Kara Brighton Commissioner Wyoming Public Service Commission November 14 2016 Todays Presentation Wexpro I Wexpro II Property 2 Cost of Service Gas vs The Market Wexpro Cost of Service Gas ID: 561509
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Slide1
Gas Hedging – Do Low Natural Gas Prices Support Scaling Back Hedging Programs at Local Distribution Companies?
Kara Brighton, Commissioner
Wyoming Public Service Commission
November 14, 2016Slide2
Today’s Presentation
Wexpro I
Wexpro II
Property 2
Cost of Service Gas vs. The MarketSlide3
Wexpro Cost of Service Gas
Wexpro I Stipulation – October 14, 1981
Resolved a dispute regarding the proceeds derived from oil production and provided a framework for cost of service gas production.
Wexpro II Stipulation – September 12, 2012
Includes new production to replace depleting resources in the Wexpro I Stipulation
Property 1 added in March 2014
Property 2 added in February 2016
Guideline letters - Parties
to the Stipulations engage in
a Guideline letter process
to address
emerging operational
and accounting issues. Slide4
Guideline Letter Examples
May 29, 1992 – Replacement Index Methodology for Determining Base Rate of Return
February 20, 2004 – Adoption of Financial Accounting Standards Board Statement No. 43, Accounting for Asset Retirement Obligations
July 20, 2016 – Letter Governing Commercial Well Designations Slide5
Wexpro II Property Acquisition
Wexpro acquires properties at its own risk
Must file with WPSC/UPSC to include all properties in the Development Drilling Areas of the Wexpro I Stipulation
Right of First Refusal alleviates the concern that Wexpro wouldn’t offer best performing properties under Wexpro II
The applications are processed in 60 daysSlide6
Wexpro II Properties
A party
may
petition the
Commission
to re-examine the current terms of the
Stipulations
and request modification
.
The
Commission
may open an investigation to
re-assess
the
Stipulations.Slide7
Manage to 65% of the Questar Portfolio
If the market price for natural gas is less than the
cost-of-service
gas on a per
Dth basis
, the amount of gas produced above 65% of the annual demand of Questar
is credited
back to customers through the 191
Account.
The credit
back to customers is calculated at the higher of market price or
cost-of-service
price to hold customers harmless for the
gas produced
above the 65% threshold
.
Wexpro may sell cost-of-service production at any time during the year to manage to the 65% threshold
.
The
credit is recorded
in the 191
Account annually.Slide8
Manage to 65% of the Questar Portfolio
If Wexpro's production volumes exceed the amount Questar can use or put into storage in a cost-effective manner, Questar will minimize costs to customers by evaluating whether to sell
cost-of-service
production or to shut-in cost-of-service production
.
If the
estimated sales
price is greater than the estimated
of
cost-of-service gas, Questar will direct Wexpro to sell cost-of-service production
.
If the sales price is less than the estimated
cost-of-service
gas minus shut-in cost, Questar will shut in the cost-of-service production.Slide9Slide10
Wexpro I
Wexpro IISlide11
Wexpro II
Prop1
Prop2Slide12
Wexpro Agreement Documents
https://
www.questargas.com/AboutUs/WEXDocs.phpSlide13
Questions?
Kara Brighton, Commissioner
Wyoming Public Service Commission
Kara.Brighton@wyo.gov
(307) 777-7427