wyoming pipeline authority october 2008 sunstone pipeline llc
TRANSCRIPT
Wyoming Pipeline AuthorityOctober 2008
Sunstone Pipeline LLC
Agenda
1. Sunstone Pipeline Project
2. Route Details
3. Capital Costs
4. Transportation Rates
5. Value To Shippers
6. Project Progress
7. Project Schedule
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1. Sunstone Pipeline
• JV partnership among Williams Gas Pipeline Company, TransCanada
Pipeline and Sempra Pipelines & Storage Corp.
• Provides the lowest cost transportation service to the broadest
market– Pacific Northwest– California– Northern Nevada
• Lower risk than greenfield construction– Existing corridors, existing infrastructure, existing operators– Lower miles– Reasonable, scrubbed cost estimate
• Majority of the capacity subscribed
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2. Sunstone Route
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OPALOPAL
CHEYENNECHEYENNE
MEEKERMEEKERDenverDenver
MALINMALIN
PowderRiver
PowderRiver
BigHornBig
Horn
WindRiverWindRiver
GreaterGreenRiver
GreaterGreenRiver
UintaUinta
PiceancePiceanceParadoxParadox
SandWashSandWash
Denver/JulesbergDenver/
Julesberg
WCSBWCSB
WillistonWilliston
AnadarkoAnadarko
NITNIT
Northern BorderFoothills
(Sask.)
NG
TL
GTN
Foothills
(B.C.)
Northwest Pipeline
TC Mainline
WAMSUTTERWAMSUTTER
STANFIELDSTANFIELD
Sunstone
RUBYRUBY
PG
&E RENORENO
Paiute
ELYELY
Tu
scarora
• 1.2 Bcf/d of capacity
• 598 miles, 42”
• 57,300 HP, 1440 MAOP
• 0.83% fuel (@ 90% LF)
• Largely parallels existing NWP and utility corridors
Mist
Jackson Prairie
3. Estimate Reflects Current Cost Trends
• Cost estimates in 2011 “as spent dollars”– Escalating steel prices and
contractor costs factored into the estimate
• Validation of costs & route– Williams recent and extensive
experience in the Rockies (i.e. Kern River Expansion)
– TransCanada engineers independently validated the Sunstone estimate
– Third party review
• Based on November 2011 start date
Engineering, Design & Project Management
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Line Pipe 746
Other Materials 68
Pipeline Construction 981Other Construction 73Land 49Environmental 29Line Pack and Commissioning 30Compression 201
Total Direct Costs 2,192
AFUDC and A&G 152
Total Project Costs ($millions)
2,344
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4. Proposed Rates
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$0.80
$0.85
Equal to or greater than 10 years but less than 15 years
Fixed Rate Option
10 Year Negotiated Rate
$0.75Equal to or greater than 15 years but less than 20 years
$0.72Equal to or greater than 20 years but less than 25 years
$0.69Equal to or greater than 25 years but less than 30 years
$0.6830 years or greater
Estimated Levelized Recourse Rates
($/Dth/d)
5. Competitive Option For PNW, Northern California and Northern Nevada Consumers
• Diversification: Replace high dependence on Canadian imports with access to Rockies production
• Reliability: As Canadian Supply declines, supply into western markets becomes the marginal market for Canadian producers
• Transport capacity to the PNW from Rockies currently at maximum utilization
• High efficiency transportation reduces fuel costs
• Access to storage at Jackson Prairie (22 Bcf capacity) and Mist (14 Bcf capacity)
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5. Sunstone Offers Rockies Producers Valuable Market Access
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5. Valuable Access For Rockies Producers
Sunstone features:
• Highest netback out of the Rockies– Lower cost to access Malin
• Of the two-thirds capacity already committed, 376 MMcfd represents long-term subscription from end-users, reducing producer commitment to launch project
• Lowest reservation charge, minimizes risk and financial commitment
• Term differentiated rate options without huge disparity among shippers maintains competitiveness for ALL shippers
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5. Valuable Access For Rockies Producers (continued)
Sunstone provides access to multiple markets and end-use meters:
• From Stanfield through interconnects with Northwest Pipeline and GTN
• Increase in electric generation loads fueling market growth– Electric generation loads counter-seasonal to California generation loads
• Downstream expansions proposed to serve PNW market growth
• No expansion required on GTN to serve Northern California and Northern Nevada– Currently 329 MDth/d available– GTN motivated to retain and expand customer base
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Sunstone Provides Access To Target Markets
• Sunstone provides
access to the broadest
market – 3.3 Bcfd currently flows into
PNW area from the Rockies and Canada
– Of which, 1.4 Bcfd flows into Northern CA and Northern NV via Malin
• 0.8 Bcfd expected
growth in PNW and CA
for 2008-2018 (Wood
Mackenzie)
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Source: Lippman Consulting, average deliveries, January, 2007 – May, 2008
Existing & Proposed PNW Gas-Fired Generation
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• 3.5 Gw of existing facilities served by NW Pipeline
• 2.9 Gw of existing facilities directly connected to GTN
• 3.2 Gw of new gas generation proposed
Major End-Use Markets Served by Northwest Pipeline & GTN
Northwest Pipeline
• Washington• Puget Sound Energy• Cascade Natural Gas• Avista Corp• PacificCorp (Chehalis
Power)
• Oregon• Northwest Natural• Portland General Electric• Avista Corp• Cascade Natural Gas
• Idaho• Intermountain Gas• Idaho Power
• Nevada• Southwest Gas• Sierra Pacific
GTN
• Washington• Avista Corp• Cascade Natural Gas
• Oregon• Avista Corp• PPM (Klamath Falls)• Cascade Natural Gas• Hermiston Power• Portland General Electric
• Nevada• Sierra Pacific
• California• PG&E• Sacramento Municipal Utility
District• Southern California
Gas/SDG&E• Conoco Phillips
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5. NW Region – Key to a Viable Project
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Historical Flows - NWP and GTN
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1/1
/20
05
3/1
/20
05
5/1
/20
05
7/1
/20
05
9/1
/20
05
11
/1/2
00
5
1/1
/20
06
3/1
/20
06
5/1
/20
06
7/1
/20
06
9/1
/20
06
11
/1/2
00
6
1/1
/20
07
3/1
/20
07
5/1
/20
07
7/1
/20
07
9/1
/20
07
11
/1/2
00
7
1/1
/20
08
3/1
/20
08
5/1
/20
08
Sch
ed
ule
d D
eli
ve
rie
s (
MD
th/d
)
Malin NW Region (WA, OR, ID,N.NV)
6. Project Progress On Track
• Route is essentially fixed, with formal approval process for
small reroutes
• Survey progress:– Wetland surveys complete by year end
– Cultural surveys complete by year end
– Paleontology surveys complete by year end
– Survey permission received from 82% of landowners
• Meetings with regulatory agencies continue to go well– Successful FERC pre-filing meeting on October 7
– Formal request for pre-filing scheduled for October 21
• Seven open houses scheduled for mid-November
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7. Schedule
• Conducted Open Season: March 17 – May 30, 2008
• Perform Biological and Cultural Surveys: Summer/Fall 2008
• NEPA Pre-Filing Request with FERC: October 2008
• Place Pipe and Materials Order: No later than May 2009
• FERC filing: Q2 2009
• FERC Certificate: Q2 2010
• Construction Start: Summer 2010
• In-Service Date: November 1, 2011
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These Economic Times…
• Three financially sound partners able to execute on
construction of a large pipeline project
• The silver lining:– Economic slowdown means pipe and construction costs may
drop before partners need to commit to these costs– For every drop of $100 per ton of steel, project saves $40
million
Sunstone Mantras
• Existing corridor
• Fewer miles
• Realistic cost
• Market diversity and size
• Lowest cost transportation
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