Apa Group · ASX:APA

Apa — Corporate Update (June 2010)

48 slides from Apa's corporate update, Jun 16, 2010

1. Slide 1: APA Group Presentation – Expanding NSW gas infrastructure

   For personal use only ASX RELEASE 16 June 2010 The Manager Company Announcements Office Australian Securities Exchange 4th Floor, 20 Bridge Street Sydney NSW 2000 Electronic Lodgement Dear Sir or Madam Company Announcement I attach the following announcement for release to the market: • APA Group Pr

2. Slide 2: Disclaimer

   APA2010SiteVisit For personal use only ExpandingNewSouthWalesgasinfrastructurefor agrowingenergymarket WaggaWaggaandYoungNSW June2010 Disclaimer TheinformationcontainedinthispresentationisgivenwithoutanyliabilitywhatsoevertoAustralianPipelineTrustor APTInvestmentTrustoranyofitsrelatedentities(collec

3. Slide 3: APA Group overview and strategy

   APA2010SiteVisit For personal use only APAGroupoverviewandstrategy MickMcCormack ManagingDirectorandCEO 3 FromIPOinJune2000… June2000 June2010 Infrastructureowner Integratedoperating andmanager business Market $0.49billion $1.95billion capital S&P/ASX100 Assets $1.3billion >$8billion owned/ 7,000km

4. Slide 4: Quality infrastructure portfolio across Australia

   QualityinfrastructureportfolioacrossAustralia For personal use only 5 Successfulstrategyimplementation „ FromIPO ”focusongastransmissionassets… pursuedevelopmentandacquisitionofothergastransmissionassets” „ MajorphasesinAPA’sgrowth APA FY2010 „ Acquiredminorities, achieving100%ownership „ Acquisitio

5. Slide 5: Building on APA's strengths

   BuildingonAPA’s strengths „ Unrivalledgasassetfootprint Australiangastransmissionpipelinesownersbylength(km) – largesttransporterofnaturalgas Prime acrossAustraliabypipelinelength, Infrastructure 1,105* For personal use only capacityandvolume Duet 1,112* SingaporePower 1,424 „ Integratedportfolioofg

6. Slide 6: APA strategy for sustainable, profitable growth

   APAstrategyforsustainable,profitablegrowth Continuetomaximisevalueforstakeholders „ FocusingongasinfrastructureassetsinAustralia’sgrowinggasmarketandenhancing APA’sportfolioofassets For personal use only – Abundantdomesticgasreserves – Increasingdemandfornaturalgas, inparticularforpowergeneration –

7. Slide 7: Commercial drivers underpinning APA's growth

   APA2010SiteVisit For personal use only CommercialdriversunderpinningAPA’sgrowth RossGersbach GroupManagerCommercial 11 Eastcoastenergymarket „ Essentialingredientsforpipelinegrowth– supplyanddemand „ Abundanceofindigenousgasreserves – conventional,coalseamgas,tightgas,shalegas „ Increasinguseofnatur

8. Slide 8: Abundant east coast gas supply

   Abundanteastcoastgassupply EastAustraliaprovenandprobablegasreserves(PJ) End2000 End2000 End2009 End2009 Vic(Gippsland,Bass,Otway) 5,907 6,709 SA(Cooper) 3,435 1,151 For personal use only Qld(Bowen/Surat) 108 204 QLDcoalseamgas 0 23,458 NSWcoalseamgas 0 2,469 TOTAL 9,450 33,990 23,662PJ 3,435PJ 108

9. Slide 9: Natural gas use by state

   Naturalgasusebystate Uniquestatecharacteristicshasinfluencedgasdemand,andcontinuestoimpactfuturedemand Eas te rn Aus tralia His toric Gas Cons um ption by State s „ VICTORIAhasthehighestgasdemand.Rapid 300 growthinthefirst10yearsasthetransmissionand distributionsystemswereextendedthroughthe For pers

10. Slide 10: Increase in gas fired power generation

    Increaseingasfiredpowergeneration Locationofnewandproposedgasfiredgeneration „ Reflectstheshifttolesscarbonintensivefuels. APAassetsandinvestments „ Growthinelectricitygeneratedfromgas(1) Otherpipelines Proposed/recentlyconstructed – Averagegrowthrate– 5%pa For personal use only gaspowergeneration –

11. Slide 11: Clean energy policies encouraging gas use

    Cleanenergypoliciesencouraginggasuse Nationalpolicies „ Renewableenergytarget(RET)– 45,000GWh/aby2020 – 41,000GWh/aofelectricitygenerationtobesuppliedbyrenewablefuel– hydro,wind,solaretc(1) – Windgenerationwilldominate– estimate7.000MWofnewinvestment For personal use only – Gasfiredgenerationtobacku

12. Slide 12: Development and growth opportunities

    Developmentandgrowthopportunities Opportunitiesdrivenbypowergeneration,supplysecurityandtransitiontocleanerfuels All pipelines Queensland CSG/LNG - Expansion opportunities for gas - New pipeline and gas storage transportation and gas storage opportunities For personal use only Carpentaria Gas Pipeli

13. Slide 13: Economic regulation of APA's pipelines

    EconomicregulationofAPA’s pipelines „ Regulationoverview „ Pipelinecoverage For personal use only „ APAassetsandregulation „ Regulationandpipelineexpansions „ Generalregulatoryupdate 23 Regulatoryoverview Regulator APAAssets Comment Australian Priceregulated „ TheAERisresponsiblefortheeconomicregula

14. Slide 14: Regulatory coverage of Australian pipelines

    RegulatorycoverageofAustralianpipelines „ Reducedregulatorycoverage – Mostpipelinesontheeast For personal use only coastareuncovereddueto interconnectionofpipelines andincreasedsupply optionsformarkets „ Coverageofgreenfield pipelines – Applyfor15yearexemption fromcoverage „ Coverageofpipeline expan

15. Slide 15: Regulatory assets

    Regulatoryassets 50%ofrevenueisattributabletoAPA’spriceregulatedassets APA’s priceregulatedassets RegulatedRevenueSplit „ VictorianTransmissionSystem(51%ofFY10forecasted CentralWest CentralRanges regulatedrevenue) For personal use only Pipeline1% Pipeline1% „ APAGasNetwork(22%) Envestra Distribution

16. Slide 16: General regulatory update

    Generalregulatoryupdate „ Differencesbetweeneconomicregulationofgasandelectricityassets „ Regulatoryandmarkettrends For personal use only „ GoldfieldsGasPipeline– ERAfinaldecision 29 Meetingcustomerrequirements Creatingvaluebydeliveringservicesthatmeetcustomerneeds „ Driversoffuturegrowthandchangein

17. Slide 17: Drivers of future growth and change in the market

    Driversoffuturegrowthandchangeinthemarket „ Increasinggassupplyanddemand „ Gasfiredpowergeneration For personal use only „ Climatedrivenlegislativechanges „ CoalseamgasforLNGexport anddomesticuse „ ShortTermTradingMarket(STTM) „ Verticallyintegratedplayers „ Competition … andmostimportantly, „ Custo

18. Slide 18: APA Commercial team aligned to customers

    APACommercialteamalignedtocustomers „ Nationalteamstructure – Salesteamsresponsibleforcustomerportfolios – ‘National’ contractsmanagementand For personal use only commercialoperations – Supportedbynationalbusinessprocesses „ Customerfocus – Accountmanagementmodel – ‘Wholeofcustomer’ view „ Serviceex

19. Slide 19: What is the STTM?

    WhatistheSTTM? „ Marketforwholesaletradingofgasatdefined hubs(SydneyandAdelaide) „ AustralianEnergyMarketOperator(AEMO) For personal use only operatestheSTTM „ Eachhub“scheduled” and“settled” separately „ Gasistradedadayaheadoftheactualgasday atdayaheadprice(“exantemarketprice”) „ Marketsettlesdaily

20. Slide 20: Why customers want storage services

    Whycustomerswantstorageservices Storageservicesprovidethemeanstomanageliabilitiesand captureopportunities „ Peaking For personal use only – shortburstsofhighdeliverabilityrequiredduetoshorttermmarketdrivers(spikesin demand) „ Loadfactormanagement – storinggasduringlongperiodsoflowdemandanddelivering

21. Slide 21: APA's storage capability

    APA’sstoragecapability Currentstoragecapabilityandexpansionopportunities „ Mondarra undergroundgasstoragefacility(WesternAustralia) For personal use only – Significantwithdrawalcapacityexpansionproposedtomeetmarketdemand – StartofinterconnectedpipelinesysteminWA „ LNGstoragefacility(Victoria) – Orig

22. Slide 22: Understanding MSP capacity and services

    UnderstandingMSPcapacityandservices Thoughputonly capacity „ Maximumcapacity(preexpansion(1)) 380TJ/d „ Currentmaximumcapacity(postexpansion(1)) For personal use only 420TJ/d – Currentcontractedforwardhaul approx320TJ/d – Otherservices(egstorage) remainingcapacity(100TJ/dequiv) „ Maximumcapacitypost

23. Slide 23: MSP well positioned into the future

    MSPwellpositionedintothefuture FutureMSPrevenuegrowthsupportedby: „ Scaleeconomicsandextensivefootprint For personal use only „ Queenslandcoalseamgas(CSG)intoNSW „ NSWCSGintoSydney,regionalandothermarkets „ GasflowintoandfromVictoriaviathesouthernlateral „ GrowingpresenceofgaspoweredgenerationinNSW

24. Slide 24: Example: Southern lateral expansion

    Example:Southernlateralexpansion IncreasedstoragecapacityontheMSPsouthernlateral „ ApprovalbyDepartmentofPlanningon8June2010,projectcompletebyendof September For personal use only „ Increasestoragecapacityby30TJto72TJ „ Gascanbedeliveredto powerstationthroughtheday andrefilledovernight „ Totalcapita

25. Slide 25: Delivering the vision of the east Australian gas grid

    DeliveringthevisionoftheeastAustraliangasgrid Aseamlesssalesandserviceexperienceforallourcustomers „ “Infrastructure” Layer – existingpipelines(APAandothers)formgridbackbone For personal use only – continuedenhancementofexistinginfrastructurebyAPAandothers 1 2 „ “Service” Layer 3 – Technologyandproc

26. Slide 26: Operations

    APA2010SiteVisit For personal use only Operations StephenOhl GroupManageroperations 49 Operationsdivisionkeyfocus „ HS&EExcellence – ToachieveHS&EExcellencethroughthereinforcementofasafetycultureandtheuseand improvementofconsistent,robustsystemsacrossAPAnationallytargetingcontinuous improvementinHS&

27. Slide 27: Operations division functions

    Operationsdivisionfunctions AssetManagement& Transmission Networks Engineering DaytoDayFunctions DaytoDayFunctions DaytoDayFunctions • ResponsibleforallAPAhighpressure • ResponsibleforAPANetworksand • StandardisingAssetManagement pipelinesandalsooperationofEII management,operation,etcofEnvestra acro

28. Slide 28: Developing a new project

    Developinganewproject Commercial 1. IdentifyOpportunity Operations Commercial 1. Operateasset 1. Ensureongoing For personal use only compliancetoGTA requirements AssetManagement& Engineering Operations 1. Scopeproject 2. Preliminarycosts 1. SupportAM&E AssetManagement Projects Commercial &Engineerin

29. Slide 29: Types of pipeline expansion options

    Typesofpipelineexpansionoptions „ Alterationofexistingpipelineoperatingparameters – Canthepipelineinlet/operatingpressurebeincreasedorthepipelineoutletpressure/s bereduced?(doublingthepressuredropacrossapipelinecanincreasetheflowcapacity byuptoapproximately30%) For personal use only – Cantheinletoro

30. Slide 30: Expansion case study: Roma Brisbane Pipeline

    Expansioncasestudy:RomaBrisbanePipeline „ Commissioned1969asfullfreeflowpipelinewithtwodeliverypoints(397kmof250mmNBClass600(7.2MPa), 38kmof300mmNBand2kmof200mmNBClass300(4.2MPa). „ Addedsix750KWcompressorstationsprogressivelyfrom1982to1987. „ Added414kmof400mmNBClass600(9.2MPa)loopinginsixstagesfro

31. Slide 31: Young Wagga Pipeline Looping

    YoungWaggaPipelineLooping For personal use only 59 YoungWaggaPipelineLooping(cont) Background „ The131kmYoungWaggalateralis300mmNB,Class600(originally8.1MPa)andinitiallyoperatedatupto 6.0MPafollowingcommissioningin1981. „ The88kmWaggatoCulcairnInterconnectis450mmNB,Class600(10.2MPa)commissionedin199

32. Slide 32: Young Wagga Pipeline Looping (cont)

    YoungWaggaPipelineLooping(cont) Projectdetails „ TheYoungWaggaloopingdesign(firststage)is61kmof450mmNB,Class600(10.2MPa) pipeline,allwithintheexistingpipelineeasement For personal use only „ Milestonestodateare: – 23March2009 ProjectDevelopmentApplicationsubmittedtoNSWGovernment – 15September2009 Te

33. Slide 33: Building a new pipeline

    Buildinganewpipeline For personal use only 63 YoungWaggaPipelineLooping(cont) 64

34. Slide 34: NSW Victoria Interconnect

    NSWVictoriaInterconnect Background „ TheNSWportionoftheInterconnectwasconstructedbyEastAustraliaPipelineLtdas88km of450mmNB,Class600(10.2MPa)pipelinefromWaggatoCulcairnandcommissionedin For personal use only 1998.Capacitylimitedbythe300mmNBYoungtoWaggapipeline. „ TheVictorianportionoftheInterconnect

35. Slide 35: NSW Victoria Interconnect (cont)

    NSWVictoriaInterconnect(cont) For personal use only 67 NSWVictoriaInterconnect(cont) 68

36. Slide 36: Moomba Sydney Pipeline capacity upgrade

    MoombaSydneyPipelinecapacityupgrade TheMoombaSydneyPipelinecapacityupgradeismadeupofanumberofprojects: „ A5yearprogramofintegrityupgradestoallowtheoperatingpressureofthepipelinetobe increased– deliversincreasedthroughputandstoragecapacity. For personal use only „ Constructionofanewcompressorstationa

37. Slide 37: East coast transmission operations

    Eastcoasttransmissionoperations „ EastCoastOperations „ YoungSiteVisit For personal use only 71 Whatwedo:Transmission Manageandoperate „ APAGroupownedassetsacrossAustralia(1) „ Envestra(APA 30.2%)GasDistributionNetworksandpipelinesinSouthAustralia,Victoria, SouthernNSW,QueenslandandtheNorthernTerrit

38. Slide 38: Operational overview – NSW operations

    Operationaloverview– NSWoperations „ ManageandoperatetheMoomba SydneyPipeline,includinglaterals For personal use only „ ManagerandoperatetheEthane Pipelinewhichrunsinthesame easementastheMSPmainline „ MainbaseatYoung,whichincludes controlcentre „ MinorbasesatCobarandWilton „ Compressorsat: – Youngan

39. Slide 39: Bulla Park Compressor Station

    BullaParkCompressorStation GasCompressor EthanePump For personal use only Station Station FromMoomba ToSydney 75 Laterals Lateralsto: „ NorthernLateral (YoungtoOrange/Lithgow) „ SouthernLateral(Youngto Wagga/Griffith) „ CentralWest(Marsdento Dubbo) „ CentralRanges(Dubboto Tamworthandoperatedby Jemen

40. Slide 40: NSW – Victorian Interconnect

    NSW– VictorianInterconnect „ InterconnecttoVictoriais bidirectionalinflow For personal use only „ CulcairnCompressor currentlycompressesgas fromSouthtoNorth „ APAoperationresponse toCulcairncanbefrom eitherVictoriaorNSW 77 Nationalaerialpatrol 78

41. Slide 41: East coast gas security

    Eastcoastgassecurity „ Priorto1998therewerenoeastcoast interstatepipelineconnections PipelinescurrentlyAPAowned/operated Otherpipelines Gasproductionfacility „ TheNSWtoVictoriainterconnectionwas For personal use only commissionedearlyinSeptember1998and providedemergencygastoVictoriaduringthe Longfor

42. Slide 42: Young Control Centre

    YoungControlCentre „ Mainlinecompressor stationandlateral Ethane Compressor For personal use only compressorstation Odourant Scraper Station Plant station „ Odourantfacility „ Gasscraperstation GasScraper „ Workshop station „ NSWGasControl room „ YoungHub YoungHub ControlRoom& „ Ethanescraper Worksh

43. Slide 43: Visit to Young Control Centre

    NSWSCADAsystem For personal use only 83 VisittoYoungControlCentre „ Uponarrival – GotoAdministrationBuilding – Freshenup,teaandcoffee „ SafetyBriefing „ Sitetours– 3groupswillsimultaneouslyvisit/inspect – ControlRoom – MaintenanceFacilities – CompressionEquipment „ Intheeventofanemergencyalarm – Ass

44. Slide 44: Investment criteria

    APA2010SiteVisit For personal use only Fundinggrowth PeterFredricson ChiefFinancialOfficer 85 Investmentcriteria APArigorouslyassessesanypotentialinvestment/divestmentfrom astrategic,riskand economicandfundingviewpoint Strategic „ APAremainsfocusedongasandrelatedinfrastructuretodeliver valuetosecuri

45. Slide 45: Capital management strategy

    Capitalmanagementstrategy „ ManagingAPA’sbalancesheettomaintainminimumBBB/Baa2investmentgradecredit ratingmetrics „ DRPandSPPequityfundingsupportsgrowthcapitalexpenditureandlowerlevelinvestment For personal use only „ Significantcapitalinvestmentswillbesupportedwithequityto maintaininvestmentgrade r

46. Slide 46: Funding for FY10 growth capex (estimate)

    FundingforFY10growthcapex(estimate) CapitalexpenditureforFY10 Organicgrowthprojects $110million For personal use only BerwyndaleWallumbillaPipelineacquisition $83million HDFequityinterest(17%) $114million $307million Funds Freeoperatingcashflowretainedinthebusiness (OCFlessdistributionsandSIBcapex)

47. Slide 47: Concluding remarks

    APA2010SiteVisit For personal use only Concludingremarks MickMcCormack ManagingDirectorandCEO 91 Concludingremarks „ NaturalgasisprovidingmoreofAustralia’senergy – Useofnaturalgasisexpectedtomorethandoubleoverthenext 20years,withgasfired powergenerationakeygrowthdriver „ ByvirtueofitsportfolioAPAhas

48. Slide 48: Celebrating a decade of delivering Australia's energy

    Celebratingadecadeof For personal use only deliveringAustralia’senergy Forfurtherinformationcontact ChrisKotsaris InvestorRelations,APAGroup Tel:+61296930049 Email:chris.kotsaris@apa.com.au orvisitAPA’swebsite www.apa.com.au

APA Group — Corporate Update (June 2010) on 6ix