Alliance Pipeline. CIBC Fixed Income Conference. April 14, 2015

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1 Alliance Pipeline CIBC Fixed Income Conference April 14, 2015

2 Forward-Looking Information Certain information contained in this presentation constitutes forwardlooking statements. The words anticipate, expects and expected to and similar expressions are intended to identify such forward-looking statements. Although Alliance believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties including, but not limited to, future operating performance, regulation, economic conditions and fundamentals affecting the oil and gas producing and marketing industries. Should one or more of these risks or uncertainties materialize or fail to materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. 2

Alliance Aux Sable Overview System Capability 1.

in excess of 135,000 bpd of NGLs 250 mmcf/d receipt

1,150 Btu/cf commingled gas Tioga lateral added 126

3 Alliance Aux Sable Overview System Capability 1.6 Bcf/d capacity from WCSB to Chicago Transporting in excess of 135,000 bpd of NGLs 250 mmcf/d receipt capacity out of the Bakken Ability to transport 1,150 Btu/cf commingled gas Tioga lateral added 126 mmcf/d of capacity out of the Bakken Reliability over 99% 3

Strength of the Alliance Asset Underpinning the New Service Offering Alliance assets have maintained operational integrity and performance levels essentially at original operational capability No

4 Strength of the Alliance Asset Underpinning the New Service Offering Alliance assets have maintained operational integrity and performance levels essentially at original operational capability No material HS&E violations or enforcement actions Completing third in-line inspection of pipeline Highly reliable asset, fulsome maintenance program and arrangement with OEM Asset base utilized throughout system Aggressive depreciation schedule 4

5 Competitive Advantages Unique and growing Natural Gas Liquid ( NGL ) transport capability Only pipe carrying natural gas and NGLs to U.S. Ability for producers to optimize field capital requirements and time to market Responsive new services framework Manage contract duration and staging, choose rich gas services and have toll certainty over contract term Connected to growing rich gas supply regions Value add of Aux Sable access to U.S. NGL markets 5

Competitive Advantages Access to growing demand markets Evolving U.S. Midwest gas market Growing U.S. NGL demand and export capacity Complementary rich gas bridge to potential B.C. Liquefied Natural

6 Competitive Advantages Access to growing demand markets Evolving U.S. Midwest gas market Growing U.S. NGL demand and export capacity Complementary rich gas bridge to potential B.C. Liquefied Natural Gas ( LNG ) export facilities Alliance Chicago Exchange ( ACE ) services provide value during market events Strategically positioned rich gas pipeline providing timely and economic access to premium markets 6

7 New Services Framework Predictable and competitive fixed tolls Receipt zone and transmission services in addition to full-path service New services to enable optimization of rich gas transport and support production build up in developing resource plays US Midwest Market Hub 7

8 National Energy Board ( NEB ) Application for New Services Application Filed May 22, 2014 General Terms and Conditions, Service Agreements, and Toll Schedules Fixed tolls for long-term firm receipt, delivery, and full path services Interruptible and Seasonal Firm Service (with full tolling flexibility) Hydrocarbon Dewpoint ( HCDP ) specification revised to -5 C NEB issued Hearing Order on August 20, 2014, adopting Alliance s request for a written hearing format Five rounds of Information Requests from NEB and two rounds from Intervenors have been completed Alliance filed Reply Evidence on April 1, Oral Final Argument scheduled for April 15 16, 2015 NEB decision expected mid-july 2015 Alliance plans to file application with Federal Energy Regulatory Commission ( FERC ) in June

9 Service Enhancements to Optimize Liquids Capacity Current NGL flows 9

10 Alliance NGL Transport Up by 62% from Source: Company reports

11 Aux Sable adds Fractionation Capacity $130 million expansion will add 24,500 barrels a day in processing capacity Target in service date is mid-2016 and will be supported by Rich Gas Premium agreements Indicative that Alliance s owners expect even more rich gas to flow on Alliance post

3 Bcf/d of new receipt capacity installed or approved for construction In 2013 and

12 New Receipt Capacity Since 2010 About 3.8 Bcf/d of production currently connected to Alliance Since 2010, ~ 1.3 Bcf/d of new receipt capacity installed or approved for construction In 2013 and 2014, 10 receipt points totaling ~1.0 Bcf/d of new receipt capacity installed or approved for construction All receipt connections were producer funded 12

13 Canadian Shipper Progression 2013 & 2014 were focused on attracting new rich gas supply to the pipe Producers seeing benefits of capital avoidance, staging commitments, rich gas flexibility and time to market Significant Montney and Duvernay interest Alliance is pleased with progress to date and NGL content of the executed deals No available capacity in Zone 1 Less than 2% of target capacity available in Zone has seen increased engagement of downstream transmission zone shippers 13

14 Montney Regions 14 *Source: BMO CM Wendy Smith Low Drillbits Presentation January 2015

Montney Acreage Well Established With most of the Montney s acreage already leased, halfcycle economics are an appropriate metric as sunk land acquisition costs are not

15 Montney Acreage Well Established With most of the Montney s acreage already leased, halfcycle economics are an appropriate metric as sunk land acquisition costs are not included Half-cycle economics will account for all F&D (well capital costs) *Source: Scotiabank The Playbook: Ranking North America s Oil and Gas Plays September

16 Montney Breakeven Advantage: As Competitive Or Better Than The Best In The US Montney at Kakwa and Dawson/Parkland breakeven costs are estimated to be lower than even Marcellus rich-gas shale gas 16

17 Payout Periods North America 17 Montney gas at Dawson/Parkland has a lower payout period than Marcellus rich-gas areas, while Montney Kakwa s payout period is extremely close to the best areas of Marcellus

18 Total Shale Play Breakeven Cost Comparison 18 Montney rich-gas areas (connected to Alliance via Septimus, Kakwa and Simonette regions) have a lower breakeven cost than any gasbased drilling play in North America

19 Montney Regions & Producers with Alliance Executed PA s Alliance Pipeline Spectra Energy TransCanada ATCO Pipelines Receipt Point Mainline Compressor Station Lateral Compressor Station Executed PAs Montney Sub-Regions: Septimus/Dawson/Parkland Elmworth/Wapiti Kakwa/Karr Kaybob Edson 19

Immediate and Economic Bridge for LNG Facilities Alliance an existing, economic solution with immediate access to market Capital avoidance and predictable rich gas transportation through 2020 and

20 Immediate and Economic Bridge for LNG Facilities Alliance an existing, economic solution with immediate access to market Capital avoidance and predictable rich gas transportation through 2020 and beyond First B.C. LNG projects still awaiting investment decisions Optionality while LNG outcomes get sorted Long-term market portfolio alternative for rich gas plays Increasing exports from U.S. Gulf Coast 20

21 Alliance an Outlet Until LNG Final Investment Decisions ( FID ) and In Service Dates Incremental Production Time 21

22 Growing U.S. Supply Tioga lateral placed in service September 2013 Approximately 100 mmcf/d of available firm receipt capacity in North Dakota 22

23 Marcellus Causing Midwest Pipelines to Reverse A number of Midwest pipelines are proposing to carry Marcellus/Utica volumes south to the U.S. Gulf Coast Among these are: ANR REX-to-NGPL Texas Eastern Transmission More than 15 Bcf/d of capacity has been proposed to bring Marcellus and Utica shale production southward Options to move volumes south on Midwest pipelines should enhance the clearinghouse nature of the Chicago hub, with volumes able to move to virtually any market (south to LNG as well as east and north) Alliance will continue to deliver to one of the premier destinations in North America 23

24 U.S. Midwest Demand Growth 24 bcfd Source: Wood Mackenzie Residential Commercial Industrial Power Transport Other Source: Wood Mackenzie - Fall 2014 U.S. Midwest demand is forecast to grow approximately 2 Bcf/d

25 Access to U.S./International NGL Markets Critical NGL Infrastructure Canadian Demand United States Demand 2012 Source: Petral, IHS Aux Sable. 25

26 Summary Customer-oriented approach Rich gas advantage, focus capital on the drill bit Flexible suite of toll and service options providing access to premium markets Known cost and contract terms provide optionality Immediate and economic bridge for LNG facilities Re-contracting efforts are progressing well 26

27 Contacts Terrance Kutryk President & CEO Direct: (403) Keith Palmer Senior Vice President & CFO Direct: (403) Kevin Sundvall Treasurer Direct: (403)

28 Supplemental Information New Services Offering Hydrocarbon Dewpoint ( HCDP ) Change HCDP tariff specification rises to -5 C (23 F) from -10 C (14 F) Enables greater access to Alliance s liquids carrying capability Only long haul, natural gas pipeline shipping to U.S. at -5 C HCDP Flexible, full-path and segmented tolling options Fixed, term differentiated firm tolls Index based tolls offering basis sharing for terms greater than five years Flexible pricing for interruptible services and seasonal services 28

29 Supplemental Information New Services Offering Firm Rich Gas Service ( FRGS ) Allows shippers to flow gas hotter than -5 C year round Customers can ship gas with more liquids than specification Surcharge of 1 for each C/mcf in excess of -5 C Offered on a first-come, first-served basis Shipper Paired Gas ( SPG ) Shippers of lean and rich gas pair to meet HCDP specification Alliance can help facilitate pairing Eliminates need for pre-pipeline gas processing facilities Creates value proposition for lean gas 29

30 Supplemental Information New Services Offering Authorized Rich Gas Overrun ( ARGO ) Optimal system conditions and warm temperatures enable shipments of hotter gas (above -5 C) When conditions allow, shippers could flow additional hot gas Posted / offered daily as available Value-add opportunity for shippers, offered free of charge Priority Interruptible Transportation Service ( PITS ) Available for firm receipt and full path shippers with 3+ year terms at contracted receipt point Provides for an additional 25% of firm contracted capacity to be utilized as PITS Scheduled after firm service but before Interruptible Transportation ( IT ) First 10% at 110% of associated firm service toll, further 15% available at 125% of associated firm service toll 30

31 Supplemental Information New Services Offering Staging of Contracted Capacity Available to firm receipt service and firm full path service shippers that: Have firm service terms of five years or more An aggregate contracted capacity averaging at least 1, m 3 /d over contracted term (~50 mmcf/d) Allow for staging of contract volumes to match production targets Pay a weighted average toll over term of transportation service agreements utilizing 1, 3 and 5 year tolls as applicable Alliance Trading Pool and Ace Hub Services Enables other market participants to transact on the pipe Broadens customer base and economic opportunities for shippers 31

32 Supplemental Information ACE Hub ACE Hub Services and Connections: Enhanced Title Transfers Interruptible Wheeling (IW) Park and Loan (PAL) 32

Alliance Pipeline. BMO Western Canadian Tour

Alliance Pipeline. BMO Western Canadian Tour Alliance Pipeline BMO Western Canadian Tour September 16, 2014 Forward-Looking Information Certain information contained in this presentation constitutes forwardlooking statements. The words anticipate,