Transco s Atlantic Access Project

Transcription

1 FOR DISCUSSION PURPOSES ONLY NOT AN OFFER OR ACCEPTANCE OF AN OFFER Transco s Atlantic Access Project April 2012

2 Atlantic Access Overview Path Capacity (Mdt/d) Receipt Point Delivery Point Original Paths Natrium 700 DTI Natrium Liberty Butler 600 Butler Liberty Rivervale 300 Rivervale Liberty Supplemental Paths Station Grugan Sta. 85 Station MARC1 Sta. 85 Leidy West 200 Sta. 515 Leidy Total 2,300 Open Season Feb. 3 July 13, 2012 Microsoft Office PowerPoint 2007.lnk Proposed ISD for all Paths is December 2015 Natrium Path Butler Path Rivervale Path Station 520 Path Station 517 Path Leidy West Path Zone 6 Zone 5 Zone 4 Zone 3 April,

3 Outcome of the February 3rd, Open Season > 3 Firm Paths Natrium Path (900Mdt/d) Capacity is Available Rivervale Path (300Mdt/d) Fully subscribed Butler Path (600Mdt/d) Fully subscribed > All 3 paths terminate at the Liberty Interconnection Transco s Zone 3 Butler Natrium Rivervale S195 Liberty MP Transco Fuel (April 1, 2012) Zone 6 fuel is 0.65% Zone 5 fuel is 1.20% Zone 4 fuel is 1.43% Zone 3 fuel is 0.34% 0% Fuel for Deliveries made by displacement in Zones 5, 4, & 3 April,

4 Atlantic Access Supplemental Open Season Path Capacity (Mdt/d) Original Paths Receipt Point Delivery Point Natrium 700 DTI Natrium Liberty Butler 600 Butler Liberty Rivervale 300 Rivervale Liberty Supplemental Paths Station Grugan Sta. 85 Station MARC1 Sta. 85 Leidy West 200 Sta. 515 Leidy Total 2,300 Natrium Path Butler Path Rivervale Path Station 520 Path Station 517 Path Leidy West Path Zone 6 Zone 5 Zone 4 Zone 3 Transco Fuel (April 1, 2012) Zone 6 fuel is 0.65% Zone 5 fuel is 1.20% Zone 4 fuel is 1.43% Zone 3 fuel is 0.34% 0% Fuel for Deliveries made by displacement in Zones 5, 4, & 3 April,

5 Production Activity April,

6 PA Marcellus Activity Permits top 10 counties NE Permitting is a forward looking indicator North/South in 2011 are 2.1 to 1 but that is a lower ratio than in 2010 SW Top 10 PA Counties Q1-Q by Permits Top 10 PA Counties Q1-Q by Permits Map Updated 12/5/11 County NE/SW Δ% (annual) Δ% (annual) Permits Permits Permits '10 to '11 '09 to '10 Rank Rank Rank Bradford NE % 93% Tioga NE % 102% Lycoming NE % 172% Washington SW % 19% Greene SW % -2% Susquehanna NE % 48% Clearfield NE % 6% Butler SW % 102% Westmoreland SW % -2% Wyoming NE % 709% ,633 2,724 1,597 33% 71% April,

7 Wells/Month PA Marcellus - Well Spuds 2008 to 2011 Doesn t include WV Update (Dec 09) Update (Dec 10) 250 Vertical Horizontal All PA 104H (12 Mo. Avg.) 151H (12 Mo. Avg.) H (12 Mo. Avg.) 50 0 Nov-11 Sep-11 Jul-11 May-11 Mar-11 Jan-11 Nov-10 Sep-10 Jul-10 May-10 Mar-10 Jan-10 Nov-09 Sep-09 Jul-09 May-09 Mar-09 Jan-09 Nov-08 Sep-08 Jul-08 May-08 Mar-08 Jan-08 April,

8 Gross Production (Bcf/d) Marcellus Production Estimates (past and present) No Utica, No New York PAST FUTURE 14 Navigant '08 Wood Mac 10/'11 * Data Gathered from publicly available sources or used by permission Tudor, P & H 1/'10 Bentek 11/'10 CHK 6/'11 (Mid-Scenario) Ind. Low '09 Ind. High '09 4 Qtr. Avg. Low Curve 8 4 Qtr. Average High Curve PA DEP 6 mo. Avg. 01/'12 Penn State (PA only) 7/' PA DEP Marcellus Production Data Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 April,

9 SW Marcellus Infrastructure Development** More takeaway needed by 2015 NFG Line N (1&2) Gas Treating 2.2 Bcf/d Blair Dry Gas Gathering 1.8 Bcf/d Regulated Projects 1.0 Bcf/d Bedford Dry Gas Gathering Bcf/d Total by Bcf/d * Data Gathered from publicly available sources ** Butler County is largely excluded April,

10 Northeast Shale Activity Q1-Q Still Early for Utica, but Ohio Shale may be #2 soon Permits PA Marcellus (4488) WV Marcellus (506) OH Utica (128) [Q1-Q3 (39)] Susquehanna Dominion East Ohio OH Butler Lycoming PA Marshall OH Utica Wells Drilled (35) [Q1-Q3 (9)] Utica Completed (3) MD Eagle Ford Permit (compare Utica) 2008 (26) 2009 (94) 2010 (1,010) 2011 (2,826) WV VA April,

11 Transportation Path Details April,

12 Natrium Path Proposed Receipt Points Contract Path April,

13 Significant Capability to Blend (2:1 rich to lean) > While Transco s gas tariff has a BTU limit of 1,100, Transco s tariff and operations allow flexibility to provide for for significant gas blending on Atlantic Access Potentially as much as 88,000 bbls/d (based on 1.5 MMdt/d capacity) > The expectation is that the heavy liquids would be processed prior to entering Transco s system and that only Ethane remains as an issue. 537 Mdt/d 1,122 Btu 14% C2 498 MDt/d 1,137 Btu 16% C2 Ft. Beeler Majorsville Line N Cantaral Waynesburg Crayne 465 Mdt/d 1,035 Btu Shamrock Atlantic Access To Transco Mainline 1,500 Mdt/d 1,099 Btu Natrium April,

14 Station 520 Path Receipt Points Potter Tioga Bradford Susquehanna 520 Path Receipt Area Lycoming Sullivan Wyoming Lackawanna Newark NYC Clinton Columbia Luzerne Contract Path Montour Centre Legend Existing Meter Stations Marcellus Interconnects In Service I/C Agmt. In Place In Negotiations Preliminary To Sta. 85 April,

15 Station 517 Path Receipt Points Potter Tioga Bradford Susquehanna Lycoming Sullivan Wyoming Lackawanna Clinton Luzerne Montour Columbia Centre Contract Path Legend Existing Meter Stations Marcellus Interconnects In Service I/C Agmt. In Place In Negotiations Preliminary 517 Path Receipt Area To Sta. 85 April,

16 Leidy West Path Receipt Points Potter Tioga Bradford Susquehanna Contract Path Lycoming Sullivan Wyoming Lackawanna Clinton Luzerne Centre Leidy West Receipt Area Montour Columbia Legend Existing Meter Stations Marcellus Interconnects In Service I/C Agmt. In Place In Negotiations Preliminary To Sta. 85 April,

17 Open Season Details April,

18 Open Season > As a result of the original open season Transco has two anchor shippers under the project for a TCQ of 900,000 dt/day: 600,000 dt/day on the Butler Path, and 300,000 dt/day on the Rivervale Path. > Any other shipper requesting at least 300,000 dt/d on the Natrium Path will be designated an Anchor Shipper; Anchor Shippers will be allocated capacity first. Anchor shippers may be provided preference with regard to negotiated rates under the Project. > On the 520, 517, & Leidy West paths capacity will be allocated by rate, term, and pro-rata by path. > Capacity Available in the Open Season: Natrium Path: 700,000 dt/d Station 520 Path: 250,000 dt/d Station 517 Path: 250,000 dt/d Leidy West Path: 200,000 dt/d April,

19 Open Season Procedure and Timing > Open Season commenced on February 3, Supplemental Open Season commenced April 16, both will close July 13, > At the conclusion of the Open Season, Transco may: (i) revise or cancel any scope element of the Project; or (ii) starting with the largest shipper, allow voluntary reduction of requested TCQs; or (iii) allocate the firm transportation capacity under the Project (as further described in the open season announcement). > Any shipper desiring firm transportation service under the Project must: (i) on or before July 13 th submit to Transco an Open Season Transportation Request form. (ii) execute and deliver to Transco before an executed precedent agreement (PA) for firm transportation service under the Project by Aug. 3, Approvals for firm transportation on each path must be met as follows: Path Shipper Approval Transco Approval Sta. 520 & Sta. 517 August 31, 2012 September 30, 2012 Leidy West and Natrium September 30, 2012 October 31, 2012 Butler December 31, 2012 January 31, 2013 > Transco may extend any Project deadlines. April,

20 Open Season Procedure Rates > Transco is offering the six paths under the Project with a single Project recourse reservation rate of $0.621 per dt/day The recourse rate for the Project is based on estimated capital and capacity, the actual recourse rate will be determined by actual costs and actual capacity. > Shippers may elect under the Precedent Agreement to choose either the Project recourse rate or a negotiated reservation rate. Negotiated reservation rates are as follows: Path Negotiated Rate Natrium $0.55/dt/d (Capacity Allocated to Anchor Shippers and then pro-rata by requested capacity). Path Minimum Negotiated Rate Station 520 $0.60/dt/d Station 517 $0.55/dt/d Leidy West $0.20/dt/d (Capacity Allocated by highest rate and then by highest term and then pro-rata by requested capacity per path). April,

21 Term Extension - Future Projects > If Shipper elects the negotiated rate offered under the Project: Transco will agree to: a term extension provision providing the shipper the option to extend the term of the service agreement for a five-year period for all or a portion of the TCQ in effect during the primary term and, at the shipper s option, at either the existing negotiated rate or the applicable recourse rate; and a second term extension provision providing the shipper the option to extend the term of the service agreement for a one-year period for all or a portion of the TCQ in effect during the first term extension at the applicable recourse rate. If Transco pursues a future expansion of the firm transportation capacity comprising the Natrium or Butler Paths and Transco determines that the incremental cost of service for such expansion would be lower than the annual revenues Transco would expect to collect from the shippers under such expansion at the applicable recourse rate under the Project, then Transco plans to seek to roll-in the cost of such future expansion into the cost of service of the Project. April,

22 Term, Fuel, Credit, ISD > Term Minimum acceptable to Transco is 15 years. > Fuel and Other Charges Transco would seek rolled-in treatment for fuel and electric power charges. In addition to the negotiated reservation rate, Buyer would be charged fuel and lineloss retention, electric power charges, commodity charges and applicable surcharges under Rate Schedule FT. > Credit Shipper will be deemed to creditworthy if it has a long term senior unsecured debt rating of BBB- or better from Standard and Poor s or Baa3 or better from Moody s Investor Services For non-creditworthy Shippers, credit support equal to 3 months FT will be required. Shipper will be required to provide credit support within 1 month of Transco approval (slide 16). > In-Service Date Target ISD is December April,

23 Market Information April,

24 21-Jul Aug-08 5-Sep Sep Oct Nov-08 6-Dec Dec Jan Feb-09 8-Mar Mar Apr May-09 8-Jun-09 1-Jul Jul Aug-09 8-Sep-09 1-Oct Oct Nov-09 9-Dec-09 1-Jan Jan Feb Mar-10 3-Apr Apr May Jun-10 4-Jul Jul Aug Sep-10 4-Oct Oct Nov Dec-10 4-Jan Jan Feb Mar-11 6-Apr Apr May Jun-11 7-Jul-11 Market Accessible to Atlantic Access Shippers No Leidy Volumes included 7,000,000 6,000,000 Sta 195 North Sch. Qty. (Dt/d) Sta 195 to Elba Deliveries (Dt/d) Zone 4 Allocated Deliveries (Dt/d) 5,000,000 4,000,000 3,000,000 2,000,000 1,000, April,

25 Market Accessible to Atlantic Access Shippers 7,000,000 6,000,000 Sta 195 North Sch. Qty. (Dt/d) [1,095 days sorted by vol.] Metered Qty. Sta. 195 to Elba GA (Dt/d) [1,095 days sorted by vol.] Min. Max. Avg. 2,290,658 Dt/d 6,801,846 Dt/d 3,677,598 Dt/d Zone 4 Allocated Qty. (Dt/d) [1,095 days sorted by vol.] 5,000,000 10% 50% 30% 70% 90% 4,000,000 3,000,000 2,000,000 1,000, April,

26 Demand Growth will be led by Power Gen Operating Coal Power Plants Proposed LNG Exports Proposed GTL Sources: Wood Mackenzie H Base Case Energy Velocity FERC Zone 6 Firm Capacity 5,494 MDth/d Zone 6 Demand Year MMDth/d Change 1.1 Zone Zone 5 Firm Capacity 2,175 MDth/d Zone 5 Demand Year MMDth/d Change 1.0 Zone 5 Zone 4 Firm Capacity 1,305 MDth/d Zone 4 Demand Year MMDth/d Change 0.7 Zone 4 Zone 3 Demand Year MMDth/d Change Zone 4B Zone 4A Florida Demand Year MMDth/d Change 0.3 April,

27 Zone 6 Market Access Party Type Party Baltimore Gas And Electric Co Consolidated Edison Company Of New York Inc Delmarva Power & Light Company Eastern Shore Natural Gas Company Keyspan Gas East Corporation D/B/A National Grid New Jersey Natural Gas Company Orange & Rockland Utilities Peco Energy Company Philadelphia Gas Works Pivotal Utility Holdings, Inc. Pseg Energy Resources & Trade LLC South Jersey Gas Company The Brooklyn Union Gas Company D/B/A National Grid NY UGI Central Penn Gas, Inc. UGI Penn Natural Gas, Inc. UGI Utilities Inc Washington Gas Light Company Industrial ConocoPhillips Tosco Refinery Industrial Holcim (Us) Inc. Industrial Solo Cup Operating Corporation Industrial Sunoco Inc Industrial United States Gypsum Company Park & Loan Transco Park & Loan Station 210 Interconnect Algonquin Centerville Interconnect Columbia Gas Transmission Downingtown Interconnect Columbia Gas Transmission Martins Creek #3 Interconnect Columbia Gas Transmission Rockville Interconnect Dominion Transmission Inc Leidy Interconnect National Fuel Gas Supply Corporation Leidy Interconnect National Fuel Gas Supply Corporation Wharton Interconnect Texas Eastern Transmission, LP Lambertville Interconnect UGI Storage Company Pooling Transco Pooling Station 210 Power Gen Calpine Mid Merit, LLC Delta Power Power Gen Nextera Energy Power Marketing, LLC Post Road Power Gen Ppl Interstate Energy Company Power Gen UGI Utilities Inc Hazleton Power Power Gen Virginia Power Energy Marketing Inc Pittsburgh Zone 5 Zone 6 VA MD PA Philadelphia 195 Baltimore Wash., DC DE NJ Rivervale 210 NY NYC Station 210 Pool April,

28 Zone 5 Market Access Party Type Party City Of Bessemer City North Carolina City Of Greenwood South Carolina City Of Kings Mountain North Carolina City Of Laurens South Carolina City Of Lexington North Carolina City Of Monroe North Carolina City Of Shelby North Carolina City Of Union South Carolina Clinton-Newberry Natural Gas Authority Columbia Gas Of Virginia Inc Lynchburg Fort Hill Natural Gas Authority Frontier Natural Gas Company, LLC Patriots Energy Group Piedmont Natural Gas Company Inc Public Service Company Of North Carolina South Carolina Electric & Gas Company Southwestern Virginia Gas Company Washington Gas Light Company Industrial First Quality Tissue SE, LLC Shaw Industrial Industrial Owens Corning Sales, LLC City Of Danville Virginia City Of Fountain Inn South Carolina Commission Of Public Works, City Of Greer South Carolina Park & Loan Transco Park & Loan Station 165 Interconnect Cardinal Pipeline Company LLC Interconnect Carolina Gas Transmission Corporation Interconnect Columbia Gas Transmission Dranesville Interconnect Columbia Gas Transmission Emporia Waldrop Interconnect Dominion Cove Point LNG, LP Pleasant Valley Interconnect Dominion Transmission Inc Nokesville Interconnect East Tennessee Natural Gas Cascade Creek Interconnect Elba Express Company, L.L.C. SC Interconnect Pine Needle Lng Company, LLC Pooling Transco Pooling Station 165 Power Gen Carolina Power & Light Company D/B/A Progress Energy Carolinas, Inc. Power Gen Cherokee County Cogeneration Partners LLC Power Gen Duke Energy Carolinas, LLC Power Gen Hess Corporation Park Road Power Gen Tec Trading, Inc. Power Gen Virginia Electric And Power Company D/B/A Dominion North Carolina Power Power Gen Virginia Power Services Energy Corp Inc Zone 4 Pine Needle Station 165 Pool Zone 5 SC 165 Charlotte VA NC Richmond April,

29 Zone 4 Market Access Party Type Party Industrial Georgia-Pacific Consumer Products LP Industrial International Paper Industrial Pratt Industries (USA) Mill Division D/B/A Visy Paper, Inc. Interconnect Elba Express Company, L.L.C. GA Interconnect Hattiesburg Gas Storage Company Interconnect Leaf River Energy Center Clarke Interconnect Mississippi Hub, LLC STG Interconnect Petal Gas Storage, L.L.C. Interconnect Southeast Supply Header, L.L.C. Interconnect Southern Natural Gas Company LLC Alabama Gas Corporation Arlington Gas Pipeline L P Atlanta Gas Light Company Atmos Energy Corporation City Of Alexander City, Alabama City Of Lagrange, Georgia Gulf South Pipeline Company LP Magnolia Municipal Gas Authority Of Georgia Sylacauga Utilities Board Town Of Liberty Mississippi Park & Loan Transco Park & Loan Station 85 Z4 Pooling Transco Pooling Station 85 Z4 Power Gen Constellation Energy Commodities Group, Inc. Hillabee Power Power Gen Municipal Electric Authority Of Georgia Power Gen Oglethorpe Power Corporation Power Gen Santee Cooper Power Gen Scana Energy Marketing Inc Power Gen Southern Company Services, Inc. Power Gen Tenaska Alabama II Partners, LP Transco Storage Transco Eminence Storage 65 MS S Eminence Station 85 Pool 85 AL Zone 4A Atlanta Zone 4 GA Zone 5 Zone 4B FL April,

30 Zone 3 Market Access Zone 2 45 Zone 3 Station 50 Pool Trunkline LNG Cameron LNG 50 Washington S LA Station 65 Pool 65 Party Type Party Industrial Occidental Chemical Corporation Industrial Zen-Noh Grain Corporation Interconnect American Midstream (MIDLA), LLC Ethel Interconnect Bridgeline Holdings LP St James Faustina Interconnect Crosstex LIG, LLC Terrebonne Interconnect Cypress Gas Pipeline LLC Romeville Interconnect Florida Gas Transmission Company St. Helena Interconnect LA Storage, LLC Liberty Gas Storage Interconnect Pine Prairie Energy Center LLC Interconnect Port Barre Investments, LLC Interconnect Texas Gas Transmission, LLC Mamou Louisiana Municipal Gas Authority Park & Loan Transco Park & Loan Station 65 Pooling Transco Pooling Station 50 Pooling Transco Pooling Station 62 Pooling Transco Pooling Station 65 Transco Storage Transco Washington Storage Sabine Pass LNG April,

31 Proposal Disclaimer > Legal Disclaimer: Neither this proposal nor the ongoing discussions, exchanges of information, and correspondence between Transco and Shipper shall constitute or imply a commitment or binding obligation between the parties or their respective affiliated entities, regarding the project. Each of Transco and Shipper reserves the right, in its sole and absolute discretion, to reject any and all proposals and to terminate discussions at any time. If, in the future, the parties elect to enter into a binding commitment regarding the project, such commitment shall be explicitly stated in a separate written agreement executed by both parties ( Definitive Agreement ), and the parties hereby affirm that their discussions, correspondence, and other activities shall not be construed as forming a contract regarding the project or any other transaction between them without execution of such separate written agreement. Without limitation of the generality of the foregoing, for purposes hereof, a Definitive Agreement does not include a proposal, a negotiated term sheet, an executed letter of intent or any other preliminary written agreement or offer (whether or not signed by either of the parties), unless specifically stated in writing to be a definitive agreement and executed by both parties. April,