Pipeline & Gas Journal’s 33rd Annual 500 Report

November 2013, Vol. 240 No. 11

Rita Tubb, Executive Editor, and Michael Reed, Managing Editor

Pipeline & Gas Journal’s 33rd Annual 500 Report offers the industry’s most comprehensive statistical review of U.S. energy pipeline systems. As in past years, the report ranks the nation’s top gas distribution, liquids and gas transmission systems. Transmission companies are ranked by mileage, while the rank of each liquids pipeline company is based on yearly crude deliveries. The gas distribution rankings are based on number of customers.

Additional statistical data compiled for the report are based on operating revenue, net income, total throughput of natural gas, bbls of crude and refined products delivered, miles of mains and service lines and additions to plant.

More than 95% of the statistical data presented is based on information from calendar year 2012, compiled through forms filled out by each company listed or data collected at the Federal Energy Regulatory Commission (FERC). The American Public Gas Association (AGPA) also provided data fo5r4 this report.

While extensive efforts are made each year to provide the latest statistical information available, some companies are no longer required to provide statistical data to the FERC and failed to respond to our inquiries. As a result, we are using the latest available information. If your company’s information is incorrect, let us know. We also need to be made aware of any changes of address, contact information, mergers and acquisitions.

The mention of acquisitions brings to mind a number of changes that are reflected in this year’s report as a result of Kinder Morgan’s 2012 acquisition of the El Paso Corporation.
To get regulatory approval for its $20 billion buyout of El Paso, Kinder Morgan had to sell certain assets. Tallgrass Energy Partners purchased the Kinder Morgan Interstate Gas Transmission (KMIGT), Trailblazer Pipeline Company, the Casper-Douglas natural gas processing and West Frenchie Draw treating facilities in Wyoming, and KMP’s 50% interest in the Rockies Express Pipeline (REX). Tallgrass is owned by the management team of Tallgrass, Kelso & Company, and a limited group of investors led by The Energy & Minerals Group including Magnetar Capital.

Despite these divestitures, Kinder Morgan is the largest midstream and the third-largest energy company (based on combined enterprise value) in North America. It owns an interest in or operates approximately 80,000 miles of pipelines and 180 terminals. The pipelines transport natural gas, refined petroleum products, crude oil, carbon dioxide (CO-2) and more.

Readers will likely notice that MichCon is shown in this year’s report under parent DTE Energy. This change was made to enhance brand recognition. DTE Energy is one of the nation’s largest diversified energy companies. Headquartered in Detroit, DTE Energy’s operating units include an electric utility serving 2.1 million customers in southeastern Michigan and a natural gas utility serving 1.2 million customers in Michigan. The DTE Energy portfolio includes non-utility energy businesses focused on power and industrial projects and energy trading.

Customers receiving natural gas service from Northern Indiana Fuel & Light (NIF&L) and Kokomo Gas are now the customers of the Northern Indiana Public Service Co. (NIPSCO).
NIPSO, headquartered in Merrillville, IN, is one of the seven energy distribution companies of NiSource Inc. With more than 786,000 natural gas customers and 457,000 electric customers across the northern third of Indiana, NIPSCO is the largest LDC and the second-largest electric distribution company in the state. NiSource distribution companies serve 3.8 million natural gas and electric customers, primarily in seven states.

The federal Energy Information Administration (EIA) estimates the United States will be the world’s top producer of petroleum and natural gas hydrocarbons in 2013, surpassing Russia and Saudi Arabia. For the United States and Russia, total petroleum and natural gas hydrocarbon production, in energy content terms, is almost evenly split between petroleum and natural gas. Saudi Arabia’s production heavily favors petroleum.

Since 2008, U.S. petroleum production has increased by 7 quadrillion Btu, with dramatic growth in Texas and North Dakota. Natural gas production has increased by 3 quadrillion Btu over the same period, with much of this growth coming from the eastern United States. Russia and Saudi Arabia each increased their combined hydrocarbon output by about 1 quadrillion Btu over the past five years.

The EIA notes that petroleum and natural gas hydrocarbon production estimates for the United States and Russia for 2011 and 2012 were roughly equivalent—within 1 quadrillion Btu of one another. In 2013 the production estimates widen out, with the United States expected to out-produce Russia by 5 quadrillion Btu.

As to prices, the EIA’s Annual Energy Outlook, 2013 notes that Henry Hub spot natural gas prices remain below $4 per million Btu (2011 dollars) through 2018 in the AEO2013 Reference case. The resilience of drilling activity, despite low natural gas prices, is partially a result of high crude oil prices, which significantly improve the economics of natural gas plays that have relatively high liquids content.

After 2018, the EIA projects natural gas prices to increase steadily as tight gas and shale gas drilling activity expands to meet growing domestic demand for natural gas and offsets declines in natural gas production from other sources. Henry Hub spot natural gas prices (in 2011 dollars) are seen reaching $5.40 per million Btu in 2030 and $7.83 in 2040.

In AEO2013, oil prices are represented by spot prices for Brent crude. Prices rise in the Reference case from $111 bbl in 2011 to about $117 bbl in 2025 and $163 bbl in 2040. The price rise starts slowly but accelerates toward the end of the projection period. In the AEO2012 Reference case, where oil prices were represented by the West Texas Intermediate (WTI) spot price, prices rose more sharply in the early years and more slowly at the end of the projection period.

AEO2013 also presents the annual average WTI spot price of light, low-sulfur crude oil delivered in Cushing, OK, and includes the U.S. annual average refiners’ acquisition cost (RAC) of imported crude oil, which is more representative of the average cost of all crude oils used by domestic refiners. In 2011, the WTI and Brent prices differed by $16 per bbl.

In the AEO2013 Reference case, the gap closes to a difference of $2 per bbl in 2025, following resolution of transportation system constraints in the United States. In each of the other outlooks in the comparison, oil spot prices are based on either Brent or WTI prices, with the exception of IEA, which represents the international average of crude oil import prices.

The projections for 2025 range from $78 bbl (WTI) to $137 bbl (Brent) in 2025 – a span of $59 bbl – and from $81 bbl (WTI) to $163 bbl (Brent) in 2040—a span of $82 per bbl. The wide range underscores the uncertainty inherent in the projections. The range of the projections is encompassed in the range of the AEO2013 low and high oil price cases, from $68 bbl (WTI) to $173 bbl (Brent) in 2025 and from $71 bbl (WTI) to $213 bbl (Brent) in 2035.

Liquids’ Top Ten. In this section, only six companies retained their top 10 ranking. Once again, Colonial claimed the first place with 885,333,000 in terms of barrels delivered per year. The second spot was claimed by newcomer Plains Pipeline, reporting 839,804,000, while the third position was claimed by Marathon with a total of 719,863,000. ExxonMobil Pipeline moved from sixth to claim fourth with 693,129,000.

Enbridge Energy Partners joined this year’s top ten to claim the fifth position with 620,397,000. The sixth through eighth positions were claimed by the following companies: ConocoPhillips Pipeline, 523,188,000; Magellan Pipeline Company, 482,403,000; and Enterprise Crude Pipeline, 480,998,000.

Joining the top ten to claim ninth was Sunoco Pipeline, reporting deliveries of 441,184,000. Ranked tenth is Shell Pipeline Company with 423,201,000.

Distribution’s Top Ten. Few changes are seen in this year’s distribution section in terms of total gas customers. Southern California Gas again claimed the first spot, reporting 5,800,000 customers. AGL Resources ranked second with 4,459,000. Third ranked is Pacific Gas & Electric with 4,300,000. The fourth through sixth ranks were claimed by National Grid at 3,465,997, followed by fifth-ranked CenterPoint Energy Operations at 3,305,108 and Atmos Energy with 3,137,298. Claiming the seventh through tenth spots are: ONEOK, 2,101,399; Xcel Energy, 1,900,000; Southwest Gas, 1,848,225 and Public Svc. Electric & Gas, Gas Delivery, 1,800,000.

Gas Transmission’s Top Ten. Little change is seen in this year’s top ten gas transmission companies in terms of miles of pipeline operated. In fact, the first nine positions remained unchanged, with DCP Midstream claiming the number one spot with 63,251. The following eight ranks were retained by: Northern Natural Gas, 14,949; Tennessee Gas Pipeline, 13,494; El Paso Natural Gas, 10,234; Columbia Gas Transmission, 9,708; ANR Pipeline, 9,549; Texas Eastern Transmission, 9,505; Transcontinental Gas Pipeline, 9,241 and the Natural Gas Pipeline Co. of America, 9,184. Dominion moved from the number 12 spot last year to claim the tenth position with 7,503.

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