1 Legislative Session February 17, 2006

2 Proposed Legislative Changes Increase WPA bonding capacity from $1 billion to $3 billion Expand State Treasurer’s investment authority to invest in WPA bonds from funds other than just the Permanent Wyoming Mineral Trust Fund. Change name from “Wyoming Natural Gas Pipeline Authority” to the “Wyoming Pipeline Authority”. Constitutional amendment allowing Wyoming to invest in works of internal improvement associated with pipeline projects.

3 Market Assessment Production of Rockies gas will continue to increase. There is insufficient pipeline capacity to export this increasing supply – especially in the spring, fall and summer. Increased LNG deliveries to the West Coast and Gulf Coast will compete with the Rockies supplies and impact prices. The highest premium-priced market for gas is the Northeast. Large basis differentials exist between the Rockies and the East Coast. At the end of the day – a substantial amount of Wyoming revenue is a function of natural gas production and price!

4 Production

5 Production Will Increase From These Wyoming Areas Jonah/Pinedale Anticline – Record of Decision due on Jonah EIS Q1- 06 which will allow for more than 3,000 additional wells. BP has proposed spending $2 billion in the Wamsutter/Echo Springs area to double capacity. 10’s of thousands of wells remain to be drilled in the Powder River Basin where production is once again increasing. Devon has proposed drilling over 1250 new wells in their Creston/Blue Gap Project area. Anadarko and Double Eagle awaiting Record of Decision on coal bed methane development in their Atlantic Rim project area. Anticipate renewed interest in developing or accelerating production from deep sour productive intervals knows to exist in SW Wyoming and the Madden area.

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7 Wyoming Needs to Look Over Its Back

8 Rockies Production Will Grow

9 Reserves U.S. Total Proved Reserves: 189 Tcf Wyoming21.7 Tcf Colorado15.4 Tcf Utah 3.5 Tcf Total Rockies40.6 Tcf Proven Probable/Possible exceeds an additional 200 Tcf! Source : EIA

10 Pricing

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14 Basis Spreads Support New Pipeline Basis differential versus Henry Hub Source: Historical Prices – GasDat, Forward Prices – Sempra Commodities Oct 05 Curve

15 What’s In It for Wyoming 4.3 Bcfd Annual Revenue - $millions Price $/MMBtu Severance Tax (6%) Ad Valorem Tax (6%) State Royalty (13% on 7%) State Share of Fed Royalty (50% of 12.5% Royalty on 67% of Minerals) Total ** $2$188 $29$131$537 $5$471 $71$329$1,342 $7$659 $100$460$1,878 $9$848 $129$592$2,415 $11$1,036 $157$723$2,952 ** Approx average Wyoming Price – 2002 Note: State royalty % for illustration only – actual royalty higher

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17 Making Sure Prices and Production Stay in Sync

Rockies Express Pipeline Proposed Route 16

19 Next Steps Negotiate and execute shipper precedent agreements Start NEPA Pre-filing in late October, 2005 Conduct binding open season in Nov. – Dec, 2005 Shipper Board approval required by Jan. 31, 2006 A minimum of 1,500,000 Dth/d is needed Determine economic viability by February, 2006

Which Brings Us Full Circle to………. Proposed Legislative Changes

21 Increasing Bonding Authority to $3 billion Pipe and pipelining costs have increased since $1 billion bonding authority added to legislation. Scope of Kinder/Sempra project significantly bigger than 36 inch, 1,000 mile line to Chicago. Pipeline companies want single debt issuer to economize on costs. If WPA is successful in financing Kinder project, additional capabilities necessary to finance CO2 lines, crude oil, coal derivative and natural gas products lines – all currently being contemplated in state. Note: WPA bonds are non-recourse to State and underwritten by contractual commitments to capacity on pipeline.

22 Expand Treasurers Investment Authority Treasurer has requested. Allows for diversity across portfolio of funds managed. Increases ability to invest in greater amount of WPA bonds. Decreases bond concentration in any one particular portfolio of managed funds. Note: This should also be considered for Wyoming Infrastructure Authority.

23 Name Change Wyoming Pipeline Authority better reflects future scope of work we will conduct. CO2, NGL, crude oil and coal derivative products lines will be needed in the State in the very near future.

24 Constitutional Amendment If industry doesn’t step to the plate………Wyoming needs to have the ability to defend its revenue stream.

25 Contact Information Bryan Hassler - Executive Director – Carla Hubbard – Administrator – Colby Drechsel - Associate Director – 152 N. Durbin Street – Suite 230 Casper, Wyoming Office (307)