Northeast Energy Direct_Northeast Energy Summit

Tennessee Gas Pipeline Co, L.L.C.
Northeast Energy Direct (NED) Project
Project Update
Northeast Energy Summit
September 17, 2014
Curtis Cole
Forward-Looking Statements / Non-GAAP Financial Measures
This presentation contains forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly
to historical or current facts. In particular, statements, express or implied, concerning future actions, conditions or events, future operating results or
the ability to generate revenues, income or cash flow or to make distributions or pay dividends are forward-looking statements. Forward-looking
statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future
results of operations of Kinder Morgan Energy Partners, L.P., Kinder Morgan Management, LLC, El Paso Pipeline Partners, L.P., and Kinder Morgan,
Inc. may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond
Kinder Morgan's ability to control or predict. These statements are necessarily based upon various assumptions involving judgments with respect to
the future, including, among others, the ability to achieve synergies and revenue growth; national, international, regional and local economic,
competitive and regulatory conditions and developments; technological developments; capital and credit markets conditions; inflation rates; interest
rates; the political and economic stability of oil producing nations; energy markets; weather conditions; environmental conditions; business and
regulatory or legal decisions; the pace of deregulation of retail natural gas and electricity and certain agricultural products; the timing and success of
business development efforts; terrorism; and other uncertainties. There is no assurance that any of the actions, events or results of the forwardlooking statements will occur, or if any of them do, what impact they will have on our results of operations or financial condition. Because of these
uncertainties, you are cautioned not to put undue reliance on any forward-looking statement. Please read "Risk Factors" and "Information Regarding
Forward-Looking Statements" in our most recent Annual Reports on Form 10-K and our subsequently filed Exchange Act reports, which are available
through the SEC’s EDGAR system at www.sec.gov and on our website at www.kindermorgan.com.
We use non-generally accepted accounting principles (“non-GAAP”) financial measures in this presentation. Our reconciliation of non-GAAP financial
measures to comparable GAAP measures can be found in the appendix to this presentation and on our website at www.kindermorgan.com. These
non-GAAP measures should not be considered an alternative to GAAP financial measures.
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Kinder Morgan: North American Assets
 4th largest energy company in North
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America with combined enterprise
value of approximately $105 billion
Largest natural gas network in U.S.
— Own an interest in / operate
approximately 68,000 miles of natural
gas pipeline, and 643 Bcf of storage,
incl. 18 Bcf of LNG storage
— Connected to every important U.S.
natural gas basin, including: Eagle
Ford, Marcellus, Utica, Uinta,
Haynesville, Fayetteville, Barnett
Largest independent transporter of
petroleum products in U.S.
— Transport ~2.3 MMBbl/d (b)
Largest transporter of CO2 in U.S.
— Transport ~1.3 Bcf/d of CO2 (b)
Largest independent terminal operator
in U.S.
— ~180 liquids / dry bulk terminals
— ~112 MMBbls dom. liquids capacity
— ~103 MMtons of dry bulk products
Only Oilsands pipe serving West
Coast
— TMPL transports ~300 MBbl/d to
Vancouver / Washington State;
expansion under way increasing
capacity to 890 MBbl/d
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TGP System Overview
System Overview
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Market Area Supply Trends
13,900 Miles Pipe Facilities
79 Bcf Storage
~8.0 Bcf/d Capacity
1.4 Million Horsepower
> 500 FT Customers
Supply & Market Rich
Overall Annual Throughput
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Northeast Production
Marcellus and Utica
UTICA
UTICA
MARCELLUS
Marcellus Area Production
Utica Area Production
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Production continues to grow
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~ 22 Bcf/d Dry Gas by 2020
TGP largest Marcellus transporter to date
Production in initial stages
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~ 4.0 Bcf/d by 2020
TGP well positioned
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~ 2.5 Bcf/d – Avg 2012 / 2013
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~0.6 Bcf/d current flow
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~ 3.6 Bcf/d – Winter ’13/14
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~0.7 Bcf/d EOY 2014
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~ 4.0 Bcf/d – Winter ’14/15 (est)
Source: U. S. Capital Advisors
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New England / Northeast Trends
New England’s Gas Burn:
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~ 52%: Gas-fired electricity generated 2013
(Source: ISO-NE)
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~ 95%: TGP average Z6 winter load factor
•
Various IT services curtailed most days
Supply Sources
•
In 2012, the Northeast region received 60%
of its gas supply from Eastern US sources,
mainly shale formations. (Source: Navigant North
American Natural Gas Market Outlook, Spring 2013)
•
It is estimated that by 2022, based on
current trends and source supply that the
Northeast will receive 92% of ifs gas supply
from Eastern US sources. (Source: Navigant
North American Natural Gas Market Outlook, Spring 2013)
Pipeline Expansion - Pricing Impact
Extreme Peaks
$25.0000
Historical Pricing
• New England and New York traded at parity
2013 Expansions to
NY/NJ, not NE
November 2013 NY/NJ expansions in-service
• New York basis significantly reduced
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TGP’s NEUP Project
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Spectra’s NJ-NY project
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Transco’s NE Supply Link
• New England basis remained high
$20.0000
$15.0000
* - Impact of NE
Infrastructure
constraints
High Power Load
Reduced LNG Imports
Mild Winter
$10.0000
*
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*
$5.0000
January 2014 price spikes
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Limited fuel switching capability in NY,
demand for gas stayed high
•
LDC’s with firm capacity to gate had
minimal exposure to high spot prices
Forward pricing Winters 2014 - 2016
•
New York: lower basis continues due to
added infrastructure
•
New England: basis remains strong and
volatility increases
$0.0000
Winter Winter Winter Nov-13 Dec-13 Jan-14 Winter Winter Winter
10-11 11-12 12-13
13-14 14-15 15-16
New England
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New York
Average settled cash prices for winters 2010/11 through 2013/14 (Source: ICE)
Current forward index prices for winters 2014/15 through 2015/16 (Source: Inside FERC)
Basis Differential Solution
• TGP’s 1.2 Bcf/d Northeast Energy Direct
Project is expected to reduce the New
England basis and price volatility,
providing long-term measurable benefits to
New England and Atlantic Canada markets
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TGP’s Recent Development
Project
Dth/d
Shippers
In-Service
Status
300L Project
350,000
EQT Energy
Nov 1, 2011
In-service
NSD
250,000
Cabot, Seneca, Anadarko, Mitsui
Nov 1, 2012
In-service
Northampton
10,400
Berkshire, Bay State
Nov 1, 2012
In-service
MPP Project
240,000
Chesapeake, Southwestern
Nov 1, 2013
In-service
NE Upgrade
636,000
Chesapeake, Statoil
Nov 1, 2013
In Service
Utica Backhaul
500,000
Various Producers
April 1, 2014
In-Service
Rose Lake
230,000
South Jersey Res., Statoil
Nov 1, 2014
Under Construction
Uniondale
34,000
UGI Resources
Nov 1, 2014
Under Construction
CT Expansion
72,100
Yankee, Southern Ct,
Connecticut Natural
Nov 1, 2016
P.A.s executed, Filed at FERC
Broad Run Projects
790,000
Antero Resources
Nov 1, 2017
P.A.s executed, FERC Filing Prep
SW Louisiana Supply
900,000
Mitsubishi, MMGS
Nov, 2017
P.A.s executed, FERC Filing Prep
NED - Market
1.2 – 2.2B
In Active Development
Nov 1, 2018
In Active Development
NED – Supply
0.8 – 1.0B
In Active Development
Nov 1, 2018
In Active Development
Proven Track Record
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Northeast Energy Direct Project – Full Path
Transformative NED Project links Large Volume, High
Pressure, and Prolific Marcellus supplies to New England
* Any final route determination is subject to surveying, land acquisition and
easements, environmental impact assessments, permitting and stakeholder
input. Final route will be finalized in any FERC Certificate that has been issued.
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Northeast Energy Direct Project – Supply Path
Project Details
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In-Service: November 2018
Scalable Volume: 0.6 – 1.0 Bcf/d
Provides incremental, direct
access to Northeast supply
~135 miles of greenfield 30” pipe
 1440 psig
~32 miles of 36” looping (TGP 300
Line)
Three new C/S including booster
C/S to deliver gas into Iroquois at
Wright
Direct access to:
 TGP’s existing regional
network
 Broad range of suppliers
 Large geographical area
The TGP Advantage
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Provides Northeast customers with direct access to prolific
Marcellus supplies.
Provides access to a diverse set of producers located in the various
counties within the core of the Marcellus.
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Incremental supply liquidity at
Wright, NY
 Serves existing and
proposed market needs
Access to various producers
Benefit of integration with TGP’s
existing pipeline network.
Proven on time project execution
Route previously reviewed 10
Northeast Energy Direct Project – Market Path
Project Details
 In-Service: November 2018
 Scalable Volume: 0.8 – 2.2 Bcf/d
 ~177 miles new and co-located pipe
 ~73 miles of market delivery laterals
 0.8 Bcf/d scalable to 2.2 Bcf/d
Market Reach
 MA, CT, RI, NH, NY directly
 M&NP & PNGTS U.S. market
 Existing & Future Power Generation
 Direct & Indirect via AGT’s HubLine
 Pending NESCOE/FERC action to allow
cost recovery
 Expected growth due to EPA
Requirements
 Atlantic Canada / Potential LNG Export
 CNG/LNG Portable Pipeline
Transformative NED Project is a long-term market solution that
provides the level of capacity to significantly reduce basis
differentials in New England and provides breadth of access to
current and new electric generation facilities
Market Benefits
 Liberates key bottlenecks
 Supply Optionality @ Wright, NY
 TGP 200 Line, NED – Supply,
Iroquois Gas Trans., Constitution,
 Reduces energy costs region-wide
 Spurs economic growth region-wide
 Incrementally enhances TGP operations
and benefits entire region
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Northeast Energy Crisis
The energy situation is likely to worsen if no new capacity is constructed;
• Currently, four large New England coal, oil and nuclear power plants are
planning to retire in the next few years due to increasing operating costs and
new emissions standards. This includes the Brayton Point and Salem Harbor
Plants in MA, the Norwalk Harbor Plant in CT, and the Vermont Yankee plant in
VT. (Source: ISO-NE, 2013)
• Unless new capacity is provided, New England’s power system will be
increasingly vulnerable to electric service disruptions and consumer prices will
increase greatly. The region will be at a large economic and competitive
disadvantage to neighboring states and regions due to high energy costs.
(Source: New England States Committee on Electricity, 2014)
Solution:
• NESCOE, ISO-NE, and New England’s Governors have all publically
identified natural gas pipelines as a solution to the Northeast Energy
crisis.
Northeast Energy Crisis
Unprecedented gas capacity constraints on existing pipelines
(Source: ISO-NE, EIA.gov)
Highest and most volatile gas commodity costs in the nation
(Source: ISO-NE, EIA.gov)
Northeast Energy Crisis
LETTER FROM THE NEW ENGLAND U.S. SENATE
DELEGATION TO DEPARTMENT OF ENERGY
SECRETARY MONIZ – December 13, 2013
“
“
According to the Federal Energy
Regulatory Commission (FERC), the New
England market is particularly at risk for
service disruption due to limited pipeline
capacity into the region. This not only
threatens reliability but also results in
more volatile natural gas and power prices
during periods of high demand.”
Energy infrastructure in the region is
simply inadequate to meet demand and
has been a key factor in the energy price
volatility.”
Governors’ Statement on
Northeast Energy Infrastructure
•
In Dec. 2013, New England Governors
called attention to the shortage of energy
infrastructure.
•
An open letter was signed by Governors
Malloy (CT), LePage (ME), Patrick (MA),
Hassan (NH), Chafee (RI), and Shumlin
(VT).
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“To ensure a reliable, affordable and
diverse energy system, we need
investments in additional energy
efficiency, renewable generation,
natural gas pipelines, and electric
transmission.”
•
“These investments will provide
affordable, clean, and reliable energy
to power our homes and businesses;
make our region more competitive by
reducing energy costs; attract more
investment to the region; and protect our
quality of life and environment.”
NED – Market Benefits
• An estimated additional $25M to local taxing
bodies in MA, $9M in NY, $2.4M in CT and
$1.1M in NH
• Estimated creation of 3,000 constructionrelated jobs
• Economic stimulus to surrounding areas
during construction (retail, hospitality, etc.)
• Providing long-term energy reliability to the
region
• Creates potential new source of energy for
communities
KM Announces Initial Anchor Shippers
On July 30, 2014, Kinder Morgan
announced it had reached agreement
with key local natural gas distribution
companies (“LDCs”) throughout New
England to transport approximately
500,000 Dth/d of long-term firm
transportation on the Northeast
Energy Direct Project route.
These LDC’s include;
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The Berkshire Gas Company
Columbia Gas of Massachusetts
Connecticut Natural Gas Corporation
Liberty Utilities (EnergyNorth Natural
Gas) Corp.
National Grid
Southern Connecticut Gas
Corporation
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Northeast Energy Direct Project Overview
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New England region as a whole stands to benefit from the
proposed NED Project as it will enable New England to
sustain its electric grid, reduce emissions, and lower
energy costs to compete on a more level economic playing
field with other regions with access to low-cost gas
NED Project interconnects with Iroquois serving upstate
and downstate NY, CT, Eastern Canada
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NED Project expands the existing TGP system within PA,
NY, MA, NH and Connecticut.
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NED Project interconnects with Joint Facilities of M&NP
and PNGTS serving NH, ME, Atlantic Canada, and southern
New England via HubLine to Algonquin’s system
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NED Project, as currently configured, would result in the
construction of approximately 418 miles of new pipeline,
additional meter stations, compressor stations and
modifications to existing facilities
The proposed NED Project could bring an estimated
increased capacity of up to 2.2 Bcf/d to the Northeast,
which is equivalent to an additional 1.5MM households
Estimated Project Schedule
Action
Timing
Outreach Meetings
Ongoing
Route Selection and
Permit Preparation
Ongoing
Submit FERC pre-filing Letter
Sept. 15, 2014
Agency Consultations
Ongoing
File for FERC pre-filing
October 2014
KM Open Houses
Nov – Dec 2014
FERC Scoping Meetings
Jan – Feb 2015
FERC filing
Sept. 2015
Anticipated FERC approval
November 2016
Proposed Start of Construction
Activity
January 2017
Proposed In-Service
November 2018
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Project Presentations to Date
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April 7, 2014 : Montague (MA) Board of Selectmen
April 8, 2014: Dracut (MA) Board of Selectmen
April 9, 2014: Ashburnham (MA) Board of Selectmen
April 21, 2014: Hollis (NH) Public Meeting
April 22, 2014: Plainfield (MA) Board of Selectmen
April 23, 2014: Ashby (MA) Board of Selectmen
May 12, 2014: Pepperell (MA) Board of Selectmen
May 13, 2014: Warwick (MA) Public Meeting
May 14, 2014: Tyngsborough (MA) Board of Selectmen
June 4, 2014: Richmond (MA) Board of Selectmen
June 5, 2014: North Reading (MA) Board of Selectmen
June 23, 2014: Groton (MA) Board of Selectmen
June 24, 2014: Tewksbury (MA) Board of Selectmen
June 25, 2014: Townsend (MA) Board of Selectmen
June 26, 2014: Bolton (MA) Board of Selectmen
July 8, 2014: Erving (MA) Board of Selectmen
July 9, 2014: Andover (MA) Board of Selectmen
July 10, 2014: Wilmington (MA) Board of Selectmen
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July 15, 2014: Lunenburg (MA) Board of Selectmen
July 22, 2014: Royalston (MA) Board of Selectmen
July 23, 2014: Berlin (MA) Board of Selectmen
July 24, 2014: Shelburne (MA) Board of Selectmen
July 24, 2014: Franklin Regional Council of Governments
(Greenfield, MA)
August 5, 2014: Nashoba Valley Chamber of Commerce
(Lunenburg, MA)
August 12, 2014: Athol (MA) Board of Selectmen
August 14, 2014: Washington (MA) Board of Selectmen.
August 18, 2014: Boylston (MA) Board of Selectmen
August 19, 2014: Northfield, (MA) Board of Selectmen
August 20, 2014: Northern Middlesex Council of
Governments (MA)
August 26, 2014: Dalton (MA) Board of Selectmen
August 27, 2014: Stamford (CT)
August 28, 2014: Conway (MA) Board of Selectmen
Contacts
Curtis Cole
Director, Business Development
[email protected]
713-420-3373 (office)
832-217-5161 (cell)
Coralie Sculley
Account Director – Marketing
[email protected]
713-420-6336 (office)
713-818-0411 (cell)
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