Transcript No Slide Title

Regulation and Investment in the U.S.
GIE Annual Conference
Bratislava, Slovakia
September 28, 2006
Robert J. Cupina, Deputy Director
Office of Energy Projects
Federal Energy Regulatory Commission
FERC
Basis of U.S. Regulation:
Natural Gas Act
NATURAL GAS ACT
Section 7(c)
Interstate
• Pipelines
• Storage
2
Section 3
Import/Export
• LNG Terminals
Office of Energy Projects
FERC
Pipeline Regulation
•Construction
and Operation
•Tariffs
• Rates
• Rate
Schedules
• Terms and
Conditions
of Service
Source: Based on Platts PowerMap
3
Office of Energy Projects
FERC
Storage Regulation
•Construction
and Operation
•Tariffs
• Rates
• Rate
Schedules
• Terms and
Conditions
of Service
Source: Based on Platts PowerMap.
4
Office of Energy Projects
FERC
LNG Regulation
• Construction
and Operation
• Ongoing Safety
• No Tariff
• Any Business
Model
Acceptable
EVERETT
COVE POINT
ELBA ISLAND
LAKE CHARLES
ENERGY BRIDGE
(Coast Guard Jurisdiction)
5
Office of Energy Projects
FERC
Evaluation of Pipeline
Proposals
• Certificate Policy Statement
– Existing Shippers Do Not Subsidize
New Facilities
– Develop Record on Impacts (positive
and negative) and Allow Commission
to Make Decision
• Environmental/Engineering Review
6
Office of Energy Projects
FERC
Evaluation of Storage
Proposals
• Storage Policy for Market-based Rates
– Relevant product market for market
power analysis includes many
substitutes, or
– MBRs allowed even if lack of market
power has not been demonstrated in
situations to encourage infrastructure
• Environmental/Engineering Review
7
Office of Energy Projects
FERC
Evaluation of
LNG Terminals
• Environmental/Engineering Review
• Safety Review
• No Tariff
– Hackberry Decision (December 2002)
no need for tariffs or third party
access . Treats re-gas as production.
8
Office of Energy Projects
FERC
Hackberry Decision
Liquid to Vapor Flow
B
LNG
Buyers
B
Open Access At
Delivery of Vapor
into Interstate
Pipeline System
9
A
LNG
Suppliers
A
Open Access At
Delivery of Liquid to
Terminal
Office of Energy Projects
FERC
Major Pipeline Projects
Certificated (MMcf/d)
January 2005 to September 2006
1. TransColorado (300)
2. Rendezvous (300)
3. WIC (350)
4. Entrega (EnCana) (1,500)
5. Questar (102)
6. Northwest (450)
7. Questar Overthrust (550)
Transcontinental
(105)
Dominion
(700)
Northern Border
(Chicago III)
Columbia (172)
(130)
Midwestern
(120)
CIG (105)
El Paso
(502)
10
12.6 BCF/D Total
26.88
903BCF/D
Miles Total
1,511 Miles
Jewell Ridge Pipeline
(East Tennessee) (235)
CenterPoint(113)
Port Arthur (3,000)
Golden Pass (2,500)
Dominion South (200)
San Patricio
(1,000)
Florida Gas
(160)
Transcontinental
(100)
Logan Lateral
(Texas Eastern)
(900)
Cove Point Pipeline
(800)
Cypress Pipeline
(Southern Natural) (500)
McMoRan (1,500)
Triple-T Extension
(Tennessee) (200)
Cheniere Creole Trail (3,300)
Cameron (1,500)
Vista Del Sol Cheniere Corpus Christi
(1,100)
(2,600)
Office of Energy Projects
FERC
Major Pipeline Projects
Pending (MMcf/d)
September 2006
Bradwood Landing
(NorthernStar)
(1,300)
Wamsutter Expansion
(Questar Overthrust)
(750)
Northern Lights
(Northern Natural)
Empire Connector
(374)
(Empire Pipeline) (250)
Broadwater
Pipeline
(Broadwater)
(1,000)
2007 Expansion
(Vector Pipeline) (245)
Rockies Express REX West
(Rockies Express Pipeline)
(1,800)
Blanco to Meeker
(TransColorado) (250)
North Baja Expansion
(North Baja Pipeline)
(2,700)
18.72 BCF/D Total
1,976 Miles
11
TIME II
(Texas Eastern) (150)
Big Sandy Pipeline
(Equitrans)
(130)
Potomac Expansion
(Transcontinental)
(167)
Gulf LNG Pipeline
(1,500)
Carthage to Perryville
(CenterPoint)
(1,237)
Compass Pass
(1,000)
Point Comfort
(1,000)
East TX
Mississippi Expansion
(Gulf South)
Phase III Project
(1,700)
(Gulfstream)
(200)
Seafarer Pipeline
(El Paso) (800)
Office of Energy Projects
FERC
Major Pipeline Projects
Pre-Filing (MMcf/d)
September 2006
Pacific Connector
(Williams Pacific)
(1,000)
GII Project
(Guardian Pipeline)
(537)
Kanda & Mainline
(WIC) (225)
Southern Expansion
(Questar Pipeline)
(170)
Phoenix Lateral
(Transwestern) (500)
11.71 BCF/D Total
2,386 Miles
12
Rockies Express REX East
(Rockies Express Pipeline)
(1,800)
Continental Connector
Southeast Expansion
(El Paso)
(Gulf South)
(1,000)
(700)
Southeast Supply Header
Louisiana Pipeline
(CenterPoint)
(Kinder Morgan)
(1,000)
(3,395)
Phase IV Project
(Gulfstream)
Sonora Pipeline
(155)
(1,000)
Office of Energy Projects
FERC
Major Pipeline Projects On The
Horizon (MMcf/d)
August 2006
Alaska (4,000)
Coronado (500)
Painter Lateral (Overthrust) (200)
EnCana Extension (Entrega) (1,000)
Questar Expansion (160)
Uinta Basin (WIC) (300)
Greasewood Lateral (Northwest)
(200)
15.22 BCF/D Total
6,976 Miles
13
Panhandle Eastern (750)
KM Illinois Pipeline
(Kinder Morgan) (360)
Kinder Morgan (170)
Northwinds Pipeline
(NFG) (500)
Dracut Interconnect
(Tennessee) (250)
Natural (232)
Henry Hub Expansion (Natural) (200)
North Texas Expansion (Trunkline) (510)
Carthage Pipeline(KM Interstate)(700)
A/G Line Expansion (Natural)(139)
Mid-Continent Express (Kinder Morgan) (1,500)
Mid-Continent Crossing (CenterPoint) (1,750)
Transcontinental (Mobile Bay) (700)
Boardwalk PL (1,000)
Shenzi Lateral (Enbridge) (100)
Office of Energy Projects
FERC
Pipeline
Infrastructure
• Least speculative gas infrastructure project
– If approved, usually gets built
– Cost-based rates required as an option, but
usually rates are negotiated
• Contracts or binding precedent agreements
with shippers usually required by sponsor, not
the Commission, prior to filing application.
• Since 2000, the Commission has approved
57.1 Bcf per day of capacity; over 9,000 miles
of pipeline; and 2.2 million horsepower of
compression
– Estimated cost of $16.9 billion.
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Office of Energy Projects
Pipeline Infrastructure
Approvals 2000-2006
16
3500
14
3000
12
2500
10
2000
8
1500
6
1000
4
2
Typical long-line and replacement
pipeline projects
0
2000
2001
2002
2003
Capacity
15
Short, high capacity pipelines to
deliver regasified LNG to grid
2004
Mileage
2005
Approved Mileage
Approved Capacity (Bcf/d)
FERC
500
0
2006
Office of Energy Projects
FERC
Pipeline Infrastructure
Future Additions
• The INGAA Foundation estimates that
between 2006 and 2020, $50.9 billion will
need to be invested in 26,000 miles of
pipelines and 5.2 milllion HP in the U.S. and
Canada
– Replacement of facilities: $16.4 billion
• 9,300 miles, 1.2 million HP
– New facilities (16,900 miles): $34.5 billion
• 16,900 miles, 4.0 million HP
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– Alaska and MacKenzie Delta
– Other facilities
Office of Energy Projects
FERC
Storage Projects
(Capacity in Bcf)
SemGas (5.5)
Bluewater
(29.2)
Dominion (9.4)
Columbia (16.4)
Unocal Windy Hill
(6.0)
Arizona Natural Gas
(3.5)
Texas Gas (8.2)
Texas Gas (6.8)
Bobcat (12.0)
Natural (10.0)
EnCana (8.0)
Falcon Worsham-Steed (12.0)
Falcon Hill-Lake (10.4)
Starks (19.2)
1/1/05
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Columbia (12.4)
Natural (10.0)
CenterPoint
(15.0)
Certificated Since
Currently Pending
On The Horizon
Dominion (18.0)
Liberty (17.6)
County Line (6.0)
Freebird (6.1)
Caledonia (11.7)
Caledonia (1.7)
Falcon MoBay (50.0)
Petal (5.0)
Office of Energy Projects
FERC
Storage
Infrastructure Additions
• More speculative gas infrastructure
project than pipelines
– Not all gas users need storage service
• New storage pricing policy to promote
storage development
• Since 2000, the Commission has
approved 275 Bcf of storage capacity
and daily deliverability from storage of
14.6 Bcf.
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Office of Energy Projects
FERC
Storage Infrastructure
Future Additions
• The INGAA Foundation estimates that
between 2006 and 2020, $5.5 billion
will need to be invested in underground
storage.
• The NPC estimates that between 2005
and 2025, 492 Bcf of storage capacity
needs to be added in the U.S. at an
estimated cost of about $4.5 billion.
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Office of Energy Projects
FERC
Existing and Proposed
North American LNG
Terminals
21
20
19
34 33
42
A 43
8
29
37
27
11
36B,13
38
4639 25
24 23
C,35
26
45 2 3
1,32
5
14D 28
15
44
4,16 12
30
9
6
40
7
10
31 41 E 18
17
22
US Jurisdiction
As of September 22, 2006
US pipeline approved; LNG terminal pending in Bahamas
** Construction suspended
*
Office of Energy Projects
FERC
MARAD/USCG
CONSTRUCTED
A. Everett, MA : 1.035 Bcfd (SUEZ/Tractebel - DOMAC)
B. Cove Point, MD : 1.0 Bcfd (Dominion - Cove Point LNG)
C. Elba Island, GA : 1.2 Bcfd (El Paso - Southern LNG)
D. Lake Charles, LA : 2.1 Bcfd (Southern Union - Trunkline LNG)
E. Gulf of Mexico: 0.5 Bcfd (Gulf Gateway Energy Bridge - Excelerate Energy)
APPROVED BY FERC
1. Hackberry, LA : 1.5 Bcfd (Cameron LNG - Sempra Energy)
2. Bahamas : 0.84 Bcfd (AES Ocean Express)*
3. Bahamas : 0.83 Bcfd (Calypso Tractebel)*
4. Freeport, TX : 1.5 Bcfd (Cheniere/Freeport LNG Dev.)
5. Sabine, LA : 2.6 Bcfd (Sabine Pass Cheniere LNG)
6. Corpus Christi, TX: 2.6 Bcfd (Cheniere LNG)
7. Corpus Christi, TX : 1.1 Bcfd (Vista Del Sol - ExxonMobil)
8. Fall River, MA : 0.8 Bcfd (Weaver's Cove Energy/Hess LNG)
9. Sabine, TX : 2.0 Bcfd (Golden Pass - ExxonMobil)
10. Corpus Christi, TX: 1.0 Bcfd (Ingleside Energy - Occidental Energy Ventures)
11. Logan Township, NJ : 1.2 Bcfd (Crown Landing LNG - BP)
12. Port Arthur, TX: 3.0 Bcfd (Sempra)
13. Cove Point, MD : 0.8 Bcfd (Dominion)
14. Cameron, LA: 3.3 Bcfd (Creole Trail LNG - Cheniere LNG)
15. Sabine, LA: 1.4 Bcfd (Sabine Pass Cheniere LNG - Expansion)
16. Freeport, TX: 2.5 Bcfd (Cheniere/Freeport LNG Dev. - Expansion)
APPROVED BY MARAD/COAST GUARD
17. Port Pelican: 1.6 Bcfd (Chevron Texaco)
18. Louisiana Offshore : 1.0 Bcfd (Gulf Landing - Shell)
CANADIAN APPROVED TERMINALS
19. St. John, NB : 1.0 Bcfd (Canaport - Irving Oil)
20. Point Tupper, NS 1.0 Bcf/d (Bear Head LNG - Anadarko)
21. Kitimat, BC: 0.61 Bcfd (Galveston LNG)
MEXICAN APPROVED TERMINALS
22. Altamira, Tamulipas : 0.7 Bcfd (Shell/Total/Mitsui)
23. Baja California, MX : 1.0 Bcfd (Energy Costa Azul - Sempra)
24. Baja California - Offshore : 1.4 Bcfd (Chevron Texaco)
PROPOSED TO FERC
25. Long Beach, CA : 0.7 Bcfd, (Mitsubishi/ConocoPhillips - Sound Energy Solutions)
26. Bahamas : 1.0 Bcfd, (Seafarer - El Paso/FPL )
27. LI Sound, NY: 1.0 Bcfd (Broadwater Energy - TransCanada/Shell)
28. Pascagoula, MS: 1.5 Bcfd (Gulf LNG Energy LLC)
29. Bradwood, OR: 1.0 Bcfd (Northern Star LNG - Northern Star Natural Gas LLC)
30. Pascagoula, MS: 1.3 Bcfd (Casotte Landing - ChevronTexaco)
31. Port Lavaca, TX: 1.0 Bcfd (Calhoun LNG - Gulf Coast LNG Partners)
32. Hackberry, LA : 1.15 Bcfd (Cameron LNG - Sempra Energy - Expansion)
33. Pleasant Point, ME : 2.0 Bcfd (Quoddy Bay, LLC)
34. Robbinston, ME: 0.5 Bcfd (Downeast LNG - Kestrel Energy)
35. Elba Island, GA: 0.9 Bcfd (El Paso - Southern LNG)
36. Baltimore, MD: 1.5 Bcfd (AES Sparrows Point – AES Corp.)
37. Coos Bay, OR: 1.0 Bcfd (Jordan Cove Energy Project)
PROPOSED TO MARAD/COAST GUARD
38. Offshore California : 1.5 Bcfd (Cabrillo Port - BHP Billiton)
39. Offshore California : 0.5 Bcfd, (Clearwater Port LLC - NorthernStar NG LLC)
40. Offshore Louisiana : 1.0 Bcfd (Main Pass McMoRan Exp.)
41. Gulf of Mexico: 1.5 Bcfd (Beacon Port Clean Energy Terminal - ConocoPhillips)
42. Offshore Boston: 0.4 Bcfd (Neptune LNG - SUEZ LNG)
43. Offshore Boston: 0.8 Bcfd (Northeast Gateway - Excelerate Energy)
44. Gulf of Mexico: 1.4 Bcfd (Bienville Offshore Energy Terminal - TORP)
45. Offshore Florida: ? Bcfd (SUEZ Calypso - SUEZ LNG)
46. Offshore California: 1.2 Bcfd (OceanWay - Woodside Natural Gas)
FERC
Potential North American
LNG Terminals
58
60 57
56
52
50
48
59
51
4953
54
47
55
47
66
62
65
63
US Jurisdiction
64
61
As of September 22, 2006
Office of Energy Projects
FERC
MARAD/USCG
POTENTIAL U.S. SITES IDENTIFIED BY PROJECT SPONSORS
47. Offshore California: 0.75 Bcfd, (Chevron Texaco)
48. St. Helens, OR: 0.7 Bcfd (Port Westward LNG LLC)
49. Philadelphia, PA: 0.6 Bcfd (Freedom Energy Center - PGW)
50. Astoria, OR: 1.0 Bcfd (Skipanon LNG - Calpine)
51. Boston, MA: 0.8 Bcfd (AES Battery Rock LLC - AES Corp.)
52. Calais, ME: ? Bcfd (BP Consulting LLC)
53. Offshore New York: 2.0 Bcfd (Safe Harbor Energy - ASIC, LLC)
54. Offshore California: 0.6 Bcfd (Pacific Gateway - Excelerate Energy)
55. Offshore California: ? Bcfd (Esperanza Energy - Tidelands)
POTENTIAL CANADIAN SITES IDENTIFIED BY PROJECT SPONSORS
56. Quebec City, QC : 0.5 Bcfd (Project Rabaska - Enbridge/Gaz Met/Gaz de France)
57. Rivière-du- Loup, QC: 0.5 Bcfd (Cacouna Energy - TransCanada/PetroCanada)
58. Prince Rupert, BC: 0.30 Bcfd (WestPac Terminals)
59. Goldboro, NS 1.0 Bcfd (Keltic Petrochemicals)
60. Énergie Grande-Anse QC: 1.0 Bcfd
POTENTIAL MEXICAN SITES IDENTIFIED BY PROJECT SPONSORS
61. Lázaro Cárdenas, MX : 0.5 Bcfd (Tractebel/Repsol)
62. Puerto Libertad, MX: 1.3 Bcfd (Sonora Pacific LNG)
63. Offshore Gulf, MX: 1.0 Bcfd (Dorado - Tidelands)
64. Manzanillo, MX: 0.5 Bcfd
65. Topolobampo, MX: 0.5 Bcfd
66. Baja California, MX : 1.5 Bcfd (Energy Costa Azul - Sempra - Expansion)
FERC
LNG
Infrastructure Additions
• Most speculative gas infrastructure
project
– Capacity usually reserved by marketers
• Hackberry Decision encourages new
LNG facilities by removing some of the
economic and regulatory barriers to
investment.
22
Office of Energy Projects
FERC
LNG
Infrastructure Additions
(Cont.)
• Existing Deliverability = 5.8 Bcf per day
• Since Hackberry Decision:
– Approved by FERC = 25.3 Bcf per day
– Pending before FERC = 13.6 Bcf per day
• Potential Deliverability = 48.9 Bcf per
day
23
Office of Energy Projects
FERC
LNG Infrastructure
Future Additions
• The NPC projects up to 9 new terminals and 9
expansions in North America are necessary by
2025 to provide a total of 15 Bcf per day of
LNG imports.
• The INGAA Foundation estimates that $9.4
billion in investment will be needed to develop
LNG terminals in the U.S. and Canada between
2006 and 2020 to support LNG imports of
about 19 Bcf per day.
24
Office of Energy Projects
FERC
Conclusions
• Infrastructure construction necessitates firm
contracts for capacity.
• The Commission is a responsible and
responsive regulator - to both the public and
the industry-the public interest.
• We approve the siting of infrastructure, but
the market ultimately decides what is built.
• Contact [email protected]
25
Office of Energy Projects