1 Cheyenne Tuscola Lebanon Clarington Meeker Wamsutter Opal “Rockies Express Pipeline”

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Cheyenne Tuscola

Lebanon

Clarington

Meeker

WamsutterOpal

““Rockies Express Rockies Express Pipeline”Pipeline”

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Market Assessment

• Production of Rockies gas is expected to increase

• There is insufficient pipeline capacity to export this increasing supply

• Potential expansion projects for existing pipelines would deliver gas to low-price markets in the Southwest or Mid-Continent

• Increased LNG deliveries to the West Coast and Gulf Coast will compete with the Rockies

• The highest premium-priced market for gas is the Northeast

• Large basis differentials exist between the Rockies and the East Coast

• Producers seek the highest netback and greatest optionality on where to deliver gas

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Reserve Base Supports New Infrastructure

Huntsman

• 20 year supply requirement for existing pipes = 36 Tcf

• 20 year supply requirement for existing pipes + Rockies Express = 50 Tcf

• 20 year supply requirement for existing pipes + Rockies Express + 50% excess = 75 Tcf

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To support Rockies production, additional pipeline capacity must be built

Total Exports 4.9 Bcfd

Rocky Mountain Production Forecast*:

2004 – 5.8 Bcfd

2007 – 7.0 Bcfd

2009 – 7.6 Bcfd

2012 – 8.3 Bcfd

*Source: CE RA W et Gas Capacity Outlook.

To maximize basis there should be ~10% excess capacity

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Basis Spreads Support New Pipeline

•Basis differential versus Henry Hub

•Source: Historical Prices – GasDat, Forward Prices – Sempra Commodities Oct 05 Curve

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Project Overview

• Construction of 42 inch or larger, 1350 mile pipeline from Cheyenne Hub to Clarington, Ohio with 2 Bcfd transport capacity

• Purchase Entrega Pipeline - 330 miles of 36 and 42 inch from Meeker to Wamsutter to Cheyenne.

• 180 miles of 36 inch pipeline from Opal to Wamsutter

• Over 20 interconnections with interstate pipelines and multiple supply points

• Staged FERC Certificates will enable access to mid-continent delivery points in Dec. 2007; access to Tuscola or Lebanon delivery points in Dec. 2008 and access to eastern Ohio, delivery points in July 2009

• Final design based on Open Season binding bids

• Expected rates of about $1 plus fuel of about 2% to 3%

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• Route follows over 90% of existing pipeline or utility ROW corridors

• Detailed engineering, environmental, and ROW studies due Nov. 15th

• Proposing 3 certificate FERC filing process and construction schedule to maintain 4Q07 in-service date to mid-continent– Certificate I route follows Kinder´s Trailblazer and Terasen’s Platte

Valley pipelines

– Existing Trailblazer and Platte ROW and project records help accelerate permitting

• Discussions with FERC yielded positive feedback on staged development

• Project is in to hold Open Season later in Q405

Development Status

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Rockies Express Pipeline Proposed Route

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Significant Developments

• Kinder & Sempra Joint Development– Kinder 2/3 equity and Sempra 1/3 equity– Sempra Affiliate committing to 200,000 Dth/d

• EnCana & Entrega Support– 500,000 Dth/d of firm long haul commitment– Incorporation of Entrega into the project

• Wyoming Natural Gas Pipeline Authority Negotiations

• Exclusivity Agreements with End-Use Markets

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WNGPA

• Provides for 90 period of exclusive negotiations• Subjects of negotiations include:

– WNGPA providing competitive financing for Rockies Express

– WNGPA facilitating extension of Project to Opal Hub– A conditional capacity commitment of up to 200 mmcfd

under the proposed Aggregation Services– Potential interim financing through 2008 or beyond for

the Project’s acquisition and/or construction of assets upstream of Cheyenne

• Any transportation commitment will be subject to Board approval by January 31, 2006

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Aggregation Services

• Would allow for the WNGPA to serve as Aggregator:– Gas-in-kind – Small producers

• WNGPA would not need to hold title to gas• “Pool Members” could change over time• Relationship of Aggregator and Pool Members is

a private contractual relationship (not subject to FERC review or jurisdiction)

• Provide credit assurances for Pool Members

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Next Steps

• Negotiate and execute shipper precedent agreements

• Start NEPA Pre-filing in late October, 2005• Conduct binding open season in Nov. – Dec, 2005

- Long haul bids coordinated with completion of construction phases are conforming

• Shipper Board approval required by Jan. 31, 2006• A minimum of 1,500,000 Dth/d is needed• Determine economic viability by February, 2006

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Contact Information

• Kinder MorganJeff RawlsVice President Business DevelopmentWest Region Gas [email protected]

• Sempra Pipelines & StorageRyan O’NealVice [email protected]