Enterprise Products Partners L.p. · NYSE:EPD
Enterprise Products Partners L.p — Investor Day (August 2006)
167 slides from Enterprise Products Partners L.p's investor day presentation, Aug 16, 2006
Slide 1: Enterprise Products Partners L.P. Analyst Conference
Enterprise Products Partners L.P. Analyst Conference New York August 16, 2006
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements and information that are based on Enterprise’s beliefs and those of its general partner, as well as assumptions made by and information currently available to them. When used in this presentation, words such as “anticip
Slide 3: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures This presentation utilizes the Non-GAAP financial measures of Gross Operating Margin and Consolidated EBITDA, and makes references to EBITDA and Distributable Cash Flow. In general, we define Gross Operating Margin as operating income before (i) depreciation, amort
Slide 4: Meeting Agenda
Meeting Agenda Michael A. Creel - Introduction Robert G. Phillips - Business Introduction James H. Lytal - Natural Gas Pipelines / Storage / Offshore A.J. “Jim” Teague - Natural Gas Processing / NGLs James M. Collingsworth - Regulated NGL Pipelines Gil H. Radtke - Petrochemical Services Richard H. B
Slide 5: Introduction / Overview
Introduction / Overview Michael A. Creel
Slide 6: Business Overview
Business Overview One of the largest publicly traded energy partnerships serving producers and consumers of natural gas, natural gas liquids (NGLs) and crude oil Enterprise value of over $16 billion Ranked 183rd on Fortune 500 list Only integrated North American midstream network that includes natur
Slide 7: EPD's Partnership Structure
EPD’s Partnership Structure Largest % ownership by management in MLP sector EPCO has consistently supported growth in EPD Purchased approximately $450 million of new issue equity since IPO Capped GP’s incentive split at 25% for no consideration Contributed half of GTM GP to EPD for no consideration
Slide 8: Key Investment Considerations
Key Investment Considerations Strategically located assets serving the most prolific supply basins of natural gas, NGLs and crude oil in the United States Leading business position in each segment of the midstream sector Over 90% of gross operating margin from diversified fee-based assets which enha
Slide 9: Diversified Business Mix
Diversified Business Mix Diversification of businesses provides multiple earnings streams and reduces risk NGL Pipelines & Services (50%) Natural gas processing plants & related marketing activities NGL fractionation plants NGL pipelines and storage Onshore Natural Gas Pipelines & Services (30%) Nat
Slide 10: Consistent Results from Diversified Businesses
Consistent Results from Diversified Businesses Stability and consistency in Gross operating margin “Consolidated EBITDA” Reflects benefits of Integrated value chain Fee-based businesses In spite of three major hurricanes in the last two years Since GTM merger, effectively hedged to swings in natural
Slide 11: Organic Growth and Lower Cost of Capital Drives Cash Flow Accretion
EPD’s Organic Growth and Lower Cost of Capital Drives Cash Flow Accretion “Cash is King” in the partnership sector Cash flow generated by a new investment supports the long-term cost of capital to fund the investment plus provides accretion for existing LP units outstanding Many analysts / investors
Slide 12: Business Introduction
Business Introduction Robert G. Phillips
Slide 13: Premier Network of Midstream Energy Assets
Premier Network of Midstream Energy Assets Key Assets of Enterprise Products Partners 19,470 miles of natural gas pipeline 13,499 miles of NGL & petrochemical pipeline 871 miles of GOM crude oil pipeline 148 MMBbls of NGL storage capacity 25 Bcf of natural gas storage capacity 7 offshore hub platfor
Slide 14: Competitive Advantages
Competitive Advantages Integrated energy value chain with fees earned in each link of the value chain Diversified business mix with access to prolific supply regions and providing services to high demand markets Significant organic growth opportunities given our size and scale of operations Low cost
Slide 15: Leading Business Positions Across Midstream Energy Value Chain
Leading Business Positions Across Midstream Energy Value Chain
Slide 16: Integrated Midstream Energy Services
Integrated Midstream Energy Services Fees are earned at each link of value chain
Slide 17: Competitive Position and Outlook: Production Platforms
Integrated Midstream Energy Services Competitive Position and Outlook Production Platforms Position Seven offshore platforms serve Deepwater GOM Marco Polo in process of ramping up Independence Hub platform in early 2007 Future tie backs as smaller fields develop Outlook 17 Deepwater discoveries sin
Slide 18: Competitive Position and Outlook: Natural Gas and Crude Oil Pipelines
Integrated Midstream Energy Services Competitive Position and Outlook Natural Gas and Crude Oil Pipelines Position Largest gas gatherer at 6+ Bcf/d (19,500 miles of oil and gas pipeline) One of the largest gas pipeline systems in Texas with access to South Texas, Barnett Shale, Bossier and Permian L
Slide 19: Competitive Position and Outlook: Gas Processing
Integrated Midstream Energy Services Competitive Position and Outlook Gas Processing Position 3rd largest processor at 6.6 Bcf/d (25 plants with 15 Bcf/d gross capacity) 250-300 MBPD feeds downstream assets; approximately 180 MBPD of NGLs extracted from EPD operated plants South Louisiana: Toca, Ven
Slide 20: Competitive Position and Outlook: NGL Pipelines
Integrated Midstream Energy Services Competitive Position and Outlook NGL Pipelines Position Largest NGL pipeline network (13,500 miles) connects supplies to Mont Belvieu and Conway hubs to markets Transports 1.2 MMBPD Y-grade and finished products Provides 55-60 MMBbl/yr propane to heating / agricu
Slide 21: Competitive Position and Outlook: NGL Fractionation
Integrated Midstream Energy Services Competitive Position and Outlook NGL Fractionation Position Leading United States fractionator with 9 plants and 450-500 MPBD gross throughput Mont Belvieu fractionators running at capacity Mont Belvieu West Texas II fractionator expansion completed in April 2006
Slide 22: Competitive Position and Outlook: NGL Storage, Marketing and Distribution
Integrated Midstream Energy Services Competitive Position and Outlook NGL Storage, Marketing and Distribution Position Largest NGL storage provider (148 MMBbls) 6 MMBbls Ferrellgas storage and terminals acquisition expanded network to western United States and Mid-Continent 650 MBPD United States pr
Slide 23: Natural Gas Pipelines and Storage and Offshore Pipelines and Services
Natural Gas Pipelines and Storage and Offshore Pipelines and Services James H. Lytal
Slide 24: Texas Pipeline System
Texas Pipeline System © Allrights reserved. Enterprise Products Partners L.P.
Slide 25: Texas Pipeline System
Texas Pipeline System 8,222-mile gathering and transportation system with 6.4 Bcf storage YTD 2006 throughput 3.4 TBtu/d Connected to major supply basins North Texas (Barnett Shale) East Texas (Bossier) South Texas (Wilcox, Vicksburg) Permian Basin Connected to all major Texas Markets San Antonio, A
Slide 26: Texas Drilling Statistics
Texas Drilling Statistics Monthly Average Rig Count Rig Count continues to increase in Barnett, Bossier and Delaware Basins
Slide 27: Barnett Shale Production Growth
Barnett Shale Production Growth North Texas Barnett Shale and Bossier producing areas continuing to grow Will need new long-term pipeline capacity Far West Texas Barnett and Woodford Shale plays will provide new opportunities EPD currently transports approximately 450 MMcf/d of Barnett Shale product
Slide 28: 2005-2006 GDA Monthly Average Spreads (Waha to HSC)
2005-2006 GDA Monthly Average Spreads (Waha to HSC)
Slide 29: 2005 Highlights
2005 Highlights Re-contracted or extended term on over 600 MMcf/d Entered into 42 new firm contracts with 20 different customers Transportation revenues increase $16 million All new contracts at increased rates Terms of new contracts range from 3-10 years
Slide 30: 2006 Highlights
2006 Highlights Completed system expansions of 240 MMcf/d 120 MMcf/d West Texas 30” expansion 120 MMcf/d Carthage compression addition Supported by long-term commitments from existing customers and fuel savings Executed long-term agreements with CenterPoint to serve a portion of their Greater Housto
Slide 31: West Texas Expansion
West Texas Expansion Addition of 120 MMcf/d capacity Installed 4 new compressors with 24,300 horsepower Supported by 5-year firm transport agreements with City of San Antonio and Devon
Slide 32: CenterPoint Transaction
CenterPoint Transaction Executed long-term contracts with CenterPoint LDC to serve a portion of their Houston area load Service begins April 1, 2007 and estimated annual demand is approximately 14 Bcf Contracts support estimated cost to connect Enterprise pipelines to 11 high-growth CenterPoint LDC
Slide 33: Cerrito Acquisition
Cerrito Acquisition d JL Gas Processing Plant ~ Enterprise Texas Pipeline — Enterprise Acquired from Cerrito ~~~ Enterprise Leased to Cerrito —— Cerrito Retained © Allrights reserved. Enterprise Products Partners L.P. 3S
Slide 34: Cerrito Acquisition
Cerrito Acquisition Purchase Price: $325 million ($146 million in cash & approximately 7.1 million EPD common units) for: Approximately 484 miles of gathering, 31,000 compression horsepower and related assets in Webb, Dimmit, Zavala, Frio and LaSalle counties in South Texas Life of lease dedication
Slide 35: Cerrito Gas Supply
Cerrito Gas Supply Over 1,450 wells currently connected and flowing over 100 MMcf/d of sweet gas Olmos / Wilcox are the primary reservoirs 1,500 remaining Olmos locations to drill Other formations expected to contribute significantly to future volumes Austin Chalk “B2” Eagleford Shale (reportedly 6
Slide 36: Historical and Projected Cerrito Volumes
Historical and Projected Cerrito Volumes
Slide 37: San Juan and Permian
San Juan and Permian © Allrights reserved. Enterprise Products Partners L.P.
Slide 38: San Juan Gathering and Processing
San Juan Gathering and Processing Gathering attributes 5,404+ miles of pipeline 276,909 hp compression Pressure ranges from 35 to 325 psig 10,450+ wells connected 1.189 Tbtu/d gathered YTD 2006 Processing facilities Chaco Plant capacity: 650 MMcf/d 500 MMcf/d processed YTD 2006 38,275 Bbls/d 8,086 B
Slide 39: San Juan Basin Optimization
San Juan Basin Optimization Optimization Project 300+ projects Completed December 2005 Increased pigging capabilities Added TW interconnect Increased capacity by 150 Mdth/d Lowered pressures Strong volume response since completion of the project
Slide 40: San Juan Basin Well Ties
San Juan Basin Well Ties Well Ties Initiated San Juan Optimization Completed San Juan Optimization gag 1998 1999 2000 2001 mmm Well Ties 2002 2003 2004 0-IF SJ Index Price 2005 2006 $6.00 $7.00 $6.00 $5.00 $4.00 $3.00 IF SJ Index Price © Allrights reserved. Enterprise Products Partners L.P. 40
Slide 41: San Juan Area Reserves
San Juan Area Reserves Reserve to Production Ratios Conventional: 1.6 Bcf/d 27 yrs. Proved / Probable 46 yrs. Proved / Probable / Possible Coal: 2.5 Bcf/d 19 yrs. Proved / Probable 22 yrs. Proved / Probable / Possible
Slide 42: San Juan Basin Production Outlook
San Juan Basin Production Outlook
Slide 43: Carlsbad Gathering
Carlsbad Gathering Carlsbad Gathering System 186 MMDth/d gathered YTD 2006 820 miles of pipe 560+ wells connected Major customers: Mewbourne, Devon, EOG NGPL Interconnect Capacity: 80 MMcf/d Supported by EOG commitment Increased system capacity In-service August 2006 South Carlsbad Dew Point Plant C
Slide 44: Waha Gathering and Treating
Waha Gathering and Treating Waha Gathering System 260 MMdth/d gathered YTD 2006; 24% increase over 2005 volume Currently treat 130+ MMcf/d 630 miles of pipe; 250+ wells connected Major customers: Anadarko, ExxonMobil, Forest, ChevronTexaco Morrow Gas Play Major players: Anadarko, Chesapeake Current
Slide 45: Permian System Throughput
Permian System Throughput 600 100 500 a0 400 60 300 40 200 20 100 a a 2001 2002 2003 2004 2008 2006 YTD mmm Permian Area = —®=Well Connects © Allrights reserved. Enterprise Products Partners L.P. 45
Slide 46: Natural Gas Storage
Natural Gas Storage © Allrights reserved. Enterprise Products Partners L.P.
Slide 47: Petal and Hattiesburg Gas Storage
Petal and Hattiesburg Gas Storage Completed 2.4 Bcf working gas conversion of brine cavern in 2005 Supported by 1.8 Bcf capacity lease with BP 13.9 Bcf of capacity sold under long-term contracts Petal is developing an additional storage cavern 5 Bcf working gas capacity Well drilled; Leaching begins
Slide 48: Petal Gas Storage
Petal Gas Storage In September 2006, Petal expects to file for FERC approval to convert 1 brine cavern and 3 Petal NGL caverns to natural gas use Provides for an additional 3.1 Bcf of working gas at Petal Estimated completion date: 3Q 2007 Expect 4 year payout at current market rates
Slide 49: Comparison of Economics & Returns of Natural Gas Storage vs. NGL Storage
Comparison of Economics & Returns of Natural Gas Storage vs. NGL Storage EPD has the largest storage position at Mont Belvieu, with 94 million barrels of NGL and petrochemical storage
Slide 50: Comparison of Economics & Returns of Natural Gas Storage vs. NGL Storage
Comparison of Economics & Returns of Natural Gas Storage vs. NGL Storage Actions to realize higher return on storage assets given shortage of United States natural gas storage capacity Increase NGL storage fees at Mont Belvieu Convert NGL storage capacity to natural gas storage consistent with actio
Slide 51: Deepwater Gulf of Mexico
Deepwater Gulf of Mexico © Allrights reserved. Enterprise Products Partners L.P.
Slide 52: Deepwater Gulf of Mexico Overview
Deepwater Gulf of Mexico Overview EPD and its predecessors have been investing in pipeline and platform projects in the Gulf of Mexico since 1993 EPD’s current integrated oil / gas pipeline and platform network covers most major corridors with active deepwater developments Significant new projects h
Slide 53: Enterprise Gulf of Mexico Assets
Enterprise Gulf of Mexico Assets
Slide 54: Gulf of Mexico Drilling Activity
Gulf of Mexico Drilling Activity
Slide 55: Deepwater Trend 2005/2006 Update
Deepwater Trend 2005/2006 Update “The deepwater discoveries to date represent a strong continuing success story in the Gulf of Mexico. We are off to a great start in calendar year 2006.” - - Chris Oynes MMS Regional Director, July 18, 2006
Slide 56: Marco Polo Platform
Marco Polo Platform Owner: EPD 50% / Helix 50% Operator: EPD Tension leg platform in 4,300 feet located in prolific South Green Canyon area Platform designed for 120 MBPD and 300 MMcf/d Demand charges of $2.1 million/month and volumetric fees Recent production of 43 MBPD and 33 MMcf/d with majority
Slide 57: Constitution Oil and Gas Pipelines
Constitution Oil and Gas Pipelines Owner / operator: EPD First production: February 15, 2006 (ahead of schedule) Currently moving 34 MBPD and 132 Mdth/d from 2 wells at Ticonderoga and 4 wells at Constitution; 2 additional wells planned at Constitution Feeds downstream Anaconda (gas), Cameron Highwa
Slide 58: Cameron Highway Oil Pipeline System (CHOPS)
Cameron Highway Oil Pipeline System (CHOPS) Owner: EPD 50% / Valero 50% Operator: EPD Dedications: Holstein, Mad Dog, Atlantis, Constitution, K2, Ticonderoga 15 wells flowing of 50 planned from Holstein, Mad Dog and Atlantis Atlantis: first flows expected in 1Q 2007 Averaged approximately 80 MBPD in
Slide 59: Poseidon Oil Pipeline System
Poseidon Oil Pipeline System Owner: EPD 36%, Shell 36%, Marathon 28% Operator: EPD Average 2005 volumes: 120 MBPD August 2006 forecast: 181 MBPD (highest since June 2000) benefiting from diverted volumes from CHOPS Increase due to new production from K2, K2 North, Constitution, Ticonderoga, Holstein
Slide 60: Increased Crude Oil Deliveries
Increased Crude Oil Deliveries Increase in overall volumes less than expected primarily due to effect on producers from delays and equipment shortages caused by 2005 hurricanes CHOPS volumes impacted by BP’s Texas City refinery complex operating at 50% of capacity Partially offset by Poseidon benefi
Slide 61: Southern Green Canyon: Continued Exploration Success
Southern Green Canyon: Continued Exploration Success
Slide 62: South Green Canyon Summary
South Green Canyon Summary Anticipate finalizing new oil gathering opportunity in South Green Canyon World class oil basin 955 to 1,165 MBPD of capacity upstream of Cameron Highway and Poseidon Anchor tenants active and firmly committed to the area Expansion of franchise area to the south into Walke
Slide 63: Independence Hub Platform & Trail Pipeline
Independence Hub Platform & Trail Pipeline Hub (80% Enterprise) / Pipeline (100% Enterprise) Expanded Hub and Pipeline to 1 Bcf/d capacity Three additional discoveries since project was sanctioned Producers: Anadarko, Kerr-McGee, Dominion, Spinnaker, Devon New 134-mile 24” gas pipeline
Slide 64: Independence Construction Update
Independence Construction Update Hull arrived KOS facility: June 24th Topside and hull fabrication are almost complete Deck to be placed on hull in early September 2006 Pipeline installation complete on or around August 18th West Delta 68 jacket installed West Delta 68 deck installation and commissi
Slide 65: Independence Hub
Independence Hub Subsea 104 blocks dedicated for life of lease to the Independence Hub Project 1st eastern Gulf well tested at more than 60 MMcf/d Independent audit confirmed reserves in anchor discoveries 197 miles of subsea flowlines under construction for anchor discoveries
Slide 66: Eastern Gulf of Mexico New Acreage Potential
Eastern Gulf of Mexico New Acreage Potential Area available for leasing adjacent to Hub could increase by 8 million acres Senate bill endorsed by White House and Florida senator Senate bill passed August 1, 2006 Subject to conference committee with House
Slide 67: Natural Gas Processing and Natural Gas Liquids (NGLs)
Natural Gas Processing and Natural Gas Liquids (NGLs) A.J. “Jim” Teague
Slide 68: Strong NGL Industry Fundamentals
Strong NGL Industry Fundamentals U.S. ethylene production has rebounded from the mid-year 2003 troughs Key factors are the economy and GDP growth, plant operating rates and gas-to-crude price ratio Ethane extraction increases as ethylene production increases History has shown that industry flexibili
Slide 69: NGL Assets
NGL Assets Rockin NGL Pipelines Terminals Fractionation Facility Natural Gas Processing Plant Storage Facility ew Import / Export Terminal opx+e| © Allrights reserved. Enterprise Products Partners L.P. 69
Slide 70: Natural Gas Processing
Natural Gas Processing 99%+ of contract portfolio is fee-based and %-of-proceeds in a low frac spread environment
Slide 71: Natural Gas Processing Equity NGLs per Contract Type
Natural Gas Processing Equity NGLs per Contract Type (MBPD)
Slide 72: Rocky Mountain Assets / Activity
Rocky Mountain Assets / Activity
Slide 73: Jonah and Pinedale Fields Growth
Jonah and Pinedale Fields Growth
Slide 74: Jonah Gas Gathering System
Jonah Gas Gathering System Jonah Gas Gathering System Approximately 600+ miles of pipe / 92,000 HP of compression Serves 900+ producing wells in Jonah and Pinedale fields Joint Venture with TEPPCO Announced August 2006 EPD will earn approximately 20% interest through funding of current expansion pro
Slide 75: Pioneer Processing Plants
Pioneer Processing Plants Existing Silica Gel Plants EPD purchased 300 MMcf/d plant from TEPPCO in early 2006 Expansion to 600 MMcf/d capacity complete in July 2006 Will serve as backup to new cryogenic plant New Cryogenic Plant 650 MMcf/d cryogenic plant under construction Capable of full NGL extra
Slide 76: Piceance Basin Growth
Piceance Basin Growth The Piceance Basin has grown by over 20% annually for the past 5 years.
Slide 77: Meeker Processing Plants
Meeker Processing Plants Phase I New 750 MMcf/d plant capable of inlet gas separation, CO2 treating, NGL recovery and residue compression Capable of full NGL extraction, ethane rejection or dew point control At full NGL extraction, capacity of 35 MBPD Ultimate residue connectivity to numerous pipeli
Slide 78: Hobbs Fractionator
Hobbs Fractionator Existing infrastructure Interconnect between MAPL and Seminole Pipeline Systems Y-grade and purity NGL storage Local delivery infrastructure Expansion New 75 MBPD NGL fractionator Supplied by 100 MBPD of Meeker and Pioneer production New 375,000 barrel underground storage cavern D
Slide 79: Texas Gas Processing
Texas Gas Processing 2.0 Bcf of processing in capacity in 10 plants 2005 1.4 Bcf/d throughput 64.4 MBPD NGL production 2006 YTD 1.4 Bcf/d throughput 76.5 MBPD NGL production Recent highlights Acquisition of certain gas gathering systems and related gathering and processing agreements from Lewis Ener
Slide 80: South Texas NGL Facilities
South Texas NGL Facilities Austin Laredo @.2.,. Christi Equistar @ueaaas. |nport / Export Terminal NGL Gathering Pipelines NGL Product Pipelines Fractionation Unit Gas Processing Plant NGL Storage Refinery Petrochernical Plant © Allrights reserved. Enterprise Products Partners L.P. 80
Slide 81: Gulf Coast Gas Processing
Gulf Coast Gas Processing 10.9 Bcf (3.7 Bcf net) of processing capacity in eleven plants 2005 131.9 MBPD gross NGL production 36.1 MBPD equity NGL production 2006 YTD 111.5 MBPD gross NGL production 28.8 MBPD equity NGL production Hurricane recovery Repairs at Yscloskey and Sea Robin completed VESCO
Slide 82: Louisiana NGL Facilities
Louisiana NGL Facilities Port All towan Section ea Mont Belvieu ane: Pe Blue Water FY nobey Pr<Promix poe atterson Il ea Robi df Terrebonne iCalume' Bums Point Petal Pascagoula \ys ‘scloskey Toca SLX Fractionator ixie Pipeline — Chunchula Q Gas Processing Plant Lake Charles and Bayport — LouTex NGL
Slide 83: Mont Belvieu, Texas & Its Pivotal Role in the Global LPG Industry
Mont Belvieu, Texas & It’s Pivotal Role in the Global LPG Industry Mont Belvieu is a primary global pricing point against which all other regions are balanced due to: Substantial underground storage providing a transparent trading hub Significant connectivity providing accessibility and liquidity to
Slide 84: Mont Belvieu Fractionation, Storage & Distribution System
Mont Belvieu Fractionation, Storage & Distribution System Largest NGL hub in the U.S. Fractionation capacity: 225 MBPD Fractionator running at capacity 15 MBPD expansion completed in first quarter of 2006 De-bottlenecked and improved energy efficiency Storage capacity of 94 million barrels Distribut
Slide 85: Houston Ship Channel Pipelines & Import / Export Terminals
Houston Ship Channel Pipelines & Import / Export Terminals Oil Tanking Import / Export Dock Connected to 3 docks and 330,000 barrels of storage from Oil Tanking Primarily imports propane, purity butanes and commercial butane at rates of 10M bph+ Fully and semi-refrigerated vessel loading rates of 6,
Slide 86: Enterprise LPG Imports and Exports
Enterprise LPG Imports and Exports
Slide 87: Enterprise NGL Marketing Import Term Contract Slate
Enterprise NGL Marketing Import Term Contract Slate Under Contract Minimum 19.9 MMBbls / Maximum 31.8 MMBbls In Negotiation Minimum 12.8 MMBbls / Maximum 15.6 MMBbls
Slide 88: Global LPG Supplies Are Expanding
Global LPG Supplies Are Expanding Annual increase in LPG supply
Slide 89: Enterprise Import / Export Expansion
Enterprise Import / Export Expansion Current System Connected to 3 docks with 2 loading arms Ability to unload 1 product at a time Ability to unload 1 vessel at a time Maximum discharge rate of 10,000 barrels/hour (bph) Export capacity at 5,500 bph for fully refrigerated loadings Expanded System Con
Slide 90: Enterprise NGL Marketing Wholesale Marketing
Enterprise NGL Marketing Wholesale Marketing
Slide 91: Enterprise NGL Marketing West Coast Refinery Services
Enterprise NGL Marketing West Coast Refinery Services
Slide 92: Enterprise NGL Marketing Gulf Coast Refinery Services
Enterprise NGL Marketing Gulf Coast Refinery Services
Slide 93: Enterprise NGL Marketing Gulf Coast Petrochemical Services
Enterprise NGL Marketing Gulf Coast Petrochemical Services
Slide 94: Enterprise NGL Marketing Domestic Marketing
Enterprise NGL Marketing Domestic Marketing Domestic marketing strategy is focused on maximizing the value of our assets by capturing system opportunities and utilizing incremental capacity Strategies are centered around a combination of system capabilities and customer needs Wet-For-Any: Take advan
Slide 95: Regulated NGL Pipelines
Regulated NGL Pipelines James M. Collingsworth
Slide 96: Regulated NGL Pipeline Group Overview
Regulated NGL Pipeline Group Overview Regulated companies Mid-America Pipeline Company LLC Seminole Pipeline Company Dixie Pipeline Company Non-regulated companies Enterprise Terminalling & Storage Company LLC Dixie Terminalling and Storage Company
Slide 97: MAPL, Seminole and Dixie Pipelines
MAPL, Seminole and Dixie Pipelines
Slide 98: 2006 MAPL Growth Initiatives
2006 MAPL Growth Initiatives Western Expansion I of the Rocky Mountain system Expand the MAPL system between Conway and Skellytown Secure long-term volume dedications in Rocky Mountain region Continue to defend cost of service filing on Northern system via FERC process Pancake rate increase on North
Slide 99: MAPL Rocky Mountain System
MAPL Rocky Mountain System MAPL Rocky Mountain Demethanized Mix system evacuates producers’ NGLs extracted in natural gas processing plant located in the Rocky Mountains to the NGL markets, mostly Mont Belvieu, Texas MAPL’s current system has the capacity to transport approximately 225 MBPD into Hob
Slide 100: Expected NGL Volume Growth in Rockies
Expected NGL Volume Growth in Rockies(1) MAPL Rocky Mountain leg flowed at 90%+ of 225 MBPD capacity in 2005 and 93% YTD 2006 MAPL Phase I - 50 MBPD expansion under construction Expected to be completed mid-2007
Slide 101: MAPL Western Expansion Project
MAPL Western Expansion Project WEP I expands the MAPL Rocky Mountain system by 50 MBPD through a combination of new pipe and additional horsepower Current status of WEP I 75 of the 165 miles of pipeline looping is complete Remaining 90 miles will be complete by October 2006 adding 30 MBPD of additio
Slide 102: MAPL Rocky Mountain System
MAPL Rocky Mountain System E: © Allrights reserved. Enterprise Products Partners L.P. 102
Slide 103: MAPL Rocky Mountain System
MAPL Rocky Mountain System Enterprise is environmentally responsible in restoring construction areas
Slide 104: Conway to Skellytown Loop
Conway to Skellytown Loop 190 miles of 12” pipe connecting the 102 miles of 10” pipe between Conway (“CN”) and Skellytown (“SK”) Project complete by March 2007 at a cost of $81 million Increase SK to CN capacity by 60+ MBPD Allows MAPL to fully utilize 48 MBPD of idle capacity from SK to Hobbs (“HB”
Slide 105: Dixie Pipeline
Dixie Pipeline 1,300 mile propane pipeline from Mont Belvieu, Texas to Apex, North Carolina (Pinehurst) 7 Dixie-owned loading terminals and 5 privately-owned terminals Storage capacity: 640,000 barrels Capacity: 220 MBPD Average daily rate: 101.4 MBPD Current ownership EPD 66% BP 23% Exxon 11%
Slide 106: Dixie Pipeline 2006 Objectives
Dixie Pipeline 2006 Objectives Seeking cost recovery of $9 million from shippers that injected off-specification propane Refining strategy for pursuing settlement from shippers that injected at Citgo Growth / optimization initiatives Pipeline connection with Dow (1 MMbbls in incremental transportati
Slide 107: Revenue Increase from PPI Adjustments
Revenue Increase from PPI Adjustments FERC-approved formula for annual indexing Indexed changes effective July 1 of each year Annual change in PPI-finished goods plus 1.3% Formula subject to review every five years Formula approved in 2006 and effective through 2010 July 1, 2006 index 6.1485% Potent
Slide 108: Petrochemical Services
Petrochemical Services Gil H. Radtke
Slide 109: Petrochemical Services Overview
Petrochemical Services Overview Petrochemical segment consists of 5 businesses Butane isomerization (116 MBPD) Propylene fractionation (4.4 billion pounds or 65 MBPD, net) Mont Belvieu hydrocarbon storage (94 MMbbls of usable capacity) Propylene and HP isobutane pipelines Octane enhancement (10 MBPD
Slide 110: Mont Belvieu Growth Initiatives
Mont Belvieu Growth Initiatives Pipelines (3Q 2005 - 1Q 2007) Propylene feedstock from Texas City area (3Q ’05) Propylene feedstock from Port Arthur area (1Q ’07) Raw make from South Texas (1Q ’07) Storage Services (3Q 2006 - 2Q 2007) Two new brine production wells Increase above ground brine storag
Slide 111: Butane Isomerization Service
Butane Isomerization Service Isomerization is the process of converting normal butane to high purity isobutane EPD has a combined capacity of 116 MBPD 57 MBPD (49%) is committed under long-term third party processing contracts with escalation provisions on the fees and 20 MBPD is used as feedstock f
Slide 112: Isomerization Business Outlook
Isomerization Business Outlook Stable demand from long-term contracts base loads isomerization business EPD has available capacity to service future growth in isobutane demand and seasonal demand for gasoline without investing new capital Expect increase in demand for isobutane as MTBE is phased out
Slide 113: Propylene Fractionation
Propylene Fractionation Propylene splitters take refinery grade propylene (RGP) and fractionate it into polymer grade propylene (PGP) or chemical grade propylene (CGP) and propane RGP is typically 60-75% propylene with the balance primarily propane RGP is referred to in barrels per day (BPD) of feed
Slide 114: Propylene Assets
Propylene Assets We own and operate 3 polymer grade propylene fractionation (“splitters”) facilities with approximately 4.8 billion pounds per year (72 MBPD) of polymer grade propylene production capacity (our share is 3.9 billion pounds) Basell owns approximately 45% of Splitter 1 and leases this c
Slide 115: Combined Propylene Systems
Combined Propylene Systems Exxon - Port Allen Basel — Lake Charles Breaux Bridge ‘Valera St Charles Valera — Texas Cty BP — Texas Oty RGP cor 6 Splitter Refinery — PoP Storage Petrochemical Plant vom Pot Atturrep EBSr8 ( © Allrights reserved. Enterprise Products Partners L.P. 115
Slide 116: Current Propylene Business
Current Propylene Business Mont Belvieu Toll processing fee agreements - 18% of capacity No exposure to commodity price volatility Implicit fee arrangements - 61% of capacity Back-to-back long-term RGP purchase contracts and long-term PGP sales contracts with a common reference price Variable margin
Slide 117: Propylene Outlook
Propylene Outlook Propylene primarily sourced from refineries (to splitters) and as a co-product from steam crackers 2006 World demand expected to be 154 billion pounds 2006 North American demand expected to be 36 billion pounds World polypropylene demand expected to grow at over 5% per year and U.S
Slide 118: Propylene Expansion
Propylene Expansion Includes the necessary improvements to pipelines, storage and measurement facilities Capacity: 1.0 billion pounds Expandable to 1.5 billion pounds Completion in 3Q 2007 Utilization ramping up from 80% in 2008, 90% in 2009 and 100% in 2010 forward Processing and sales margins of 3
Slide 119: Mt. Belvieu Storage Services
Mt. Belvieu Storage Services Own and operate 94 MMBbls of underground storage capacity at Mont Belvieu These storage facilities are interconnected by multiple pipelines to other producing and offtake facilities throughout the Gulf Coast, as well as connections to the Rocky Mountain and Midwest regio
Slide 120: Mont Belvieu Storage Outlook
Mont Belvieu Storage Outlook Provide critical logistical services for our customers Growth tied to petrochemical, refinery and NGL fractionation markets as well as imported NGL Expansion tied to this growth, as well as new product storage opportunities Very steady cash flows with limited competitors
Slide 121: Octane Enhancement
Octane Enhancement EPD owns a facility at Mont Belvieu that produces octane additives for motor gasoline Modification of the plant to produce isooctane completed in 2Q 2005 Have produced isooctane since March and isobutylene which is used to produce specialty chemicals (performance additive in lube
Slide 122: Isooctane
Isooctane Key markets are Gulf Coast and California Only the second plant of its kind in the world; in place in advance of the phase out of MTBE Isooctane production Current capacity: 10.3 MBPD Capacity beginning February 2007: 12 MBPD Feedstock comes from our isomerization business Requires 2 gallo
Slide 123: Ethanol Drives Demand for Isooctane
Ethanol Drives Demand for Isooctane 2005 Energy Bill effectively removed MTBE from United States gasoline market Significant octane loss with 6.0 lbs. vapor pressure Corresponding Renewable Fuels Standard (RFS) mandated ethanol usage Blends to higher vapor pressure of 15.0 lbs. Forces removal of hig
Slide 124: Ethanol Renewable Fuel Standard
Ethanol Renewable Fuel Standard
Slide 125: Corporate Governance
Corporate Governance Richard H. Bachmann
Slide 126: Current EPCO Structure
Current EPCO Structure x aR eee [m= Enterpiise Produds Operating LP. © Allrights reserved. Enterprise Products Partners L.P. 126
Slide 127: EPCO Family Governance
EPCO Family Governance EPCO is sensitive to the appearance of and the potential for conflicts of interest which may arise among its various public and private entities and strives to ensure that each of the public entities that it controls is governed in a manner that is solely for the benefit of su
Slide 128: Non-Consolidation Objectives
Non-Consolidation Objectives Avoiding the risk of “substantive consolidation” is important to the EPCO family of entities (i.e. EPCO, EPE, EPD, TPP) As a result, we are very sensitive to ensuring that third parties understand the “separateness” of the various EPCO family of entities We have provided
Slide 129: Financial Overview
Financial Overview Michael A. Creel
Slide 130: Strong 2006 Performance
Strong 2006 Performance $102 million, or 20%, increase in gross operating margin for first six months of 2006 led by $47 million increase from Petrochemical Services and $44 million increase in NGL Pipeline & Services segment Petrochemical services benefited from $25 million increase from octane enh
Slide 131: Strong Financial Position at June 30, 2006
Strong Financial Position at June 30, 2006
Slide 132: History of Financial Discipline
History of Financial Discipline Financial discipline while executing EPD’s growth strategy Financed 53% of $11.8 billion in capital investment since 1999 with equity Retired $1.2 billion acquisition term loan used to finance the acquisition of the Mid-America and Seminole Pipelines in less than 7 mo
Slide 133: History of Financial Discipline: Funding Growth with Equity
History of Financial Discipline Funding Growth with Equity (1) Capital investment includes the capital expenditures, cash used for business combinations and asset purchases, investments in and advances to unconsolidated affiliates, and intangible asset acquisitions amounts as reflected on our Statem
Slide 134: History of Financial Discipline: Debt to Total Capitalization
History of Financial Discipline Debt to Total Capitalization
Slide 135: History of Financial Discipline: Managing Distributable Cash Flow
History of Financial Discipline Managing Distributable Cash Flow 14% of Distributable Cash Flow Retained in Partnership
Slide 136: Realizing Benefits of Eliminating GP's 50% Splits
Realizing Benefits of Eliminating GP’s 50% Splits “Landmark” action taken by EPD’s GP in December 2002 to eliminate GP’s 50% IDR for no consideration is beginning to provide significant benefits to debt and equity investors 2nd Qtr 2006 savings of $17 million Cumulative savings of $67 million 31% of
Slide 137: Cost of Capital Evaluation
Cost of Capital Evaluation © Allrights reserved. Enterprise Products Partners L.P.
Slide 138: Largest Energy Partnerships Indicative Cost of Capital Comparison
10 Largest Energy Partnerships Indicative Cost of Capital Comparison(1) (1) 50/50 mix of debt and equity. 10-year debt cost based on the yield of the nearest note to 10-year maturity for each partnership adjusted for an estimated new 10-year issuance spread provided by a leading debt underwriter in
Slide 139: Updated Cost of Capital Study
Updated Cost of Capital Study Updated cost of capital study from January 2006 evaluation. This study shows the cumulative effect of EPD and a Generic MLP with a 50% GP split making a uniform series of $100 million investments each year over a ten-year period. Analysis has 3 return scenarios: A - 15.
Slide 140: Generic Partnership - Scenarios A & B Assumptions & Resulting WACC
Generic Partnership - Scenarios A & B Assumptions & Resulting WACC
Slide 141: EPD - Scenarios A & B Assumptions and Resulting WACC
EPD - Scenarios A & B Assumptions and Resulting WACC
Slide 142: Portfolio Cost of Capital per Year Financed 50% Debt / 50% Equity
Portfolio Cost of Capital per Year Financed 50% Debt / 50% Equity
Slide 143: Portfolio Blending Masks the High Cost of Capital for the Year 1 Investment
Portfolio Blending Masks the High Cost of Capital for the Year 1 Investment
Slide 144: Investment Scenario A - 15% ROI + 2% Growth
Investment Scenario A - 15% ROI + 2% Growth Cash Accretion to Existing Limited Partners
Slide 145: Investment Scenario B - 12.5% ROI + 2% Growth
Investment Scenario B - 12.5% ROI + 2% Growth Cash Accretion to Existing Limited Partners
Slide 146: Investment Scenario C - 10% ROI No Growth
Investment Scenario C - 10% ROI No Growth Cash Accretion to Existing Limited Partners
Slide 147: Capital Expenditure Overview
Capital Expenditure Overview
Slide 148: Capital Expenditures
Capital Expenditures $ Ne in Millions IGL Pipelines & Services: Growth Capital A © Allrights reserved. Enterprise Products Partners L.P. Meeker Cryogenic Processing Plant #1 & 2 Pioneer Cryogenic Processing Plant # 1 & 2 Pioneer Silica Gel Plant Expansion MAPL Expansion Hobbs Fractionator Skellytown
Slide 149: Capital Expenditures (continued)
Capital Expenditures (continued)
Slide 150: Major Organic Growth Projects Expected Investment & Timing
Major Organic Growth Projects Expected Investment & Timing
Slide 151: Hybrid Offering Summary
Hybrid Offering Summary © Allrights reserved. Enterprise Products Partners L.P.
Slide 152: Hybrid Offering Benefits
Hybrid Offering Benefits Provides financial flexibility by broadening and diversifying access to capital markets 61 investors, of which 22 investors participated in EPD bond offering for the first time Good distribution; largest investor allocated $30 million Establishes another channel for access t
Slide 153: Hybrid Offering Summary
Hybrid Offering Summary $300 million Hybrid Security due 2066 rated Ba1 (Moody’s), B+ (S&P) and BB+ (Fitch) Equity Content Ascribed: 75% by Fitch, Basket C (50%) by Moody’s and Intermediate (i.e. 50%) by S&P 1st partnership to issue a hybrid 4th non-financial / corporate issuer to issue a hybrid 3 d
Slide 154: Equity Markets Realize Benefit of Hybrid in EPD's Capital Structure
Equity Markets Realize Benefit of Hybrid in EPD’s Capital Structure EPD and EPE outperformed Alerian MLP Index from announcement of hybrid offering to ex-distribution date
Slide 155: Hybrid Potential in Capital Structure
Hybrid Potential in Capital Structure
Slide 156: Largest Energy Partnerships Ranked by Enterprise Value
10 Largest Energy Partnerships Ranked by Enterprise Value(1) EPD’s business and geographic diversification along with size provide investors with stability and excellent platform for future growth (1) Based on closing unit price on August 8, 2006 applied to outstanding units, inclusive of I-shares a
Slide 157: Largest Energy Partnerships Ranked by Average Daily Trading Volume
10 Largest Energy Partnerships Ranked by Average Daily Trading Volume(1) EPD provides investors with greatest daily liquidity of any energy partnership in the $80+ billion MLP sector (1) Based on closing unit price on August 8, 2006 applied to average daily trading volume for the last six months per
Slide 158: Proven Growth, Superior Returns
Proven Growth, Superior Returns (1) MLP Index includes BPL, EEP, ETP, KMP, MMP, OKS, PAA and TPP. REIT (2) Long-term growth based on Wall Street research estimates for distribution growth for MLPs and REITs and earnings growth for the Utility Index.
Slide 159: Financial Summary
Financial Summary EPD has consistently exercised financial discipline in funding capital investment Investment grade debt ratings a priority - important from both a cost of capital and commercial business perspective Funding with appropriate mix of equity and hybrid-equity EPD has provided LP invest
Slide 160: Closing Remarks
Closing Remarks Robert G. Phillips
Slide 161: Major Growth Projects Overview
Major Growth Projects Overview1 1 This summary includes selected major growth capital projects which were completed in 2004 or 2005 and projects currently under construction or development.
Slide 162: First Half 2006 Recap
First Half 2006 Recap Delivered record gross operating margin of $623 million and EBITDA of $600 million Revenue and operating income both increased by 30% from the first half of 2005 Strong contributions from NGL pipelines and processing, onshore natural gas pipelines and our petrochemical services
Slide 163: Summary
Summary Enterprise is well capitalized with a leading position in all facets of the midstream business Assets access the most prolific basins of natural gas, crude oil and NGLs in the United States Size and diversity of businesses provide an abundance of organic growth opportunities when acquisition
Slide 164: Appendix
Appendix © Allrights reserved. Enterprise Products Partners L.P.
Slide 165: Non-GAAP Reconciliations
Non-GAAP Reconciliations Enterprise Products Pa Gross Operating Margin by Segment (Dollars in 000s) For the Quarterly Period, Fo08 1005 20.05 30.05 40.05 10.06 2006 Gross operating margin by segment: NGL Pipelines & Services $142,466 $153,904 120828 $153,760 $ 152314 $170,950 $148,414 Onshore Natura
Slide 166: Non-GAAP Reconciliations
Non-GAAP Reconciliations Enterprise Products Partners LP. Consolidated EBITDA (Dollars in 000s, Unaudited) For the Quartetly Period wood 1005 2008 30 05, 1005 1006 2006 Reconcilton of Non-GAAP "Consolidated EBITOA"to GAAP "Net Income” aan a. Net income (1) 3 117483 § 109970 § 71023 § 131,344 § 10880
Slide 167: Non-GAAP Reconciliations
Non-GAAP Reconciliations Enterprise Products Partners LP. EBITDA (Dollars in 000s, Unaudited) Reconailiation of Non-GAAP "EBITDA" to GAAP "Net income" and. GAAP ‘Cash provicied by operating activities" Net income Additions to net income to derive EBITDA Add interest expense (including related amarti
Enterprise Products Partners — Investor Day (August 2006) on 6ix