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All rights reserved. Enterprise Products Partners L.P. 1
Why Natural Gas Liquids are Important to the
Wyoming Natural Gas Industryor
Support Your Local Cryogenic Processing Plant
Presented to
Wyoming Pipeline Authority
August 24, 2004
All rights reserved. Enterprise Products Partners L.P. 2
Why Natural Gas Liquids are Important to the Wyoming Natural Gas Industry
• Presentation OverviewPresentation Overview
• Brief introduction to Enterprise and Mid-America Pipeline (MAPL)Brief introduction to Enterprise and Mid-America Pipeline (MAPL)
• MAPL’s relationship to Wyoming and the natural gas pipeline industryMAPL’s relationship to Wyoming and the natural gas pipeline industry
• Comparison of MAPL to natural gas pipelinesComparison of MAPL to natural gas pipelines
• What MAPL gives WyomingWhat MAPL gives Wyoming
• What Wyoming gives MAPLWhat Wyoming gives MAPL
• System operation and expansion opportunitiesSystem operation and expansion opportunities
• Future of natural gas liquids in the Rockies (Wyoming)Future of natural gas liquids in the Rockies (Wyoming)
All rights reserved. Enterprise Products Partners L.P. 3
Overview of Enterprise (EPD)
2nd largest publicly traded energy partnership serving producers and consumers of natural gas and natural gas liquids (NGLs) IPO in July 1998 Currently ranked 336th on Fortune 500 and 7th on Forbes list of
America’s 25 Fastest-Growing Big Companies
Large platform of assets across the midstream energy value chain Only integrated natural gas and NGL transportation, fractionation,
processing, storage and import/export network in North America Pending merger with GulfTerra Energy Partners (GTM) adds
complementary scale, scope and diversity to existing operations
All rights reserved. Enterprise Products Partners L.P. 4
SYSTEM MAP OF COMBINEDSYSTEM MAP OF COMBINED ENTERPRISE (“EPD”) AND GULFTERRA (“GTM”)ENTERPRISE (“EPD”) AND GULFTERRA (“GTM”)
Combined System Map
ROCK SPRINGS
ST. PAUL
AUXSABLE
HOBBS
CONWAY
MT. BELVIEU
HOUSTON
SYSTEM MAP OFSYSTEM MAP OFENTERPRISE (“EPD”)ENTERPRISE (“EPD”)w/ South Texas Midstream Assetsw/ South Texas Midstream Assets
All rights reserved. Enterprise Products Partners L.P. 5
Relative Position Across the Value Chain (By Capacity)Relative Position Across the Value Chain (By Capacity)
Leading Business Positions Across Value Chain
Gas Gas GatheringGathering
Gas Gas ProcessingProcessing
Raw Mix Raw Mix PipelinePipeline
FractionationFractionationSalt Dome Salt Dome
StorageStorageImport Import
TerminalTerminalExport Export
TerminalTerminalDistributionDistribution
Duke FS Duke FS Enterprise Enterprise Enterprise Dow Enterprise Enterprise
Enterprise BP TEPPCO Koch TEPPCO Enterprise Dynegy Dow
Williams Enterprise Koch ConocoPhillips Dow Dynegy ChevronTexaco ConocoPhillips
BP Williams ChevronTexaco Dynegy Dynegy Trammo TEPPCO
Oneok ExxonMobil Dynegy El Paso Williams Koch
ConocoPhillips ONEOK BP ExxonMobil ConocoPhillips KinderMorgan
Devon ConocoPhillips El Paso BP BP ChevronTexaco
Dynegy Devon ExxonMobil ONEOK ExxonMobil Dynegy
Dynegy ConocoPhillips Duke El Paso El Paso
Williams ONEOK ExxonMobil
All rights reserved. Enterprise Products Partners L.P. 6
Introduction to Mid-America Pipeline (MAPL)
• Approximately 7,500 Approximately 7,500 miles of pipelinemiles of pipeline
• Transports Transports approximately approximately 700,000 barrels per 700,000 barrels per dayday
• Operates in 14 statesOperates in 14 states• FERC regulatedFERC regulated
All rights reserved. Enterprise Products Partners L.P. 7
Mid-America Pipeline CompanyWyoming History and Relationship
All rights reserved. Enterprise Products Partners L.P. 8
• Pipeline constructed in 1982 Pipeline constructed in 1982 • Expanded in 1999Expanded in 1999• Expanded in 2006?Expanded in 2006?
• Largest of two natural gas liquids Largest of two natural gas liquids pipelines leaving Wyomingpipelines leaving Wyoming
• Transported average 106,000 bpd Transported average 106,000 bpd in 2002 in 2002
• (4.4 million gallons per day)(4.4 million gallons per day)
• Connected to 15 gas processing Connected to 15 gas processing plantsplants
• Served 2.2 BCFD of gas Served 2.2 BCFD of gas processing in 2003 (46% of total)processing in 2003 (46% of total)
• Transports liquids 1,500 miles to Transports liquids 1,500 miles to market (Gulf Coast)market (Gulf Coast)
• 1,250 miles as the crow flies1,250 miles as the crow flies
Mid-America Pipeline CompanyWyoming History and Relationship
All rights reserved. Enterprise Products Partners L.P. 9
Mid-America Pipeline CompanyWhere Does 1,250 Miles Get You?
1250
Mile
s
All rights reserved. Enterprise Products Partners L.P. 10
Comparison of MAPL to Natural Gas Pipelines
All rights reserved. Enterprise Products Partners L.P. 11
Comparison of MAPL to Natural Gas Pipelines
• Who are the largest natural gas transporters out of Wyoming?Who are the largest natural gas transporters out of Wyoming?
2002 Volumes2002 Volumes
MMBTU / DayMMBTU / Day
774,489774,489
1,166,0001,166,000
755,477755,477
509,180509,180
408,298408,298
311,520311,520
194,226194,226
164,357164,357
119,946119,946
Kern RiverKern River
Wyoming Interstate Wyoming Interstate
TrailblazerTrailblazer
NorthwestNorthwest
CIGCIG
Kinder MorganKinder Morgan
QuestarQuestar
Southern Star CentralSouthern Star Central
Williston BasinWilliston Basin
All rights reserved. Enterprise Products Partners L.P. 12
2002 Volumes2002 Volumes
MMBTU / DayMMBTU / Day
774,489774,489
1,166,0001,166,000
755,477755,477
509,180509,180
408,298408,298
353,290353,290
311,520311,520
194,226194,226
164,357164,357
119,946119,946
Kern RiverKern River
Wyoming Interstate Wyoming Interstate
TrailblazerTrailblazer
NorthwestNorthwest
CIGCIG
Mid-America PipelineMid-America Pipeline
Kinder MorganKinder Morgan
QuestarQuestar
Southern Star CentralSouthern Star Central
Williston BasinWilliston Basin
Comparison of MAPL to Natural Gas Pipelines
• Who are the largest natural gas transporters out of Wyoming?Who are the largest natural gas transporters out of Wyoming?
All rights reserved. Enterprise Products Partners L.P. 13
2002 Volumes2002 Volumes
MMBTU / DayMMBTU / Day
774,489774,489
1,166,0001,166,000
755,477755,477
509,180509,180
353,290353,290
408,298408,298
311,520311,520
194,226194,226
164,357164,357
119,946119,946
Kern RiverKern River
Wyoming Interstate Wyoming Interstate
TrailblazerTrailblazer
NorthwestNorthwest
Mid-America PipelineMid-America Pipeline
CIGCIG
Kinder MorganKinder Morgan
QuestarQuestar
Southern Star CentralSouthern Star Central
Williston BasinWilliston Basin
2002 Volumes2002 Volumes
Sales Value / DaySales Value / Day
$ 4.9 MM$ 4.9 MM
$ 7.3 MM$ 7.3 MM
$ 4.8 MM$ 4.8 MM
$ 3.2 MM$ 3.2 MM
$ 2.8 MM$ 2.8 MM
$ 2.6 MM$ 2.6 MM
$ 2.0 MM$ 2.0 MM
$ 1.2 MM$ 1.2 MM
$ 1.0 MM$ 1.0 MM
$ 0.8 MM$ 0.8 MM
• Who are the largest natural gas transporters out of Wyoming?Who are the largest natural gas transporters out of Wyoming?
Comparison of MAPL to Natural Gas Pipelines
All rights reserved. Enterprise Products Partners L.P. 14
What MAPL gives WyomingProcessing Economics (Ethane Recovery)
EthaneEthane57%57%
$ 0.569 $ 0.569
$ 0.024$ 0.024
$ 0.072$ 0.072
$ 0.473$ 0.473
66,36966,369
$ 7.13$ 7.13
$ 5.02$ 5.02
PropanePropane25%25%
$ 0.885$ 0.885
$ 0.024$ 0.024
$ 0.072$ 0.072
$ 0.789$ 0.789
91,59991,599
$ 8.61$ 8.61
$ 5.02$ 5.02
IsobutaneIsobutane5%5%
$ 0.950$ 0.950
$ 0.024$ 0.024
$ 0.072$ 0.072
$ 0.854$ 0.854
99,65299,652
$ 8.57$ 8.57
$ 5.02$ 5.02
Normal ButaneNormal Butane7%7%
$ 0.968$ 0.968
$ 0.024$ 0.024
$ 0.072$ 0.072
$ 0.872$ 0.872
103,724103,724
$ 8.40$ 8.40
$ 5.02$ 5.02
GasolineGasoline6%6%
$ 1.081$ 1.081
$ 0.024$ 0.024
$ 0.072$ 0.072
$ 0.985$ 0.985
110,000110,000
$ 8.96$ 8.96
$ 5.02$ 5.02
Weighted AverageWeighted Average
$ 0.726$ 0.726
$ 0.024$ 0.024
$ 0.072$ 0.072
$ 0.63$ 0.63
79,60679,606
$ 7.91$ 7.91
$ 5.02$ 5.02
8/16/048/16/04Mont Belvieu Liquid Price $ / gallonMont Belvieu Liquid Price $ / gallon
Fractionation Cost @ $ 5.94 gasFractionation Cost @ $ 5.94 gas(Houston Ship Channel)(Houston Ship Channel)
Pipeline TransportationPipeline Transportation
Wyoming Liquid ValueWyoming Liquid Value
BTU / gallonBTU / gallon
Liquid Value $ / MMBTULiquid Value $ / MMBTU
Kern River Index (8/16/04)Kern River Index (8/16/04)
All rights reserved. Enterprise Products Partners L.P. 15
What MAPL gives WyomingProcessing Economics (Ethane Recovery)
• By having access to the NGL pipeline (8/16/2004 example):By having access to the NGL pipeline (8/16/2004 example):
• 353,290 MMBTU is “sold” at $ 7.91 / MMBTU353,290 MMBTU is “sold” at $ 7.91 / MMBTU
• 2,310,000 MMBTU is “sold” at $ 5.02 / MMBTU2,310,000 MMBTU is “sold” at $ 5.02 / MMBTU
• 2,663,290 MMBTU is “sold” at $ 5.40 / MMBTU2,663,290 MMBTU is “sold” at $ 5.40 / MMBTU
• The NGL outlet provided a $ 0.38 / MMBTU upgrade to the gas priceThe NGL outlet provided a $ 0.38 / MMBTU upgrade to the gas price
• The NGL outlet provides over $ 1 Million / day upgrade to gas ownersThe NGL outlet provides over $ 1 Million / day upgrade to gas owners• Approximately $ 370 Million annualizedApproximately $ 370 Million annualized
• The NGL outlet proves approximately 20% of the value to gas ownersThe NGL outlet proves approximately 20% of the value to gas owners
• Approximately 70% of this value comes from ethane and propaneApproximately 70% of this value comes from ethane and propane
All rights reserved. Enterprise Products Partners L.P. 16
What MAPL gives WyomingProcessing Economics (Ethane Rejection)
EthaneEthane40%40%
$ 0.392$ 0.392
$ 0.021$ 0.021
$ 0.072$ 0.072
$ 0.299$ 0.299
66,36966,369
$ 4.51$ 4.51
$ 5.02$ 5.02
PropanePropane32%32%
$ 0.598$ 0.598
$ 0.021$ 0.021
$ 0.072$ 0.072
$ 0.505$ 0.505
91,59991,599
$ 5.51$ 5.51
$ 5.02$ 5.02
IsobutaneIsobutane9%9%
$ 0.660$ 0.660
$ 0.021$ 0.021
$ 0.072$ 0.072
$ 0.567$ 0.567
99,65299,652
$ 5.69$ 5.69
$ 5.02$ 5.02
Normal ButaneNormal Butane10%10%
$ 0.674$ 0.674
$ 0.021$ 0.021
$ 0.072$ 0.072
$ 0.581$ 0.581
103,724103,724
$ 5.60$ 5.60
$ 5.02$ 5.02
GasolineGasoline9%9%
$ 0.798$ 0.798
$ 0.021$ 0.021
$ 0.072$ 0.072
$ 0.705$ 0.705
110,000110,000
$ 6.41$ 6.41
$ 5.02$ 5.02
Weighted AverageWeighted Average
$ 0.547$ 0.547
$ 0.021$ 0.021
$ 0.072$ 0.072
$ 0.454$ 0.454
85,10085,100
$ 5.33$ 5.33
$ 5.02$ 5.02
2/6/042/6/04Mont Belvieu Liquid Price $ / gallonMont Belvieu Liquid Price $ / gallon
Fractionation Cost @ $ 5.27 gasFractionation Cost @ $ 5.27 gas(Houston Ship Channel)(Houston Ship Channel)
Pipeline TransportationPipeline Transportation
Wyoming Liquid ValueWyoming Liquid Value
BTU / gallonBTU / gallon
Liquid Value $ / MMBTULiquid Value $ / MMBTU
Kern River Index (2/6/04)Kern River Index (2/6/04)
All rights reserved. Enterprise Products Partners L.P. 17
What MAPL gives WyomingProcessing Economics (Ethane Rejection)
• By having access to the NGL pipeline (8/16/2004 example):By having access to the NGL pipeline (8/16/2004 example):
• 214,453 MMBTU is “sold” at $ 5.33 / MMBTU214,453 MMBTU is “sold” at $ 5.33 / MMBTU
• 2,448,837 MMBTU is “sold” at $ 5.02 / MMBTU2,448,837 MMBTU is “sold” at $ 5.02 / MMBTU
• 2,663,290 MMBTU is “sold” at $ 5.04 / MMBTU2,663,290 MMBTU is “sold” at $ 5.04 / MMBTU
• The NGL outlet provided a $ 0.02 / MMBTU upgrade to the gas priceThe NGL outlet provided a $ 0.02 / MMBTU upgrade to the gas price
• The NGL outlet provides over $ 50,000 upgrade to gas ownersThe NGL outlet provides over $ 50,000 upgrade to gas owners• Approximately $ 18.5 Million annualizedApproximately $ 18.5 Million annualized
• The NGL outlet proves approximately 9 % of the value to gas ownersThe NGL outlet proves approximately 9 % of the value to gas owners
All rights reserved. Enterprise Products Partners L.P. 18
What MAPL gives Wyoming
• Over the past 5 1/2 years:Over the past 5 1/2 years:
• NGL pipeline has NGL pipeline has provided an aggregate provided an aggregate $ 725 Million premium $ 725 Million premium to Wyoming gas to Wyoming gas ownersowners
• NGL pipeline has NGL pipeline has averaged an $ 130 averaged an $ 130 Million annual Million annual premium to Wyoming premium to Wyoming gas ownersgas owners
All rights reserved. Enterprise Products Partners L.P. 19
What Wyoming Gives MAPL
• Published tariff (Incentive) from Published tariff (Incentive) from Wyoming to Gulf Coast: $ 0.072 / Wyoming to Gulf Coast: $ 0.072 / gallongallon
• Annual volume moved during 2002:Annual volume moved during 2002:1,619,875,110 1,619,875,110
gallonsgallons
• Revenue received during 2002:Revenue received during 2002:$ $
116,631,008116,631,008
• Total MAPL revenue during 2002:Total MAPL revenue during 2002:$ $
269,367,769269,367,769
• Percentage of MAPL revenue earned Percentage of MAPL revenue earned from Wyomingfrom Wyoming 43 %43 %
All rights reserved. Enterprise Products Partners L.P. 20
System Operations
• Wyoming South: Capacity of 125,000 bpdWyoming South: Capacity of 125,000 bpd• Transports: 100,000 bpdTransports: 100,000 bpd
• Grand Junction South: Capacity of 200,000 bpdGrand Junction South: Capacity of 200,000 bpd• Transports: 125,000 bpdTransports: 125,000 bpd
• San Juan Basin South: Capacity of 215,000 bpdSan Juan Basin South: Capacity of 215,000 bpd• Transports: 200,000 bpdTransports: 200,000 bpd
All rights reserved. Enterprise Products Partners L.P. 21
System OperationsRocky Mountain Pipeline System Utilization
0
25
50
75
100
125
150
175
200
225
Feb
-99
May
-99
Aug
-99
Nov
-99
Feb
-00
May
-00
Aug
-00
Nov
-00
Feb
-01
May
-01
Aug
-01
Nov
-01
Feb
-02
May
-02
Aug
-02
Nov
-02
Feb
-03
May
-03
Aug
-03
Nov
-03
Feb
-04
May
-04
Bar
rels
Per
Day
(x
1,00
0)
All rights reserved. Enterprise Products Partners L.P. 22
System OperationsKey Observations
• Since Opal expansion in 2000, MAPL has been operationally full, or declines Since Opal expansion in 2000, MAPL has been operationally full, or declines have matched growth almost exactlyhave matched growth almost exactly
• Ethane margins can cut MAPL volumes by 25 %Ethane margins can cut MAPL volumes by 25 %• Corresponding gas pipeline increase approximately 6%Corresponding gas pipeline increase approximately 6%
• Next round of plant expansions will over fill pipeline, and force plants into ethane Next round of plant expansions will over fill pipeline, and force plants into ethane / propane rejection/ propane rejection
• Without MAPL expansion NGL value enhancement opportunities will shrink or Without MAPL expansion NGL value enhancement opportunities will shrink or go awaygo away
All rights reserved. Enterprise Products Partners L.P. 23
System OperationsExpansion Opportunity
• MAPL is spending $ 20 Million to permit a MAPL is spending $ 20 Million to permit a 50,000 bpd expansion out of Wyoming50,000 bpd expansion out of Wyoming
• Permit should be obtained in 4Q 2005Permit should be obtained in 4Q 2005• Pipeline could be in service 3Q 2006Pipeline could be in service 3Q 2006
• Completed expansion would cost $ 150 - 170 Completed expansion would cost $ 150 - 170 MillionMillion
• 200 miles of pipe200 miles of pipe• 23 pump stations modified and expanded23 pump stations modified and expanded
• Further information can be found atFurther information can be found at
http://www.epplp.com/mapl/EPPindex3.htmhttp://www.epplp.com/mapl/EPPindex3.htm
• Unique challenge: Expansion must be full to Unique challenge: Expansion must be full to provide adequate returnprovide adequate return
All rights reserved. Enterprise Products Partners L.P. 24
Future of NGLs in WyomingSummary and Dilemma• San Juan basin has remained flat to slight increases in NGL productionSan Juan basin has remained flat to slight increases in NGL production• Piceance / Uintah basin experiencing growthPiceance / Uintah basin experiencing growth• Southwest Wyoming experiencing growthSouthwest Wyoming experiencing growth
• Under current philosophy, MAPL must build expansion on speculative basis, no Under current philosophy, MAPL must build expansion on speculative basis, no “Open Season”“Open Season”
• As regulated pipeline, difference between cost of capital and maximum allowable As regulated pipeline, difference between cost of capital and maximum allowable return less than 10%return less than 10%
• Decision to expand is based more on the relative value of NGLs to natural gas, Decision to expand is based more on the relative value of NGLs to natural gas, rather than simply natural gas production growth or Wyoming gas pricesrather than simply natural gas production growth or Wyoming gas prices
• Without pipeline expansion, value opportunities diminish or disappear as Without pipeline expansion, value opportunities diminish or disappear as dewpoint control volumes replace discretionary volumesdewpoint control volumes replace discretionary volumes
All rights reserved. Enterprise Products Partners L.P. 25
Future of NGLs in WyomingSummary and Dilemma
• Decision to expand is made based on ratio of NGL prices to Wyoming Decision to expand is made based on ratio of NGL prices to Wyoming gas pricegas price
• Expansion decision will be made based on ethane and propane marginsExpansion decision will be made based on ethane and propane margins
• With little or no ethane and propane extraction, expansion is not With little or no ethane and propane extraction, expansion is not necessary, or can be delayednecessary, or can be delayed
All things being equal……All things being equal…… Best case scenario…..Best case scenario…..
Wyoming gas price increaseWyoming gas price increase
NGL Extraction Value, MAPL volumesNGL Extraction Value, MAPL volumes
Profitability of pipeline expansionProfitability of pipeline expansion
Wyoming gas price increaseWyoming gas price increase
NGL Extraction Value, MAPL volumesNGL Extraction Value, MAPL volumes
Profitability of pipeline expansionProfitability of pipeline expansion
All rights reserved. Enterprise Products Partners L.P. 26
Future of NGLs in Wyoming
• MAPL is financially 10 - 15% committed to pipeline expansionMAPL is financially 10 - 15% committed to pipeline expansion
• We are working with producers / processors to build cryogenic plants to We are working with producers / processors to build cryogenic plants to preserve the option to extract ethane and propane to enhance valuepreserve the option to extract ethane and propane to enhance value
• We can manage some of the ethane / propane margin risks to pipelineWe can manage some of the ethane / propane margin risks to pipeline
• Pipeline expansion provides growth of pipeline revenue for MAPL and Pipeline expansion provides growth of pipeline revenue for MAPL and value enhancement for Wyomingvalue enhancement for Wyoming
• Cryogenic plants are the key to successful MAPL expansionCryogenic plants are the key to successful MAPL expansion
• Cryogenic plants provide the necessary volume, and the discretionary Cryogenic plants provide the necessary volume, and the discretionary ethane and propane to fill an expansionethane and propane to fill an expansion
All rights reserved. Enterprise Products Partners L.P. 27
Support Your Local Support Your Local Cryogenic Processing PlantsCryogenic Processing Plants
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