Subject: Re: Presentation slides
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked]
Date: Tue, 14 Nov 2000 01:36:00 -0800 (PST)

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.