natural gas society of east texas pipeline roundtable

CenterPoint Energy Proprietary and Confidential Information

Natural Gas Society of East TexasPipeline Roundtable

March 8, 2012Cascades Country Club – Tyler, TX

Linda RobertsMgr. Business DevelopmentCenterPoint Energy Gas Transmission


Agenda

CenterPoint Energy Corporate Overview

CenterPoint Pipeline Overview and Operation

Western Oklahoma / Texas Panhandle

Waskom Processing Plant and F-185

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Company History

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In 1866, Houston Gas Light Company was organized to supply gas (made from oyster shells and coal) for the street lights in a fledgling coastal village in southeast Texas that had sprung from the banks of a winding bayou. Four years later, the city of Minneapolis granted the newly formed Minneapolis Gas Light Co. a franchise to provide gas service with gas manufactured from coal or oil at a plant along the Mississippi River. After another quarter century, in 1905, an organization of businessmen was granted the first franchise for distribution of natural gas in Shreveport, La. Decades later, from 1988 to 1990, these three businesses merged to form a company that became NorAm Energy Corp.

Meanwhile, back in 1882, Houston Electric Light & Power filed a charter and was granted a franchise by the Houston City Council. Over the next century, HL&P generated electricity from steam, natural gas, coal or lignite and finally nuclear fission for sale and delivery to retail customers in the rapidly growing greater Houston area.

In 1995, NorAm Energy Services began marketing wholesale electric power nationwide. NorAm Energy Management was established for retail energy marketing and NorAm's gas gathering assets were unbundled and transferred to NorAm Field Services.

Two years later, NorAm merged with Houston Industries, Inc., the parent company of HL&P, to become one of the United States' largest integrated energy companies, which in 1999 was named Reliant Energy, Inc. With the restructuring of the electric market in Texas in 2002, the company spun off its retail electric sales (and some other unregulated energy services) as Reliant Resources. Within two years, the company would also sell its electric generation assets.

In October 2002, the remaining mostly regulated energy delivery company adopted the name CenterPoint Energy to reflect our role in the center of the energy value chain and the center of our customers' lives.

Today, CenterPoint Energy, Inc., headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission & distribution, natural gas distribution, competitive natural gas sales and services, interstate pipeline and field services operations. The company serves more than five million metered customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. Assets total nearly $19 billion. With about 8,900 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years.


Where we serve

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CenterPoint Energy, Inc., is headquartered in Houston, Texas. Our electric transmission and delivery business delivers electricity in a 5,000 square-mile area that includes Houston, the nation's fourth largest city.

Our natural gas distribution business operates in six states: Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. We also own and operate two interstate natural gas pipelines in Arkansas, Illinois, Louisiana, Missouri, Oklahoma and Texas.

Our Field Services business gathers and processes natural gas from major producing fields in Arkansas, Louisiana, Oklahoma and Texas. The ServiceStar division installs and operates remote data monitoring and communications services in Alabama, Arkansas, Colorado, Illinois, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Texas and Wyoming.

With offices in Arkansas, Illinois, Indiana, Louisiana, Minnesota, Missouri, Pennsylvania, Texas and Wisconsin, CenterPoint Energy Services (CES), our competitive natural gas sales and service business, serves approximately 11,100 customers in the eastern half of the United States.


Where we serve (cont’d)

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CenterPoint Energy Proprietary and Confidential Information6

Regulated local gas distribution companies in AR, LA, MN, MS, OK, TX

3.2 million customers

Solid growth in key urban areas

423 Bcf throughput in 2011

Regulated ‘wires only’ business

5,000 sq. mile service territory in and around Houston

2 million metered customers in the Houston area

Solid, consistent customer growth

Non-rate regulated

Markets natural gas and services

12,000 commercial, industrial and utility customers in 17 states


Complementary Electric & Natural Gas Portfolio

2 FERC regulated pipelines

Strategically located at the center of the nation’s gas transportation infrastructure

Connected to over 20 other pipelines

1,579 Bcfthroughput in 2011

Non-rate regulated

Gathering, treating and processing focused in mid-continent , ETX/NLA production area

Well head monitoring (ServiceStar)


Natural Gas Distribution

Electric Transmission & Distribution

Natural Gas Pipelines

Natural Gas Field Services

Natural Gas Sales & Services


Agenda


CenterPoint Pipeline Overview and Operations



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Carthage

Perryville

Barnett Shale

Woodford ShaleFayetteville Shale

Haynesville Shale

LegendCEGTMRTLine CPSESHCEFS

Miles of Pipe (miles): 6,320 (CEGT) 1641 (MRT)274 (SESH)

Compression (hp): 277,283 (CEGT) 117,572 (MRT) 52,000 (SESH)Storage Capacity (Bcf working gas): 67.0 Maximum Capacity (daily Bcf) 8.0

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CenterPoint Energy Proprietary and Confidential Information9

Carthage to Perryville – Line CP Map

Line CP

Westdale Compressor


Agenda



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Western Oklahoma/Texas Panhandle Summary

Robust production growth is anticipated from Texas Panhandle and Western Oklahoma shale and wash plays

Producer interest is primarily driven by liquids uplift and oil plays

Some production areas have 5.0 - 6.0 GPM gas

Crude/gas price relationship suggests this area can weather lower natural gas pricing

Adequate residue takeaway may be available from Texas Panhandle today, but Western OK capacity could become constrained and could impact Texas Panhandle with OK drilling commitments in upcoming years (Cana, Cleveland, Mississippi Lime, Woodford)

New production areas consisting of Cana-Woodford, Cleveland/Tonkawa and Mississippi Lime areas along with prolific production from existing plays such as Granite & Colony Wash and Woodford could likely constrain the pipeline system in upcoming year(s)

Potential for an expansion or new build is possible with continued production growth

Most expansions would likely be significant distance and large diameter pipeline

Rates and contract terms for a new build will likely need to be higher rates with long term commitments

Potential for widening basis in Midcontinent area with forecasted production growth

Capacity hedge could derisk certain core production and asset areas

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CenterPoint Project Timeline

Announced Thunder Pipeline Open Season

Open season for new capacity held in summer 2011

Design was a 36” pipeline capable of transporting up to 1 bcf/d to Bennington, OK from Cana/Woodford area

Received interest but not sufficient support to move forward on project

Subsequent to Thunder Pipeline open season, CEGT held a capacity open season for its core west system

Open season held in 3Q2011 for capacity on CEGT from Western OK/TX Panhandle to Perryville Hub

Capacity had more flexibility due to pipeline system crossing the Granite & Colony Wash areas, Cana/Woodford area and near the Cleveland/Tonkawa area

Open season also had a capacity turn-back potential in the event capacity was needed sooner

Have held preliminary discussions with producers and plant operators on CEGT capacity needs to support upstream & midstream capital investment

Seeking flow assurance to support capital investment in either producing or processing/gathering assets

CEGT capacity to PVH provides market opportunity to Midwest, Northeast and Southeast via SESH

CEGT capacity provides diversification with capacity out of Midcontinent region and liquidity with new Perryville Hub Trading Point

Capacity provides flow assurance and pipeline capacity when new production competes for takeaway space

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CenterPoint Energy Gas Transmission

CEGT seeking multi year capacity subscriptions from West 1 area to PVH to support drilling programs

Some capacity could be part of the capacity turn-back option depending on timing

Incremental firm capacity from the west area becomes available in November 2012

Potential to subscribe up to 125 mm/d in 4Q12

Ultimate capacity potential as part of open season may be approximately 250 - 350 mm/d

CEGT capacity benefits :

CEGT existing capacity has rates and terms more competitive than any expansions or new build

Contract terms and credit terms more flexible and may require less commitment than traditional new expansion projects (i.e. 10 - 15 year terms)

Existing capacity provides flow assurance and pipeline capacity when new production competes for takeaway space

Capacity has potential for ramp up volumes not traditional to new transmission projects

Receipts can be from Granite Wash, Colony Wash, Cleveland, Cana/Woodford & possibly Mississippi Lime

Receipt flexibility, reaching most Oklahoma/Tx Panhandle plays, unmatched by other pipelines

Capacity provides improved marketing alternatives versus other expansions that have limited export options

No construction or timing risks that will exist for a new pipeline

Provides a hedge in the event of widening basis due to prolific supply growth

CEGT willing to consider capital investment for certain long term capacity opportunities13


CenterPoint Energy Gas Transmission Infrastructure Map

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Cleveland

Colony Wash

Granite WashCana Woodford

Woodford

Mississippi Lime


CEGT Transmission Infrastructure Map

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Granite Wash“easily “ accessible

to existing interstates

Cana WoodfordRemote from

existing interstates


Proposed Thunder Pipeline

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CenterPoint Energy Proprietary and Confidential Information 17

(NGPL)0.3 Bcf/d

0.2 Bcf/d

0.5 Bcf/d

0.3 Bcf/d

Current Pipe Capacity from Oklahoma Panhandle

Source: ICFI

(Southern Star

(CEGT)

(NGPL)

(ANR)0.7Bcf/d

(PEPL)0.65 Bcf/d

(NNG)0.3 Bcf/d


Western OK/TX Panhandle Gathering & Processing Summary

Announced processing infrastructure suggests production is coming:Atlas expanding Velma plant in Stephens Co, OK ‐ 100 mm/d to 160 mm/d in July 2012Atlas expanding Waynoka plant in Woods Co, OK ‐ 200 mm/d to 400 mm/d in July 2012Devon Energy Cana plant in Canadian Co, OK – 200 mm/d operational with expansion plansEagle Rock constructing 125 mm/d cryo plant in Wheeler, TX ; expected in service 4Q2012Enbridge Partners constructing 150 mm/d cryo plant near Wheeler, TX to serve Granite Wash play; expected in service 1Q2013Enogex constructing South Canadian plant – 200 mm/d in 4Q2011Enogex constructing and expanding Wheeler Co, TX plant ‐ 200 mm/d in 3Q2012(120 mm/d 1Q12 and added 80 mm/d by 3Q2012)

Enogex will construct Custer Co, OK plant – 200 mm/d in 2013Markwest expanded Arapaho plant in Custer Co, OK – 160 mm/d to 235 mm/d in 3Q2011Mustang Gas Products announced expansion and extension of its Rodman gathering and processing capability in Kay and Noble counties, OK; adding 50 mm/d of gathering capacity in 1Q2012PVR Partners expanding Antelope Hills plant in Hemphill Co, TX – 20 mm/d to 70 mm/d in 2Q2012Semgroup announced new plant for Mississippi play – 60 mm/dSuperior constructing plant in Kay Co, OK – 30 mm/d in 2Q2012CEFS announces 200 mm/d cryo plant in heart of Mississippi lime area to gather oil and gas

Total announced plans of up to 1.8 bcfpd of new processing capacity for Western OK/TX Panhandle

Other processing plants proposed which could total up to 800 – 1,000 mm/d

Will the residue take‐away capacity be sufficient for this growth or will constraints appear limiting processing plant volume and/or growth?

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Western OK E&P Deals – Mississippi Play

Sandridge Energy – holder of 1+ million acres in area/play

Created Mississippian Trust I in March 2011

$500 MM Joint Venture with Atinum Partners Co, LTD

• Atinum to pay $250 MM with a $250 MM drilling carry over 3 year period

$1 Billion Joint Venture with Repsol YPF

• Repsol to pay $250 MM with a $750 MM drilling carry over 3 year period

CHK – holder of over 1.1+ million acres in Mississippi area/play

Other players in area reviewing growth projections in light of limited infrastructure

Additional upstream JV transactions may occur with continued emphasis in this region

More JV transactions may occur due to gas GPM value and likelihood to drill

Residual Impact:

Drilling carries could suggest that areas/production play may be drilled with greater intensity

Commodity pricing could be less critical when a drilling carry has a defined term

Added transmission infrastructure may be needed to support upstream & midstream growth

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CEGT - Western OK Summary

Aspects to consider for flow assurance capacity:

• CEGT capacity will provide hedge and flow assurance for production growth

• Capacity will suit producers and processors with high volume growth and desire for flow assurance to ensure upstream project economics

• CEGT capacity should be least costly flow assurance contract for robust growth in several plays (Granite, Colony, Cleveland/Tonkawa, Cana/Woodford, Mississippi Lime) versus new build

• Timing of capacity could be more suited to areas with growing production

• CEGT capacity could have flexibility for many production areas and multiple receipts in Western Oklahoma and Texas Panhandle allowing for rig movement flexibility

• Capacity will provide hedge in the event of widening basis due to high volume growth

• CEGT would have improved contracting terms over greenfield system

• Construction & timing risks mitigated due to existing infrastructure

• CEGT credit terms more favorable than new build projects

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CenterPoint Energy Proprietary and Confidential Information 22

CEGT PVH Trading Point Key Points of Interest

• CEGT plans to file tariff modifications to establish the Trading Point by the end of March with an effective date of May 1, 2012.

• CEGT currently has 21 interconnects and another interconnect to be added in the future with Cardinal Energy’s Perryville Gas Storage

• CEGT will be offering both firm and interruptible transport and wheeling services to the PVH Trading Point as well as from the PVH Trading point

• CEGT will be establishing this point on the Intercontinental Exchange “ICE”

• CEGT will be providing a Title Transfer service under the newly created Title Transfer Contract at the PVH Trading Point free of charge.


SONAT

Columbia Gulf-core

SESH FM 65

Tenn 800

SESH / SONAT

Gulf South

MEP

CGTANRTGCTGT

TGTTenn 100

TGC

ANR

TetcoGulf South

MRT

Perryville Gas Storage (Future Interconnect)

Delhi

Alto

Atmos

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Proposed Perryville Hub Trading Point -- Eligible Points

Enbridge

CEGT CoreLine CPPerryville Hub HeaderBi-directional MetersDelivery Meters (Receipts by Displacement)


Agenda




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Line F-185

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F-185

Line CP

Waskom

Carthage Deliveries

CP Pool

CEFS Header System

F-185-A (loop) Gulf South

FOM Col Gulf = $3.01 Col Gulf GDA = $2.65FOM HSC = $3.04 Carthage GDA = $2.62

Marketing OptionsAll prices from January 2012

Willow Springs

Columbia Gulf

Sales Pool

South PoolFlex PoolPool to Pool

Transfer

Sales Pool

FOM CEGT- East = $2.97 Average Daily CEGT Sales

= $2.60

Waskom Carthage Pool


CEGT Contacts

Corporate Address:

1111 Louisiana Street

Houston, Texas 77002

Bryan Ginsburg 713.207.5166

Linda Roberts 713.207.3390

Kathy Kennedy 713.207.5189

Waskom processing and business analysis:

Lee Hart 713.207.6195

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natural gas society of east texas pipeline roundtable

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