Wyoming Pipeline Authority - Kern River

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Wyoming Pipeline Authority
August 24, 2004
Mark C. Moench John R. Smith
Vice President and General Counsel
Director, Regulatory and Governmental Affairs
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Operational Highlights

• System design is 1.75 Mdth/d.
• Receipt point capacity is 3.95 Bcf/d.
• Delivery point capacity is 5.70 Bcf/d, including
  3.4 Bcf/d in California.
• 97 of design capacity is contracted to
  California
• Delivery point capacity into SoCal is 1.385
  Bcf/d.
• Delivery point capacity into PGE is .55 Bcf/d.
• Post expansion load factor is 100.7 of design
  capacity.
• Peak day delivery was 2,097,500 Dth on June 17,
  2004.
• Peak interruptible volumes reached 575 Mdth on
  July 8, 2004.
• Average volume delivered to California delivery
  points is 1,420 Mdth/d
• Capacity constraints of up to 300 Mdth/d persist
  at Wheeler Ridge and Kramer Junction,
  particularly in summer months.

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Market Opportunities

• 2 Bcf/d of California LDC core contracts will
  expire by August 2006.
• 545 MMcf/d of non-core contracts held by
  SoCalGas will expire by August 2006.
• The CPUC recently issued a proposed decision
  authorizing utilities to terminate contracts on
  El Paso, Transwestern and Gas Transmission
  Northwest, and approving an expedited process to
  grant pre-approval of new replacement contracts.
• Supply diversity is a stated policy objective
  of the CPUC and the utilities.
• Kern River will compete for re-contracting
  volumes as the utilities and the CPUC seek to
  achieve greater supply diversity.

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Market Opportunities

• 1,200 MW Moapa Power Plant - Nevada Power has
  announced it will purchase the plant from Duke
  and complete construction bymid-2006. 3.5-mile
  lateral to serve the plant is already
  constructed.
• 1,050 MW Mountainview Power Plant (SCE) is under
  construction and will begin commercial operations
  by the second quarter 2006.
• 750 MW Pastoria Power Plant (Calpine) will be
  placed into commercial operation in two phases
  250 MW by December 2004 and 500 MW by second
  quarter 2005.
• Other announced power projects
• 525 MW Currant Creek Power Plant (PacifiCorp) is
  under construction.
• PacifiCorp has announced that Summit Energy will
  construct the 535 MW Lake Side Power Plant in
  Utah County.
• 500 MW Cosumnes (SMUD) will begin commercial
  operation by fourth quarter 2005.

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Kern River 2003 Expansion
New Power Plants
Existing Compressor New
Compressor 2003 Facility Additions
717 miles additional looping
634 miles of 36 82
miles of 42 163,700 HP of
compression POWER PLANTS Under
Construction Recently Constructed
Announced
SALT LAKE CITY
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Questar ML 104 272 MMCFD
BAKERSFIELD
LAS VEGAS
PROJECT SPONSOR MWS
Sunrise Edison Mission
320 El Dorado Reliant/Sempra
480 L.V. Cogen Black Hills
280 West Valley
PacificCorp 168 La
Paloma PGE 1,124
Apex Mirant
550 High Desert Constellation
830 Sunrise Ph. II Edison Mission
265 Silverhawk Pinnacle
West 570 Bighorn
Reliant 570 Pastoria
Calpine 750
Moapa Duke 1,200
Currant Creek PacifiCorp
525 Mountainview SoCal Edison
1,050 Lake Side Summit/PacifiCorp
535 TOTAL MWs 9,217
High Desert Lateral 282 MMCFD
LOS ANGELES
SoCal Gas Adelanto 500 MMCFD
Questars ML 104 Lateral Interconnect Kern
Rivers High Desert Lateral Interconnect SoCals
Adelanto Lateral Interconnect Kern River
Existing Kern River Expansion
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Speaker Notes ISO had record send out of over
44,000 MW in July 2004. Power demand is growing
with economic recovery.
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Expansion Opportunity

• Route studies and cost estimates have been
  completed.
• Kern River can be expanded by 200-500 MMcf/d at
  market tested rates.
• An open season this winter, after the CPUC issues
  a final OIR Decision.
• Construction is planned for 2007, with a November
  2007 proposed in-service date.
• 66-year proven reserve life in the Rockies, the
  strongest production growth profile and the most
  attractive pricing forecast of any supply basin
  in the lower 48 states.
• California has 2.5 Bcf/d of expiring interstate
  capacity, no Rocky Mountain supply.
• Supply diversity is important to 1) Promote
  gas-on-gas competition, 2) Provide price
  stability and 3) Increase infrastructure
  reliability
• Utility re-contracting is an opportunity to
  achieve supply diversity and enhance pipeline
  infrastructure by providing contract support
  necessary for infrastructure investment.
• A looped Kern River system will provide increased
  security, reliability and flexibility.
• Kern River is well positioned and willing to
  invest in infrastructure enhancements.
• Pipeline looping projects are predictable
  compared to new Westcoast LNG import terminals
  which have uncertainties associated with siting,
  licensing, gas interchangeability, safety
  and environmental concerns and political
  considerations.

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California Regulatory Issues

• A preliminary decision has been issued in the
  California OIR encouraging state utilities to
  de-contract on El Paso and Transwestern and
  recommending an expedited process to pre-approve
  new capacity.
• The designation of primary vs. secondary receipt
  point rights at SoCalGas city gates should be
  immediately eliminated.
• - Discriminates against new supplies, new
  pipelines and LNG imports.
• - Restricts gas-on-gas competition and withholds
  lower cost gas. Favors southwest gas supplies
  from New Mexico and Texas.
• - Creates a disincentive to construct new
  infrastructure, including Rocky Mountain supply
  that may seek markets to the east.
• - Physical capacity of 300 MMcf/d exists today
  at the Kramer Junction which is being withheld
  from the market due to the primary/secondary
  receipt point issue.
• - The CPUC has embraced non-discriminatory
  access however, the implementation date remains
  uncertain.
• SoCalGas proposes to implement an off-system
  service which will provide additional flexibility
  to Kern River shippers to manage load variations.

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Wyoming Pipeline Authority
August 24, 2004
Mark C. Moench John R. Smith
Vice President and General Counsel
Director, Regulatory and Governmental Affairs