Natural gas midstream december 12 2012 brent breon vp business development
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Natural Gas Midstream December 12, 2012 Brent Breon VP Business Development. Caiman Energy – Who Are We? . Caiman is a private equity based midstream development company focused on the Appalachian Basin Initial private equity funding of $50 million – February 2009

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Natural Gas Midstream December 12, 2012 Brent Breon VP Business Development

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Natural gas midstream december 12 2012 brent breon vp business development

Natural Gas Midstream December 12, 2012Brent BreonVP Business Development


Caiman energy who are we

Caiman Energy – Who Are We?

  • Caiman is a private equity based midstream development company focused on the Appalachian Basin

    • Initial private equity funding of $50 million – February 2009

    • Increased equity funding to $380 million – July 2010

    • Capitalized to $900 million - July 2011

    • Built $750 million in Marcellus midstream infrastructure since October 2009

      • $680 million in West Virginia (wet gas)

      • $70 million in Pennsylvania (dry gas)

    • Sold West Virginia assets to Williams for $2.5 billion – May 2012

      • Continue central Pennsylvania operations

      • Transition services for Williams

    • Recapitalized with $800 million in private equity in July 2012

      • Caiman Energy II

      • Focused on Utica Shale development


Caiman energy why are we here

Caiman Energy – Why are we here?

  • Develop midstream infrastructure for the Utica Shale

  • Needs are similar to Marcellus Shale

  • Capital intensive infrastructure preceding cash flows

    • Limits traditional sources of capital

    • Ideal for Private Equity

  • Leverage Marcellus experience


Us natural gas and oil production

US Natural Gas and Oil Production

The development of techniques to produce oil and gas from shales has dramatically increased midstream infrastructure needs across the US.

For every $1 spent on upstream activity, a subsequent $.15 to $.35 needs invested in midstream infrastructure


Us natural gas and oil production1

US Natural Gas and Oil Production

The Marcellus, Eagle Ford, Bakken, Permian, Cana-Woodford, and Utica Plays will impact conventional sources of natural gas and NGL production but will require significant infrastructure build out

Cana-Woodford

Eagle Ford

Permian

Marcellus

Bakken

Utica

Source for map: EIA, 2004.


Everything midstream and more

Everything Midstream and More!

  • Caiman Energy can complement our midstream services with marketing and commodity transport relationships


Midstream natural gas services

Midstream Natural Gas Services

Source: Enterprise Products Partners


Example capital spend ft beeler system

Example Capital Spend: Ft. Beeler System

  • Annual Capital Investments

  • 2010

    • $100 million

  • 2011

    • $325 million

  • 2012

    • $525 million

  • 2013

    • $350 million

  • 2014

    • $100 million

  • 5-year cumulative capex

    • $1.4 billion

  • Capex Distribution


Midstream natural gas services1

Midstream Natural Gas Services

  • Dry Natural Gas:

  • Meets interstate gas spec

    • Below 1100 Btu

  • Pipeline, compression, meter, and tap

  • Wet or Rich Natural Gas:

  • Does not meet interstate gas specs

    • Over 1100 Btu

  • Requires processing to remove heavy hydrocarbons

  • Pipeline, meter, separation, cryogenic processing, and fractionation

  • Creates the most value from production stream


Midstream natural gas services2

Midstream Natural Gas Services

  • Services Utilized by Midstream:

  • Land Acquisition

  • Right of Way Acquisition

  • Environmental Permitting

  • Pipeline Construction

    • Gathering

    • Condensate

    • Oil

    • Residue Gas

  • Plant and Facility Construction

  • Safety Trailing

  • Reclamation

  • Lodging and Catering

  • Etc.


Gathering pipeline

Gathering Pipeline

Pipelines gather natural gas, oil, and condensate to Processing Plant

Natural Gas

Gathering

Well Head

Oil/Condensate


Cryogenic processing

Cryogenic Processing

Cryogenic processing strips valuable NGLs from the gas stream

Residue Gas

Processing

Rich Gas

NGLs


Fractionation

Fractionation

Fractionation separates the respective NGLs into discrete purity hydrocarbons

Ethane*

  • Volatile NGL

  • Market for ethane has strengthened as petrochemicals have increasingly switched to ethane as a feedstock

Propane

  • Various sources of demand:

    • 25% - residential market

    • 30% - petrochemical demand

    • 35% - commercial/industrial/agricultural

Fractionation

NGLs

Butanes

  • Iso vs. normal butane pricing and liquidity differences

  • Petrochem feedstock

  • Ethanol blend stock

Pentanes+

  • Blend stock of motor gasoline

  • Highest priced NGL

* Ethane may be recovered or rejected by modern cryogenic processors.


Economics of rich gas

Economics of Rich Gas

LEAN GAS NETBACK

Net to Producer

$3.00 NYMEX

$3.25 DTI Appalachia

$2.75/Mcf

1 Mcf

Lean Gas

(1000 Btu)

1.00 MMBtu

$0.50

gathering fee

RICH GAS NETBACK

(residue, processed liquids & condensate)

$3.25 DTI Appalachia

1.01 MMBtu

$3.00 NYMEX

$60/Bbl

$6.10/Mcf

1 Mcf

Rich Gas

(1250 Btu)

.054 Bbl NGL

$80/Bbl

$1.00 incremental fees

$0.63

gathering fee

.015 Bbl Condensate


Thank you

Thank You

EVERYTHING MIDSTREAM

Ohio Office:

3500 Massillon Road

Suite 280

Uniontown, Ohio 44685

330.546.4609

Brent Breon

VP – Business Development

Dallas Office:

5949 Sherry Lane

Suite 1300

Dallas, Texas 75225

214.580.3700

Scott Williams

SVP - Commercial


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