WIC Gas Quality Working Group Meeting Notes
August 3, 2010
WIC presented a power point presentation detailing gas quality issues on the WIC system.
The Operating Agreement between WIC, Fort Union Gas Gathering, LLC, (FUGG) MIGC, LLC, and Thunder
Creek Gas Services, LLC .
Thunder Creek has executed the document, FUGG and MIGC are finalizing and will execute
shortly.
The agreement is temporary, WIC would blend gas at Cheyenne as long as there is an
understanding that upstream parties agree to maximize CO2.
o Parties can terminate their participation with 15 days notice.
Gas Quality in the Powder River Basin (PRB)
Anadarko commented that CO2 issues are a long term problem for PRB operators
o Trailblazer allocates when CO2 levels exceed downstream specification requirements
which in turn, affects WIC allocations.
o Anadarko will have 3 processing units at its Dark Horse Plant (1800 gpm) to treat gas
delivered into Bison and currently is using one of the three units to help improve overall
gas quality of gas being delivered into WIC.
o Requested information/analysis that considers the effects of Ruby and Bison Projects
going into service on gas C02 levels entering WIC on Medicine Bow.
o Agreed on the need for a WIC gas quality (CO2) tariff change.
o Anadarko is ready to participate in gas quality working group.
Parties agree and understand that PRB gas physically delivers to the Mid-continent
Williams supports the Interim Agreement and iterated that something has to be done to address
CO2 levels in gas stream.
WIC stressed the need to address gas quality, it is an imminent problem that needs solutions
sooner rather than later.
Yates commented that WIC is challenged by the fact that it is “book-ended” on the west and
east by Overthrust and Trailblazer who both have a 3% CO2 tariff specification.
o The Trailblazer system was built with very generous gas quality specifications to incite
shipper support; however, the market today is not supportive of the higher CO2
Copano noted that there is a need to get a better analysis of what effects Ruby and Bison will
have on Powder River Basin (PRB) production delivered into WIC’s MedBow lateral.
PSCO questioned WIC’s assumption on the 350 MMcf/d takeaway volumes it believes will be
flowing west from WIC’s system.
WIC indicated the null point on WIC’s system will move once Ruby goes into service
Anadarko noted that had NGPL started to allocate its gas in May/June 2010, PRB would have
likely seen some shut-in of wells.
o Raised the question on whether more gas processing capacity is needed in the PRB.
Marathon/BP acknowledged that there is a problem, believes that a tariff change to 2% is
needed, and that gas treatment facilities are needed to treat gas tendered by shippers who have
non-compliant gas, and wants the group to consider 3rd party treating services and agreements
Marathon commented that any gas shut in means that wells would be lost.
o Noted that NNG/NGPL notices on gas allocations put producers in a panic mode earlier
this year.
Page 1 of 5
Thunder Creek stressed the importance of maintaining the marketability of gas and recognized
that certain volumes of gas from the PRB have lower CO2 levels while other gas exceeds the 3%
levels; any approach/solution should recognize this difference.
Copano questioned the investment protection of potential gas treatment facilities when gas
quality problem exist on WIC mainline and downstream pipes.
Marathon/BP recognized that there is an immediate issue on WIC’s MedBow lateral but that the
gas quality issue really is more of a WIC system issue.
Yates reasserted that even if WIC makes a tariff CO2 gas quality tariff change, you will still have
two different pipelines that will have different CO2 specs.
Devon asserted that they are meeting WIC’s 3% CO2 gas specification and a tariff change is not
currently required but agreed that a longer term solution that involves a 2% CO2 specification is
needed.
o The focus of the group should be to keep gas flowing at 100% of production.
o Devon still supports the need for all pipes to maximize their ability to blend gas.
o Would consider centralized gas treatment as a solution.
Marathon questioned whether Cheyenne Plains (CPG) could provide some gas treatment
capabilities to alleviate problem and how CPG recovers its cost for gas treatment.
o WIC explained that CPG gas treatment facilities costs are embedded in its transportation
costs and there is no separate surcharge. Further, CPG runs its gas treatment facilities
commensurate with what gas is being scheduled on its system.
NNG commented on gas quality issues on its system.
o Higher CO2 on its pipeline leads to corrosion issues and also affects LNG operations on
its system.
o NNG will also try to maximize its gas blending capabilities to the extent possible.
Trailblazer commented that they want to better understand shipper gas quality issues and it is
still evaluating its options and its ability to blend on its system.
o Trailblazer has few shippers on its system that bring in gas east of Cheyenne.
o Approximately 90% of Trailblazer receipts are from WIC
WIC raised the issue of the groups readiness to proceed with a recommendation for WIC to
change its CO2 gas quality tariff specification.
Marathon/BP responded by stating that it needs to see a proposal by WIC for gas treatment
facilities that includes enough detail concerning cost, rate structure, timing.
WIC stated that a high level analysis was done earlier as part of discussions with certain WIC
shippers. That analysis provided an approximate $100-$115 million investment would be
required for a gas treating facility at Cheyenne.
o WIC did not/does not have a critical mass of producers who would subscribe to a
treating service to support such an investment.
Marathon/BP asked the larger group of attendees if anyone (producers) has explored the
potential for subcontracting a gas treatment facility.
WIC pointed out that producers are also competitors and whether producers would fully
support having another producer treat their gas.
o Questioned that if centralize gas treatment facilities are installed at Cheyenne, how will
this WIC address west end shippers who may have already treated their gas down to
1%, i.e., Shell?
o Indicated that central blending may not benefit shippers on the west end if they elect to
move their gas to western markets.
Page 2 of 5
o
Installing treating facilities on Trailblazer precludes WIC shippers from access to a 1.0
Bcf market on CIG Front Range.
Yates acknowledged that any gas treatment option will require significant investment and that
WIC should study a centralized gas treatment option.
WIC commented that a gas treatment facility at Douglas would be preferable over a gas
treatment facility at Cheyenne which would not serve shippers who move gas to west end.
o Would need to know volume targets in order to design its treatment facilities.
Marathon/BP commented that WIC should produce benchmark estimates and allow shippers/
producers to develop a counterproposal.
Marathon inquired why Trailblazer does not consider installing treatment facilities on its system.
WIC commented that Anadarko and Williams would not see a need to retreat their gas given
their gas is already being treated to reduce the CO2.
Marathon/BP commented that gas treatment services would likely cost around the 8 cent range
and thought that Anadarko/Williams could provide cheaper service if they decided to offer
treatment services. Tariff gas quality specification change would be part of any gas treatment
facility installation.
Marathon/BP commented that WIC should research what volumes of non-conforming gas
versus conforming gas would be treated. WIC needs to get this number from upstream
shippers. Being able to distinguish between both will allow WIC to only charge shippers who
tender non-conforming gas.
Copano indicated that once you receive gas at Ft. Union, gas has already been comingled
between higher and lower CO2 content gas. This makes it difficult to provide accurate volume
numbers showing what gas has higher/lower CO2 content.
o Indicated that determining the volume breakdown requires going back to the well head.
Marathon proposed that a producer/gatherer meeting may be called for. Iterated that it is
important to correctly allocate costs to those parties that don’t meet gas quality specifications.
o Indicated that at this point in time it is still unclear what kind of effect Anadarko gas
moving to Bison will have on gas quality dynamics.
Copano indicated that FUGG is currently treating gas at 3% and would entertain the possibility
to treat down to 2%.
Marathon/BP pointed out that the solution lies with gatherers putting in gas treatment facilities
and wants to know what it will cost.
WIC stated that it will provide within a week an estimate (cost of service) for centralized gas
treatment facilities that would be installed at/near Douglas for the purposes of discussion.
o Estimate will consider 4 or 5 volume points for design purposes.
o Commented that currently the WIC MedBow lateral has 3 receipt points, can WIC have
assurances that 1 of 3 feeds will be supplying gas at less than 2%.
Marathon/BP indicated that it would like to have a one on one meeting with PRB gatherers to
further discuss issues among themselves
WIC commented that it will not know what to build unless it sees what type of contractual levels
will support gas treatment facilities.
Anadarko addressed earlier comment on what effect will be once Anadarko gas moves into
Bison. On a short-term basis, gas quality should improve, however, this improvement will likely
not last long. The need for gas treatment to be done at the gatherer level was reiterated.
Devon commented that they want an estimate on WIC centralized gas treatment facility before
supporting any tariff change.
Page 3 of 5
Thunder Creek suggested that WIC should consider making a contribution to shippers
(“throwing money into pot”) to facilitate tariff change. He also stressed that WIC should provide
an estimate that is “optimistic” since this would facilitate Thunder Creek to approach its
producers about buying into tariff change.
o In response to Thunder Creek’s suggestion concerning a financial contribution by WIC to
its shippers to facilitate a tariff change, WIC indicated its readiness to work with
shippers on a one on one basis.
Marathon/BP suggested that at the next meeting, producers/gatherers should have meeting
breakout sessions for FUGG and Thunder Creek members only.
Williams inquired about what type of transition would be involved with tariff change and
whether FERC would entertain a transition plan that could extend beyond 6 months.
WIC commented that FERC would entertain a transition plan as part of tariff change.
ACTION ITEMS
WIC to provide cost of service analysis on WIC/El Paso owned operated gas treatment facility at
Douglas compressor station.
o For the purposes of analysis, provide a 3 year cost of service look and treatment of gas
from 3% to 2%.
o 400 MMcf/d, 750 MMcf/d, and 1,500 MMcf/d scenarios
WIC to post meeting notes on its EBB and via email to the GQWG.
WIC will schedule the next GQWG meeting
Page 4 of 5