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Questar PipelineCurrent Capacity and Development

Shelley A. Wright

Director, Business Development

May 15, 2007

Wyoming Pipeline Authority Meeting

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Agenda

• Questar Pipeline Overview• Basin Projections for Production vs. Pipeline

Capacity• Pipeline Expansion Projects• Case Study – Southern System Expansion II

– Finding Resources– Paying for Pipeline Projects– Covering the Costs

• Storage Update• Summary

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Questar Pipeline System MapQuestar Pipeline System Map

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Questar Pipeline TransportationConsolidated Contract Demand

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

MD

th/d

ay

5

GREEN RIVERBASIN

PINEDALE / JONAHGREATER GREEN RIVER BASIN

UINTA BASIN

UNITA BASIN

PICEANCEBASIN

PICEANCE BASIN

COLORADO

Questar Pipeline

Other Pipelines

Producing Basins

UTAH

Rockies Producing Basins

WYOMING

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UTAHWYOMING

COLORADO

PICEANCEBASIN

UINTA BASIN

GREEN RIVERBASIN

GREATER GREEN RIVER BASIN

UINTA BASIN

PICEANCE BASIN

Questar Pipeline

Other Pipelines

Producing Basins

Greater Green River BasinPipeline Capacity vs. Production

QOPC-QPC 250,000

KRGT 1,770,000

NPC 500,000

CIG-WIC 1,365,000

Southern Star 194,000

Production

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Dth

/d

* Production forecast assumes 600 wells drilled per year through 2015

Uinta BasinPipeline Capacity vs. Production

QPC - 600,000

NPC - 95,000

CIG -UBL - 230,000

Production

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Dth

/d

* Production forecast based on PIRA Study dated September 2006

Piceance BasinPipeline Capacity vs. Production

QPC -120,000

NPC - 330,000

TransColorado 425,000

WIC Piceance Lateral 350,000

REX West - Piceance Lateral 750,000

Production

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Dth

/d

* Production forecast based on PIRA Study dated September 2006

Production is forecast toexceed pipeline capacityin our core basins.

Production vs. Pipeline Capacity

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Rockies Producers Are Seeking To Rockies Producers Are Seeking To Expand Export CapacityExpand Export Capacity

Cheyenne Hub

East Louisiana

Midwest

MidContinentOhio Valley

Northeast

Opal Hub

Goshen

Meeker Greasewood

California

Northwest

Cheyenne Hub

East Louisiana

Midwest

MidContinentOhio Valley

Northeast

Opal Hub

Goshen

Meeker Greasewood

California

Northwest

Wamsutter

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Expansion ProjectsExpansion Projects

• Overthrust Pipeline Expansions

– Opal

– Wamsutter

• Southern System Expansions to Greasewood

and Meeker

– Fidlar to Greasewood/Meeker

– Divide Creek to Greasewood/Meeker

• Southern System Expansion II

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Overthrust Pipeline Expansions

Opal Plant

Clear Creek Storage

Blacks ForkPlant

GrangerPlant

KandaCompressor

WAMSUTTER2

2KANDA TO WAMSUTTER

In Service: 12/31/07

Volume: 750 MDth/d

Capacity: 1 BCF/d

Distance: 77.3 miles

PINEDALEFIELD

J ONAHFIELD

Questar Pipeline

Other Pipelines

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1OVERTHRUST TO OPAL

In Service: 12/31/06

Volume: 300 MDth/d

Capacity: 500 MDth/d

Distance: 27.1 miles

Overthrust Pipeline

Questar Pipeline

Other Pipelines

Utah

Wyoming

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Overthrust Pipeline Expansion to Opal

• Up to 500,000 Dth/d of capacity to Opal (West deliveries)– New 27.1 mile pipeline extension to Opal– Deliveries to Kern River at Opal

• 300,000 Dth/d capacity subscribed• January 1, 2007 in-service date• No fuel charge, lost and unaccounted for

only

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Opal Project

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Opal Project

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Overthrust Pipeline Expansion to Wamsutter

• Capacity of 750,000 Dth/d -fully subscribed• 77.3 mile extension from Kanda to Wamsutter

– Two new compressor stations at Roberson Creek and Kanda

• Deliveries to Rockies Express and WIC• New receipt points: Williams Opal Plant, Enterprise-

TEPPCO Pioneer Plant and QGM Blacks Fork Plant• January 1, 2008 in-service date• Fuel rate anticipated to be less than 1% (high load factor)• FERC Notice to Proceed received 5/10/07

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FidlarCompressor

MeekerDelivery Greasewood

Delivery

WICREX

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2DIVIDE CREEK TO

GREASEWOOD

In Service: 11/1/09

Volume: 200 MDth/d

Distance: 37 miles

Other Pipelines

1BONANZA TO

GREASEWOOD/MEEKER

In Service: 11/1/09

Volume: Up to 540 MDth/d

Distance: 60 miles

Divide CreekReceipt

Sand SpringsDelivery

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Questar Pipeline

Other Pipelines

Expansions to Greasewood/Meeker Hub

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Potential Expansion for Deliveries to Greasewood/Meeker Hub

• Potential expansion to provide deliveries of up to 540,000 Dth/d

• Receipt points at Fidlar Station (Uinta Basin)• Delivery to Greasewood/Meeker hub to Rockies

Express, WIC and TransColorado• Approximately 60 miles of 24-inch diameter pipeline

from Bonanza to Greasewood/Meeker for large volume requirements

• Various volume options have been evaluated• Proposed in-service date November 1, 2009

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Deliveries to Greasewood/Meeker- continued

• Initial project is minor line looping and compression:– Compression at Greasewood– High pressure Interconnection with REX at Meeker – New hub pipeline between Greasewood and Meeker

• Capacity of 50,000 Dth/d available on a first-come, first-served basis. QPC currently negotiating with several parties

• Maximum rate and 15-year term required to acquire capacity

• Delivery to Greasewood/Meeker hub to Rockies Express, TransColorado, and possibly WIC

• Proposed in-service date November 1, 2008

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Divide Creek to Greasewood/Meeker

• Expansion of 200,000 Dth/d from Piceance Area to Greasewood

• Receipt points:– Divide Creek - 100,000 Dth/d– Clough/Rulison - 100,000 Dth/d

• New facilities include 37 miles of 24-inch diameter pipe and compression

• Target November 1, 2009 in-service date• Smaller project of 25,000 Dth/d expansion recently

subscribed. Can be provided with compression by 11/1/08.

• Additional processing at Greasewood allows increased volumes from the Divide Creek Area

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Case Study: Southern System Expansion II

Oak SpringsCompressor

Price

Fidlar Compressor

Southern System Expansion II

In Service: 11/1/07

Volume: 175 MDth/d

Distance: 59 miles

Blind CanyonCompressor

Questar Pipeline

Other Pipelines

GoshenDelivery

PaysonDelivery

ThistleCompressor

ML104 Ext

ML104 Loop

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• Construct 59 miles of 24-inch diameter pipe in Carbon, Duchesne and Uintah Counties, Utah

– ML104 Ext – 53.9 miles east from Soldier Creek to Green River BV on ML 40

– ML104 Loop - 4.7 miles between Fausett Junction and Oak Spring Interstage

– 53% BLM, 43% Private, and 4% State

– 15 landowners

• No new compressor stations – modifications at existing Oak Springs and Blind Canyon stations

• FERC 7(c) application filed on November 21, 2006

• Anticipated Start of Construction: May 1, 2007

• In-service date: November 1, 2007

• Estimated capital cost: $108 Million, a 49% increase from $73 Million estimate in March 2006

Case Study: SSXP II Project Description

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Case Study: SSXP II Proposed Route

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Black Diamond Slope in Water Canyon (SSXP II)

• One of the steepest slopes on the QPC system.

• Drop is over 900 ft.

• Average Slope is almost 30%.

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Backside of a Slope in Water Canyon (SSPX II)

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Case Study: Finding Resources for Expansions—SSXP II

• Pipeline contractors– Had to do two job showings– Evaluated 30 contractors– 13 contractors reviewed the job– Only 3 provided bids/proposals– Contractor concerns

• Lack of resources (manpower and equipment)• Difficult terrain

• Materials– 24 inch pipe has a lead time of 9 to 12 months– 24 inch valves have a lead time of at least 6 months

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Case Study: Paying for Expansions—SSXP II

• 49% increase in Capital cost:

– $73 Million (March 2006 Estimate)

• Pipeline construction contractor costs based on $87 / ft (Almost 1½ times the SSXP I contractor costs which was constructed Fall 2005.)

– $108 Million (November 2006 Estimate)

• Pipeline construction contractor costs based on $190 / ft (Almost 3½ times the SSXP I contractor costs.)

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Case Study: Covering the Costs—SSXP II

• Need for longer term contracts (15 years)• Increased rates (SSXP I and SSXP II are

priced at $0.26/Dth/day vs. system maximum of $0.18)

• Expectations of delays in completion due to many factors including but not limited to: regulatory delay, environmental issues, backorder or unavailability of parts, skilled labor going to easier projects, etc.

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Storage Update At Clay Basin

• Storage at Clay Basin continues to be an integral part of natural gas markets in the Rockies

• Temperatures well below normal in the Great Basin area in January demonstrated the importance of Clay as a source of supply

• Pipeline capacity constraints during the summer demonstrated the importance of Clay as market

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Clay Basin Activity

-600,000

-400,000

-200,000

0

200,000

400,000

600,000

Clay Basin Injection/Withdrawal (6/05-2/07) MCF

Injections and Withdrawals June 5, 2006 to Feb. 7, 2007

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Clay Basin Yearly Comparisons

Clay Basin Working Gas Inventory

0

10

20

30

40

50

60

APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR

Min/Max Range '05-06 '06-07 AVG 99-07

MM dths

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Other Potential Storage Opportunities

• Southwest Wyoming Salt Cavern– Located near Evanston, WY – Ultimate capability 12.5 Bcf working gas – initially 5 Bcf– Potential deliverability of 500 MMcf/day associated with 5

Bcf of storage– Increased interest due to new electrical generation and

eastern markets– Interconnects with QPC and Kern River with potential tie to

Overthrust Pipeline– Potential storage of liquids and compressed air

• Other Potential Storage Projects

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Summary

• Questar Pipeline along with other pipeline companies is trying to keep up with production growth in the Rockies by pursuing major expansion projects.

• The path to complete these projects is arduous in many ways with geography, regulatory and environment, manpower, materials and cost challenges to overcome.

• Questar Pipeline greatly appreciates its customers in their willingness to support projects.