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US MarketsUS MarketsLNG Growth OpportunitiesLNG Growth Opportunities
Kathleen EisbrennerKathleen EisbrennerSenior Managing DirectorSenior Managing Director
This presentation includes forward-looking statements and projections, madeThis presentation includes forward-looking statements and projections, madein reliance on the safe harbor provisions of the Private Securities Litigationin reliance on the safe harbor provisions of the Private Securities LitigationReform Act of 1995. The companies have made every reasonable effort toReform Act of 1995. The companies have made every reasonable effort toensure that the information and assumptions on which these statements andensure that the information and assumptions on which these statements andprojections are based are current, reasonable, and complete. However, aprojections are based are current, reasonable, and complete. However, avariety of factors could cause actual results to differ materially from thevariety of factors could cause actual results to differ materially from theprojections, anticipated results or other expectations expressed in thisprojections, anticipated results or other expectations expressed in thispresentation, including, without limitation, oil and gas prices; generalpresentation, including, without limitation, oil and gas prices; generaleconomic and weather conditions in geographic regions or markets served byeconomic and weather conditions in geographic regions or markets served byEl Paso Energy and Coastal and their affiliates, or where operations of theEl Paso Energy and Coastal and their affiliates, or where operations of thecompanies and their affiliates are located; inability to realize anticipatedcompanies and their affiliates are located; inability to realize anticipatedsynergies and cost savings on a timely basis; difficulty in integration ofsynergies and cost savings on a timely basis; difficulty in integration ofoperations; and competition. While the companies make these statementsoperations; and competition. While the companies make these statementsand projections in good faith, neither company nor its managements canand projections in good faith, neither company nor its managements canguarantee that the anticipated future results will be achieved. Referenceguarantee that the anticipated future results will be achieved. Referenceshould be made to the companies (and their affiliates ) Securities andshould be made to the companies (and their affiliates ) Securities andExchange Commission filings for additional important factors that may affectExchange Commission filings for additional important factors that may affectactual results.actual results.
Cautionary Statement RegardingCautionary Statement RegardingForward-looking StatementsForward-looking Statements
Investors are urged to read the proxy statement/prospectus which isInvestors are urged to read the proxy statement/prospectus which isincluded in the Registration Statement on Form S-4 filed with the SEC onincluded in the Registration Statement on Form S-4 filed with the SEC onFebruary 24, 2000 in connection with the proposed merger because itFebruary 24, 2000 in connection with the proposed merger because itcontains important information. The proxy statement/prospectus is availablecontains important information. The proxy statement/prospectus is availablefor free on the SEC s web site (www.sec.gov) and from El Paso Energyfor free on the SEC s web site (www.sec.gov) and from El Paso EnergyCorporation s office of Investor Relations. The merger between Coastal andCorporation s office of Investor Relations. The merger between Coastal andEl Paso is subject to government approvals and is expected to close in theEl Paso is subject to government approvals and is expected to close in thefourth quarter of 2000.fourth quarter of 2000.
In addition, the identity of the people who, under SEC rules, may beIn addition, the identity of the people who, under SEC rules, may beconsidered particip ants in the solicitation o f El Paso Energy shareholdersconsidered particip ants in the solicitation o f El Paso Energy shareholdersin connection with the proposed merger, and a description of their interests,in connection with the proposed merger, and a description of their interests,is available in an SEC filing under Schedule 14A made by El Paso Energyis available in an SEC filing under Schedule 14A made by El Paso EnergyCorporation on January 18, 2000.Corporation on January 18, 2000.
Investor NoticeInvestor Notice
Business UnitsBusiness Units
El PasoEl PasoEnergyEnergy
CorporationCorporation
El PasoEl PasoEnergyEnergy
InternationalInternational
El PasoEl PasoProductionProduction
Oil and GasOil and GasProductionProduction
El PasoEl PasoMerchantMerchantEnergyEnergy
WholesaleWholesaleMarketing,Marketing,Trading, andTrading, andPower GenerationPower Generation
El PasoEl PasoFieldField
ServicesServices
Gas GatheringGas GatheringandandProcessingProcessing
InternationalInternationalEnergyEnergyInfrastructureInfrastructureDevelopmentDevelopment
TennesseeTennesseeGasGas
PipelinePipeline
SouthernSouthernNaturalNatural
GasGas
El PasoEl PasoNaturalNatural
GasGas
Natural GasNatural GasTransmissionTransmission
Natural GasNatural GasTransmissionTransmission
Natural GasNatural GasTransmissionTransmission
El PasoEl PasoRegulated Regulated CompaniesCompanies
El PasoEl PasoUnregulated Unregulated CompaniesCompanies
AgendaAgenda
�� Drivers of growth in the LNG businessDrivers of growth in the LNG business�� GlobalGlobal�� Domestic U.S.Domestic U.S.
�� Role of El Paso Merchant Energy in theRole of El Paso Merchant Energy in theU.S. LNG BusinessU.S. LNG Business�� Elba IslandElba Island�� Cove PointCove Point�� OtherOther
Drivers of Growth inDrivers of Growth inGlobal LNG BusinessGlobal LNG Business
�� Cost reductionsCost reductions�� Exploration costs (somewhat)Exploration costs (somewhat)�� Liquefaction costs by 33%Liquefaction costs by 33%�� Shipping by 40%Shipping by 40%
�� Design efficiencies, technology improvements, andDesign efficiencies, technology improvements, andinnovative financing have all contributed to improvedinnovative financing have all contributed to improvedproject economicsproject economics
�� LNG supply is global business; prices paid for LNGLNG supply is global business; prices paid for LNGwill depend on fuel prices in the U.S., Europe, andwill depend on fuel prices in the U.S., Europe, andother foreign marketsother foreign markets
�� Global long term demand is increasing at a rateGlobal long term demand is increasing at a ratesignificantly greater than increases in LNG suppliessignificantly greater than increases in LNG supplies
Industrial
Other
Residential
Commerical
Power
0
5
10
15
20
25
30
35
1997 1998 2005 2010 2015 2020
(Tcf per year)
Drivers of Growth inDrivers of Growth inU.S. Natural Gas DemandU.S. Natural Gas Demand
Source: Energy Information Administration / Annual Energy Outlook 2000
Source: WEFA, Inc. Natural Gas Outlook 1999Source: WEFA, Inc. Natural Gas Outlook 1999
BcfBcf
Southeast/Mid-AtlanticSoutheast/Mid-AtlanticGas Demand GrowthGas Demand Growth
405
589
1,209
Southern Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)Southern Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)
Mid-Atlantic (NJ, NY, PA)Mid-Atlantic (NJ, NY, PA)
Annual capacity ofAnnual capacity ofCove Point and Elba IslandCove Point and Elba Island
terminalsterminals
2000-20052000-2005 2000-20102000-2010Gas demand increaseGas demand increase
872872
1,7351,735
283283526526
Southeast / Mid-AtlanticSoutheast / Mid-AtlanticGas Demand Growth: Electric GenerationGas Demand Growth: Electric Generation
337
1074
Mid-Atlantic 2000-2010 South Atlantic 2000-2010
Gas demand increase for electric generationGas demand increase for non-electric
526526(36%)(36%)
(64%)(64%)
1,2091,209
(89%)(89%)
(11%)(11%)
Source: WEFA, Inc. Natural Gas Outlook 1999Source: WEFA, Inc. Natural Gas Outlook 1999
(Volumes in BCF per year)(Volumes in BCF per year)
189189
135135
Drivers of Growth of LNG in U.S.Drivers of Growth of LNG in U.S.MarketsMarkets
�� New LNG supply volumes exceed terminal capacityNew LNG supply volumes exceed terminal capacityon the U.S. east coaston the U.S. east coast
�� Demand growth will outstrip supply increaseDemand growth will outstrip supply increase
�� Cost of service rates are extremely attractiveCost of service rates are extremely attractive
�� Flexibility inherent in LNG facilities well-suited toFlexibility inherent in LNG facilities well-suited topower generation requirementspower generation requirements
�� Terminal capacity will become a constrainedTerminal capacity will become a constrainedresource and increase in value beyond cost ofresource and increase in value beyond cost ofservice ratesservice rates
U.S. LNG Facilities:U.S. LNG Facilities:Current StatusCurrent Status
Elba IslandElba Island
Cove PointCove Point
EverettEverett
Lake CharlesLake Charles
�� Everett: Operating since 1988 withEverett: Operating since 1988 withlong-term supply contractslong-term supply contracts
�� Lake Charles: Operating since 1989Lake Charles: Operating since 1989on a short-term, spot cargo basison a short-term, spot cargo basis
�� Elba Island: To reopen late 2001 /Elba Island: To reopen late 2001 /early 2002early 2002
�� Cove Point: To reopen 1st Qtr 2002Cove Point: To reopen 1st Qtr 2002
ME
NY
PA
VA
NC
KY
WV
TN
SC
GAALMS
LA
FL
NJ
VT
NHMACT
MD
Send-outSend-outCapacityCapacityMMcfMMcf/d/d
StorageStorageCapacityCapacity
Bcf Bcf
Annual Annual CapacityCapacity
Bcf/YrBcf/Yr
2000 2000 Imports Imports Jan-SeptJan-SeptBcf (est)Bcf (est)
Lake Charles, LALake Charles, LA
Elba Island, GAElba Island, GA
Cove Point, MD**Cove Point, MD**
Everett, MAEverett, MA
TotalsTotals
TerminalTerminal
U.S. LNG Terminal CapacityU.S. LNG Terminal Capacity
700700
540540
750750
535535
2,7752,775
6.306.30
4.004.00
6.756.75
3.603.60
20.6520.65
183183
160160
245245
164164
752752
$100$100
$ 29$ 29
$ 36$ 36
Market BasedMarket Based
100100
— —
— —
7070
170170
AnnualAnnualCost ofCost ofServiceService
MMMM
**Cove Point capacity noted only relates to the import terminal capacity allocated to the three import capacity holders; storage capacity includes the 5th tank expansion
U.S. LNG Terminal CapacityU.S. LNG Terminal Capacity
Peak-DayPeak-DayMMcf/dMMcf/d
StorageStorageCapacityCapacity
Bcf Bcf
Annual Annual CapacityCapacity
Bcf/YrBcf/Yr
2000 2000 Imports Imports Jan-SeptJan-SeptBcf (est)Bcf (est)
Lake Charles, LALake Charles, LA
Elba Island, GAElba Island, GA
Cove Point, MDCove Point, MD****
Everett, MAEverett, MA
TotalsTotals
TerminalTerminal
700700
540540
750750
535535
2,7752,775
6.306.30
4.004.00
6.756.75
3.603.60
20.6520.65
183183
160160
245245
164164
752752
$100$100
$ 29$ 29
$ 36$ 36
Market BasedMarket Based
100100
— —
— —
7070
170170
AnnualAnnualCost ofCost ofServiceService
MMMM
**Cove Point capacity noted only relates to the import terminal capacity allocated to the three import capacity holders; storage capacity includes the 5th tank expansion
U.S. LNG Terminal CapacityU.S. LNG Terminal Capacity
Peak-DayPeak-DayMMcf/dMMcf/d
StorageStorageCapacityCapacity
Bcf Bcf
Annual Annual CapacityCapacity
Bcf/YrBcf/Yr
2000 2000 Imports Imports Jan-SeptJan-SeptBcf (est)Bcf (est)
Lake Charles, LALake Charles, LA
Elba Island, GAElba Island, GA
Cove Point, MD**Cove Point, MD**
Everett, MAEverett, MA
TotalsTotals
TerminalTerminal
700700
540540
750 750
535535
2,7752,775
6.306.30
4.004.00
6.756.75
3.603.60
20.6520.65
183183
160160
245245
164164
752752
$100$100
$ 29$ 29
$ 36$ 36
Market BasedMarket Based
100100
— —
— —
7070
170170
AnnualAnnualCost ofCost ofServiceService
(Million $) (Million $)
**Cove Point capacity noted only relates to the import terminal capacity allocated to the three import capacity holders; storage capacity includes the 5th tank expansion
Forecast gas demand growth (2000-2010)Forecast gas demand growth (2000-2010)
Existing unused pipeline capacity (GA, VA)Existing unused pipeline capacity (GA, VA)
1 Bcf/d new pipeline to Florida1 Bcf/d new pipeline to Florida
1 Bcf/d new pipeline(s) to mid- and south Atlantic1 Bcf/d new pipeline(s) to mid- and south Atlantic
Unmet gas demand growth (2000-2010)Unmet gas demand growth (2000-2010)
Annual capacity of Cove Point and Elba IslandAnnual capacity of Cove Point and Elba Island
1,7351,735
(200) (200)
(365) (365)
(365) (365)
805 805
405 405
Demand Growth andDemand Growth andInfrastructureInfrastructure(Volumes are in (Volumes are in BcfBcf per year) per year)
LNG will complement other supply sources to meetLNG will complement other supply sources to meetdemand growth in mid- and south Atlantic marketsdemand growth in mid- and south Atlantic markets
El Paso Merchant EnergyEl Paso Merchant EnergyLNG StrategyLNG Strategy
�� Secure long-term LNG suppliesSecure long-term LNG supplies
�� Actively pursue spot LNG opportunitiesActively pursue spot LNG opportunities
�� Create downstream market opportunitiesCreate downstream market opportunities
�� Utilize downstream positions to leverage into otherUtilize downstream positions to leverage into otheraspects of the LNG chainaspects of the LNG chain
�� Explore international opportunitiesExplore international opportunities
El Paso Merchant Energy :El Paso Merchant Energy :Capacity Holder in Elba IslandCapacity Holder in Elba Island
Recent Events: Elba IslandRecent Events: Elba Island
�� 19991999�� Preliminary agreement reached with Trinidad producerPreliminary agreement reached with Trinidad producer
consortiumconsortium�� SES bid for 100% of Elba terminal capacity MaySES bid for 100% of Elba terminal capacity May�� SES awarded capacity JuneSES awarded capacity June
�� 20002000�� FERC certificate accepted April 17FERC certificate accepted April 17�� LNG supply contract finalizedLNG supply contract finalized
Southern Natural GasSouthern Natural Gas
South Georgia Natural GasSouth Georgia Natural Gas
Florida Gas Trans Florida Gas Trans
TranscoTransco
Elba IslandElba Island
Elba Island Terminal Capacity enhances positionElba Island Terminal Capacity enhances positionin High Demand Growth Areasin High Demand Growth Areas
El Paso Merchant Energy:El Paso Merchant Energy:Terminal Capacity Holder in Cove PointTerminal Capacity Holder in Cove Point
El Paso Merchant Energy in LNGEl Paso Merchant Energy in LNGBusiness: Cove PointBusiness: Cove Point
******************************************************************************
�� El Paso controls 1/3 of theEl Paso controls 1/3 of thecapacity in the Cove Pointcapacity in the Cove Pointfacilityfacility
******************************************************************************
��Terminal Facilities (current)Terminal Facilities (current)�� LNG Storage Capacity: 1.5LNG Storage Capacity: 1.5
million barrels (5 million barrels (5 Bcf Bcf VaporVaporEquivalent; 237,000 mEquivalent; 237,000 m33))
�� Send Out Capacity: 1 Send Out Capacity: 1 Bcf Bcf perperdayday
�� Dual Berth Pier: 50,000 Dual Berth Pier: 50,000 gpmgpmUnloading RateUnloading Rate
�� 2003 Storage Capacity2003 Storage CapacityExpansion: 750,000 barrelsExpansion: 750,000 barrels(2.5 (2.5 Bcf Bcf Vapor Equivalent;Vapor Equivalent;118,500 m118,500 m33))
Cove Point StatusCove Point Status
�� Open season held in March 2000Open season held in March 2000
�� Three bidders offered maximum rate,Three bidders offered maximum rate,unconditional offersunconditional offers
�� El Paso controls 1/3 of the capacityEl Paso controls 1/3 of the capacity
�� Cove Point targeting 4th Qtr. 2000 FERCCove Point targeting 4th Qtr. 2000 FERCfilingfiling
�� Reactivation of import capability by 1stReactivation of import capability by 1stquarter 2002quarter 2002
ConclusionsConclusions
�� LNG supply growth is market drivenLNG supply growth is market driven
�� US represents a competitive LNG marketUS represents a competitive LNG marketopportunity for LNG supplyopportunity for LNG supply
�� Atlantic Basin production will change globalAtlantic Basin production will change globaldynamics of LNG businessdynamics of LNG business
�� LNG supplies will complement growingLNG supplies will complement growingpower generation load in southeast U.S.power generation load in southeast U.S.
�� Receiving terminal capacity will increase inReceiving terminal capacity will increase invaluevalue