Bryan Hassler, Executive Director

Western Energy InstituteDomestic Supply Perspectives

October 23, 2003Las Vegas, NV

2

The Sky is Falling……………

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The Problems Facing North America………….

• High Prices• Declining Supplies in Traditional Basins• Lack of Access to New and Growing Basins

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High Prices – NYMEX Last Day Settle

  1993 1995 1997 1999 2000 2002 2003

Jan 2.05 1.65 4.00 1.77 2.34 2.65 4.97

Feb 1.60 1.46 2.99 1.71 2.61 2.03 5.66

Mar 1.94 1.45 1.78 1.69 2.60 2.40 9.00

Apr 2.26 1.58 1.81 1.85 2.90 3.41 5.12

May 2.76 1.67 2.12 2.34 3.09 3.34 5.11

Jun 1.98 1.75 2.12 2.23 4.41 3.43 5.96

Jul 1.94 1.51 2.15 2.26 4.37 3.31 5.33

Aug 2.13 1.34 2.16 2.60 3.82 2.90 4.65

Sep 2.36 1.53 2.52 2.91 4.62 3.33 4.88

Oct 2.05 1.65 3.32 2.56 5.31 3.70 4.44

Nov 2.19 1.78 3.27 3.09 4.54 4.14  

Dec 2.40 2.29 2.58 2.12 6.02 4.14  

Avg 2.14 1.64 2.57 2.26 3.89 3.23 5.51

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Declining Supplies……………..

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Anadarko Basin and Hugoton Embayment

0

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3,000

4,000

5,0006,000

7,000

8,000

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Anadarko Hugoton

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Thomas Driscoll – Lehman Brothers

“……….LNG won’t fill supply gap until at least 2006-2008 time frame.”

“…….available gas supply will drop by 5% this year…..due to an expected decline in domestic production of 2% and a decline in Canadian imports of 10%.”

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Lack of Access

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What Can Be Done??????????????

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Invent a Better Chicken???????

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Look to Growing Supply Areas

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Green River Basin

0

500

1,000

1,500

2,000

2,500

3,000

3,500

MM

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13

Southwest Wyoming Plant Output (MMcf/day)

• 1998 – 807

• 1999 – 836

• 2000 – 911

• 2001 – 986

• 2002 – 1,117

• 2003 (Mar) – 1,269 MMcfd

• Average daily throughput Opal/Granger/Blacks Fork Plants

• Data Source – WOGCC

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Powder River Basin Production

0

200

400

600

800

1,000

1,200J

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-93

Jan

-94

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-95

Jan

-96

Jan

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Conventional CBM

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Powder River Basin CBM Output (MMcfd)

• 1998 – 82

• 1999 – 156

• 2000 – 403

• 2001 – 673

• 2002 – 848

• 2003 (Mar) – 905 MMcfd

• Data Source - WOGCC

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Other Wyoming Areas of Production Growth

• Wamsutter/Echo Springs – 346 MMcfd• Lost Cabin/Madden Deep – 190 MMcfd

• Note: Lost Cabin Shut-in for much of 2003 due to operational problems.

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Growth In Production – Colorado (Garfield County)

• 1999 154,000 Mcfd• 2000 190,000 Mcfd• 2001 241,000 Mcfd• 2002 315,000 Mcfd• March ’03 365,000 Mcfd• Going to? 1 Bcfd +

Major Operators include: EnCana, Williams, Calpine, Mesa, Tom Brown, Exxon/Mobil

Data Source: Colorado Oil and Gas Conservation Commission

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Does The West Have Supply Issues?

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Producer Critical Success Factors

• Access to Federal Lands• Gas Price• Timing of Regulatory Approvals• Gathering System Capacities and Pressures• Transportation Export Capacity• Capital Efficiency• Public Acceptance

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Pipeline Projects In-service or Full Market Support

• Kern River Pipeline Expansion

• Williston Basin Grasslands Pipeline

• El Paso Cheyenne Plains Pipeline

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Kern River Expansion

Kern River 2003 Expansion$1.3 Billion

Kern River 2002 Expansion$31.4 Million

Kern River 2003 Expansion$1.3 Billion

Kern River 2002 Expansion$31.4 Million

California Action Project

•135,00 Dth/d July 1, 2001

•53,900 hp of compression

•$81 million

Kern River 2002 Expansion

•Additional 10,500 Dth/d May 1, 2002

•21,000 hp of compression (6,000 new)

•$31.4 million

Kern River 2003 Expansion

•906,626 Dth/d May 1, 2003

•716 miles of 36 and 42 inch pipe

•160,000 hp of compression

•$1.3 billion

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WBI Grasslands Pipeline

•80,000 Dth/d Nov 1, 2003

•247 miles of 16 inch pipe

•5,380 hp of compression

•Expansion to 200 MMcfd

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Cheyenne

WY

MT

OK

KS

CO

NM

UT

AZ

Cheyenne Plains

NE

SD

Cheyenne Plains Pipeline

Capital cost: $336.5 MMCapital cost: $336.5 MMPipe: Pipe:

– 380 miles of 30"380 miles of 30"– 7 miles of laterals7 miles of laterals

Compression: 33,155 hpCompression: 33,155 hpCapacity: 560 MDth/dCapacity: 560 MDth/dExpandable to 1,000 MDth/dExpandable to 1,000 MDth/dIn-service: August 2005In-service: August 2005

El PasoEl Paso NGPLNGPLCIGCIG PEPLPEPLWICWIC WNGWNGNNGNNG TrailblazerTrailblazerANRANR MCMCMCMC

Greensburg

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Everybody Likes Rockies Supplies…….

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Pipeline Export Projects Proposed

• Kinder Morgan Advantage

• Northern Border Bison Project

• Enbridge Chicago Project

• Southern Star Western Frontier Project

• El Paso Ruby Project

• Kinder Morgan TransColorado Expansion.

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Intraregional Projects

• Questar Kern Expansion• Northwest Rockies Expansion• El Paso Front Range Expansions• Xcel Front Range Projects• Kinder Huntsman Storage Project• Totem Gas Storage Project• Wyoming Interstate/Overthrust Backhaul

Projects• Jonah/Opal/Powder/Wind River

Gathering/Processing Expansions

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Cost of Limited Infrastructure to Wyoming

• $130 + million in Federal/State royalties and severance taxes – 2002.

• $1 million per day in March 2003.• Stalled investment in development of mineral

resources.• Limited ability to predict revenues with certainty.

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Thanks for the opportunity to speak with you.

Bryan Hassler

President - United Energy Partners, LLC

& Interim Executive Director - Wyoming Natural Gas Pipeline Authority

1625 17th Street, 3rd Floor

Denver, CO 80202

Ph 303-357-7314

Cell 303-748-6473

Fax 303-948-1428

Email uep1@comcast.net

Wyoming Pipeline Authority Presentations Can be Accessed via the Wyoming Oil & Gas Conservation Commission Website at: www.wogcc.state.wy.us