WHY PIPELINES ARE IMPORTANT TO WYOMINGL.E.A.D. Class X February 2008 Carla Hubbard
2006 Gross State Product
2006 = $2,307,397,038
(Includes: ad valorem, severance, sales & use taxes, US rent & royalty returns, State rents & royalties, General Fund income
Includes: oil, gas, coal, uranium, trona, other solid minerals)
Coal, Natural Gas, Coal Gasification
$0
$10
$20
$30
$40
$50
$60
0
2,000
4,000
6,000
8,000
10,000
12,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
U S$
B ill
io ns
M ill
io ns
Year
Production and Price Comparison of Wyoming Coal, Coal Gasified into Methane1 after 1997, and Natural Gas
Energy Equivalents Coal (Million MMBtue)
Methane (Million MMBtue)
Methane Value (US$Billions)
Coal Value (US$Billions)
Coal Value in terms of methane price (US$Billions)$ Derivatives from
Prices & Trading Hubs
+/- $6 million revenue change
Natural Gas - $0.10/mcf change +/- $23 million revenue change
Source: Wyoming Economic Analysis Division
Pipeline Impacts
• 93% of WY natural gas production is exported out of state
• Without capacity: prices lower, production is shut in, drilling is curtailed and revenues are decreased
• Rockies Express Pipeline – if built one year sooner would have resulted in an additional $430 million revenue
Rockies Express Pipeline-In-service
Natural Gas Pipeline Company of America
Kinder Morgan Interstate Gas Transmission
TransColorado Gas Transmission
OVER- THRUST
CAPACITY LEASE
R O C K I E S E X P R E S S P I P E L I N E REX EASTREX
IN-SERVICE
PIPELINE – 1,679 MILES COMPRESSION – 460,000 Hp
Production Vs Pipeline Capacity
B cf
Natural Gas Interstate Pipeline Export Capacity vs. Production for Wyoming
REX
Wyoming Saleable Production WSP + Garfield Co., CO
21% increase, Kern River Expansion
14% increase, Cheyenne Plains
production/capacity forecasts • Start discussions with natural gas producers,
end users, utilities, etc to determine demand • Develop a project: Route/ROW, Size, Cost
Estimates & Rate Estimates, Start Permitting/Environmental Review
• Hold an Open Season
C O L O R A D O
I D A H O
C A L I F .
W Y O M I N G
CIG
WIC
• Every Wyoming citizen should be concerned with pipeline capacity because:
It has direct effect on State revenues and thus State spending on projects and programs
It effects prices so the mineral and surface owners as well as the State does not receive full value for a nonrenewable resource
WHY PIPELINES ARE IMPORTANT TO WYOMING
2006 Gross State Product
Prices & Trading Hubs
Energy Price Sensitivity
Ruby Pipeline
Wyoming Citizens