Kinder Morgan, Inc. · NYSE:KMI
Kinder Morgan — Kinder Morgan Energy Partners — 2008 KMP Analyst Conference
32 slides from Kinder Morgan's conference presentation, Jan 24, 2008
Slide 1: CO2 – Tim Bradley, President CO2 Group
ENERGY PARTNERS, L.P. CO2 Tim Bradley President CO2 Group
Slide 2: CO2 Business – View from the top
ENERGY PARTNERS, L.P. CO2 Business – View from the top Overview We operate and own significant interests in oil fields with over 5 Billion barrels remaining in place We operate the premier CO2 Source and Transportation assets in the industry Opportunities We have the capability and resources to deve
Slide 3: Distributable Cash Track Record
ENERGY PARTNERS, L.P. Distributable Cash Track Record CO2 Sales and Transportation - steady historical growth CO2 Flood Development Opportunities - growing faster $800 $700 $600 DCF - MM$ $500 $400 $300 $200 $100 $0 '01 '02 '03 '04 '05 '06 '07 '08 CO2 S&T CO2 Flood Properties Plan for each Year ____
Slide 4: 2007 Performance Recap
ENERGY PARTNERS, L.P. 2007 Performance Recap Overall, disappointing results CO2 Source and Transportation Outperformed $172 MM vs $164 MM Yates Outperformed $195 MM vs $177 MM 27,004 B/d vs 26,200 B/d SACROC* Underperformed $162 MM vs $252 MM 27,604 B/d vs 32,513 B/d Future growth in cash flow even
Slide 5: SACROC and Yates Oil Production DCF
ENERGY PARTNERS, L.P. SACROC and Yates Oil Production DCF Oil Production 80,000 Historical Summary SACROC Yates 60,000 Acquisitions: SACROC June 2000 40,000 MKM January 2001 Yates November 2003 20,000 Significant Development Events 0 SACROC: 2002 2003 2004 2005 2006 2007 2008 CLPL April 2002 CL V, B
Slide 6: Oil and Gas Margins Improving
ENERGY PARTNERS, L.P. Oil and Gas Margins Improving Net of Hedged Prices Sacroc Cost Structure Yates Cost Structure 40 Net Realized Price 60 30 Net Realized Price 40 $/BOE 20 $/BOE 20 10 0 0 2004 Actual 2005 Actual 2006 Actual 2007 Actual 2008 Budget 2004 2005 2006 2007 2008 Actual Actual Actual Act
Slide 7: SACROC Production Deterioration
ENERGY PARTNERS, L.P. SACROC Production Deterioration BOPD Oil Production 2002-2007 2007 – Recap 40,000 35,000 Actual Challenge 1: Reservoir responding differently 30,000 Budget 25,000 Lower recoveries in post Center-Line Projects 20,000 Lower injectivity growth than previously observed 15,000 Devel
Slide 8: SACROC Tertiary Oil Recovery Efficiency
ENERGY PARTNERS, L.P. SACROC Tertiary Oil Recovery Efficiency Evolution of Expectations and Responses over Time CenterRing Projects RE = 8.2% - Expansion expectation from Bullseye thru (4 – 18 %) CR2 was based on the Centerline Projects 2000- 2000-2003 - We used a single pattern simulation to verify
Slide 9: SACROC Conformance Improvement Effort
ENERGY PARTNERS, L.P. SACROC Conformance Improvement Effort Bullseye Project Still Has Hope - 3D Geologic Model has Progressed - Even poorest recovery areas have 88% connected pay between wells but injection in only a small percentage - Injection Diversion Projects in Late 2006 and 2007 9
Slide 10: Conformance Improvement Efforts
ENERGY PARTNERS, L.P. Conformance Improvement Efforts: Bullseye: 12 Polymer Patterns (Fall 2006 Treatments) Combined Well Production 12 Wells Treated with Polycrystal Polymer – late 2006 Profiles Changed in majority of wells, CO2 Injection resumed in 2007 Results look promising Additional 8 Well Pol
Slide 11: New Project Economics – South Platform
ENERGY PARTNERS, L.P. New Project Economics – South Platform New Projects remain economic at lower recoveries and lower oil prices South Platform Expansion Economic Sensitivity 40% Injectivity Growth IRR-% 100.0 $50 Flat 75.0 $60 Flat $70 Flat 20% IRR 50.0 25.0 0.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 O
Slide 12: SACROC Development Plan
ENERGY PARTNERS, L.P. SACROC Development Plan Platform Cisco Platform Green (2012) (2011) Platform Middle (2009) CR-II (Done) So. Platform (Mid 2008) GI Expected Range of Recoveries (Late 2008) SWCL 7.7% So. Platform 7.7% SWCL3 Other Developments 6.0 to 9.5% (Mid 2008) 7.4% avg. SWCL (Curr) 12
Slide 13: SACROC Oil Production Historical Forecasts
ENERGY PARTNERS, L.P. SACROC Oil Production Historical Forecasts 2007 Base 2007 (go forw ard = Bullseye) Proved Reserves 40 35 30 25 20 15 10 5 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 13
Slide 14: Yates Production Forecast by Program
ENERGY PARTNERS, L.P. Yates Production Forecast by Program 30,000 25,000 20,000 BOEPD 15,000 10,000 5,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Base Base Pre 05 HDH Pre 05 HDH 05 Phs 05 Phs 06 Phs 06 Phs 2007 Ph 2007 Ph 2008 Ph Misc BOE Misc BOE 7 Rivers 7 Rive
Slide 15: Yates Oil Production Forecasts
ENERGY PARTNERS, L.P. Yates Oil Production Forecasts Production continues to exceed expectations Response to CO2 injection earlier than prior simulation model suggested MBOEPD 35 Sum of the Parts Simulation Model Vertical well production is 30 flattening 25 20 More horizontal drain holes 15 drilled
Slide 16: HDH Production Performance by Year
ENERGY PARTNERS, L.P. HDH Production Performance by Year 275 ms: 250 g ra Pr o 3 225 200 200 004 BOPD 2 175 150 005 06 2 2 0 007 125 2 100 75 50 25 0 10 20 30 40 50 60 70 80 90 100 Days 16
Slide 17: Yates Field – CO2 Injection Results
ENERGY PARTNERS, L.P. Yates Field – CO2 Injection Results Areas of •CO2 Injection started March 2004, CO2 Response Injection (N2 venting) began March 2005 •Responding well count continues to increase; well performance becoming more uniform •Oil column thickness is stable CO2 Inj. Well Gas Inj. Well
Slide 18: Eastern Shelf: Katz & Claytonville
ENERGY PARTNERS, L.P. Eastern Shelf: Katz & Claytonville Katz Field: Sheep Bra Co Katz vo Avg WI 86%, NRI 73% rte sh Mtn z Pi pe n-Iri lin to OOIP 156MM e An Lubbock r ghte SACROC Current Production: 475 boepd te Wellman Es Slau Llano Claytonville: ir Centra Ada Means Hobbs Snyder l WI 66%, NRI 55%
Slide 19: CO2 Source and Transportation
ENERGY PARTNERS, L.P. CO2 Source and Transportation Growing Business Opportunities (MMcf/d) Permian Basin CO2 Deliveries 1500 Other Permian Basin 1000 Sheep Mtn Supplies pro- pro-rated on occasion KM Demand Permian Basin Demand expected to continue to increase Bravo Dome given existing project expan
Slide 20: Southwest Colorado Expansion
ENERGY PARTNERS, L.P. Southwest Colorado Expansion On Schedule for + 300 MMCFD Doe Canyon Doe Canyon Cortez Station Doe Canyon 12” Pipeline Proposed Blanco Station Placitas Station Hovenweep Yellowjacket McElmo Dome Proposed Caprock Station Moqui Cortez Station Sand Canyon Goodman Point Allred Stati
Slide 21: SW Colorado Delivered Volumes and Values
ENERGY PARTNERS, L.P. SW Colorado Delivered Volumes and Values Entitled Volumes MMCFD 600 500 400 Significant growth over past 5 years 300 200 100 CAGR: 0 2003 2004 2005 2006 2007 2008 Volumes + 7.3% Budg Price + 21% Source Price 1. 4 2008 vs 2007 1. 2 Volumes up 23% 1 0. 8 0. 6 Price up 35% 0. 4 0.
Slide 22: 3rd Party Sales Portfolio
ENERGY PARTNERS, L.P. 3rd Party Sales Portfolio Growth in Sales and Greater Diversity 2006 Actual Deliveries 219 MMCF/D Percent 3rd Party Sales 70 60 50 40 30 2008 Budget Deliveries 20 410 MMCF/D 10 0 2006 2007 2008 2009 2010 22
Slide 23: GHG Abatement Opportunities/Costs
ENERGY PARTNERS, L.P. GHG Abatement Opportunities/Costs CCS costs are on the high end of the range of options Cost Real 2005 dollars per ton CO2e Potential Gigatons/year 100 Commercial buildings – 90 HVAC equipment efficiency Residential buildings – 80 Residential buildings HVAC equipment Fuel econo
Slide 24: U.S. CO2 EOR Business
ENERGY PARTNERS, L.P. U.S. CO2 EOR Business Potential EOR CO2 Demand: Up to13.5 BCF/D Rockies potential demand: 0-1.7 BCF/D Illinois potential demand: 0-0.4 BCF/D Washington Maine Montana Great Plains Coal Plant New Hampshire North Dakota Vermont Minnesota Oregon Idaho South Dakota Wisconsin Potenti
Slide 25: Current Challenges with Carbon Capture and Storage: Power Generation Costs
ENERGY PARTNERS, L.P. Current Challenges with Carbon Capture and Storage Power Generation Costs 14 Cost of CO2 Capture/Avoided 12 11.68 and EOR Affordability (a) cents/kWh ($2007) 10.63 10 9.74 100 7.79 8 6.36 6.84 EOR Target 6 80 Price @ $60- 4 $80/b 2 60 Cost of CO2 Avoided $/tonne 0 Coal NGCC IGC
Slide 26: Current Challenges with Carbon Capture and Storage
ENERGY PARTNERS, L.P. Current Challenges with Carbon Capture and Storage Who is going to pay, and how? Electricity Consumers likely EOR projects possibly How will it be regulated? Pore space ownership Liability Jurisdiction – Federal, State What needs to be done? Financial structure/tax incentives f
Slide 27: 2008 Expansion Capital Budget - $491 Million
ENERGY PARTNERS, L.P. 2008 Expansion Capital Budget - $491 Million Easter Shelf Other SACROC Wells Staff OVHD Source/Trans. Gas Plants Yates CO2 Injection Yates Gas Handling SACROC Field Fac. Yates Field Facilities Yates HDH SACROC CO2 Inj SACROC Gas Handling __________________________ Note: 2007 bu
Slide 28: Impact of Oil Price/Volume Variance on 2008 DCF
ENERGY PARTNERS, L.P. Impact of Oil Price/Volume Variance on 2008 DCF 2008 Budget: 736 MM$ +/- 1000 BOPD SACROC 24.4 MM$ Yates 12.5 MM$ +/- 1 $/B WTI 5.3 MM$ 3rd Party CO2 Deliveries + 50 MMCF/D 7MM$ __________________________ Note: Unhedged WTI price presumed to average $81.95/b, WTI-WTS spread = $
Slide 29: CO2 Crude Production Hedge Profile
ENERGY PARTNERS, L.P. CO2 Crude Production Hedge Profile SACROC & Yates Crude Oil Production (a) Avg Hedge Px WTI & WTS $43.97 $49.38 $55.72 $62.54 $74.61 ($/Bbl) (b) 50 Net Equity Production 40 (MBboe/d) 30 20 83% 73% 71% 69% 10 22% 0 2008 2009 2010 2011 2012 Swaps Puts Unhedged % Hedged __________
Slide 30: KM CO2 Long-term Potential
ENERGY PARTNERS, L.P. KM CO2 Long-term Potential Development Plans 2008- 2008-2018 1. SACROC Base Case Forecast – Proved Reserves Case - 121 MMBOE Gross, 1.7 B$ Gross capital required includes 700 MM$ cap. CO2 DCF, MM$/Yr (b) 2. Yates Sum of the Parts Forecast Sacroc Complex Yates S&T - 81 MMBOE Gro
Slide 31: 2007 Achievements, 2008 Goals
ENERGY PARTNERS, L.P. 2007 Achievements, 2008 Goals 2007 Missed plan CO2 and Yates Volumes remain strong, SACROC Oil production lower Continued aggressive development plans S&T Business is growing both domestically and abroad SACROC project is large and complex, recovery efficiency and well failures
Slide 32: Kinder Morgan Energy Partners, L.P.
KINDER/MORGAN ENERGY PARTNERS, L.P.
Kinder Morgan Energy Partners — 2008 KMP Analyst Conference on 6ix