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Mt. Hayes Liquefied Natural Gas Storage Facility Terasen Gas (Vancouver Island) Inc.
Stakeholder Workshop for theCPCN Application
June 27th, 2007 Coast Bastion Inn, Nanaimo BC
2
Overview
• Peak shaving storage facility located near Ladysmith on Vancouver Island
• Design and operation similar to current facility located on Tilbury Island in Delta BC
• Natural Gas is transported to facility via existing pipeline system during summer months, stored as LNG and then sent out during winter peaking periods
• Current project based on 2004 proposal that was approved by the BCUC but subsequently deferred due to termination of Duke Point Power Project
Proposed LNG Storage
facility
3
Proposed Mt Hayes Facility
Capacity 1.5 BcfLiquefaction 7.5 MMcfdDeliverability 150 MMcfdCapital Investment $176 million Target In-Service Date 2011
4
Welcome – Workshop Agenda
Introduction Cynthia Des Brisay Director, Business Development & Resource Planning
Project Overview and Description Guy Wassick, Project Manager
Gas Supply Portfolio Cynthia Des Brisay
TGVI System Benefits Edmond Leung Project Assessment Manager
Economic Justification Dave Perttula Manager, Market Development
Regulatory Process Review & Next Steps Tom Loski Director, Regulatory Affairs
Questions / Discussion All
5
Terasen Inc, a Fortis Company
6
Terasen Utilities
Management Structure
Terasen Gas(Vancouver Island) Inc
Terasen Gas (Whistler) Inc
Terasen Gas(Vancouver Island) Inc
Terasen Gas (Whistler) Inc
Terasen Storage IncTerasen EnergyServices Inc
LNG Storage Facility
Shared Services Agreements
Ownership StructureTerasen Inc
A Kinder Morgan CompanyTerasen Inc
A Fortis Company
Terasen Gas Inc Terasen Gas(Vancouver Island) Inc
Terasen Gas (Whislter) IncTerasen Gas Inc Terasen Gas
(Vancouver Island) IncTerasen Gas (Whistler) Inc
Terasen Storage LtdTerasen Energy Services Inc
Terasen Gas IncTerasen Gas Inc
7
Project Justification
• 2006 Integrated Resource Plan concludes Mt Hayes is a cost effective long term resource for Terasen Gas– Provides long term storage capacity to meet core market peak day
growth on Vancouver Island and the Lower Mainland– Reduces dependence on storage facilities located in Washington
and Oregon states to serve residential and commercial customers– Avoids transmission facility additions on the Vancouver Island
transmission system and the Coastal Transmission System– On-System storage facility enhances reliability and security of
supply – Allows the utilities to better manage future industrial and
generation demand uncertainty (Island Cogen and Burrard Thermal)
8
Optimization and Allocation of Storage Capacity &
Deliverability
Benefits from Mt. Hayes Project- System Capacity and Gas Supply
TGVIGas
Supply
TGVIMt. Hayes LNG
1.5 bcf150 mmcfd
TGVISystem
Capacity
0.5
bcf
50 m
mcf
d
TGIGas Supply 1.
0 bc
f10
0 m
mcf
d
Guy WassickLNG Project Manager
Terasen Gas (Vancouver Island) Inc.
Project Description & Overview
10
Project Description & Overview
• LNG Intro & General • Site Selection and Public Consultation• Environmental Assessment• 2007 & 2004 Projects Comparison• Mt. Hayes LNG Storage Facility• Project Schedule & Cost• Project Management• Local Impacts
11
What Is LNG?
• LNG (liquefied natural gas) is natural gas cooled until it condenses into a clear liquid.
• LNG is stored at -162o Celsius (-260o F) at atmospheric pressure in a “thermos”like storage container.
• LNG takes up far less space – about 1/600th of its original volume as a gas.
• LNG (the liquid itself) is not flammable or explosive.
• When LNG is warmed it evaporates and becomes a lighter-than-air gas and is flammable only when it occurs in a 5% to 15% concentration in air.
12
Types of LNG Facilities• Peak Shaving:
LNG storage with liquefaction and vaporization capability; send out on peak days; connected to a pipeline system
• Terminals, Import & Export:Large storage capacity and continuous operation;–Export - liquefaction of a pipeline supply to load marine tankers–Import – receipt of marine tanker supply, with base load sendout to a pipeline system
• Satellite Plants:For peaking or smaller base load send out; supplied by truck transport; with vaporization capability only
• Transportation Fuel: Cars, trucks & buses
13
The LNG Industry
• There are over 240 LNG storage facilities operating in the world.
• In North America there are approximately 110 peak shaving facilities (3 located in Canada) and 4+ import/export terminals.
• LNG storage tanks are insulated tanks, operating at atmospheric pressure and constructed of 9% nickel steel; no tank of this design has failed in service anywhere in the world.
14
LNG Facilities – North America
15
Tilbury Island (Delta, B. C.)“Peak shaving” LNG Plant (1970) - 0.6 bcf
16
Tilbury Island (Delta, B. C.)“Peak shaving” LNG Plant – 0.6 bcf
17
Major Components OfPeakshaving LNG
• Liquefaction(freezer)
• Storage(thermos)
• Vaporization(hot water tank)
Preheater
Boil-off Compressor
LNG Vaporizers
LNG Tank
LNG TankerUnloading &Loading
to TransmissionPipeline System
LNG Pumps
Feed Gas
Tail Gas
DessicationLiquefaction
18
Site Selection Process
• Terasen Gas examined a strip of land 5 km on either side of the main natural gas transmission pipeline from the Courtenay area down to the Langford area to locate a storage facility of up to 1.5 bcf.
• Based on this analysis, 25 potential sites were identified.
• Further analysis of slope, geotechnical characteristics, view sheds and pipeline system hydraulics reduced potential sites to seven, then to three, and then finally the Mt. Hayes site was selected.
19
Final Site – Near Ladysmith
LNG Storage
• Proposed facility– Storage 1-1.5 bcf– Send-out 100-150
mmcf/d– Liquefaction 5 –
7.5mmcf/d
• 6km NW of Ladysmith, West of Mt. Hayes
• Located near load center on Southern Vancouver Island
20
Storage Plant Location
21
Consultation Process
TGVI undertook a comprehensive public consultation process over a period of 12 months which included the following key elements.
• Letters to stakeholders• Meetings with and presentations to stakeholders• 2 focus groups • 3 Open Houses• CVRD sponsored Public Meeting • Environmental and Social Review (ESR)• CVRD Public Hearing
Site re-zoning approved by CVRD May 26/04
22
Consultation Process - Ongoing
TGVI has maintained communication with interested parties in the community, including direct contact with:
• Cowichan Valley Regional District• Chemainus First Nation• Cowichan Tribes• Regional District of Nanaimo• Municipalities of Ladysmith and Nanaimo
TGVI’s 2006 Resource Plan which identified the LNG Storage Project as the next major capital addition was widely communicated with TGVI stakeholders.
23
LNG Storage Facility Site Details
New zone is U-1, LNG Storage Utility
• 42.7 ha (105 acres) rezoned• 12 ha (30 acres) facility fenced site• 20 ha (49 acres), western and eastern buffers,
beyond rezoned area will be retained in forestry operations
• Total 82 ha (204 acres) will be owned or controlled by TGVI
24
Private Property Purchased
Property to be purchased
142 ha
25
Rezoned Area
42 ha
Rezoned
Area
26
Proposed Storage Plant Area
Plant area
12 ha
27
Land Owned or Controlled by TGVI
Exclusion Zone
Total area 82 ha
28
2007 & 2004 Storage Projects
2004 2007Storage Tank
Storage Volume 1.0 Bcf 1.5 BcfApprox. Tank Height 40 m. 40 m.
Approx. Tank Diameter 48 m. 60 m.Facility
Facility Area 12 ha. 12 ha.Liquefaction Rate 5.0 mmcfd 7.5 mmcfd
Max. Sendout Rate 100 mmcfd 150 mmcfd
Comparison of Proposed Storage Facilities
29
Summary of Project EnvironmentalImpact Significance
Impact Significance* Impact Topic
Unmitigated Mitigated PHYSICAL ENVIRONMENT
• Geology and Soils N N • Natural Hazards N N • Water and Aquatic Systems S N • Air Quality and Climate N N
BIOLOGICAL ENVIRONMENT
• Vegetation S N • Wildlife N N • Fish and Fish Habitat N N
* N = Not Significant S = Significant B = Beneficial N/A = Not applicable, project design and construction standards incorporate these requirements U = Unknown due to lack of information
30
Summary of Project Environmental Impact Significance
Impact Significance* Impact Topic
Unmitigated Mitigated HUMAN ENVIRONMENT
• Urban and Rural Settlement N N • Transportation N N • Forestry N N • Recreation N N • Archaeology N N • Aesthetics N N • Noise N N • Domestic Water Supply N N • Economic Effects B B
* N = Not Significant S = Significant B = Beneficial N/A = Not applicable, project design and construction standards incorporate these requirements U = Unknown due to lack of information
31
Summary of Project EnvironmentalImpact Significance
Impact Significance* Impact Topic
Unmitigated Mitigated FACILITY AND PUBLIC SAFETY
• Forest Fires N/A N • Seismicity N/A N • Facility Integrity N/A N • Pipeline Integrity N/A N • LNG Transportation N/A N • Site Security N/A N
CUMULATIVE EFFECTS
• Construction N N • Operation N N
* N = Not Significant S = Significant B = Beneficial N/A = Not applicable, project design and construction standards incorporate these requirements U = Unknown due to lack of information
32
Environmental Assessment:Key Human Impact Findings
• 3 km from facility to nearest dwelling• Traffic effects on existing roads limited to
construction period• Little impact on forestry or recreation• Minimal aesthetics and noise impacts
-3 kms to nearest dwelling-Landscape is already heavily disturbed
• Unaffected domestic water supplies-Outside of aquifer recharge areas
Location of the site in an isolated area mitigates most human and safety impacts
33
Environmental Assessment:Key Biophysical Findings
The site is privately owned and has already been disturbed, reducing impacts on physical and biological environment
• Site is mostly clearcut• Site is geologically stable• Aquatic and vegetation impacts can be mitigated• Intermittent streams (non fish bearing) will be
channelized, a pond created, replacing the present bog
• No effect on fish• Little effect on wildlife
34
2003 Site Photograph
Mt. Hayes in background - view to east
Tank Location
35
Artist Rendering
36
Layers of Safety
1. Design to LNG specific standards, using proven LNG technology and materials.
2. Isolation and containment systems in all systems in the facility.
3. Safeguard systems – detection, shut-down, fire-fighting; 24/7 on-site personnel and monitoring from gas control centre.
4. Separation distances per code requirements.5. Proven operating, maintenance and emergency
standards and procedures.
37
Design/Safety Features
• Insulated, non pressurized, 9% nickel steel inner tank (like a thermos)
• 100% secondary containment around tank• Controlled buffer zone around facility • Safeguard systems (eg: fire/smoke/gas
detection, automatic/remote control, manned full time) designed for isolation/containment and shut-down
• Fire water system, water deluge and dry chemical extinguishers
LNG facilities are designed to isolate segments, contain fluid and shut down.
38
Typical 9% Nickel Steel Tank Design
39
Application Projects
• LNG Storage Facility Project:– Site Preparation, Pond, Power Line, Substation and
Restoration– LNG Storage Facility (by EPC Contractor)
• System Facilities Project:– Pipeline laterals– Gas measurement/odourization station– Reverse flow modifications on existing pipeline
system
40
LNG Storage Facility Project Schedule
• Per Application – Schedule
ID Task Name Duration
1 BCUC 5.5 mons2 Application Preparation 2 mons3 Application Approval 3.5 mons4 UPDATING PHASE 5 mons5 LNG Facility EPC 5 mons6 Contract Negotiation 2 mons7 Design Development 2 mons8 Geotechnical Evaluation 2 mons9 Cost Development 3 mons10 Owner's Project Work 3 mons11 Power Line Update 2 mons12 Site Prep Design/Contract 3 mons13 ESR Update 2 mons14 APPROVALS UPDATING 3 mons15 OGC - Facility 3 mons16 Prov Ministries - Permits 2 mons17 DECISION TO PROCEED 0 mons18 ONGOING COMMUNICATION 49 mons19 LAND 3 mons20 Exercise Site Option 0 mons21 R-O-W Acquisition 3 mons22 CONSTRUCTION 41 mons23 LNG Facility Project Work 12 mons24 Site Grading 4 mons25 Road Improvements 3 mons26 R-O-W Preparation 3 mons27 Power Line 3 mons28 LNG Facility EPC 37 mons29 Facility EPC On-Site 30 mons30 Commission & Test 3 mons31 Final Acceptance 4 mons32 FILLING 5 mons33 Operation by TGVI 5 mons34 RESTORATION 3 mons
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 42007 2008 2009 2010 2011
41
System Facilities Project Schedule
ID Task Name Duration
1 BCUC 5.5 mo2 Application Preparation 2 mo3 Application Approval 3.5 mo4 UPDATING PHASE 3 mon5 Design & Cost Update 2 mo6 ESR Update 2 mo7 OGC - Facilities 2 mo8 Prov Ministries - Permits 2 mo9 DECISION TO PROCEED - LNG 0 mo10 DECISION TO PROCEED 0 mo11 ONGOING COMMUNICATION 35 mo12 LAND 3 mon13 R-O-W Acquisition 3 mo14 TGVI PROJECT WORK 40 mo15 R-O-W's Preparation 3 mo16 Pipelines 6 mo17 Gas Msmt/Odour Faciity 6 mo18 Reverse Flow Facilities 6 mo
Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 42007 2008 2009 2010 2011
42
2007 Pre-Construction Development
• Minimize capital costs and reduce uncertainty• Communicate and prepare with stakeholders• Confirm project scheduleKey Activities:
– EPC Contract negotiation and cost/schedule development
– Update the cost estimates for non-EPC work – Update the Environmental & Social Review– Update the Geotechnical report for the 1.5 Bcf facility
43
LNG Storage Facility Project Costs
P10 P50 P901.5 Bcf LNG Facility $154.9 $165.0 $185.71.0 Bcf LNG Facility $116.3 $124.9 $140.8
P10 P50 P901.5 Bcf LNG Facility $155.7 $166.0 $186.81.0 Bcf LNG Facility $116.8 $125.7 $141.6
LNG Storage Facility Costs (Direct 2007$ millions)
LNG Storage Facility Costs (AsSpent$ millions)
44
System Facilities Project Costs
P10 P50 P90Pipelines $6.0 $6.4 $6.8
Msmt & Odour Stn $0.8 $0.8 $0.9Reverse Flow Facilities $2.1 $2.4 $2.7
Project Management $0.1 $0.1 $0.1Contingency $0.5 $1.0 $1.5
Projects for 1.5 Bcf Facility $9.5 $10.7 $12.0Projects for 1.0 Bcf Facility $6.3 $7.1 $7.9
P10 P50 P90Projects for 1.5 Bcf Facility $10.4 $11.6 $13.2Projects for 1.0 Bcf Facility $6.9 $7.8 $8.7
System Facilities Costs (AsSpent$ millions)
System Facilities Costs (Direct 2007$ millions)
45
Terasen Gas Project Management
Managing LNG Storage Facility and System Facilities Projects
• Terasen Gas team managing all the work;– Project managers– Administrative functions (purchasing, financial,
engineering, environmental, safety)– Operations (LNG and pipeline)– Communications
• LNG Facility– Experienced EPC Contractor providing a turnkey
facility– TGVI consultants for design and construction
management
46
System Facilities Project Execution
Managed by the Terasen Gas project team;• Individual projects are “typical” projects for
Terasen Gas and will be managed engaging;– Internal engineering and project management
resources– Local consultants, suppliers and contractors as
required• Similar process for TGVI directed work on the
LNG Storage Facility Project (site preparation, power line and substation, site work outside the facility fence).
47
LNG Storage Project Execution
EPC Contractor provides LNG engineering, procurement and construction execution expertise– For non-LNG specific work, typically engage local
consultants, suppliers and contractors, e.g.;• Civil, electrical, mechanical, buildings subcontracts• General construction support services• Materials and supplies locally available• Local labour and equipment resources
– For LNG specific construction, engagement of local construction resources directed by EPC Contractor’s LNG expertise;
• Local skilled trades and general labour requirements
48
Socio-Economic Impacts
LNG Storage Facility Project will positively impact, and help to diversify, the existing economy.
Total construction expenditures $165 Million• $50 M of local expenditures; $73 M in British Columbia • 290 person-years of local employment (120 direct, 170
indirect/induced)• 840 person-years of B.C. employment (180 direct, 660
indirect/induced)
Facility operation provides;• 9 full-time jobs• $150,000/year in local goods and services expenditures• Local property taxes
Gas Portfolio Benefits
50
Overview
• Sourcing Natural Gas– Upstream Supply and Transportation Resources
• Overview of gas supply planning at Terasen Gas– Meeting Future Peak Load Growth– Infrastructure projects have long lead times
• Regional Resource Options Available– Current and Future
– Best Fit for TGI/TGVI
• Market Valuation of Resources Options
51
Gas Supply Planning Criteria / Managing Risks• Build supply diversity into portfolio
Ideally have multiple suppliers, pipelines, storage resources, supply basins.Attempt to limit exposure to problems associated with a single source.
• Support regional infrastructure planning-NWGA
Work cooperatively with other utilities in the region.Ensure adequate supply.Infrastructure projects have long lead times.Add resources that reduce price volatility.
• Manage price riskStore gas in summer Use financial tools (buy at fixed prices in advance).
• Build a flexible plan
52
2006/07 TGI Normal and Design Load vs SupplyTypical Resource Fit
Create a portfolio to meet Design Peak Day RequirementsBaseload/Seasonal Pipeline for average day supply Shorter-term pipeline contracts and upstream storage for winter average day Market Area storage most efficient for short term peaks
Provide security of supply in event of failuresPipeline capacity sets a price cap
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
01/11/
2006
15/11/
2006
29/11/
2006
13/12/
2006
27/12/
2006
10/01/
2007
24/01/
2007
07/02/
2007
21/02/
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07/03/
2007
21/03/
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04/04/
2007
18/04/
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02/05/
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16/05/
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30/05/
2007
13/06/
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27/06/
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11/07/
2007
25/07/
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08/08/
2007
22/08/
2007
05/09/
2007
19/09/
2007
03/10/
2007
17/10/
2007
31/10/
2007
TJ/d
Peaking Resources
Market Area Storage/Shaped PipelineCapacityPipeline Capacity
Design
Normal
Design Peak Day
53
Meeting Future Demand Growth
• As peak day grows each year need combination of pipe/incremental shorter duration resources…..
• Regional Issues– Growth in peak day
requirements is higher than average day.
– All utilities in our region face need to add new resources to meet growth.
– Availability of Shaped Resources vs baseload
– Large infrastructure projects require longer lead times
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
01/11/
2006
15/11/
2006
29/11/
2006
13/12/
2006
27/12/
2006
10/01/
2007
24/01/
2007
07/02/
2007
21/02/
2007
07/03/
2007
21/03/
2007
04/04/
2007
18/04/
2007
02/05/
2007
16/05/
2007
30/05/
2007
13/06/
2007
27/06/
2007
11/07/
2007
25/07/
2007
08/08/
2007
22/08/
2007
05/09/
2007
19/09/
2007
03/10/
2007
17/10/
2007
31/10/
2007
TJ/d
Peaking Resources
Market Area Storage/Shaped PipelineCapacity
Pipeline Capacity
Design
Design Peak Day
54
Regional Resource Options
Upstream Supply/Storage
Pipeline Capacity
Market Area Storage
On System Resources
Pipeline Capacity
55
Market Area Storage InfrastructureOn and Off System Alternatives
• Off System Storage– JPS Expansion
• Up to 300 MMcfd• One third contracted
for avg term 32 years• Redelivery More
Expensive (30-50% of Firm NWP Rate)
– Mist Expansion• Potential for Future
Expansions• Issue of Redelivery
• On System– Tilbury LNG Storage
Expansion– Proposed Mount Hayes
Storage
On System Storage
56
Valuation of Resource Alternatives
• Downstream storage value based on – Incremental JPS Storage based
on recent expansion offering– Redelivery based on discounted
NWP TF1 transport rate• Pipeline Capacity based on
– T-South tolls with and without mitigation
– Mitigation based on full recovery of demand charges in winter
JPS + TF-1@30%JPS + TF-1@50%T-South (with mitigation)T-South (no mitigation)
Equivalent Cost for 10 Day Service
$180
$115
$131 $137
Annual Cost of Market Area Storage Deliverability to Huntingdon ($ per GJ)
57
The Need for Storage Resources
58
Gas Portfolio Summary• New Resources required to meet future peak growth
and manage expiring contractsInfrastructure projects have long lead times
• Pipeline Expansions– No Expansion on T-South in the near term– No Expansion North of JPS scheduled
• Storage Expansions– JPS Expansion and potential Mist Expansion– Firm redelivery will cost more than existing contracts
• On System resource better fit– Security of Supply– Value of resource comparable to cost of Off System Market Area
Storage and/or Westcoast Pipe
59
Valuation of Resource Alternatives
• Downstream storage value based on – Incremental JPS Storage
based on recent expansion offering
– Redelivery based on discounted NWP TF1 transport rate
• Pipeline Capacity based on– T-South tolls with and without
mitigation– Mitigation based on full
recovery of demand charges in winter
JPS + TF-1@30%JPS + TF-1@50%T-South (with mitigation)T-South (no mitigation)
Equivalent Cost for 10 Day Service
$180
$99
$130 $132
Annual Cost of Market Area Storage Deliverability to Huntingdon ($ per GJ)
60
Transmission System BenefitsEdmond Leung
Project Assessment Manager
61
Topics
• System Overview• Load Requirements• Resource Portfolio Options
– The pipeline and compression option– Local gas storage option
• Pipeline System Benefits from Local Gas Storage
62
63
Coastal Transmission System
FRASER VALLEY
-
METROVANCOUVER
-COQUITLAM
LangleyComp Stn
Nichol-Coquitlam Loop
64
Coquitlam Stn
Texada Stn
Pt. Mellon
Stn
TGVI Transmission System
65
Meeting Future Demand Growth
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
01/11
/2006
15/11
/2006
29/11
/2006
13/12
/2006
27/12
/2006
10/01
/2007
24/01
/2007
07/02
/2007
21/02
/2007
07/03
/2007
21/03
/2007
04/04
/2007
18/04
/2007
02/05
/2007
16/05
/2007
30/05
/2007
13/06
/2007
27/06
/2007
11/07
/2007
25/07
/2007
08/08
/2007
22/08
/2007
05/09
/2007
19/09
/2007
03/10
/2007
17/10
/2007
31/10
/2007
TJ/d
Peaking Resources
Market Area Storage/Shaped PipelineCapacity
Pipeline Capacity
Design
Design Peak Day
66
TGVI current System Capacity vs. Demand Projection
TGVI Design Day Forecast
0
50
100
150
200
250
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Year beginning November
Tera
joul
es p
er D
ay
TGVI Core Squamish
Whistler VIGJV
ICP System Capacity
67
Pipe & Compression Portfolio
Coquitlam Stn
Texada Stn
Pt Mellon Stn
Squamish
Coquitlam
Sechelt
Dunsmuir
Crofton Nichol –Coquitlam Loop in the Coastal
Transmission System
Watershed Loop
68
Coquitlam Stn
Texada Stn
Port Mellon Stn
Gas Storage Portfolio
Mt. Hayes Storage
Coquitlam
Squamish
Dunsmuir
69
Gas Storage Benefit – Increase operational flexibility and efficiency
• Balancing– Weather forecast error ranging from 1 to 3 oC– LNG to make up shortfall– No need to follow 3rd party nomination cycle
• Reduce line-pack requirement– Currently relies on line-pack to meet transient demands, to manage
pressure upset from unplanned compressor shutdown or valve closure
– LNG can respond quickly with lower optimum line-pack • Increase O&M windows
– Currently O/M windows requiring pipeline isolation limited by line-pack available to downstream customers
– LNG would provide a secondary source of supply to extend O/M windows.
70
Gas Storage Benefit – Increase System Reliability
Coquitlam Stn
Texada Stn
Pt Mellon Stn
71
Gas Storage Benefit – Security of Supply
Coquitlam Stn
Texada Stn
Pt Mellon Stn
72
Pipeline System Benefits from Local Gas Storage
Summary• Reduced system capital costs for both TGVI System and Coastal
Transmission System• As a short duration resource (10 peak days) to match high peak
day growth• Increase operational flexibility and efficiency (balancing, reduce
line-pack requirement, increase O&M windows)• Increase system reliability• Increase security of supply
73
Financial Justification and Rate ImpactDave Perttula
74
Financial Evaluation Approach
• Components of the Financial Evaluation– Cost of Service of the LNG Facility – Gas Supply benefits for gas customers of TGVI and TGI
• On-system storage services at competitive rates• Reduced requirement to contract for storage in US Pacific Northwest
– TGVI System Benefits• Future expansion requirements of the TGVI transmission system are
greatly reduced with the LNG facility.
– Potential TGI System Benefits• Reduced future expansion of TGI CTS (some scenarios)
75
Storage Facility Cost of Service
• Storage Facility to be built, owned and operated by as part of TGVI transmission and distribution system
• Incremental revenue requirement based on TGVI’s cost of service methodology with adjustments– Fair return for investment (TGVI ROE + 50 BP)– Adjusted depreciation schedule to reduce up front costs
2.1%
2.1%
2.1%
2.2% 2.2%
2.2% 2.3% 2.4% 2.5% 2.6% 2.
8% 3.0% 3.
1% 3.3% 3.
5% 3.8% 4.
0% 4.3% 4.
6%
4.9%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
$Milli
ons
Adjusted Depreciation
Straight Line Depreciation
76
Storage Facility Revenue Requirement
156
125
165
230
163
117
230
148
0
50
100
150
200
250
15 Year 25 Year 15 Year 25 Year
Pres
ent V
alue
Straight Line Depreciation
Adjusted Depreciation
----------6.2% Discount Rate---------- ----------10% Discount Rate----------
$Millions
77
Allocation of Cost of Service
TGVIGas
Portfolio
TGVI StorageFacility$20.8 M
TGVISystem
Capacity
Bas
ed o
n to
0.
5 bc
f50
mm
cfd
TGIMidstream B
ased
on
1.
0 bc
f10
0 m
mcf
d
$12.6 M
$1.9 M
$6.3 M
Annual Cost of ServiceYear 2015
Allocation to gas portfolios based on alternative peaking resource
Allocation to system capacity compares to P&C Alternative
Annual Revenue requirement based on Cost of Service
78
TGVI Portfolio Comparison Annual Cost
0
5
10
15
20
25
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
$ M
illio
ns
LNG Portfolio
Pipe & CompressionPortfolio
Baseline ScenarioPipe & Compression vs LNG Portfolio
79
TGVI Portfolio Comparison
P&C Portfolio
LNG Portfolio
P&C Portfolio
LNG Portfolio
115 21 72 15
230 163
(68) (48)
(135) (97)
115 49 72 33
15-Year Evaluation Period
48 14 36 11
148 117
(45) (36)
(90) (72)
48 27 36 21
6.20% 10%
TGVI System Costs
TGVI LNG Costs
($ Millions) 25-Year Evaluation Period
TGVI Gas Supply Benefit
Storage Revenues from TGI
Storage Revenues from TGI
Net Portfolio Cost
Net Portfolio Cost
TGVI System Costs
TGVI LNG Costs
TGVI Gas Supply Benefit
Baseline Scenario
80
Sensitivity Analysis
Scenario Assumptions
Baseline Scenario • LNG and TGVI System costs based on P50 Capital Costs and TGVI Baseline Demand scenario (no firm service to ICP)
• Gas Supply Benefits based on JPS + discounted TF1• TGI Revenues based on Storage & Delivery Agreement
Base + ICPScenario
• LNG and TGVI System costs based on TGVI Base + ICP Demand scenario which includes firm service to ICP
• All other assumptions same as Baseline Scenario
Low Core DemandScenario
• LNG TGVI System Costs based on low core demand forecast and no firm service to ICP
• All other assumptions same as Baseline Scenario
High Cost Scenario • LNG and TGVI System costs based on P90 Cost Estimates and TGVI Baseline Demand
• All other assumptions same as Baseline Scenario
Upside Case • LNG and TGVI System Costs based on P10 Cost Estimates and TGVI + ICP Demand Scenario
• Gas Supply Benefits based on avoided WEI Costs • TGI revenues the same as Baseline Scenario
81
Net Portfolio Cost Comparison
$0
$20
$40
$60
$80
$100
$120
$140
$160
$ M
illio
ns
Pipe & Compression Portfolio
LNG Portfolio
25 Year 15 Year 15 Year25 Year
Baseline Scenario High Cost Scenario
115
49 48
27
135
74
57
43
82
0
20
40
60
80
100
120
140
160
180
Baseline Scenario Base + ICPDemand Scenario
Low Core DemandScenario
High CostScenario
Upside Scenario
$ M
illio
ns
Pipe & Compression Portfolio
LNG Portfolio
66
69
32
6187
Net LNGBenefit
Net LNGBenefit Net LNG
Benefit Net LNGBenefit
Net LNGBenefit
Present Value @ 6.2%, 25 Year Evaluation Period
Sensitivity Analysis
83
Levelized Allocated Average Delivery Cost ImpactBaseline Scenario - Core Market
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
8.0
8.1
$ / G
J
15 Year Evaluation Period 25 Year Evaluation Period
Pipe & Compression
LNG
84
Allocated Average Delivery Costs Comparison
LNG LNG Pipe & LNG LNG Pipe & Approach 1 Approach 2 Compression Approach 1 Approach 2 Compression
Core Market 7.65 7.52 7.75 7.77 7.63 8.02
Firm Transport 0.96 1.14 1.17 0.94 1.13 1.17
Core Market 7.35 7.08 7.56 7.32
Firm Transport 0.83 1.07 0.85 1.08
Impact of Firm Service to ICP to 2018
Levelized Allocated Cost 2011 - 2032
($/GJ)
Baseline Scenario
Levelized Allocated Cost 2011 - 2022
($/GJ)
Comparison of Levelized Allocated Average Delivery Costs Excluding Gas Costs
85
Regulatory Process ReviewTom Loski
86
Request for approval from BC Utilities Commission
• Certificate of Public Convenience and Necessity – Pursuant to Section 45 of the Utilities Commission Act – TGVI
• Storage Services Agreement– Pursuant to Section 61 of Act – TGVI– Pursuant to Section 71 of Act – TGI
• Fair return on Equity• Adjusted Depreciation Schedule
– Pursuant to Section 56 of Act – TGVI
• Development cost recovery• Written hearing process
87
Regulatory Process Steps Completed
1. Application Submitted to BCUC Tuesday, June 5
2. BCUC Procedural Order No. G-63-07 Friday, June 8
3. Public Notice Friday, June 15
4. Intervenor Comments on Procedure Monday, June 25
5. Workshop Wednesday, June 27
88
Project Description & Overview
Questions?
TGVI MT. HAYES LNG STORAGE FACILITY WORKSHOP
Held in Nanaimo on June 27, 2007
At the Coast Bastion Inn
Terasen Presenters and Attendees
• Stan Ballance
• David Bodnar
• Cynthia Des Brisay
• Bruce Falstead
• Carol Greaves
• Chris Hyland
• Rose Jacques
• Edmond Leung
• Tom Loski
• Don Wallace
• Guy Wassick