. –’03 NIPSCO 255,100 peak/138,000 off- off-peak dt/d long- long-haul FTS 10.5 Bcf DSS 80,000 dt/d market- market-area FTS 40,00
Slide 42: Rollover Negotiations Completed
Rollover Negotiations Completed Peoples 19.2 BCF NSS; Rolled for 3 years 175,000 peak/29,000 off-peak dt/d market area (short-haul) FTS Rolled for 3-year term and extended 65,000/d peak/29,000/d off-peak dt/d to long-haul FTS at higher rate Wisconsin Electric 71,000 dt/d long-haul FTS rolled
Slide 43: NGPL FTS Capacity Summary
NGPL FTS Capacity Summary (Volumes in TBtu/d) Louisiana and Long Haul Total Crosshaul Contract MDQ 2.01 .63 2.64 Expiring in 2003 Re-contracted 1.29 .46 1.76 Remaining .72 .17 .90 Capacity 43
Slide 44: Renegotiation of NSS
Renegotiation of NSS Summary for 2003 Available Capacity 88.6 TBtu expiring /available in 2003 Sold 64.2 TBtu sold Average term = 3.34 years (23 month to 5 year contracts) Average rate = $.4750 (max rate = $.4912) Remaining 24.4 TBtu expiring in March - April 44
Slide 45: Renegotiation of DSS
Renegotiation of DSS Summary for 2003 Available Capacity 21.73 TBtu expiring in 2003 Sold 21.68 TBtu sold Average Term = 2.43 years Average Rate = $1.248 (max rate = $1.368) Remaining 0.05 TBtu expiring in the fall 45
Slide 46: Natural's Gas Fired Power Generation Market
Natural’s Gas Fired Power Generation Market Megawatts under construction for in-service thru 2004… Gas Fired Generation Developed on Natural Gas Pipeline 20000 15000 Megawatts Peaker 10000 Baseload 5000 Total 0 Before 1999 2000 2001 2002 2003 2004 '99 Year Plant in Service Before '99 1999 2000 2001
Slide 47: Texas Intrastate Pipeline Group Update
Texas Intrastate Pipeline Group Update
Slide 48: Gulf Coast System
Gulf Coast System Houston KM Texas-2,500 mile system 2.0 Bcf/day peak capacity KM Tejas-3,400 mile system W. Clear Lake 3.4 Bcf/day peak capacity Tejas-Stratton Ridge Storage-12 Bcf working capacity KMTP-Stratton Ridge Hubs-Katy, Agua Dulce, HSC Markham Storage Mexico Texas Laredo Corpus Christi KM
Slide 49: Strategy – Texas Intrastate Group
Strategy – Texas Intrastate Group Integration of Tejas and KMTP Physical interconnects Commercial integration Minimize commodity and basis risk Includes conversion to fee-based storage program Increase operational efficiencies Fuel efficiency Gas loss and unaccounted for Targeted market ex
Slide 50: Electric Generation – Texas Intrastate Group
Electric Generation – Texas Intrastate Group Electric Utility $11.0 MM Electric Utility Electric Utility Merchant $16.6 MM $14.5 MM Merchant Merchant $27.7 MM $30.8 MM $38.1 MM 2001: $44.3 MM 2002 est: $45.3 MM 2003 est: $49.1 MM 50
Slide 51: Contracting Success – Texas Intrastate Group
Contracting Success – Texas Intrastate Group BP Firm Transportation and Storage − Term: September 1, 2002 to March 31, 2006 and year to year thereafter unless terminated with 2 years’ notice − Transport Volumes: 600,000/d ramping up to 1 Bcf/d in ’03 − Sales Volume: 50% of transport volume − Stora
Slide 52: Contracting Success – Texas Intrastate Group
Contracting Success – Texas Intrastate Group CPS at San Antonio Combined firm transport/sales obligation of 50,000/d for 2-year term, July 1, 2002 to June 30, 2004 Praxair, Inc. – Sales contract Texas City Facility − 100% requirements contract; 15 year term beginning 1st quarter of 2004 − Initia
Slide 53: Regulatory Developments
KINDER’ MORGAN Regulatory Developments
Slide 54: Regulatory Developments
Regulatory Developments Order No. 637 Almost a non-event for KM pipelines Tighter Creditworthiness Provisions NGPL’s “test case” pending Review of Negotiated Rate Policy 54
Slide 55: Regulatory Developments: Rate Case Filing Requirements
Regulatory Developments Rate Case Filing Requirements NGPL − No filing requirement − Any change under NGA 5 prospective KMIGT − No filing requirement − Cost and revenue study in 2004 − Any change prospective TransColorado − No filing requirement − Any change prospective 55
Slide 56: Regulatory Developments
Regulatory Developments Horizon Pipeline − Three-year filing requirement − Section 4 filing due mid-2005 − Existing agreements are negotiated rate deals Rate Case Filing Requirements Trailblazer − Rate decrease filed November 29, 2002 − Rates effective January 1, 2003 − Hearing no later than October
Slide 57: Pipeline Safety & Integrity Development
Pipeline Safety & Integrity Development Pipeline Safety Improvement Act of 2002 Applies to interstate pipelines regulated by DOT Baseline integrity assessments required in high consequence areas within 10 years 50% of highest risk segments must be completed within 5 years Reassessment required eve