Hot Button Issues and Priorities SGA Fall Leadership Conference

Robert Cupina, Principal Deputy Director

Office of Energy Projects

Federal Energy Regulatory Commission

Hot Button Issues and Priorities

SGA Fall Leadership Conference

October 16, 2007

October 16, 2007 Federal Energy Regulatory Commission 2

EPAct 2005 and LNGEPAct 2005 and LNG

Section 311

(Revised NGA § 3, new § 3A)

FERC: Exclusive Authority

Codifies Hackberry Policy

Mandatory Pre-filing

State and Local Considerations

Section 313

(Revised NGA §§ 15, 19)

FERC acts as lead agency; sets schedule

FERC maintains consolidated record

Judicial streamlining


What Has FERC Done WithWhat Has FERC Done WithEPAct Gas Mandates?EPAct Gas Mandates?

Order No. 665 (Pre-filing)

NOPR: August 26, 2005

Final Rule: October 7, 2005

Order No. 687 (Coordination/Consolidation)

NOPR: May 18, 2006

Final Rule: October 19, 2006Order No.687

Order

No.

665


Pre-Filing ProcessPre-Filing Process

Pre-filing process must begin at least six months prior to filing an application.

Pre-filing procedures are designed to encourage cooperation with state and local authorities.


During Pre-filingDuring Pre-filing

Staff issues scoping notice. Sponsor attends and participates in scoping meetings.

Sponsor files monthly reports on project activities. Staff facilitates identification of issues and reviews draft resource reports.

Staff conducts site visits and agency meetings. Sponsor attends. Staff begins preparing environmental document.


Gas Project Scheduling/CoordinationGas Project Scheduling/CoordinationEPAct MandateEPAct Mandate

Section 313 - Process Coordination

Revised Sections 15 and 19 of NGA

• FERC acts as lead agency; sets schedule

• FERC maintains consolidated record

• Streamlines judicial review

Order No. 687 issued by FERC on October 19, 2006

Final rule sets schedule/consolidation procedures

• When filed, applicant must ID all needed Federal authorizations

• 90 days after notice date, FERC issues notice of schedule or EA

• 90 days after EA or EIS is the deadline for other agencies

• 30 days after deadline expiration, each agency must file a copy of decision and an index of the record for inclusion in the FERC record.


FERC and TransmissionFERC and TransmissionEPAct MandateEPAct Mandate

Section 1241 - Transmission Infrastructure Investment

New Section 219 of the FPA

FERC directed to develop incentive-based rate treatments for transmission

Order No. 679 issued by FERC on July 20, 2006

Provides for an expedited, case-by-case analysis of incentives needed to support new investment in transmission.


FERC and TransmissionFERC and TransmissionEPAct MandateEPAct Mandate

Section 1221 - Siting of Interstate Electric Transmission Facilities

New Section 216 of the FPA

FERC given authority to site interstate transmission after attempting to site at state level

• Must be in corridors designated by DOE

• Must render decision within 12 months of filing date

DOE delegated lead agency authority to FERC

MOU signed with DOE and seven other federal agencies to coordinate processing.

Order No. 689 issued by FERC on November 16, 2006

Final rule provides direction for filing an application

• Pre-filing process

• Application process


All Sources of Supply Needed to Meet DemandAll Sources of Supply Needed to Meet Demand

Source: EIA, EEA, FERC

0

10

20

30

40

50

60

70

80

2004 2007 2010 2013 2016 2019 2022 2025

Billion C

ubic

Feet

per

Day

NET PIPELINE IMPORTS

85% 71%

12% 5%

LNG IMPORTS17%

3%

ALASKAN GAS

7%

LOWER 48 PRODUCTION

Bil

lio

n C

ub

ic F

eet

per

day


Top LNG ImportersTop LNG Importersfor 2006for 2006

Source: BP Website – Trade Movements 2006

Bil

lio

n C

ub

ic F

eet

per

day


Operating Regasification CapacityOperating Regasification CapacityWill Increase by 10XWill Increase by 10X

U.S. RegasificationCapacity

Atlantic Basin Liquefaction Capacity

0

5

10

15

20

Bcf

per

day

Includes RegasFacilities UnderConstruction

Source: FERC, CERA

20

15

10

5

0

Bcf

/Day

2000 2002 2004 2006 2008 2010


Top LNG ImportersTop LNG Importers2007-20152007-2015

Source: CERA


Storage Capacity in Major LNG Importing Storage Capacity in Major LNG Importing Countries: Atlantic BasinCountries: Atlantic Basin

Source: Data from IGU 23rd World Gas Conference-WGC 2006

Working Gas Capacity

(Tcf)

United States 3.56

Italy 0.61

France 0.41

United Kingdom 0.11

Spain 0.07

Belgium 0.02

Mexico 0.00


All Storage ProjectsAll Storage Projects(Capacity in Bcf)(Capacity in Bcf)

Falcon MoBay (50.0)

County Line (6.0)

Bluewater(29.2)

Columbia (12.4)

Natural (10.0)

Dominion (9.4)

Texas Gas (8.2)

Freebird (6.1)CenterPoint (3.0)

Starks (19.2)

Falcon Hill-Lake (3.0)

Liberty (17.6) Petal (9.0)

SemGas (5.5)

Falcon Worsham-Steed (8.0)

Unocal Windy Hill(6.0)

Natural (10.0)

Bobcat (12.0,1.5)

Dominion (18.0)

Caledonia (11.7) Caledonia (1.7)

Arizona Natural Gas(3.5)

ANR Pipeline(14.7)

Mississippi Hub (12.0)

Leaf River Energy (24.0)

Central NY (13.0)

Dominion (4.4)

Floridian Natural (8.0)

SG Resources (12.0)

Northern Natural(8.5)

Petal (2.8)

ANR Pipeline(17.0)

Texas Gas (11.3)

Texas Eastern (3.0)

Gulf South (1.2)

Egan Hub (8.0)

Liberty (5.0)

Enstor-Waha Storage (7.2)

Four Mile Creek (8.0)

ANR Pipeline (70.0)

Tres Palacios (36.0)

Black Bayou (15.0)

CIG (7.0)

Southeast Storage (14.0)

Copiah (12.2)Enterprise (10.0)

PetroLogistics (6.0)

AGL (12.0)Enstor (30.0)

Steckman Ridge (12.0)

Columbia (15.0)

Tenasda (17.5)Northern Natural (6.0) Texas Gas (8.25)

Northern Natural(2.1)

Monroe Gas (12.0)

Columbia (5.7)

Pine Prairie (16.0)

Natural (10.2)

Bobcat (2.1, 9.4)

Dominion (11.0)Chestnut Ridge (25.0)

On The Horizon

Certificated Since 1/1/05Currently Pending

Pre-Filing


August FERC Report on AlaskaAugust FERC Report on Alaska

The State of Alaska has enacted and begun to implement its Alaska Gasline Inducement Act (AGIA);

The U.S. Court of Appeals, DC Circuit upheld the Commission’s open season regulations;

The Federal Coordinator has been active in discussions with project stakeholders;

The U.S. Department of Labor has issued a grant to the state for pipeline worker training;

FERC Commissioners and Staff continue to prepare for the filing of any applications for an Alaskan gas pipeline; and

FERC Staff has toured potential routes of the pipeline.


Recent, Current andRecent, Current andFuture EventsFuture Events

Alaska Gasline Inducement Act-AGIA(5/07)

Open, Competitive Process for Projects

Financial Incentives to Pipeline and Producers

Five delivery points and construction-hiring offices in Alaska

Application Review Criteria

Seven specific criteria related to timeliness, cost overruns, expansions, rates/tariff, amount of state money, feasibility, sponsor’s ability

Request for Applications-RFA Process (7/07)

Deadline November 30, 2007


Next AGIA StepsNext AGIA Steps

Applications Filed (11/07)

Applications determined complete

Public notice of applications 60 days

Alaska commissioners’ recommendation to legislature for 60-day review

License issued (4/08)


Next FERC Steps for AGIA ProjectNext FERC Steps for AGIA Project

Begin Pre-Filing and FERC Certificate Application Development

Parallel Activities of Staff and Sponsor

Complete Capacity Open Season


Natural Gas Reserves in the U.S.Natural Gas Reserves in the U.S.

Source: Based on data from EIA Annual Energy Outlook

Offshore Gulf of Mexico, TX & LAOffshore Gulf of Mexico, TX & LA

TX & LATX & LA

RockiesRockies

Other U.S. ReservesOther U.S. Reserves

Source: Based on data from EIA US Crude Oil, Natural Gas, Natural Gas Liquids Reserves 2005


Major Pipeline Projects Major Pipeline Projects Certificated (MMcf/d)Certificated (MMcf/d) January 2007 to October 2007January 2007 to October 2007

21.5 Bcf/D Total2,366 Miles

12.6 BCF/D Total903 Miles

Gulf South (1,700, 560)

Gulfstream (345, 155)

Natural (200)

Sonora (1,000)

KM (360)

Southeast Supply (1,140)

Elba Express (1,175)

Point Comfort (1,000)

NorthBaja

( 2,700)

Gulf LNG(1,500)

Phase IV(Maritimes)

(418)Northern Lights(Northern Natural)

(374)

Transco(165)

Rockies Express West (1,800)

Questar Overthrust (750)

TransColorado (250)

Questar (175)

Trunkline(510)

CenterPoint(280)

WIC (556)

TETCO(150)

Kinder Morgan (3,395)

Algonquin(800)


Broadwater Pipeline

(Broadwater) (1,000)

Bradwood Landing(NorthernStar)

(1,300)

Phoenix Lateral(Transwestern) (500)

GII Project(Guardian Pipeline)

(537)

Quoddy Bay(2,000)

Downeast(500)

Mid-Atlantic Express(1,500)High Plains Expansion

(CIG)(899)

Port Dolphin (1,200)

Rockies Express REX East(Rockies Express Pipeline)

(1,800)

Medicine Bow Expansion (WIC) (330)

Gulf Crossing Pipeline(Boardwalk)

(1,732) Cedar Bayou

(Texas Eastern)(360)

Fayetteville/Greenville(Texas Gas)

(1,609)

Pacific Connector(Williams Pacific)

(1,000)

08/09 Expansion(Iroquois)

(200)

Mid-Continent Express(1,500)

Major Pipeline ProjectsMajor Pipeline ProjectsPending (MMcf/d)Pending (MMcf/d)

October 2007October 2007

17.97 BCF/D Total2,798 Miles


3.31 BCF/D Total604 Miles

Major Pipeline ProjectsMajor Pipeline ProjectsPre-Filing (MMcf/d)Pre-Filing (MMcf/d)

October 2007October 2007

Sentinel Expansion(Transcontinental)

(151)

East End Expansion(Ozark)(1,000)

Brookhaven Lateral(Iroquois)

(80)

2009 Expansion(Eastern Shore)

(60)Yuma Lateral(North Baja)

(81)

Palomar Project(Palomar Gas)

(700)

Tontitown Project(CenterPoint)

(90)

HubLine Expansion(Algonquin)

(1,145)


Source: Platts PowerMap

Interstate natural gas pipelines in proximity to

the Barnett and Fayetteville Shale


Barnett ShaleFort Worth Basin

Fayetteville ShaleArkoma Basin

Ozark Gas TransmissionEast End Expansion

1,000 MMcf/d

CenterPoint EnergyCarthage to Perryville

1,237 MMcf/d*

Gulf South PipelineEast Texas to Mississippi

1,700 MMcf/d & 560 MMcf/d**

Natural Gas PipelineLouisiana Line200 MMcf/d**

BoardwalkGulf Crossing1,732 MMcf/d

Midcontinent1,500 MMcf/d

Texas Gas TransmissionFayetteville/Greenville

1,609 MMcf/d

Ozark Gas Transmission70 MMcf/d

CenterPoint EnergyCarthage to Perryville (Phase III)

280 MMcf/d**

Approved & Proposed Pipelines to Move Barnett and

Fayetteville Shale

* In-Service** Approved Source: Platts PowerMap


Southern LNGElba Island, GA.

Elba Express Pipeline

With the approval of Elba Express Pipeline and the commencement of service (Phase I) of the Cypress pipeline in May 2007, LNG volumes from Elba Island will be available to Florida and the Northeast.

Source: Platts PowerMap


Capacity ReleaseCapacity ReleaseRM06-21-000 & RM07-4-000RM06-21-000 & RM07-4-000

Petitions filed in 2006 asking that FERC:

Remove the maximum rate cap on capacity releases

Clarification of capacity release rules vis-à-vis portfolio management services

FERC issued a request on January 3, 2007 for comments asking:

Should the maximum rate cap be lifted?

Should the Commission’s shipper-must-have-title requirement be modified?

Comments were due by April 11, 2007.


RM07-10 Market Transparency, April 19, 2007

Intrastate pipeline daily posting of capacity at major receipt/delivery points

Buyers and sellers report annual numbers and volumes of relevant transactions

RM07-1 Standards of Conduct, January 18, 2007

Comply with National Fuel decision

Asset managers = marketing affiliates

Competitive Markets and Market ManipulationCompetitive Markets and Market Manipulation


Comprehensive Energy Oversight ProgramComprehensive Energy Oversight Program

RM07-9 FERC Form 2, February 15, 2007

Gas, Oil, Electric forms included

Sufficient information to determine company’s rates, excess fuel retention?

Monitor Markets Daily

Review and Analyze Data

Provide Feedback to the Commission

Disseminate Information

Audits


Composition of Proxy Groups for Composition of Proxy Groups for Determining Return on EquityDetermining Return on Equity

PL07-2, July 19, 2007

Fewer and fewer diversified natural gas companies

Inclusion of MLPs

Consumer safeguards

Distributions vs. depreciation


Conclusions

Commission implementing EPAct mandates

U.S. needs gas from diverse sources

High level of gas-related activity at FERC

State of the Natural Gas Industry Conference November 6 (AD07-15)

[email protected]

Documents

Hot Button Issues and Priorities SGA Fall Leadership Conference