Low Risk, Sustainable Growth

Transcription

1 Low Risk, Sustainable Growth 7 th Annual Wachovia Pipeline and MLP Symposium December 2008 #1

2 Legal Notice Certain information during this presentation will constitute forward-looking statements. These will include, but are not necessarily limited to, throughput volumes, financial projections, expansion or acquisition projects, external economics, financing assumptions and competitive factors. These statements are based on certain assumptions made by management. Accordingly, actual results may differ materially from current estimates. You are referred to the Enbridge Energy Partners' SEC filings, including the annual report on Form 10-K and quarterly reports on Form 10-Q, for a more detailed discussion of risk factors. This presentation will make reference to certain financial measures, such as adjusted net income, which are not recognized under GAAP. Reconciliations to the most closely related GAAP measures are available in the investor section of the Partnership's website at enbridgepartners.com. #2

3 Enbridge - EEP Strategic Position in North America Inuvik Normal Wells Fort St. John Zama Fort McMurray Cheecham Edmonton Hardisty Seattle Portland Salt Lake City Casper Clearbrook Superior Montreal Ottawa Toronto Buffalo Sarnia Toledo Chicago Saint John Cushing Wood River Patoka Liquids Pipelines Major Projects Gas Pipelines Gas Distribution Houston Wind Farms #3

4 Enbridge - EEP Main System Expansions Crude Oil Fort McMurray Cheecham Edmonton Hardisty Clearbrook Superior Ottawa Montreal Cushing Wood River Chicago Manhattan Patoka Sarnia Toledo Toronto Buffalo Mainline Expansion Projects Southern Access Alberta Clipper Line 4 Diluent Supply Project Southern Lights Houston #4

5 EEP Business Model Prudent Growth Based on strong supply/demand fundamentals Industry / Customer commitment y Execution risk largely mitigated Seattle Regina Growth Portland Salt Lake City Casper Kansas City Clearbrook Superior Chicago Sarnia Ottawa Toledo Montreal Toronto Buffalo Saint John El Dorado Cushing Wood River Patoka Income Houston Safety Predictable Income Stream Attractive yield, stable distributions Strong diversified asset base Significant cash flow increase in next two years Low Risk Proven Business Model Long history through different economic cycles Growth projects enhance business profile Minimal commodity price exposure #5

6 Strong Diversified Asset Base ~ 60% crude - 40% natural gas (by Operating Income) Uniquely positioned to connect growing production from oil Chicago Wood River Patoka Toledo Buffalo sands to key U.S. refinery markets More than 10% of US crude imports go through EEP s Cushing Lakehead System Natural gas gathering, treating, Houston processing and transmission systems in core growth areas EEP Liquids Systems EEP Gas Systems Enbridge Liquids Systems EEP gathers more than 20% of gas from the Anadarko, North Texas & East Texas service areas #6

7 Low Risk Business Model More than 70% of net income comes from regulated businesses Increasing as new projects are in-service Limited capital cost risk on major projects Low credit risk More than 80% of top 30 counterparties are investment grade companies Limited commodity price risk 7.5% cash flow at risk (CFaR) limit Gas contracts by type in 2007: 35% fee based, 22% keep-whole, 43% PoP & PoL Commodity risk exposure is managed through 5 year rolling hedging program, which further reduces risk profile. #7

8 Oil Sands Supply & Demand Actual Forecast Actual Forecast 2008 Potential Extended Markets (East/West Coast, PADD III) Raw Bitumen Synthetic Crude Raw Conventional Heavy Imported & Recycled Condensate Pentanes Plus Conventional Light PADD II PADD V PADD IV Eastern Canada Western Canada Source: Enbridge Inc. #8

9 Developing Markets for Western Canadian Crudes Current Canadian Supply Total Refining Capacity #9

10 Current Crude Oil Projects Clearbrook Superior Minneapolis Toronto Delavan Flanagan Chicago Sarnia Toledo Buffalo Wood River Robinson Canton Lima Cushing Patoka Catlettsburg Enbridge Partners Southern Access Expansion Alberta Clipper Expansion North Dakota Expansion Corsicana Houston Beaumont New Orleans #10

11 Natural Gas Supply & Demand Production in Anadarko, North TX and East TX expected to continue to grow by 1-2% per annum A Waha C Carthage B Perryville Bethel Henry Hub Houston Katy A B C Anadarko Service East Texas Service Fort Worth Service Interstate Corridor Palo Duro Pipeline LNG East Texas Expansion North Texas Link East Texas Extension Source: Enbridge Forecast #11

12 Rig Count in Core Areas Strong activity remains in our core areas, despite recent slowdown Anadarko 6 County AOI - Weekly Rig Count Fort Worth Basin - Weekly Rig Count SEP 5 SEP 12 SEP 19 SEP SEP 5 SEP 12 SEP 19 SEP East Texas Basin - Weekly Rig Count SEP 5 SEP 12 SEP SEP #12

13 Natural Gas Infrastructure Requirements Major Changes in Gas Flows Increased Flow WCSB Decreased Flow (1) Bcf/d (2) Bcf/d 1 Bcf/d Rockies 1 Bcf/d 2 Bcf/d 2 Bcf/d East Coast LNG 1 Bcf/d Midcon / East TX 3 Bcf/d (2) Bcf/d Source: PIRA Gulf of Mexico 1 Bcf/d Gulf Coast LNG #13

14 Current Natural Gas Projects Barnett Shale Clarity project nearing completion to increase market access for producers in East and North Texas to large industrial base in SE Texas and several interstate pipelines Aker Teague Bethel Plum Creek Henderson Double D Carthage Haynesville Shale New treating and HCDP plants provide competitive advantage, as East Texas volumes are approaching capacity Grapeland Well positioned to provide access Processing Plants Existing New HCDP Treating Plants Existing New Marquez Clarity Bossier Sands to Haynesville Shale, Barnett Shale and Bossier Sands Haynesville emerging shale play Illustrative map does not include all EEP facilities #14

15 Main Projects Successfully executing commercially secured organic expansion program Expected CAPEX Estimated Incremental Annual EBITDA* Southern Access Expansion $2.1 B Stage 1: $160 MM Stage 2: $80 MM Risk Profile 30-yr Cost of Service agreement limited capital cost risk no volume risk Capacity/ In-Service date Stage 1: 190 kbpd Commissioned Stage 2: 210 kbpd Apr Alberta Clipper Expansion $1.2 B $175 MM 15-yr renewable cost of service agreement limited capital cost risk no volume risk North Dakota Expansion $0.2 B $50 MM Phase 5: 5-yr cost of service Phase 6: 7-yr cost of service No capital cost risk no volume risk 450 kbpd Mid 2010 Phase 5: 30 kbpd In Service Phase 6: 50 kbpd Clarity $0.6 B $80 MM + Acreage / supply dedications 700 mmcf/d Commissioned * For first full year of operations #15

16 Overview of Core Liquids Projects Risk Framework Tolling Methodology Capital Cost Contract Term Volumetric Operating Cost Counter Party Cost of Service Rolled-In Pass through Shared although capped within a band Shared Depreciable life For contract arrangements we look for long term fixed contracts with incentives for early renewal Cost of service and rolled-in None Shared with incentives Investment grade counter parties or equivalent with credit support #16

17 Tolling Methodology Example: Alberta Clipper Surcharge Cost of Service Surcharge stipulated inputs are: Debt / Equity ratio 45% / 55% Rate Base Capex, annual maintenance costs, pipeline integrity costs, among others. Return on Equity NEB multi-pipeline rate (8.71% for 2008) plus 225 basis points Cost of Debt Taxes Weighted average cost of long-term debt incurred for the project Income tax allowance under FERC s policy Operating Expenses Power costs are a flow through All other operating expenses recovered (calculated based on actual expenses and adjusted for inflation) #17

18 Capital Program Projects expected to be on budget and on time 2,200 2,000 1,800 ($ millions) 1,600 1,400 1,200 1, Gas Liquids Gas Liquids Gas Liquids Alberta Clipper Southern Access Other Liquids Natural Gas 18 #18

19 Funding of Capital Program Available Liquidity - $1.7B of term committed credit facilities; $1B undrawn; new equity subscribed by General Partner $1.2 billion, revolving term credit facility diversified across 13 lenders (matures in 2013) $0.5 billion, revolving term credit facility with a subsidiary of Enbridge Inc. (matures in 2010) $0.5 billion Class A shares subscribed by General Partner Capital sources: Existing Payment-in-Kind securities Incremental cash from operations Sales of non-core assets Support from identified institutional investors Public market transactions Support from General Partner #19

20 Financial Strength and Flexibility Sufficient short term liquidity $2.9 Billions $ Enbridge Inc. (C$) Facility Usage Available Liquidity EEP (US$) #20

21 Financial Profile Growth has been managed with a view to managing the balance sheet and preserving financial flexibility % 53% 53% 50% 48% 52% EBITDA $ millions LTM 2008 Q3 0 EBITDA * Adj Debt/Cap * Excludes FAS 133 non-cash adjustments and other non-cash adjustments #21

22 Summary Low Risk Business Model Strong Competitive Position Prudent Growth Financial Strength Support from Enbridge Inc. #22