1 / 14

Major New U.S. Pipeline Projects Reasons and Implications

Major New U.S. Pipeline Projects Reasons and Implications. Presented to: National Association of Regulatory Utility Commissioners Staff Subcommittee on Accounting and Finance Spring 2008 Meeting New Orleans, Lousiana April 1, 2008 Presented by: Richard G. Smead Director, Energy.

yana
Download Presentation

Major New U.S. Pipeline Projects Reasons and Implications

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Major New U.S. Pipeline ProjectsReasons and Implications Presented to: National Association of Regulatory Utility CommissionersStaff Subcommittee on Accounting and Finance Spring 2008 MeetingNew Orleans, Lousiana April 1, 2008 Presented by: Richard G. Smead Director, Energy

  2. Gas Pipeline Infrastructure—What’s the Big Deal? • Physical—Can Enough Gas Get to Market? • Shifting Supply Patterns • Power Demand in the Northeast • LNG OK with Existing Infrastructure—You Can Pick Your Spot • Not So with New Domestic Production • Rockies • Shale Plays • Economic—Basis Blowout = Inadequate Infrastructure • Not enough into market, becomes a seller’s market • Not enough out of supply area, becomes a buyer’s market • Either one means unconstrained price fly-up or fly-down

  3. The Impact of Inadequate Infrastructure—New York’s Basis Blowout

  4. The Same Kind of Impact for Producers—The Rockies Last Year

  5. A Massive US Pipeline Infrastructure, Moving 66 Bcfd to Market

  6. The Market Is Reacting with Pipe Solutions • Rockies Express • 2 Bcfd, Wyoming to Ohio • Multiple other takeaway pipes emerging • Intersects most major south-to-north long-lines • Maritimes • Nova Scotia to Boston • Not New, but filling it would be new • Relieves the Power Gen Capacity Issue in New England • Big Shale Plays, and the Pipes that Love Them • Barnett Shale—CenterPoint’s Carthage-Perryville Pipelin • Oklahoma Shale—MEP, Gulf Crossing, with Feeder Pipes • Rockies to California • Spectra’s Bronco • El Paso’s Ruby

  7. U.S. Natural Gas Flow Through Producing and Consuming Regions

  8. Rockies Express—A 2 Bcfd “Rifle Shot” to the Market

  9. Rockies Express—Multiple Opportunities for Short-Hauls to Market

  10. Filling Maritimes—Does More for New England than Another Pipe

  11. New Domestic Supply—Big Pipes out of the Shale Plays

  12. Rockies to California—Ruby or Bronco

  13. Nothing Affects Prices as Much as Infrastucture Adequacy • Each constraint creates trading chaos • But new capacity can destroy basis, making project underwriters look stupid • So it’s a continuing balancing act • Don’t allow chronic inadequacy • Don’t promote significant excess capacity • Each big new pipeline totally reorients the market • “After ReX, the world will never be the same.” Porter Bennett, Bentek • “Build it and they will come.” Shoeless Joe in Field of Dreams • “Don’t do anything stupid.” My old boss.

More Related