2011 LDC Gas Forum Canada / IGUA

Transcription

1 2011 LDC Gas Forum Canada / IGUA Tony Straquadine Manager, Government Affairs

2 Forward looking statements and information Certain information contained in this presentation, including use of the words anticipate, expects, and expected to, constitute forward looking statements and information. 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 LDC Gas Forum - Canada / IGUA

3 Agenda Alliance Pipeline System Background WCSB Supply / Export Fundamentals Future Demand Expectations Alliance Competitiveness Serving Producers & Market Demands - New Projects: ACE Hub Tioga, ND Lateral Closing Remarks 3 LDC Gas Forum - Canada / IGUA

4 Alliance Ownership & System Background Strong and stable ownership 50% Enbridge TSX:ENB / NYSE:ENB 50% Veresen TSX:VSN Unique 1.6 Bcf/d Natural Gas System British Columbia to Chicago Entered service in 2000 Highly reliable Fuel efficient 2988 kilometer of 36 high pressure system (1740 psi in Canada / 1935 psi in the US) Dense phase operation accepting up to 1500 btu associated gas and NGL injections Aux Sable Liquid Products owned 2.1 Bcf/d - state of the art - fractionation facility located on Alliance s delivery header south of Chicago and directly connected to key North American NGL markets 4 LDC Gas Forum - Canada / IGUA

5 The Alliance Pipeline System Taylor 11 years of safe operations Transport capacity of 1.6 Bcfd of which Bcfd contracted through 2015 Over 6 Tcf has been transported since start-up 5 LDC Gas Forum - Canada / IGUA

6 Western Canadian Sedimentary Basin Fundamentals To paraphrase: Reports of WCSB death are greatly exaggerated! Growth in WCSB unconventional shale gas plays (beginning in BC and moving into Alberta) will offset declining conventional production in Alberta Growth is sufficient to supply growing oil sands demand Current WCSB export flows are maintained Sweet spot for Alliance connected to the Midwest market Growth in WCSB supply coupled with growth in Midwest demand supports basis strengthening Marcellus does not materially push back into Midwest markets 6 LDC Gas Forum - Canada / IGUA

7 2011 WCSB Production Forecast Forecasts of BC production from the Horn and Montney are being revised upwards Supply Growth near Alliance Pipeline Since last year Alliance s Montney forecast has doubled from a peak of 2.5 Bcf/d year to a peak of 5 Bcf/d Indications from producers also suggest that future planned production profiles are being raised 7 LDC Gas Forum - Canada / IGUA

8 Supply Story Within 40 Kilometers of APL Production within 40 Km s of APL is projected to grow to 7+ Bcf/d while overall WCSB production has declined 15% since 2001 ~ 1/3 of WCSB production lies within the 40 km radius of Alliance APL forecasts that production within this radius will grow another 35% by 2020 over 2010 levels Alliance s close proximity to the growth allows connection for relatively low cost 8 LDC Gas Forum - Canada / IGUA

9 WCSB to Chicago - Basis Forecasts Supply-demand dynamics suggest that AECO-Chicago basis will widen significantly over 2010 levels * Wood Mackenzie s forecast is sourced from the April 2011 Long-Term View. Wood Mackenzie has just issued its October 2011 Long-Term View which is still being reviewed by APL 9 LDC Gas Forum - Canada / IGUA

10 Future Natural Gas Demand? Significant new Shale Gas Production will continue to moderate gas prices Proposed Environmental Regulations are expected to enhance demand: U.S. EPA proposed Clean Air Act - Maximum Achievable Control Technology rules will drive natural gas demand: Predicable prices, due to abundant supply Cost effective plant replacement (base load & peaking capability) Natural gas is viewed as the environmentally preferred fossil fuel 10 LDC Gas Forum - Canada / IGUA

11 Demand Growth in the US Midwest WoodMac forecasts significant US demand growth ~2 Bcf/d growth in Midwest demand from power generation Full utilization of WCSB pipes to Chicago Causation includes rising coal prices and new emissions standards the U.S. EPA Clean Transport Rule, new mercury standards (released March 2011), future federal carbon legislation 11 LDC Gas Forum - Canada / IGUA

12 Large Fuel Switching Potential for Midwest Power Generation 51% 31% 7% 9% 1% 63 % 63% MISO 14 % 7% 17 % 0% 13% 9% 9% 5% 70% NYISO ISO -NE 5% 18% 7% 0% West 41% 36% 64% 18% 5% 1% 27% 8% 1% 1% PJM 12 CALISO * Source: FERC, EIA & RTO s 7% 40% 47% SPP 6% 0% 70% 5% 18% 7% 0% ERCOT 46% 34% 12% 7% 2% South Nuclear Coal Gas & Oil Renewables Other

13 Large Fuel Switching Potential for Midwest & US Power Generation Existing unutilized natural gas generation capacity in the Midwest & US overall could compensate for 100% of coal generation 13 LDC Gas Forum - Canada / IGUA Source: EIA, 2009 statistics

14 Alliance Competitiveness: Supply available to Alliance is greater today than at any time and it is anticipated to continue growing suggesting that Alliance will remain full Significant gathering and processing capacity and mainline transmission will be required by our competitors to accommodate growth in western Alberta and northeast BC (the heart of Alliance s Gathering Zone) Competitor s future tolls are anticipated to continue to be out-ofthe money while Alliance expects to be in-the-money Alliance will be gas-on-gas Competitive with Alternatives Intra-BC/Alberta tolls will be very competitive Export transmission tolls will be compelling and predictable 14 LDC Gas Forum - Canada / IGUA

15 Future Alliance Services The preponderance of foundational transport arrangements on Alliance expire at the end of 2015 a timely market opportunity for producers, marketers and end users New Canadian and US services are in development to best serve markets in each country while continuing the important long haul delivery to the ACE Hub complex for Midwest delivery The service opportunities include: NGL rich gathering of tight BC and Alberta associated gas NGL rich gathering of North Dakota associated gas Market deliveries for conventional uses, power generation and resurgent industrial demand 15 LDC Gas Forum - Canada / IGUA

16 ACE Hub Delivery & Receipt Capacity Downstream Receipt Capacity * Delivery Point Destination Market Downstream Takeaway Capacity 2010 Average Utilization Spare Capacity ANR Northern Illinois, Michigan Guardian Wisconsin Horizon Midwestern Nicor NGPL Peoples Vector Northern Illinois Indiana, Illinois, Kentucky Chicago, Illinois Northern Illinois, Indiana Northern Illinois Ontario (Dawn) Northern Michigan Total * Volumes in MMcf/d New Hub Services from Dec 2011 Park and loan Wheeling Title transfer * Source: RBAC Inc., Gas Pipeline Competition Model, 11Q2 Case 16 LDC Gas Forum - Canada / IGUA

17 Forecast North Dakota Natural Gas Production By County Source: Enerdeq & N.D. Department of Minerals Management 17 LDC Gas Forum - Canada / IGUA

18 Introducing: Tioga Lateral Project 18 LDC Gas Forum - Canada / IGUA

19 Closing Remarks WCSB and the Bakken will continue to remain attractive as supply basins for gas for delivery to the Chicago marketplace Natural Gas usage will increase due to an improving clearing price relative to the full cycle cost of coal and other alternatives Repowering to improve the environment, NATURAL GAS share will grow in a resurgent energy market Alliance offers value to a dynamic Midwest market, sourcing emerging Western Canada and North Dakota supply Thank you! 19 LDC Gas Forum - Canada / IGUA

20 Alliance Business Contact Tony Straquadine Manager, Government Affairs Direct: (952) LDC Gas Forum - Canada / IGUA