Wisconsin Public Utility Institute
Gas: What’s in the Pipeline
September 13, 2012
Kirk Lavengood
Vice President
Business Development
Northern Natural Gas Company
1
Northern Natural Gas’ System
• Northern’s system has two distinct rate areas
 Market Area with a peak-day capacity of
over 5.5 Bcf
 Field Area with a peak-day capacity of
over 2.3 Bcf
• Northern has a vast network of pipeline
facilities
 14,900 miles of pipeline
 48 compressor stations
 Over 2,150 receipt and delivery points
• Northern has five storage facilities with 59 Bcf
firm capacity and 1.1 Bcf/day of peak
deliverability
 Three underground storage facilities
• Redfield, Iowa
• Cunningham, Kansas
• Lyons, Kansas
 Two liquefied natural gas facilities with
4.0 Bcf capacity
• Wrenshall, Minnesota
• Garner, Iowa
MN
Market
Area
MI
WI
SD
NE
IA
IL
Demarcation
KS
MO
OK
AR
NM
2
D
Field
Area
TX
ABC
EF
Field Zone
LA
Electric Generation on Northern
•
Northern serves electric generation facilities directly and through utility distribution
systems
•
Direct connected plants – 38 with generating capacity of 11,870 MW
– Combined cycle plants – 17 with capacity of 6,806 MW
– Peaking plants – 21 with capacity of 5,064 MW
•
Over the past two years, direct-connected plants comprised approximately 12% of
Northern’s throughput
– Winter peak generation load was 15% of Northern’s system load
– Summer peak generation load was 40% of Northern’s system load
•
Over the last decade, Northern has expanded its system to serve 14 firm contracted
electric generation plants with over 5,000 MW of generating capacity and has met the
in-service date for each plant
3
Electric Generation Load
4
Direct-Connect Power Plants
M i n n e s o t a
M i c h i g a n
Wi s c o n s i n
So u t h
D a k o t a
N e b r a s ka
I o w a
I l l i n o i s
K a n s a s
M i s s o u ri
N e w
M e x i co
Ok l a h o m a
Te x a s
Te x a s
5
Service Flexibility – Electric Generation
•
Electric generation loads are very similar to Northern’s temperature-sensitive heating loads
– Traditional utility loads swing significantly based on weather changes and variations in
forecasts
– Electric generation loads swing significantly based on weather changes and RTO
market orders
•
Active communication between customer and Northern’s gas control group (available 24
hours per day) is key to providing flexible and reliable service and managing load variations
•
Northern’s 16-hour Market Area design day provides significant hourly flow flexibility
– Consistent with on-peak power market
– No hourly penalties on Northern’s system
•
Northern provides an 8 a.m. end of gas day true-up for actual usage variations, providing
significant daily load flexibility
•
Northern’s pipeline system has been designed to accommodate transient loads
– Two LNG facilities capable of delivering up to 600,000 Dth/day
– Approximately 6 Bcf of line pack to accommodate load variations
– Supply receipts throughout the pipeline system provide exceptional physical and price
diversity
– System operational storage gas of 14 Bcf
6
Potential Electric Generation Growth
•
Northern anticipates additional growth from new power plants, expansion of existing
plants and coal to gas conversions
•
Potential of an additional 6,000 MW of generating capacity and over 600,000 Dth/day
of natural gas load
– New plants
1,500 MW
150,000 Dth/day gas load
– Expansion
3,200 MW
350,000 Dth/day gas load
– Conversion to gas
1,200 MW
120,000 Dth/day gas load
•
Northern is well situated to serve these customers
– Availability of diverse supplies
– The grid nature of Northern’s system is comprised of multiple mainlines and
redundant paths to serve the market
– Availability of peaking facilities and balancing services
– History of exceptional service reliability
•
Supporting incremental loads with firm transportation assures available capacity to
meet market requirements
7
Expansion Projects Since 2007
Minnesota
$250.0 million
South Dakota
466,000 Dth/day
$8.0 million
Wisconsin
60,000 Dth/day
$860,000
17,500 Dth/day
Iowa
Nebraska
$88.0 million
$25.0 million
122,000 Dth/day
58,000 Dth/day
Redfield 8 BCF
Expansion
Texas/New Mexico
• Northern is expanding its Field Area
supply interconnects, resulting in
approximately 1.3 Bcf/day of
incremental capacity
• Expansion requirements for firm
markets vary based on market
location, volume and pressure
requirements
$52.0 million
$10.0 million
220,000 Dth/day
• Northern has invested over
$430 million since 2007 to expand
its system by over 900,000 Dth/day
plus
8 Bcf of storage capacity to meet
market needs
Granite Wash
Supply Interconnect
615,000 Dth/day
• Northern is ready and willing to
partner with customers to complete
projects that meet customer growth
requirements
Wolfberry Supply
Interconnect
705,000 Dth/day
8
Meeting Market Expansion Needs
•
Northern works with its customers to provide effective services and processes to meet firm service
needs
•
FERC should continue to permit its historic pipeline-by-pipeline approach to addressing service
needs
•
Increased natural gas demand generally requires pipeline construction, which is subject to FERC
regulation and approval by appropriate government agencies
•
FERC has granted blanket authority for projects up to the following levels
– Automatic Blanket – up to $10.8 million; may not be used for mainline expansions
– Prior-Notice Filing – more than $10.8 million up to $30.8 million; agency approvals can range
from 30 days to six months, while authorization generally occurs within 60-70 days
Projects costing more than $30.8 million require Section 7 Application – Six months prior to filing
the Section 7 application, a request to use FERC’s pre-filing process is filed. Authorization from
FERC may take six to eight months from the Section 7 application filing
•
•
FERC should consider the following project approval improvements
– Expand scope of the blanket authorizations to include mainline facilities, MAOP increases
– Increase the cost-limit for blanket authorizations
– Identify measures to shorten review time for Section 7 applications
– Initiate consultation with agencies that typically will not formally consult on blanket projects
without FERC’s formal initiation
9