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Abstract: Wellhead to Megawatts

CHAMBERS, CHARLES, Calpine Natural Gas Company, Houston, TX; KEN BARROW, Calpine Natural Gas Company, Denver, CO

Power deregulation has sparked significant demand for natural gas as the fuel of choice. Calpine leads the power industry with the largest construction and development program in the U.S. Currently, Calpine has 44 plants in operation, which generate 3,355 megawatts. In addition, 10 projects are under construction and 11 facilities are in announced development, adding another 10,654 megawatts by 2003. By the end of 2004, Calpine expects to generate 25,000 megawatts.

At year end 2004, Calpine's annualized gas usage will be 1.3 trillion cubic feet, with a gas bill of $3.7 billion, which represents 5% of domestic deliverability. Calpine's fuel bill will equal 60% of its cost of doing business.

Calpine's strategy is to secure natural gas through 1.) long-term contracts, 2.) strategically located gas reserves and 3.) midstream assets. Our current daily gas requirement is 440 million cubic feet. By year end 2004 Calpine expects to increase its daily consumption to 3.5 billion cubic feet.

Currently, Calpine Natural Gas owns and operates 230 BCF of proved reserves, over 75 % of which are in the Sacramento Basin. To meet our goals, we expect to acquire an additional 250 BCF of proved reserves by year end 2000 and own a total of approximately 1.6 TCF by year end 2003.

The Sacramento Basin represents the best example of Calpine's strategy, i.e., owning upstream, midstream, and downstream assets. This synergy provides a competitive advantage by access to less expensive fuel and by reducing gathering and marketing costs.

AAPG Search and Discovery Article #90911©2000 AAPG Pacific Section and Western Region Society of Petroleum Engineers, Long Beach, California