Natural Gas & Oil Infrastructure in the Rockies

An UpdateJOINT MINERALS, BUSINESS AND ECONOMIC

DEVELOPMENT COMMITTEE

Casper, Wyoming May 25, 2006

A Lesson From Natural Gas

First Year Natural Gas Production, J onah/Pinedale

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000Dec

-00

Dec

-01

Dec

-02

Dec

-03

Dec

-04

Dec

-05

Year

Flow

(M

cfd)

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

Pre-1990 Total (Mcfd)

Updated March 6, 2006 (Data accurate through December 1, 2005)

Garfield County, Colorado

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Mcf

d

2000 2001 2002 2003 2004 2005

Colorado Oil and Gas Commission

AAPG

WBIGrasslands80 MMcfd

El PasoCIG

50 MMcfd

William’sNorthwest175 MMcfd

El PasoCheyenne

Plains770 MMcfd

MidAmericanKern

1,052 MMcfd

GasInfrastructure Added in Last

5 years

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

020,00040,00060,00080,000

100,000120,000140,000160,000

BOPD

2004 2005

Utah

Colorado

Montana

N Dakota

Wyoming

EIA

395 MBOPD 424 MBOPD

Current Status of Infrastructure

Production/Refinery Balance

Oil Production Refinery Capacity

Montana 89,000 181,200

North Dakota 93,000 58,000

South Dakota 4,000 0

Wyoming 139,000 152,000

Nebraska 7,000 0

Utah 43,000 167,350

Colorado 54,000 87,000

Subtotal 429,000 645,550

Available Refinery Capacity 216,550

Export via Enbridge in N Dakota 78,000

Export via Platte in Wyoming 143,000

Canada (Import capability via Express) 280,000 0

Source: EIA

The Law of Supply and Demand

Wikipedia

WTI $60.75OK 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)

Canadian Association of Petroleum Producers (CAPP)

Solutions to Crude Oil Bottlenecks in the Rockies

The Future is Rail?

Commodity: Fuels

Search Date: 2006-04-10

Route: BNSF  

  Tank Cars  

   Shipper Owned/Leased Zero Mlg. 

 

Destinations Origin: GUERNSEY,WY Transit Time

NORMAN, OK $2794 N/A

  per car  

Standard tank car is 23,500 gallons or 525-550 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 HasslerExecutive Director

303-748-6473152 North Durbin Street, Suite 230

Casper, Wyoming 82601Office (307) 237-5009Fax (307) 237-5242

www.wyopipeline.com