1 southern star central gas pipeline spring customer meeting overland park, kansas april 19, 2007
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Southern Star Central Southern Star Central Gas PipelineGas Pipeline
Spring Customer Spring Customer MeetingMeeting
Overland Park, Kansas
April 19, 2007
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Jerry MorrisJerry MorrisPresident &President &
Chief Executive OfficerChief Executive Officer
2006 Accomplishments2006 Accomplishments• Highest customer survey results in 13 years of
survey
• No lost time accidents since September 7, 2004
• No unscheduled firm service interruptions due to pipeline failures
• All planned pipeline integrity work completed
• Ozark Trails project placed in service – 25,000 dth/d incremental service
• Waynoka Supply lateral project Approved• Two major business growth opportunities
identified – Westar and Midwest Energy • Worked with Front Street, BP Amoco, and
NNG to attach incremental gas supplies at the BP Jayhawk Plant
• Successfully implemented first phase of AIM and SUCCESS initiatives
• Held our first SSU Leadership Conference
2006 Accomplishments Cont.2006 Accomplishments Cont.
LONG-TERM STRATEGIESLONG-TERM STRATEGIES
• Maximize Shareholder Value
• Provide Exceptional Customer Service
• Operate Safely, Reliably and Efficiently
• Ensure Workforce Excellence
2007 Goals2007 Goals
• Implement Navision by April 1• Achieve Financial Targets• Complete Waynoka Project by July 1• Complete Westar & Midwest Goodman
Laterals• Implement Base Capex Plan on Time &
within Budget
• Complete HCA Integrity Testing Goal• Begin Development of Gas Measurement
System• Provide Opportunities within SSU• Evaluate SUCCESS self-nominations• Implement AIM Action Items
2007 Goals Cont.2007 Goals Cont.
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Bob BahnickBob BahnickSenior Vice President, Senior Vice President,
Operations & Technical ServicesOperations & Technical Services
Operations & Technical SupportOperations & Technical Support
• Recent Organizational Changes
• 2007 Pipeline Activities– Pipeline Integrity Projects– Pipeline Replacement Projects
• 2007 Storage Activities– KCC Storage Regulation Compliance– Storage Work Plans
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Jim KlineJim KlineDirectorDirector
Support Services Support Services
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2007 Pipeline Activities
• Wichita District• Run in-line inspection tool for Part of The
Wichita 16” Line TG (13.6 miles total - 9.1 miles HCA)
• Replace .85 miles of 20” pipe on the Wichita 20” Line G
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2007 Pipeline Activities
• Edmond District– Relocate Cement 16” Line VP launcher
Relocate Cement 16” Line VP receiver to end of Line VP
– Chemical Cleaning of Cement 16” Line VP– Run in-line inspection tool for Cement 16”
Line VP covering 3.47 miles of HCA
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2007 Pipeline Activities
• Independence District– Pressure Test 0.79 miles of the Neodesha 8”
Line EO - 0.50 miles of HCA– Replace 0.45 miles of Neodesha 8” Line YB -
0.08 miles of HCA
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2007 Pipeline Activities
• Kansas City District – Replace Kansas City 16” Line DLA - 0.32
miles of HCA– Run in-line inspection for Sugar Creek 16”
Line XMB (34 miles covering 11.89 miles of HCA
– Replace – Sedalia 12” Line XT at Whiteman AFB 0.83 miles covering 0.27 miles of HCA
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2007 Major Pipeline Projects
• Replace 10 miles of the Ottawa 20” Line ES– Original line installed in 1929 – Constructed with acetylene welds
• Project scope includes– 10 miles of 20”– Pig launcher and receiver
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2007 Major Pipeline Projects
• Replace 0.8 miles of 24” Oklahoma City Line V– Replacement will eliminate repair of multiple
anomalies discovered by 2006 smart pig – Relocation from existing route will allow
pipeline to be in clear zone at Tinker Air Force Base.
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Jim NeukamJim NeukamManager, Storage ServicesManager, Storage Services
Southern Star CentralSouthern Star CentralStorage FacilitiesStorage Facilities
• 8 Storage Fields
• 514 injection and withdraw wells
• 53 observation wells
• 43BCF Storage Capacity
• 1.225 MM/D Deliverability
KCC Storage RegulationsKCC Storage Regulations• Operating Under Provisional Permits • Fully Authorized Operating Permit
Applications In Preparation• Multi-Year Initial MIT Program (Kansas)
• 174 Storage Wells with Previous Tests• 114 Storage Well Tests in 2004• 113 Storage Well Tests in 2005• 114 Storage Well Tests in 2006
• Repeat MITs on 5 year Frequency
KCC Fully Authorized Operating PermitsKCC Fully Authorized Operating Permits
KCC Granted
Fully Authorized KCC Granted
Operating Permit Provisional
Field Docket # Application Due Date Extension Date
Elk City S-013 1/31/2006 10/31/2007
Colony S-014 6/16/2006 11/30/2007
Piqua S-016 7/31/2006 1/31/2008
North Welda S-019 10/31/2006 2/28/2008
Alden S-018 1/31/2007 7/31/2008
McLouth S-015 4/30/2007 5/31/2008
South Welda S-020 7/31/2007 4/30/2008
2007 Storage Work Plan2007 Storage Work Plan
• 2007 Storage Integrity Plan – KS Fields• 41 Mechanical Integrity Tests • 71 Vertilogs (Alternate MITs)
• 2007 Storage Integrity Plan – Webb Field, Oklahoma• 1 Mechanical Integrity Tests • 14 Vertilogs (Alternate MITs)
• Storage Well Inspection & Valve Testing – 567 Wells
2007 Storage Work Plan2007 Storage Work Plan
• Complete Three KCC Applications for Fully Authorized Operating Permits
• Colony Storage Field Modifications • Piqua Storage Field Modifications• North Welda Field Modifications (Pending
FERC Approval)• South Welda Booster Expansion (FERC Filing)• Storage Field Performance Evaluations
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Scott LaMarScott LaMarManager - Rates & Manager - Rates & Strategic PlanningStrategic Planning
FERC Order 2004 VacatedFERC Order 2004 VacatedOn November 25, 2003, FERC adopted
standards of conduct that applied uniformly to natural gas and electric utility transmission providers. Order 2004 revised the standards of conduct from Order 497. Through Order 2004, the Commission expanded the affiliates definition to include basically any affiliate involved in the energy (gas or electric) industry. Order 497 had previously defined affiliates as only those in the marketing arena.
The Court of Appeals vacated Order 2004 on November 17, 2006. On Jan 9, 2007, FERC issued Interim Rules that reinstated all the standards of conduct of Order 2004 that were not at issue in the case before the Court of Appeals. FERC is currently working on a Notice Of Proposed Rulemaking (NOPR) to establish permanent rules and have given partial clarification on the Interim Rules. All indications point to an affiliate definition including only gas marketers on our system. We will continue to monitor these actions and conduct our business accordingly.
FERC Order 2004 Vacated Cont.FERC Order 2004 Vacated Cont.
FlexibilityFlexibilityAlthough FERC Order 2004 has been vacated, we are
still required to follow our tariff and treat all our shippers in the fairest and most equitable manner possible. FERC has been stressing in recent years that pipelines follow their tariff and backed that up this past year by penalizing some pipelines who didn’t.
We realize how important flexibility is to our customers and we will continue to be as flexible as possible within the parameters of our tariff. We will also continue to explore new services to add to our tariff that will offer additional value for our customers.
• The 2006 Fuel Filing (RP07-96-000) was filed 12/1/2006
• Production Area fuel retention dropped from 1.86% to 1.18%
• Market Area fuel retention dropped from .71% to .51%
• Storage fuel retention increased from 3.08% to 6.29%
• Technical conference was held 2/2/07 in Washington, DC to discuss storage fuel %
• Responses have been provided for all data requests received
2006 Fuel Filing2006 Fuel Filing
Storage FilingsStorage Filings
During storage field evaluations for the KCC fully authorized operating permits required by the Kansas Underground Porosity Gas Storage Act of 2002, Southern Star identified several issues that require FERC certificate amendments.
FERC filings have already been made for Colony, Piqua, and North Welda. The Colony and Piqua filings have been approved by FERC orders. Additional filings are expected for the McLouth and South Welda storage fields.
Storage FilingsStorage Filings
These storage filings generally request the following:
Expand acreage for gas storage, mineral, and pipeline easement rights
Redefine the cap rock for each of the fields Construct facilities (compression and laterals) to recover gas in
fields where migration from original storage reservoirs is believed to have occurred (only when required)
Although costs and time are associated with these improvements, they are required by KCC regulations and increase the security and integrity of our storage fields.
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Gary HinesGary HinesManager - Gas Manager - Gas ManagementManagement
Areas of InterestAreas of Interest
• Weather
• Storage
• Measurement Reports
• 2007 Planned Maintenance
• Gas Quality Waivers
Summer OutlookSummer Outlook
Kansas City HDD ChartKansas City HDD Chart
SSC EIA: 2006 vs. 2007SSC EIA: 2006 vs. 2007
EIA – 5 Year ComparisonEIA – 5 Year Comparison
Current Storage StatusCurrent Storage Status
• 5 of 8 Fields Deadweight Tested
• Why Perform A “Low-Inventory” Test?– GT&C Section 13.4
• Spring Low Inventory– “…perform the end-of-the-withdrawal-cycle shut-in
pressure test on each field at the point in time when SSC reasonably believes the field is at or near its lowest inventory level that will be achieved.
• Fall High Inventory– Visa-versa
Measurement Report UpgradesMeasurement Report Upgrades
• Initially Rolled Out Feb 9th
• Reverted To Existing Reports Feb 9th
• Current Status– Validating Security– Increasing Flexibility
• Proposed New Roll Out in May
2007 Planned Maintenance2007 Planned Maintenance
• Edmond Station– April 3rd
• Expected to last 60 days• Capacity cut to 105,000 dth/day
• Pipeline Integrity– “Sugar Creek” (LS 235, East of Peculiar Sta.)– “Cement Line” (LS 340, S. of Edmond)– Line Segment 120, Wichita Area
• ILI Run Complete•
2007 Planned Maintenance – 2007 Planned Maintenance – Cont’dCont’d
• April 16 – 20– Arlington Station
• April 16 – 25– Hoxie Station
• May 14 – 18– Ogallah Station
• May 14 – 25– Cheyenne Station
• September 24 – 28– Yuma Station
• October 15 – 19– Otis Station
Rawlins HesstonRawlins Hesston
2007 Planned Maintenance – 2007 Planned Maintenance – Cont’dCont’d
– Review Posted Planned Service Outages (PSO)• Posted around the 15th of the month
• Emailed to those on the PSO email distribution list
Current Gas Quality WaiversCurrent Gas Quality Waivers
• April to June 2007– LS 458 (Canadian – Blackwell)
• CO2 up to 1.5% (see posted requirements)
– LS 377 & 315 (Guymon – Blackwell)• HCDP for third-party storage operators
• Always Evaluating Others
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Jeff DavisJeff Davis Chairman,Chairman,
Missouri Public Service Missouri Public Service CommissionCommission
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Natural Gas Purchasing & Planning: A Commissioner’s Perspective
Southern Star Central Gas Pipeline Spring MeetingApril 19, 2007
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Disclaimer
• The opinions expressed here today are the opinions/impressions of one Commissioner. Nothing in this presentation should be attributed to any position in any particular case or to any other member of the Commission, the Commission as a whole, any member(s) of the MO PSC staff or anyone else.
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Topics
• Missouri Local Distribution Company Natural Gas Procurement Responsibilities
• Natural Gas / Electricity Interdependability Issues
• Natural Gas Market Conditions
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LDC Responsibilities
• The LDC is responsible for managing gas costs to consumers. They seek to:
– Fill their storage before winter when natural gas prices are usually lower. Storage is also necessary to maintain reliability of supply during the winter.
– Implement plan for purchasing natural gas in a prudent manner that insulates consumers from spikes in the price of natural gas.
– Enter into reliable contracts for the supply and delivery of the natural gas.
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The PGA• Purchased Gas Adjustment charge is the charge the LDC uses
to recover its cost for natural gas.
• The PGA consists of two elements:– The LDC’s projected cost per unit to receive natural gas for
delivery to customers mixed with any known cost per unit. – A factor that returns any overcollections or charges any under-
collections of gas cost for the previous year (the Actual Cost Adjustment - ACA).
• The LDC’s cost per unit to receive natural gas typically includes the wholesale cost of the natural gas, interstate transportation charges, storage charges and fuel for compression.
• Although the PGA may include incentive plans, the PGA does not include a mark-up or “profit” for the LDC.
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Observations
• Staff GW Case Observations– Three General Categories of Hedging Activity
• 80% or More (AmerenUE & Aquila)
• 50% to 60% (Atmos, Laclede & MGE)
• Little or None (SMNG, MGU & Fidelity)
– Mostly Year-to-Year Planning (One Year @ a Time)
– Extremely Mild Weather Clearly Impacted Bill Levels and Effectiveness of Hedging Programs
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Observations - continued
• Staff GW Case Observations– Some Utility Hedging Plans Impacted by
Hurricane Related Price Spikes & Avoidance of Entering Into Contracts @ Record Prices
– Higher Hedging Activity Did Not Always Result in Lower PGA Rates
– Lower Hedging Activity Did Not Always Result in Higher PGA Rates
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Responsibilities – Smaller LDCs
• Challenges Facing Smaller LDCs
– Access to Storage
– Minimum Size of Futures Contracts (10,000 MMBtu) May Limit Participation
– Minimum Size of Supply Contracts May Limit Multi-Year Layering of Purchases
– Credit Requirements
– Propane Competition and Need to Stay at or Near Market
– Smaller utilities still have options but may be different than larger utilities.
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Price Risk Hedging Strategy - AmerenUE
• Hedge Minimum of 75% of Normal Winter Demand Against Market Price Volatility
• Four Primary Methods to Hedge System Supply:– Storage Inventory at Fixed WACOG– Physical Gas Supply at Fixed Prices or “Costless Collars”– Financial Swaps from OTC Markets (Morgan Stanley,
Bank of America, Goldman Sachs, Deutsche Bank,…) – NYMEX Futures Contracts
• Storage Provides Over 50% of Gas Supply During Normal Winter
• Financial Swaps/NYMEX to Fix Prices of Indexed Baseload Contracts While Diversifying Credit Risk
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Diversified Supply Portfolio - Aquila
• Supply Diversification Goals• Mitigate price volatility
• Promote price stability
• Provide operational flexibility
• Diversified Supply Portfolio Mix• Monthly index price
• Fixed price
• Storage
• Daily index price
• Options
• Dollar Cost Averaging
• Multiple purchase increments
• Multiple purchase types
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Next Steps
• Extend Timeframe Over Which LDC Purchasing & Planning Takes Place– Minimum 3 Years Supply & 5 Years Capacity– Spread Out Purchasing Programs– Minimum Hedging Levels – Regular Reporting & Updating Requirements
• Continue to Encourage Energy Efficiency & Conservation
• Continue to Expand Consumer Education Efforts• Continue to Encourage Federal & State Funding
of Liheap & UtiliCare
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Methane & Megawatts-
Interdependability • Infrastructure Issues Facing Regulators
– Natural Gas Pipelines, Gas-Fired Generation & Electric Transmission Lines
– Coordination – Reliability of Electricity & Natural Gas
• How Regulators View the Market & Respond to Volatile Pricing
– Natural Gas & Gas-Fired Electric Generation
– How Natural Gas Markets Impact Electric Prices
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Methane & Megawatts
• Infrastructure Issues Facing Regulators– Siting considerations for gas-fired electric
plants: Do you build a pipeline to the plant or do you build a plant along the pipeline?
– Is it easier to site natural gas pipelines or electric transmission lines?
– Are natural gas pipelines cheaper than electric transmission lines?
– What are the reasons to choose building a natural gas pipeline or electric transmission line?
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Methane & Megawatts
• Infrastructure Issues Facing Regulators – continued– One interstate pipeline capacity improvement
project in our state is largely necessary to support the growing demand for natural gas-fired generation in a particular area.
– Much of our energy in Missouri comes from coal and nuclear power but a significant portion of our peak capacity is met by natural-gas fired units.
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Missouri Generation Missouri Generation (MWh) By Energy Source(MWh) By Energy Source
• MO plants only MO plants only
• Proportion of Proportion of energy energy generated by generated by coal (83.5%) coal (83.5%) exceeds coal exceeds coal capacity capacity (65.1%) (65.1%) because coal because coal plants have plants have lower variable lower variable cost (except for cost (except for nuclear) so are nuclear) so are dispatched first.dispatched first.
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Source: Energy Information Administration, Form EIA-860, "Annual Electric Generator Report."
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Gas Demand Outlook
Gas Consumption (Trillion Cubic Feet, Tcf)
0
5
10
15
20
25
30
35
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19
Residential
Commercial
Industrial
Power Generation
Other
Source: Energy and Environmental Analysis (EEA)
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Methane & Megawatts• Reliability
– Natural gas and electric utility industries need to be aware of the recommendations of the NERC and NAESB Gas/Electricity Interdependency Task Force.
– As natural gas demand grows to support electric generation needs this coordination effort will only become more important.
– Some areas of the country now depend on natural gas as a primary fuel source for electric generation.
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Methane & Megawatts
• How Regulators View the Market & Respond to Volatile Pricing
– Throughout the 1990s the U.S. experienced an unprecedented build up gas-fired electric generation capacity.
– Much of that capacity is now needed to meet capacity needs during hot, or unusually cold, weather.
– This has impacted summer natural gas markets which use to be influenced primarily by natural gas LDC storage demand.
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Methane & Megawatts
National Natural Gas Storage Inventory (Source: DOE/EIA)
Natural Gas Demand for Electric Generation
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Methane & Megawatts
• Natural Gas Market Impacts– When natural gas storage levels are impacted
by summer electricity peaking demand, we often see natural gas markets respond.
– Winter demand for natural gas, storage levels, and natural gas supply disruptions are still the primary drivers in market prices.
– Volatility is dealt with by our utilities through several different approaches – as discussed earlier.
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Methane & Megawatts
• Other Market Drivers?– Carbon Tax – It is widely felt by our electric
utilities that a significant “carbon tax” would place upward pressure on natural gas market prices. Our electric utilities now analyze this scenario as part of their integrated resource planning.
– Renewables – For wind projects in particular, when capacity needs are assessed it may be determined that “back-up” gas-fired generation is prudent.
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Methane & Megawatts
• Vertically Integrated vs Restructured Utilities– In Missouri, our vertically integrated utilities
have been able to receive large off-system sales profits from their coal and nuclear baseload fleet selling into a market that reflects natural gas-fired generation market prices.
– This revenue stream has permitted our rates to stay among the lowest in the country.
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Methane & Megawatts
• Vertically Integrated vs Restructured Utilities– Where electric restructuring has occurred and
natural gas generation is the primary fuel, significant rate increases have often been observed.
– Retail energy providers may have more difficulty building coal or nuclear power plants and this may contribute to more natural gas demand in some regions.
– It should be noted that increases in the cost of coal, transportation and coal-fired environmental upgrades are narrowing the gap.
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Methane & Megawatts
• Effects of Imperfect Natural Gas Pricing on Electric Consumers– Where natural gas prices reflect market spikes
that are not reasonable, for any number of reasons, these price spikes can quickly show up in electric markets.
– Other Effects?
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Questions?
Contact Information:Jeff Davis, ChairmanMissouri Public Service CommissionPhone (573) 751-3233E-Mail: [email protected]
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Dale SandersDale SandersContract AdministrationContract Administration
Contracts UpdateContracts Update
• Agency Updates
• Help Desk Availability- (270) 852-5123
• Password Resets
Forgot Password
Contracts UpdateContracts Update
• Agency Updates
• Help Desk Availability- (270) 852-5123
• Password Resets
• CSI Access Request Form
Contracts UpdateContracts Update
Some Service Request Forms Online
Contracts UpdateContracts Update
• Some Service Request Forms Online
• CSI Reports Reference List
GoalGoal - Shipper/Operator Naming - Shipper/Operator Naming ConsistencyConsistency
• CSI 015 Operator Allocation-Current
Operator Location Allocation Summary by Flow Date-New
• CSI 022 Noms vs. Actuals Daily-Current
Shipper Noms vs. Actuals Daily- New
Contracts UpdateContracts Update
• Some Service Request Forms Online
• CSI Reports Reference List
• Security Administrator Audit
Contracts UpdateContracts Update
• Some Service Request Forms Online
• CSI Reports Reference List
• Security Administrator Audit
• Online CSI Tutorial
Contracts RemindersContracts Reminders• % Sign Search Wildcard
• System Map Online
• Contact Changes
• Gas Supplier List
• After Lunch Sessions
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Kevin Kevin RenshawRenshaw
Supervisor, SchedulingSupervisor, Scheduling
Introducing!!!Introducing!!!
David BristowDavid Bristow
Manager, Scheduling & BillingManager, Scheduling & Billing
Customer Services Innovations (CSI) Update
A focus group consisting of customers and SSCGP employees met April 18th to discuss the CSI system. The group’s objective is to determine system enhancements our customers would like to see. Enhancements could consist of CSI functionality, new reports, or improving existing reports.
If anyone would like to request system enhancements or new reports, please forward your suggestions to [email protected] or [email protected].
Also, if you would like to join the focus group please contact either of us at the above email address or David at (270) 852-4602 and Kevin at (270) 852-4567.
Customer Services Innovations (CSI) Update
Customer Members
Katie Barton – Empire District
Teri Burkett – KGS
Heather Gaynor – Oneok
Kent Kopetzky - Aquila
John Hayes – MGE
Melissa Masters – Seminole
Jennifer Mosser - Tenaska
SSCGP Members
Stephanie Hathaway - Contracts
Ruth Clark – Gas Accounting
Suzanne Capps - IT
Kelly Englehart – Customer Services
Keith Mock – IT
Bridgette Whittinghill – Scheduling
Kevin Renshaw – Scheduling
David Bristow – Scheduling & Billing
Semi-Annual Request to Rank Nominations
We never miss an opportunity to remind shippers to rank their nominations and operators to rank their confirmed noms for allocations. Continuous enhancement of CSI will allow you to more efficiently, timely, and accurately schedule and allocate the gas flowing through SSCGP. Automating processes requires rankings for cuts, balancing, and allocations to be completed correctly and in line with your business needs.
Not Ranking brings out the ‘Incredible Pro-Rata
Team
Capacity AllocationKey Points in Determining Scheduling Priorities
• Each day begins a new scheduling process. Previous day scheduled nominations have no effect on the next day’s scheduling rights. Increases within a gas day will have less priority within the same class of nominations already scheduled.
•Higher rights nominations may bump lower rights nominations except on ID2.
•Pooling agreements receive rights from the takeaway transportation agreements up to the nominations of the takeaway agreements from the pool.
•Direct nominations from transportation agreements are allocated rights first then any leftover rights are pushed up to pooling agreements.
Capacity Allocation
Key Points in Determining Scheduling Priorities (cont’d)
•As with transportation agreements, direct nominations from pooling agreements will be allocated priority rights with any remaining rights be pushed up to the next pooling agreement.
•Transportation agreement nominations from pools with a transaction type of 02 overrun will be pushed up so the pooling agreements receipts will be allocated overrun priority rights.
•For transportation agreements nominating gas from multiple pooling points, after direct nominations are allocated priority rights, all remaining capacity will be pushed up pro rata between the various pooling agreements by pooling area. The exception to this will be when the transportation agreement stipulates that primary be pushed up to a particular pooling agreement.
Invoices
• Gas accounting has been consistently getting invoices out on the fifth workday.
•Most customers have elected to receive their invoices through email. Any customer wishing to receive their invoice via email please contact Dennis Wathen at 270-852-4570 or [email protected]
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Philip RullmanPhilip RullmanManager – Customer Manager – Customer Service & Business Service & Business
DevelopmentDevelopment
Provide Exceptional Customer Provide Exceptional Customer ServiceService
• Pursue Strategies Actively to Provide Enhanced Access to Gas Supply Options
• Grow Markets
• Achieve Consistently High Customer Survey Results
Access to Gas Supply OptionsAccess to Gas Supply Options
As of April 13, 2007Type I Projects Active - 7
Type I is a request for cost estimate
Type II Projects Active – 5Type II begins the process of ordering material,
permitting, etc.
Access to Gas Supply OptionsType III allows actual construction to begin
Project Name AreaDesign
CapacityExpected
Completion Date
NEOK Production Market 2,000 Jul-07
Kansas Processing Market 2,000 Jul-07
Keystone Mulhall Production 2,000 Mar-07
Dart Cherokee Market 10,000 Jul-07
Canary Market 8,000 Mar-07
Acme Market 7,000 Apr-07
Access to Gas Supply OptionsType IV projects ready for service
Project Name AreaProject Type
Design Capacity
Final Completion
Date
Layne Drumcreek Market Receipt 6,000 Mar-07
Admiral Bay Market Receipt 8,000 Oct-06
Access to Gas Supply OptionsAnadarko WaynokaAnadarko Waynoka
Waynoka Plant Specifics• Nominal processing capacity of 200,000
Mcf/d
• Located in Woods County, Oklahoma
• Constructed & placed in operation 3rd qtr 2006
Access to Gas Supply OptionsAnadarko WaynokaAnadarko Waynoka
Benefits to Southern Star Customers• Strategic incremental gas supply for SSC• Designed to receive up to 175,000 Mcf/d• Connected to line segment 377 (Straight-
Blackwell)• Lateral in-service early 3rd qtr 2007• Anadarko production basin is expected to grow
over the next five years
Grow our MarketsGrow our MarketsMarket Growth ProjectsMarket Growth Projects
Midwest Energy, Inc. – Goodman Energy Center• Provide natural gas service to the Midwest Energy
Goodman Energy Center power generation facility, located in Ellis County Kansas. This facility will have a total generation capacity of 75 MW.
• Commercial in-service is targeted for June 1, 2008
Prairie Pride, Inc. (MPUA)• This project will provide natural gas service to the
new Prairie Pride Biodiesel facility and MPUA 15 MW cogeneration plant.
• Commercial in-service is targeted for June 15, 2007
Grow our MarketsGrow our MarketsMarket Growth ProjectsMarket Growth Projects
Westar Energy, Inc. – Emporia Energy Center• Provide natural gas service to the new Westar
Emporia Energy Center power generation facility, located in Lyon County Kansas, that will have initial generating capacity of up to 300 megawatts (MW), with additional capacity to be added in phases, bringing the total capacity to 600 MW.
• Commercial in-service is targeted for June 1, 2008 (300 MW)
Imbalance ServicesImbalance Services
“Shippers shall maintain thermal balancing of receipts and deliveries on a daily basis to
the maximum extent possible”
Imbalance ServicesImbalance ServicesInterruptible Storage Services - ISSInterruptible Storage Services - ISS
• Requires ISS Form of Service Agreement and is available to any shipper that has an FTS, SFT, or ITS Service Agreement.
• Charges are commodity plus injection & withdrawal fee
• Injections & withdrawals are nominated
• Gas Stored under ISS may be sold in place to other parties having sufficient available rate schedule FSS or ISS Storage Capacity
Imbalance ServicesImbalance Services Park & Loan – PLSPark & Loan – PLS
Service Available to any PLS Shipper
• Interruptible service
• Park or Loaned Quantity• May be Delivered or Received at:
• A Logical (non-physical point) in the P/M area• At any Pool Defined in Rate Schedule PS• Must be at the Same Point where PLS Shipper Tendered or
Borrowed Gas from SSC
• PLS does not include Transportation• PLS and Transportation or Pooling Agreement(s) must be
Held by the Same Entity
• Fee “Based on Daily Commodity”
Imbalance ServicesImbalance ServicesImbalance Transfer - FTS, SFT, ITSImbalance Transfer - FTS, SFT, ITS
• Imbalance trading among Shippers in the same area
• Treat the imbalance as if it had been injected into or withdrawn from the Shipper's storage account to the extent Shipper has storage capacity available or Shipper's storage inventory is sufficient to cover the imbalance (applies only to those Shippers who also have storage agreements with Southern Star)
• Adjusting nominations for the remainder of the month
Imbalance ServicesImbalance Services Imbalance Transfer – TSS, FSS, ISSImbalance Transfer – TSS, FSS, ISS
• Gas stored under this rate schedule may be sold in place to other parties having sufficient available Rate Schedules FSS or ISS storage capacity. Parties wishing to make sales of gas in place must obtain confirmation from Southern Star 24 hours prior to the proposed effective date of such sale that the quantity proposed to be sold is available and shall notify Southern Star in writing that such sale has occurred by the effective date of the transaction.
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Jim HarderJim HarderVP, Customer Service & VP, Customer Service & Business DevelopmentBusiness Development
LDC
40%
Producer12%
Marketer33%
End-User9%
Power Generator6%
Review of 2006 Survey ResultsReview of 2006 Survey ResultsCustomer Type
Upper Management15%
Middle Management32%
Front Line53%
Review of 2006 Survey ResultsReview of 2006 Survey ResultsManagement Level
Upper Management15%
Middle Management32%
Front Line53%
Upper Management15%
Middle Management32%
Front Line53%
Review of 2006 Survey ResultsReview of 2006 Survey Results
• Performance– Average Performance of 8.4% (HIGHEST
EVER)– Performance Improvement on 14 of 19
Factors
• Importance– Average Importance: 9.2% (Increase)
ChallengesChallenges
• The Bar has Been Raised for 2007
• Our Customers Expectations are Greater
• WE HAVE A PLAN!!!!!!
2007 Customer Survey Team 2007 Customer Survey Team
• Debbie Hendrix• Suzanne Capps• Ruth Clark• Stephanie Hathaway• Ronnie Hensley• Matt McCoy• Todd Millay• David Roberts• Philip Rullman
Ensure SSC Personnel are Ensure SSC Personnel are AccessibleAccessible
• Customer Service Managers will Develop Departmental Plans to Identify Areas for Improvement by April 1, 2007
Ensure that SSC Representatives Know Ensure that SSC Representatives Know our Business & Apply that Knowledge to our Business & Apply that Knowledge to Solve Customer IssuesSolve Customer Issues
• Understand SSC Business Practices– Monthly Roundtables
– Monthly Business Topics at Business Reviews
• Understand our Customer’s Business– Establish Customer Visit Standards and Research
– Senior Management will Meet Annually with their Respective Counterparts
Provide Appropriate Level of Provide Appropriate Level of Operating Flexibility to CustomersOperating Flexibility to Customers
• Gas Mgmt & Scheduling will Meet with OBA Parties to Discuss SSC Expectations on OBA Agreements
• “DAD” Concept– Don’t say we can’t before understanding the issue– Always ask why, what, how to fully understand the
issue– Don’t say, “they said”…. Take Responsibility
Enhance SSC System to Ease Enhance SSC System to Ease Customer’s Ability to Conduct Day to Customer’s Ability to Conduct Day to Day BusinessDay Business• Create Online CSI guide by May 1, 2007• Conduct Q&A Session at Customer Meeting(s)• Connect New Users to CS Reps within 2 Days• Review & Discuss PLS Improvements• Enhancement of Pooling Process• Clarify CSI Report Names• Improve Timely Problem Resolution on CSI
Issues