Interstate PipelinesPipelines: Annual Throughput Chart

Interstate Pipelines

Increasing Capacity and Contract Terms to Secure Future Earnings

Expanding our infrastructure and successfully renegotiating significant contracts, our midstream pipelines business had another good year. Operating income was $270 million in 2010, compared to $256 million in 2009. Additionally, we recorded equity income of $19 million from our 50 percent interest in a jointly owned pipeline in 2010, compared to $7 million in 2009.

We completed the fourth phase of our Carthage to Perryville pipeline ahead of schedule and below budget. The expansion boosted the capacity to approximately 1.9 billion cubic feet per day. New contracts related to the pipeline expansion and additional transportation agreements for natural gas-fired power plants were the main contributors to increased earnings for the year.

We executed a 10-year agreement with our natural gas distribution affiliate that helped contribute to an increase of 21 percent in our average contract term for our largest pipeline. We also received approval for new tariffs that allow us more flexibility to better support our power generation customer needs in the summer when local natural gas distribution companies demand less gas.

We are making intelligent investments in new technology to enhance customer service, collaboration, innovation and communication. As a result, our customers will have more information on daily pipeline flows and capacity availability. We will also use this information to better manage and schedule pipeline capacity, operations and maintenance. In addition, we co-developed and use a variable speed in-line maintenance tool that cleans large diameter pipelines while minimizing customer impact.

As part of our pipeline integrity program, we completed more than 91 percent of high consequence area evaluations through 2010. We now have covered more than 2,300 miles of our more than 8,200-mile system, including approximately 2,100 miles by in-line inspection tools, or smart pigs.

Our workforce safety record continues to be strong, with 2010 results representing our best safety performance in four years.

We continue to seek opportunities in a changing economic landscape of lower gas prices and increased shale production. We are also preparing for possible increases in compliance expenditures as a result of proposed new environmental and pipeline integrity rules. While we do not anticipate major pipeline expansions in the near-term, we are actively seeking additional industrial and power plant customers on our core system.

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Interstate Pipelines System

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Our pipelines are in the mid-continent, strategically located near prolific shales.
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Interstate Pipelines Highlights

21%
We increased our average contract term by 21 percent on our largest pipeline and 11 percent overall.

Interstate Pipelines Highlights

8,200 Miles
We own and operate more than 8,200 miles of pipeline near prolific shale areas.

Interstate Pipelines Highlights

91%
As of the end of 2010, more than 91 percent of high consequence areas were evaluated in our pipeline integrity program.



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