Natural Gas Oil Infrastructure in the Rockies

Natural Gas & Oil Infrastructure in the Rockies An Update JOINT MINERALS, BUSINESS AND ECONOMIC DEVELOPMENT COMMITTEE Casper, Wyoming May 25, 2006

A Lesson From Natural Gas

Garfield County, Colorado Oil and Gas Commission

AAPG

Total of 2, 127 Mcfd added in the past 5 yrs WBI Grasslands 80 MMcfd El Paso CIG 50 MMcfd Mid. American Kern 1, 052 MMcfd Gas Infrastructure Added in Last 5 years El Paso Cheyenne Plains 770 MMcfd William’s Northwest 175 MMcfd

THE FUTURE! 1. 8 Bcfd 42 –inch diameter 1, 323 Miles

Crude Oil In The Rockies

What Has Happened to Rockies Crude Prices? ? • Rockies production increasing • Express Pipeline capacity increased in 2005 adding approximately 110, 000 of potential additional Canadian crude • Export pipelines approached capacity in late 2005 • Suncor refinery fire eliminates demand for 60, 000 Bopd • Refinery turnarounds and low sulfur diesel requirements exacerbate the problem

Regional Crude Production is Growing in Some States 395 MBOPD EIA 424 MBOPD

Current Status of Infrastructure

Production/Refinery Balance Oil Production Refinery Capacity Montana 89, 000 181, 200 North Dakota 93, 000 58, 000 South Dakota 4, 000 0 Wyoming 139, 000 152, 000 Nebraska 7, 000 0 Utah 43, 000 167, 350 Colorado 54, 000 87, 000 429, 000 645, 550 Subtotal Available Refinery Capacity Export via Enbridge in N Dakota 216, 550 78, 000 Export via Platte in Wyoming 143, 000 Canada (Import capability via Express) 280, 000 Source: EIA 0

The Law of Supply and Demand Wikipedia

The Crude Market a Few Months Ago WY Sweet $35 KS $55. 75 WTI $60. 75 OK Sweet $60. 75 Prices on 3/23/06

The Market Today Platts – North America Crude Wire

The World Might be Fine but for the Fact that …….

Canadian Association of Petroleum Producers (CAPP)

Canadian Association of Petroleum Producers (CAPP)

Solutions to Crude Oil Bottlenecks in the Rockies

The Future is Rail? Commodity: Search Date: Route: Fuels 2006 -04 -10 BNSF Tank Cars Shipper Owned/Leased Zero Mlg. Destinations Origin: GUERNSEY, WY Transit Time NORMAN, OK $2794 per car N/A Standard tank car is 23, 500 gallons or 525 -550 Bbls.

Current Proposed Expansions are a Band-Aid to Long Term Development Efforts Enbridge (to Clearbrook, MN) 35, 000 Bbl/D $0. 15 per Bbl tariff (all shippers) Kinder Morgan Platte Pipeline (added pumping capacity) 15 -25, 000 Bbl/D $1. 50 per Bbl tariff (new shippers only)

Near term (2 yr) Kinder Morgan Pony Express Re -conversion up to 200, 000 Bbl/D

The Plan to Convert from Crude to Natural Gas

Cost of a Reconversion $124 million • Reconversion Cost $115 million • Cost Allocation to Existing Pipe $100 million? • Natural Gas Contracts • Total Cost to Convert $339 million

Follow an NGL Line to Cushing? Add in El Paso Medicine Bow to get you north and central.

Longer term (3 -5 yr) Grass roots pipeline from Wyoming to Cushing, OK 400, 000 Plus Bbl/D – Up to $1. 2 billion

Solutions Require Commitments • Long Term Commitments to Capacity • Support of Canadian Imports to Anchor a Solution • Support and Commitment of Refiners to Buy Wyoming Crude • Support of Producing Community to “get behind a common solution – quickly”

Wyoming Pipeline Authority Bryan Hassler Executive Director 303 -748 -6473 152 North Durbin Street, Suite 230 Casper, Wyoming 82601 Office (307) 237 -5009 Fax (307) 237 -5242 www. wyopipeline. com