NGPL 2019 Customer MeetingAugust 20, 2019
Abbey Resort Fontana, Wisconsin
1
2
Ameren Illinois Vonda Seckler Black Hills Service Co. Jodi Culp BP Canada Energy Marketing Corp. Jennifer Fitch-Clayton Citadel Americas LLC Amine Alaoui Cheniere Energy Eric Franco Wes Mitchell DTE Energy Trading Michael Bottger David Dulak
Eco-Energy Natural Gas, LLC Kevin Humpich ENGIE Energy Marketing Jeremy Sims EOG Resources, Inc. Scott Allison EQT Energy LLC Mark Moyer ETC Nick Nunley Exelon Generation Co. Kenneth Barb
Freepoint Commodities Tim Blanchard G2X Energy Alexandria Lopez Golden Pass Pipeline Jeff Hammad Katherine Medrano
Hartree Partners, LP Rafael Martinez Rhonda Pantoja
Invenergy Scott Ebner Kinder Morgan David Anderson Dee Bennett Trennis Curry Tom Dender Andy Edling Sam Hosper Danny Ivy Mary Limbaugh Carol Mikucki Tom Mikucki Bruce Newsome Beth O'Connor Kevin Palmer Jay Richardson Paul Robey Jason Sweeney David Weeks
Kinder Morgan (cont’d) Lonnie West Richard Williams Kinect Energy Melanee Pfautz Koch Energy Services Blake Jablonski Nathan Steele Macquarie Energy LLC Preston Roobaert David Virgilio Mansfield Power & Gas LLC Viking Dietrich Mex Gas Supply Medardo Becerril Cesar Castro NGPL Jim Brett Will Burton Dave Devine Maria Pavlou
Nicor Gas Martha White Michelle Carbone Debbie Santolin Joe Deters NIPSCO Tom Pysh
NRG Power Marketing Sam Kwak Oxy Energy Mktg, Inc. Jason Novosad Repsol Energy Kylene Isenberg River Energy LLC Kevin Stiles Chelle Shepard Sempra LNG David Challman Eric Hansen Sequent Energy Management L.P. John Serio Roy Rodriguez Tommy Segner
Seven Generations Energy Robert Culler Shell Energy North America Michael Maldonado Hung Nguyen
Southern Company Gas (Nicor) Daryl Kilpatrick Tim Sherwood Ken Yagelski
Spire Marketing Amanda Thacker Tenaska Marketing Ventures Mike Cozad Ken Meier Matt Millard Andrew Murren
Uniper Energy David Orlik Paul Park United Energy Trading Jim Stilling WEC Energy Group Tom Smith Wells Fargo Commodities, LLC Kari Yost World Fuel Services Bradley Dammann
3
Jim BrettVice President, Marketing & Business Development
Introduction/Welcome - Jim Brett Legal Cautionary Statement – Maria Pavlou
Opening Remarks - Dave Devine Market Fundamentals - Tom Mikucki
System Operations Overview – Danny Ivy Break at ~9:45 a.m. (15 minutes)
Integrity Program Discussion Dave DevineTom DenderDee Bennett
Mary LimbaughDave Weeks
Business Development Update – Jason Sweeney / Sam HosperClosing Remarks – Dave Devine/Jim Brett
Adjourn for Lunch/Afternoon Activities
NGPL 2019 Customer Meeting Agenda
Legal Cautionary Statement
Please keep in mind that sharing your company’s forecasts, predictions, pricing plans, production plans or purchasing plans with competitors is illegal. Please do not discuss current or future prices, price trends, production, demand or other sensitive information with persons who are your competitors. Please do not use this meeting as a forum to share information that is proprietary or confidential. I’m sure that each of your employers has an antitrust policy in place. I ask that you keep that policy and the antitrust laws in mind during today’s formal and informal activities.
5
6
Gas Market Fundamentals Tom Mikucki, Director – Market Services
7
+ Supply+ 2019 gas production is estimated at 90.1 Bcf/d, 7.6 Bcf/d (9%) greater than 2018
+ Increases over ‘18 primarily in Marcellus/Utica, Permian, Haynesville and Midcontinent
Lower Net Canadian Imports ~0.4 Bcf/d than 2018+ 2020 gas production is estimated at 94.4 Bcf/d, ~4.4 Bcf/d higher than ‘19
+ Increases over ‘19 primarily in the Permian, Haynesville and Marcellus/Utica
Source: WoodMac July ‘19 Short-Term Outlook
8
Current Landscape+ Demand
+ 2019 U.S. natural gas consumption is estimated at 94.5 Bcf/d, ~5.4 Bcf/d (6%) higher than 2018+ LNG exports are forecasted at 5.7 Bcf/d for the year+ Exports to Mexico are forecasted at 5.1 Bcf/d, 0.5 Bcf/d higher than 2018+ Power generation usage for 2019 is forecasted at ~1.2 Bcf/d higher than 2018+ 2019 R&C and Industrial usage are both forecasted at ~0.3 Bcf/d higher than 2018
+ 2020 Demand is forecasted at 5.7 Bcf/d higher than 2019+ Increase over ‘19 primarily due to greater LNG exports and Power
Source: WoodMac July ‘19 Short-Term Outlook
9
Current Landscape
* Assumes normal weather beginning August 2019
10
Current Landscape
U.S. +14.4 Bcfd
Res +0.7 Bcfd
NE +7.6 Bcfd
+2.2 Bcfd-1.3 Bcfd
+6.1 Bcfd
Source: ICF International and Kinder Morgan Analysis
Ind +1.9 Bcfd
Growing NA exports
Industrial demand growth Less Canadian Exports to U.S. More U.S. Exports to Mexico
Continued supply increases More Gas-fired generation
Can. +1.8 Bcfd
SupplyDry Gas
Source: ICF International and Kinder Morgan Analysis
13
0
2,000
4,000
6,000
8,000
10,000
12,000
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
MB
o/d
Permian Oil Forecast
+6.8 MMBo/d
Gas DemandIncluding Exports
Power: -0.2Other: +0.1
Power: +0.3Other: -0.1
Power: +0.7Other: -0.1
Power: +1.8Other: +0.5
Power: +2.2Other: +0.3
Power: +0.5
Power: +1.1Other: +0.3Plant: +0.2
Ind: +0.4Other: +0.2
Ind + Power: +0.8Other: +0.2
Plant: +0.9Ind: +0.7Other: +0.4
Power: +0.7Other: +0.6Ind: +0.4
Gulf: +12.6Canada: +1.8East: +0.5West: +0.7Mexico: +0.5
Source: ICF International and Kinder Morgan Analysis
15Proprietary Information Sources: IEA, ICF
16
Unit In-ServiceMonth
2020 Feed Gas Volume (Bcf/d)
In Service 12/31/18 5.08
Corpus T2 July 2019 0.71
Elba December 2019 0.33
Cameron T1 July 2019 0.62
Cameron T2 March 2020 0.44
Cameron T3 June 2020 0.30
Freeport T1 November 2019 0.68
Freeport T2 February 2020 0.56
Freeport T3 June 2020 0.32
9.04
WM expects “second wave” export facilities to increase total U.S. feed gas requirements to 17.5 Bcf/d in 2025
ExportFacility
In-ServiceYear
2025 Feed Gas Volume (Bcf/d)
In Service 12/31/20 10.59
Corpus Christi T3 2022 0.71
Sabine Pass T6 2023 0.73
Calcasieu Pass 2023-24 1.51
Golden Pass 2024-25 2.14
Freeport T4 2025 0.60
Port Arthur 2025 1.27
17.55
WM also assumes LNG Canada @ 1.6 Bcf/d, Woodfibre @ 0.3 Bcf/d and Costa Azul in start-up in 2025.
Assumes delays in Cameron Trains 2 and 3 and Freeport Trains 2 and 3, resulting in reductions of almost 200 MMcf/d in 2019 and 500 MMcf/d in 2020.
Annual Average: 2018 3.3 Bcf/d2019 5.8 Bcf/d 2020 9.0 Bcf/d
Source: WoodMac May 2019 Short Term Outlook and H1 2019 Long Term Outlook, KM Analysis16
17
Continued decline in gas production, ban on fracking, lack of capital and challenging regulatory environment will continue Mexico’s reliance on US Natural Gas for the foreseeable future
Current government has a more nationalistic approach; Promoting PEMEX to grow oil and gas production with minimal outside investment
$1.5 Billion stimulus to PEMEX – may be insufficient to turn around production
Cancellation of further private party auctions
Promoting upgrades at six existing refineries and construction of Dos Bocas refinery (340 kbpd), but questions remain about adequate capital
Mexico’s pipeline system is still in a buildout process, new builds have faced unexpected pushback from environmental and Indigenous peoples rights groups
Slowing delivery and increasing costs
Mexico importing LNG from the U.S. - 50% more expensive than piped imports
CFE is arbitrating in international courts to renegotiate $980 Million paid on gas pipeline contracts due to in-service delays
Delays could cap U.S. exports at 5 Bcfd
Carso recently revised their 4Q 2019 in service date for Sam to Sasabe pipeline to Q1 2020 due to continued right of way disputes and unfavorable court rulings.
Sur de Texas – Tuxpan was mechanically completed in June 2019; however, CFE has yet to sign the official start date for pipeline flows to begin.
Fermaca announced that they again pushed back the in service date of their Wahalajara pipelines to December 2019.
Point # Project Status In-Service Capacity
1 Valley Crossing Pipeline In-Service 11/2018 2.6 Bcf/d
2Sur de Texas-Tuxpan Pipeline
Mechanically Complete June, 2019 2.6 Bcf/d
3 Tuxpan Tula Pipeline On Hold 4Q 2021 0.9 Bcf/d
4Tula Villa de Reyes Pipeline On Hold 4Q 2020 0.9 Bcf/d
5
Villa de Reyes Aguascalientes Guadalajara Pipeline
Under Construction 4Q 2019 0.9 Bcf/d
6 Nueva Era (Expansion) Proposed 2020/2021 1.4 Bcf/d
7Mirage's Concho-Progreso Pipeline Proposed Unknown Unknown
8SNG & Mayakan Interconnect
Under Construction H2 2019 N/A
9Cempoala Compressor Reversal Completion
Under Construction 2020 N/A
10 Samalayuca – SasabeUnder
Construction 1Q 2020 0.5 Bcf/d
11 El Encino - La Laguna Completed Dec, 2017 1.5 Bcf/d
12La Laguna –Aguascalientes
Under Construction 4Q 2019 1.2 Bcf/d
13Guadlajara Pipeline (Make Bi-Directional)
Under Construction 2019 N/A
NGPL Pipeline Operations ReviewDanny Ivy
VP – Gas Control
Operations Review2018-19 Winter Recap
Supply and Market ChangesSummer ReviewStorage UpdateOutage SummaryContact List
20
Natural’s facilities performed well during the extended cold
Compressor stations staffed 24x7, as needed
Storage assets were heavily utilized
No pressure issues in the Market Delivery Zone
Extreme temperatures – Record Demand
24 hour throughput record on 11-13-18 at 7.7 BcfPrior record 7.5 Bcf on 12/27/17
LDC record take set at 4.7 Bcf on 1/30/19Prior record 4.5 Bcf on 1/2/18
March 4th was 3rd all time highest delivery day (7.6 Bcf)LDC takes were 4.6 Bcf
21
Record cold weather experienced on Jan 30 (81 HDDs)Jan 30 was 2nd coldest day on record next to Dec 24, 1983 (83 HDDs)
Jan 30 had the 5th lowest temp (-23 deg.) and Jan 31 had the 10th
coldest low (-21 deg.)
Wind chill index of -52 deg. at O’Hare on Jan 30.
4th longest consecutive time below zero at 52 hours.
5th time there were 2 consecutive days with lows below -20 deg.
22
HDDs-Variance % of
from Normal Normal
November 179 124%
December (142) 87%
January 112 109%
February 44 104%
March 114 113%
Winter 307 106%
LDC Takes vs HDDs
For Nov 1 through March 31, HDDs were 106 % of normal
For Jan 19 through March 31, HDDs were 116% of normal
23
OFOs were issued in accordance with Natural’s Tariff to protect system integrity and primary firm services, including firm no-notice services.
OFO reports were posted on Natural’s interactive website.
24
During periods of extended colder-than-normal weather and near record HDDs, the system functioned as designed
Proactive steps taken to protect and maintain system integrity, storage deliverability, and firm service
Timely usage of OFOs and Critical Time in accordance with NGPL Tariff
As always, effective and transparent communication is key
25
26
2019 2018 % vs 2018
LA Line deliveries 779 737 + 6 %
South Texas deliveries 496 303 + 64 %
Permian receipts 358 154 + 132 %
Midwest LDCs 2,354 2,399 - 2 %
Power 634 597 + 6 %
LNG 805 537 + 50 %
• All volumes are MDth/d
2019 2018 % vs 2018
5,026 4,815 + 4 %
Total System Deliveries
• All volumes are MDth/d
27
Power generation set a record of 1.4 Bcf on July 108 out of the top 10 power days were in July 2019
Selected market storage fields were on withdrawal to serve markets
No OFOs issued
Gulf Coast system flowing southbound .750 – 1.0 Bcf/dMarket area receipts consistently in the 1.5 Bcf/d rangeFlows are at capacity in the below areas:
Into South Texas Southbound through TX-OKOut of the PermianNorthbound out of the MidcontinentEastbound out of the Midcontinent
28
29
NGPL Gas Storage Inventory Update2019 Update
Record monthly injections : April / May
Market fields performing as expected
Field storage recovering from historic lows
Overall injections are 60 % greater than same period in 2018
2020 Winter OutlookMarket fields on pace to achieve target inventory level
Field inventory on pace to be near full on October 31
30
TYPE2019Job
Count
2018Job
Count
2017Job
Count
2016Job
CountIntegrity 254 203 221 187
O&M 233 207 270 324
System Total 487 410 491 511
Market Area and Storage 63 36 93 128
Amarillo projects 240 200 205 214
GC projects 184 174 124 169
Posted 131 119 82 58
Posted with Impact 38 38 26 24
32
Gas Control
Emer 800-733-2490
24 hr 713-369-9400#[email protected]
Trennis Curry
713-369-9378
Cell 713-819-4577
Doug Gaskin
713-369-9131
Kenny Robbins
713-369-9432
Cell 832-588-3901
Danny Ivy
713-369-9311
Cell 713-829-2761
Tom Dender
713-420-3833
Cell 205-572-1549
Transport and Storage Services
TSS Hotline
24 hr 713-369-9683
Richard Williams
713-369-9283
Cell 713-819-1748
Gene Nowak
713-369-9329
Cell 713-252-9759
Account Services
Dave Weeks
630-725-3030
Cell 630-399-1193
Mary Limbaugh
713-420-4576
Cell 972-672-4809
Jim Brett
630-725-3040
Cell 630-437-0103
Field Operations
Dee Bennett
815-272-9104
Cell 815-693-0517
Joe McLaughlin
713-369-9847
Cell 630-269-3006
Ken Grubb
713-369-8763
Cell 281-702-1210
Houston TX Office
713-369-9000
1001 Louisiana St
Houston, TX 77002
Downers Grove IL Office
630-725-3000
3250 Lacey Rd
Suite 700
Downers Grove, IL 60515
33
Panel DiscussionDavid DevineTom DenderDee Bennett
Mary LimbaughDavid Weeks
34
NGPL is committed to operating its system in a prudent and safe manner, and in compliance with all applicable regulationsKinder Morgan applies the same degree of diligence and the same procedures, in managing risk, to the operation of NGPL as it does to the operation of all its pipelinesWe know that outages have been numerous and impactful this year especiallyNGPL and KM senior management are very focused on this issueProvide you today with a description of the NGPL integrity management program and compressor reliability programs
35
NGPL has a commitment to spend $400 million on pipeline integrity in the 5-year period from 2017 through 2021
Minimum annual spending of $65 million
Actual spending for 2017 was $88.4 million and 2018 was $79.5 million
Planned expenditures are $94.6 million for 2019 and preliminary planned expenditures are $91.5 million for 2020
Expenditures for compressor work are incremental to this pipeline integrity spending
36
PHMSA/Anticipated Mega-Rule Requirements
NGPL’s current actionable response criteria is aligned with the expected requirements of the Mega-Rule
Risk Ranking
Population density
Has the line been previously pigged?
Numerous other factors
KMI Process – Validated analytical method for predicting the location of stress corrosion cracking in a steel gas pipeline system
37
Pig runs are scheduled to:Meet compliance dates in accordance with applicable rules/regulations and the KM Integrity Management Program proceduresMinimize customer impact during pig runs
In highly-utilized segments of the system, there may be no good time for a pig run
Minimize the likelihood that results are received during periods of high utilization
A “failed” pig run or tool availability may necessitate pig runs in sub-optimal periods
38
In Line Inspection (ILI) – examples of smart tools used to:
Identify general internal, external corrosion, and “hard spots” using ‘standard’ MFL tool
Identify longitudinal defects including long-seam corrosion using C-MFL (also known as an AFD tool)
Identify Stress Corrosion Cracking (SCC) using an EMAT tool
Identify pipeline strain using a Mapping tool
When possible, multiple tool types will be run in tandem
39
In-Line Inspection technology has advanced significantly in recent years
Anomalies can be identified with greatly improved accuracy
In the case of EMAT technology, anomalies can be detected that would not have been in the past
Pig runs can be disruptive due to low speed requirements
40
“Typical” time sequence of events when running a pig:Prior to running certain types of in-line inspection tools, several cleaning runs may be required to prepare the pipeline for inspection The speed at which a tool can be run varies based on the type of tool
MFL and AFD tools can be run between 5 and 7.5 mphEMAT tools must be run at 3 to 3.5 MPHDepending on operational conditions, normal pipeline velocity ranges from 10 to 15 mph
41
The following table shows the typical timeline to receive results after a pig run is completed:
Type of In-Line Inspection Tool
# of weeks to determine a
successful run
# of weeks to Preliminary
Report
# of weeks to Final Aligned
Report
MFL 1 - 2 3 - 4 8 - 13 AFD 2 - 3 3 - 4 12 - 16
EMAT 2 - 3 N/A 17 - 30
42
Direct Assessment Testing for HCAsVisual pipe examinations performed in pipeline sections that are relatively short and/or not conducive to ILI or hydrostatic pressure tests
KMI Assessment DigsExcavations performed to prove-up the existence of SCC after applying the “KMI process”
Pressure and Spike TestsHydrostatic pressure tests performed in pipeline sections that are not piggable
43
Results from a pig run: May require an immediate pressure reduction per regulations and KM/NGPL’s Integrity Management Program
May necessitate Intra-day cuts
Prior to beginning remediation, various actions must be completed
Appropriate environmental notifications and approvals
Landowner notification
One calls (Call 811)
Other approvals
44
Compression ReliabilityNGPL is allocating significant dollars annually for work at key compressor stationsNGPL’s compression work falls into various categories:
Routine planned maintenanceMajor compressor unit overhauls Expansion Capital
Targeting reliability projects in areas of highest utilization including the MC and Permian zonesThis work is to improve compressor performance and enhance system reliability
45
Provides more frequent notification of upcoming projectsHighlights changes and new outagesProvides quick summary of key scheduling impactsLists projects geographically by Segment
46
Posted at the NGPL page at https:\\pipeline.kindermorgan.com under “Operating Information”
47
Based on a prior tool run, NGPL was required to perform integrity-related remediation on Segment 2 between C/S 156 and C/S 801
This segment is a single 26” diameter pipelineInitial outage duration was 4/3 through 5/31
NGPL took various steps to reduce the outage impact, including:Phased the work to minimize point impactsDeployed multiple crews and worked 7 days per week to reduce the anticipated outage duration by 2 weeks (5/15)
Significant rainfall and flooding, as well as a separate incident at C/S 801 impacted the return to service on 6/24/19
48
We understand communication is key We would like input from youTopics for further discussions in August-October:
What type of information is helpful?Communication of detail when it’s available?Estimation of end date, even if it could change?What other information would be helpful?
49
Current Expansion Projects
Jason Sweeney / Sam Hosper
50
Market DevelopmentLNG - Completed projects include:
NGPL GC Phase 1 in-service; Phase 2 application pending at FERC, anticipated in-service 2021; SPL Compression Expansion awaiting FERC certificate; anticipated in-service 2020
Niche Midwest ExpansionsChicago Market Expansion In-Service
Supply DevelopmentREX/Alliance/Northern Border – Completed projects include:
GC Phase 1 & 2, Chicago Market Expansion
Permian
South TexasNote that all projects discussed today are preliminary and subject to change
51
Project Scope Station reversal project Creates incremental Gulf Coast Southbound capability to CS-302Leverages REX and Canadian supply to feed emerging GC Market
Project DescriptionCapacity: 260,000 Dth/dReceipts: REX, Alliance, Northern BorderDeliveries: Texok North (north-end of Seg-26), Texok South (CS-302) Estimated In-Service: 2.5 yrs (from contract-execution)
Commercial StatusIndicative Rate: $0.22 - $0.42 (15- 20 yrs)
Dependent on pathCustomer outreach currently underway
302
52
“302-East” expansion (302-to-LA Line)
Project Scope Compression project Leverages NGPL’s Gulf Coast footprint to provide expanded access to “LNG Fairway”
May be bolted on to GC-III expansion capacity (to bring supply from the north) May be bolted on to currently avail STX-to-302 capacity (to bring supply from the south)
Project DescriptionCapacity:
185,000 Dth/d260,000 Dth/d315,000 Dth/d
Receipt: Station-302Deliveries: Segments 25, 23, 24 (e.g., Golden Pass, Henry Hub, FGT, SPL, Trunkline) Estimated In-Service: 2.5 yrs (from contract-execution)
Capacity is available prior to completion of facilities
Commercial StatusIndicative Rates: $.20-$.25/Dth (20 years)Customer outreach currently underway
302
53
Project Scope
Compression project
Leverages NGPL’s Permian footprint to provide take-away to liquid Midcon Pool
Project Description
Capacity: 125,000 Dth/d
Receipts: Permian, Indian Basin, Lockridge Lateral
Delivery: Station-154 (also Midcon Pool)
Estimated In-Service: Q1/21
Commercial Status
Indicative Rate: mid-to-upper $0.30s (10 yrs)
Customer outreach currently underway
Open Season anticipated Q3/19
154
54
Project Scope
Compression and looping project
Leverages NGPL’s interconnect with Permian Highway to provide Permian access to South Texas markets
Project Description
Capacity: 235,000 Dth/d
Receipt: Station-301
Deliveries: Agua Dulce, Banquete
Estimated In-Service: 2.5 yrs (from contract-execution)
Commercial Status
Indicative Rate: $0.35 (20 yrs)
Customer outreach currently underway
301
55
Project Scope
Compression projects
Expanded delivery capability to Chicago area markets
Project Description
Capacity: Horizon - 265,000 Dth/d
NGPL - 238,000 Dth/d
Receipts: NGPL, Alliance, ANR, NBPL, Rex
Delivery: Nicor, NIPSCO, PGLC, Chicago area power plants
Estimated In-Service: mid 2022
Commercial Status
Indicative Rate: Horizon - $0.19/Dth (20 yrs)
NGPL - $0.16/Dth (20 yrs)
Customer outreach currently underway
265
/d H
ori
zon
pro
jec
t(C
hic
ago
are
a d
eliv
erie
s)
238
/d C
S3
12
pro
jec
t(R
ex
re
cei
pts
)
56
Dave DevineJim Brett
NGPL 2019 Customer MeetingAugust 20, 2019
Abbey Resort Fontana, Wisconsin
57