Crude Oil Forecast, Markets and Pipeline Expansions June 2007

Transcription

1 REPORT Crude Oil Forecast, Markets and Pipeline Expansions June 2007

2 Background The Canadian Association of Petroleum Producers (CAPP) represents 150 producer member companies that explore for, develop and produce natural gas, natural gas liquids, crude oil, oil sands, and elemental sulphur throughout Canada. CAPP member companies produce more than 95 percent of Canada s natural gas and crude oil. CAPP also has 130 associate members that provide a wide range of services that support the upstream crude oil and natural gas industry. Together, these members and associate members are an important part of a $100 billion-a-year national industry that affects the livelihoods of more than half a million Canadians. Disclaimer This publication was prepared by the Canadian Association of Petroleum Producers (CAPP). While it is believed that the information contained herein is accurate under the conditions and subject to the limitations set out, CAPP does not guarantee its accuracy. The use of this report or any information contained will be at the user s sole risk, regardless of any fault or negligence of CAPP. 2100, th Ave. S.W. Calgary, Alberta Canada T2P 3N9 Tel (403) Fax (403) communication@capp.ca 403, 235 Water Street St. John s, Newfoundland Canada A1C 1B6 Tel (709) Fax (709) Website:

3 1 EXECUTIVE SUMMARY CRUDE OIL PRODUCTION AND SUPPLY FORECAST Introduction Canadian Crude Oil Production Western Canadian Crude Oil Production Oil Sands Conventional Crude Oil Production Western Canadian Crude Oil Supply Summary CRUDE OIL MARKETS Introduction Canada Western Canada Ontario Québec United States PADD I PADD II Northern PADD II Eastern PADD II Southern PADD II PADD III PADD IV PADD V Washington California Asia Summary CRUDE OIL SUPPLY FORECAST AND MARKET DEMAND Light Crude Oil Supply versus Market Demand Heavy Crude Oil Supply versus Market Demand Western Canadian Crude Oil Supply versus Market Demand CRUDE OIL PIPELINES Major Crude Oil Pipelines Existing Crude Oil Pipelines Enbridge Pipelines Kinder Morgan (Trans Mountain) Pipeline Kinder Morgan Express-Platte Pipelines Enbridge Spearhead Mustang Pipeline ExxonMobil Pegasus Crude Oil Supply Transportation Requirements Crude Oil Pipeline Expansions/Proposals from Western Canada Kinder Morgan TMX

4 5.4.2 Enbridge Southern Access Expansion/Extension Enbridge Light Sour Line TransCanada Keystone Enbridge Line 4 Extension Enbridge Clipper Enbridge Line 5 Expansion Enbridge Line 6B Expansion Enbridge Line 6C Enbridge Line 14 Extension TransCanada Keystone Heartland Extension Crude Oil Pipeline Proposals in the United States BP Pipelines (North America) Minnesota Pipeline Enbridge North Dakota ExxonMobil Pipeline Enbridge Spearhead Enbridge Chicago to Lima Post 2011 Crude Oil Pipeline Proposals from Western Canada Altex Energy Ltd Enbridge Gateway Kinder Morgan Trans Mountain TMX 2 and TMX Kinder Morgan Express/Platte Pipeline Systems Kinder Morgan United States Gulf Coast (USGC) TransCanada California Enbridge Montreal-to-Sarnia (Line 9) Reversal Enbridge Eastern PADD I Access Sunoco Pipeline Enbridge Spearhead Looping TransCanada Keystone Cushing Extension Post 2010 Crude Oil Pipeline Proposals from Patoka, Illinois and Cushing, Oklahoma to the USGC ExxonMobil Pipeline Enbridge Pipelines Joint Initiative TEPPCO TransCanada Gulf Coast Diluent Pipeline Proposals Enbridge Southern Lights Enbridge Gateway Diluent BP Pipelines (North America) CONCLUSIONS APPENDICES CAPP Canadian Crude Oil Production Forecast Pipeline Planning Case CAPP Canadian Crude Oil Production Forecast Moderate Growth Case CAPP Canadian Crude Oil Supply Forecast Pipeline Planning Case CAPP Canadian Crude Oil Supply Forecast Moderate Growth Case Historical Production Oil Sands Projects (includes merchant upgraders) Crude Oil Pipelines and Refineries North American Crude Oil Pipeline Proposals

5 1 EXECUTIVE SUMMARY The Canadian Association of Petroleum Producers (CAPP) prepares an annual long-term forecast of Canadian crude oil production and supply. This year, CAPP s outlook also looks at the potential demand in various markets, and the proposed pipelines to these markets. CAPP has prepared two production and supply cases the Pipeline Planning Case and the Moderate Growth Case. In the Pipeline Planning Case, western Canadian crude oil supply is projected to increase from 2.4 million b/d in 2006 to almost 5.3 million b/d in 2020 while in the Moderate Growth Case, supply rises to about 4.6 million b/d. The primary reason for the difference is that in situ projects ramp up at a more gradual pace in the Moderate Growth Case. In both Cases, however, oil sands growth is significant. Due to the maturity of the basin, conventional crude oil supply in western Canada continues to decline. The expected growth in western Canadian crude oil supply will require additional pipeline capacity to meet demand from existing and new markets. To assess this requirement, CAPP surveyed refineries in traditional and some potential new markets. The survey results showed that demand for western Canadian crude oil by Canadian refineries is expected to rise from 765,000 b/d in 2006 to almost 1.1 million b/d in 2015, a 44 percent increase. As expected, the majority of the growth will be heavy crude oil and light synthetic. Over the same period, United States total refinery demand for western Canadian crude oil is projected to increase from about 1.6 million b/d to almost 3.1 million b/d, a 100 percent growth. Demand for heavy crude oil is by far the largest of the crude types. The refinery survey results indicate that traditional markets (i.e. western Canada, Ontario, upper PADD II, PADD IV and Washington State) in Canada and the United States will continue to process large volumes of western Canadian crude oil. There is, however, potential for expansions into new markets such as Québec, eastern PADD I, southern and eastern PADD II, PADD III, California and Asia Western Canadian Crude Oil Supply, Market Demand and Refining Capacity (thousand barrels per day) Western Canadian Supply 2, Western Canadian Crude Oil Supply, Market Demand and Refining Capacity (thousand barrels per day) Western Canadian Supply 4,400 Western Canada 560 / 610 Ontario 205 / 383 Western Canada 624 / 610 Ontario 470 / 383 Washington 97 / 625 California 7 / 2,000 PADD V PADD IV PADD II Northern Rockies PADD II 270 / 600 Southern 1,008 / 1,900 PADD II 46 / 970 Eastern PADD II 84 / 735 PADD I 63 / 1,630 Washington 170 / 625 California?? / 2,000 PADD V PADD IV PADD II Northern Rockies PADD II 315 / 600 Southern 1,820 / 1,900 PADD II 75 / 970 Eastern PADD II 670 / 735 PADD I?? / 1,630 PADD I PADD I PADD III PADD III Market 2006 Demand / 2006 Capacity USGC 30 / 7,500 Market 2015 Demand / 2006 Capacity USGC?? / 7,500 PADD: Petroleum Administration for Defense District PADD: Petroleum Administration for Defense District By 2011, western Canadian crude oil supply rises by almost 1 million b/d in the Pipeline Planning Case, and in the same year, it is expected that almost 1.3 million b/d of additional crude oil pipeline capacity will be available from western Canada. These crude - 1 -

6 oil pipeline expansions will provide additional access to the core markets (e.g. Ontario, PADD II). Looking out past 2011, there are numerous crude oil pipeline proposals from western Canada to the U.S. Midwest, the United States Gulf Coast, the west coast of British Columbia and to eastern PADD I. In light of the expected growth in oil sands supply after 2011, industry will need to decide in the near future on the numerous crude oil pipeline options. The lead time to receive regulatory approvals and construct a new crude oil pipeline is at least four years. 2 CRUDE OIL PRODUCTION AND SUPPLY FORECAST 2.1 Introduction The CAPP forecast has been developed to provide industry with a long-term outlook of production trends and the types of crude oil that could be available to the market. In addition, the CAPP forecast is used to determine crude oil pipeline capacity requirements to handle the expected growth in western Canadian crude oil supply. CAPP has also prepared a forecast of offshore eastern Canadian crude oil production. Oil Sands & Conventional Production Pipeline Planning Case Thousand Barrels Per Day Actual Conventional Heavy Forecast 2006 Forecast Mining East Coast In Situ Conventional Light 0 Pentanes The forecast is based on the results of a survey of oil sands producers that was conducted in early CAPP has subsequently prepared two cases employing different constraints. The first case which is more aggressive is called the Pipeline Planning Case while the other is the Moderate Growth Case. It should be noted that the surveys were completed by crude oil producers prior to the Federal Government s decision to eliminate the Accelerated Capital Cost Allowance, commencement of the Alberta Royalty review and announced Federal and Provincial climate change initiatives. These factors could conceivably result in reducing the crude oil production forecast Canadian Crude Oil Production Canadian crude oil production is comprised of western Canadian, which includes crude oil from the oil sands and conventional resources, as well as offshore production from the east coast of Canada. East Coast crude oil production is forecast to increase this year, however, in the long term, a gradual decline is expected. In 2006, East Coast offshore crude oil production of 305,000 b/d approximated 12 percent of total Canadian crude oil Oil Sands & Conventional Production Moderate Growth Case Thousand Barrels Per Day Actual Conventional Heavy Forecast 2006 Forecast East Coast Mining In Situ Conventional Light 0 Pentanes

7 production of 2.6 million b/d. Western Canadian crude oil production is projected to grow significantly over the forecast period due to the oil sands. In the Pipeline Planning Case, Canadian crude oil production is forecast to grow from 2.6 million b/d in 2006 to about 4.6 million b/d in 2015 and to over 5.3 million b/d in The growth in the forecast is attributable to increasing production from the oil sands Western Canadian Crude Oil Production Western Canadian crude oil production comes from conventional resources and the oil sands. Until recently, conventional crude oil production exceeded oil sands production; however, in 2006 oil sands production reached over 1.1 million b/d and surpassed conventional production for the first time. Total western Canadian crude oil production in 2006 was over 2.3 million b/d and is projected to increase to about 4.6 million b/d in 2020 in the Moderate Growth Case and to almost 5.2 million b/d in the Pipeline Planning Case. Million Barrels per Day Pipeline Planning Case Moderate Growth Case Oil Sands Bitumen is primarily extracted from the oil sands using either in situ or mining techniques. In areas where the oil is located near the surface, mining is the most efficient method; however, for oil that is located further below the surface, in situ production techniques such as Steam Assisted Gravity Drainage (SAGD) and Cyclic Steam Simulation (CSS) are employed. Mining currently accounts for more than half of the total oil sands production. The three main oil sands deposits are located in the Peace River, Athabasca and Cold Lake areas. Oil Sands in Three Deposits Peace River Edmonton Calgary Athabasca Fort McMurray Cold Lake In the Pipeline Planning Case, output from in situ and mining projects is projected to increase four-fold by This Case assumes that the majority of the oil sands projects that have been proposed will proceed without significant delays to scheduled in service dates, and that the capacity of the projects will be achieved. The in situ and mining production forecasts are based on the results of the CAPP oil sands producer survey, however, adjustments to the survey results have been made to reflect historical performance trends of oil sands projects following start up. Historically, in situ projects require some time to ramp up to capacity while new mining projects typically require some fine tuning before capacity is maintained on a consistent basis

8 Current oil sands production makes up roughly half of western Canada s total crude oil production, and is expected to grow from roughly 1.1 million b/d in 2006 to approximately 3.4 million b/d in 2015 and to about 4.4 million b/d in 2020 in the Pipeline Planning Case. Of the 1.1 million b/d of oil sands production in 2006 over 600,000 b/d was mined. Currently, the majority of mined bitumen is upgraded into synthetic crude oil as part of an overall integrated operation. This trend of upgrading mined bitumen is expected to continue throughout the forecast period. The majority of in situ bitumen production is currently not upgraded prior transporting it to market. This trend, however, will change as more in situ production will be coupled with upgrading operations. Oil Sands & Conventional Production Pipeline Planning Case Thousand Barrels Per Day Actual Conventional Heavy Forecast 2006 Forecast Mining In Situ Conventional Light 0 Pentanes The integrated upgrading projects will be augmented by merchant upgrading projects of which there are several in various stages of planning and development. CAPP has included the contribution of merchant upgrading in its supply forecast which is discussed in the Western Canadian Crude Oil Supply section. The Moderate Growth Case is based on the assumption that oil sands projects will be developed and brought into service at a more gradual pace. The majority of oil sands projects, particularly in situ, are executed in multiple phases and this Case projects that the timing between phases will be greater than the Pipeline Planning Case. There are many factors that could lead to more moderate growth in oil sands production, such as, cost increases and availability of labour and materials Conventional Crude Oil Production Conventional crude oil production in western Canada has been declining gradually since the late 1990s as a result of the maturity of the basin. By 2020, total conventional crude oil production declines to about 670,000 b/d, almost 35 percent less than its current level of over 1 million b/d. Recent trends indicate that the year-over-year decline rate for conventional crude oil production has slowed somewhat due to high crude oil prices and in some areas, such as Saskatchewan and Manitoba, production is increasing modestly. Last year, CAPP s conventional crude oil production forecast reflected a more aggressive decline. In 2006, however, Saskatchewan drilling completions increased almost 14 percent while Manitoba rose 75 percent. In Manitoba, the Sinclair field, newly designated in 2005, accounted for 20 percent of that province s crude oil production. It is the first major discovery in Manitoba in many years

9 2.1.3 Western Canadian Crude Oil Supply Heavy crude oil and bitumen must be blended with diluent to meet pipeline specifications for density and viscosity. Currently, the main source of diluent is natural gas condensates that are produced in western Canada. In the future, this diluent supply will not meet the blending needs of growing bitumen production. As a result, producers are considering imports of condensate by pipeline as well as the use of light synthetic crude oil. The blend of bitumen and diluent is referred to as DilBit while blending bitumen and synthetic crude oil is known as SynBit. The DilBit blend is typically made up of three parts bitumen and one part condensate. SynBit blend is comprised of roughly fifty percent synthetic and fifty percent bitumen. DilBit blend continues to make up the majority of the blended heavy crude oil. As noted above, locally produced condensate is no longer sufficient and, in fact, producers are currently importing about 25,000 b/d of diluent into Alberta by rail. In addition to these railed imports, Enbridge is planning to construct a diluent pipeline from Chicago to Alberta. It is expected to be in service in the second half of 2010 and will provide the potential to supply up to 180,000 b/d of diluent to western Canada. In the Pipeline Planning Case, supply of light synthetic crude oil is forecast to grow from about 600,000 b/d in 2006 to 1.7 million b/d by 2015 and 2.3 million by It is worth noting that a significant amount of synthetic crude oil is forecast to be blended as part of the SynBit supply. The supply of synthetic crude oil could increase in the event that additional amounts of diluent are imported which results in less SynBit available to the market. The amount of synthetic crude oil available to the market also includes Western Canadian Crude Oil Supply Pipeline Planning Case Thousand Barrels Per Day Actual Conventional Heavy Forecast SynBit DilBit & Heavy Synthetic Light Synthetic Conventional Light heavy synthetic. However, heavy synthetic is included as part of heavy crude oil supply with the DilBit blend. Heavy crude oil supply from the oil sands, including DilBit, SynBit and heavy synthetic grows from 800,000 b/d in 2006 to 2.0 million b/d in 2015 and up to almost 2.5 million b/d in It is assumed that growing bitumen production in this Case will require additional diluent imports by pipeline in 2017 which will result in an increase in DilBit supply. In the Moderate Growth Case, there is less production of synthetic crude oil and bitumen resulting in lower blended heavy crude oil than the Pipeline Planning Case. In the Moderate Growth Case, light synthetic crude oil supply is projected to grow from about 600,000 b/d in 2006 to almost 2.1 million b/d in

10 In this Case, there is less demand for imported diluent and, therefore, less supply of DilBit. The Moderate Growth Case and the Pipeline Planning Case both include growing amounts of SynBit and DilBit supply. Heavy crude oil supply from the oil sands in the Moderate Growth Case is forecasted to increase from 800,000 b/d in 2006 to 1.7 million b/d in 2015 and to almost 2.0 million b/d in In 2020, this is about 500,000 b/d less than the Pipeline Planning Case. Western Canadian Crude Oil Supply Moderate Growth Case Thousand Barrels Per Day Actual Conventional Heavy Forecast SynBit DilBit & Heavy Synthetic Light Synthetic Conventional Light Million Barrels per Day Pipeline Planning Case Moderate Growth Case Summary In both Cases, CAPP projects significant growth in oil sands supply. In the Pipeline Planning Case, oil sands supply grows by 3.3 million b/d in comparison to an increase of 2.6 million in the Moderate Growth Case. On the other hand, conventional crude oil supply falls by 400,000 b/d in both Cases. East Coast crude oil production is forecast to increase this year, however, in the long term, a gradual decline is expected. In summary, western Canadian crude oil supply will increase from 2.4 million b/d in 2006 to almost 5.3 million b/d in 2020 in the Pipeline Planning Case while in the Moderate Growth Case supply rises to about 4.6 million b/d. The primary reason for the difference is that in situ projects ramp up at a more gradual pace. 3 CRUDE OIL MARKETS 3.1 Introduction In previous reports, CAPP provided a long-term forecast of western Canadian crude oil production and supply. CAPP is of the view that it is necessary to review the market potential to process the expected growth in oil sands supply. This assessment will, as well, assist industry in the development of adequate pipeline infrastructure. In this context, CAPP surveyed the majority of North American refineries (western Canada, Ontario, PADDs II and IV, and Washington) to obtain information on their ability or plans to process increasing volumes of western Canadian crude oil and, in particular, oil sands to The data was aggregated and analyzed, and are discussed in this section. CAPP did not put any constraints on the data submitted by refiners nor did it prepare any alternate cases. CAPP did not survey refineries located in Québec, eastern PADD I, PADD III or California, however, discussions with these refiners indicate that a significant potential exists, and this is supported by numerous pipeline proposals

11 The CAPP refinery survey assessed four types of western Canadian crude oil. They are: 1. Conventional Light Sweet (30-40 API, less than 0.5%S) including condensates and pentanes plus; 2. Heavy (less than 27 API) and includes synthetic sour, DilBit, SynBit and DilSynBit); 3. Conventional Medium Sour (greater than 27 API and 0.5%S); and 4. Light Sweet Synthetic. In 2006, available supply of crude oil from western Canada was over 2.3 million b/d. Domestic demand for western Canadian crude oil was approximately 765,000 b/d and the remaining supply of almost 1.6 million or 68 percent was exported. The primary markets for western Canadian crude oil are: British Columbia; the Prairie Provinces; Ontario; northern PADD II (i.e. Chicago, Twin Cities and Toledo); PADD IV; and Washington State. With the reversal of the Enbridge Spearhead pipeline and the Forecast Canadian Refinery Receipts of Western Canadian Crude Oil Thousand bpd Total Refining Capacity 993 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic ExxonMobil (Pegasus) pipeline in early 2006, western Canadian crude oil is delivered to the Cushing, Oklahoma hub and the United States Gulf Coast, respectively. 3.2 Canada Canadian refineries that have access to western Canadian crude oil have a refining capacity of almost 1 million b/d. In 2006, these refineries processed about 765,000 b/d of western Canadian crude oil. The survey results project that this will increase to approximately 945,000 b/d in 2010 and with refinery expansions to almost 1.1 million b/d in 2013, a 40 percent increase from Western Canada There are seven refineries located in western Canada with a total refining capacity of about 610,000 b/d, and they process exclusively western Canadian crude oil. In 2006, they refined about 560,000 b/d and this, according to the survey, is expected to increase to 578,000 b/d in 2007, and remain relatively flat through Subsequently, receipts are expected to rise to 624,000 b/d and remain at this level through Western Canada Forecast Western Canadian Crude Oil Receipts Thousand bpd Total Refining Capacity 610 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic

12 Receipts of conventional light sweet crude oil are expected to fall, in part, due to the maturity of the basin as well as, for example, a conversion of Petro-Canada s Edmonton refinery in 2008 to process 100 percent oil sands feedstocks. As a result, receipts of heavy and light synthetic crude oils are expected to increase throughout the forecast period. Consumers Co-operatives refinery is currently assessing a 30,000 b/d expansion of its Regina refinery that could start up in There are some proposals to upgrade bitumen at the mining projects as well as a number of merchant upgrader proposals located in Fort Saskatchewan, Alberta Ontario There are four refineries (excludes Nova Chemicals Sarnia facility) located in Ontario with a total refining capacity of almost 383,000 b/d. These refineries process both western Canadian crude oil as well as crude oil (imports and eastern Canadian crude oil production) that is received by tankers from the Portland-to-Montreal pipeline and, subsequently, the Enbridge Montreal-to-Sarnia pipeline (Line 9). Ontario refineries have, for a number of years, based their feedstock sourcing on both availability and pricing. In 2006, Ontario refineries processed over 350,000 b/d of which almost 60 percent or about 205,000 b/d was from western Canada. Receipts of western Canadian crude oil in 2007 are projected to rise to 349,000 b/d or 90 percent of refining capacity, and should remain at this level through This will, however, depend on the economics of imported crude oil in Ontario Forecast Western Canadian Crude Oil Receipts Thousand bpd Total Refining Capacity 383 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic comparison to equivalent quality western Canadian crude oil. Subsequently, western Canadian crude oil receipts increase to 471,000 b/d. There are two reasons for this potential increase in First, Shell Canada is exploring a new 200,000 b/d refinery in Sarnia and, second, it appears that the Enbridge Line 9 would either be shutdown or possibly re-reversed, in fact, this could occur sooner than Enbridge forecasted in its application to the National Energy Board in April 2007 for tolls and tariffs that it expects a steady decline in throughput on Line 9 to It subsequently expects no throughput on Line Québec The two refineries located in Montreal have a total refining capacity of 235,000 b/d, and a refinery in Québec City has a capacity of 215,000 b/d. The Montreal refineries process crude oil, eastern Canadian and foreign, that is received from the Portland-to-Montreal pipeline. If Enbridge s Line 9 pipeline is reversed, the Montreal market would provide western Canadian crude oil producers with another outlet for their production

13 3.3 United States The United States with a refining capacity of over 17 million b/d is Canada s largest market for crude oil exports and, in 2006, Canada was the largest exporter of crude oil supplying almost 12 percent of United States requirements, ahead of both Mexico and Saudi Arabia. In 2006, Canada exported almost 1.6 million b/d and the survey results show that this will grow to 2.4 million b/d in 2011 and to over 3.1 million b/d in The major growth is expected to be conventional medium sour and heavy crude oils. The rise in crude oil Forecast Western Canadian Crude Oil Exports to the U.S. (includes Western PADD I, PADD II, PADD IV and Washington) Thousand bpd Total Refining Capacity 4,867 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic exports to the United States, in CAPP s view, reflects various drivers, such as; Canada s proximity to the United States; geopolitical stability; and security of supply for Canada and the United States PADD I PADD I is located along the east coast of the United States with refineries in Delaware, New Jersey, Pennsylvania and West Virginia. There are 12 refineries with a total capacity of 1.6 million b/d. In 2006, refinery runs in this market consisted of 61 percent light sweet crude oil, 22 percent heavy crude oil and 17 percent medium sour crude oil. In 2006, 14 percent of refinery runs in PADD I were Canadian sourced crude oil. Receipts of Canadian crude oil, including offshore East Coast, were 208,000 b/d with just over 30 percent or 63,000 b/d from western Canada. The bulk of these receipts were heavy crude oil delivered to the United refinery in Warren, Pennsylvania. Without additional access to this market, western Canadian crude oil deliveries are expected to remain flat to PADD I refineries have a huge potential to process western Canadian crude oil by displacing PADD I Imported Crude Oil Thousand bpd Total Refining Capacity 1,627 thousand bpd Source: EIA Light Sweet Light/Medium Sour Heavy PADD I Forecast Western Canadian Crude Oil Receipts Thousand bpd Total Refining Capacity 1,627 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic

14 imports of foreign crude oil, in particular, light sweet crude oil. There are, in fact, pipeline proposals to serve this market with western Canadian crude oil PADD II PADD II, located in the U.S. Midwest, is the largest market for western Canadian crude oil and it has a refining capacity of almost 3.6 million b/d. In 2006, PADD II processed over 1.1 million b/d of western Canadian crude oil and this is projected to grow to over 2.5 million b/d in 2015, an increase of about 125 percent. The forecasted receipts in 2015 equal about 70 percent of current refining capacity. PADD II Forecast Western Canadian Crude Oil Receipts Thousand bpd Total Refining Capacity 3,583 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic For purposes of this report, PADD II has been divided into north, east and south Northern PADD II Northern PADD II has 12 refineries located in Illinois, Indiana, Minnesota, North Dakota, Ohio (Toledo) and Wisconsin and they run predominantly heavy crude oil which reflects the complexity of these refineries. Total refining capacity in northern PADD II is 1.9 million b/d, and the Illinois/Indiana area makes up 60 percent of the region s refining capacity followed by Minnesota with 19 percent. In 2006, imports into northern PADD II were 1.1 million b/d and western Canadian crude oil accounted for 94 percent (1 million b/d) of those imports. Imports of western Canadian crude oil are expected to grow to over 1.4 million b/d in 2010 and to 1.8 million b/d in 2014, an 80 percent increase in comparison to Historically, western Canadian heavy crude oil was the feedstock of choice; and, in 2006, it approximated 636,000 b/d or 63 percent of total western PADD II (North) Forecast Western Canadian Crude Oil Receipts Thousand bpd Total Refining Capacity 1,883 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic Includes refineries in IL, IN, KY, MI, MN, ND, OH, and WI Canadian crude oil refined in that area. Receipts of heavy crude oil are projected to rise up to 1.1 million b/d in Conventional medium sour crude oil is expected to grow from 222,000 b/d in 2006 to 547,000 b/d in 2012, and remain flat thereafter. The large growth in heavy and medium sour crude oils reflects refiners expectations to add conversion capacity and reduce receipts of U.S. domestic or imports from the U.S. Gulf Coast. Conventional light sweet crude oil receipts are forecasted to rise slightly while light synthetic crude oil is projected to remain flat at about 123,000 b/d through

15 Eastern PADD II Eastern PADD II is located east of Chicago and Patoka, but excludes Toledo, Ohio which is considered an existing market in northern PADD II. Eastern PADD II has a refining capacity of 734,000 b/d and, in 2006, western Canadian crude oil accounted for only 11 percent or 84,000 b/d of that capacity. Receipts of light synthetic crude oil are expected to increase from 2009 to 2011 and then decline significantly. Heavy crude oil deliveries are expected to grow from 33,000 b/d in 2006 to 126,000 b/d in PADD II (East) Forecast Western Canadian Crude Oil Receipts Thousand bpd Total Refining Capacity 734 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic Includes refineries in IL, KY, MI, and OH 2011, and then jump to almost 400,000 b/d in 2012 with a further increase to about 633,000 b/d in Proposed expansions and conversions will significantly increase runs of western Canadian heavy crude oil by over 600,000 b/d in the next ten years Southern PADD II The nine refineries in southern PADD II are located in Kansas, Oklahoma and Tennessee and have a total refining capacity of 966,000 b/d. With the reversal of the Enbridge Spearhead pipeline in March 2006, western Canadian producers are able to deliver up to 125,000 b/d of crude oil into Cushing, Oklahoma. Spearhead pipeline has been at capacity and, recently, Enbridge announced a successful open season to expand the capacity to 190,000 b/d in early PADD II (South) Forecast Western Canadian Crude Oil Receipts Thousand bpd Total Refining Capacity 966 thousand bpd Includes refineries in KS, OK and TN Conv Light Sweet Conv Med Sour Heavy Light Synthetic Access to the Cushing market offers western Canadian crude oil producers opportunities to penetrate other markets (e.g. PADD III) through existing pipelines. Recently announced refinery conversions in Southern PADD II provide opportunities to ship increased volumes of western Canadian crude oil. In 2006, this market processed about 46,000 b/d of western Canadian crude oil, and this is projected to rise to almost 76,000 b/d in The increase in demand will be heavy crude oil PADD III PADD III, comprising of Alabama, Arkansas, Louisiana, Mississippi, New Mexico and Texas, is the largest and most complex refining district in the United States and has 49 refineries. Total refining capacity approximates 7.5 million b/d, of which a significant portion has heavy crude oil processing capabilities. In recent years, PADD III refineries have added six new cokers. These additions allow refineries to run heavier and more sour

16 grades of crude oil which are becoming increasingly more predominant in the world s oil production slate. In 2006, PADD III refineries imported over 5.6 million b/d of crude oil, and almost 2.4 million b/d of that was heavy crude oil. It imports crude oil from Mexico (18 percent), Venezuela (13 percent), Saudi Arabia (10 percent) and Iraq (5 percent), and it also imported from 16 other countries. Deliveries of western Canadian crude oil commenced in April 2006 through the reversed ExxonMobil pipeline (Pegasus) from Patoka, Illinois to Corsicana, Texas. The pipeline is operating at its capacity of about 65,000 b/d. PADD III Imported Crude Oil Total Refining Capacity 7,464 thousand bpd Thousand bpd Source: EIA Light Sweet Light/Medium Sour Heavy Due to its size and ability to run heavy sour crude oil, PADD III is currently the largest untapped market for western Canadian crude oil. There are several pipeline proposals to access this market. New infrastructure would provide western Canadian crude oil producers opportunities to access this market. Although a number of the cokers in PADD III were originally dedicated to specific supply sources, such as Venezuela, these contracts are expected to expire in the near future providing western Canadian crude oil producers with a significant opportunity, particularly for heavier grades PADD IV PADD IV which includes Colorado, Montana, Utah, Wyoming and Idaho is the smallest of the Districts, and accounts for about four percent of total crude oil consumption. It is comprised of 16 refineries located in four of the five states (there are no refineries in Idaho), and has a total refining capacity of 596,000 b/d. Although PADD IV is smaller than the other core markets, it has been a consistent market for western Canadian crude oil supply. Until recent domestic crude oil production increases in certain areas of PADD IV, it has increasingly processed western Canadian crude oil. PADD IV Forecast Western Canadian Crude Oil Receipts Total Refining Capacity 596 thousand bpd 600 In 2006, PADD IV processed almost Conv Light Sweet Conv Med Sour Heavy Light Synthetic 270,000 b/d of Canadian crude oil or 45 percent of its feedstock requirements. There are no other crude oil imports into this market, outside of Canadian, due to the lack of alternative crude oil accessibility. In 2007, western Canadian crude oil receipts are forecasted to increase to almost 295,000 b/d and remain at this level through 2011, and then increase to about 313,000 b/d for the Thousand bpd

17 remainder of the period. Conventional light sweet crude oil receipts increase from about 68,000 b/d in 2006 to almost 83,000 b/d in 2010, decline to 71,000 b/d in 2011 and remain flat through The growth occurs in heavy crude oil receipts and they increase from almost 158,000 b/d in 2006 to about 200,000 b/d in Although PADD IV has experienced some recent demand growth, the lack of expected population growth, combined with the dispersed nature of the population provides for limited opportunities to increase western Canadian crude oil deliveries. Future opportunities for western Canadian crude oil will rely on the replacement of declining domestic supply combined with backfilling any small growth in refinery capacity PADD V PADD V includes Alaska, Washington, Oregon, California, Nevada, Arizona and Hawaii. The majority of PADD V is geographically divided from the rest of the United States by the Rocky Mountains, and has very good access to tanker traffic, including proximity to Alaskan and offshore California crude oil production. It therefore results in the region being relatively independent from the rest of the country for its domestic sources of crude oil supply, and it imports over 35 percent of its requirements. PADD V - Imported Crude Oil (California and Washington) Thousand bpd Total Refining Capacity 2,630 thousand bpd Source: EIA Light Sweet Light/Medium Sour Heavy For purposes of this report, the PADD V has been divided into two market regions: Washington and California. These two states account for 80 percent of the 3.2 million b/d of refining capacity, and they represent both the current demand and future prospects for western Canadian crude oil Washington There are five refineries in Washington with a capacity of almost 624,000 b/d and they primarily process medium sour crude oil. These refineries have historically sourced their feedstocks from Alaska, and it currently accounts for approximately 70 percent of their runs. Washington has historically been a small but important niche market for western Canadian crude oil, particularly conventional light sweet. In 2006, western Canadian crude oil accounted for 16 percent of imports into Washington - the largest single import source. It imports the remainder of its requirements primarily from the Persian Gulf. Receipts of western Canadian crude oil are estimated to increase by over 33 percent from 97,000 b/d in 2006 to almost 129,000 b/d in 2007 or about 21 percent of refining capacity. Conventional light sweet crude oil will continue to be the predominant feedstock growing from about 45,000 b/d in 2006 to 78,000 b/d in 2008 and remaining flat thereafter. Heavy crude oil demand is estimated to increase marginally from 18,000 b/d in 2006 to about 25,000 b/d in 2008, and then rise substantially to 48,000 b/d in

18 and maintain that level through Conventional medium sour crude oil is also expected to rise marginally over the next few years. The growth in these crude oils reflects announced refinery conversion projects. Light sweet synthetic crude oil is forecasted to grow from 20,000 b/d in 2006 to 30,000 b/d in 2008 and remain flat through 2010, and then decline to 17,000 b/d through to The Washington market has the potential to process additional volumes of western Canadian crude oil in view of the ongoing decline in Alaskan North Slope (ANS) crude oil production. The survey results show Canadian deliveries to Washington increasing from about 97,000 b/d in 2006 to 160,000 b/d in Pipeline constraints, however, may be an issue. Trans Mountain s TMX1 program will add about 75,000 b/d in late 2008, and based on the survey results it would leave PADD V (Washington) Forecast Western Canadian Crude Oil Receipts almost 15,000 b/d of the incremental capacity for the remainder of Trans Mountain s shippers California California has 20 refineries with a refining capacity of over 2 million b/d. Most of the refineries are located in two regions (Los Angeles and San Francisco) and account for approximately 95 percent of the state s refining capacity. California s refineries are highly complex with extensive upgrading capabilities, in part, due to having the strictest environmental requirements in the United States for refined petroleum products. Thousand bpd Total Refining Capacity 624 thousand bpd Conv Light Sweet Conv Med Sour Heavy Light Synthetic Refineries in California have primarily processed medium sour and heavy crude oils. Last year, California refineries received almost two-thirds of their supply from domestic sources, and ANS accounted for approximately 85 percent. The remainder is sourced from Saudi Arabia (12 percent), Ecuador (10 percent), Iraq (8 percent) and Mexico and Brazil (5 percent each) while Canada accounted for less that one percent. PADD V (California) - Imported Crude Oil Thousand bpd Source: EIA Total Refining Capacity 2,005 thousand bpd Light Sweet Light/Medium Sour Heavy California s traditional domestic crude oil supply sources are forecasted to fall by three to five percent per year and, as a result, it will become increasingly reliant on imports of foreign crude oil. Given Canada s proximity and forecasted growth in crude oil supply, this market represents a significant opportunity for western Canadian crude oil producers. Currently, however, pipeline capacity to the west coast of British Columbia is limited and there is no overland route available. However, there are proposals to serve this market

19 3.4 Asia The Asian market has attracted significant interest in the last few years because of its rising demand for energy and this is expected to continue. The United States Energy Information Administration (EIA) forecasts that demand will increase from 23.3 million b/d in 2004 to 32.7 million b/d in 2020, a 40 percent increase. It projects that demand in China will grow from 6.4 million b/d in 2004 to 11.9 million b/d in 2020, a rise of over 85 percent. This market has the potential to process Canada s oil sands production. In fact, some of these countries are currently involved in oil sands development while others are considering acquisitions. In addition, some proponents are proposing pipelines to the west coast of British Columbia to serve this market. 3.5 Summary Demand for western Canadian crude oil by Canadian refineries is expected to rise from 765,000 b/d in 2006 to almost 1.1 million b/d in 2015, a 44 percent increase. As expected, the majority of the growth will be heavy and light synthetic crude oils. Over the same period, exports to the United States are projected to increase from about 1.6 million b/d to almost 3.1 million b/d, a 100 percent growth. Demand for heavy crude oil is by far the largest of the crude types. The refinery survey results indicate that traditional markets (i.e. western Canada, Ontario, upper PADD II, PADD IV and Washington State) in Canada and the United States will continue to process large volumes of western Canadian crude oil with the potential for expansions into new markets such as Québec, eastern PADD I, southern and eastern PADD II, PADD III, California and the Far East. 4 CRUDE OIL SUPPLY FORECAST AND MARKET DEMAND The following three charts illustrates CAPP s western Canadian crude oil supply forecast in the Pipeline Planning Case in comparison to the CAPP refiner survey. During the period from 2006 to 2011, inclusive, market demand for western Canadian light crude oil will exceed supply, and then market demand declines resulting in light crude oil supply exceeding demand. The opposite occurs for heavy crude oil supply and market demand. This reflects refiners views that they expect to add upgraders at their refineries to process growing volumes of heavy crude oil supply. It is not expected that all of the proposed upgraders at the refineries will proceed as there are also proposals to build upgraders in the Fort Saskatchewan, Alberta area. In total, CAPP s crude oil supply forecast is relatively close to the aggregated results of the CAPP refiner survey. However, as mentioned previously, CAPP did not survey all the refineries in North America that could conceivably process western Canadian crude oil

20 As a result, refinery demand for specific crude types may exceed supply in some instances. 4.1 Light Crude Oil Supply versus Market Demand Western Canadian Light Supply* vs Market Demand Thousand bpd Light Supply Market Demand * Pipeline Planning Case 4.2 Heavy Crude Oil Supply versus Market Demand Western Canadian Heavy Supply* vs Market Demand Thousand bpd Heavy Supply Market Demand * Pipeline Planning Case

21 4.3 Western Canadian Crude Oil Supply versus Market Demand Western Canadian Crude Oil Supply* vs Market Demand Thousand bpd Total Supply Total Demand * Pipeline Planning Case 5 CRUDE OIL PIPELINES 5.1 Major Crude Oil Pipelines As discussed in the Crude Oil Production and Supply section, significant expansion of the oil sands is expected through 2020 while the Oil Markets section illustrates that additional pipeline infrastructure will be required to meet demand. This section will focus on current infrastructure and proposed pipeline expansions to meet growing supply and increased market demand. Historically, major Canadian crude oil pipelines, with the exception of Express Pipeline and Enbridge Line 9 (Montreal, Québec to Sarnia, Ontario), operated as common carriers. On common carrier pipelines, shippers nominate on a monthly basis for space, without a contract. In the future, some pipelines are proposing contract carriage (i.e. long-term take-or-pay commitments), such as TransCanada Keystone and Enbridge Gateway pipelines, to ensure there is sufficient support for these projects. 5.2 Existing Crude Oil Pipelines Western Canadian crude oil is delivered to markets through three major Canadian trunklines (see Appendix 7.7). Enbridge s mainline originates at Edmonton, Alberta and extends east across the Prairies to the U.S. border near Gretna, Manitoba where it connects to the Lakehead system and delivers crude oil to the U.S. Midwest and to Sarnia, Ontario. Kinder Morgan s Trans Mountain pipeline originates in Edmonton and extends across British Columbia to Burnaby, its Westridge dock and Washington State

22 Kinder Morgan s Express pipeline originates in Hardisty, Alberta and delivers to locations in PADD IV and connects to the Platte pipeline in Casper, Wyoming for delivery to Wood River, Illinois. The following chart illustrates the estimated capacity of the major trunklines from western Canada. Pipeline Enbridge Crude Quality/Type Estimated Capacity b/d Light 818,000 Heavy 1,116,000 Express Light/heavy ratio (50/50) 282,000 Trans Mountain Light/heavy ratio (80/20) 260, Enbridge Pipelines The Enbridge pipeline system which operates in Canada and the U.S. is the world's longest crude oil pipeline. It can deliver more than 2 million b/d of crude oil and other commodities from western Canada to other markets in western Canada, the U.S. upper Midwest and Ontario. In addition, it connects to various pipelines in the U.S. such as Spearhead and Mustang. It also receives crude oil from U.S. pipelines for deliveries to markets in the U.S. Midwest and Ontario. At the end of 2005, Enbridge completed its Terrace Phase III expansion adding 130,000 b/d of capacity. In late 2006, Enbridge completed Stage 1A of its Southern Access program adding about 38,000 b/d at Superior, Wisconsin Kinder Morgan (Trans Mountain) Pipeline The Trans Mountain pipeline system originates in Edmonton, Alberta and transports crude oil to the Vancouver area, including its Westridge dock for vessel loadings, and to refineries in Washington. The system also ships refined petroleum products from the Edmonton refineries to Kamloops and Vancouver. The capacity of the pipeline varies depending on the amount of heavy crude oil transported; however, it can currently transport about 260,000 b/d under typical conditions. In April 2007, it completed the Pump Station Expansion (PSE) which added about 35,000 b/d of capacity. The PSE was designed to increase heavy crude oil capabilities from 10 percent to 20 percent Kinder Morgan Express-Platte Pipelines The Express pipeline ships light, medium and heavy crude oil from Hardisty, Alberta to markets in PADD IV. The Express system was expanded in 2005 from 172,000 b/d to its current capacity of 282,000 b/d. The pipeline is underpinned by contracts totaling 235,000 b/d with the remaining space for spot shippers

23 Express is connected to Platte pipeline at Casper, Wyoming which extends to Guernsey, Wyoming and then to Wood River, Illinois. Capacity from Guernsey to Wood River is about 143,000 b/d and because of strong demand, it has been allocating line space since January, Enbridge Spearhead The Spearhead pipeline is connected to the Enbridge Lakehead system at Flanagan, (near Chicago) Illinois and delivers crude oil to Cushing, Oklahoma. The pipeline was reversed in March 2006 with an initial capacity of 125,000 b/d and has the capability to move light and heavy crude oil Mustang Pipeline The Mustang system connects to the Enbridge Lakehead system at Lockport, Illinois and extends to the Patoka, Illinois terminal. It has a heavy crude oil capacity of about 93,000 b/d, and nominations have exceeded capacity since December 2005, and this is expected to continue. Mustang has a committed capacity of 88,000 b/d ExxonMobil Pegasus The Pegasus pipeline was reversed in April, 2006 and runs from Patoka, Illinois to Nederland, Texas providing western Canadian crude oil producers with pipeline access to the U.S. Gulf Coast. The pipeline has a heavy crude oil capacity of 66,000 b/d, of which 50,000 b/d is committed capacity. Nominations have exceeded capacity since March, Crude Oil Supply Transportation Requirements The demand for western Canadian crude oil by western Canadian refiners is expected to increase modestly by 50,000 b/d to 624,000 b/d from 2007 to During the same period, western Canadian crude oil supply in the Pipeline Planning Case is forecast to increase from 2.5 million b/d to 3.4 million b/d. This represents an average year-overyear growth rate of almost 230,000 b/d during this period. Since the increase in western Canadian refinery demand will only use 50,000 b/d of this growth, the remaining increased supply will need to be shipped to other markets. In 2007, the three major trunk pipelines, Express, Trans Mountain and Enbridge will transport about 1.8 million b/d of crude oil (excludes shipments of refined petroleum products on Enbridge and Trans Mountain) which is over 70 percent of total western Canadian crude oil supply. The throughputs on these pipelines have recently been subject to capacity limitations either directly, in the case of Enbridge and Trans Mountain, through apportionment or indirectly due to downstream bottlenecks as is currently the case on Platte pipeline. Though the recent capacity restrictions have been short-lived, western Canadian oil pipelines are reaching the limits their capacity

24 Based on recent oil pipeline capacity restrictions and increasing crude oil supply, the need for oil pipeline expansion projects is increasing. The incremental growth in crude oil supply using 2007 as a base year is as follows. Incremental Western Canadian Crude Oil Supply to Market Pipeline Planning Case (kbpd) ,921 2,740 Approximately 1 million b/d of oil pipeline capacity will need to be in service prior to As illustrated in section 5.4, almost 1.3 million b/d of oil pipeline capacity from western Canada is scheduled to be in service by July Although some of this proposed capacity is currently subject to lengthy regulatory proceedings. It generally takes over four years for a new pipeline to be put into service. The need for incremental capacity beyond 2011 is also significant and amounts to greater than 1.9 million b/d by 2015 and over 2.7 million b/d by Crude Oil Pipeline Expansions/Proposals from Western Canada The following tables illustrate crude oil pipeline expansions from western Canada through to 2010, and crude oil pipeline expansions and proposals by Enbridge downstream of Superior, Wisconsin in the same period. These expansions and proposals are either in the construction phase or in the regulatory process. There are no major expansions from western Canada and downstream of Superior until the first quarter It is possible that leading up to these expansions in the first quarter 2008 that crude oil pipeline capacity will be tight; in fact, capacity may be apportioned. By mid-2010, it is expected that an additional 1.3 million b/d of additional oil pipeline capacity will be available from western Canada to the west coast of British Columbia, the U.S. Midwest and Ontario. Current Oil Pipeline Expansions ex Western Canada Cumulative Pipeline In Service Date kbpd kbpd Enbridge Southern Access 2A 1Q Kinder Morgan TMX1 Anchor Loop November Enbridge Light Sour Line 4Q Enbridge Southern Access 2B 1Q Enbridge Line 4 Edmonton to Hardisty March N/A TransCanada Keystone 4Q Enbridge Clipper July ,

25 Enbridge is proposing to add over 1 million b/d of additional capacity downstream of Superior, Wisconsin by the end of Current Oil Pipeline Expansions/Proposals by Enbridge Lakehead Cumulative Pipeline In Service Date kbpd kbpd S. Access 1A 3Q S. Access 1B 1Q S. Access 2 1Q Line 5 3Q Line 6B 3Q Line 6C 4Q ,056-1, Kinder Morgan TMX 1 The second phase of TMX1, Anchor Loop, adds another 40,000 b/d of capacity and the target completion date is November At that time, capacity will increase to 300,000 b/d with 20 percent heavy crude oil Enbridge Southern Access Expansion/Extension Enbridge is proceeding with the Southern Access expansion program that will add up to 145,000 b/d to its current capacity from Hardisty, Alberta to Superior, Wisconsin by early The staged program primarily includes modifications and enhancements to existing pump stations. The program commencing at Superior, Wisconsin includes the construction of a new 42- inch line from Superior along the Lakehead system to Delavan, Wisconsin then to Flanagan, Illinois where it will connect with the Enbridge Spearhead pipeline. The staged expansion has an initial capacity of 400,000 b/d and should be completed by early Further expansions to 600,000 b/d and 800,000 b/d are possible by the addition of pump stations, and could be in service by early 2011 and early 2012, respectively. Enbridge is also extending the Southern Access pipeline to Patoka, Illinois from Flanagan, Illinois with a 36-inch line that will have an initial capacity of 400,000 b/d and an in service date of early The extension will have the capability to expand to 800,000 b/d Enbridge Light Sour Line As part of its Southern Lights project (see 5.8.1), Enbridge is constructing a 20-inch 185,000 b/d light sour crude oil pipeline from Cromer, Manitoba to Clearbrook, Minnesota with an in service date of the fourth quarter TransCanada Keystone The Keystone pipeline, currently subject to regulatory review processes, will run from Hardisty, Alberta to terminals in Wood River and Patoka and is scheduled to be in service in late 2009 with an initial capacity of 435,000 b/d. The pipeline will include both new

26 construction and the conversion of existing pipe that is currently in natural gas service. In February 2007, it received approval from the National Energy Board (NEB) to transfer a portion its natural gas facilities to crude oil service. The NEB is conducting a public hearing in June 2007 regarding TransCanada s application to construct and operate the Canadian facilities, and for tolls and tariffs Enbridge Line 4 Extension Line 4 currently extends from Hardisty, Alberta to Superior, Wisconsin. Enbridge will extend Line 4 back to Edmonton by connecting currently deactivated 48-inch segments with a new 36-inch pipeline. It will have an initial capacity of 450,000 b/d and an ultimate capacity of 880,000 b/d, and the targeted in service date is March, This extension back to Edmonton is required for Enbridge Clipper to ensure capacity is available Enbridge Clipper The 36-inch Clipper pipeline is an expansion of Enbridge s existing mainline system and would extend from Hardisty, Alberta to Superior, Wisconsin with a connection to the Minnesota pipeline at Clearbrook, Minnesota. The initial capacity would be 450,000 b/d and could be expanded to 800,000 b/d based on 100 percent heavy crude oil. It is expected to be in service in July, Enbridge filed its application with the regulatory authorities in May Enbridge Line 5 Expansion Enbridge is considering a 50,000 b/d expansion of Line 5 that extends from Superior, Wisconsin to Sarnia, Ontario by adding pump stations to serve increasing demand by Ontario refineries. It could be in service by third quarter Enbridge Line 6B Expansion Enbridge is exploring various options to expand Line 6B which extends from Chicago to Sarnia. The proposals include adding pump stations which would increase capacity, depending on the number of pump stations added, by 20,000 b/d to 100,000 b/d. If all the pump stations were added the additional capacity on Line 6B would be about 235,000 b/d. The in service date(s) would range from third quarter 2009 to third quarter 2010 depending the option(s) Enbridge Line 6C Enbridge is considering a new line from the Griffith/Hartsdale terminal to Stockbridge, Michigan and it would parallel Line 6B. The intent is to supply additional Michigan and Ohio refinery demand. The estimated capacity would be 500,000 b/d with an in service date of late If needed, the line could be extended to Sarnia, Ontario

27 Enbridge Line 14 Extension Enbridge is reviewing an extension (12 miles) of Line 14 to connect with the Mustang pipeline at Lockport, Illinois to ship light crude oil. The capacity would be about 200,000 b/d and could be in service in TransCanada Keystone Heartland Extension The Keystone pipeline proposal also includes an extension from its Scotford, Alberta terminal to Hardisty. The 600,000 b/d pipeline could be in service in 2009 or Crude Oil Pipeline Proposals in the United States Oil Pipeline Proposals in the United States Burnaby Trans Mountain Anacortes Edmonton Express Hardisty Enbridge (North Dakota) expansion Capacity 30 kbpd In service 4Q08 Line 5 Expansion Capacity 50 kbpd In service 3Q08 Line 6B Expansion Capacity 100 kbpd In service 3Q09 Line 6C New Line Capacity 500 kbpd In service 2010 Montreal Minnesota MinnCan expansion Capacity 165 kbpd In service 2Q08 Guernsey Enbridge Sarnia Portland BP Ohio Pipeline Capacity 450 kbpd Salt Lake City Chicago Toledo BP Light line ex-chicago Capacity 100 kbpd In service 1Q09 Chicap Reversal Capacity 300+ kbpd In service 4Q07-2Q08 Platte BP Wood River Cushing ExxonMobil Lima Patoka Mid Valley Enbridge New Line Capacity 450 kbpd In service mid 2010 ExxonMobil/Enbridge Mustang Expansion Capacity 40 kbpd In service 4Q08 ExxonMobil/Enbridge Pegasus Expansion Capacity 30 kbpd In service 4Q08 Houston Capline St. James Spearhead Expansion (N/S) Inc. Capacity 1 65 kbpd In service 2Q BP Pipelines (North America) BP is proposing a redeployment of existing pipeline infrastructure from Chicago, and there are several proposed options. They are: 1) reverse the BP#1 Cushing to Chicago pipeline which provides 100,000 to 200,000 b/d of light crude oil capacity; 2) reverse the Chicap pipeline to allow over 300,000 b/d of light crude oil from Chicago; 3) expand BP#2 from the Griffith/Hartsdale terminals to the BP Whiting, Indiana refinery by 170,000 to 220,000 b/d between late 2007 and mid-2008; and/or 4) construct a 450,000 b/d pipeline from the Lakehead system at Chicago to the Toledo, Ohio refineries Minnesota Pipeline Minnesota Pipeline, operated by Koch Pipeline Company, is constructing the MinnCan project. The expansion consists of a new 165,000 b/d pipeline extending from Clearbrook, Minnesota to the Flint Hills and Marathon refineries near Minneapolis/St. Paul, Minnesota. It is scheduled to be in service in the second quarter Current capacity of the Minnesota pipeline is about 300,000 b/d

28 5.5.3 Enbridge North Dakota The North Dakota pipeline connects to the Enbridge Lakehead pipeline at Clearbrook, Minnesota, and provides producers in Montana and North Dakota with access to markets in PADD II. Increased production in these areas has resulted in a need for additional pipeline capacity and, as a result, Enbridge will add 30,000 b/d of capacity to the North Dakota system later this year, and possibly another 30,000 b/d in late ExxonMobil Pipeline ExxonMobil is proposing expansions on its Mustang and Pegasus pipelines. The Mustang expansion would provide an additional 40,000 b/d of capacity from Lockport, Illinois to Patoka while the Pegasus expansion would increase capacity by 30,000 b/d from Patoka to Nederland, Texas with a start up in late 2008 for both proposals Enbridge Spearhead Enbridge recently announced the successful completion of an open season. As a result, Enbridge will increase the capacity by 65,000 b/d to 190,000 b/d, with a completion date of early Of the 65,000 b/d increase, 30,000 b/d is for committed shippers Enbridge Chicago to Lima Enbridge is considering a 30-inch greenfield pipeline from Chicago to Lima, Ohio. The 450,000 b/d pipeline could be in service in mid Post 2011 Crude Oil Pipeline Proposals from Western Canada Post 2011 Oil Pipeline Proposals from Western Canada TMX Northern Leg Capacity 400 kbpd In service 2012 TMX2 Expansion Capacity 100 kbpd In service mid-2011 TMX3 Expansion Capacity 300 kbpd In service 2012 TransCanada AB-California Capacity 400 kbpd In service 4Q12 AB-USGC Capacity kbpd In service 2012 Express Option 1 Capacity 170+ kbpd In service 2011 Burnaby Anacortes Salt Lake City Gateway Capacity 400 kbpd In service Trans Mountain Express Option 2 Capacity 55 kbpd In service 2011 Edmonton Express Hardisty Guernsey Platte Chicago Wood River Cushing ExxonMobil Altex Capacity 250+ kbpd In service 2011 Enbridge Keystone Cushing Extension Capacity 155 kbpd In service 2013 Patoka Sarnia Lima Mid Valley Line 9 Reversal Capacity 180 kbpd In service 2013 Montreal Portland Sunoco New Line Capacity 200+ kbpd In service Enbridge New Line Capacity 400 kbpd In service Express Bullet Capacity 400+ kbpd Express Routing Patoka South Houston Capline St. James Spearhead Looping Capacity 1200 kbpd In service

29 5.6.1 Altex Energy Ltd. Altex is proposing a direct heavy crude oil pipeline from either Fort McMurray or Hardisty, Alberta to Port Arthur, Texas with an initial capacity of 250,000 b/d. It would be a contract carrier with some capacity for spot shippers, and could be in service in Altex will use proprietary technology that will eliminate the need for condensate Enbridge Gateway The Gateway project includes the construction of a new 30-inch pipeline from Edmonton, Alberta to a deep water port at Kitimat, British Columbia and is being designed to provide over 400,000 b/d of crude oil export capacity. Crude oil would be loaded on tankers for delivery to PADD V or the Far East. Enbridge is anticipating an in service date between 2012 and Kinder Morgan Trans Mountain TMX 2 and TMX 3 TMX 2 is a proposed new 30 and 36-inch line from Edmonton to Kamloops to provide an incremental 100,000 b/d with an in service date of mid-2011, and is dependant on market support. TMX 3 is a 30-inch pipeline from Kamloops, British Columbia to Sumas and would add 300,000 b/d resulting in a total capacity of 600,000 b/d by These expansions would provide additional access to Burnaby, Washington State and other markets served by oil tankers which load at its Westridge dock. TMX Northern Leg is a proposed 30-inch 400,000 b/d pipeline extending from its existing system near Rearguard, British Columbia to a deep water port facility at Kitimat, British Columbia that could accommodate Very Large Crude Carriers (VLCC). Depending on industry support, the pipeline could be in service by early This option allows shippers to ship on either the north or south line Kinder Morgan Express/Platte Pipeline Systems Kinder Morgan has two expansion options. Option 1 includes a new 24-inch pipeline from Hardisty to Casper, Wyoming with an initial capacity of 170,000 b/d expandable to 330,000 b/d. It would also include an extension to Cushing, Oklahoma with an initial capacity of 100,000 b/d with the capability to expand up to 200,000 b/d. Option 2 consists of a partial looping of Express pipeline which would add 55,000 b/d of capacity and a 14,000 b/d capacity increase to the Platte pipeline. The proposed in service date for both options is Kinder Morgan United States Gulf Coast (USGC) Kinder Morgan is also considering three possible routes to the USGC. They include a bullet line from Hardisty to the USGC; an extension of Express pipeline to the USGC; and a line from Patoka to the USGC

30 5.6.6 TransCanada California TransCanada is conducting a feasibility study to ship up to 400,000 b/d of western Canadian crude oil by pipeline to California. The target completion date is fourth quarter Enbridge Montreal-to-Sarnia (Line 9) Reversal As discussed in the Markets section, Enbridge forecasted in its application to the National Energy Board in April 2007 for tolls and tariffs that it expects a steady decline in throughput on Line 9 to It subsequently expects no throughput on Line 9 beyond Therefore, if market demand exists there is a potential that this line could be reversed to serve the Montreal refineries of Petro-Canada and Shell Canada Enbridge Eastern PADD I Access Enbridge is conceptually considering a light crude oil pipeline from Chicago, Patoka or Toledo to refineries in New Jersey and Philadelphia. The pipeline, with a capacity of up to 400,000 b/d, would require an industry decision by 2007 to be in operation in the timeframe Sunoco Pipeline Similar to Enbridge, Sunoco is considering a light crude oil pipeline to refineries in eastern PADD I, including its Marcus Hook, Pennsylvania refinery in the timeframe. The initial capacity would be about 200,000 b/d Enbridge Spearhead Looping Enbridge has indicated that if shipper support exists, it could loop the Spearhead pipeline with 200,000 b/d of capacity that could be in service in about 2011 or TransCanada Keystone Cushing Extension Keystone pipeline, which would extend from Hardisty to Wood River/Patoka, is proposing an extension to Cushing, Oklahoma. With shipper support, it would have an ultimate capacity of 590,000 b/d

31 5.7 Post 2010 Crude Oil Pipeline Proposals from Patoka, Illinois and Cushing, Oklahoma to the USGC Post 2010 Oil Pipeline Proposals from Patoka, Illinois and Cushing, Oklahoma to USGC Edmonton Trans Mountain Hardisty Burnaby Anacortes Express Montreal Guernsey Enbridge Sarnia Portland Salt Lake City Chicago Platte Lima BP Cushing Wood River Patoka Mid Valley TEPPCO Maple Leaf New Line Capacity 370 kbpd In service 3Q10 Houston Capline St. James ExxonMobil/Enbridge Clydesdale New Line Capacity 400 kbpd In service late ExxonMobil Pipeline Enbridge Pipelines Joint Initiative ExxonMobil and Enbridge are jointly developing a project from Patoka to the Beaumont and Houston, Texas areas. The proposed Clydesdale pipeline would be a new 30 or 36- inch heavy crude oil pipeline from Patoka to Beaumont, and then a 24-inch line to Houston with a capacity of 400,000 b/d and a start-up in late Depending on the size of the pipeline it could expand to either 600,000 b/d or 800,000 b/d TEPPCO TEPPCO is proposing to build a new 36-inch line from its Cushing terminal to refineries from western Louisiana to Texas City, Texas. The initial capacity would be 370,000 b/d expandable to about 800,000 b/d. It is seeking non-binding commitments and, if successful, the pipeline would be in service by third quarter, TransCanada Gulf Coast TransCanada is working on three alternatives to deliver between 400,000 b/d and 600,000 b/d to the Gulf Coast from Cushing, Oklahoma. It is seeking expressions of interest in 2007 and depending on the results it will conduct an open season in the first quarter 2008 with a target completion date of the fourth quarter

32 5.8 Diluent Pipeline Proposals Condensate Import Options Enbridge Gateway Condensate Import Capacity 150 kbpd In service Edmonton Trans Mountain Hardisty Burnaby Anacortes Express Enbridge Southern Lights Capacity 180 kbpd In service 2010 Montreal Portland Enbridge Salt Lake City BP Diluent Line Capacity 300 kbpd Guernsey Cushing Platte Chicago BP Wood River Sarnia Lima Patoka Mid Valley ExxonMobil Capline Houston St. James Enbridge Southern Lights Enbridge applied to the National Energy Board in March, 2007 for approval of its Southern Lights project. The project was initiated by Enbridge in response to demand for additional diluent supply in western Canada from sources in the U.S. Midwest. The project includes: a new 16-inch diluent line from Flanagan, Illinois (near Chicago) to Clearbrook, Minnesota; the reversal of Line 13 from Clearbrook to Edmonton, Alberta to ship diluent; a capacity replacement project to expand its mainline capacity by modifying pump units on Line 2; and constructing a 20-inch 185,000 b/d light sour crude oil pipeline from Cromer, Manitoba to Clearbrook in the fourth quarter The result of these changes would increase the light crude oil system capacity by 45,000 b/d from Edmonton to the U.S. Midwest. The capacity of the proposed diluent import line is 180,000 b/d, of which 77,000 b/d is for committed shippers. It will coincide with expansions of the Enbridge mainline system (i.e. Southern Access and Alberta Clipper) in order that crude oil capacity is unaffected. The project is expected to be in service by June Enbridge Gateway Diluent As part of its Gateway crude oil export project, Enbridge is proposing a 150,000 b/d diluent import pipeline that would extend from Kitimat, British Columbia to Edmonton, Alberta. It would supply diluent to western Canadian heavy crude oil producers. The in service date will coincide with the export pipeline between 2012 and BP Pipelines (North America) BP is considering options to move diluent into the Chicago area. They include the conversion of the Cushing to Chicago pipeline or the Chicap/Capline into a diluent line

33 Both of these options would take diluent to the Chicago area where the Enbridge Southern Lights pipeline would ship it to Hardisty and Edmonton. 6 CONCLUSIONS CAPP s western Canadian crude oil supply forecast in the Pipeline Planning Case is slightly below last year s in the early years, but higher later in the period. The CAPP refinery survey indicates that the crude oil supply outlook is aligned with refinery demand for western Canadian crude oil. There is, however, potential for expansions into new markets such as Québec, eastern PADD I, southern and eastern PADD II, PADD III, California and Asia. By 2011, western Canadian crude oil supply rises by almost 1 million b/d in the Pipeline Planning Case, and in the same year, it is expected that almost 1.3 million b/d of additional crude oil pipeline capacity will be available from western Canada. These crude oil pipeline expansions will provide additional access to the core markets (e.g. Ontario, PADD II). Looking out past 2011, there are numerous crude oil pipeline proposals from western Canada to the U.S. Midwest, the United States Gulf Coast, the west coast of British Columbia and to eastern PADD I. In light of the expected growth in oil sands supply after 2011, industry will need to decide in the near future on the various crude oil pipeline options. The lead time to receive regulatory approvals and construct a new crude oil pipeline is at least four years

34 7 APPENDICES

35 7.1 CAPP Canadian Crude Oil Production Forecast Pipeline Planning Case Thousand barrels per day Actuals Forecast CONVENTIONAL Light & Medium Alberta B.C Saskatchewan Manitoba N.W.T Total Conv. Light and Medium Heavy Alberta Conv. Heavy Saskatchewan Conv. Heavy Total Conventional Heavy TOTAL CONVENTIONAL PENTANES/CONDENSATE OIL SANDS Oil Sands Mining Oil Sands In-Situ TOTAL OIL SANDS WESTERN CANADA OIL PRODUCTION EASTERN CANADA OIL PRODUCTION TOTAL CANADIAN OIL PRODUCTION Notes: 1. Statistics Canada reports Saskatchewan Area III Medium as heavy crude. CAPP reallocates this to the Light & Medium Category. Reserves data shows about 17% of Area III is > 900 kg/m3 June

36 7.2 CAPP Canadian Crude Oil Production Forecast Moderate Growth Case Thousand barrels per day Actuals Forecast CONVENTIONAL Light & Medium Alberta B.C Saskatchewan Manitoba N.W.T Total Conv. Light and Medium Heavy Alberta Conv. Heavy Saskatchewan Conv. Heavy Total Conventional Heavy TOTAL CONVENTIONAL PENTANES/CONDENSATE OIL SANDS Oil Sands Mining Oil Sands In-Situ TOTAL OIL SANDS WESTERN CANADA OIL PRODUCTION EASTERN CANADA OIL PRODUCTION TOTAL CANADIAN OIL PRODUCTION Notes: 1. Statistics Canada reports Saskatchewan Area III Medium as heavy crude. CAPP reallocates this to the Light & Medium Category. Reserves data shows about 17% of Area III is > 900 kg/m3 June

37 7.3 CAPP Canadian Crude Oil Supply Forecast Pipeline Planning Case Blended Supply to Trunk Pipelines and Markets Thousand barrels per day Actual Forecast CONVENTIONAL Total Light and Medium Net Conventional Heavy to Market TOTAL CONVENTIONAL NGL Mix OIL SANDS Upgraded Light (Synthetic) Heavy Equivalent Dil Bit Blend and Synthetic Heavy Syn-Bit Total Heavy Equivalent TOTAL OIL SANDS AND UPGRADERS Total Light Supply Total Heavy Supply WESTERN CANADA OIL SUPPLY June

38 7.4 CAPP Canadian Crude Oil Supply Forecast Moderate Growth Case Blended Supply to Trunk Pipelines and Markets Thousand barrels per day Actual Forecast CONVENTIONAL Total Light and Medium Net Conventional Heavy to Market TOTAL CONVENTIONAL NGL Mix OIL SANDS Upgraded Light (Synthetic) Heavy Equivalent Dil Bit Blend and Synthetic Heavy Syn-Bit Total Heavy Equivalent TOTAL OIL SANDS AND UPGRADERS Total Light Supply Total Heavy Supply WESTERN CANADA OIL SUPPLY June

39 7.5 Historical Production Thousand Barrels Per Day Heavy Light & Medium Synthetic Bitumen Condensate Pentanes Total British Columbia Alberta Saskatchewan Manitoba NWT Total Thousand m3 Per Day Heavy Light & Medium Synthetic Bitumen Condensate Pentanes Total British Columbia Alberta Saskatchewan Manitoba NWT Total

40 7.6 Oil Sands Projects (includes merchant upgraders) Oil Sands Mining, In Situ and Upgrading Projects Startup Capacity (b/d) Athabasca Oil Sands Project Jackpine Mine Phase 1A Phase 1B Phase Muskeg River Mine Existing Expansion & Debottleneck Pierre River Phase 1 TBD Phase 2 TBD CNRL Horizon Phase Phase 2& Phase Phase Imperial/ExxonMobil Kearl Lake Phase Phase Phase Petro-Canada/UTS Fort Hills Mine Phase 1 / Phase 3 / Suncor Steepbank & Millennium Mine Millennium Mine Millennium Debottleneck North Steepbank Extension Voyageur South Phase Syncrude Mildred Lake and Aurora Mines Stages 1& Stage 3 Expansion Stage 3 Debottleneck Stage 4 Expansion Synenco Northern Lights Mine Phase ,000 Phase ,000 Total E&P Joslyn Mine Phase 1 (North) Phase 2 (North) Phase 3 (South) Phase 4 (South)

41 Oil Sands Mining, In Situ and Upgrading Projects Startup Capacity (b/d) Athabasca In Situ Projects CNRL Birch Mountain Phase Phase Gregoire Lake Phase Phase Phase Phase Kirby Phase Chevron Ells River Connacher Great Divide ConocoPhillips Surmont Phase Phase Phase Phase Devon Jackfish Jackfish Jackfish EnCana Borealis Phase Phase Phase Phase Phase Christina Lake Phase 1A Phase 1B Phase 1C Phase 1D Expansion Expansion Expansion Expansion Expansion Foster Creek Phase 1A Phase 1B - Debottleneck Phase 1C Stage Phase 1C Stage Phase 1D Phase 1E Expansion

42 Oil Sands Mining, In Situ and Upgrading Projects Startup Capacity (b/d) Husky Sunrise Phase Phase Phase Phase JACOS Hangingstone Pilot Phase Phase MEG Christina Lake Phase Nexen/OPTI Long Lake Phase Phase Phase Phase Nexen/OPTI Long Lake South Phase Phase North American Kai Kos Dehseh Phase Initial Hubs Future Petro-Canada Chard Phase 1 TBD Lewis Phase 1 TBD Phase 2 TBD MacKay River Phase Phase Meadow Creek Phase 1 TBD Phase 2 TBD Suncor Firebag Phase Phase Cogeneration and Expansion Phase Phase Phase Phase Phase Phase

43 Oil Sands Mining, In Situ and Upgrading Projects Startup Capacity (b/d) Total E&P Joslyn Phase Phase Phase 3a Phase 3b Value Creation Halfway Creek North Joslyn TBD Cold Lake In Situ Projects CNRL Primrose Primrose South Primrose North Primrose East Husky Tucker Lake Caribou Lake Demonstration Imperial Oil Cold Lake Phases Phases Phases Shell (Blackrock) Orion (Hilda Lake) Phase Phase Peace River In Situ Projects Shell Peace River Cadotte Lake Carmon Creek Phase Carmon Creek Phase Upgrader Projects Athabasca Oil Sands Project Scotford Upgrader Phase Expansion Expansion Expansion Expansion Expansion BA Energy Heartland Upgrader Phase Phase Phase Halfway Creek Phase 1 TBD TBD North Joslyn Phase 1 TBD

44 Oil Sands Mining, In Situ and Upgrading Projects Startup Capacity (b/d) CNRL Primrose Upgrader Phase Phase 2 & Horizon Upgrader Phase Phase 2 & Phase Phase North American Oil Sands Corporation Upgrader (Fort Saskatchewan) Phase Phase North West Upgrading Sturgeon County Phase Phase Phase OPTI/Nexen Long Lake Upgrader Phase Phase Phase Phase Phase Phase Peace River Oil Bluesky Phase 1 & Petro-Canada Fort Hills Upgrader Phase Phase Phase 3 TBD Suncor Tar Island Upgrader Base U1 and U Millennium Vacuum Unit Millennium Coker Unit Voyageur Upgrader Phase Phase Syncrude Mildred Lake Stages 1 & Stage 3 Expansion Stage 3 Debottleneck Stage 4 Expansion Total E&P Strathcona Upgrader Phase Phase 2 TBD

45 Vancouver to: Japan - 4,300 miles Taiwan - 5,600 miles S.Korea - 4,600 miles China - 5,100 miles San Francisco miles Los Angeles - 1,100 miles Puget Sound BP ConocoPhillips Shell Tesoro US Oil Prince George Husky...11 Prince George Vancouver Chevron...52 Kamloops Vancouver Anacortes Taylor WESTERN (PEMBINA) TRANS MOUNTAIN Enbridge NW P/L Rainbow Lake NORTHERN (PEMBINA) PEACE TRANS MOUNTAIN Sundre PLAINS (RANGELAND) RAINBOW P/L Edmonton CENTRAL BOW RIVER Zama CORRIDOR EXPRESS AOSPL COLD LAKE Upgraders Syncrude (Fort McMurray) Suncor (Fort McMurray Shell (Scotford) Hardisty Fort McMurray SUNCOR ATHABASCA COLD LAKE Lloydminster Kerrobert ENBRIDGE Edmonton Imperial Petro-Canada Shell...98 Lloydminster Husky...26 Regina Co-op Regina 2006 Canadian Crude Oil Production 000 m 3 /d 000 b/d British Columbia 7 41 Alberta 290 1,828 Saskatchewan Manitoba 3 19 Northwest Territories 3 20 Ontario Western Canada 371 2,337 Atlantic Canada Total Canada 419 2,641 For Information Contact: (403) / Newfoundland North Atlantic Hibernia White Rose Terra Nova 7.7 Crude Oil Pipelines and Refineries Great Falls Montana Refining...8 Cutbank PLAINS Cromer San Francisco Chevron ConocoPhillips Shell Tesoro Valero San Francisco Santa Maria Torrance Los Angeles Los Angeles BP Chevron ConocoPhillips ExxonMobil Shell...99 Valero...81 PADD V Bakersfield Billings Cenex ConocoPhillips ExxonMobil PADD IV Salt Lake City Great Falls Wyoming Frontier (Cheyenne)...47 Little America (Casper)...25 Sinclair Oil (Sinclair)...66 Wyoming (Newcastle)...13 Salt Lake City Big West...29 Chevron...45 Holly...25 Tesoro...58 W. CORRIDOR W. CORRIDOR Denver/Commerce City Suncor Suncor PADD III El Paso El Paso Western Refining Casper Sinclair Billings Cheyenne WINK SUNCOR BELLE FOURCHE BRIDGER BUTTE Denver Guernsey McKee Borger Midland BELLE FOURCHE ENBRIDGE TESORO Mandan Tesoro...58 Oklahoma ConocoPhillips (Ponca City) Sinclair (Tulsa)...70 Sunoco (Tulsa)...85 Valero (Ardmore)...84 Wynnewood...54 Borger/McKee ConocoPhillips Valero Houston/Texas City BP ConocoPhillips Deer Park ExxonMobil Lyondell CITGO Marathon Valero (2) BP KOCH BASIN WTG Three Rivers Corpus Christi ENBRIDGE Mandan PADD II El Dorado Ponca City Cushing Gretna Clearbrook St. Paul Flint Hills Marathon McPherson NCRA El Dorado Frontier Coffeyville Coffeyville Resources PLATTE JAYHAWK SEAWAY SEAWAY McPherson BP EXXON MOBIL BP Houston Coffeyville Tulsa Wynnewood Ardmore SUN EXON MOBIL BP MINNESOTA St. Paul Superior El Dorado Longview MILLENIUM KOCH P/L SPEARHEAD EXON MOBIL Superior Murphy EXON MOBIL Memphis ENBRIDGE Port Author/Beaumont St. James Freeport Port Arthur/Beaumont ExxonMobil Motiva Valero Total Lockport Wood River OZARK MAP CAPWOOD CHICAP New Orleans Chicago Robinson Patoka CAPLINE Chicago BP ExxonMobil PDV MUSTANG MAP MID VALLEY MAP Memphis Valero Lake Charles/Garyville ConocoPhillips CITGO Marathon Sarnia Imperial Nova...80 Shell...71 Suncor...80 Nanticoke Imperial Toledo Sarnia Detroit Lima Nanticoke Canton Catlettsburg Wood River ConocoPhillips Robinson Marathon ENBRIDGE PADD I Montreal/Québec Petro-Canada Shell Valero Warren Warren United Québec City Montreal MONTREAL PORTLAND Detroit Marathon Toledo BP Sunoco Lima Husky Canton Marathon Catlettsburg Marathon Portland Philadelphia ConocoPhillips (Trainer) Sunoco (Marcus Hook) Sunoco (Philadelphia) Saint John Irving St.John New Jersey ConocoPhillips Sunoco Valero Pipeline Tolls (US$ per barrel) Edmonton to Burnaby (Trans Mountain) 1.55 Anacortes (Trans Mountain) 1.70 Sarnia (Enbridge) 2.05 Chicago (Enbridge) 1.85 Wood River (Enbridge/Mustang/Capwood) 2.45 USGC (Enbridge/Mustang/ExxonMobil) 3.60 Hardisty to Guernsey (Express/Platte) 1.40 Wood River (Express/Platte) 1.70 USGC (Express/Platte/MAP/ExxonMobil) 3.15 USEC to Sarnia (Portland/Montreal/Enbridge) 1.25 St. James to Wood River (Capline/Capwood) 0.65 Freeport to Wood River (Seaway/Ozark) 1.45 Note 1) Heavy crude adds 20-30% Note 2) Tolls rounded to nearest 5 cents Note 3) Tolls in effect July 1, 2007 PADD Halifax Halifax Imperial Canadian and U.S. Crude Oil Pipelines and Refineries Area Refineries - Capacities in 000s barrels per day (b/d) Petroleum Administration for Defense District (U.S.)