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Pipeline Economics and Successful Joint Ventures
The pipeline gathering and transmission business in the US generates a little more than $30 billion annual revenue, a small number when compared to the overall economy. But, given the large asset base these revenues generate a healthy margin. Revenues, expenses, and asset base, the three largest financial levers are each discussed along with current rate setting mechanisms. The section on project economics covers IRR, NPV and accretion calculations. Additional time is allocated to Master Limited Partnerships – what made them possible, popular, and profitable for the limited and especially the general partner. The module concludes with recommended practices for establishing joint ventures.
Students are expected to gain a general knowledge of the ways in which MLPs are formed and operated, the reason pipeline purchase multiples have about doubled over the past 20 or so years, along with a general understanding of pipeline revenues and expenses along with rate calculations, an understanding of how to value pipeline assets, and the basics of joint ventures. Topics include the following:
• Expected value
• Traditional project economics
• Cash flow and IRR calculations
• The game changer – MLPs
• MLP structure
• Limited partner economics
• General partner economics
• The evolving MLP structure
• Financial levers
• Rate setting mechanisms
• Cost of service calculations
• Cost of service example
• Natural gas services and rates
• Managing expenses
• Economics of non-return projects
• Performing pipeline appraisals
• Appraisal example
• Reasons for joint ventures
• Potential challenge of joint ventures
• Best practices
Learners who successfully complete this course will receive a certificate of completion for 1.0 professional development hours.
This class is taught by Tom Miesner, an oil and gas pipeline veteran who spent a quarter of his career actively engaged in pipeline strategy, business development, and joint ventures. It is intended for those who want to understand the basics of pipeline economics and joint ventures.
The intended audience for this class includes:
• Oil and gas pipeline company new employees
• Current oil and gas pipeline company employees who want to better understand the economic drivers of their industry
• Investment professionals who are considering investing in pipeline assets or companies
• Pipeline support personnel such as those in accounting, finance, HR, legal, supply chain, and risk management functions
• Suppliers and vendors who need to understand pipeline economics
• Outside attorneys
• Legislatures and regulators
• Members of the public who want to learn more about energy pipelines
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