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Chris Price Market Development Wild Goose Storage Inc.

Chris Price Market Development Wild Goose Storage Inc. CEC Workshop January 24, 2003. 4.4 Tcf Working Gas Volume. Independent (559 Bcf). State Utility (1,704 Bcf). North American Storage Capacity. FERC Utility (2,128 Bcf). California Storage Infrastructure. Current April, 2004

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Chris Price Market Development Wild Goose Storage Inc.

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  1. Chris PriceMarket DevelopmentWild Goose Storage Inc. CEC Workshop January 24, 2003

  2. 4.4 Tcf Working Gas Volume Independent (559 Bcf) State Utility (1,704 Bcf) North American Storage Capacity FERC Utility (2,128 Bcf)

  3. California Storage Infrastructure Current April, 2004 Wild Goose PGE Lodi SoCal Total Wild Goose PGE Total Inventory Bcf 14.0 40.5* 12.0 119.6 186.1 29.0 47.0* 207.6 Max. Injection 80 315 400 803 1,598 450 315 1,968 MMcf/d Max. Withdrawal 200 1,361 500 3,125 5,186 700 1,361 5,686 MMcf/d * Proposed inventory expansion of 6.5 Bcf in 2004

  4. Gas Storage • Market Area Storage • Optimizes transportation from supply area • Reduces peak transportation capacity required • Improves efficiency of transportation usage • Insurance function: supply reliability and price stability for demand peaks • Optimize purchased volumes and sales prices • OFO and EFO Protection • Provides an operational tool for balancing supply with demand

  5. The Benefits of Storage Optimization Operational Reliability Intermonth Arbitrage Intramonth Arbitrage OFO/EFO Insurance Intrastate Transportation Management Interstate Transport Management Seasonal Price Arbitrage Storage Value Pyramid Every Company is Different

  6. 2.5 Bcf Inventory 50,000 Dth/d Injection and Withdrawal 3.65 cycle $1.56/Dth Demand (100% Rack Rate) $5,360,000 Total incl. variable and fuel Storage Demand Peak Market 150,000 Dth/d Average Market 100,000 Dth/d Minimum Market 50,000 Dth/d Pipeline Fixed Toll = $0.80/Dth Supply Without Storage $1.20 150,000 Dth/d pipeline capacity $43,800,000/year fixed cost 67% LF $1.20/Dth Overall Cost With Storage $0.95 Contract 100,000 Dth/d pipeline capacity $29,200,000/year Fixed Cost 100% LF $5,360,000/year total storage cost $34,560,000 Total annual cost $0.95/Dth Overall Cost Save $9,240,000 or $0.25/Dth each year Pipeline Enhancement Example

  7. Storage customers Get the right kind of storage to match your business • Gas Storage Economics: • Storage Development Costs • higher cycling = higher cost • costs increase exponentially at high cycling rates • Storage Value (to customer) • higher cycling = higher value • diminishing returns from higher cycling rates • best value proposition depends on your needs Storage cost $/mcf WGV Value Number of Cycles

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