Slide 1: Products Pipelines
Products Pipelines Tom Bannigan
Slide 2: 2003 Results
2003 Results Refined Products volumes off 1.3%; Revenues up 1.5%. Volumes impacted by several events. West Coast − Conversion from MTBE to ethanol − SARS / slower than anticipated commercial air travel recovery − Military deployment Southeast (PPL) − Texas / Louisiana supply logistics shifts − C
Slide 3: 2003 Results (continued)
2003 Results (continued) Refined Products volumes rebounded in 4th quarter Total Products Pipelines volumes up 2%; up 3.2% adjusted for ethanol conversion PPL volumes up 4.1% Pacific gasoline and total volumes up 2.8% adjusted for ethanol Calnev gasoline up 3% adjusted for late December pipe
Slide 4: 2003 Results
2003 Results Pipeline Volumes MMBBL Pipeline Revenues $MM 2003 2002 Pct 2003 2002 Pct Pacific 413.0 415.3 -0.6%1 302.6 296.7 2.0% Calnev 44.7 44.2 0.9%2 54.6 51.7 5.6% Plantation 223.5 232.5 -3.9% 157.8 160.3 -1.5% Heartland 7.4 6.6 12.8% 6.7 6.2 8.5% CFPL 35.2 34.3 2.4% 33.9 32.3 4.9% Total 723.7 7
Slide 5: 2003 vs. 2002 – Volume Growth Trending Positive
2003 vs. 2002 – Volume Growth Trending Positive 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 8% 6% 4% 2% 0% -2% -4% -6% -8% SFPP SFPP ex Calnev Plantation Central ethanol Florida conversion 5
Slide 6: Demand Drivers
Demand Drivers Operate in Growth Markets US 2000 Census (1995-2015 Population Growth) >30% (California, New Mexico, Arizona, Nevada) >30% (Florida) >20% (Georgia, North Carolina, Virginia) Operate in Large Markets Los Angeles, San Francisco, Phoenix Atlanta, Washington D.C. Vehicle Sales Prefe
Slide 7: Commodity Demand
Commodity Demand U.S. Petroleum Products Supplied per Day 18 16 CAGR = 1.9% 14 M illio n B arrels P er D a y 12 Jet Fuel 10 Distillate 8 Gasoline 6 4 2 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: EIA, January 2004 Short-Term Energy Outlook. 7
Slide 8: 2003 Volumes
2003 Volumes Nationwide Pacific Calnev CFPL Demand Gasoline +1.0% +1.5%1 +3.0%2 +2.3% Diesel +4.5% +4.9% +4.2% +2.5% Jet -1.9% -4.1% -4.0% +3.0% Total +1.4% +1.3% +1.8% +2.5% 1 Adjusted for ethanol 2 Adjusted for December ’03 washout 8
Slide 9: 2003 Volumes (continued)
2003 Volumes (continued) Pacific Gasoline demand above national average (up 1.5% adjusted for ethanol) Diesel volumes up 4.9% due to improving economy Jet volumes down 4.1% − Military volumes down 13% in 1st half of 2003 due to war in Iraq; rebounded to 23.9% growth in 4Q03 − Commercial jet tr
Slide 10: 2003 Volumes (continued)
2003 Volumes (continued) Plantation Gasoline volumes down 7.4% − Major suppliers (including XOM) in extended turnarounds − Severe winter weather impacted demand late 1Q / early 2Q − Gasoline volumes down 10% in 1Q-3Q03 as refiners shifted supply sources (from Louisiana to Texas) to meet new low su
Slide 11: 2003 Volumes (continued)
2003 Volumes (continued) Calnev Gasoline volumes up 1.6% (up 3% adjusted for late December ’03 washout) Diesel volumes up 4.2% due to improving economy Jet volumes down 4.0% due to SARS and overseas military deployment CFPL Gasoline volumes up 2.3% Diesel volumes up 2.5% Jet volumes up 3
Slide 12: California Ethanol Conversion
California Ethanol Conversion MTBE Eliminated from California gasoline in 2 major steps in 2003 Beginning January 2003: Approximately 50% of CA gasoline converted by major refiners on a voluntary basis November 2003: Remaining 50% of CA gasoline converted to comply with 1/1/04 regulatory mandate
Slide 13: California Ethanol Conversion (continued)
California Ethanol Conversion (continued) Impact on Pacific Volumes 2003 Ethanol Effect: 7.8 million barrels 2004 Estimated Ethanol Effect: 3.7 million barrels 2003 Gasoline volumes would have been up 1.5% adjusted for ethanol conversion 2003 Total volumes would have been up 1.3% adjusted fo
Slide 14: California Ethanol Effect
California Ethanol Effect 2003 Ethanol Effect 2004 Ethanol Effect 900 2003 Total = 7.8 million barrels 800 2004 Total = 3.7 million barrels 700 Thousands of Barrels 600 500 400 300 200 100 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 14
Slide 15: SFPP Rate Case
SFPP Rate Case OR 96-2 “Global Complaint” Complaints filed in 1996 Hearings held from October 2001 through March 2002 ALJ non-binding Initial Decision on Phase I (grandfathering) issued in June 2003 Initial Decision appealed to the Commission in August 2003 Expect ALJ non-binding Initial D
Slide 16: Tucson
Tucson Arizona House of Representatives Draft Report on Gasoline Shortage found: “Although the pipeline break was a contributing factor…” “It appears that gasoline demand resulting from panic buying was the major cause of the Phoenix area gasoline spot shortage” Demand spike was more than 5 ti
Slide 17: Sustaining Capex
Sustaining Capex 2002: $28.2 million 2003: $30.0 million 2004: $40.6 million KM has projected increased costs associated with implementation of DOT’s Integrity Management Rule The IMP rule has compressed the time frame/frequency for internal inspections Prior to the IMP rule, KM had inspected 6,
Slide 18: Sustaining Capex (continued)
Sustaining Capex (continued) Kinder Morgan’s 10-year Integrity Management Plan Under DOT’s IMP Rule, KM prioritizes pipeline segments to be tested each year Criteria used for prioritization of High Consequence Areas (HCAs) − Commercial navigable waterways − Highly populated areas − Unusually Sen
Slide 19: Annual Internal Inspections
Annual Internal Inspections 2,500 M iles o f P ip e In tern a lly In sp e cted 2,000 1,500 1,000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 19
Slide 20: 2004 Products Pipeline Segment Overview
2004 Products Pipeline Segment Overview * CalNev 9% West Coast Terminals SE 9% Terminals Terminals 17% 2% CO2 Pacific Products CFPL 52% Pipelines Pipelines 6% 24% 33% Natural Plantation Gas 8% Pipelines 26% North System Cochin 7% Transmix 2% 5% * 2004 budgeted distributable cash flow before allocati
Slide 21: 2004 Plan
2004 Plan Pipeline Volumes MMBBL Pipeline Revenues $MM 2004 2003 Pct 2004 2003 Pct Pacific 424.8 413.0 2.9% 322.5 302.6 6.6% Calnev 47.0 44.7 5.3% 55.7 54.6 2.1% Plantation 227.6 223.5 1.8% 163.6 157.8 3.7% Heartland 9.5 7.4 28.1% 8.6 6.7 29.4% CFPL 37.3 35.2 6.1% 36.3 33.9 7.0% Total 746.2 723.7 3.
Slide 22: 2004 Volume Forecast
2004 Volume Forecast Expect continued improvement as gasoline and jet volumes return to historical growth patterns Pacific / Calnev Expect 4% volume growth in Arizona and Las Vegas Ethanol effect will be diminished by more than 50% in 2004; gasoline demand expected to increase by 3% Military v
Slide 23: 2004 Volume Forecast (continued)
2004 Volume Forecast (continued) Plantation Expect 3% growth in gasoline volumes as logistics shifts were completed in early 2003 and Murphy refinery returns to normal production Expect 3% growth in commercial jet volumes Length of haul will increase due to Colonial capacity issues during peak
Slide 24: Revenue Breakdown – Products Pipelines
Revenue Breakdown – Products Pipelines 2003 2004 Transmix Transmix 4% 4% Terminals Terminals 19% 22% Pipelines 77% Pipelines 74% 24
Slide 25: Expansion Projects
Expansion Projects Pacific East Line Expansion Favorable Order on Tariff Structure from FERC 8/1/03 Projected Startup 4Q05 / 1Q06 $200 Million Investment Increase Capacity to Phoenix by 44MBD or 80% Pacific North Line EIR approved 4Q03 Construction scheduled to begin 2Q04 with completion
Slide 26: Expansion Projects (continued)
Expansion Projects (continued) Pacific Concord to Bakersfield Shell announced plans for closure of Bakersfield refinery, slated for October 2004 Bakersfield refinery has crude capacity of 65MBPD Kinder Morgan evaluating expansion of Concord-Fresno pipeline and reversing Bakersfield-Fresno pipe
Slide 27: 2003 Acquisitions
2003 Acquisitions Shell West Coast Terminals Five Terminals $20 Million purchase, additional $8 Million to be invested by KM Approximately 700M barrels of storage capacity Colton, Mission Valley, Phoenix, Tucson, and Reno All are connected to SFPP pipeline system Conoco Phillips Southeast
Slide 28: Kinder Morgan
KINDER’ MORGAN