SASKENERGY/TRANSGAS FORECAST FOR 2017 AND BEYOND THE SASKATCHEWAN OIL & GAS SUPPLY CHAIN FORUM

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1 SASKENERGY/TRANSGAS FORECAST FOR 2017 AND BEYOND THE SASKATCHEWAN OIL & GAS SUPPLY CHAIN FORUM NOVEMBER 15, 2016 Derrick R. Mann, P.Eng. (Acting) Vice President Engineering, Integrity and Construction 1

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3 ASSETS Distribution Transmission 386,900 Customers 1097 Employees 70,500 HP Compression 200 PJ Annual Volume 55 Locations 315 PJ Annual Volume 69,600 km Pipelines $1.8B Infrastructure 15,000 km Pipelines 3

4 SAFETY PRIORITY System integrity programs designed to prevent, detect and mitigate threats In-line Inspections Cathodic Protection Plant Integrity efforts Leak Surveying, Service Connection Upgrades Remote Monitoring Line Locating Safety Patrols Line Supervision Aerial and Ground Patrols Nearly $93M earmarked for system integrity and damage prevention efforts in

5 Energy (PJ) PROVINCIAL DEMAND Provincial transport growth of 5.7% forecasted for 2017 Provincial transport has increased by 50% since PJ 175 PJ Provincial Growth Saskatchewan Production 260 PJ Importing of Supply 130 PJ 50 5

6 Supply (TJ/d) 1000 ALBERTA RECEIPT FORECAST - AVERAGE DAY WITH SUMMER AND WINTER PEAKS Alberta Receipt Capacity (Physical) NIT to TEP Capacity Average Day Spare Capacity Peak Spare Capacity 600 NIT to TEP Firm McNeil (Foothills) 300 Unity Cold Lake Empress (TCPL Mainline) 0 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 6

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8 PROCUREMENT OVERVIEW SaskEnergy s overall procurement totals Total Purchasing Spend Saskatchewan Content Aboriginal Content (with labour) 2012 $191.6 million 77% 20% 2013 $267.4 million 67% 21% 2014 $307.9 million 56% 15% 2015 $236.5 million 69% 13.6 Aboriginal procurement is a key evaluation criteria for all competitions, not a separate business policy SaskEnergy s procurement activity level for 3 rd party services * 15% of the Contracts category is for Engineering and Engineering Consulting Services Construction Contracts * Services 2012 $51 million $28 million 2013 $52 million $30 million 2014 $91 million $32 million 2015 $74 million $47 million 8

9 ABORIGINAL PROCUREMENT OPPORTUNITIES 2016 represents over 21 years of sustained, pragmatic effort by SaskEnergy with our Aboriginal Procurement Program. Over $36M in Aboriginal Purchases in the last 5 years. SaskEnergy s workforce has an Aboriginal representation of almost 15% which mirrors the Saskatchewan Aboriginal population. SaskEnergy supports Aboriginal owned business but also encourages Aboriginal content in bids 5 year average is 4.7% Work with Aboriginal owned and non-aboriginal owned business to increase overall content 9

10 EFFICIENCY FOCUS Nearly $43.6M in efficiency savings and process improvements ( ) Mobile compression, modular facility approaches & Crown collaboration are now standard Further $4.4M in savings targeted for

11 CROWN COLLABORATION 4PT Crown Collaboration Four Party Turnkey SaskEnergy, SaskPower, SaskTel and Cable providers developed new servicing process Option for Developer to perform Design/Build requirements for new urban subdivisions Opportunity for engineering firms to provide services relative to urban distribution design 11

12 $/M INNOVATION PIPELINE COSTS NPS 16 NPS 8 NPS 3 REGULATORY REQUIREMENTS ENVIRONMENTAL CONSIDERATIONS NIMBY PUBLIC SAFETY 12

13 SASKENERGY INTEGRATED APPROACH INNOVATION Virtual Pipeline or Pipeline On Wheels SAFETY AND SUSTAINABILITY GROWTH INTEGRATED APPROACH EFFICIENCIES 5% - 7% 13

14 VIRTUAL PIPELINE KEY DELIVERABLES NIMBLE AND FLEXIBLE Moveable / Scaleable Technology Enabled Leverage Private Sector Manufacturing Expertise ACCELERATE TIME TO SERVICE Construction Time: Reduce from two years to eight weeks Two weeks or less in critical or emergency situations COST EFFECTIVENESS Address escalating costs of field construction Address future cost of maintenance Address possible future stranded assets 14

15 VIRTUAL PIPELINE MENU DEVELOPMENT CAPACITY ON WHEELS CAPACITY ON WHEELS Mobile Compression Mobile Compression Lower costs Lower costs Lower emissions Lower emissions Quicker installation Quicker installation Leverage private sector Leverage manufactured private skids sector manufactured skids SUPPLY ON WHEELS Compressed and Liquefied Natural Gas Added supply to meet winter peaks on short-term supply needs Leverage private sector fleets (only pay when using their their trailers) trailers) 15

16 CAPACITY ON WHEELS VIRTUAL PIPELINE INDUSTRY STANDARD FIXED UNITS Concrete and Free Standing Buildings PACKAGED SELF RELIANT Mobile Compression with Piping Skids 20,000 BHP fleet of 17 units meeting needs of 30 units while avoiding pipeline construction 16

17 SUPPLY ON WHEELS VIRTUAL PIPELINE ABERDEEN / ST. BRIEUX EARLY DAYS Private Sector providing CNG/ LNG natural gas trailers for four months of the year $12 million pipeline replacement avoided 17

18 CAPITAL SPENDING $1 B infrastructure in next five years 18

19 MAJOR SYSTEM INTEGRITY PROGRAMS Transmission Block Valve Modifications In-Line Inspection (pigging) Washout Repair Distribution Service Upgrade Program Main Replacement Station Pipe Stress Facilities Piping & Vessel Inspection Storage Well Logging $ 4.4 M $ 6.6 M $ 4.8 M $13.5 M $ 1.3 M $ 1.0 M $ 1.5 M $ 2.3 M Total System Integrity Capital $68.9 Million 19

20 MAJOR CAPITAL PROJECTS Saskatoon South Bypass $7.9M $58M Regina Pipeline Expansion $4.7M $45M Alberta Supply Compression $7.0M $50M Regina TBS #4 & EP Pipeline $2.0M $11M Moose Jaw TBS #2 and Lateral $2.0M $17M Success-TCPL Pipeline $8.2M 20

21 Transmission Pipeline Construction Distribution Installation Information Technology Mechanical Construction Pipeline Construction Inspection Directional Drilling In-line Inspection Mobile Compression Shop/Crew Welders Engineering Services All Disciplines HydroVac Services Survey Radiographic Services Site Prep / Earthwork Plough Train Services Leak Survey $250 Million $75 Million $45 Million $35 Million $30 Million $30 Million $25 Million $20 Million $20 Million $15 Million $15 Million $10 Million $10 Million $10 Million $10 Million $10 Million 21

22 High Pressure Valves & Fittings Steel Pipe Natural Gas Regulators Vehicle Fuel Natural Gas Meters Plastic Pipe Electrical Material Line Heater Upgrades $70 Million $60 Million $15 Million $15 Million $10 Million $10 Million $10 Million $5 Million 22

23 PURCHASING RESPONSIBILITIES The procurement of all goods and services, specifically of $25,000 or greater value Ensuring that purchases, unless single sourced, are based on a fair competitive bid process; all negotiations relating to the Tender/RFP process; bringing any deviations (such as bid withdrawal, disqualification of bidders, other than low bidder etc.) in the Tender/RFP process to the attention of Legal for guidance and/or clarification. 23

24 PURCHASING RESPONSIBILITIES Initiating and maintaining effective and professional relationships with existing and potential suppliers; maintaining high standards of purchasing ethics and fairness in dealing with suppliers. Ensuring that material, equipment or services purchased are the best value, comply with specifications, are of acceptable quality and are delivered as scheduled to satisfy the needs of SaskEnergy/TransGas. Negotiating surplus major asset disposal; negotiating the return of excess, defective, or rejected equipment and supplies to suppliers. 24

25 PROCUREMENT COMPETITION THRESHOLDS Purchase Amount Up to $2,500 $2,500 - $25,000 Greater than $25,000 Professional Services less than $100,000 Single Source Awards Policy Field personnel have ability to manage awards. Quotes are encouraged. Three quotes are encouraged. In circumstances where three quotes are not possible, the manager of the business unit must authorize and document these purchases. Provisions of applicable trade agreements will be followed. Purchasing must be involved so that a formal bidding process can be used. A direct appointment process may be used to select a Consultant qualified in the type of work involved. A single source appointment process may be used in very specific events requiring niche equipment or skill availability. Requires Executive approval and notification to President & Chief Executive Officer. 25

26 PROCUREMENT PROCESSES Opportunity Engagement at SaskEnergy Register on SaskTenders Fill out a SaskEnergy Prequalification Form Contact SaskEnergy Purchasing and request a prequalification form Provide Purchasing a list of ALL Services you offer Qualified companies are placed on Bid List 26

27 PROCUREMENT TEAM Colleen Huber Vice President Corporate Support Tresca Reichert Manager, Purchasing Jo-Ann Rud Purchasing Agent Brent Hales Purchasing Agent Ashli Andreas Gradworks Contractor Purchasing Melissa Todd Buyer Vacant Buyer 27

28 QUESTIONS? 28