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Rockies Alliance Pipeline Wyoming Pipeline Authority Meeting Casper, Wyoming October 21, 2008 Gaylen Haag

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Rockies Alliance Pipeline. Wyoming Pipeline Authority Meeting Casper, Wyoming October 21, 2008 Gaylen Haag. Agenda. Project Introduction Project Owner Background Connected Facilities RAP Project Advantages Supply & Demand Outlook Proposed Negotiated Rates & Competitive Analysis - PowerPoint PPT Presentation

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Page 1: Rockies Alliance Pipeline

Rockies Alliance PipelineWyoming Pipeline Authority MeetingCasper, WyomingOctober 21, 2008Gaylen Haag

Page 2: Rockies Alliance Pipeline

Slide 2

Agenda

• Project Introduction • Project Owner Background• Connected Facilities• RAP Project Advantages• Supply & Demand Outlook• Proposed Negotiated Rates & Competitive Analysis• Project Details and Schedule

Page 3: Rockies Alliance Pipeline

Slide 3

Rockies Alliance Pipeline “Bullet Line To Chicago”

Proposed In-Service Nov. 1, 2012

Opal to Wamusutter:• 213 miles• 36”• 1458 psig• Capacity of 1.0 Bcf/d• Expansion up to 1.3

Bcf/d

Meeker to Wamusutter:• 140 miles• 36”• 1440 psig• Capacity of 810 mmcf/d• Expansion up to 1.0

Bcf/d

Wamusutter to Joliet:• 1080 miles• 42”• 1440 psig• Capacity of 1.3 Bcf/d• Expansion up to 1.7

Bcf/d

Chicago

Page 4: Rockies Alliance Pipeline

Slide 4

RAP Project Summary

• Bullet Pipeline from Rockies producing area to Chicago markets.

• Capacity of 1.3 Bcf/d, expandable to 1.7 Bcf/d.• 1080 miles of 42” inch pipe @ 1440 MAOP.• In-service date anticipated to be

November 1, 2012.• Estimated capital cost of $5.0 Billion.

Page 5: Rockies Alliance Pipeline

Slide 5

Alliance PipelineLargest construction project in North Americaat the time - larger than Rockies Express US$4.5B project delivered

on time and on budget Project executed 1997-2000 2,311 miles from NE BC to

Chicago Operational since 2000 Operating at full capacity

(1.6 bcf/d)

Owned 50% by Enbridge and 50% by Fort Chicago

Page 6: Rockies Alliance Pipeline

Slide 6

Alliance Pipeline Ownership Support – Enbridge – Pipeline Experience

Ottawa Saint John

Kansas City

SuperiorClearbrook

Zama

Fort McMurray

Montreal

Toronto

Buffalo

Regina

Hardisty

Patoka

CasperSalt Lake City

Houston

Toledo

Edmonton

Norman Wells

Fort St. John

Cushing

Inuvik

Chicago

WoodRiver

El Dorado

Gas Distribution

Liquids Transportation

Gas Transmission

Wind farms/developments

Rabaska

•12,000 miles of gas gathering and transmission

•Deliver nearly 70% of WCSB crude oil production to the US

•Canada’s largest LDC, Consumers Gas

•16 major pipeline projects under development or execution:

- Ranging between 20” to 42” Dia.

- Totaling 2,475 miles

- over $19B in projected capital

Page 7: Rockies Alliance Pipeline

Slide 7

Questar Pipeline

• Questar Pipeline has become a major force in the Rockies

• Questar Pipeline’s strategic location provides the lowest cost options for expansion

• More than 2,500 miles of pipe with plans to add nearly 1,000 miles more

• Capacity commitments have grown on the system from 1.5 bcf/d to 3.5 bcf/d over the past four years

• Questar Pipelines E&P affiliate will be a major shipper on RAP

Page 8: Rockies Alliance Pipeline

Slide 8

Questar Overthrust Pipeline• Overthrust is a 213-mile, 36”

diameter pipeline from Opal to Wamsutter with contracted capacity of over 1.4 Bcf/d

• Overthrust is economically expandable from Opal to Wamsutter.

• Overthrust is proposing to expand its system from Wamsutter to White River Hub (at Meeker).

• Overthrust is expected to be the major supply system to the Rockies Alliance Pipeline

Page 9: Rockies Alliance Pipeline

Slide 9

RAP Contracted Facilities – Questar Overthrust Pipeline

Opal Blacks F

orkPioneerWilliams -Opal

Kern

Rive

r

NWP OTPL

CIG

Grange

r

Opal Blacks F

orkPioneerWilliams -Opal

Kern

Rive

r

NWP OTPL

CIG

Grange

r

White RiverHub

QPC NWP/Williams

Enterprise

REXWIC

CIG

Trans-Colorado

CIGWICREX

OTPL(White RiverLateral)

White RiverHub

QPC NWP/Williams

Enterprise

REXWIC

CIG

Trans-Colorado

CIGWICREX

OTPL(White RiverLateral)

CheyenneCIGPowder

MedicineBow

CheyennePlains

REXTrailblazer

REXWIC

RAP RAP

CheyenneCIGPowder

MedicineBow

CheyennePlains

REXTrailblazer

REXWIC

RAP RAP

Wamsutter

REXWIC

LostCabin

CIGWICREX

Echo Springs

OTPL

CIG

RAP

OTPL(White River Lateral)

Wamsutter

REXWIC

LostCabin

CIGWICREX

Echo Springs

OTPL

CIG

RAP

OTPL(White River Lateral)

RAP to contract for capacity on Questar Overthrust Pipeline to provide the

following interconnections:

Opal area Opal Plant Pioneer Plant Blacks Fork Plant Granger Plant Multiple interstate pipelines

Wamsutter area Echo Springs Lost Cabin Multiple interstate pipelines

White River Hub (Meeker) Enterprise Multiple interstate pipelines

Cheyenne (direct to RAP) Powder River pipelines Multiple interstate pipelines

Page 10: Rockies Alliance Pipeline

Slide 10

Alliance Header Delivery CapabilityMeter Alliance SpareStation Contracted Station

Delivery Point Capacity Deliveries CapacityNicor 350 350 0NGPL 1,600 2 1,598Vector 2,000 381 1,619ANR 1,150 650 500Midwestern 650 3 647Peoples 600 588 12Guardian 1,150 14 1,136

Total 7,500 1,988 5,513

Downstream Receipt Capability *Downstream 2007 2007

Takaway Average SpareDelivery Point Capacity Utilization CapacityNicor 750 450 300NGPL 1,200 250 950Vector 1,033 919 114ANR 1,000 300 700Midwestern/Horizon 780 204 576Peoples 600 600 0Guardian 750 323 428

Total 6,113 3,046 3,067

* as reported by GPCM 08Q1 Base Case

RAP Connection to Alliance Pipeline

“Alliance, into interstates” and “Chicago city-gates” market indices, as reported in Platts Gas Daily, are very closely matched with 99.95% correlation over the past 5 years.

Page 11: Rockies Alliance Pipeline

Slide 11

RAP Project Advantage• Integrated pipeline solution to deliver Rockies gas to

market with a seamless single rate service.• Optimizes and utilizes existing system capability.• Expansion capability from 1.3 Bcf/d to 1.7 Bcf/d.• Initial fuel rate = 1.42% (Wamsutter – Chicago).• Potential for an integrated “delivery hub” with Alliance

Pipeline for over 3 Bcf/d of combined flow.• Well established, highly liquid delivery point into

Chicago market.• Focused project team dedicated to meet shipper

needs and to deliver project on timeand on budget.

Page 12: Rockies Alliance Pipeline

Slide 12

Growing Rockies Gas Supply

Bcf/d * Historical Data Source: PI / Dwights 2007

Accelerated Drilling Forecast

Historical Trend+ Pinedale SEIS

Page 13: Rockies Alliance Pipeline

Slide 13

Production vs. Pipeline Capacity

Bcf/d

Ruby Pipeline 26 Years 1.1 BCF/D

Eastbound Expansion 20 Years 1.3 BCF/D

Accelerated DrillingHistorical Trend+ Pinedale SEIS

Export Capacity + Rockies Consumption 9.4

Export Capacity 7.8

Page 14: Rockies Alliance Pipeline

$0

$1,000,000,000

$2,000,000,000

$3,000,000,000

$4,000,000,000

$5,000,000,000

$6,000,000,000

$7,000,000,000

$8,000,000,000

$9,000,000,000

$10,000,000,000

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Value Lost On Shut-In Gas

Loss From Basis Differential

Value Lost On Local Gas

Surplus Production Impact on Rockies Value

Shut-In Gas

11.8 tcf total

11.8 tcf x $5.00 = $59 Billion

Gas Impacted By Basis

11.1 tcf total

11.1 tcf x $3.00 = $33 Billion

Gas Impacted By Basis

7.6 tcf total

7.6 tcf x $3.00 = $23 Billion

Total Lost Value@$3.00 Basis Differential / $5.00 Gas

$50 billion

$115 billion*Value Associated w/ $1.00 Basis Change

$19 billionNet Present Value (10.00%)

Page 15: Rockies Alliance Pipeline

Slide 15

Surplus Production Impact on Rockies Value

Oct-01

Jan-0

2

Apr-02

Jul-0

2

Oct-02

Jan-0

3

Apr-03

Jul-0

3

Oct-03

Jan-0

4

Apr-04

Jul-0

4

Oct-04

Jan-0

5

Apr-05

Jul-0

5

Oct-05

Jan-0

6

Apr-06

Jul-0

6

Oct-06

Jan-0

7

Apr-07

Jul-0

7

Oct-07

Jan-0

8

Apr-08

Jul-0

8

Oct-08

Jan-0

9

Apr-09

Jul-0

9

Oct-09

($7.00)

($6.00)

($5.00)

($4.00)

($3.00)

($2.00)

($1.00)

$0.00

Cheyenne Plains Exp.

REX East to AudrainREX East to LebanonREX East to Clarington

Kern Expansion

Severe Cold Front

Katrina / Rita

Current Rockies Basis Blowout

Rockies Basis Blowout

Page 16: Rockies Alliance Pipeline

Slide 16

RAP Negotiated Reservation Rates(Deliveries to Chicago)

Foot notes:

1. Fuel to be adjusted to reflect actual fuel requirements. Fuel charges associated with transport upstream of Wamsutter will be calculated as per Questar Overthrust Transportation Tariff.

2. Incremental rates from Opal to Wamsutter are as per the current Overthrust Recourse Rate.

3. Incremental rates from Meeker to Wamsutter are as per the Overthrust Open Season dated Feb. 29, 2008

10 Year 15 Year 20 Year

Wamsutter 1.50 1.42 1.35 1.55 1.42%

Opal/Overthrust 2 1.62 1.54 1.47 1.67 2.22%White R. Hub 3

At Meeker 1.72 1.64 1.57 1.77 2.22%

EstimatedFuel Rates 1Contract TermReceipt Area

EstimatedRecourse

Rates

Negotiated Rates

Page 17: Rockies Alliance Pipeline

Slide 17

Transportation to ChicagoCompetitive Analysis

15 YR CONTRACT RATES 10 YR CONTRACT RATES

Meeker - Chicago Meeker - Chicago RAP Pathfinder CHEX RAP Pathfinder CHEX

Wamsutter Rate $1.42 $1.30 $1.61 Wamsutter Rate $1.50 $1.35 $1.68Meeker Rate $0.22 $0.21 - Meeker Rate $0.22 $0.21 -

Total Demand Charge $1.64 $1.52 $1.61 Total Demand Charge $1.72 $1.57 $1.68

Fuel Costs $0.17 $0.31 $0.26 Fuel Costs $0.17 $0.31 $0.26Assumed Fuel Rate 2.22% 4.18% 3.50% Assumed Fuel Rate 2.22% 4.18% 3.50%

Total Cost $1.81 $1.83 $1.88 Total Cost $1.89 $1.88 $1.94

Opal - Chicago Opal - ChicagoRAP Pathfinder CHEX RAP Pathfinder CHEX

Wamsutter Cash Rate $1.42 $1.30 $1.61 Wamsutter Cash Rate $1.50 $1.35 $1.68Opal Rate $0.12 $0.12 - Opal Rate $0.12 $0.12 -

Total Demand Charge $1.54 $1.42 $1.61 Total Demand Charge $1.62 $1.47 $1.68

Fuel Costs $0.17 $0.31 $0.26 Fuel Costs $0.17 $0.31 $0.26Assumed Fuel Rate 2.22% 4.18% 3.50% Assumed Fuel Rate 2.22% 4.18% 3.50%

Total Cost $1.71 $1.74 $1.88 Total Cost $1.79 $1.79 $1.94

Page 18: Rockies Alliance Pipeline

Slide 18

Market OutlookCIG to Chicago Basis

• Forecast Basis based on Platts 20 year monthly Forecast from 2009 to the end of 2028.

• Historical Basis based on actual monthly indices for the past 4 years.• Reservation Rates based on proposed rates for 15 year contracts.

Page 19: Rockies Alliance Pipeline

Slide 19

Project Details• Open Season ended June 16, 2008

Initial interest = 480,000 Dth/d of subscriptions• Follow-Up Open Season to be held in the near future.• Targeted in-service November 1, 2012

Based on execution kick off early 2009 Historic regulatory and permitting process defines critical path

• Capacity 1.3 Bcf/d expandable to 1.7 Bcf/d• Minimum contract requirements for kick off ~ 1.0 Bcf/d• Project Scope

Capital Cost ~ $5.0 Billion Length = 1080 miles Size and Pressure = 42” @ 1440 MAOP

Page 20: Rockies Alliance Pipeline

Slide 20

RAP Project Schedule

Page 21: Rockies Alliance Pipeline

Slide 21

Rockies Alliance Pipeline Contact Information

Questions concerning the RAP project shouldbe directed to:

Alliance Pipeline:• Eric Besseling (403)-517-6551• Lorraine Lindberg (713)-821-1746

Questar Overthrust Pipeline:• Shelley Wright (801) 324-2509• Gaylen Haag (801) 324-5133

Page 22: Rockies Alliance Pipeline