CenterPoint Energy 2012 Annual Report Download - page 14

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Interstate Pipelines
& Field Services
Our midstream business was challenged
by a mild winter, lower natural gas prices,
an oversupply of pipeline capacity and
increased competition, yet posted solid results.
We completed two strategic transactions,
increased our capabilities and more efficiently
managed operations.
Interstate Pipelines
For the year, operating income was
$207 million, down from $248 million
in 2011. Equity income from our 50 percent
interest in the Southeast Supply Header
totaled $26 million, up from $21 million.
We continue to execute our long-term
strategy of securing power generation
business. Last year, throughput to
ourgeneration customers increased
30percent to more than 101 billion
cubicfeet.
Value from Integrating
We began a major integration eort that will
consolidate our pipeline commercial
operations groups. This investment willallow
us to serve customers more eectively and
optimize our assets, giving us the flexibility to
adapt quickly to changes in the industry and
regulatory environment. State-of-the-art
automation will provide our employees and
customers with greater access to near real-
time operational data, such as pipeline flows
and available capacity. This will improve our
ability to identify and take advantage of new
service opportunities that will drive growth.
We expect to complete the integration in the
third quarter of 2013.
Field Services
For the third consecutive year, operating
income increased in our field services
business. However, well connects were
downdue to lower natural gas prices and
decreased drilling activity in our footprint.
Operating income was $214 million,
compared with $189 million in2011.
Volume commitments and guaranteed
returns negotiated into our major contracts
provided a boost to income. Atrack
record of exceptional customer service
has provided us with opportunities to
pursue new projects.
Value from Growth
Closing on two major transactions in north-
east Texas also helped us grow in ahighly
competitive market and expandedour
capabilities in a liquids-rich production area.
We completed a $273 million acquisition of
gathering and processing assets, including
a50 percent interest in the Waskom Gas
Processing Company, giving us 100 percent
ownership of the business. Waskom
providescustomers with several natural gas
transportation options, including our CEGT
and Carthage-to-Perryville pipelines. Also,
the rail loading facility gives customers
increased access to premium natural gas
liquids markets. This acquisition positions
usas a primary operator of key processing
assets in the region.
By completing the baseline assessment
ofour pipelines located in high consequence
areas, we achieved a major safety milestone.
These are areas where a natural gas pipeline
failure could have significant impact on public
safety or the environment. The 10-year
project included more than 400 evaluations
on over 180 miles of interstate pipeline, as
well as reviewing an additional 2,600 miles of
pipeline in non-high consequence areas. As
part of our ongoing commitment to safety,
we will continue to enhance our strong
pipeline integrity management program.
Our two major interstate pipelines have
bothbegun to pursue new rates to recover
increases in the cost of service and
mechanisms for recovering additional
expenses associated with security, safety and
environmental requirements. The Mississippi
River Transmission pipeline request for an
increase in rates is expected to be finalized
inthe third quarter of 2013. CenterPoint
Energy Gas Transmission (CEGT) pipeline
isin pre-filing discussions with customers
about a new rate structure.
We worked to shape legislation as a company
and through industry organizations such as
the Interstate Natural Gas Association of
America. The Pipeline Safety Reauthorization
Act, which was signed into law in early 2012,
iscritical to maintaining the safety of our
nation’s natural gas pipelines and increasing
public confidence in our energy infrastructure.
With INGAA, we will continue to take a
leadership role in helping ensure any future
regulations are prudent and supportive of
ourindustry.
12
VALUE from VISION // CENTERPOINT ENERGY 2012 ANNUAL REPORT