Northern Border Partners, L.P.
Northern Border Partners’ primary asset
is its 70% interest in the Northern Border Pipeline Company (the other 30% is
held by another PTP, TC PipeLines, L.P.).
However, thanks to a number of recent acquisitions, its business
operations have expanded; and it now operates in three separate segments:
interstate natural gas pipelines, natural gas gathering and processing, and a
coal slurry pipelines.
Natural
Gas Pipelines
The
Northern Border Pipeline Company owns
a 1,249-mile United States interstate pipeline system that transports natural
gas from the Montana-Saskatchewan border to natural gas markets in the
Midwestern United States. This pipeline
system connects with multiple pipelines, which provide more than 40 shippers
with access to the various natural gas markets served by those pipelines. Initially constructed in 1982, the pipeline
has undergone several expansions and extensions, the most recent in 2001. In the year ended December 31, 2003,
Northern Border Pipeline transported approximately 22% of the total amount of
natural gas imported from Canada to the United States.
The
pipeline system has pipeline access to natural gas reserves in the western
Canadian sedimentary basin in the provinces of Alberta, British Columbia, and
Saskatchewan in Canada, as well as the Williston Basin in the United
States. It also has access to synthetic
gas produced at the Dakota Gasification plant in North Dakota.
The
system consists of 822 miles of 42-inch diameter pipe designed to transport
2,374 million cubic feet per day from the Canadian border to Ventura, Iowa;
30-inch diameter pipe and 36-inch diameter pipe, each approximately 147 miles
in length, designed to transport 1,484 million cubic feet per day in total from
Ventura, Iowa to Harper, Iowa; and 226 miles of 36-inch diameter pipe and 19
miles of 30-inch diameter pipe designed to transport 844 million cubic feet per
day from Harper, Iowa to a terminus near Manhattan, Illinois (Chicago area) ;
and 35 miles of 30-inch diameter pipe designed to transport 545 mmcfd from
Manhattan, Illinois to a terminus near North Hayden, Indiana. Along the pipeline there are 16 compressor stations
with total rated horsepower of 499,000 and measurement facilities to support
the receipt and delivery of gas at various points. Other Northern Border facilities include four field offices and a
microwave communication system with 51 tower sites.
At
its northern end, the pipeline system is connected to TransCanada's
majority-owned Foothills Pipe Lines Ltd. system in Canada, which is connected
to the Alberta system, owned by TransCanada, and the pipeline system owned by
Transgas Limited in Saskatchewan. The
pipeline system also connects with facilities of Williston Basin Interstate
Pipeline at Glen Ullin and Buford, North Dakota, facilities of Amerada Hess
Corporation at Watford City, North Dakota and facilities of Dakota Gasification
Company at Hebron, North Dakota in the northern portion of the pipeline system.
The
pipeline system serves more than 40 firm transportation shippers with diverse
operating and financial profiles. Based upon shippers' contractual obligations,
as of December 31, 2003, 94% of the firm capacity is contracted by producers
and marketers. The remaining firm capacity is contracted to local distribution
companies (5%) and interstate pipelines (1%).
All of Northern Border Pipeline's capacity was under contract through
December 31, 2003 and, assuming no extensions of existing contracts or
execution of new contracts, approximately 70% and 59% is under contract through
December 31, 2004 and 2005, respectively
Northern
Border Partners also owns Midwestern Gas
Transmission, which it acquired
on May 1, 2001 from El Paso Corporation for approximately $102 million. The Midwestern Gas Transmission system
extends from an interconnection with Tennessee Gas Transmission near Portland,
Tennessee to a point of interconnection with several interstate pipeline
systems near Joliet, Illinois. Midwestern Gas Transmission serves markets in
Chicago, Kentucky, southern Illinois and Indiana. The Midwestern Gas Transmission system consists of 350 miles of
30-inch diameter pipe with a capacity of 650 mmcfd for volumes transported from
Portland, Tennessee to the north. The
system is also capable of moving approximately 350mmcfd southbound, depending
upon receipt and delivery point locations.
There are six compressor stations capable of generating 70,170
horsepower.
The
Midwestern Gas Transmission system connects with multiple pipeline systems that
provide its shippers access to various markets served by those pipelines. Because of its position in the U.S. grid,
Midwestern Gas Transmission is configured to receive gas volumes at both ends
of its system. In the north end,
Midwestern Gas Transmission can receive gas from ANR Pipeline Company, Northern
Border Pipeline, Natural Gas Pipeline Company of America, Alliance Pipeline,
The Peoples Gas Light and Coke Company and Trunkline Gas Company. The significant receipt point on the
southern end of the system is the interconnection with Tennessee Gas
Transmission at Portland, Tennessee.
Additionally, Midwestern Gas Transmission is capable of receiving gas at
five other interconnections along its pipeline system. With respect to market access, Midwestern
Gas Transmission is capable of delivering natural gas at points of
interconnection with the interstate pipeline systems of ANR Pipeline Company,
Guardian Pipeline, L.L.C., Natural Gas Pipeline Company of America, Northern
Border Pipeline, and Texas Gas Transmission Company as well as interconnections
with local distribution companies. In
addition, a number of end users and electric power generation facilities can be
served by connections off the pipeline system.
In January 2003 Northern Border acquired the Viking Gas Transmission Company, including a one-third interest in Guardian Pipeline, L.L.C. The Viking Gas Transmission system extends from an interconnection with TransCanada near Emerson, Manitoba to an interconnection with ANR Pipeline Company near Marshfield, Wisconsin and has interconnections with Northern Natural Gas Company and Great Lakes Gas Transmission to serve markets in Minnesota, Wisconsin and North Dakota. The system contains 499 miles of mainline pipe and 174 miles of looping and lateral pipes, along with 8 compressor stations with a total horsepower of 68,650. The Viking Gas Transmission system serves over 40 firm transportation shippers. Based upon shipper contractual obligations as of December 31, 2003, approximately 81% of the firm transportation capacity is contracted by local distribution companies, 12% by marketers and 7% by end-users.
Guardian Pipeline is a 141-mile interstate natural gas pipeline system that went into service on December 7, 2002. This system transports natural gas from Joliet, Illinois to a point west of Milwaukee, Wisconsin. Subsidiaries of Wisconsin Public Service and Wisconsin Energy Corporation hold the remaining interests in this system. Wisconsin Gas Company, a subsidiary of Wisconsin Energy Corporation, has contracted for 87% of the pipeline's 750 mmcfd capacity. Guardian Pipeline is currently operated by Trunkline Gas Company, which is part of the Panhandle Companies. Northern Plains Natural Gas Company, a general partner of Northern Border, has been selected to be the operator of Guardian Pipeline effective July 1, 2004.
Natural Gas Gathering and Processing
Northern
Borders’ gas gathering and processing segment provides services for the
gathering, treating, processing and compression of natural gas and the
fractionation of natural gas liquids ("NGLs") for third parties and
related field services. Properties in
this segment include:
Ø
Bear Paw Energy, L.L.C., acquired in March 2001.
Bear Paw, which has extensive gathering and processing operations, will
become part of the Partnership’s U.S. midstream business. Bear Paw owns approximately 600 miles of
high and low pressure gathering pipelines in the Powder River Basin in Wyoming
and has approximately 226,000 leasehold production acres under dedication. In the Williston Basin in Montana, North
Dakota and Saskatchewan, Bear Paw owns over 3,000 miles of gathering pipelines
and four processing plants with 90 MMcf/d of capacity.
Ø
Crestone Energy Ventures, a wholly-owned subsidiary of Northern Border, holds
ownership interests in various Rocky Mountain properties, including a 100
percent ownership of Crestone Gathering Services; a 49 percent interest in
Bighorn; a 33 percent interest in Fort Union; and a 35 percent interest in Lost
Creek. These entities collectively own over 300 miles of gas gathering
facilities in Wyoming. Crestone Gathering
Services provides gas gathering services to third parties and
the facilities connect to the interstate gas pipeline grid serving gas markets
in the Rocky Mountain, the Midwest and California. Following the Bear Paw acquisition, its gathering facilities in
northeastern Montana were integrated with those of Crestone Gathering. Between the two this comprises approximately
1,100 miles of high and low pressure gathering pipelines, approximately 71
compressor stations with approximately 114,000 installed horsepower and
long-term volumetric contracts with producers covering approximately 300,000
acres of dedicated reserves in the Powder River Basin.
Ø
The Bighorn and Fort Union systems gather coal bed methane gas produced
in the Powder River basin in northeastern Wyoming. The Bighorn system consists
of approximately 90 miles of pipeline running from southwest of Gillette to
north of Spotted Horse, Wyoming and 12 compressor facilities in various stages
of completion. The Bighorn system is capable of gathering more than 250 mmcfd
of natural gas for delivery to the Fort Union gathering system. The Fort Union gathering system is capable
of delivering more than 634 MMcf/d of natural gas into the interstate pipeline
grid. Fort Union facilities include a
gathering trunkline with 103 miles of 24-inch pipeline from Gillette to
Glenrock, Wyoming and a CO2 extraction plant.
Bear
Paw Energy's and Crestone Gathering's facilities are interconnected with the
facilities of Bighorn and Fort Union, and all the gathering facilities interconnect
to the interstate gas pipeline grid serving gas markets in the Rocky Mountains,
the Midwest and California.
Ø
The Lost Creek system gathers natural gas
produced from conventional gas wells in the Wind River basin in central Wyoming
and consists of 106 miles of gathering header.
Facilities include 106 miles of 24-inch pipeline extending from the
Madden field in the 39 miles, 5,000 HP of electric compression and a
hydrocarbon decontrol plant. The system is capable of delivering more than 275
MMcf/d of production into the interstate pipeline grid.
Ø
Canadian Midstream Business Northern Border owns, through a wholly-owned subsidiary,
Border Midstream Services, an interest in the Canadian Midstream business
consisting of the Mazeppa Plant, the Gladys Plant, and a minority interest in
the Gregg Lake/Obed Pipeline, all of which are located in Alberta, Canada. The
Mazeppa Plant is a sour gas processing plant with 80 mmcfd of capacity and
pipelines consisting of 115 miles of gathering systems. The Gladys Plant is a
sour gas processing plant with 10 mmcfd of capacity. The Gregg Lake/Obed
Pipeline consists of 85 miles of gathering lines with a capacity of 150 MMcf/d.
Coal
Slurry Pipeline
Through the Black Mesa Pipeline
Pipeline Company, a wholly-owned subsidiary, Northern Border owns a 273-mile,
18-inch diameter coal slurry pipeline which originates at a coal mine in
Kayenta, Arizona. The coal slurry
pipeline transports crushed coal suspended in water. It traverses westward
through northern Arizona to the 1,500 megawatt Mohave Power Station located in
Laughlin, Nevada. The coal slurry
pipeline is the sole source of fuel for the Mohave Power Station, which
consumes an average of 4.8 million tons of coal annually. The capacity of the pipeline is fully contracted
to the coal supplier for the Mohave Power Station through the year 2005.
Northern Border’s business strategy
is focused on growing its businesses, its income and cash flow, and its
distributions to unitholders. The strategy involves three main components:
Ø
Continue
to focus on safe, efficient, and reliable operations and the further
development of the company’s regulated pipelines. Northern Borders intends to maintain its position as a low cost
transporter of Canadian gas to the Midwestern U.S. and provide highly valued
services to its customers.
Ø
Developing
its gas gathering and processing segment, where it is building on its
established business relationships with producers and marketers in the Canadian
and Rocky Mountain supply basins.
Ø Continuing to acquire
complementary businesses, with a goal of approximately $200 to $250 million of
capital expenditures annually in growth through acquisitions and internal
development. Northern Border targets businesses
that leverage its core competencies of energy transportation, are conservative
in terms of commodity price risk, are located in the U.S. and Canada, and
provide immediate earnings and cash flow contribution. The focus will be on acquisitions of natural
gas assets including interstate and intrastate natural gas pipelines, storage
facilities and gathering and processing assets. Northern Border anticipates financing its capital expenditures
and acquisitions conservatively through an appropriate mix of additional
borrowings and equity issuances.
Northern Border Partners trades on
the New York Stock Exchange under the symbol NYSE/NBP. For more information, visit northern
Borders’ website at http://www.northernborderpartners.com/
or contact Ellen Konsdorf, Director of Investor Relations, at 402-492-7500, or
e-mail [email protected].
Financial Information from 2003 10-K
(in thousands, except per
unit amounts)
|
2003 |
2002 |
|
|
|
Market
Value* |
$1,802,118 |
$1,373,496 |
Current
Assets |
$114,195 |
$100,157 |
Net
Property, Plant & Equipment |
$1,992,104 |
$2,015,280 |
Total Assets |
$2,570,583 |
$2,715,936 |
Current Liabilities |
$106,922 |
$176,221 |
Long-Term
Debt |
$1,408,246 |
$1,335,978 |
Partners’
Equity |
$800,573 |
$944,035 |
Revenues |
$555,927 |
$495,617 |
Operating
Income |
$11,937 |
223,359 |
Net Income |
$(88,454) |
$113,676 |
Net Income/Unit |
$(2.08) |
$2.44 |
Distribution
/ Unit |
$3.20 |
$3.20 |
High unit
price |
$44.07 |
$45.50 |
Low unit
price |
$35.98 |
$29.30 |
*As of June
30, 2003 and June 28, 2002 |
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