Platts NGLs Conference September 24, 2013
Agenda 2013 - Executing the Plan 2014 Responding to Delineation Results 2015 Major Ramp Up 2016 Utica to Reach 50% of Marcellus Wet Conclusions 1
Executing the Plan 2
Assets at Formation BRM system average trunk line pressure of 400 to 600 psi Assets at formation of BRM TPL 7 66 miles of 18 TPL 3 42 miles of 30 TPL 2 11 miles of 18 Immediate Plans at Formation Build the Western Connector Drop down Natrium I Cryo & Frac Drop down TL 404 Begin construction of gas gathering pipelines Future Plans at Formation Construct Natrium II Cryogenic Processing Construct Berne Processing Complex Drop down of Northern and Western Systems 3
Current Assets BRM has been successfully executing its business plan since formation Assets as of Q3 2013 TPL 7 66 miles of 18 TPL 3 42 miles of 30 TPL 2 11 miles of 18 TL-404 26 miles of 24 Western Connector 12 miles of 16 TL-388 36 miles of 24 Natrium I Cryogenic Processing 200 MMcf/d - 350 psi Suction Pressure Current residue into DTI Approved tap into TETCO and DEO Negotiating REX Interconnect Natrium I Fractionation 36 MBbls/d C2+ Pipe, Rail, Barge, Truck Loading Additional Interconnects DTI Hastings - 140 MMcf/d capacity UEO Kensington 4
Approved Drop Downs BRM has approved acquisition, construction, and associated funding Approved Drop Downs from Dominion Western System (Q4 2014) 214 miles of 8 to 16 Operates 300 to 500 psi Northern System (Q1 2014) 130 miles of 10 to 20 Operates 400 to 600 psi OIGTC System 63 miles of 8 to 20 G-150 60 miles of 8 purity NGL line Approved New Construction Pipelines Gas Gathering Pipelines Jumper Pipeline 5
Approved Gathering Expansions BRM has approved acquisition, construction, and associated funding Approved Drop Downs from Dominion Western System (Q4 2014) 214 miles of 8 to 16 Operates 300 to 500 psi Northern System (Q1 2014) 130 miles of 10 to 20 Operates 400 to 600 psi OIGTC System 63 miles of 8 to 20 G-150 60 miles of 8 purity NGL line Approved New Construction Pipelines Gas Gathering Pipelines Jumper Pipeline 6
Approved Processing and Fractionation Expansions BRM has approved acquisition, construction, and associated funding Processing Facilities (Under Construction) Natrium II Cryogenic Processing Operational in Q1 2014 200 MMcf/d capacity Berne I Cryogenic Processing Operational in Q3 2014 200 MMcf/d capacity Fractionation Facilities (Under Construction) Construct Natrium II Fractionation Operational in Q1 2015 Adds 80 MBbl/d C2+ capacity, 114 MBbl/d total NGL Pipelines Berne to Natrium Construct 30 mile 10 Y-grade line Construct 30 mile 8 condensate line Stabilization at Berne Convert G-150 from ethane to propane service Construct 15 mile 10 C2 pipeline to Williams OVM Access to ATEX, Mariner East and West 7
Planned Processing Expansions BRM is currently negotiating agreements to support system expansions Processing Facilities Berne II and III Cryogenic Processing 400 MMcf/d capacity Residue: Approved tap into TETCO Negotiating REX Interconnect Petersburg I and II Cryogenic Processing 400 MMcf/d capacity Residue: Planned DTI, DEO, and TGP Lewis I, II, III Cryogenic Processing 600 MMcf/d capacity Tap requested to deliver gas into new Tennessee wet line and to take them off at Lewis for processing Residue: Planned DTI, DEO, and TGP 8
Planned Condensate and Water Services BRM is currently negotiating agreements to support system expansions Condensate Gathering, Stabilization and Marketing Extend condensate gathering beyond Berne Bring condensate to Natrium Marketing Hub Storage Class I Rail Permitted Barge Hydraulic Fracturing Water Supply Exploring opportunity to develop water services 30 mile 12-16 water line from the Ohio River to Berne 3.5 MMGpd capacity Water line extensions off trunk line to central impoundments 9
Diversity of Markets Residue Gas 10
Drilling Activity in the Northeast Current Drilling Activity Rigs declining in dry Marcellus counties; moving to wet Marcellus/Utica Non-producing well inventory still large and will keep dry production growing Results Wet Marcellus/Utica show strong returns and will drive gas and NGL production in Northeast Core dry Marcellus still economic despite low gas prices Northeast expected to become a net supply zone over time Total rig count has decreased, but production will continue to grow due to high IP rates and backlog of nonproducing wells Northeast Versus Total U.S. Natural Gas Production [Bcf/d]; [%] Gas Production [Bcf/d] 90 75 60 45 30 15 0 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total Other U.S. Production Northeast Production Northeast % of Total 30% 25% 20% 15% 10% 5% Northeast % of Total Production Source: RBN Energy; Wood Mackenzie Regional Supply Outlook 11
Northeast Natural Gas Production Northeast production is a game changer Production is meeting (and exceeding) demand Production potential is over 20 Bcf/d by 2020 Marcellus production has already eliminated NE basis Continued volume growth from Marcellus and Utica will put increasing pressure on local prices In order to balance, Northeast needs to send gas to other regions on a seasonal basis Wet Marcellus / Utica show strong returns and will drive Northeast production growth Robust economics in rich area of Marcellus / Utica Core Marcellus still economic despite low gas prices Large inventory backlog of wells in the dry gas window Current Northeast natural gas production is approximately 11.2 Bcf/d Magnitude of production requires substantial investments in infrastructure Requires redesign and expansion of interstate pipeline systems Northeast Natural Gas Supply / Demand [Bcf/d] 25 20 15 10 5 0 Marcellus / Utica Wet Gas Production [Bcf/d] 10 9 8 7 6 5 4 3 2 1 0 Production Demand Range 3.6 Bcf 5.7 Bcf Source: RBN Energy; Dominion Marcellus South West Utica 12
Historical Import Region Southwest Production TETCO Tennessee Gas Transco Existing Transmission Lines Appalachian Production Dominion Columbia Rockies Production Rex Canadian Production Iroquois Canadian Gas Dominion Cove Point LNG Import Source: Bentek Energy; Investor Presentations 13
Exports: Where do we go? Spectra TEAM (2014) Options from Marcellus to Texas Eastern M3 and Henry Hub area OPEN (2015) Move Utica production west to Lebanon and south to Mississippi NEXUS (2016) Access to E. Canada LDC & power markets Williams Transco Atlantic Access (on hold) Dominion Cove Point LNG Export Anticipated Pipeline Industry Takeaway Additions Tenn. Gas Tenn. Gas Atlantic Access BRM is targeting residue outlets with growth potential: Rex: gets gas to Midwest and allows us to displace Canadian gas Rex TEAM 2014 TEAM 2014 TETCO: significant potential to reverse flow DTI s TL-400: gets gas to Midwest Potential new markets: power plants and LNG export Source: Bentek Energy; Investor Presentations 14
Diversity of Markets NGLs 15
Marcellus / Utica NGL Production Forecast NGL Production (25% Recovery) [MBbl/d] 1,200 1,100 1,000 900 800 700 600 500 400 300 NGL Production (80% Recovery) [MBbl/d] 1,200 1,100 1,000 900 800 700 600 500 400 300 Marcellus/Utica NGL production will increase from ~100 MBbl/d in 2012 to over 600 MBbl/d by 2018 Ethane will move into export markets and Mont Belvieu Mariner West to Canada Mariner East to Marcus Hook ATEX to Mont Belvieu Some will continue to be reinjected or blended off into natural gas 200 100-2012 2013 2014 2015 2016 2017 2018 2019 2020 Ethane Propane Normal Butane Isobutane Nat Gasoline 200 100-2012 2013 2014 2015 2016 2017 2018 2019 2020 Ethane Propane Normal Butane Isobutane Nat Gasoline By 2020, we expect 726 to 1,175 MBbl/d Propane surpluses will move out of the region via pipeline, rail and some ship Excess butanes and natural gasoline will move out via pipeline and rail Source: Dominion Internal 16
Marcellus / Utica Processing Capacity Vs. Production Wet Production Vs. Processing Capacity [Bcf/d] 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Dominion Internal Wet Production Capacity 17
Marcellus / Utica NGL Fractionation Capacity NGL Fracionation Capacity [MBbl/d] 900 800 700 600 500 400 300 200 100 0 Current 2013 4Q 2014 2015 2016 TBD C3+ Frac Capacity C2 Frac Capacity Source: Dominion Internal 18
Marcellus / Utica NGL Production Vs. Frac Capacity C3+ Production Vs. Capacity [MBbl/d] 700 Ethane Production Vs. Capacity [MBbl/d] 700 600 600 500 500 400 400 300 300 200 200 100 100-2013 2014 2015 2016 2017 2018 2019 2020 C3+ Production C3+ Frac Capacity Source: Dominion Internal - 2013 2014 2015 2016 2017 2018 2019 2020 C2: 25% Recovery C2: 80% Recovery C2: Frac Capacity 19
Marcellus / Utica Ethane Ethane Supply / Demand Balance [MBbl/d] 700 600 500 400 300 200 100-2012 2013 2014 2015 2016 2017 2018 2019 2020 Pipeline Demand Potential Ethane Cracker Demand Excess Supply/Ethane Rejection Potential Supply (80% Rec.) Source: Dominion Internal 20
Exports: Where do we go? Mariner West (MarkWest/Sunoco) Convert existing line to transport ethane from MW Houston Complex to Sarnia Ramping up service through YE13 to 50k BPD Ontario New York Mariner East (MarkWest/Sunoco) Transport propane and ethane from MarkWest Houston Complex to Marcus Hook, PA to be stored, chilled, and distributed to local, regional, and international markets Open season expected by end of 3 rd quarter for up to 150k BPD In service 2H 2015 ATEX Express (Enterprise Products) A three part system to transport ethane from PA to IN, from IN to Mont Belvieu Propane transportation service is anticipated to start in 1Q 2015 Ohio Mariner West - 50 65 MBbl/d Pennsylvania Mariner East 70 MBbl/d Mariner East II 150 + MBbl/d Kinder Morgan Gulf Coast NGL Development of an initial, 200 MBbl/d C2+ NGL pipeline from Tuscarwas Co. to Gulf Coast Conversion of ~900 existing miles plus new construction Expandable to 400 MBbl/d with addition of pump stations Bluegrass (Williams/Boardwalk) Deliver mixed NGLs from the Marcellus and Utica to fractionation and storage facilities in LA Export facility also being developed All facilities planned for in-service 4Q 2015 West Virginia Virginia 21
Conclusion 22
Advantages of Partnering with Blue Racer Gathering Existing Footprint: Gathering exposure through existing trunklines Undiluted Service: 100% ownership of operated pipelines Condensate Gathering Expertise: first to gather condensate in Marcellus Risk Mitigation: BRM s gathering footprint provides producers processing optionality Processing Experience: Veteran processing team has constructed and/or commissioned over 60 processing plants and 20 fractionators Optionality: Multiple residue options Fractionation Premium Netbacks: DTI has the best NGL marketing team in basin Flexibility: Willingness to frac locally or partner with y-grade export projects Diverse Markets Blue Racer is seeking multiple residue gas outlets at each processing plant with flexibility to switch among plants Blue Racer is developing new, diverse outlets for NGLs: new crackers; new pipelines; water borne; and y-grade. The market will dictate where we go, but producer will have options 23