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WPA Presentation on Oil Springs

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WPA Presentation on Oil Springs Powered By Docstoc
					      Presentation to the
   Wyoming Pipeline Authority
 Update on Kinder Morgan’s Oil
Springs Storage Field Expansion
            Project



           March 23, 2004
                       Kinder Morgan System Map
                   2
              PACIFIC                                         COCHIN



                                                                                                    2
                                                              KMIGT
       2
            PACIFIC                                                                   NORTH                  2
                                                       3
                       CALNEV                  3



NGPL           4                PACIFIC                                    NGPL
                                             KMCO2
NGPL Storage
Retail Natural Gas Division                                           KM TEJAS                          PLANTATION
Products Pipelines                                                                          10
Products Pipeline Terminals                                      KMTP                 2
                                      Gas-Fired Power Plants                      2                                  CFPL
Transmix Facilities
Natural Gas Pipelines                 CO2 Pipelines               2
Natural Gas Storage                   Terminals
                              (2,3,10) Indicates # of Facilities in area              Kinder Morgan Headquarters, Houston, Texas
Natural Gas Plants
                                                                                                                                   2
                             Sheridan
                                                                             Oil Springs
                 BIG
                HORN                                                         Storage Field
                                               Gillette
                                                                             Expansion
                                                       POWDER
                                                        RIVER                Project
                                                        BASIN
               WIND
               RIVER




                                    Casper
                                    Oil Springs
                                   Storage Field
KMICD (formerly NGC)
KMIGT                              HANNA      Proposed                      NEBRASKA
                                               Lateral                           Huntsman
CIG
WIC
                                                                                  Storage
SOUTHERN STAR           WASHAKIE                       Cheyenne
                              WYOMING
PROP. KMIGT ADVANTAGE
TRAILBLAZER                                  Cheyenne
THUNDER CREEK                                  Hub
FT. UNION                                                       D-J BASIN
MIGC/MGTC
GAS STORAGE
COMPRESSOR STATION
                                              Denver                        COLORADO
MARKET HUB                                                                                   3
GAS SUPPLY BASIN
              Oil Springs Storage Field
                         General Information
• Located in eastern Carbon County, Wyoming on the southern leg of
  Kinder Morgan, Inc.’s (Casper Division) pipeline system
  approximately 10 miles northwest of Medicine Bow, midway between
  Rawlins and Laramie.
• Storage services are currently an integrated component of the cost of
  service of Kinder Morgan, Inc.’s Casper Division subject to the
  jurisdiction of the Wyoming Public Service Commission.
• Currently used to supply seasonal and peak day needs for Kinder
  Morgan, Inc.’s Retail distribution system in conjunction with the
  Bunker Hill Storage Field located in northwestern Carbon County and
  the Kirk Ranch Storage Field located in southeastern Fremont
  County.
• Current annual cycling capability of 1.0 to 1.6 Bcf from all three fields
  (0.5 to 0.8 Bcf from Oil Springs, 0.3 to 0.5 Bcf from Bunker Hill and
  0.2 to 0.3 Bcf from Kirk Ranch).

                                                                      4
        Oil Springs - Project Summary
•   Expand storage capability and off system utilization.
•   Access Interstate Pipeline(s).
•   Reduce storage costs for Wyoming retail customers.
•   Enhance reliability and efficiencies for Wyoming retail
    customers.
•   Provide direct storage access and greater control and
    flexibility for third party users.
•   No capital investment by utility or rate base increase
    to Wyoming retail customers as a result of this
    project.

                                                         5
      Oil Springs - Proposed Services
       Meeting the Needs of the Wyoming Marketplace

• Proposed Storage Services to include:
   – Firm Storage Service.
   – Interruptible Storage Service.
   – Parking and Lending Services.
   – Other Market Center Services.
• Maintain current LDC cycling capability to continue
  serving Wyoming retail customers:
   – New pipeline would interconnect with KMI’s
     existing pipeline.
                                                        6
       Oil Springs - Project Description
               Expanded Storage Capabilities
•   Expand annual field cycling capability up to 11 Bcf *.
•   Increase injection capabilities up to 67 MMcf/d *.
•   Increase withdrawal capabilities up to 133 MMcf/d *.
•   New capital construction to include:
     – Drilling additional injection / withdrawal wells.
     – Expanding the field gathering system.
     – Constructing a pipeline of sufficient diameter from Oil
        Springs down to the I-80 pipeline corridor which contains
        CIG, WIC and Southern Star pipelines.
     – Installing additional compression horsepower and
        dehydration facilities.
•   (* Or more, based on field characteristics and contractual
    commitments.)
                                                                7
     Oil Springs - Project Description
               Cushion Gas Sale

• New capital investment will result in excess
  cushion gas which Kinder Morgan would sell to
  help fund the project.
• KMI’s (Retail) rate base correspondingly
  reduced.
• Cushion gas may be sold in place in lieu of
  initial injections.


                                             8
    Oil Springs - Project Timeline
• Obtain Shipper support to justify enhanced reservoir
  modeling and geologic / seismic reviews.
• Presentation to the Wyoming Public Service
  Commission.
• Reservoir modeling and geologic / seismic reviews.
• Open Season.
• Obtain FERC Certification.
• Field expansion and facilities and pipeline
  construction.
• 2006 – In-service date – Commence injections.
                                                     9
        Oil Springs - Project Benefits
        To State of Wyoming & Retail Customers
• Reduction in KMI (Retail) rate base.
• Reduction in Storage Operations costs due to improved
  productivity and economies of scale.
• Enhanced KMI system reliability:
   – Pipeline looping.
   – Supplemental horsepower.
   – New interconnect capabilities.
• Economic development benefits for other sectors of the
  Wyoming economy based on significant investment and
  gas infrastructure development for the state.
• Contributes to stated goals of the Wyoming Pipeline
  Authority.
                                                      10
      Oil Springs - Project Benefits
               Third Party Users
• Market competitive storage services.
• Operational efficiencies due to
  economies of scale.
• Use of Existing Cushion Gas.
• Pricing Arbitrage.
• Production area storage.

                                         11
   Kinder Morgan Energy Partners, L.P.
                      General Information

• Kinder Morgan Energy Partners, L.P. (“KMP”) is a
  Master Limited Partnership (MLP) traded on the NYSE.
• KMP’s assets located in Wyoming include:
   – Kinder Morgan Interstate Gas Transmission.
   – Kinder Morgan Operating L.P. “A” (Casper / Douglas).
   – Thunder Creek Gas Services (non-operating partnership
     interest).
   – Trailblazer Pipeline Company (portion of line runs through
     SE Wyoming).



                                                             12
     Continuing Support from the WPA
•   Directly,
    – Support Kinder Morgan in its efforts to obtain WPSC
      and/or FERC approval for the expansion of Oil Springs
    – Encourage the State of Wyoming to take its gas in-kind for
      royalty purposes and contract for storage space at Oil
      Springs
    – Encourage tax incentives, e.g. reduced ad valorem taxes
      on pipeline expansions
•   Indirectly,
    – Support the Wyoming DEQ in their efforts
    – Support the State Lands office, BLM and various BIA
      agencies in their efforts
    – Support the industry in terms of responding to
      environmental assessment requests
    – Encourage the BLM/MMS to take its gas in-kind for royalty
      purposes

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