Title: Steve Beasley PresidentEastern Pipeline Group
1Steve BeasleyPresident-Eastern Pipeline Group
2Agenda
- Industry overview
- Pricing environment for natural gas
- Supply and demand dynamics
- Movement of natural gas
3El Paso Pipeline Assets
4U.S. Natural Gas Pipelines
Source INGAA Website
5The Natural Gas Industry in the U.S.
Source INGAA Website
6Natural Gas Prices January 15, 2004
Source Platts Gas Daily Midpoint
7Value Conflict Physical vs. Financial
Customization
Customization
Commoditization
Physical service
Physical service
Financial product
Receipt service
Delivery service
- Hourly Mcf
- Pressure
- Quality
- Demand service
- Unique capacity
- Hourly Mcf
- Pressure
- Quality
- Demand service
- Unique capacity
Transmission
- Daily Dth
- Basis differentials
- Fungible capacity
- Scheduled transactions
8Fully Unbundled Value Chain
Synthetic Pipeline
Financials
Financials
Financials
Producers
Marketers/ aggregators
- End users
- Industrial
- Commercial
- Powergeneration
- Residential
Gathering/ processing
Marketers/ aggregators
Marketers/ aggregators
Pipeline transportation
LDC transport
Virtual pipeline
(Secondary capacity)
9Accelerating Demand Environmental Drivers
Carbon content
- Wood
- Coal
- Oil
- Natural gas
- Hydrogen
High
- Increasing
- Cleanliness
- Energy intensity
- Technological sophistication
Medium
Low
(Zero)
10Natural Gas in the 21st CenturyIndustry Drivers
- Accelerating demand
- Stretching for supply
- Rewiring the grid
- Value conflict
- Public policy turmoil
Economy and environment Access and price New
connections and new services Physical vs.
financial Regulatory ambiguities,
politicalcontradictions
11Accelerating Demand Gas Fired Generation
Growing Electricity Demand
12Power Plants ConnectedEl Paso Eastern Pipelines
13New Sources To Fill Added Demand
Bcf/d
105
93
3 CAGR
33
2 CAGR
72
14Outlook for 2015Supply From the Perimeter
Arctic 5 Bcf/d
WCSB 11 Bcf/d
LNG exports 0.3 Bcf/d
Nova Scotia 2 Bcf/d
2015 net gasimports/exports fromperimeter
sources
Mexico 1 Bcf/d
LNG imports 12 Bcf/d
LNG imports 2 Bcf/d
15Worldwide Gas Movement
Source BP Website
16Conclusion
- Evolving natural gas economy
- Commoditized products / customized service
- Reshuffling of the supply deck
- Globalization