Wyoming Natural Gas Pipeline Authority “Moving Wyoming Gas to California” December 9, 2003 John R. Smith Director Regulatory and Governmental Affairs Mark Moench Vice President and General Council
Kern River Business Update May 1 through November 30, 2003 On May 1, 2003, Kern River transported 1,659,000 Dth/d (95% load factor). Post-expansion, Kern River has averaged a 100% load factor. The summertime peak day scheduled delivery was over 2Bcf/d. Basin price differential have narrowed from $1.05 on May 6, 2003 to a low of $-.16 on November 6, Currently it is $.18. November throughput has declined to a low of 1.3 Bcf/d and averaged 1.6 Bcf/d. Gas Supply into Kern River appears to be insufficient in the winter.
Future Expansions Opportunities Over 3,000 MWs of new direct-connected electric generation are currently under construction and projected to come on-line by California utilities have 2 Bcf/d of contract capacity on competing interstate pipelines which expires by California LDCs need supply diversity and Kern River will compete for this market. YearVolume in Dth’s , , , ,240, ,239 Total2,465,328 Kern River can be economically expanded by completing un-looped segments and adding compression. Engineering, environmental and hydraulic modeling work is underway to enable the pipeline to be expanded in a market responsive manner when market signals appear.
Expansions Prerequisites Remove SoCal Gas tariff based delivery constraints at their city gates. Develop addition Wyoming and Rockies supply infrastructure. Rationalize any unwanted Kern River capacity. Capture California core market share as transportation contracts expire on competing pipelines.
Kern River Rate Case Facts Kern River must file a rate case no later than May 1, 2004 pursuant to its existing settlement in RP Kern River has entered into confidential pre-filing settlement negotiations with its shippers to achieve a settlement in lieu of filing a rate case. Settlement negotiation started October 1 and are still in progress. Kern River hopes to conclude negotiations by February 1, 2004.
Opportunities and Conclusions Kern River’s 2003 Expansion is complete and has been operating at a high load factor until colder weather started in November. Reserve life of Rocky Mountain production is large, but new supply infrastructure to fill Kern River and underpin new expansions is still necessary. Significant California utility contract expirations will occur over the next four years providing Kern with a market entry opportunity to capture California core markets.