Natural Gas & Oil Infrastructure in the Rockies An Update JOINT MINERALS, BUSINESS AND ECONOMIC DEVELOPMENT COMMITTEE Casper, Wyoming May 25, 2006

A Lesson From Natural Gas

Garfield County, Colorado Colorado Oil and Gas Commission

AAPG

Gas Infrastructure Added in Last 5 years MidAmerican Kern 1,052 MMcfd El Paso Cheyenne Plains 770 MMcfd William’s Northwest 175 MMcfd El Paso CIG 50 MMcfd WBI Grasslands 80 MMcfd Total of 2,127 Mcfd added in the past 5 yrs

THE FUTURE! 1.8 Bcfd 42 –inch diameter 1,323 Miles

Crude Oil In The Rockies

What Has Happened to Rockies Crude Prices?? Rockies production increasing Express Pipeline capacity increased in 2005 adding approximately 110,000 of potential additional Canadian crude Export pipelines approached capacity in late 2005 Suncor refinery fire eliminates demand for 60,000 Bopd Refinery turnarounds and low sulfur diesel requirements exacerbate the problem

Regional Crude Production is Growing in Some States EIA 395 MBOPD424 MBOPD

Current Status of Infrastructure

Production/Refinery Balance Oil ProductionRefinery Capacity Montana89,000181,200 North Dakota93,00058,000 South Dakota4,0000 Wyoming139,000152,000 Nebraska7,0000 Utah43,000167,350 Colorado54,00087,000 Subtotal429,000645,550 Available Refinery Capacity216,550 Export via Enbridge in N Dakota78,000 Export via Platte in Wyoming143,000 Canada (Import capability via Express)280,0000 Source: EIA

The Law of Supply and Demand Wikipedia

WTI $60.75 OK Sweet $60.75 WY Sweet $35 KS $55.75 Prices on 3/23/06 The Crude Market a Few Months Ago

Platts – North America Crude Wire The Market Today

The World Might be Fine but for the Fact that …….

Canadian Association of Petroleum Producers (CAPP)

Solutions to Crude Oil Bottlenecks in the Rockies

The Future is Rail? Commodity:Fuels Search Date: Route:BNSF Tank Cars Shipper Owned/Leased Zero Mlg. DestinationsOrigin: GUERNSEY,WYTransit Time NORMAN, OK $2794 N/A per car Standard tank car is 23,500 gallons or Bbls.

Current Proposed Expansions are a Band-Aid to Long Term Development Efforts Kinder Morgan Platte Pipeline (added pumping capacity) 15-25,000 Bbl/D $1.50 per Bbl tariff (new shippers only) Enbridge (to Clearbrook, MN) 35,000 Bbl/D $0.15 per Bbl tariff (all shippers)

Near term (2 yr) Kinder Morgan Pony Express Re-conversion up to 200,000 Bbl/D

The Plan to Convert from Crude to Natural Gas

Cost of a Reconversion Natural Gas Contracts $124 million Reconversion Cost $115 million Cost Allocation to Existing Pipe $100 million? Total Cost to Convert $339 million

Follow an NGL Line to Cushing? Add in El Paso Medicine Bow to get you north and central.

Grass roots pipeline from Wyoming to Cushing, OK 400,000 Plus Bbl/D – Up to $1.2 billion Longer term (3-5 yr)

Solutions Require Commitments Long Term Commitments to Capacity Support of Canadian Imports to Anchor a Solution Support and Commitment of Refiners to Buy Wyoming Crude Support of Producing Community to “get behind a common solution – quickly”

Wyoming Pipeline Authority Bryan Hassler Executive Director North Durbin Street, Suite 230 Casper, Wyoming Office (307) Fax (307)