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Comments of the Gas Processors Association

Comments of the Gas Processors Association. Natural Gas Quality & Interchangeability Docket No. PL04-3 May 17, 2005 Technical Conference. Joel Moxley, Sr. Vice President Enterprise Products Operating L.P. Consumers. Transportation. Power Distribution. Power Retailing. Power Generation.

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Comments of the Gas Processors Association

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  1. Comments of the Gas Processors Association Natural Gas Quality & Interchangeability Docket No. PL04-3 May 17, 2005 Technical Conference Joel Moxley, Sr. Vice President Enterprise Products Operating L.P.

  2. Consumers Transportation Power Distribution Power Retailing Power Generation Petrochemicals Gas Transportation Upstream Refining Processing & Treating Exploration & Production Gas Distribution Gas Retailing Propane Retailing Gas Storage NGL Storage Gathering NGL Transportation NGL Fractionation Midstream GPA & the “Midstream” Energy Industry What is the GPA? • Trade organization of 110 member companies • Members produce over 90% of U.S. NGLs • Strong history in technical, safety, and environmental issues

  3. NGC “Plus” Findings The GPA participated in and supports the findings of NGC “Plus” found in White Papers on Liquid Hydrocarbon Drop Out and Gas Interchangeability. The GPA is the only organization solely representing gas processing in the midstream energy segment. UpstreamMidstreamTransportationConsumers NGSA GPA INGAAAGA IPAA NAESB APGA Intl. LNG EEI NAESB EPSA PGC Other: Univ. of Houston GAMA NAESB

  4. GPA Recommendations • Hydrocarbon drop-out should be controlled using cricondentherm HDP standards • CHDP standards should be uniform in specific geographic regions in the 10-40°F range • Determination of CHDP should be done using extended gas analyses (C9+) combined with equation of state calculations • Long term, CHDP results should be verified through automated dewscope equipment • Waivers of CHDP standards should be short term and transparent to all parties

  5. Processing Clarifications • Gas processing isn’t always profitable • Gas quality variations make economic differences • NGL and gas market locations are significant • Operating costs of processing are material • Operation of processing plants is subject to physical and contractual limits • Idle processing capacity isn’t always useable due to gas availability • Processing plants won’t recover more NGLs than necessary to meet CHDP standards unless economics dictate • Plant residue gas must meet the strictest common denominator of quality specifications

  6. Gulf Coast Processing 2001-2003 Sustained period of marginal processing economics $10.00 $9.00 $8.00 2001 Nat Gas $4.26 NGL $4.11 $7.00 2002 Nat Gas $3.21 NGL $3.56 $6.00 ($/MMBtu) $5.00 $4.00 2003 Nat Gas $5.39 NGL $5.10 $3.00 $2.00 $1.00 2001 2002 2003 NGL Value NYMEX Natural Gas

  7. PartingThoughts • GPA members operate the facilities to insure sufficient amounts of NGLs are extracted to meet CHDP standards • Improved economics in 2004 and 2005 have not altered inherent volatility of processing • CHDP standards should be clearly defined in next 60 days so all parties can make necessary operational and economic decisions; FERC should continue to review standards as more data is known • With clear and consistent CHDP standards and practices, GPA members will continue to play a vital role in the US energy value chain

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