Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Faisel Khan – Citigroup.
Faisel Khan – Citigroup
A question on cap ex for next year, if we run the math on the cap ex for next year and your operating cash flows and you commodity price deck and you guys have said that you would probably tap some of your revolving credit capacity. In this market given the credit markets does it make sense to be that aggressive on the cap ex front? I guess, how much flexibility do you guys have on that front if you had to ramp it down?
Keith O. Rattie
Faisel, we think we have a lot of flexibility and we tend to manage this very carefully. Obviously, if prices fall further from current levels and it looks like our cash flow from operations is going to be less than what we expect, we clearly will adjust capital spending further. I want to make a couple of points though, we as I mentioned in the call, only about 20% from our cash flow from operations is really exposed to a falling natural gas drip, number one.
Number two, in the 2009 plan particularly in the E&P business Chuck and his team have assumed that cost remain flat with what we’ve seen and what in retrospect looks like an overheated market this year. I have a lot of confidence in the operational capability of our asset managers to find ways to cut our costs and we’re always seeing as a trend in the third quarter signal a downward movement in all the costs that ultimately aggregate up to well costs.
But, we’re going to manage this very carefully. We think we have sufficient liquidity to operate under this plan. The board and I and the management team focused extensively on that question in the board meetings we held earlier this week but as you’ve heard we do have the ability to adjust either downwards or upwards as market conditions dictate.
Faisel Khan – Citigroup
Then just on the Rockies export pipelines, if for whatever reason your proposal did not become the front runner for a new export pipeline to move gas east would you submit some of your E&P volumes to whatever the export pipeline was to move gas east?
Stephen E. Parks
Well, we think the right market for the east bound pipeline is straight to Chicago and we do think we are the front runner Faisel. We had over 500 million cubic feet a day of initial subscription in the open season but you’ll recall the original RAPP project was routed basically northeast out of the Rockies to interconnects on northern border and alliance pipeline. We heard from Rockies producers in the open season that they didn’t want to go to an intermediary delivery point, they wanted to go to a large liquid market, i.e. the [Joliette] hub in Chicago which delivers in to multiple pipelines that take gas into Canada and on to big markets in the upper Midwest.
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