Bank of America 2008 Energy Conference. Fred Fowler President and CEO

Transcription

1 Bank of America 2008 Energy Conference Fred Fowler President and CEO November 13, 2008

2 Safe Harbor Statement Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additional information contained in Spectra Energy s Form 10-K and other filings made with the SEC concerning factors that could cause those results to be different than contemplated in today's discussion. Reg G Disclosure In addition, today s discussion includes certain non-gaap financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available at the end of this packet and on our website. 2

3 Strategically Located Assets 2007 Natural Gas Throughput 3.6 Tcf Miles of Transmission Pipe 18,000 Miles of Gathering & Processing Pipe 58,500 Miles of Distribution Pipe 37,000 Storage Capacity 265 Bcf Retail Customers 1.3 million 3

4 Third Quarter 2008 Excellent earnings in 3Q08 $0.49 ongoing fully diluted EPS 29% increase over 3Q07 Solid financial performance from all segments - robust commodity prices fueled Field Services and Western Canada earnings Completed share repurchase program in mid-august 2008 expansion projects substantially complete Healthy balance sheet and liquidity position 4

5 2008 Outlook and Beyond Expect to exceed our $1.56 ongoing, fully diluted EPS employee incentive target for 2008 Committed to dividend growth Increased by $0.04/share to $0.92/share in January 2008 Further increased by $.08/share to $1.00/share in July 2008 Continue to execute on Capex plans About $1 billion+ per year spending through projects substantially complete; $1.7 billion in-service during expansion projects expected to add $500 million in incremental annualized EBIT by 2011 Aggressively pursuing post-2010 opportunities 2008 Long Term Incentive 50% based on TSR relative to a peer group of companies for three years 5

6 Natural Gas Flows: Shifting Sources, Growing Demand Demand Volume CAGR : Combined SET Markets 2.5% Northeast 1.6% Southeast 4.1% Pacific Northwest 1.9% British Columbia 1.1% Ontario 1.5% Lower 48 States 1.6% Source: ICF International (Formerly EEA), January 2008 Emerging Shale Plays Supply Basins Major Spectra Energy Markets Supply Flows 6

7 Well-Positioned for Growth Expansion Opportunities Northeast Region Projects Tribute Storage In-Service 6/08- $35 MM Dawn Area Storage In-Service 1H09 / 2H09 $25 / $15 MM Dawn Storage Deliverability In-Service 1/09 - $120 MM Dawn Trafalgar (Phase III) In-Service 12/08 - $75 MM TEMAX In-Service 2H10 M&NE Phase V In-Service 2H10- $255 MM M&NE Phase IV In-Service 11/08 - $320 MM AGT East West In-Service 2H09 - $395 MM Algonquin J-2 In-Service 2H09 - $35 MM Islander East In-Service Post 2010 NYC Extension In-Service Post 2010 Ramapo In-Service 11/08 - $260 MM TIME III In-Service 2H10 Steckman Ridge In-Service 1H09 - $140 MM Northern Bridge In-Service 2H09 - $45 MM TIME II (Phase II) In-Service 11/08 - $90 MM Lebanon Connector In-Service Post 2010 Execution Development 7

8 Texas Eastern Transmission Northeast Market - Rockies Supply Strategy Destination of Rockies Supply Rockies Supply ~ 1.5 Bcf/d (Bcf/d) Rockies Supply Arriving at Clarington, OH ~ Confirmed TETLP Expansions from Clarington, OH (0.695) Third Party Projects (0.400) Remaining at Ohio ~ Ohio 2 Northern Bridge 11,000 HP add l compression Nov, MMcf/d BP, Merrill Lynch Oakford, PA 1 TIME II 32 mi 36 looping / replacement 34,000 HP add l compression Nov MMcf/d NJN, PSEG Texas Texas Eastern Eastern Market Market Area Area New Jersey 4 TEMAX 20 mi 36 looping / replacement 30 mi 30 new pipeline 95,000 HP add l compression Nov MMcf/d ConocoPhillips 3 TIME III 4.5 mi 36 replacement Nov MMcf/d PPL Energy Plus, Centerpoint Transco Interconnect 8

9 Well-Positioned for Growth Expansion Opportunities Southeast Region Projects Glade Spring In-Service 10/08 - $20 MM Egan Storage Cavern 4 & 3 In-Service 7/08 / 2H09 $60 / $160 MM Moss Bluff Storage In-Service Post 2010 $115 MM Southeast Supply Header In-Service 9/08 - ~$600 MM Gulfstream IV In-Service 10/08-1/09 - $95 MM Gulfstream III In-Service 8/08 - $60 MM Copiah Storage In-Service Post 2010 Execution Development Gulfstream Expansion (G-2) In-Service Post

10 Well-Positioned for Growth Expansion Opportunities Western Region Projects West Doe (Phase III) In-Service 2H09 - $60 MM Pine River (Phase 3) In-Service 11/08 - $50 MM West Doe (Phase II) In-Service 11/08 / 1H09 $5 / $40 MM South Peace Pipeline In-Service 2H09 - $130 MM Execution Development West Project In-Service Post

11 Major 2008 Projects Substantially Complete Expansion Project Segment Est. CapEx ($MM) In-Service M&NE Phase IV (Canaport TM ) Expansion UST 320 4Q08 Ramapo UST 260 4Q08 Dawn Storage Deliverability Dist 120 1Q09 TIME II (Phase II) UST 90 4Q08 Gulfstream Phase III UST (1/2 SEP) 60 3Q08 Egan Storage (Caverns 4) UST (1/2 SEP) 60 3Q08 West Doe Phase II WC 5 4Q08 Dawn-Trafalgar Pipeline Phase III Dist 75 4Q08 Pine River Phase 3 WC 50 4Q08 Glade Spring Expansion UST (SEP) 20 4Q08 Tribute Storage Dist 35 2Q08 Southeast Supply Header UST ~600 3Q08 Total Major 2008 Projects 2008 projects deliver returns on capital employed at the upper end of our 10-12% targeted range $ 1.7 B Total est 2008 EBIT $ 90 million Total est 2009 Incremental EBIT $ 110 million 11

12 Financial Overview

13 Third Quarter 2008 Summary ($ millions) 3Q08 3Q07 Reported Net Income $ 296 $ 234 Special Items 3 5 Discontinued Operations 3 (3) Extraordinary Item - 4 Ongoing Net Income $ 302 $ 240 Reported Diluted EPS $ 0.48 $ 0.37 Ongoing Diluted EPS $ 0.49 $ % increase in ongoing EPS New projects contributed to EBIT at U.S. Transmission Distribution had continued growth in storage and transportation Western Canada benefited from a strong frac spread and increased volumes at Empress Strong commodity markets at Field Services 13

14 9/30/08 Liquidity Summary As of 9/30/2008 (USD in Millions) Spectra Capital Westcoast Union Gas SEP Total Revolving Credit Commitments * $ 1,500 $ 188 $ 470 $ 500 $ 2,658 Plus: Net Available Cash / Investments Total Liquidity Sources $ 1,523 $ 230 $ 476 $ 594 $ 2,823 Less: Borrowings (782) - (131) (240) (1,153) Less: Letter of Credit Utilization (5) (5) Available Liquidity $ 736 $ 230 $ 345 $ 354 $ 1,665 * A subsidiary of Lehman Brothers is a lender under the Spectra Capital and SEP bank credit facilities and as of September 30, 2008 was in default in its obligation to fund borrowings under the Spectra Capital facility. As a result, Spectra Capital and SEP consider the $64 million of unfunded Lehman Brothers commitments to be unavailable. Well-positioned to manage through current market volatility. 14

15 Long-term Debt Maturities 4Q08, 2009 & 2010 As of 9/30/02008 (USD in Millions) Long-term Debt Maturities Spectra Capital TETLP Westcoast Union Gas SEP Total 4Q08 $ - $ - $ - $ - $ - $ - 1Q09 $ 148 $ - $ - $ - $ - $ 148 2Q Q Q Total 2009 $ 648 $ - $ - $ 28 $ Total 2010 $ - $ 300 $ 235 $ 209 $ - $ 743 No significant long-term funding needs until late

16 2008 Crude Oil Price 2008 Crude Oil Pricing $/bbl $140 $130 $120 $110 $ Annual Avg of Settled and Forward Prices as of 11/04/08 ($103) 11/04/2008 Fwds 2008 Settled Prices $90 $80 $70 SE 2008 Annual Avg Forecast Assumption as of Late Oct 2007 ($83) Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Pricing information compiled from NYMEX WTI Futures. 16

17 Commodity Sensitivity Overview Jan 2008 DCP Midstream s primary sensitivity is to NGL prices (for which we assume a 60% price relationship to oil); changes in contract mix have resulted in some exposure to natural gas DCP Midstream* * Represents Spectra Energy s 50% interest in DCP Midstream Estimated average price of crude oil for 2008 is $83 / Bbl 1 $1.00 / Bbl change in oil = ~ $12 MM change in EBIT Estimated average price of natural gas for 2008 is $8.00 / MMBtu $0.10 / MMBtu change in natural gas = ~ $2 MM change in EBIT 1 Based upon 2008 forward curve for last half of October Empress Empress is sensitive to changes in frac spread Empress: estimated average frac spread for 2008 is ~ $7.25 / MMBtu 2 $0.50 / MMBtu change in frac = ~ $16 MM EBIT 2 Based upon average frac spread for 2006 and 2007 Canadian Dollar Canadian earnings have exchange rate risk Exchange rate at parity for full year $0.01 change in Fx rate = ~ $3 MM change in Net Income Hedging No hedges in place for above sensitivities, except cash flow hedges at DCP Midstream s MLP 17

18 Great Investment Opportunity Premier Natural Gas Infrastructure Company Attractive industry dynamics Connects diverse supply base to fastest growing markets Solid investment grade balance sheet; strong & stable cash flows Financial flexibility Solid, steady growth and attractive dividend yield Management committed to enhancing shareholder value Expect to deliver total shareholder return in excess of 10% 18

19 19

20 Appendix 1: Supplemental Financial Data

21 Business Segment Overview NYSE: SE Western Canada U.S. Distribution Transmission (1) (1) Transmission & Field Services Processing (1) Texas Eastern Transmission Algonquin Gas Transmission Maritimes & Northeast Pipeline (77.53%) Gulfstream Natural Gas System (25.5%) Market Hub Partners (50%) Southeast Supply Header (50%) Spectra Energy Partners (84%) NYSE: SEP Union Gas BC Pipeline & Field Services Empress System Midstream Assets DCP Midstream (50%) DCP Midstream Partners (15.05%) NYSE: DPM (1) Represents Spectra Energy Transmission ( SET ) 2

22 U.S. Transmission Reported & Ongoing Segment EBIT ($ millions) 3Q08 3Q07 Reported Segment EBIT $ 213 $ 230 Special Items Ongoing Segment EBIT $ 217 $ 230 3Q08 ongoing segment results decreased $13 million compared with 3Q07 primarily a result of: Northeast Gateway, Time II and Egan projects in-service capitalized interest on expansion projects offset by: project development costs expensed in 3Q08 compared with the capitalization of costs in 3Q07 higher transmission, storage and G&A costs in 3Q08 3

23 Distribution Reported & Ongoing Segment EBIT ($ millions) 3Q08 3Q07 Reported Segment EBIT $ 44 $ 40 Special Items Ongoing Segment EBIT $ 44 $ 40 3Q08 ongoing segment results were $4 million higher compared with 3Q07 primarily a result of : increased storage and transportation revenues 4

24 Western Canada Transmission & Processing 3Q08 ongoing segment results were $12 million higher than 3Q07 due to: higher Empress earnings due to higher volumes and frac spread partially offset by: Reported & Ongoing Segment EBIT ($ millions) 3Q08 higher expenses primarily due to quarter-over-quarter timing higher repair and maintenance costs in 3Q08 3Q07 Reported Segment EBIT $ 113 $ 101 Special Items Ongoing Segment EBIT $ 113 $ 101 5

25 Field Services Reported & Ongoing Segment EBIT ($ millions) 3Q08 3Q07 EBIT before MTM at DPM $ 216 $ 140 DPM Non-cash MTM 23 - Reported Segment EBIT $ 239 $ 140 Special Items - 3 Ongoing Segment EBIT $ 239 $143 3Q08 ongoing EBIT higher by 67% compared with 3Q07 resulting from: favorable commodity prices derivative timing gains associated with gas marketing positions favorable DCP Midstream Partners (DPM) hedge mark-to-market (MTM) offset by impact of Hurricane Ike on volumes and plant operations and higher O&M spending Commodity prices: crude oil averaged $118/barrel in 3Q08; $76/barrel in 3Q07 correlation for 3Q08 was 51%; 62% for 3Q07 natural gas averaged $10.24/MMbtu for 3Q08; $6.16/MMbtu for 3Q07 $269 million in cash distributions to Spectra Energy 6

26 Other Reported & Ongoing EBIT ($ millions) 3Q08 3Q07 Other Reported EBIT (Loss) $ (9) $ (15) Special Items - 5 Other Ongoing EBIT (Loss) $ (9) $ (10) 3Q08 ongoing EBIT for other was flat with 3Q07 Continue to expect 2008 corporate costs to be in the $80 - $90 million forecasted range 7

27 Ongoing Segment and Other EBITDA Ongoing Segment and Other EBITDA ($ millions) 3Q08 3Q07 YTD 08 YTD 07 U.S. Transmission $ 285 $ 296 $ 856 $ 864 Distribution Western Canada Transmission & Processing Field Services Other (5) (8) (46) (38) Total $ 829 $ 709 $ 2,505 $ 2,022 U.S. Transmission Ongoing EBITDA also includes Spectra Energy s 50% share of Gulfstream and SESH Interest and DD&A Field Services Ongoing EBITDA represents Spectra Energy s Ongoing Equity Earnings of DCP Midstream plus half of DCP Midstream s Interest, Taxes and DD&A 8

28 3Q08 Additional Items Interest expense for 3Q08 was $163 million compared with $156 million for 3Q07 Effective tax rate was 33% for 3Q08 compared with 32% in 3Q07 Debt to Total Capitalization at September 30, 2008 is 59.6% Canadian currency net after tax effect on earnings for 3Q08 was favorable by about $1 million compared with 3Q07 Total credit facility capacity at September 30, 2008 of $2.7 billion; available liquidity of $1.7 billion 9

29 Hypothetical Example for Commodity Price Change Effect on Field Services EBIT Hypothetical average commodity prices for calendar year 2008: $100/bbl crude oil 55% Crude/NGL price relationship $10/MMBtu natural gas Change for Crude Oil Price Assumption $ 204 ($100 - $83) x $12 Change in Correlation Assumption (75) (55% - 60%) x $15 Change for Natural Gas Assumption 40 (($10 - $8)/$0.10)) x $2 Total potential EBIT Increase $ 169 Field Services Sensitivities: (SE's 50% share) MM $ per each $1.00/barrel move in Crude Oil $ 12 MM $ per each percentage move in Correlation $ 15 MM $ per each $0.10/MMBTU change in Natural Gas $ 2 10

30 Original 2008 Ongoing Earnings Expectations Jan 2008 ($MM) EBIT 2008 EBITDA U.S. Transmission (1) $ 870 $ 1,125 Distribution Western Canada Transmission & Processing Field Services (2) Other (85) (75) TOTAL Ongoing Segment and Other EBIT $ 2,160 $ 3,075 Expect 7-9% CAGR in Spectra Energy Transmission ongoing segment EBIT for 2007 through 2010, using 2007 as base Other financial metrics: Interest Expense = $670 MM Effective Tax Rate = ~33% No New Equity Issuances Fully Diluted Shares Outstanding = 639 MM (1) EBITDA includes Spectra Energy s proportional share of DD&A and Interest for Gulfstream and SESH, less Minority Interest DD&A for M&NE and ETNG. (2) EBIT represents Spectra Energy s Equity in Earnings of DCP Midstream. EBITDA determined by adding half of DCP Midstream s DD&A and Interest. $1.56 ongoing, fully diluted EPS for Target Incentive Payout 11

31 2008 Key Forecast Assumptions Jan 2008 Commodity strips based on late October forward prices: Crude Oil: $83 / Bbl (WTI) NGL/Crude price relationship: 60% Natural Gas: $8.00 / MMBtu (NYMEX) Empress Frac Spread: ~ $7.25 / MMBtu Canadian Dollar/US Dollar: Parity 2008 Expensed Project Development costs of about $25 million Interest Expense: $670 million Long Term Debt Costs Embedded average cost of existing debt at 12/31/07 is 7.0% US - New Debt Market rate when issued (Forecast assumes 6.5%) Canada - New Debt - Market rate when issued (Forecast assumes 5.5%) No Equity Issuances in forecast period 2008 Dividend increase to $0.92/share; subject to Board approval, grows at $0.04/share per year through 2010 Effective Tax Rate: ~33% Fully Diluted Shares Outstanding: 639 million 12

32 Appendix 2: Major Projects

33 Significant Growth Projects Organic Growth Projects (Execution) Expansion Project Segment Status Est. CapEx ($MM) In-Service M&NE Phase IV (Canaport TM ) Expansion UST Execution 320 4Q08 Ramapo UST Execution 260 4Q08 Dawn Storage Deliverability Dist Execution 120 1Q09 TIME II (Phase II) UST Execution 90 4Q08 Gulfstream Phase III UST (1/2 SEP) Execution 60 3Q08 Egan Storage (Caverns 4 & 3) UST (1/2 SEP) Execution 60 / 160 3Q08 / 2H09 West Doe Phase II WC Execution 5 / 40 4Q08 / 1H09 Dawn-Trafalgar Pipeline Phase III Dist Execution 75 4Q08 Pine River Phase 3 WC Execution 50 4Q08 Glade Spring Expansion UST (SEP) Execution 20 4Q08 Gulfstream Phase IV UST (1/2 SEP) Execution 95 4Q08 / 1Q09 South Peace Pipeline WC Execution 130 2H09 West Doe Phase III WC Execution 60 2H09 Dawn Area Storage Dist Execution 25 / 15 1H09 / 2H09 Algonquin J-2 Expansion UST Execution 35 2H09 AGT East to West UST Execution 395 2H09 Northern Bridge UST Execution 45 2H09 M&NE Phase V UST Execution 255 2H10 Total Organic Projects in Execution Execution agreement with shippers completed, currently in permitting process and/or in construction Segments: UST = U.S. Transmission UST (SEP) = Part of U.S. Transmission but is Spectra Energy Partners project Dist = Distribution WC = Western Canada Transmission and Processing $ 2.3 B 2

34 Significant Growth Projects Organic Growth Projects (Development) Expansion Project Segment Status Est. CapEx ($MM) In-Service TEMAX UST Development N/A 1 2H10 TIME III UST Development N/A 1 2H10 Total Organic Projects in Development Total Organic Projects (incl( Execution) $.7 B $ 3.0 B Development in various stages of negotiation 1 Not Available - Scope of project subject to change Segments: UST = U.S. Transmission UST (SEP) = Part of U.S. Transmission but is Spectra Energy Partners project Dist = Distribution WC = Western Canada Transmission and Processing 3

35 Significant Growth Projects Greenfield Projects Expansion Project Segment Status Est. CapEx ($MM) In-Service Tribute Storage Dist Execution 35 2Q08 Southeast Supply Header UST Execution ~600 3Q08 Steckman Ridge Storage UST Execution 140 1H09 Total Greenfield Projects in Execution $ 0.8 B Execution agreement with shippers completed, currently in permitting process and/or in construction Segments: UST = U.S. Transmission UST (SEP) = Part of U.S. Transmission but is Spectra Energy Partners project Dist = Distribution WC = Western Canada Transmission and Processing 4

36 Significant Growth Projects Major Opportunities post-2010 Expansion Project Segment Status Est. CapEx ($MM) Moss Bluff Storage Expansion UST (1/2 SEP) Execution 115 Major Opportunities post-2010 (Execution) $0.1 B Gulfstream Expansion (G-2) UST (1/2 SEP) Development N/A 1 NY City Extension (formerly Rockaway Beach) UST Development N/A 1 Copiah Storage UST Development N/A 1 West Project UST Development N/A 1 Islander East UST Development N/A 1 Lebanon Connector UST Development N/A 1 Total Major Opportunities post-2010 $4 B $5 B Development in various stages of negotiation 1 Not Available - Scope of project subject to change Segments: UST = U.S. Transmission UST (SEP) = Part of U.S. Transmission but is Spectra Energy Partners project Dist = Distribution WC = Western Canada Transmission and Processing 5

37 Well-Positioned for Growth Ramapo Almost 5 miles of 42 pipeline replacement downstream of Ramapo, NY New compressor station at Oxford, CT (37,700 HP) HP upgrades/additions at Southeast, Stony Point, and Hanover compressor stations (31,710 HP) New meter installations connecting Algonquin to Millennium (Ramapo, NY) and Iroquois (Brookfield, CT) Pipeline capacity of 320 Mmcf/d Customers are Con Edison and National Grid Est. capital expenditures: $260 million In-service November 1,

38 Well-Positioned for Growth M&N Phase IV Expansion Quebec Quebec City Maine PNGTS Bangor VT Westbrook Portland NH Boston MA Algonquin New Brunswick Fredericton Moncton Saint John Nova Repsol- Scotia Irving Canaport LNG Prince Edward Island Halifax MNP Phase IV Expansion - 5 New Compressor Stations - 2 Station Upgrades - 2 Miles 30-inch Loop Point Tupper Goldboro Maritimes & Northeast Pipeline Existing Compressor Stations New Compressor Stations Brunswick Pipeline (Emera) Corridor Resources Supply Lateral (Corridor) Compression and pipe expansion to connect Maritimes & Northeast to Canaport LNG Terminal via Brunswick Pipeline Canaport is a LNG receiving and regas terminal developed by Repsol YPF & Irving Oil located in Saint John, New Brunswick 25 year firm contract with Repsol for 730 Mmcf/day on Maritimes US system Construction commenced Summer 2007 In-service November, 2008 Est. capital expenditures: $320 million (100%) M&NE pipeline is joint venture with Exxon and Emera 7

39 Well-Positioned for Growth M&N Phase V Expansion Increase capacity by 170 Mmcf/d on Maritimes U.S. system to bring new natural gas supplies from EnCana s planned Deep Panuke project located off the coast of Nova Scotia to Atlantic Canada and Northeast U.S. markets Expected in-service 2H10 Est. capital expenditures: $255 million (100%) M&NE pipeline is joint venture with Exxon Mobil and Emera 8

40 Well-Positioned for Growth Time II Phase II of project to provide 150 Mmcf/d of new transportation service from Lebanon, OH to New Jersey commencing Total project facilities include 4 miles of new pipeline looping, 28 miles of replacement pipeline installation, construction of a new compressor station, additional compression at an existing station Construction began June, year and 10 year firm contracts underpin this expansion Customers: Phase I NJR Energy Services; Phase II New Jersey Natural Gas; PSEG Power, LLC Est. capital expenditures: Phase II $90 million In-service: Phase I completed 12/1/07; Phase II November,

41 Well-Positioned for Growth Northern Bridge 150 Mmcf/d of new takeaway capacity from REX at Clarington, Oh to Oakford/Delmont, PA Total project facilities include installation of new HP at Holbrook, PA and uprate of existing HP at Uniontown, PA (10,666 HP total) Long term firm contracts underpin this expansion Customers: BP Energy Company Merrill Lynch Commodities Est. capital expenditures about $45 million In-service: 2H09 10

42 Well-Positioned for Growth TEMAX / TIME III TEMAX: Executed agreement with ConocoPhillips to transport 395 Mmcf/d of Rocky Mountain natural gas from the Clarington, Ohio, supply point to a point near Station 195 on the Transco system located in York County, Pa. TIME III: Executed agreements with PPL Energy Plus and CenterPoint Energy Services to transport 55 Mmcf/d of Rocky Mountain natural gas from Oakford, PA to a point near Station 195 on the Transco system ~30 miles of pipe from Texas Eastern mainline in Marietta, Pa., to a point near Transco s Station 195 in York County, Pa. 5 new compressor units Pipeline loop (~8 mi.) adjacent to existing corridor; 36 pick-up and relay of existing 20 & 24 (~19 mi.) Est. capex: $600 - $700 million Est. in-service: 2H10 11

43 Well-Positioned for Growth Steckman Ridge Storage Strategically located storage capacity along Texas Eastern system in Bedford County, PA Proposed 12 Bcf of storage, 1 compressor station, 7 miles of 16 pipe and 4 miles of lateral pipe 50/50 partnership with New Jersey Resources FERC approval received 6/08 Est. capital expenditures: $140 million (Spectra Energy s share) In-service 1H09 12

44 Well-Positioned for Growth AGT East to West 750 Mmcf/day capacity expansion on AGT to facilitate east to west flows of new LNG supplies into NE market 13 miles of new pipeline, 18 miles of replacement pipeline, 1 new compressor station, bi-directional flow at 3 compressor stations Customers: 2 LNG Suppliers and 3 LDC s FERC filing submitted 6/08 Est. capital expenditures about $395 million In-service 2H09 13

45 Well-Positioned for Growth Dawn Storage Projects Dawn Storage Deliverability: New compressor at Dawn Plant, 11 new wells, about 1 mile of pipeline Construction progressing on a tight schedule Est. capital expenditures: $120 million In-service 1H09 delayed due to delays in supplier deliveries Dawn Area Storage: Sarnia Airport 50/50 partnership over 5 Bcf of capacity - 3 new wells, compressor plant, construct 11 miles of pipeline Est. capital expenditures: $25 million (50% share) In-service 2H09 Heritage (Sombra) Acquired about 1 Bcf of capacity Est. capital expenditures: $15 million In-service 2H09 Tribute Storage (Tipperary Pools): 75% ownership, developing 3 Bcf of new storage capacity Est. capital expenditures: $35 million (75% share) In service June

46 Well-Positioned for Growth Dawn-Trafalgar Phase III Phase III: Replace 2 engines at the Bright Compressor Station to create incremental capacity on the Dawn- Trafalgar transmission system Construction progressing on a tight schedule Est. capital expenditures: $75 million In-service date: 4Q08 15

47 Well-Positioned for Growth Southeast Supply Header 272 miles of pipe from Perryville Hub in NE La. to Gulfstream Natural Gas near Mobile, Al. 1.0 Bcf/d capacity 50/50 partnership with CenterPoint Energy Provides access to growing onshore shale gas basins as an alternative to offshore supply 95% of capacity is subscribed under firm, long-term agreements Customers are: FPL, Progress Energy, Southern Company, Tampa Electric, EOG Resources Construction commenced October, 2007 Capital expenditures: Approx. $600 million (Spectra Energy s share) In-service September,

48 Well-Positioned for Growth Gulfstream Phase III & IV Gulfstream Phase III: 34.5 miles of 30 pipeline in Martin & Palm Beach counties, FL 345 Mmcf/day firm capacity Construction commenced April, 2008 Customer: Florida Power & Light Est. capital expenditures $60 million (Spectra Energy s share) In-service August, 2008 Gulfstream Phase IV: 18 miles of 20 pipeline in Tampa Bay, FL ; two 15,000 HP compression units onshore Florida, one 15,000 HP unit at Coden, AL 155 Mmcf/day firm capacity Construction commenced Jan, 2008 Customer: Progress Energy Est. capital expenditures $95 million (Spectra Energy s share) Partial in-service October, 2008; Full inservice early 2009 Gulfstream is fully subscribed at Bcf/d at full implementation of Phase IV Gulfstream is jointly owned by Spectra Energy (SE 25.5% and SEP 24.5%) and Williams 17

49 Well-Positioned for Growth Egan & Moss Bluff Storage Expansion Egan and Moss Bluff are strategically located storage along the Gulf Coast interconnecting with 7 and 5 major pipelines, respectively, including Texas Eastern Egan Cavern #4 Project: Full 8 Bcf of capacity in-service July 2008 Total capital expenditures $60 million Egan Cavern #3 Project: Add 8 Bcf of capacity and 16 miles of 24 pipe Est. capital expenditures $160 million Capacity phased-in service beginning in 2H09 Moss Bluff Cavern #4 Project: Add 6.5 Bcf of capacity Est. capital expenditures $115 million In-service post

50 Well-Positioned for Growth South Peace Pipeline Proposed pipeline and plant modifications in northeast B.C. to connect South Peace resource area to McMahon processing plant Over 55 miles of 20 pipeline with approximately 220 Mmcf/day capacity Est. capital expenditures about $130 million Purchase of Storm Pipeline completed in 2007 for $15 million In-service 2H09 19

51 Well-Positioned for Growth West Doe Phase III Proposed expansion to existing West Doe gas plant in Peace River Arch area of northeast BC Additional gas processing train and sales gas tie-ins to process incremental 45 mmcf/d of Montney/Doig gas Est. capital expenditures about $60 million In-service 2H09 20

52 2007 Projects In-Service Major Projects In-Service in 2007: Northeast Gateway - $215 million TIME II (Phase I) - $125 million Dawn-Trafalgar Phase II - $130 million Moss Bluff & Egan Storage - $60 million Western Canadian Gathering & Processing - $40 million Other - $80 million Total 2007 EBIT contribution from these projects ~$25 million Additional 2008 EBIT expected to be ~ $50 million 13 projects totaling about $650 million 21