Subject: confidential - - re : august 24 tw conference call minutes
following up on my " to do " from our conference call , the information below
may be useful as we attempt to justify capital / operational expenditures on
the tw system :
objective : try and quantify in revenue terms the lost value of decreased
west throughput to tw
first a few assumptions :
fuel prices used were : permian = $ 4 . 785 / mmbtu and san juan = $ 4 . 14 / mmbtu
baseload volume flowing west was assumed to be 1 , 090 , 000 mmbtu / d
fuel consumed = 2 %
revenue impact is based upon current contracts and assumes lost fuel and
commodity charges only . tw continues to collect the reservation charges .
result :
based on current gas fuel prices , for every 1000 mmbtu / d delivery we lose on
the west end , this translates to approximately $ 150 / day of lost revenue . if
we assume the pressure drop at station 1 is preventing us from delivering
25 , 000 mmbtu / d into socal , then the lost revenue for tw would be $ 3 , 305 per
day or $ 1 , 206 , 000 per year . to give you an idea of the significance of the
fuel value , of the $ 3 , 305 daily revenue , approximately $ 3 , 072 of it is fuel
related .
one more thing :
we assume here that tw continues to collect the reservation charges .
however , on a long term basis , if the west condition continues , we run the
risk of losing the reservation as well . based on 25 , 000 mmbtu / d , this value
equals $ 2 , 500 , 000 per year .
let me know if you have questions . i can be reached at 713 - 853 - 5559
kh