east tennessee natural gas 2009 customer meeting pat gibson vice president, east tennessee natural...

East Tennessee Natural Gas2009 Customer Meeting

Pat GibsonVice President, East Tennessee Natural Gas

September 2, 2009

East Tennessee Natural Gas 2009 Customer Meeting | September 2, 2009 2

Agenda• Introduction• Spectra Energy Highlights• Market Fundamentals• Business Development Update• System Operations• Marketing Update• LINK Enhancements• Q&A

East Tennessee Natural Gas 2009 Customer Meeting | September 2, 2009

Spectra Energy Highlights

Pat GibsonVice President, East Tennessee Natural Gas


Spectra Energy Asset PortfolioOne of the Largest Midstream Systems in North America

2008 Natural Gas Pipeline Throughput

3.6 TcfMiles of Transmission Pipe

19,100Miles of Gathering Pipe

62,500Miles of Distribution Pipe

37,000Storage Capacity

285 BcfRetail Customers

1.3 million


System Overview

• 1.5 Bcf/d capacity

• 1,500 miles of pipe

• Diverse market: Marketers, Producers, Electric Generation, Utilities, Industrial

• Access to diverse and reliable supply sources– Major pipeline interconnections– On-system Appalachian suppliers – On-system LNG storage - ~1.1 Bcf working gas– On-system Storage - 5.5 Bcf


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20

40

60

80

100

120

140

160

180

200

2000 2001 2002 2003 2004 2005 2006 2007 2008

MM

Dth

DirectConnectSupply

TETCO

SONAT

TennesseeGas

East Tennessee Natural Gas Projects In-service

• Driven by the need for Appalachian producers to economically deliver Appalachian production to liquid markets (i.e. Transco-Cascade Creek)

– Patriot Uprate• Creates capacity from Jewell

Ridge to Cascade Creek• Uprates MAOP on 146 miles

of 12” & 24” pipelines– Greenway Nora

• Extends mainline path from Jewell Ridge back to Nora Lateral with deliveries to Cascade Creek

• Replaces 6 miles of 8” pipeline with 24”

– Equitable-Glade Spring• Install one 7,600 HP electric

compressor unit • Creates capacity from

Nora/Jewell Ridge to Cascade Creek

• Reflects the shift in supply source

Patriot Uprate40Mdth/dIn-Service 12/2008

Equitable-Glade Springs50MDth/d capacityIn-Service 10/2008Greenway Nora

48MDth/d capacityIn-Service 12/2008

Supply source


Our Charter• We know we are successful when we are the:

• Supplier of choice for our customers• Employer of choice for individuals• Advisor of choice on policy and regulation for governments and

regulators• Partner of choice for our communities• Investment opportunity of choice for investors


Natural Gas – The Natural Choice• Naturally Clean• Naturally Abundant• Naturally Reliable• Naturally Versatile• Naturally Efficient • Natural Gas is Safe

• Natural Gas is Needed• Natural Gas is Now


Market Fundamentals

Erika YoungProject DirectorEast Tennessee Natural Gas


Spectra Energy North America Asset Mapwith Basins and Shale Plays

Data source: Potential Gas Committee (2009)•Value as of year-end 2007 (mean values)

Traditional Natural Gas Resources

1,673.4 Tcf

Coalbed Gas Resources

163.0 Tcf

Total U.S. Resources

1,836.4 Tcf

Proved Reserves (EIA)

237.7 Tcf*

Future U.S. Natural Gas Supply

2,074.1 Tcf

TCF/year

Data source: ICF International July 2009 Compass


Abundant Domestic Supply Potential

Source: ICF International July 2009 Compass


North America Regional Gas Demand (Bcf/d)

Source: ICF International July 2009 Compass

Annual Bcf/d

ETNG Specific Regions 2008 2013 2018

2008-2013

CAGR%

2008-2018

CAGR%

Northeast 9.8 10.8 11.0 2.1% 1.2%Southeast 6.1 8.4 10.4 6.7% 5.5%Mid Atlantic 2.9 3.8 4.5 5.4% 4.4%Tennessee 0.7 0.8 0.9 3.7% 3.3%Florida 2.8 3.9 4.9 6.6% 5.7%Lower 48 States 61.9 66.8 72.4 1.5% 1.6%Source: ICF International July 2009 Compass


Where Will Supply Be Sourced?

A myriad of factors drive each producers’ decision:

Capital access Acreage rights Ultimate resource base Price of liquids Capacity positions LNG

Access to infrastructure Saturated conventional gas vs

drier shale gas International vs. domestic players

No two producers are the same

Shales will help to fill supply gaps and to meet demand growth largely driven by gas-fired electric generation.

North America consumes ~ 70 Bcf/d

Existing production declines at 20% - 30% a year

14-20 Bcf/d per year of new production is required to replace annual decline

New supply is sufficient to make LNG a price-taker

$0

$2

$4

$6

$8

$10

$12

$14

$16

0 5 10 15 20Annual Replacement Gas Volumes

Mar

ing

al c

ost

of

new

wel

l p

rod

uct

ion

Indicative New Production Price Stack

Other Unconventional

Onshore Conventional

Offshore Conventional

Bcf/d/y

$

AssociatedGas

Shales

Assumes breakeven prices in low to high $3s.


Business Development Update

Bill WickmanDirectorMarketing


Appalachian Shale and CBM

Marcellus Shale

Devonian Shale

Huron, New Albany Shale

Chattanooga Shale

Coal Bed Methane


ETNG Supply - Past0.

65

MM

dth/

d

0.04

MM

dth/d

0.05

MM

dth/d


ETNG Supply - Present

0.22 M

Mdth/d

0.1

9

MM

dth

/d

TGP

+

TETL

P+CGT

1.9

MM

dth/

d

0.04

MM

dth/d

0.03 M

Mdth/d

0.40 M

Mdth/d

0.0

2

MM

dth

/d


ETNG Supply - Future


Current State of Capacity• ETNG

– Capacity from the “West End” is limited• No capacity from TGP• Capacity from TETLP only short term (through Dec-09)• Some capacity from SNG

– Long-term capacity from the “East End (3300 Line)” to western delivery points is not available. Short-term winter capacity is available.

– Nora Lateral remains fully subscribed – Limited capacity still exists on Jewell Ridge Lateral and on Stone

Mountain Line– Limited Capacity exists from Saltville/Jewell Ridge to Cascade Creek

(Transco)• Saltville Storage - Some capacity exists


Business Development Initiatives

• Continue expanding ETNG system to meet emerging market needs

• Explore and develop opportunities to enhance ETNG access to Appalachian Supply

• Incorporate existing customer growth needs into new expansion projects.


Northeast Tennessee Project (NET)• Overview

– Adds 150,000 Dth/d of firm capacity

– Creates mainline capacity from Jewell Ridge to Flatwoods Compressor Station 3306

– Extends ETNG system 8.5 miles from Flatwoods to a proposed power plant in Hawkins County

– Enhances market reach from growing Appalachian supply basin

• Schedule– 7/1/2009 completed open season– 8/4/2009 completed reverse

open season– March 2010 file FERC Certificate

application– February 2011 commence

construction– September 2011 in-service


Summer 2009 Spectra Energy Operations Review

Ryan JamesDirectorCapacity Services


East Tennessee Natural GasTop 25 Delivery Days

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Dem

and

(D

th)

06/07 07/08 08/09

2/4

1/16 1/20 3/21/15 2/5 1/21

3/311/21

11/18 2/3 2/23

1/14 1/17


East Tennessee Natural Gas Top 25 Summer Delivery Days

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

De

ma

nd

(D

th)

S06 S07 S08 S09

7/14 6/24 7/15 6/23 7/16 7/30 6/25


Seasonal Peak Demand

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

1,100,000

1,200,000

S00 & W00-01

S01 & W01-02

S02 & W02-03

S03 & W03-04

S04 & W04-05

S05 & W05-06

S06 & W06-07

S07 & W07-08

S08 & W08-09

S09 & W09-10

Dem

and

(D

th)

Summer Peak Winter Peak


Total Seasonal Deliveries

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

100,000,000

110,000,000

120,000,000

S00 & W00-01

S01 & W01-02

S02 & W02-03

S03 & W03-04

S04 & W04-05

S05 & W05-06

S06 & W06-07

S07 & W07-08

S08 & W08-09

S09 & W09-10

To

tal

De

live

rie

s (D

th)

Summer Total Winter Total

Projected


Cascade Creek Deliveries

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Jan-

07

Ma

r-0

7

Ma

y-07

Jul-0

7

Se

p-07

No

v-0

7

Jan-

08

Ma

r-0

8

Ma

y-08

Jul-0

8

Se

p-08

No

v-0

8

Jan-

09

Ma

r-0

9

Ma

y-09

Jul-0

9

Primary Secondary IT


Daily Receipt Profile (Excluding Storage)

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Jan-

08

Feb

-08

Mar

-08

Apr

-08

May

-08

Jun-

08

Jul-0

8

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan-

09

Feb

-09

Mar

-09

Apr

-09

May

-09

Jun-

09

Jul-0

9

Aug

-09

Rec

eip

ts (

Dth

)

Non-West End Supply TE, TGP, MGT, CGT


Receipts from TGP

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007 2008 2009

% o

f Y

earl

y S

up

ply

TGP Other Supply


Outages• Rural Retreat Outage Sept 21-27• Glade Spring Outage Oct 5-12• Estill Springs to Ooltewah ILI Runs: Sept 9 and 16• Estill Springs to Ooltewah DOT Investigations: Beginning

Oct 16• Bristol ILI Runs: August 25 and 27• Bristol ILI DOT Investigations: Beginning October 3• Ooltewah to 3500 ILI Run: Sept 1 and 2• Ooltewah ILI Investigations: Beginning October 26


Winter Imbalances

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

0 10 20 30 40 50 60

EHDD

Imb

alan

ces

W06-07 No MAD W07-08 No MAD W08-09 No MAD W06-07 MAD W07-08 MAD W08-09 MADW06-07 Adj Mad W07-08 Adj MAD W08-09 Adj MAD

+ Due Pipe

- Due Shipper


Winter Imbalances – MAD* Not Implemented

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

0 10 20 30 40 50 60

EHDD

Imb

alan

ces

W06-07 No MAD W07-08 No MAD W08-09 No MAD

+ Due Pipe

- Due Shipper

*Maximum Allowed Deliveries


Winter Imbalances – MAD Implemented

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

0 10 20 30 40 50 60

EHDD

Imb

alan

ces

W06-07 MAD W07-08 MAD W08-09 MAD

+ Due Pipe

- Due Shipper


Winter Imbalances – Adjusted MAD with TGP OFO

+ Due Pipe

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

0 10 20 30 40 50 60

EHDD

Imb

alan

ces

W06-07 Adj Mad W07-08 Adj MAD W08-09 Adj MADW 06-07 Adj MAD

- Due Shipper


Imbalances• ETNG has minimal linepack to absorb any overtakes or undertakes on

its system.

• ETNG relies on upstream interconnecting pipelines to help manage any imbalances.

• Flexibility of upstream interconnects will continue to be limited during times of constraints on their systems.– Anticipate upstream interconnect flexibility will be limited during peak and

near peak periods similar to previous few years.– Limitations may also occur during outages and low demand periods.


New ETNG Service Options

George SnyderDirectorETNG Marketing


Potential Service Options• Enhance Storage Delivery Option

• Creation of No Notice Service

• TETLP upstream capacity


System Operational Changes• System growth

• Evolving customer contract mix

• Expiration of FTC Agreement Containing Consent Order

– Potential tariff changes


Imbalance Management Tools• Current Tariff Based Tools

– MAD (LMSMA Agreement): • LMSMA OBA’s tied to MDDO

and scheduled usage• SDO: swing on storage

attached to system• Limited to select peak days

– SSO: upstream storage on TGP • Not currently utilized• Customers can opt in or out so

it has narrow application – Force Balance Letters: Due

shipper imbalance control only– OFO: command and control

• Operational Tools– Line Pack:

• Limited capability• System integrity put at risk to

support overtakes – Upstream OBA

• Dependent on upstream pipes’ capability

• Subjects customers to “cascading OFO’s”


Potential Service Options Considerations• Enhance Storage Delivery Option

– Year round– Not solely dependent on MAD

• Creation of No Notice Service– New No Notice rate schedule on ETNG – Supported by upstream capacity on TETLP and Moss Bluff or

Egan storage

• TETLP capacity– Alternate upstream capacity– Leverage recent expansions (Kosciusko, etc.)


Benefits of Potential Service Options• Higher priority imbalance management service

• Preservation of flexibility

• Supply diversity

• Available in 2011/2012


Next Steps• One on one customer meetings

• Assess opportunity for a new service

• Refine scope and structure of new service or enhancements


East Tennessee LINK® Update

Michael WolfCommercial Business Analyst

LINK® Systems


TeamLeaderJeff Pekar

ProductionSupportTrish MeigsSandra BryantAdriel CervantesBlanca RiveraJoyce SchubrickMichael Wolf

Project TeamElias MacalEugene BrennanJoe CaseyRobert GardnerClaude MundyMichael Wolf

LINK® Support Team• The LINK® System is continually being enhanced to reflect changing business

requirements, customer needs, and advancements in technology, with many of our enhancements prompted by our customers.

• LINK® Group support personnel average over 19 years of industry experience. This provides a unique ability to understand and address customer needs.

• All of our application designers and developers are located on-site which allows quicker turnaround time and higher quality.

• LINK® Group personnel are involved in all enhancements from inception to implementation and are also responsible for conducting LINK® Training, ensuring they are in constant contact with our customers and are attuned to their needs


Customer Service Application Enhancements

– Nomination Customization– Cross Pipeline Nomination– Password Self-Service– Activity Roll– ETNG Default Time– BA Level Nominations– Graphical ETR Maps– Graphical Capacity Release

There have been 37 meaningful customer enhancements implemented since 2007. The following are just a few of the enhancements that have been implemented since the Fall 2008 Shipper meeting:


Customer Service Application Enhancements The following enhancements are planned for the remainder of 2009:

– Auto-Confirmation improvements– Package ID Confirmation– LINK® Mobile – Priority Modeling– Auto-Renomination– Report Subscription– Know Your Account Manager (Phase II)


Customer Service Application Enhancements

– Automated Validation/Approval of Retro-Active Adjustments– Graphical Nomination Priority Communication and Modeling– Additional Capacity Release/ETR Map Enhancements– Cross Pipeline Nomination Enhancements– Ad Hoc Reporting– Projected Allocations/Imbalances– Automatic Activity Roll– Entity Level Confirmations

What enhancements do you recommend for 2010?

Potential enhancements already identified for 2010 include:


LINK® Business Strategy• Consistent with Spectra Energy’s goal of becoming the “Supplier of Choice” in

the Natural Gas Industry, the LINK® Group is dedicated to ensuring the LINK® System is the leading Customer Interface System in the Industry and that our customer service levels exceed management and customer expectations.

• To achieve these goals, we focus on:– Identifying and implementing system enhancements that benefit customers.– Integrating customer feedback into system design, quality control and

service.– Promptly addressing customer issues/concerns.– Maintaining quality measures.– Providing customer training at geographically diverse sites.– Implementing changes that increase internal efficiency and reduce costs.– Continually enhancing the technical and business expertise of internal

staffing.


Quality Improvement Efforts Continue

• Quality measures are tracked and evaluated.

• Project Managers are challenged to find 95% of all project defects.

• Employee incentive goals are keyed to quality.

• Overall defects reduced 22% over last year.

Does your experience with LINK® coincide with our tracking statistics?

91.04%

93.36%

98.08%

86.00%

88.00%

90.00%

92.00%

94.00%

96.00%

98.00%

100.00%

2007 Projects 2008 Projects 2009 Projects

Project Defects Identified During Testing


Business Continuity/Disaster Recovery

• Business Continuity/Disaster Recovery plans are in place and routinely tested.

• We have a redundant LINK® site located in Austin, Texas.

• In the event of a major operational, environmental, or other crisis situation, a secondary site for LINK® staff is located in Nashville.

Hurricane Ike Recovery in Nashville


Training

• This year, East Tennessee focused training was provided in Nashville during the week of June 15.

• Attendance was low.

• Do we need to change our offerings, locations or frequency?

• Should we consider any of the following?

– Provide East Tennessee focused training every other year unless there are major system/business changes.

– Provide training every year in Nashville, but include Texas Eastern, East Tennessee and Southeast Supply Header in the same week?


How are we doing? What can we do better?

http://link.spectraenergy.com/enhancements/suggestion.asp


LINK® Model Demo


Q & A

east tennessee natural gas 2009 customer meeting pat gibson vice president, east tennessee natural...

Documents

noweast tennessee natural

bcfeast tennessee natural

natural gas supply2

safenatural gas

needednatural gas

potential gas committee

tcfcoalbed gas resources163

regulatorspartner of