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Bill Waldheim Business Unit President November 3, 2011 PowerPoint PPT Presentation


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PFAA – 18 th Annual Conference NGL Infrastructure Back to the Future. Bill Waldheim Business Unit President November 3, 2011. NGL Infrastructure. 1985. 1955. NGL Infrastructure. Doc Brown. Einstein. Flux Capacitor. NGL Infrastructure. DeLorean. 1981. NGL Infrastructure.

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Bill Waldheim Business Unit President November 3, 2011

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PFAA – 18th Annual Conference

NGL Infrastructure

Back to the Future

Bill WaldheimBusiness Unit President

November 3, 2011


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NGL Infrastructure

1985

1955


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NGL Infrastructure

Doc Brown

Einstein

Flux Capacitor


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NGL Infrastructure

DeLorean

1981


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NGL Infrastructure

What musician or band wrote the soundtrack for the original movie?

Huey Lewis and the News!


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Back in Time – 1990’s-2000’s

Rockies

Mid-Continent

Permian

Gulf Coast

GOM

2000-2010

1986-2000

  • A period of declining domestic crude oil production and uncertain gas production


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Gas Evolution Timeline

Infrastructure Build

1990

2010

Supply Build

Demand Build

Overbuild

  • More capacity than needed

  • Repurpose lines

  • Marcellus displacement

  • REX - Rockies & MidCont to East Coast

  • Gulf Stream - Gulf Coast to Florida

  • Expanding of Transwestern, El Paso & Questar

  • Maritimes

  • Portland Natural Gas Pipeline

  • Expansion of Texas Intrastate Pipeline infrastructure

  • Shift in power generation & industrial loads to gas

  • PetChem industry relied on heavier (Naptha) feeds

  • Rising demand for plastic & packaging materials

  • Viewed as environmentally friendly energy source

  • Deregulate natural gas industry

  • Conventional / Tight Sands Drilling

  • Rising natural gas prices

  • NGPA pricing incentives

  • More than 20,000 miles of natural gas transmission pipelines were placed in service in the US over the past 10 years


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Historical Gas Infrastructure Constraints

West to East Flows

Market

Market

Production Growth Areas

Move East

Capacity Constraints

  • High gas production with capacity bottlenecks to move gas to market


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Gas Infrastructure

West to East Bottleneck

  • Gas Infrastructure proposals to alleviate capacity constraints


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Gas Basis Spreads

  • Natural Gas basis spreads narrowed with Gas infrastructure build out


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2000’s forward

  • Drilling shifts to liquids rich areas, driving growth in NGL supply


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Increased NGL Supply

Bottleneck

  • New rich shale gas driving the need for additional NGL Infrastructure


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NGL Infrastructure Constraints

Market

Wet Gas Fairway

Capacity Constraints

Market

  • NGL evolution is beginning similar to Gas. High NGL production with capacity constraints to move to market


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Proposed NGL Infrastructure

  • Additional access to Mt. Belvieu expected to drive a tightening in Conway/Belvieu basis spreads


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DCP Midstream’s NGL Projects

  • Providing customers with NGL transportation services


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Basis Spreads

??

  • Expect basis spreads to narrow with additional pipeline infrastructure build


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NGL Evolution Timeline

2000

Forward

Infrastructure Build

Supply Build

Demand Build

Overbuild

  • What’s next?

  • Narrow basis spreads

  • Operational improvements

  • Extra capacity to handle outages and turnarounds

  • Reverse flow on NGL Lines

  • Repurposing

  • Mapco

  • Seminole

  • Chevron

  • Oneok - OPPL

  • Southern Hills

  • Oneok - Sterling

  • Sand Hills

  • MEPS

  • Vantage Pipeline

  • Lone Star West Texas Pipeline

  • Texas Express Pipeline

  • Shift from to gas fired power generation

  • Petrochemical companies incentives to convert to lighter feed stocks

  • Increased consumer demand for plastics and packaging materials

  • Emerging Shale pays

  • New horizontal drilling technology

  • Gas to crude ratios

  • Infrastructure needed to meet production and demand growth


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Evolution Timeline

  • The NGL market development cycle is evolving similar to gas, just later in time.


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Summary

?


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