+
Natural Gas Midstream
December 12, 2012
Brent Breon
VP Business Development
+ Caiman Energy – Who Are We?
Caiman is a private equity based midstream development company focused on the
Appalachian Basin
 Initial private equity funding of $50 million – February 2009
 Increased equity funding to $380 million – July 2010
 Capitalized to $900 million - July 2011
 Built $750 million in Marcellus midstream infrastructure since October 2009
 $680 million in West Virginia (wet gas)
 $70 million in Pennsylvania (dry gas)
 Sold West Virginia assets to Williams for $2.5 billion – May 2012
 Continue central Pennsylvania operations
 Transition services for Williams
 Recapitalized with $800 million in private equity in July 2012
 Caiman Energy II
 Focused on Utica Shale development
2
+ Caiman Energy – Why are we here?
 Develop midstream infrastructure for the Utica Shale
 Needs are similar to Marcellus Shale
 Capital intensive infrastructure preceding cash flows
 Limits traditional sources of capital
 Ideal for Private Equity
 Leverage Marcellus experience
3
+ US Natural Gas and Oil Production
The development of techniques to produce oil and gas from shales has dramatically increased midstream
infrastructure needs across the US.
For every $1
spent on
upstream
activity, a
subsequent
$.15 to $.35
needs
invested in
midstream
infrastructure
4
+ US Natural Gas and Oil Production
The Marcellus, Eagle Ford, Bakken, Permian, Cana-Woodford, and Utica Plays will impact conventional
sources of natural gas and NGL production but will require significant infrastructure build out
Bakken
Utica
Marcellus
Permian
CanaWoodford
Eagle Ford
Source for map: EIA, 2004.
5
+ Everything Midstream and More!
6
Caiman Energy can complement our midstream services with marketing and
commodity transport relationships
Oil and Gas
Producer
Midstream
Services
Gas and NGL
Marketing
•
•
•
•
• Well Head Gathering
or Centralized
Gathering
• Measurement
• Dehydration
• Compression
• Processing
• Fractionation
• Condensate
Gathering
• Gas Marketing
• Natural Gas Liquids
Marketing
Geological
Drilling
Completing
Producing and
Separating
Residue and
Natural Gas
Liquids
Transportation
• Natural Gas
Transmission
• Y-grade
Transportation
• Purity Ethane,
Propane, and Butane
Transportation
+ Midstream Natural Gas Services
Source: Enterprise Products Partners
7
+Example Capital Spend: Ft. Beeler System






Annual Capital Investments
2010
$100 million
2011
$325 million
2012
$525 million
2013
$350 million
2014
$100 million
5-year cumulative capex
$1.4 billion
Capex Distribution
48%
52%
Gathering /
Compression
NGL
Infrastructure
8
+ Midstream Natural Gas Services
Dry Natural Gas:
 Meets interstate gas spec
 Below 1100 Btu
 Pipeline, compression, meter, and tap
Wet or Rich Natural Gas:
 Does not meet interstate gas specs
 Over 1100 Btu
 Requires processing to remove heavy
hydrocarbons
 Pipeline, meter, separation, cryogenic
processing, and fractionation
 Creates the most value from production
stream
9
+ Midstream Natural Gas Services
Services Utilized by Midstream:









Land Acquisition
Right of Way Acquisition
Environmental Permitting
Pipeline Construction
 Gathering
 Condensate
 Oil
 Residue Gas
Plant and Facility Construction
Safety Trailing
Reclamation
Lodging and Catering
Etc.
10
+ Gathering Pipeline
Pipelines gather natural gas, oil, and condensate to Processing Plant
Well Head
Gathering
Natural Gas
Oil/Condensate
11
+ Cryogenic Processing
Cryogenic processing strips valuable NGLs from the gas stream
Rich Gas
Processing
Residue Gas
NGLs
12
+ Fractionation
Fractionation separates the respective NGLs into discrete purity hydrocarbons
Ethane*
 Volatile NGL
 Market for ethane has strengthened as
petrochemicals have increasingly
switched to ethane as a feedstock
Propane
NGLs
Fractionation
 Various sources of demand:
 25% - residential market
 30% - petrochemical demand
 35% - commercial/industrial/agricultural
Butanes
 Iso vs. normal butane pricing and liquidity
differences
 Petrochem feedstock
 Ethanol blend stock
Pentanes+
 Blend stock of motor gasoline
 Highest priced NGL
* Ethane may be recovered or rejected by modern cryogenic processors.
13
+ Economics of Rich Gas
LEAN GAS NETBACK
$3.00 NYMEX
1 Mcf
Lean Gas
(1000 Btu)
$0.50
gathering fee
$3.25 DTI Appalachia
Net to Producer
1.00 MMBtu
$2.75/Mcf
RICH GAS NETBACK
(residue, processed liquids & condensate)
$3.25 DTI Appalachia
1.01 MMBtu
$3.00 NYMEX
$60/Bbl
1 Mcf
Rich Gas
.054 Bbl NGL
(1250 Btu)
$80/Bbl
$0.63
gathering fee
.015 Bbl
Condensate
$6.10/Mcf
$1.00
incremental fees
14
+ Thank You
EVERYTHING MIDSTREAM
Dallas Office:
5949 Sherry Lane
Suite 1300
Dallas, Texas 75225
214.580.3700
Ohio Office:
3500 Massillon Road
Suite 280
Uniontown, Ohio 44685
330.546.4609
Scott Williams
Brent Breon
VP – Business Development
SVP - Commercial
15