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Natural Gas Pipelines -
Responding to Changing Supply Shannon Spencer, Energy Transfer
2
This presentation may contain statements about future events, outlook and expectations of Energy
Transfer Equity, L.P. (ETE), Energy Transfer Partners, L.P. (ETP), Sunoco Logistics Partners L.P.
(SXL), Southern Union Company, and Regency Energy Partners LP (RGP) (collectively, the
“Companies”), all of which are forward-looking statements. Any statement in this presentation that is
not a historical fact may be deemed to be a forward-looking statement. These forward-looking
statements rely on a number of assumptions concerning future events that are believed to be
reasonable, but are subject to a number of risks, uncertainties and other factors, many of which are
outside the Companies’ control, and which could cause the actual results, performance or
achievements of the Companies to be materially different. While the Companies believe that the
assumptions concerning future events are reasonable, we caution that there are inherent difficulties in
predicting certain important factors that could impact the future performance or results of our
businesses. These risks and uncertainties are discussed in more detail in the filings made by the
Companies with the Securities and Exchange Commission, copies of which are available to the public.
The Companies expressly disclaim any intention or obligation to revise or publicly update any forward-
looking statements, whether as a result of new information, future events, or otherwise.
All references in this presentation to capacity of a pipeline, processing plant or storage facility relate to
maximum capacity under normal operating conditions and with respect to pipeline transportation
capacity and are subject to multiple factors (including natural gas injections and withdrawals at various
delivery points along the pipeline and the utilization of compression) which may reduce the throughput
capacity from specified capacity levels.
Legal Disclaimer
Energy Transfer – Company Overview
3
Energy Transfer began in 1995 as a small intrastate natural gas pipeline
operator and is now one of the largest and most diversified investment
grade master limited partnerships in the United States.
The Energy Transfer family of partnerships consists of the following
publicly traded partnerships:
• Energy Transfer Partners, L.P. (NYSE: ETP)
• Energy Transfer Equity, L.P. (NYSE: ETE)
• Regency Energy Partners, L.P. (NYSE: RGP)
• Sunoco Logistics Partners, L.P. (NYSE: SXL)
Energy Transfer Assets - 2002
Approximately 3,400 miles of natural gas pipelines
4
Energy Transfer Today
A Leading Midstream Energy Platform
5
ETP Assets
Pipelines
Processing
Storage
Treating
SXL Assets
Pipelines
Terminals
SUG Assets
Pipelines
Storage
Trunkline LNG
Note: Assets Shown Exclude SUN Retail and SUG Distribution
RGP Assets
Pipelines/
Gathering
Processing
More than 65,000 miles of natural gas, NGL,
crude, and refined products pipelines
Agenda
6
The recent unprecedented growth in U.S. natural gas supply has altered the
interstate pipeline grid and traditional flow patterns
How has Energy Transfer responded and what is being planned?
We’ll look at production growth over the last five years in several key areas
and the resulting:
• Pipeline Expansions
• New systems
• Interconnects on existing systems
• Flow changes
• Asset conversions
Energy Transfer/Southern Union
Legacy Interstate Assets (1)
Panhandle Eastern Pipe Line
• 6,500 mile system
• 2.8 Bcf/d combined capacity
• 4 storage fields ~ 55 Bcf
(1) Pipeline systems in operation prior to 2008
Trunkline Gas
• 3,059 mile system
• 1.5 Bcf/d mainline capacity
• 1 storage field ~ 12.9 Bcf
Sea Robin Pipeline
• 963 mile offshore system
• 0.85 Bcf/d - East
• 1 Bcf/d – West (previously TGC)
Transwestern Pipeline
• 2.700 mile system
• 1.225 Bcf/d mainline capacity
Florida Gas Transmission
• 5,300 mile system
• 3.1 Bcf/d capacity
7
8
Energy Transfer Interstate Assets
Trunkline LNG Import Terminal
• One of the nation’s largest LNG import terminals
• Located in Lake Charles, Louisiana
• 2.1 Bcf/day of peak send out capacity; 9.0 Bcf of storage
State of the Markets
Five Years Ago:
• High, volatile gas prices
• Economic downturn reducing gas
demand
• Imports are ~13% of the U.S. total
supply mix (1)
• Domestic production growing
• Dry shale gas
• Concentrated in TX, LA, AR
• Nearly 11% of total U.S. supply
comes from the Gulf of Mexico (1)
• Insufficient pipeline takeaway
capacity from new supply areas
Today:
• Sustained low gas prices
• Rebounding gas demand in gas-
intensive industries
• Imports are only ~6% of the U.S. total
supply mix (1)
• Record levels of domestic production
• Drilling shifts to liquids-rich areas
• Production growth in the Northeast
• Only ~6% of total U.S. supply comes
from the Gulf of Mexico (1)
• Numerous new “supply push” interstate
systems; insufficient midstream
infrastructure
(1) Source: EIA. “Today” represents 2012 annual average. 9
Production Growth
Barnett Shale
10
• Started the nation’s shale gas boom; has already
produced more than the original reserve estimate
• Required new pipeline capacity out of the area
• A new study foresees slowly declining production
lasting through the year 2030 and beyond
Source: WoodMackenzie
11
Pipeline Expansion
Barnett Shale
Midcontinent Express Pipeline
• Placed in service in 2009
• 500 miles; 1.4 Bcf/day capacity
• Access to supply from the
Midcontinent region and the
Barnett Shale
• Interconnects with multiple
interstate pipelines serving the
Midwest, Northeast, Southeast and
Mid-Atlantic (1)
• 50/50 joint venture between
Energy Transfer and Kinder
Morgan
• Operated by Kinder Morgan
Perryville Hub
(1) ANR, CenterPoint, Columbia Gulf, Destin, NGPL, Sonat,
Tennessee, Texas Eastern, Texas Gas, Transco
12
Production Growth
Fayetteville Shale
• Shorter “learning curve” as drilling techniques
learned in the Barnett were applied, allowing
production to ramp up quickly
• Required new pipeline capacity out of the area
Source: WoodMackenzie
13
Pipeline Expansion
Fayetteville Shale
Fayetteville Express Pipeline
• Placed in service in 2010
• 185 miles of pipeline
• 2 Bcf/day capacity
• Originates in the heart of the
Fayetteville Shale production area
• Interconnects with four interstate
pipelines serving the Midwest (1)
• 50/50 joint venture between Energy
Transfer and Kinder Morgan
(1) ANR, NGPL, Texas Gas, Trunkline
Production Growth
Haynesville Shale
14
• Wells produce dry gas at extremely high rates
• Existing pipeline capacity was insufficient to
handle unprecedented production levels
combined with Barnett production
• Drilling has dropped off significantly due to low
gas prices, but still the second largest
producing play in the country
Source: WoodMackenzie
15
Pipeline Expansion
Haynesville Shale
Perryville Hub
Tiger Pipeline
• Placed in service in 2010
• 195 miles; 2.4 Bcf/day capacity
• Originates near the Carthage, TX hub;
can access Barnett Shale and
Haynesville Shale supplies
• Delivers to pipelines serving the Midwest,
Northeast and Southeast (1)
• Interconnects with Arcadia and Cadeville
Storage
(1) ANR, Columbia Gulf, SESH, Tennessee, Texas
Eastern, Texas Gas, Trunkline
Pipeline Expansion
Energy Transfer Overview
Fayetteville Express Midcontinent Express
Tiger
Shale Plays
16
• Many new pipeline systems were constructed in the last five years to transport
production out of new supply areas:
Source: EIA. Excludes expansions and laterals on existing systems.
• Mostly large diameter, single-line systems with multiple interstate pipeline delivery
points
• Most of these “supply push” pipelines were not built into distinct market areas, but
into the pipeline grid or a centralized hub
Origin
Capacity
(Bcf/day)
Barnett/Haynesville Shale 6.4
Fayetteville Shale 4.0
LNG Terminals 6.6
Rockies 5.2
Other 2.9
Total 25.1
Pipeline Expansion
We Weren’t The Only Ones …
17
Pipeline Expansion
Perryville Hub
18
• Owned and operated by
CenterPoint Energy
• Access to gas supply from:
• Gulf Coast and offshore
• Barnett Shale
• Eagle Ford Shale
• Haynesville Shale
• Midcontinent region
• Marcellus (via backhaul)
• Gas can be delivered to
multiple consuming areas:
• Midwest
• Northeast
• Florida
• Other Southeast states Southeast Supply Header
(SESH)
Pipeline Expansion
Accessing Florida Markets
19
Southeast Supply Header (SESH) • 274-mile pipeline
• Jointly owned by Spectra
Energy (operator) and
CenterPoint Energy
• Capacity of 1 Bcf/day
• Transports gas from the
Perryville Hub area to
various interstate
pipelines
Gas is picked up by
FGT and Gulfstream for
delivery into Florida
Changing Supply
Florida Gas Transmission
20 * Pending
Zone Interconnect Supply Access
Capacity
(MMcf/d) Enbridge Orange Barnett 200
1 Enterprise Magnet Withers Eagle Ford 100
Enterprise Pledger Eagle Ford 200
2 Enterprise Acadian Frisco Haynesville 1,000
Columbia Gulf Lafayette (via Regency) Haynesville 300
Gulf South (Destin/SESH)* Barnett/Haynesville 350 - 400
Gulf South St. Helena Barnett/Haynesville 600
Gulfcrossing (via Destin) Barnett/Haynesville 750
3 Southeast Supply Header – Lucedale Barnett/Haynesville 1,000
Southeast Supply Header – Station 44 Barnett/Haynesville 250
Transco Mobile Bay South Expansion Barnett/Haynesville 500
Destin (via Gulf South/MEP) Haynesville 750
Tennessee Carnes Marcellus 60
Market SNG Cypress * Marcellus 280
Total: 6,390
FGT – Supply Access Additions Since 2008
Changing Supply
Florida Gas Transmission
21
Total Storage Access: +4 Bcf/d
Total Supply Access: +15 Bcf/d
FGT – Storage Connections
22
Changing Supply – Altering Flow Patterns
Trunkline Gas
Trunkline Receipts
By Zone
• Less gas coming into the system
from traditional production areas
• More “backhaul” deliveries into hubs
and other liquid points
New Pipeline Receipt Points
Perryville
Hub
23
Changing Supply – Altering Flow Patterns
Panhandle Eastern
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2009 2010 2011 2012
Ave
rage
Dth
/day
Panhandle Receipts
From Rockies Express
REX ends in
Missouri until
completed mid-
2009 Volumes shift to
delivery points
furthest east
Marcellus
supply filling
up eastern
pipelines
Changing Supply
MidContinent and Southwest
24
Shale drilling technology is being
applied in new and existing supply
basins
Granite Wash
• Liquids-rich; attractive returns
Mississippian Lime
• Mostly oil-focused
• Fairly high gas ratios/well
• Low-cost drilling
Permian Basin
• Renewed oil drilling with
associated gas production growth
Mississippian
Granite Wash
Permian
• Increased supply interconnect activity
• Transwestern - sold several laterals for
conversion to liquids or wet-gas gathering
systems
Changing Supply - Asset Conversions
Trunkline Gas
25
Eagle Ford Shale
• Primarily an oil play; oil production
nearly tripled in 2012
• Gas production (mostly associated)
is now over 2 Bcf/day
• Adequate eastbound gas pipeline
capacity exists
• New projects focused on
Mexico
• Gas is liquids-rich and must be
processed
• Massive midstream infrastructure
build-out underway
Trunkline So. Texas Project (2011)
• System modifications to allow the
bi-directional flow of liquids-rich gas
to So. Texas processing plants
• Required isolation of the
southernmost segment of
Trunkline’s system
26
Changing Supply – Asset Conversions
Proposed Projects
Trunkline Crude Conversion
• Proposing to abandon a segment of one
of Trunkline’s parallel mainlines for
conversion to crude oil service
• Pending FERC abandonment order
• The converted system would provide
crude oil pipeline access to the eastern
Gulf Coast refinery market from the
Patoka, Illinois hub
LNG Export Project
• Proposing to build and operate a natural
gas liquefaction and export facility at the
Trunkline LNG site
• Export capacity up to 15 mtpa (~ 2 Bcf/d
from three trains)
• Requires DOE and FERC authorization
27
LNG
LNG
The Way We Were…
Typical pipeline routes five
years ago: longhaul flows from
“Field to Market”; imports
28
LNG
LNG
LNG
Current and potential
additional routes: shorter and
bi-directional flows; exports
Going With the Flow…