Midwest Supply Update: Alliance Pipeline and Rockies Alliance Pipeline Tony Straquadine Government Affairs Manager
Forward looking statements and information o Certain information contained in this [presentation], including use of the words anticipate, expects, and expected to, constitute forward looking statements and information. Although Alliance [Canada or US] believes that these statements are based on information and assumptions which h 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. Slide 2
Midwest Supply Update About Alliance Pipeline Developments in Canada Development in North Dakota Rockies Alliance Pipeline Slide 3
Alliance Pipeline is one of the longest pipelines in North America Serving WCSB Shippers: Consistently operating since December 2000: US$4.5B Pipeline project executed 1997-2000 2,311 miles from NE BC to Chicago constructed on schedule and on budget Operating at full capacity (1.6 bcf/d) in dense phase ~1100 Btu/scf (25 F HDP) Owned 50% by Enbridge and 50% by Fort Chicago Energy Partners Slide 4
About Alliance Pipeline e High pressure (1440 to 1935 psi) 42-36 inch Efficient compressor stations with expanding waste heat power generation Chicago market hub delivery Alliance Interstates has been at premium to Chicago City Gates Straddled by the Aux Sable Channahon extraction/fractionation plant south of Chicago ANR Guardian NGPL Vector Pipeline Midwestern Chicago LDC s (Nicor & Peoples) Slide 5
Why is Shale Gas important? t It s Abundant : Availability and security of supply is critical Montney, Horn & Bakken plays are maturing Attractive prices: Shale gas will likely create downward pressure on traditional gas supply basins Transportation options : Alliance is uniquely positioned to offer long haul transport to Mid Continent Markets Slide 6
Alliance Pipeline Canadian ad a Open Seasons s Between June 1-July 15, 2009, Alliance held concurrent open seasons for a new gathering receipt and Canadian delivery services Slide 7
Gathering Receipt Service (GRS) (1) (1) (2) (3) (4) Slide 8
(A) Canadian ad a Delivery e Service (CDEL) (C) (B) (B) Sask. (D) Slide 9
Alliance is focused on North Dakota Bakken located in the Williston Basin overlapping Saskatchewan, Manitoba, Montana and North Dakota Estlin Alameda 50+ Bcf of recoverable associated gas reserves - liquids-rich at 1400+ btu/cf Pecan Pipeline deliveries to Alliance Pipeline are starting this fall with a waiver allowing over 1500 btu/cf Towner Wimbledon Source: http://bakkenoil.com/faq/, US Geological Survey, April 2008, Production info: North Dakota website Slide 10
North Dakota NatGas Production Early days for the Bakken/Three Forks/Sanish # OF WELLS PRODUCING NATGAS 2007 2008 YEAR OVER YEAR BAKKEN 415 825 410 MADISON 1522 1517 5 RED RIVER B 276 301 25 TOTAL 2741 2757 16 MMCFD PRODUCED 2007 % TOTAL 2008 % TOTAL2 YEAR OVER YEAR BAKKEN 19 9% 50 21% 158% MADISON 63 29% 58 24% 8% RED RIVER B 27 12% 50 21% 85% TOTAL 219 100% 238 100% 9% *North Dakota Industrial Commission, Department of Mineral Resources, Oil and Gas Division Slide 11
Alliance Pipeline e - Capacity FERC Certificated Capacity - 1.513 Bcfd Contracted t Capacity - 1.325 Bcfd Pecan s Prairie Rose Pipeline targeted to be completed Q4 2009 The remaining unsubscribed capacity will be 108 MMcfd Alliance is capable of serving forecast Bakken associated gas production Slide 12
The Alliance Value Equation Alliance is the best Bakken to Market Option Capacity with expandability Competitive transport rates NGLs capable Slide 13
Rockies Alliance Pipeline e Project Specifics -1,080 Miles - $4.5 Billion - 1.3 1.7 Bcf/d - 1440 psig - NPS 42 - C/S = 6 12 stns Slide 14
RAP will work in concert with Questar Overthrust Pipeline e Williams Opal Pioneer NWP Opal Kern River OTPL CIG Blacks Fork Granger Lost Cabin Wamsutter OTPL RAP CIG REX WIC CIG Echo Springs WIC OTPL REX (White River Lateral) RAP will contract for capacity on Questar Overthrust Pipeline to provide the following interconnections: Opal area Opal Plant Pioneer Plant Blacks Fork Plant Granger Plant Multiple l interstate t t pipelines Wamsutter area Echo Springs Lost Cabin Multiple interstate pipelines Trans Colorado CIG OTPL WIC (White River REX Lateral) White River Hub CIG Enterprise WIC REX QPC NWP/Williams CIG Medicine Powder Bow Cheyenne REX REX WIC Trailblazer RAP Cheyenne Plains RAP White River Hub (Meeker) Enterprise Multiple interstate pipelines Cheyenne (direct to RAP) Powder River pipelines Multiple interstate pipelines Slide 15
RAP will deliver to the Chicago and Mid-Continent markets through a connection to Alliance Pipeline s Hub Alliance Header Delivery Capability Meter Station Delivery Point Capacity Nicor 350 NGPL 1,600 Vector 1,500 ANR 1,150 Midwestern 650 Peoplesl 600 Guardian 1,000 Total 6,850 Alliance Contracted Deliveries 350 2 381 650 3 588 14 1,988 Spare Station Capacity 0 1,598 1,119 500 647 12 986 4,863 Downstream Receipt Capability * Downstream Takaway Delivery Point Capacity Nicor 800 NGPL 1,200 Vector 1,200 ANR 1,000 Midwestern 780 Peoples 600 Guardian 750 Total 6,330 2008 Average Utilization 584 60 1080 1,080 90 100 600 53 2,567 2008 Spare Capacity 216 1,140 120 910 680 0 698 3,764 Alliance, into interstates and Chicago citygates market indices, as reported in Platts Gas Daily, are very closely matched with 99.95% correlation over the past 5 years. * as reported by GPCM 09Q1 Base Case Slide 16
The supply side of Rockies remains competitive Initial production rates in the Rockies rival most shale plays Tight gas recoverable reserves similar to Fayetteville Large shale gas reserves yet to be developed Mmcf/d 9 8 7 6 5 4 3 2 1 0 Barnett 2.1 2.1 Fayetteville Initial Production Rates By Basin (30 Day) Montney 5 Horn River 7 Haynesville 8 Pinedale/Jonah Sources: Wood Mackenzie, BMO, Ultra Petroleum Corp. 85 8.5 Slide 17
With a little help from pricing, Rockies production basins will grow Slide 18
Coal displacement is likely to raise gas demand in the Midwest Slide 19 East North Central (Midwest) region has the largest amount of baseline power production from coal of any in the U.S. Any significant push from Washington to replace coal-fired generation with lower emissions production sources could generate significant demand growth for natural gas, especially in the Midwest Political pressures are likely to boost price basis between Rockies and the Midwest going forward Coal-Based Power Production by US Census Division (TWh) 15 214 Source: EIA, 2008 Full-Year Estimate 237 463 463 TWh of Midwest power generation represents approximately 10 Bcf/d of gas demand 147 241 234 423 19
Key RAP advantages a Integrated pipeline solution to deliver Rockies gas to market with a seamless single rate service Optimizes and utilizes existing system capability Expansion capability from 1.3 Bcf/d to 1.7 Bcf/d Initial fuel rate = 1.42% (Wamsutter Chicago) Delivery to an integrated delivery hub with Alliance Pipeline for over 3 Bcf/d of combined flow Well established, highly liquid delivery point into Chicago market Slide 20
Current RAP status Open Season ended June 16, 2008 Initial interest t = 480,000000 Dth/d of subscriptions Second Open Season pending market stabilization Capacity 1.3 Bcf/d expandable to 1.7 Bcf/d Project Scope Capital Cost $4.5 Billion Length = 1080 miles Size and Pressure = 42 @ 1440 MAOP Slide 21
Slide 22 Summary North American is poised to be a natural gas power house Shift to environmentally friendly natural gas Shale plays in North America will play an important role in energy mix Alliance offers opportunities to move Montney, Bakken and Rockies gas to market October 1, 2009 Northeast B.C. Natural Gas Summit
Key Contacts: Bob Blattler Business Development Manager bob.blattler@alliance-pipeline.com (403) 517-6431 Tony Straquadine Government Affairs Manager tony.straquadine@alliance-pipeline.com (952) 983-1005 Cathie Legge Manager Customer Service cathie.legge@alliance-pipeline.com lli i li (403) 517-6585 Joi Wollen Manager Gas Control joi.wollen@alliance-pipeline.com (403) 517-6540 Brian Troicuk Regulatory Affairs Manager brian.troicuk@alliance-pipeline.com (403) 517-6354 Slide 23