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Enron Mail |
Hi John and Vince I had an opportunity to review the slide presentation
of EP and here is my assessment. Bottom line: Too robust by 2005 on merchant plants being built; up and running baseload and too optimistic about offshore gas volume growth by 2005 as well. WESTERN MARKETS EP forecast is way too high by 2005 by their assuming 1.4 BCFD of new power generation gas demand could be in place in the west in such a short time..This means ..they may be forgetting to consider the tough NIMBY siting hurdles that stalled all but 550 MW of the current 10,000 mw of planned capacity in the West.....EP is assuming not only do 80 percent of these planned plants get built but then they l run baseload...which is very unlikely. Most shall be peaking or intermediate load in the start years which trims that gas use by 50 to 85 percent. WEFA and ENE Corp. thinks the area gas use growth will be more like 3.2/ 2.9 BCFD BY 2010 -- but 80 percent of this gas use happening late -- not early -- in the time period out to 2010. I foresee the EP scenario as unrealistic given NIMBY and enviro siting limitations short term in the West. WEST SO CENTRAL TX/LA EP sees the area at 2.7 bcfd by 2005; way too high compared to WEFA and ENE at -400 mmcfd and +500 mmcfd, respectively BY 2010 and even prematurely high by PIRA's robust standard of 3.5 bcfd by 2010 . EP like PIRA assumes the gas thermal demand stays on even as merchant plants get built; ENE and WEFA assume merchant kwhs and lower variable costs and better heat rates shut in the thermals or cause them to be repowered as combined cycles. Given where EP's pipes are located in the West and Texas and up the Northeast this demand scenario fits their wants...so I can see why they like this scenario but it assumes power generators will not act economically rationally. NORTHEAST EP sees 2.7 bcfd by 2005 vs WEFA, PIRA and ENE seeing 2.3/2.5/2..6 bcfd by 2010 .Way premature for this area to see such growth as 385 mmcfd annually. They are real robust on offshore gas being there to fill this need too. GAS SUPPLY Offshore supply, which has fallen 2.4 bcfd since 1995 is expected to grow in EP's forecast by 3.6 bcfd by 2005...extremely unlikely given the slow start Shell and Texaco and Exxon offshore has been showing us so far. I was burned in my supply analysis work in 1999 by Shell's forecasts of their adding alone 2 bcfd to offshore deliverability by 2000 which never happened -- it fell 500mmcfd instead !! so I do not give a lot of hope right now for 3.6 bcfd incremental gas by 2005 per EP. Cambridge Energy says if all goes well the Offshore overall will be up 1.1- 1.7 bcfd by 2005..way less than EP is showing.
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