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Operations Directors Conference October 9, 2001

Operations Directors Conference October 9, 2001. Transwestern Pipeline Company Steve Harris Vice President Commercial Group. Overview. 2001 Results 2002 Plan Market Environment Upside/Downside Projects. 2001 Third Current Estimate As of 9/17/2001. 2001 Successes.

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Operations Directors Conference October 9, 2001

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  1. Operations Directors ConferenceOctober 9, 2001 Transwestern Pipeline Company Steve Harris Vice President Commercial Group

  2. Overview • 2001 Results • 2002 Plan • Market Environment • Upside/Downside • Projects

  3. 2001 Third Current Estimate As of 9/17/2001

  4. 2001 Successes • $14.7 MM above Plan as of 3rd Current Estimate • Subscribed 106,700/d of Red Rock Expansion Capacity (15.5% ROE) • All West & East mainline capacity, San Juan & Ignacio to Blanco capacity subscribed • New Deal Structures: • IT Pool to Pool at CA border (Reliant, Texaco) • Index to Index deals (Sempra & Richardson) • East to East sharing with alternate West (USGT & Astra)

  5. 2001 Successes(continued) • Renewed Navajo R-O-W • Renewed Laguna R-O-W • Marketing capacity through Enron Online • Connected 26,000/d of new supply • New 200,000/d pipeline interconnect with Oneok • Dashboard & Pipeline Profile systems

  6. Transwestern Pipeline Company Commercial Group 2002 Operating Plan Commercial Contribution (Millions)

  7. Capacity Subscription Level on Transwestern (including Red Rock)

  8. PGT Kern Southern Trails EPNG TWPL Expansions to California Filed With the FERC WA 200,000 MMBtu/d OR ID WY NV 1,010,000 MMBtu/d UT CO CA 120,000 MMBtu/d OK 150,000 MMBtu/d AZ NM TX 230,000 MMBtu/d

  9. Expansions to CaliforniaFiled With the FERC

  10. Additional ExpansionsAnnounced

  11. NYMEX Prices ($/MMBtu)

  12. Basin Prices, Border Prices & Transport Rates * ($/MMBtu) $0.320 $0.074 * Transport Rates are net of fuel.

  13. 2001 Actual prices 107% of plan prices Actual unhedged volumes 213% of plan volumes 2002 Volumes to be significantly impacted by Red Rock outages (180,000/d April-May) I to I deals reduce volumes received in-kind Unhedged Fuel

  14. Fuel Prices 2001 vs. 2002 ($/MMBtu) 15,000/d @ $3.96 20,000/d @ $3.55

  15. Potential Impacts2002 Plan • Upside • Negotiated rate proceeding: $10MM • SoCal rate dispute: $2.2MM • Downside • Red Rock in-service delay: $1.124MM • Gas prices: $.4MM • (per $.10 variance) • Agave & Amoco options to reduce MAXDTQ: $1.3MM

  16. Load Factor Upside/Downside(Million $)

  17. Projects • Red Rock Expansion • Sun Devil • Trans Pecos • Southern Trails • Caithness/Big Sandy • PG&E Potential Opportunities

  18. Red Rock Expansion • Incremental 120,000/d delivered to California & East of California • Additional hp at Stations 1, 2, 3 & 4 • 1.210 Bcf/d total deliveries West • Supplies from East of Thoreau • In-service June, 2001 • 106,700/d subscribed, resulting in 15.5% ROE

  19. Sun Devil Project Nevada Utah Colorado NNG California Kansas New Mexico Sun Devil Oklahoma TWPL Phoenix Arizona Texas • $550 MM capital cost • 450,000/d capacity to Phoenix • 780,000/d Blanco to Thoreau on TW • 330,000/d to CA border on TW

  20. Path San Juan to Thoreau Thoreau to CA Border Thoreau to Phoenix Total Bids Received 651,000/d 265,000/d 440,000/d Sun Devil Open Season Results

  21. TransPecos Project Nevada Utah Colorado NNG California Kansas New Mexico Oklahoma TWPL Arizona Texas • TW/KM LOI executed • TP/Pemex LOI tendered: • 250,000/d @ $.2950/MMBtu • Pemex counter-offer: • 240,000/d @ $.25/MMBtu NGPL TransPecos

  22. Southern Trails Project Nevada Utah Colorado NNG California Kansas Southern Trails New Mexico Oklahoma TWPL Arizona • RFP to purchase • West leg, due Oct 15th • In-service 7/2002 • “East” San Juan to CA border: • 87,500 MMBtu/d • “West” CA border to Long Beach: • -120,000 MMBtu/d Texas

  23. Caithness/Big Sandy Project Nevada Utah Colorado NNG California Kansas New Mexico Arizona Oklahoma TWPL Big Sandy Texas • Caithness will build 41 miles to TW • Interconnect cost to TW, $550 K • 780 MW baseload generating plant • Phase I: 520 MW, 90,000/d, Q4 2003 • Phase II: 260 MW, 40,000/d, Q3 2004

  24. PG&E Potential Opportunities • Bi-directional capability at PG&E/Topock interconnect • 20 mile lateral to serve generation plants in Bakersfield area, incremental 300,000/d load

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