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El Paso Will Spend $4.1 Billion in 2010 on Gas Pipelines
El Paso Corp. will follow through on its plan to spend $4.1 billion on natural gas pipelines and exploration next year, despite the slow economy, according to a Dec. 10 announcement of the company’s financial and operational outlook for 2010.
El Paso expects a cash flow of $1.6 billion to $1.8 billion from operations, which means the company will spending more than it earns next year, but the company expects its spending to pay off in 2012, according to a report by the Wall Street Journal.
Included in the $4.1 billion in capital spending, $2.9 billion will be allocated to the El Paso’s Pipeline Group, and $1.1 billion will go toward gas exploration and production.
"El Paso is finishing one of its best years ever operationally," says Doug Foshee, chairman, president and CEO of El Paso. "Our pipelines continue to execute extremely well on the construction of our committed backlog, while developing new opportunities for future growth, such as the Marcellus Shale. Our [exploration and production] business has had an excellent year, as domestic operations have exceeded expectations with the advancement of our Haynesville, Eagle Ford and Altamont programs. We enter 2010 with excellent momentum, and during our investor and analyst meeting today, we will touch on the robust outlook we have for the next several years."
El Paso's Pipeline Group will operate with a $2.9 billion capital budget, with approximately $0.5 billion of that going toward maintenance capital and $2.4 billion allocated for growth projects, including $1.7 billion for 100 percent of Ruby Pipeline Project, a 675-mile natural gas pipeline. The Pipeline Group has an industry-leading backlog of committed pipeline and LNG projects, most of which will be placed into service by the end of 2011. A significant amount of the construction and materials price risk of these projects has been mitigated. El Paso expects to deliver its construction backlog on time and on budget.
El Paso Exploration & Production expects to spend approximately $1.1 billion in 2010, with $0.9 billion allocated to domestic programs. Roughly half of domestic capital will be allocated to the Haynesville Shale, Eagle Ford Shale and Altamont oil programs. During today's investor and analyst meeting, the company will show that its risked unproved resources have grown sharply, and now total almost 5 trillion cu ft equivalent.
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