2021 Winter Forum Overland Park, Kansas - September 23, 2021 - Northern Natural ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
2021 Winter Forum
Overland Park, Kansas
September 23, 2021
Laura Demman
Vice President
Customer Service and Business
Development
Agenda
• Business Update
• Growing to Meet Market Demand
• Operations Update
• Customer Service Update
• Guest Speakers: Jacy Good and Steve Johnson
– “Hang Up and Drive”
• Weather Forecast
1
Tom Halpin
Vice President Marketing
&
Frank Rozmus
Vice President Gas Control
and Facility Planning
Berkshire Hathaway Energy
• 12 million customers worldwide
• Top-rated service provider within the
industry
• OSHA Recordable Incident Rate of
0.51 `
• 48% renewable/noncarbon generation
• 31% below national average prices at
MidAmerican Energy
• 23% below national average prices at
PacifiCorp
• 11% below national average prices at
NV Energy
• $127.3 billion in total assets
• Exceptional cyber and physical
protection
• 2020 net income > $3.5 billion
• Operating cash flows > $6.2 billion
2
BHE Pipeline Group
BHE Pipeline Group operates more than 21,000 miles of
pipeline in 23 states.
In 2020, BHE Pipeline Group pipelines transported
approximately 15% of the natural gas consumed in the U.S.
3
Customer Commitment
Vision Statement
• To be the preferred provider of natural gas transportation and storage services based on our integrity,
operational excellence, financial strength and environmental responsibility
Mission Statement
• We are in business to serve our customers. Fairly. Efficiently. Reliably.
These statements mean that
• You will get what we promise on time
• We will share the purpose behind our actions
• We will commit to making it easy to do business with us
• We will negotiate and perform in good faith
• We will continue to invest in the pipeline in order to provide you highly reliable service and to meet your future
growth needs
-Permanent Partners-
• Mutually beneficial relationships based on our core principles, not quarter over quarter profits
• Perform necessary due diligence, but maintain an attitude of partnership
• No surprises either way
• Frank, candid discussions
• Seek balanced outcomes
Why Six Core Principles and the focus on Permanent Partnerships? Sustainability
4
Industry Leading Customer Service
• Northern ranked first in the “Mega” and “Major”
pipeline categories for the 13th consecutive year
• Northern ranked second and Kern River Gas
Transmission, its sister pipeline company, ranked
first out of 32 interstate pipelines in the 2021 Mastio
& Co. survey
− Annual survey of all interstate pipelines in U.S.
− Northern and Kern River have finished first or
second in the survey over the last 12 years.
The BHE Pipeline Group has finished first in
the organization category for each of the last
16 years.
• Northern scored highest in the following areas
1. Representatives are accessible
2. Accuracy of invoices
3. Scheduled gas volumes are accurate
4. Firm transportation is highly reliable
5. Financial stability
• What must we do now to earn a “10” later this year?
− “10” = 1st place
− “9” = 4th place
− “8” = Bottom 20%
− “7” = Last
5
Cold-Weather Event of February 2021
• Extended cold weather from February 4-19, 2021
– Winter storms hit the central U.S. with sustained, cold weather that ultimately resulted in
record high natural gas prices
– Northern’s Market Area experienced 13 consecutive days of system-weighted
temperatures below zero degrees
• Prices set records for the weekend February 13-16, with daily index prices of $154.905 per
Dth and $231.67 per Dth at Ventura and Demarc, respectively, and higher in other areas of
the Midwest
• A number of Northern’s customers reduced their usage during this period to avoid the high
gas prices
• Northern began experiencing loss of gas supply from upstream parties in its Field Area
beginning February 14 and accelerating throughout the morning of February 15
– More than 0.5 Bcf/day of Northern’s customers’ supply failed to be delivered to Northern
– Northern was able to continue making deliveries; at 2 p.m. central time February 15, the
shortfall was addressed through the normal scheduling process, which requires
customers’ scheduled deliveries to equal their scheduled receipts
6
How Did Northern Perform?
• As noted, despite losing over 0.5 Bcf of supply in Northern’s Field Area, Northern continued
making deliveries through effective line pack management and redirecting north-end gas
towards the south-end of the system, including critical power plants connected to Northern
• While Northern also lost power to a number of its compressor stations in the Field Area,
Northern was able to utilize the backup generation capability it had invested in to maintain
service
• Northern relocated several employees to critical facilities to monitor for manual restarts in the
event issues developed
• Through a combination of system investment, planning and preparation, Northern was able
to weather the storm such that Northern met all of its obligations, both in physical deliveries
and pressure guarantees
– Compression facilities attained 100% reliability
– Underground storage facilities met all delivery orders
– Liquefied natural gas facilities achieved 100% availability to meet all pressure and line
pack requirements for customer firm capacity obligations
– Utilities and end-use customers did an excellent job balancing demand with supply
during supply disruptions
7Early Penalty Refund
• Scheduling penalties exist to provide proper incentive for customers to keep their gas receipts
into Northern’s system in balance with their deliveries from Northern’s system
– All penalties incurred are fully refunded to customers annually, pursuant to Northern’s tariff
and FERC policy
• During the month of February 2021, some customers incurred penalties that were much higher
than normal
• Northern proposed to refund penalties for the winter of 2020-2021 totaling $10.8 million,
compared to the annual penalty total of approximately $2 million for both 2019 and 2020
– Northern received positive feedback from customers
– On May 24, 2021, Northern filed a petition for limited waiver of Northern’s tariff
– FERC approved Northern’s waiver filing on August 2, 2021
– Refunds were issued to customers on August 12, 2021 (DDVC Invoice)
8Northern Rate Proceedings
• Northern settled its Natural Gas Act sections 4 and 5 rate proceedings in 2020
• Northern committed to a rate moratorium through June 30, 2022, unless there is an increase
in federal corporate income tax rates or Northern’s annual return on equity is below 11.02%
• A rate case will be filed by July 1, 2022, to cover the significant investment Northern is making
in its pipeline system and as a result of a likely tax rate increase
• Maintenance capital investment
– 2020 - $505 million (actual)
– 2021 - $520 million
– 2022 - $407 million
– 2023 - $366 million
• Asset modernization costs are forecast in excess of $1.6 billion over the next decade, which
is in addition to normal maintenance capital requirements
• Northern is open to developing a pre-filed settlement with its customers
9Tariff Working Group
• One outcome of the 2020 settlement was that parties agreed to address certain issues outside
of the rate case process through a tariff working group
– Carlton Flow Obligation Alternatives
– Daily System Balancing
• Scheduling penalties
• Scheduling tolerance levels
• After multiple collaborative meetings, the parties agreed to leave the current Carlton flow
obligation in place and on November 30, 2020, Northern filed to implement the following
changes to the daily system balancing parameters:
– Effective January 1, 2021, implement index-based penalties to ensure shippers have the
proper incentives to provide the supply needed to meet their markets
– Effective November 1, 2021, modify scheduling tolerance levels from 5% to 4% on SOL
days and 3% on Critical Days
• On December 31, 2020, the FERC approved Northern’s filing
– Index-based penalties were implemented January 1, 2021, and the modifications to
scheduling tolerances during SOL and Critical Days will go into effect November 1, 2021
10Market Area Expansions: Recently Completed
• New Lisbon Branch Line Expansion for 2020
– 15,180 Dth/day (Peak winter MDQ)
– In service: November 1, 2020
– Capital: $31.3 million
– Looping of one existing branch line, new branch line regulator, upgrade of existing
branch line compression, and modifications to 13 existing measurement stations
• LaCrosse/Tomah Branch Line Expansion for 2020
– 9,845 Dth/day (Peak winter MDQ)
– In service: November 1, 2020
– Capital: $14.3 million
– Looping of one existing branch line, modifications to four existing measurement stations,
one new measurement station, and extension of existing mainline to be constructed prior
to November 1, 2023
11Northern Lights 2021 Expansion
• Incremental capacity of 45,693 Dth/day
• Project scope
– 0.8-mile extension of the Willmar D branch line
– 0.63-mile loop of the Carlton interconnect
branch line
– New 11,153-horsepower natural gas-fired
compressor station at Hinckley, Minnesota
– Modifications made to Pierz compressor station
interconnect
– Additional 1,100-horsepower electric-driven
compressor unit at Pierz compressor station
– Modifications to 26 town border stations
• Project Cost: $78.2 million
• In-service date: Late 2021
12West Leg 2022
• Incremental capacity of 10,065 Dth/day
– Nine customers
• Project scope
– 1.7 miles of new 16-inch-diameter
mainline loop near the existing Welcome,
Minnesota, interconnect
• Project Cost: $5.9 million
• In-service: November 1, 2022
13Field Area Expansions
• Recently In-Service
– Trans-Pecos Lateral Expansion and Interconnect
• 500,000 Dth/day lateral capacity
• 250,000 Dth/day interconnect capacity, bi-directional location
• In-service: December 2019
• Approximately $7.0 million
– Permian Highway Pipeline, Waha Interconnect
• 100,000 Dth/day, delivery to Permian Highway
• In-service: December 2020
• Approximately $1.7 million
– Spraberry Compression Project
• Adds compression and pipeline headers and lateral
• Increases Spraberry high pressure delivery capacity by 67,000 Dth/day
• In-service: June 2021
• Approximately $19.2 million
14Field Area Expansions
• Recently In-Service (continued)
– Gulf Coast Express Pipeline, Spraberry Interconnect - bi-directional updates at the
interconnect
• Adds bi-directional service for deliveries to Gulf Coast Express
• 100,000 Dth/day interconnect delivery capacity
• In-service: September 2021
• Approximately $1.1 million Under Construction:
• Under Construction
– Whistler Pipeline, Spraberry Interconnect
• 100,000 Dth/day, delivery to Whistler Pipeline
• In-service forecast: September 2021
• Approximately $5.5 million
15Pipeline Project Approval Changes
• Under section 7 of the Natural Gas Act, FERC reviews applications for the construction and
operation of natural gas pipelines
• FERC ensures that the applicant has certified that it will comply with Department of
Transportation safety standards and the federal environmental regulations of the National
Environmental Policy Act (NEPA)
• Significant changes have recently developed that are changing the process and timeline for
pipeline project approval – overall timeline for project development is likely increased by up to
one year
• FERC issuance of “Notice to Proceed” letters to pipeline to begin construction are stayed until
rehearing process is completed, or a maximum of five months (formerly, NTP were issued
shortly after the certificate order)
• Increased emphasis on green house gas emissions (GHG) beyond the pipeline construction and
operations
– Likely adding review of upstream and downstream GHG impacts to determine overall
impact to climate change
– Will likely require an environmental impact statement be prepared instead of an
environmental assessment
16Winter 2020-2021 Review
• Warmer than normal winter with one notable exception
• Early to Mid-February
– Market Area system-weighted temperature at or below 10 degrees Fahrenheit for 16
consecutive days (4th – 19th)
– 13 consecutive days at or below zero (4th – 16th)
– Seven consecutive days of Market Area loads over 5.1 Bcf (6th – 12th)
– Four top 10 Market Area delivery days over a five-day stretch (7th – 11th) including the 3rd
highest of all time (11th)
– Record February delivery day of 5.41 Bcf (11th)
• Market Area deliveries for the 2020-2021 heating season averaged 3.49 Bcf compared to
3.62 Bcf for 2019-2020, representing a 3.6% decrease
17February from an Operations Perspective
• Physical pipeline operations performed exceptionally well throughout the severe weather event
– Compression assets attained 100% reliability
• Once running, units stayed running
– Compression remote start success rate was 97% vs. 99% goal
• Opportunity for improvement
• Post-analysis to determine cause and mitigate future risk
• Impact of remote start failures was mitigated by having personnel on site to quickly start units manually
– Underground Storage (UGS) facilities met all delivery orders from Gas Control
– Liquefied Natural Gas (LNG) facilities achieved 100% availability
• Critical to meeting line pack targets and being able to withstand significant Field Area supply disruptions
– All delivery point facilities met all flow and pressure requirements
• All delivery point pressure guarantees were met despite severe supply disruptions that occurred in the
Field Area
• Exceptional operation does not just happen
– Asset modernization and reliability investment
– Day-to-day operation: All hands-on deck!
• From February 1-18, field personnel traveled over 440,000 miles throughout 11 states with no OSHA
recordable injuries or preventable vehicle accidents
• Every compressor station was continuously staffed or field-monitored twice daily
• Remote monitoring of assigned receipt and delivery points with empowerment to proactively respond to
early indications of abnormal operations
18Environmental Respect: Methane Reduction
• BHE Pipeline Group is committed to environmental
respect and reducing the impact of greenhouse-gas
emissions on climate change
• Northern is a charter member of the STAR program
initiated by the Environmental Protection Agency
– Voluntary industry partnerships to identify
best practices to reduce methane emissions
• Northern’s methane reduction practices include
improved leak detection, reductions in venting
during maintenance, and investing in modern Using a stopple bypass for pipeline outages, rather than venting the
equipment natural gas to the atmosphere, allows Northern to reduce methane
emissions.
• In 2018, BHE Pipeline Group became the 14th member of ONE Future, an industry group that reduces
methane emissions by sharing best practices and new technologies
– ONE Future goal: reduce the national emissions rate to 1.22% by 2020, and to 1.00% by 2025
– BHE Pipeline Group’s combined emissions rate is 0.044% for 2020, significantly outperforming the
transmission and storage segment’s emission rate of 0.112%
• BHE Pipeline Group projects help our customers transition from coal-fired power generation to natural gas-
fired energy generation and allows them to replace aging infrastructure with newer, lower-emitting facilities
19Vickie Wonder Vice President Customer Service
Commercial Application Update
• Throughput Management System (TMS)
– New online Throughput Management
System (TMS) was implemented August
2020
– As with any major implementation, there
were a few challenges which we were
able to work through quickly
– We appreciated our customers’ support
during the implementation and numerous
training sessions
• Daily Delivery Variance Charges (DDVCs)
̶ Rate case tariff working group tolerance change effective November 1, 2021
• 4% tolerance level on System Overrun Limitation day (SOL)
• 3% tolerance level on Critical Day
• No change for standard or System Underrun Limitation (SUL) days
20DDVC Changes
21DDVC Changes (continued)
• DDVC calculator was updated to reflect DDVC tolerance changes
– Two DDVC calculators will be available on training web page until November 1
• Current version --- effective Gas Days September 23 through October 31
• New version --- effective beginning Gas Day November 1
• https://www.northernnaturalgas.com/support/Pages/TrainingMaterials.aspx
22DDVC Changes (continued)
• Enhanced DDVC Rates webpage (implemented September 21, 2021)
– Drop down menu to select date range and Market or Field Area location
– Rates are updated by 7:30 a.m. CCT prior to the start of the gas day
– Replaces the current Market and Field spreadsheets on website
– https://www.northernnaturalgas.com/infopostings/rates/Pages/DDVC-Rates.aspx
23Storage Flow Indicator
• Purpose: Provide customers with Northern’s best estimate of upcoming storage constraints
̶ Best estimate only; actual constraints will depend on customer nominations, which may
not follow previous day’s trend due to changing market conditions
̶ Targeted implementation date of November 1, 2021
̶ Information to be provided:
• Direction of Constraint – Injection/Withdrawal/Unknown
• Likelihood of Allocation – Likely/Unlikely/Unknown
– Location: At a Glance web page
• https://www.northernnaturalgas.com/infopostings/Pages/AtaGlance.aspx
̶ Display information for the next three gas days and include a comment section
̶ Timing of data update
• Standard refresh at 9 a.m. CCT each day
• Intraday refresh only if Northern anticipates nomination changes based on a major
market change
24Passwords
• With the heightened awareness of cybersecurity concerns for pipelines, Northern is
undertaking a major effort to update its password application
– Multifactor authentication (optional)
– Password requirements are the same as today plus a comparison to a database of
passwords known to have been exposed in a data breach
– New self-service password application for managing passwords
• Need an “account support” email address – personal email address instead of group
– Targeted implementation of late spring/early summer
• Prior to the implementation, customers are encouraged to modify passwords if the current one
is considered weak
– https://www.northernnaturalgas.com/support/Pages/ChangeEnergyPassword.aspx
– Website to view corrupt passwords -- https://haveibeenpwned.com/
• My experience --- passwords consisting of all lowercase letters and some with
numbers were corrupt
25New Allocation Groups
• New Allocation Group
– Market Area
• Homer South delivery group to be effective November 1, 2021
• Impacted area: deliveries within the group from receipts sourced at NBPL/NNG
Aberdeen (POI 193), NBPL/NNG Hazel (POI 79244) and NBPL/NNG Welcome (POI
1665)
– Field Area
• Spraberry 16-inch delivery group to be effective October 1, 2021
• Impacted area: deliveries to GCX Spraberry (POI 79391) and Whistler Pipeline –
Spraberry (POI 79537)
̶ Supporting information located in winter forum training presentation and on website
• https://www.northernnaturalgas.com/support/allocationoverview/Pages/default.aspx
26You can also read
