Bryan Hassler, Executive Director

Society of Petroleum Engineers

January 21, 2004Rock Springs, WY

2

The Problems Facing America………….

• High Prices• Declining Supplies in Traditional Basins• Lack of Access to New and Growing Basins

3

High Prices

                   

   

  1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

J 2.050 2.115 1.645 3.448 3.998 2.309 1.765 2.344 9.978 2.650 4.970

F 1.600 2.460 1.460 2.340 2.986 2.001 1.714 2.610 6.293 2.025 5.660

M 1.940 2.395 1.445 2.746 1.780 2.286 1.693 2.603 4.998 2.395 9.000

A 2.260 1.955 1.575 2.779 1.807 2.409 1.852 2.900 5.384 3.410 5.120

M 2.760 2.060 1.673 2.214 2.122 2.262 2.340 3.089 4.891 3.340 5.110

J 1.980 1.850 1.750 2.361 2.122 2.017 2.226 4.406 3.738 3.430 5.960

J 1.940 1.945 1.505 2.646 2.145 2.358 2.262 4.369 3.182 3.305 5.330

A 2.130 1.780 1.340 2.322 2.161 1.942 2.601 3.820 3.167 2.900 4.650

S 2.360 1.455 1.530 1.853 2.515 1.672 2.912 4.618 2.295 3.325 4.880

O 2.045 1.415 1.647 1.828 3.324 2.031 2.560 5.312 1.830 3.695 4.440

N 2.185 1.675 1.780 2.652 3.266 1.972 3.092 4.541 3.202 4.140

4.460

D 2.400 1.720 2.285 3.901 2.577 2.149 2.120 6.016 2.316 4.140 4.880

Avg 2.138 1.902 1.636 2.591 2.567 2.117 2.261 3.886 4.273 3.230 5.372

Per Mcf Cost

Gathering (0.20)$

Dehydration

CO2 Treating (0.05)$

Compression (0.12)$ two stages plus fuel

TXU Transport (0.15)$ plus 1.5% fuel

Maypearl Sales Point (0.52)$ Cost from Wellhead to Sales Point

Basis to Maypearl (0.33)$

(0.85)$ NYMEX less this number is theapproximate netback for a workinginterest participant.

12 Month Nymex 5.26$ (0.85)$

Approximate Wellhead Netback 4.41$ /MMBtu

5

Declining Supplies

RatonRatonRatonRatonRatonRatonRatonRatonRatonBasinBasinBasinBasinBasinBasinBasinBasinBasin

ParadoxParadoxParadoxParadoxParadoxParadoxParadoxParadoxParadoxBasinBasinBasinBasinBasinBasinBasinBasinBasin

Uinta BasinUinta BasinUinta BasinUinta BasinUinta BasinUinta BasinUinta BasinUinta BasinUinta BasinPiceancePiceancePiceancePiceancePiceancePiceancePiceancePiceancePiceance

BasinBasinBasinBasinBasinBasinBasinBasinBasin

D J BasinD J BasinD J BasinD J BasinD J BasinD J BasinD J BasinD J BasinD J Basin

Greater GreenGreater GreenGreater GreenGreater GreenGreater GreenGreater GreenGreater GreenGreater GreenGreater GreenRiver BasinRiver BasinRiver BasinRiver BasinRiver BasinRiver BasinRiver BasinRiver BasinRiver Basin

WindWindWindWindWindWindWindWindWindRiverRiverRiverRiverRiverRiverRiverRiverRiverBasinBasinBasinBasinBasinBasinBasinBasinBasin

PowderPowderPowderPowderPowderPowderPowderPowderPowderRiverRiverRiverRiverRiverRiverRiverRiverRiverBasinBasinBasinBasinBasinBasinBasinBasinBasin

BigBigBigBigBigBigBigBigBigHornHornHornHornHornHornHornHornHornBasinBasinBasinBasinBasinBasinBasinBasinBasin

SanSanSanSanSanSanSanSanSanJuanJuanJuanJuanJuanJuanJuanJuanJuanBasinBasinBasinBasinBasinBasinBasinBasinBasin HugotonHugotonHugotonHugotonHugotonHugotonHugotonHugotonHugoton

Anadarko BasinAnadarko BasinAnadarko BasinAnadarko BasinAnadarko BasinAnadarko BasinAnadarko BasinAnadarko BasinAnadarko Basin

Permian BasinPermian BasinPermian BasinPermian BasinPermian BasinPermian BasinPermian BasinPermian BasinPermian Basin

WillistonWillistonWillistonWillistonWillistonWillistonWillistonWillistonWillistonBasinBasinBasinBasinBasinBasinBasinBasinBasin

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Big Horn Basin

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Wind River Basin

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D J Basin

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Green River Basin

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Paradox Basin

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Piceance Basin

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Powder River Basin

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Uinta Basin

Rocky Mountain Natural Gas Supplies(volumes in MMcf/day)

Anadarko BasinPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

8,4752,9382,938

---

-2%-7%

Big Horn BasinPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

2236767

---

-3%-15%

D J BasinPipe Capacity4Q '02 Production Conventional CBMTotal Production Change 1 year 5 year

1,283598598 ---

+10%+52%

Green River BasinPipe Capacity4Q '02 Production Conventional CBMTotal Production Change 1 year 5 year

4,2362,9912,989

2

+8%+9%

Piceance BasinPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

605419415

4

+8%+51%

Hugoton EmbaymentPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

8,4751,7681,768

---

-9%-33%

Paradox BasinPipe Capacity4Q '02 Production Conventional CBMTotal Production Change 1 year 5 year

140107107 ---

+1%+9%

Powder River BasinPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

1,3481,089

175914

+14%+439%

ConventionalCBM

Raton BasinPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

29522975

154

+27%+269%

San Juan BasinPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

4,1003,9051,7292,176

-6%-1%

Uinta BasinPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

865627349278

+6%+102%

Wind River BasinPipe Capacity1Q '03 Production Conventional CBMTotal Production Change 1 year 5 year

708580580 --

+16%+42%

0

500

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San Juan Basin

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Raton Basin

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Anadarko Basin

Alta Energy Consulting James G. Hoff (303) 471-4083 July 2003

6

Lack of Access

7

What Can Be Done???????????

8

Growth In Production

Wyoming Production From Major Plants and Fields (Sales)

Production is stated in MMCFD and is average daily production for a particular year.

Blacks Echo Lost Powder

Opal Granger Fork Springs Cabin PavillionRiver Basin

1998 545 172 89 303 35 82

1999 582 156 98 279 55 47 156

2000 645 139 127 295 78 50 403

2001 713 148 125 323 84 56 673

2002 839 189 89 346 91 68 848

Oct ’03 Average 1078 255 98 344 121 45 952

9

JonahUnrestricted Development

Jonah - Unrestricted Capital and Production Forecast

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2000 2001 2002 2003 2004 2005 2006 2007

Pro

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MM

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/D)

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$)

2003 = 70 wells/year2004 = 165 wells/year2005-2012 = 200 wells/year

Current Production

Future Development

10

Growth In Production – Colorado (Garfield County)

• 1999 154,000 Mcfd• 2000 190,000 Mcfd• 2001 241,000 Mcfd• 2002 315,000 Mcfd• March ’03 365,000 Mcfd• Going to? 1 Bcfd +

Major Operators include: EnCana, Williams, Calpine, Mesa, Tom Brown, Exxon/Mobil

Data Source: Colorado Oil and Gas Conservation Commission

11

Producer Critical Success Factors

• Access to Federal Lands• Gas Price• Timing of Regulatory Approvals• Gathering System Capacities and Pressures• Transportation Export Capacity• Capital Efficiency• Public Acceptance

12

Pipeline Projects In-service or Full Market Support

• Kern River Pipeline Expansion

• Williston Basin Grasslands Pipeline

• El Paso Cheyenne Plains Pipeline

13

14

Kern River Expansion

Kern River 2003 Expansion$1.3 Billion

Kern River 2002 Expansion$31.4 Million

Kern River 2003 Expansion$1.3 Billion

Kern River 2002 Expansion$31.4 Million

California Action Project

•135,00 Dth/d July 1, 2001

•53,900 hp of compression

•$81 million

Kern River 2002 Expansion

•Additional 10,500 Dth/d May 1, 2002

•21,000 hp of compression (6,000 new)

•$31.4 million

Kern River 2003 Expansion

•906,626 Dth/d May 1, 2003

•716 miles of 36 and 42 inch pipe

•160,000 hp of compression

•$1.3 billion

15

WBI Grasslands Pipeline

•80,000 Dth/d Nov 1, 2003

•247 miles of 16 inch pipe

•5,380 hp of compression

•Expansion to 200 MMcfd

16

Cheyenne

WY

MT

OK

KS

CO

NM

UT

AZ

Cheyenne Plains

NE

SD

Cheyenne Plains Pipeline

Capital cost: $336.5 MMCapital cost: $336.5 MMPipe: Pipe:

– 380 miles of 30"380 miles of 30"– 7 miles of laterals7 miles of laterals

Compression: 33,155 hpCompression: 33,155 hpCapacity: 560 MDth/dCapacity: 560 MDth/dExpandable to 1,000 MDth/dExpandable to 1,000 MDth/dIn-service: August 2005In-service: August 2005

El PasoEl Paso NGPLNGPLCIGCIG PEPLPEPLWICWIC WNGWNGNNGNNG TrailblazerTrailblazerANRANR MCMCMCMC

Greensburg

17

Pipeline Export Projects Proposed

• Kinder Morgan Advantage

• Northern Border Bison Project

• Enbridge Chicago Project

• Southern Star Western Frontier Project

• El Paso Ruby Project

• Kinder Morgan TransColorado Expansion.

18

Intraregional Projects

• Questar Kern Expansion• Northwest Rockies Expansion• El Paso Front Range Expansions• Xcel Front Range Projects• Kinder Huntsman Storage Project• Totem Gas Storage Project• Wyoming Interstate/Overthrust Backhaul

Projects• Jonah/Opal/Powder/Wind River

Gathering/Processing Expansions

19

Cost of Limited Infrastructure to Wyoming

• $130 + million in Federal/State royalties and severance taxes – 2002.

• $1 million per day in March 2003.• Stalled investment in development of mineral

resources.• Limited ability to predict revenues with certainty.

20

The Wyoming Pipeline Authority Will

• Promote all industry sponsored and supported projects.• Proactively promote infrastructure development within the state

and the Rocky Mountain Region.• Promote efficient utilization of existing infrastructure in a cost

effective manner.• Promote development of Wyoming’s mineral resource base in a

systematic, streamlined and environmentally responsible manner.

• Utilize its bonding authority to build or cause to be built infrastructure projects that will enhance state netbacks and promote development of a resource base that is in the nation’s best interests.

21

Thanks for the opportunity to speak with you.

Bryan Hassler

President - United Energy Partners, LLC

& Interim Executive Director - Wyoming Natural Gas Pipeline Authority

1625 17th Street, 3rd Floor

Denver, CO 80202

Ph 303-357-7314

Cell 303-748-6473

Fax 303-948-1428

Email uep1@comcast.net

Wyoming Pipeline Authority Presentations Can be Accessed via the Wyoming Oil & Gas Conservation Commission Website at: www.wogcc.state.wy.us