1 Rockies Outlook For Internal Use Only April 12, 2001

2 To Chicago Western U.S. Gas Grid Northern Border Kern PGT Northwest El Paso Trailblazer CIG KN NGPL = Glenrock = Cheyenne/Rockport = OPAL CIG & WIC

3 Rockies Summary  The Rockies take-away pipes are currently running at capacity  Some relief will be experienced this winter as the Denver/Salt Lake City winter demand comes on.  Glenrock is experiencing the greatest gas-on-gas competition, as the current bottleneck for the increasing Powder River Basin production.  The WIC – Medicine Bow expansion, expected late this year, will move some of the constrained Powder River gas to Cheyenne, which is already constrained.  Kern’s emergency expansion of 135 MMcfd (late summer 2001) should easily be filled by gas out of OPAL and other western Rockies supply points.  Cheyenne will receive minimal relief from the 50 MMcfd CIG expansion in August  The Trailblazer expansion (August 2002) will provide 175 MMcfd of incremental capacity from Cheyenne to the Mid-Continent. However, Powder River Basin production is expected to easily fill this expansion, providing only moderate price relief as gas-on-gas competition remains.  Significant price relief is not expected until 2003, when Kern’s full 900 MMcfd expansion is expected to come on-line. It should be noted that Rockies gas that has traditionally flowed east will begin to flow west on CIG, WIC, or a new project to fill this expansion.

4 Rocky Mountain Market Dynamics  CERA forecasts indicate that the recent ramp-up in Powder, Wind, and Green River Basin supply will continue for the next few years  Take-away lines are at capacity and planned expansions and market growth are not sufficient to meet the growing Rockies supply  Rockies’ basis and the availability of firm markets are expected to continue to weaken due to “gas on gas” competition until the Kern expansion comes in during 2003 Four pipeline expansions/projects are expected in the next four to five years CERA forecasts incremental Rockies supply to significantly exceed demand/take-away capacity  CIG expansion  50 MMcfd in October 2001  Kern River expansions  135 MMcfd in August 2001  900 MMcfd in May 2003  Trailblazer expansion  175 MMcfd in August 2002  New Rockies’ pipeline project (Bison, Coastal Connection, or Frontier)  500 MMcfd in 2005 (Doubtful) Note: This chart assumes excess eastern supply can access the Kern expansion

5 Eastern Supply vs. Western Capacity  After the 900 MMcfd Kern expansion in 2003, the Rockies will be in a situation where the take-away capacity to the west exceeds western Rockies production by MMcfd.  At the same time, forecasts indicate approximately 500 MMcfd of eastern Rockies supply will be shut-in, lacking eastern take-away outlets.  In the absence of east-to-west flow on the CIG mainline or a new east-to-west project, the CIG and NWPL Rocky Mountain indexes would be expected to widen relative to one another.  However, expectations are that CIG or a new project will accommodate the need to transport eastern Rockies supply to the 2003 Kern expansion capacity. Rough build-economics estimates indicate that a rate of $ with 2-5% fuel could be expected for the haul from Cheyenne to Kern. Kern Northwest Trailblazer CIG KN Eastern Rockies : 500 MMcfd of excess supply Eastern Rockies : 500 MMcfd of excess supply Western Rockies : MMcfd of excess take-away capacity Western Rockies : MMcfd of excess take-away capacity CIG WIC/Overthrust

6 Incremental East/West Production vs. Take-Away Capacity

7 NWPL, CIG Basis