natural gas pipelines - responding to changing...

Natural Gas Pipelines -

Responding to Changing Supply Shannon Spencer, Energy Transfer

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This presentation may contain statements about future events, outlook and expectations of Energy

Transfer Equity, L.P. (ETE), Energy Transfer Partners, L.P. (ETP), Sunoco Logistics Partners L.P.

(SXL), Southern Union Company, and Regency Energy Partners LP (RGP) (collectively, the

“Companies”), all of which are forward-looking statements. Any statement in this presentation that is

not a historical fact may be deemed to be a forward-looking statement. These forward-looking

statements rely on a number of assumptions concerning future events that are believed to be

reasonable, but are subject to a number of risks, uncertainties and other factors, many of which are

outside the Companies’ control, and which could cause the actual results, performance or

achievements of the Companies to be materially different. While the Companies believe that the

assumptions concerning future events are reasonable, we caution that there are inherent difficulties in

predicting certain important factors that could impact the future performance or results of our

businesses. These risks and uncertainties are discussed in more detail in the filings made by the

Companies with the Securities and Exchange Commission, copies of which are available to the public.

The Companies expressly disclaim any intention or obligation to revise or publicly update any forward-

looking statements, whether as a result of new information, future events, or otherwise.

All references in this presentation to capacity of a pipeline, processing plant or storage facility relate to

maximum capacity under normal operating conditions and with respect to pipeline transportation

capacity and are subject to multiple factors (including natural gas injections and withdrawals at various

delivery points along the pipeline and the utilization of compression) which may reduce the throughput

capacity from specified capacity levels.

Legal Disclaimer

Energy Transfer – Company Overview

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Energy Transfer began in 1995 as a small intrastate natural gas pipeline

operator and is now one of the largest and most diversified investment

grade master limited partnerships in the United States.

The Energy Transfer family of partnerships consists of the following

publicly traded partnerships:

• Energy Transfer Partners, L.P. (NYSE: ETP)

• Energy Transfer Equity, L.P. (NYSE: ETE)

• Regency Energy Partners, L.P. (NYSE: RGP)

• Sunoco Logistics Partners, L.P. (NYSE: SXL)

Energy Transfer Assets - 2002

Approximately 3,400 miles of natural gas pipelines

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Energy Transfer Today

A Leading Midstream Energy Platform

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ETP Assets

Pipelines

Processing

Storage

Treating

SXL Assets

Pipelines

Terminals

SUG Assets

Pipelines

Storage

Trunkline LNG

Note: Assets Shown Exclude SUN Retail and SUG Distribution

RGP Assets

Pipelines/

Gathering

Processing

More than 65,000 miles of natural gas, NGL,

crude, and refined products pipelines

Agenda

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The recent unprecedented growth in U.S. natural gas supply has altered the

interstate pipeline grid and traditional flow patterns

How has Energy Transfer responded and what is being planned?

We’ll look at production growth over the last five years in several key areas

and the resulting:

• Pipeline Expansions

• New systems

• Interconnects on existing systems

• Flow changes

• Asset conversions

Energy Transfer/Southern Union

Legacy Interstate Assets (1)

Panhandle Eastern Pipe Line

• 6,500 mile system

• 2.8 Bcf/d combined capacity

• 4 storage fields ~ 55 Bcf

(1) Pipeline systems in operation prior to 2008

Trunkline Gas


• 1.5 Bcf/d mainline capacity

• 1 storage field ~ 12.9 Bcf

Sea Robin Pipeline

• 963 mile offshore system

• 0.85 Bcf/d - East

• 1 Bcf/d – West (previously TGC)

Transwestern Pipeline

• 2.700 mile system

• 1.225 Bcf/d mainline capacity

Florida Gas Transmission


• 3.1 Bcf/d capacity

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Energy Transfer Interstate Assets

Trunkline LNG Import Terminal

• One of the nation’s largest LNG import terminals

• Located in Lake Charles, Louisiana

• 2.1 Bcf/day of peak send out capacity; 9.0 Bcf of storage

State of the Markets

Five Years Ago:

• High, volatile gas prices

• Economic downturn reducing gas

demand

• Imports are ~13% of the U.S. total

supply mix (1)

• Domestic production growing

• Dry shale gas

• Concentrated in TX, LA, AR

• Nearly 11% of total U.S. supply

comes from the Gulf of Mexico (1)

• Insufficient pipeline takeaway

capacity from new supply areas

Today:

• Sustained low gas prices

• Rebounding gas demand in gas-

intensive industries

• Imports are only ~6% of the U.S. total

supply mix (1)

• Record levels of domestic production

• Drilling shifts to liquids-rich areas

• Production growth in the Northeast

• Only ~6% of total U.S. supply comes

from the Gulf of Mexico (1)

• Numerous new “supply push” interstate

systems; insufficient midstream

infrastructure

(1) Source: EIA. “Today” represents 2012 annual average. 9

Production Growth

Barnett Shale

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• Started the nation’s shale gas boom; has already

produced more than the original reserve estimate

• Required new pipeline capacity out of the area

• A new study foresees slowly declining production

lasting through the year 2030 and beyond

Source: WoodMackenzie

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Pipeline Expansion

Barnett Shale

Midcontinent Express Pipeline

• Placed in service in 2009

• 500 miles; 1.4 Bcf/day capacity

• Access to supply from the

Midcontinent region and the

Barnett Shale

• Interconnects with multiple

interstate pipelines serving the

Midwest, Northeast, Southeast and

Mid-Atlantic (1)

• 50/50 joint venture between

Energy Transfer and Kinder

Morgan

• Operated by Kinder Morgan

Perryville Hub

(1) ANR, CenterPoint, Columbia Gulf, Destin, NGPL, Sonat,

Tennessee, Texas Eastern, Texas Gas, Transco

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Production Growth

Fayetteville Shale

• Shorter “learning curve” as drilling techniques

learned in the Barnett were applied, allowing

production to ramp up quickly

• Required new pipeline capacity out of the area


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Pipeline Expansion

Fayetteville Shale

Fayetteville Express Pipeline


• 185 miles of pipeline

• 2 Bcf/day capacity

• Originates in the heart of the

Fayetteville Shale production area

• Interconnects with four interstate

pipelines serving the Midwest (1)

• 50/50 joint venture between Energy

Transfer and Kinder Morgan

(1) ANR, NGPL, Texas Gas, Trunkline

Production Growth

Haynesville Shale

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• Wells produce dry gas at extremely high rates

• Existing pipeline capacity was insufficient to

handle unprecedented production levels

combined with Barnett production

• Drilling has dropped off significantly due to low

gas prices, but still the second largest

producing play in the country


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Pipeline Expansion

Haynesville Shale

Perryville Hub

Tiger Pipeline


• 195 miles; 2.4 Bcf/day capacity

• Originates near the Carthage, TX hub;

can access Barnett Shale and

Haynesville Shale supplies

• Delivers to pipelines serving the Midwest,

Northeast and Southeast (1)

• Interconnects with Arcadia and Cadeville

Storage

(1) ANR, Columbia Gulf, SESH, Tennessee, Texas

Eastern, Texas Gas, Trunkline

Pipeline Expansion

Energy Transfer Overview

Fayetteville Express Midcontinent Express

Tiger

Shale Plays

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• Many new pipeline systems were constructed in the last five years to transport

production out of new supply areas:

Source: EIA. Excludes expansions and laterals on existing systems.

• Mostly large diameter, single-line systems with multiple interstate pipeline delivery

points

• Most of these “supply push” pipelines were not built into distinct market areas, but

into the pipeline grid or a centralized hub

Origin

Capacity

(Bcf/day)

Barnett/Haynesville Shale 6.4

Fayetteville Shale 4.0

LNG Terminals 6.6

Rockies 5.2

Other 2.9

Total 25.1

Pipeline Expansion

We Weren’t The Only Ones …

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Pipeline Expansion

Perryville Hub

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• Owned and operated by

CenterPoint Energy

• Access to gas supply from:

• Gulf Coast and offshore

• Barnett Shale

• Eagle Ford Shale

• Haynesville Shale

• Midcontinent region

• Marcellus (via backhaul)

• Gas can be delivered to

multiple consuming areas:

• Midwest

• Northeast

• Florida

• Other Southeast states Southeast Supply Header

(SESH)

Pipeline Expansion

Accessing Florida Markets

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Southeast Supply Header (SESH) • 274-mile pipeline

• Jointly owned by Spectra

Energy (operator) and

CenterPoint Energy

• Capacity of 1 Bcf/day

• Transports gas from the

Perryville Hub area to

various interstate

pipelines

Gas is picked up by

FGT and Gulfstream for

delivery into Florida

http://www.spectraenergy.com/

Changing Supply


20 * Pending

Zone Interconnect Supply Access

Capacity

(MMcf/d) Enbridge Orange Barnett 200

1 Enterprise Magnet Withers Eagle Ford 100

Enterprise Pledger Eagle Ford 200

2 Enterprise Acadian Frisco Haynesville 1,000

Columbia Gulf Lafayette (via Regency) Haynesville 300

Gulf South (Destin/SESH)* Barnett/Haynesville 350 - 400

Gulf South St. Helena Barnett/Haynesville 600

Gulfcrossing (via Destin) Barnett/Haynesville 750

3 Southeast Supply Header – Lucedale Barnett/Haynesville 1,000

Southeast Supply Header – Station 44 Barnett/Haynesville 250

Transco Mobile Bay South Expansion Barnett/Haynesville 500

Destin (via Gulf South/MEP) Haynesville 750

Tennessee Carnes Marcellus 60

Market SNG Cypress * Marcellus 280

Total: 6,390

FGT – Supply Access Additions Since 2008

Changing Supply


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Total Storage Access: +4 Bcf/d

Total Supply Access: +15 Bcf/d

FGT – Storage Connections

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Changing Supply – Altering Flow Patterns

Trunkline Gas

Trunkline Receipts

By Zone

• Less gas coming into the system

from traditional production areas

• More “backhaul” deliveries into hubs

and other liquid points

New Pipeline Receipt Points

Perryville

Hub

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Changing Supply – Altering Flow Patterns

Panhandle Eastern

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2009 2010 2011 2012

Ave

rage

Dth

/day

Panhandle Receipts

From Rockies Express

REX ends in

Missouri until

completed mid-

2009 Volumes shift to

delivery points

furthest east

Marcellus

supply filling

up eastern

pipelines

Changing Supply

MidContinent and Southwest

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Shale drilling technology is being

applied in new and existing supply

basins

Granite Wash

• Liquids-rich; attractive returns

Mississippian Lime

• Mostly oil-focused

• Fairly high gas ratios/well

• Low-cost drilling

Permian Basin

• Renewed oil drilling with

associated gas production growth

Mississippian

Granite Wash

Permian

• Increased supply interconnect activity

• Transwestern - sold several laterals for

conversion to liquids or wet-gas gathering

systems

Changing Supply - Asset Conversions

Trunkline Gas

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Eagle Ford Shale

• Primarily an oil play; oil production

nearly tripled in 2012

• Gas production (mostly associated)

is now over 2 Bcf/day

• Adequate eastbound gas pipeline

capacity exists

• New projects focused on

Mexico

• Gas is liquids-rich and must be

processed

• Massive midstream infrastructure

build-out underway

Trunkline So. Texas Project (2011)

• System modifications to allow the

bi-directional flow of liquids-rich gas

to So. Texas processing plants

• Required isolation of the

southernmost segment of

Trunkline’s system

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Changing Supply – Asset Conversions

Proposed Projects

Trunkline Crude Conversion

• Proposing to abandon a segment of one

of Trunkline’s parallel mainlines for

conversion to crude oil service

• Pending FERC abandonment order

• The converted system would provide

crude oil pipeline access to the eastern

Gulf Coast refinery market from the

Patoka, Illinois hub

LNG Export Project

• Proposing to build and operate a natural

gas liquefaction and export facility at the

Trunkline LNG site

• Export capacity up to 15 mtpa (~ 2 Bcf/d

from three trains)

• Requires DOE and FERC authorization

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LNG

LNG

The Way We Were…

Typical pipeline routes five

years ago: longhaul flows from

“Field to Market”; imports

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LNG

LNG

LNG

Current and potential

additional routes: shorter and

bi-directional flows; exports

Going With the Flow…

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