el paso pipelines
DESCRIPTION
TRANSCRIPT
![Page 1: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/1.jpg)
Pipeline Group
![Page 2: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/2.jpg)
29
Strong and Growing
Broad market presence: Growing demand regions, key supply basins, LNG terminals
Excellent connections to markets and supply
Almost $4 billion of committed growth projects with attractive risk/return profile
6%–8% long-term EBIT growth
![Page 3: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/3.jpg)
30Source: El Paso Corporation based on 2007 dataNote: Includes El Paso Corporation and El Paso Pipeline Partners, L.P.
El Paso Pipeline Group
El PasoNatural Gas
Mexico Ventures
MojavePipeline
ColoradoInterstate Gas
Wyoming Interstate
Cheyenne Plains Pipeline
TennesseeGas Pipeline
SouthernNatural Gas
Florida GasTransmission (50%)
Elba IslandLNG
19% of total U.S. interstate pipeline mileage24 Bcf/d capacity (16% of total U.S.)17 Bcf/d throughput (28% of gas delivered to U.S. consumers)
Gulf LNG(50%)
North America’s Leading Natural Gas Pipeline Franchise
![Page 4: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/4.jpg)
31
2007 Highlights
EBIT: 7% growth (YOY)
Pipeline integrity program: 75% complete
Organic growth: Six projects placed in-service, backlog increased from $2 billion to $4 billion
Acquisitions (divestitures): Gulf LNG purchase, (closed ANR sale)
Successful IPO: El Paso Pipeline Partners MLP
![Page 5: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/5.jpg)
32
Our Pipelines AccessBest Markets and Supply
RockiesSupply
+2.9
MexicoLNG+1.5
Rockies & SouthwestDemand
+1.2
MexicoDemand
+1.8
ElbaLNG+1.2
CanadianLNG+1
NortheastDemand
+2.0
Gulf ofMexico LNG
+5.6
SoutheastDemand
+3.6
Canada-3.5
Source: El Paso Corporation
2007–2016 Growth in Bcf/d
![Page 6: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/6.jpg)
33
Continued Throughput Increase% Increase 2007 vs. 2005
TGP
SNG 18%
31%
EPNG
CIG
14% overall increase
10%
Unchanged
Note: CIG includes Colorado Interstate Gas, Cheyenne Plains and Wyoming InterstateEPNG includes El Paso Natural Gas and Mojave
![Page 7: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/7.jpg)
34
The High Value of“Last Mile” and “First Mile” Service
High Value High ValueCommodityService
Integrated withSuppliers
Supply Hub
Integrated withMarkets
Point-to-PointTransportation
Wellheads
Processing
LNG
Storage
Pipelines
LDC Citygate
Direct Connects(Industrial, Power Gen)
StorageMarket Hub
Pipeline
![Page 8: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/8.jpg)
35
Excellent Connectivity in Markets
97 delivery meters into 26 LDCs
VT
NH
NY
PA NJ
CT RIMA Boston
New York
348 delivery meters in Arizona
CA AZ
UTNV
NMPhoenix
66 supply meters in the Rockies110 delivery meters along the Front Range
WY
CO
ID
UT
NESD
Denver
155 delivery meters into Alagasco and AGLAlso, FGT deep connectivity in Florida
AL GA
SC
FL
AtlantaBirmingham
![Page 9: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/9.jpg)
36
$0$250$500$750
$1,000$1,250$1,500$1,750$2,000$2,250$2,500
Revenue Stability
Reservation as a % of total revenue increases over time
61% 86% 86%86%
77%
Total SNG EPNG CIGTGP FGT
93%
Note: CIG includes Colorado Interstate Gas, Cheyenne Plains and Wyoming Interstate; EPNG includesEl Paso Natural Gas and Mojave; SNG includes Elba Island
3Q 2009
1Q 2009
4Q 2011
2Q 2010N/A
2007 reservation revenueUsage and other revenue
Projected effective dates for next rate case
$ Millions
![Page 10: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/10.jpg)
37
Contract Stability
01,0002,0003,0004,0005,0006,0007,0008,0009,000
10,00011,000
2008 2009 2010 2011 2012 Beyond
8%1,836
11%2,539
14%3,388 11%
2,755
16%3,909
40%9,740
Average remaining contract term: 5.4 years
Thousands of Dth/d as of December 2007
![Page 11: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/11.jpg)
38
Northeast Focus
Source: El Paso Corporation
TGP Concord$21 MM
Nov 200930 MMcf/d
NE Passage
TGP
Volume Change from 2007–2016
LNG+1 Bcf/d
Canada-1 Bcf/d
+2 Bcf/d
TGP Position
Excellent connectivity inNE/upstate NYExcellent supply access to diverse sourcesOrganic expansions
ConneXion NY/NJ (2006)ConneXion NE (2007)
Well placed to bring new supplies into region, especially NYC areaAppalachia supply potential
Region Demand+ 2 Bcf/d
![Page 12: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/12.jpg)
39
Southeast Focus
Region Demand
+ 3.5 Bcf/d
Elba Island
FGT
Gulf LNG
SNG
TGP
Volume Change from 2007–2016
+ 4 Bcf/d
LNG+ 5.5 Bcf/d
+ 4 Bcf/d
LNG+ 1 Bcf/d
Excellent connectivityElba a unique asset tocapture growthGulf LNG well-placedNumerous storageopportunities
SNG/FGT Position
Source: El Paso Corporation
![Page 13: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/13.jpg)
40
Coal Fired Power GenerationLosing Favor
Source: Global Energy Intelligence—Velocity Suite
Cancelled 5 GWRetired 1Converted to gas 2
Total 8 GW
Represents approx. 1 Bcf/d future gas demand
![Page 14: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/14.jpg)
41
Southeast Growth ProjectsSNG SESH—Phase I
$150 MMJuly 2008
140 MMcf/dSNG South System III/
SESH Phase II$285 MM / $35 MM
2010–2012370 MMcf/d / 350 MMcf/dTGP Carthage Expansion
$39 MMMay 2009
100 MMcf/d
TGP Bluewater/800 Line Expansion
$25 MMNovember 2008
340 MMcf/dGulf LNG
$1.1 Billion (100%)October 2011
6.6 Bcf / 1.3 Bcf/d
FGT Phase VIII Expansion$2+ Billion (100%)
2011800 MMcf/d
SNG CypressPhase II & III
$20 MM / $85 MMMay 2008 / January 2011115 MMcf/d / 160 MMcf/d
Elba Expansion III & Elba Express$1.1 Billion2010–2013
8.4 Bcf / 0.9 Bcf/d & 1.2 Bcf/d
![Page 15: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/15.jpg)
42
Leveraging LNG ExperienceGulf LNG
Pascagoula, MSElba Island LNG
Savannah, GA
Investing more than $2 billion on LNG and related projects
$1.1 billion terminal expansion andElba Express Pipeline8.4 Bcf incremental storage capacity0.9 Bcf/d incremental send-out capacityFully contracted with Shell and BGEPC with CBICurrent expansion will double facility
$1.1 Billion (100%); 50% EP$870 MM non-recourse financing completed1.3 Bcf/d base sendoutFully contracted with Angola LNG and ENIEPC with Aker Kvaerner2011 In-service
![Page 16: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/16.jpg)
43
FGT Phase VIII Added toCommitted Backlog
$2+ billion (100%)50% EP, 50% SUG500 miles800 MMcf/d capacityPA with FPL for 400 MMcf/d for 25-year term2011 in-service
Proposed Pipeline ExpansionFGT
AL GA
FL
![Page 17: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/17.jpg)
44
Southwest Focus
*Net change into/out of regionSource: El Paso Corporation
Volume Change from 2007–2016
Mojave
EPNG
Las Vegas
Phoenix
Los Angeles
Region Demand
+ 0.8 Bcf/d
-0.2 Bcf/d
+0.5 Bcf/d
Net from Mexico*+1 Bcf/d
+0.5 Bcf/d
EPNG PositionExcellent connectivity to Phoenix marketSupply diversity; excellent supply basin connectivitySignificant Mexico cross border opportunitiesStorage play
![Page 18: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/18.jpg)
45
Rockies Focus
Source: El Paso Corporation
CIG, WIC, CP Supply PositionAttached to all growth basinsMany solely connected supply sourcesWIC is lowest cost pipe
CIG Front Range PositionServes nearly the entireFront Range demandWell connected to storage facilitiesStrong customer linkage
CIGWICCheyenne Plains
Green River
Big Horn
Powder River
Piceance
Raton
San Juan
Uinta
Wind River
Cheyenne
Denver
Opal
Denver-Julesburg
![Page 19: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/19.jpg)
46
Rockies Production Growth19
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
16
DenverPiceanceUintaPowder RiverOverthrustGreen RiverWind RiverBig Horn
Forecast by 2016 (Bcf/d):
High Case 13.3Mid Case 11.9Low Case 10.4
Forecast
1990–2006: Wellhead total data from HIS database2007–2016: El Paso forecast
14
12
10
8
6
4
2
0
+3 Bcf/d
Wellhead Volumes in Bcf/d
![Page 20: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/20.jpg)
47
Rockies Growth Projects
Source: El Paso Corporation
Ruby PIpeline
~ 1.5 to 2.0 Bcf/d
~ 1.0 to 1.5 Bcf/d
Cheyenne
Opal
CIGWICCheyenne Plains
CP Coral Expansion$23 MM
July 200870 MMcf/d
WIC Medicine Bow Expansion
$37 MMSeptember 2008
330 MMcf/d
WIC Piceance Lateral$62 MM4Q 2009
220 MMcf/d
CIG High Plains Pipeline$198 MM (100%)November 2008
900 MMcf/d
CIG Totem Storage$139 MM (100%)
July 2009200 MMcf/d
Volume Change from 2007–2016
![Page 21: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/21.jpg)
48
CIG High Plains Pipeline$198 MM (100%)November 2008
900 MMcf/d
TGP Carthage Expansion
$39 MMMay 2009
100 MMcf/d
SNG South System III/ SESH Phase II
$285 MM / $35 MM2010–2012
370 MMcf/d / 350 MMcf/d
Elba Expansion III & Elba Express
$1.1 Billion2010–2013
8.4 Bcf / 0.9 Bcf/d & 1.2 Bcf/d
SNG Cypress Phase II & III $20 MM/$85 MM
May 2008 / Jan 2011115 MMcf/d / 160 MMcf/d
CIG Totem Storage$139 MM (100%)
July 2009200 MMcf/d
WIC Piceance Lateral$62 MM4Q 2009
220 MMcf/dSNG SESH –Phase I
$150 MMJul 2008
140 MMcf/d
El Paso PipelineEl Paso Pipeline Partners, LP
TGP Concord$21 MM
Nov 200930 MMcf/d
Gulf LNG$1.1 Billion (100%)
Oct 20116.6 Bcf / 1.3 Bcf/d
CP Coral Expansion$23 MM
July 200870 MMcf/d
El Paso Backlog: Large and Profitable
WIC Medicine Bow Expansion
$37 MMSep 2008
330 MMcf/d
FGT Phase VIII Expansion
$2+ Billion (100%)2011
800 MMcf/d
Capex EBITDA (run rate)* Multiple$3.9 billion $0.6 billion 7x
TGP Bluewater / 800 Ln Exp$25 MM
Nov 2008340 MMcf/d
*EBITDA based on pro-rata basisNote: As of March 31, 2008; El Paso Pipeline Partners owns 10% of SNG & CIG
![Page 22: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/22.jpg)
49
De-risking of Backlog Capital Costs
30%–35% 35%–40%
Pipe Contractor-related Right-of-wayOther
Typical Pipeline Capex Breakdown
$1.70.81.4
$3.9
ContractorCustomerEl Paso
$ BillionPrimary Party
At-Risk for Capex
25%–35%
![Page 23: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/23.jpg)
50
Managing Execution
Backlog mostly lower risk organic projects
Reasonable lead times
EP’s size/scale alliances with pipe mills/contractors
Experienced project managers (28 yrs. avg.)
EVA-like “value creation” compensation
Solid track record
![Page 24: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/24.jpg)
51
Solid Track Record
Cheyenne Plains
Elba II
LPG Burgos
Cypress Phase I
ConneXion NE
Triple TLA Deepwater
Link
Kanda Lateral
Raton Exp I
Piceance LateralConneXion
NY/NJ
Sta 317 HPYuma County
Raton Exp II
Actual Capex EBITDA (run rate)* Multiple$ 1.6 billion $220 million 7x
11% capex increase vs. original budget in challenging environment
Projects Completed in 2005–2007
*Estimated EBITDA run rate based on pro rata basis
![Page 25: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/25.jpg)
52
Large Projects in Development
Northeast Passage
$2+ billion (100%)1.1 Bcf/d capacity2012 In-serviceJoint development with Equitable
Ruby Project
$2+ billion (100%)1.2 Bcf/d capacity2011 In-servicePAs with PGE & 2 othersJoint ownership
Potential $4+ billion capex (100%)Estimate $2+ billion El Paso’s share
Several other organic projects under development
Note: Not included in backlog
![Page 26: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/26.jpg)
53
El Paso Pipeline Partners (EPB)Primary focus is natural gas transmission and storage assetsThree FERC regulated interstate pipelines:
100% of WIC: 800 miles, 2.7 Bcf/d10% of CIG: 4,000 miles, 3.0 Bcf/d10% of SNG: 7,600 miles, 3.7 Bcf/d
Demand-based revenues from high-quality customers with strong credit profilesSeveral organic expansions underway
Diverse, Growing Supply Regions High Connectivity to Growing Markets
WICCIG SNG
![Page 27: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/27.jpg)
54
EPB’s Importance to El Paso
Strategic growth vehicle for El PasoCompetitive cost of capitalFinancial flexibility to optimize capital structure
Growth
Value
Alignment
Highlight value of El Paso’s pipeline franchiseAssets receive a higher value in MLP structureProvide strong cash flow
EP and EPB’s interests are alignedEP retains 67% ownership (LP and 2.0% GP)General partnership ownership—IDRs
![Page 28: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/28.jpg)
55
Commitment to MLP Growth
Committed to growEl Paso Pipeline Partners
OrganicDrop downs from El PasoThird-party acquisition
El Paso highly incentivizedwith unit ownership, GP interest and IDR
Most pipeline assets suitable for MLP
$2.4 billion NOL
Review on ongoing basis
Proceeds available for reinvestment, share buy backs, debt reduction
![Page 29: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/29.jpg)
56
Leading Pipeline Franchise
Broad market presence
Excellent connectivity
$4 billion backlog: attractive risk/return profile
6%–8% long-term EBIT growth
EPB MLP highlighting value of pipes
![Page 30: el paso Pipelines](https://reader031.vdocument.in/reader031/viewer/2022020217/5481601f5806b501118b4679/html5/thumbnails/30.jpg)
Q&A