I have an idea

Mount McKinley
----- Forwarded by Rick Suderman/Bakersfield/Eott on 01/26/01 07:19 AM
-----

Rick Suderman
To: Rich Jolly/ET&S/Enron@ENRON
11/27/00 cc:
11:35 AM Subject: I have an idea

Rich,

I have an idea. It is a little far fetched, but could potentially make
Enron 100MM in the first year so hear me out.

At the regional meeting this month, I was interested in the discussions
about the gas delivery's to the California border, and how the pipeline was
running at capacity. When I heard the potential of dollars that could be
made If we only had more capacity, I was shocked. This will hopefully be a
way to increase your MMBTU delivery without major expense. Someone might
have already looked at this, but if not, it might be worth the time.

Although the pipeline is full of MCF's it has room if you look at BTU's. I
received an analysis of the gas delivered to the border and found it was
running at 1015 BTU, with less than %.5 C3+. With the SoCal limit of C3+ at
%3, there is room to inject %2.5 C3+ and raise that BTU value.

The Idea is to use rail cars to transport Normal Butane (or any other NGL
that proves cost affective) to the California border, vaporize the liquid,
and inject the vapor into the pipeline up-stream of the custody meter to
SoCal Gas.

I know there is rail access in the area, so this should not be an issue. We
off-load the product, and vaporize it using heaters, or the more efficient
way is to use waste heat from a turbine engine. We then compress the vapor
and introduce it into the pipeline. My estimates are we can off-load up to
52 rail cars per day, vaporize the butane and compress the 50 MCF/day of
gas to pipeline pressure. This will raise the C3+ number to approximately
%2.75 just under the SoCal spec. The 52 rail cars of Butane will introduce
another 160,000 MMBTU per day but only raise your volume by 50MMCF, hardly
noticeable when you are at 2.2BCF. This idea will work at any facility
along the pipeline system that is a large delivery.

The C3+ that has the largest impact is Normal Butane due to is relatively
low cost and high BTU value. I am not sure what the Butane market is in
other areas, but we are selling Normal currently for .65c. /gal, and this
is abnormally high for California. The value of Normal Butane used in the
spreadsheet is .65c, the contract price currently used at the NCL plant.

I assumed .05c per gallon for operating cost. This number is conservative
as our operating cost at the NCL plant is .035c - .04c per gallon with full
fractionation. This number includes fuel necessary for vaporizing the
Butane, employees, etc. This operating cost number will drop dramatically
if we are able to use waste heat from a turbine. Most of the cost is fuel
necessary to run the heater.

The price used for sales gas is what I am not sure about. The price of
$8.50 /MMBTU is the number I have heard will hold for at least the next
year at the Cal. border, and possibly go up. No one knows if this is
sustainable for any length of time, but it is what I assumed for this
spreadsheet. (Notice the profit if you enter the gas value currently traded
at the Cal. border)

Take a look at the spreadsheet and hopefully it will clarify where I came
up with these numbers. All the BTU and MCF numbers for Normal Butane came
from the GPA Standard 2145 and all other numbers are my best guess. If you
find this an interesting idea, please forward to the appropriate people. I
would love to discuss it further so let me know what you think.

Rick

(See attached file: NGLasBTU.xls)

- NGLasBTU.xls