Argus Americas Crude Summit 2009 PAA Terminals and Expansion Projects John Keffer Vice President, Terminals Houston, Texas January 27, 2009
Forward-Looking Statements & Non-GAAP Financial Measures Disclosure This presentation contains forward-looking statements, including, in particular, statements about the plans, strategies and prospects of Plains All American Pipeline, L.P. ( the Partnership or PAA ). These forward-looking statements are based on the Partnership s current assumptions, expectations and projections about future events. Although the Partnership believes that the expectations reflected in these forwardlooking statements are reasonable, the Partnership can give no assurance that these expectations will prove to be correct or that synergies or other benefits anticipated in the forward-looking statements will be achieved. Important factors, some of which may be beyond the Partnership s control, that could cause actual results to differ materially from management s expectations are disclosed in the Partnership s most recent 10-K, 10-Q and 8-Ks filed with the Securities and Exchange Commission. This presentation also contains non-gaap financial measures, such as EBITDA. For a presentation of the most directly comparable GAAP measures and a reconciliation of the two as well as additional detail regarding selected items impacting comparability, you can visit our website at www.paalp.com. Click on the Investor Relations section on our homepage followed by the Non-GAAP Reconciliations link. You will also find such reconciliations at the end of this presentation. 2
Plains All American Profile (NYSE: PAA) Aggregate Size/Yield Total Assets (9/30/08) $11.9 B Book Equity (9/30/08) $3.7 B Book Cap. (9/30/08) $6.9 B Enterprise Value * $7.9 B Equity Market Cap. * $4.6 B Fortune 500 Rank 121 Unitholders ~69,000 Current Yield* ($3.57 annualized) ~9.4% * Based on 01/16/09 closing unit price; excludes value of GP. Public Guidance Midpoint (1) 2008 Adjusted EBITDA $887 MM 2008 Adjusted Net Income $476 MM Assets (2) : Pipelines (active miles) ~20,000 miles Storage ~76 MMBbls LPG Railcars ~1,400 Truck Fleet ~620 Trucks ~1,100 Trailers Barge Fleet (Settoon) ~62 Barges ~32 Tugs Crude, Product & LPG Volumes: >3.0 MMBbl/d Operational Metrics Operational footprint: Domestic >40 States Canada 5 Provinces Employees ~3,100 (1) EBITDA and Net Income are the midpoint of PAA s public guidance furnished via 8-K on November 5, 2008 and exclude selected items impacting comparability. (2) Includes owned or leased assets as of 12/31/07 3
PAA s Business Model Complements Established Supply & Demand Trends on a U.S. and Regional Basis U.S. Crude Oil Supply & Demand (Millions of Barrels per Day) 18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Refinery Inputs: 15.1 MMbbls 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 LPG Domestic Supply Shortfall 10.0 MMbbls Production: 5.1 MMbbls Seasonal shifts in regional demand: Alternating needs of refineries to store/blend Complex transportation logistics Shortage of diluent for Canadian heavy oil Inefficiency caused by multiple supply sources and numerous regional supply and demand imbalances U.S. Imports of Refined Products (Millions of Barrels per Day) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Imports: 3.4 MMbbls 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 U.S. Natural Gas Supply & Demand (Billions of Cubic Feet per Day) 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Consumption: 63.1 Bcf Domestic Supply Shortfall: 10.8 Bcf Production: 52.3 Bcf 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Energy Information Administration 4
PAA s Business Platform Primary & Developing Primary Crude Oil LPG Producers Transportation, Facilities, Marketing Refiners Refinery Transportation, Facilities & Marketing Truck Pipeline Truck Retail Distribution Pipeline Gas Plants Pipeline Gathering Barge Injection Station Terminal / Storage / Exchange Location Pipeline Above Ground or Underground Storage Chemical Plants Tanker Rail Car Diluent for Heavy Crude Developing Refined Products Natural Gas Storage Refineries Transportation, Facilities & Marketing Gas Stations Producers Facilities End Users Barge Pipeline Storage Common Carrier Pipeline Bulk Storage Terminal Gathering Pipeline Common Carrier Pipelines Injection / Withdrawal Facilities Common Carrier and LDC Pipelines Salt Dome Depleted Reservoir Tanker Underground Storage LNG Tanker 5
Today, PAA is Well Positioned to Meet Complex Demands of U.S. Energy Markets PAA Business model underpinned by storage assets at key market hubs = Key Market Hub Import data from Energy Information Administration: Crude Oil & Refined Products daily average from past 52 weeks ending October 12, 2007. Natural Gas, 2005 annual. Note: Some terminals capable of receiving both Crude Oil and Refined Products 6 Crude oil Cushing (OK) St. James (LA) Mobile (AL) Kerrobert (SK) Los Angeles (CA) (incl. Pier 400) Midland (TX) Patoka (IL) Refined products LPG Martinez (CA) Richmond (CA) Philadelphia (PA)/ Paulsboro (NJ) Bakersfield (CA) BumStead (AR) Tirzah (SC) Natural Gas / LNG Bluewater (MI) Pine Prairie (LA)
Multiple Factors are Driving Increased Demands for Storage Continued imports By tanker (storage needed to break down bulk transfers and deliver ratably) From Canada through pipelines (storage needed to stage crude) Of light products to handle Canadian Diluent requirements Increasing need for segregation resulting from Additional crude grades & nominal imported barrel increasingly heavy and sour Refineries needing increased flexibility for refined product and crude oil blending and segregations API 653 DOT has mandated that all tanks connected to DOT regulated pipelines comply with API tank standards by May 2009 Expect that many tanks will be taken out of service (some temporarily maybe permanently), increasing the need for replacement tankage and driving up the value of tankage in service 7
Storage Required for Foreign Imports Waterborne & Pipeline Imports Import Tankers Tankage ensures ability to stage crude and deliver ratable supply to refiners Refinery 1 2 MMbbl. Cargoes Pipeline 50,000 bpd Feedstock Requirement Additional operational tankage required to enable batching on new pipelines under construction Imported Canadian barrels require segregation Need to source LPG as diluent to enable heavy crude transport Additional tankage required to handle increases in crude and product imports into the Gulf, East and West Coasts Crude & Product Imports Canadian Crude US Crude / Foreign Crude & Products Diluent Patoka St. James Diluent Product Imports 8
Refinery Inputs Reflect Changing Crude Mix Additional storage needed to segregate increasingly heavy and sour crude types 1.6 1.5 1.4 1.3 1.2 1.1 1 0.9 0.8 U.S. Refinery Crude Oil Input Qualities 33.4 32.9 32.3 31.8 31.2 30.7 30.1 29.6 29.0 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 Sulfur Content API Gravity Source: Energy Information Administration 9
PAA owns and continues to expand storage at strategic crude oil trading hubs PAA Capacity: ~ 11 MMBLS SEM PAA (3) COP COP Keystone Osage COP Cushing PAA Spearhead BP Ozark W Tulsa Sun Enbridge Keystone Capwood WoodPat Mustang Patoka XOM Capline Locap Chicap PAA Capacity: 3.4 MMBLS Under Construction Marathon (3) Marathon SEM XOM (3) Capline Marathon Sun OXY OXY PAA (Basin) Inbound pipelines Outbound pipelines Proposed or Announced Seaway PAA (Red River) PAA Capacity: ~7 MMBLS (Current + Construction) 10 SPR / Shell Ship Shoal Shell St James XOM Note: Pipelines shown are to hub locations and may not be directly connected to PAA facilities. Shell Miss. River Loop / Locap
Cushing Terminal Recently Completed $50 Million Phase VI Expansion Significant expansion activity in Cushing Recent/Current Owner Expan. (1) Total (1) PAA 3.4 10.8 EEP 5.0 15.5 SEM 6.1 10.9 TPP 3.0 6.1 Drivers Need to Segregate Increased Canadian crude oil Contango market / financial participants API 653 Status of PAA Tankage Leases are term contracts primarily with refiners and producers Refiners use tankage for operations Balance used for PAA strategies (1) Based on PAA estimates. Note: Pipelines shown are to Cushing hub and may not be directly connected to PAA facilities. 11 Sun SEM PAA (3) SEM OXY COP COP OXY Keystone Osage PAA (Basin) Cushing COP Seaway Inbound pipelines Outbound pipelines Proposed or Announced PAA Spearhead BP Ozark W Tulsa Sun PAA (Red River)
Our Cushing Terminal Post Phase VI Expansion ~ 11 MMBLS of storage Interconnected (directly or indirectly) to all incoming/outgoing pipelines Manifold capacity - 800,000 barrels per day Tanks average less than 7 years of age PAA owns sufficient land to expand 12
Thoughts on Cushing Storage Capacity / Contango Crude Market Much Discussion of Cushing Storage Resulting From Current Contango Market Media sources report current Cushing shell capacity from 42.4 47.5 million barrels When is Cushing Full? Working capacity different from shell capacity Depending on age and design of tanks, working capacity ~80% ~85+% of shell capacity Cushing is an operational hub servicing refiner and producer activities Cannot utilize all of theoretical working capacity for storage due to: Mismatched pipeline capacities / volumes of incoming and outgoing crude shipments Refiner usage of tankage for segregations and custom blending requirements For these reasons previous Cushing storage utilization high was estimated ~78% of shell capacity (April 2007) after barrels stranded at Cushing due to McKee refinery outage Extended periods of contango market structure can increase storage efficiency 13
St. James Terminal ~7 MM barrels (once currently announced projects complete) Phase I (3.5 MMbls) placed in service in 2007 Phase II (2.7 MMbls) 2.0 MMBLS completed; remaining 700,000 bbls expected to be in service in first half of 2009 Phase III (0.9 MMbls of light product tankage and dock) Locap XOM (3) SPR / Shell Ship Shoal Capline (PAA) St James Marathon Shell Shell XOM Loop / Locap Inbound pipelines Outbound pipelines Proposed or Announced Miss. River One of the most liquid crude oil markets in the U.S. Drivers Refinery Expansion/Upgrades Increasing Gulf of Mexico Production Supports PAA Merchant Activities Note: Pipelines shown are to St. James hub and may not be directly connected to PAA s facility. 14
Patoka Terminal Phase I $87 Million total cost 2.8 Million Barrels Phase II 600,000 Barrels of light product tankage Pipeline connected to PAA terminals at St. James, Cushing, Edmonton & Kerrobert Existing terminals include: Capline ExxonMobil Marathon 6.2 MMBbls 2.1 MMBbls 2.2 MMBbls Significant expansion in Patoka PAA EEP Current Status 3.4 MMBbls 2.0 MMBbls CAPP approved terminal Phase I expected to be in service Q1 2009 Note: Pipelines shown are to Patoka hub and may not be directly connected to PAA s facility. Inbound pipelines Outbound pipelines Proposed or Announced 15 Keystone Capwood (PAA) WoodPat XOM Enbridge Mustang Canadian Crude Patoka US/Foreign Crude Chicap Marathon (3) Capline (PAA) Diluent Patoka Diluent Marathon
Patoka Terminal Fundamental Drivers Planned Pipeline Projects to/from Patoka will require operational tankage Keystone (24 lateral from Wood River) Enbridge Southern Access Significant influx of new crude grades Heavy bitumen from Canada Synthetic grades Condensate for Southern Lights New tanks potentially used for Segregating crude grades Custom blending for refinery requirements Staging batches Market Structure (Contango) Keystone Capwood WoodPat XOM Enbridge Mustang Patoka We believe these changes will cause the Patoka hub to evolve from an intersection of pipelines to an increasingly important trading location Capline Chicap Inbound pipelines Outbound pipelines Proposed or Announced Marathon (3) Marathon Note: Pipelines shown are to St. James hub and may not be directly connected to PAA s facility. 16
Additional U.S. Tank Expansion Projects Paulsboro, PA (Refined Products) $44 million total cost 8-tank expansion for total of 1 million additional barrels of capacity Placed 450,000 barrels into service during 4Q08 and expect to place remaining 550,000 barrels into service during 2Q09 Ft. Laramie Crude Oil Tank Construction $34 million total cost 6-tank expansion for total of 900,000 barrels Tanks staged into service throughout 2008 with final capacity in service 4Q08 17
Additional U.S. Tank Expansion Projects Martinez (West Coast) $33 million total cost 850,000 barrels refined product expansion, brings total to 4.8MM barrels* Leased to 3rd Parties Final capacity brought into service during 1Q08 West Hynes (West Coast) 550,000 barrels crude oil expansion Leased to 3 rd Parties In service by end of 2008 * A portion of this capacity is attributable to crude storage 18
Why Customers Choose PAA Service & Expertise PAA recognized by refiner customers as delivering superior service and expertise in terminalling and storage; When customers have technical and operational problems, they have been known to seek PAA s expertise for help with solutions Flexible Assets PAA assets known for superior operational flexibility, enabling refiners to meet precise requirements PAA is a service provider, not a refiner; therefore, minimized competitive sensitivity As a result, PAA is a provider of choice to meet customer s terminalling and storage needs Leads to additional future expansion possibilities 19
Non-GAAP Reconciliations 2003-2009 EBITDA Reconciliations (Dollars in Millions) 2003 2004 2005 2006 2007 4Q08(G) 1 2008(G) 1 2009(PG) 2 Reported Net Income $59 $130 $218 $285 $365 $117 $456 $492 Interest Expense 35 47 59 86 162 54 197 210 Depreciation & Amort. 46 69 84 100 180 54 204 225 Other - - - (1) 16 4 11 23 Reported EBITDA $140 $246 $361 $470 $723 $228 $867 $950 SFAS 133 - (1) 19 4 24 - (72) - Other 29 8 28 36 32 7 92 - Selected Items Impacting Comp. 29 7 47 41 56 7 20 - Adjusted EBITDA $169 $253 $408 $511 $779 $235 $887 $950 Note: Amounts may not recalculate due to rounding. Additional Non-GAAP Reconciliations can be found on our website at www.paalp.com 1. Midpoint of 4Q and full-year 2008 guidance as found in Form 8-K issued on November 5, 2008 2. Midpoint of 2009 Preliminary Guidance found in Form 8-K issued on May 29, 2008 20