Enterprise Products Partners L.P. Analyst Conference New York March 26, All rights reserved. Enterprise Products Partners L.P.

Transcription

1 Enterprise Products Partners L.P. Analyst Conference New York March 26, 2008

2 Forward Looking Statements This presentation contains forward-looking statements and information based on Enterprise s beliefs and those of its general partner, as well as assumptions made by and information currently available to them. When used in this presentation, words such as anticipate, project, expect, plan, goal, forecast, intend, could, believe, may, and similar expressions and statements regarding the plans and objectives of Enterprise for future operations, are intended to identify forward-looking statements. Although Enterprise and its general partner believe that such expectations reflected in such forward looking statements are reasonable, neither it nor its general partner can give assurances that such expectations will prove to be correct. Such statements are subject to a variety of risks, uncertainties and assumptions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those Enterprise anticipated, estimated, projected or expected. Among the key risk factors that may have a direct bearing on Enterprise s results of operations and financial condition are: Fluctuations in oil, natural gas and NGL prices and production due to weather and other natural and economic forces; A reduction in demand for its products by the petrochemical, refining or heating industries; The effects of its debt level on its future financial and operating flexibility; A decline in the volumes of NGLs delivered by its facilities; The failure of its credit risk management efforts to adequately protect it against customer non-payment; Actual construction and development costs could exceed forecasted amounts; Operating cash flows from our capital projects may not be immediate; National, international, regional and local economic, competitive and regulatory conditions; Terrorist attacks aimed at its facilities; and The failure to successfully integrate its operations with assets or companies, if any, that it may acquire in the future. Enterprise has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. 2

3 Non-GAAP Financial Measures This presentation utilizes the Non-GAAP financial measures of Gross Operating Margin, EBITDA and Distributable Cash Flow. In general, we define Gross Operating Margin as operating income before (i) depreciation, amortization and accretion expense; (ii) operating lease expense for which we do not have the payment obligation; (iii) gains and losses on the sale of assets and (iv) general and administrative costs. The GAAP measure most directly comparable to Gross Operating Margin is operating income. This presentation also includes references to gross operating margin amounts from selected assets. For consolidated assets, we define asset gross operating margin as asset operating income before depreciation, amortization and accretion expense and any allocation of indirect costs and expenses. Asset gross operating margin is calculated by subtracting direct operating costs and expenses (net of the adjustments noted above) from asset revenues, with both totals before the elimination of intercompany transactions. For those assets in which we own an equity interest through a joint venture arrangement, we define asset gross operating margin as our share of the earnings from such investment. Since we do not prepare GAAP financial statements at the asset level, we are not able to provide reconciliations between asset-specific gross operating margin amounts and our consolidated operating income, which includes all aspects of our operations. We define EBITDA as net income plus (i) interest expense, (ii) provision for income taxes and (iii) depreciation, amortization and accretion expense. EBITDA is commonly used as a supplemental financial measure by management and external users of our financial statements. Because EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the EBITDA data presented in this presentation may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to EBITDA is net cash flows provided by operating activities. In general, we define Distributable Cash Flow as net income or loss plus (i) depreciation, amortization and accretion expense; (ii) operating lease expense for which we do not have the payment obligation; (iii) cash distributions received from unconsolidated affiliates less equity in the earnings of such affiliates; (iv) the subtraction of sustaining capital expenditures; (v) gains and losses on the sale of assets; (vi) cash proceeds from the sale of assets or return of investment from unconsolidated affiliates; (vii) gains or losses on monetization of financial instruments recorded in Accumulated Other Comprehensive Income less related amortization of such amount to earnings; (viii) transition support payments received from El Paso related to the GulfTerra Merger; (ix) the addition of losses or subtraction of gains related to other miscellaneous non-cash amounts affecting net income for the period; (x) the addition of minority interest amounts related to the public unitholders of Duncan Energy Partners L.P. less cash distributions to such unitholders; and (ix) the subtraction of cash expenditures for asset abandonment activities. The GAAP measure most directly comparable to Distributable Cash Flow is net cash flows provided by operating activities. 3

4 Meeting Agenda 1. Michael Creel Introduction / Overview 2. Bill Ordemann Engineering / Operations / EHS&T 3. Jim Collingsworth Regulated NGL Pipelines 4. Gil Radtke Petrochemical Services 5. James Lytal Natural Gas Pipelines / Storage / Offshore 6. Jim Teague NGLs / Gas Processing / Imports & Exports / Gas Marketing 7. Randy Fowler Financial Overview 8. Non-GAAP Reconciliations 4

5 Introduction / Overview Michael A. Creel

6 Overview Enterprise Products Partners L.P. (NYSE: EPD) is one of the largest publicly traded partnerships with an equity market capitalization of approximately $13 billion, assets of $17 billion and an enterprise value of approximately $21 billion Ranks 177 th on the Fortune 500 Delivered record performance in 2006 and 2007 EPD owns and operates one of North America s largest fully integrated midstream energy value chains with significant geographic and business diversity 2

7 Record was a record year in Operating Terms NGL, crude oil and petrochemical transportation volumes 1.9 MMBPD Natural gas transportation volumes 8.3 Bcf/d NGL fractionation volumes 394 MBPD Butane isomerization volumes 90 MBPD Propylene fractionation volumes 68 MBPD 2007 was a record year in Financial Terms Gross operating margin $1.5 billion Operating income $883 million EBITDA $1.4 billion DCF $1.0 billion 3

8 Key Investment Considerations Strategically located assets serving the most prolific supply basins and largest consuming regions of natural gas, NGLs and crude oil in the United States Leading business positions across energy value chain Large portfolio of organic growth projects with potentially higher returns vs. acquisitions at higher multiples Visible cash flow growth from capital projects completed in 2007 and from projects expected to be completed in 2008 History of financial discipline while executing growth strategy Track record of delivering distribution growth and attractive total returns Experienced management team with substantial ownership 4

9 Enterprise Family of Partnerships Formation of DEP Dan L. Duncan, EPCO and Other Affiliates 30% L.P. Interest DEP Holdings, LLC 2% G.P. Interest 77% L.P. Interest 100% Ownership Interest 2% G.P. Interest Enterprise GP Holdings L.P. (NYSE: EPE) IDRs Enterprise Products Partners L.P. (NYSE: EPD) 26% L.P. Interest Duncan Energy Partners L.P. (NYSE: DEP) 3% L.P. Interest Duncan Energy Partners L.P. (NYSE: DEP) was created as a vehicle to facilitate the growth of EPD No GP incentive distribution rights ( IDRs ) and slower growth results in lower long-term cost of equity capital EPD benefits through drop downs to DEP and DEP s direct investment in competitive projects and acquisitions Initial $572 million transaction highly successful IPO Gives EPD the ability to rationalize assets while retaining control of the assets and maintaining the integrity of EPD s value chain Value added for EPD s unitholders as it redeploys proceeds from drop downs to fund new EPD projects with higher expected returns on investment Diversifies EPD s sources of capital and provides EPD with an alternative source of low cost equity capital Interests of Enterprise family of PTPs are aligned Growth at DEP with reinvestment at EPD is expected to drive higher distributable cash flow ( DCF ) per unit at EPD, which benefits EPE through its 25% IDR in EPD 5

10 No GP IDRs at DEP Results in Lower Cost of Equity Capital 50% 40% 30% 20% 10% 0% 50% 40% 30% 20% 10% 0% 2% GP s Share of Distribution Increases 2% 11% DEP EPD Current GP Share of Total Distributions * 11% 25% 25% 13% 15% 17% 30% 31% 50% 50% 50% 50% 50% 50% 50% TPP DPM WPZ ETP KMP MMP OKS XTEX DEP Current / Ultimate Peer Current Peer Ultimate in Highest GP Splits 36% 43% DEP DPM WPZ EPD OKS TPP XTEX MMP ETP KMP * Based on distributions paid in 4Q 2007 Unlike most partnerships, DEP s GP does not have IDRs DEP s GP distribution is always capped at 2% of total distributions Results in a lower cost of equity capital than most partnerships and corporations Makes DEP more competitive in pursuing acquisitions and organic projects Lower payments to GP enhances DEP s financial flexibility by providing cash for additional investment, debt reduction or increased cash distributions to limited partners 6

11 Diversified Business Mix Diversification of businesses provides multiple earnings streams and reduces risk $1.5 Billion Gross Operating Margin % 12% 54% 22% NGL Pipelines & Services (54%) Natural gas processing plants & related NGL marketing activities NGL fractionation plants NGL pipelines and storage Onshore Natural Gas Pipelines & Services (22%) Natural gas pipelines Natural gas storage facilities Natural gas marketing Offshore Pipelines & Services (12%) Natural gas pipelines Oil pipelines Platform services Petrochemical Services (12%) Propylene fractionation facilities Butane isomerization facilities Octane enhancement facilities 7

12 Consistent Results from Diversified Businesses $450 $100 $10 $400 $90 $9 $8 $80 $350 $7 $ in Millions $300 $ per Barrel $70 $60 $6 $5 $ per MMBtu $250 $50 $4 $3 $40 $200 $30 $2 $1 $150 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 $20 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 $0 Gross Operating Margin EBITDA Crude (Bbl) Ethane (Bbl) Nat. Gas (MMBtu) 8

13 Strategic Overview EPD owns one of the industry s leading midstream asset base Large geographic footprint touches approximately 92% of natural gas production and 88% of reserves in lower 48 states Great market access for NGLs produced to approximately 95% of ethylene capacity and 90% of motor gasoline refining capacity east of Rockies Unique integrated value chain concept promotes: Stronger earnings power Competitive positioning in corridors Linkage provides multiple service opportunities Benefit from affiliation with TEPPCO 9

14 Strategic Overview (continued) Organic growth investments designed to: Expand value chain Increase supply sources Improve market access Optimize capacity Maximize downstream economics New strategies focus on emerging trends / opportunities Unconventional natural gas plays gathering Shift in NGL production from east to west processing Shift in gas movements from west to east transportation Increased volatility in gas pricing storage Expansion of refining capacity product distribution 10

15 EPD s Premier Midstream Network Serves Largest Producing and Consuming Regions Approximately 35,000 miles of natural gas, NGL, crude oil and petrochemical pipelines 155 MMBbls of NGL and petrochemical storage capacity 28 Bcf of natural gas storage capacity 26 natural gas processing plants ROCKIES Asset Overview 13 fractionation facilities 6 offshore hub platforms NGL import / export terminals Butane isomerization complex Octane enhancement facility SAN JUAN MID-CONTINENT NGL Pipelines Natural Gas Pipelines Natural Gas Pipelines (under construction) Crude Oil Pipelines Fractionation Facilities Natural Gas Processing Plants Natural Gas / NGL Storage Facilities NGL Terminal / Storage Import / Export Terminals Platforms PERMIAN BARNETT SHALE MT. BELVIEU 11

16 Access to High Growth Supply Regions 30.8 / 45.8 ROCKIES Since 2000, proved natural gas reserves have grown 26% in supply regions accessed by Enterprise vs. (3%) for the rest of the lower / / 26.8 SAN JUAN MID-CONTINENT 13.5 / 16.4 Proved Gas Reserves in Tcf 2000 / 2006 PERMIAN 1.9 / 7.7 BARNETT SHALE 36.8 / 44.8 GULF COAST ONSHORE 8.7 / 6.7 DEEPWATER GULF OF MEXICO Source: U.S. Department of Energy EIA, December

17 Multiple Value Chain Corridors ROCKIES EPD pipelines, processing plants and production platforms handle over 10 Bcf/d of natural gas, or approximately 20% of the nations natural gas production from the lower 48 MID-CONTINENT SAN JUAN BARNETT SHALE Assets in areas with 92% of production and 88% of proved reserves in the lower 48 states (1) (1) Source U.S. Department of Energy EIA, December 2007 PERMIAN MT. BELVIEU NGL Pipelines Natural Gas Pipelines Natural Gas Pipelines (under construction) Crude Oil Pipelines Fractionation Facilities Natural Gas Processing Plants Natural Gas / NGL Storage Facilities NGL Terminal / Storage Import / Export Terminals Platforms 13

18 Major Capital Projects In Service 2007 / is the culmination of several years of capital growth and development activities $2.5 billion major growth projects placed in-service in 2007 and 1Q 2008 Generated significant incremental gross operating margin With the installation of Independence Hub and Trail, we have completed most of the major offshore projects initiated in Visibility to growth through our Western franchise Meeker cryogenic processing facility began operations in 4Q 2007; Pioneer plant in February 2008 Completed 50 MBPD expansion of MAPL s Rocky Mountain system Hobbs NGL fractionator began operations in 3Q

19 Completed Projects Generate Significant Cash Flow Newly constructed assets are expected to generate significant gross operating margin and EBITDA in 2008 Independence Hub and Trail (approximately $200 million) Meeker and Pioneer ($ million) Hobbs Fractionator ($20 25 million) Significant gross operating margin, EBITDA and DCF expansion expected in 2008 First quarter is on track to exceed internal expectations Growth capital budget for 2008 approximately $1.6 billion A decrease from peak 2006 and 2007 levels by $244 million and $532 million, respectively, as major projects have been completed Approximately $1 billion of investments for 2008 are related to projects announced in 2006 and

20 Focus on Rocky Mountain Region Continues The Rocky Mountain Region has become a focal point in EPD s regional growth strategy Investing approximately $2.9 billion in growth capital Attractive long-term fundamentals (long-lived reserves, low F&D costs) Large commitment by majors for exploration and production in Piceance Basin ExxonMobil announced that it will begin drilling 200 new wells this year to tap the estimated 35 Tcf of gas reserves in the Piceance Basin; will be their only land-based drilling operation planned in North America Other major E&P companies committed to drilling EnCana, BP, Chevron, ConocoPhillips 16

21 New Projects and Emerging Strategies Barnett Shale / Gulf Crossing natural gas pipelines Unloads Texas Pipeline System; provides west to east bridge to access better markets Expands position in Barnett Shale region Expanded natural gas storage play Increased customer demand for seasonal storage Developing a Natural Gas Marketing organization to complement our successful NGL Marketing group Leverage existing expertise and significant portfolio of natural gas assets Provide customers with value-added solutions and flexibility while reducing Enterprise s operating costs 17

22 New Projects and Emerging Strategies Deepwater Trend miocene and lower tertiary crude oil developments Excess GOM oil pipeline capacity provides competitive advantage as production develops Increase services to expanding refinery sector Increased demand for blending products and offtake of co-products Increased demand for octane enhancement Continually link assets and optimize capacity utilization Leverage footprint Lower operating costs Maximize throughput 18

23 Engineering / Operations / EHS&T Bill Ordemann

24 EPCO Operated Assets (EPD and TPP) 46,000 miles of pipelines natural gas, NGLs, crude oil, refined products, LPG & petrochemical 28 Bcf of natural gas storage 190 MMBbls of NGL, refined products, LPG & crude oil storage 8 Bcf/d of natural gas processing 600 MBPD NGL & propylene fractionation 116 MBPD butane isomerization NGL terminals 20 MBbls/hr import / 7 MBbls/hr export 6 offshore hub platforms Octane enhancement facility EPCO, INC. 2

25 EPCO Operated Assets (EPD and TPP) Engineering 475 employees $2.1 billion 2008 growth project CAPEX budget Operations 2,500 employees $1.6 billion 2008 OPEX budget $265 million sustaining 2008 CAPEX budget Environmental, Health, Safety and Training ( EHS&T ) 125 employees supporting Operations and Engineering EPCO, INC. 3

26 Enterprise Major Growth Projects Overall, executed capital expenditure program satisfactorily Successes Independence Hub and Trail Mont Belvieu Propylene Splitter IV MAPL Western Pipeline Expansion MAPL Central Expansion Disappointments Meeker I Gas Processing Complex Pioneer Gas Processing Plant Neutral Hobbs NGL Fractionation Facility Jonah Gas Gathering System Expansion 4

27 Enterprise Major Growth Projects Key issues Availability / quality of outside Engineering and Construction resources Appropriate level of EPCO oversight on projects given current business environment (T&M vs. lump sum contracts) Quality of materials and equipment Rising labor and materials costs 5

28 EPCO Engineering Currently performing a top down reorganization of the entire EPCO Engineering organization Named new Senior Vice President Consolidated Offshore and Onshore functions Added new Vice Presidents of Project Management and Technical Services for increased focus and leadership Reviewing remainder of organization to ensure optimum staffing EPCO, INC. 6

29 New EPCO Engineering Organization Project Management Technical Support Non-Technical Support EPCO, INC. 7

30 EPCO Engineering Project Management focus Initiated lookback studies on select projects to capitalize on lessons learned Evaluating and addressing core competency needs and staffing levels Developing EPCO common process for project execution from initial estimating to commissioning Reviewing specifications and quality control procedures Developing contracting strategies for the current business environment EPCO, INC. 8

31 EPCO Engineering Technical Support focus Increasing focus on Operations support Enhancing college recruiting efforts Developing training and progression plans for new hires EPCO, INC. 9

32 EPCO Operations Striving for operational excellence: Implementing EPCO Maintenance Optimization Program (EMOP) Enhancing materials management / inventory processes and systems Initiating technician skills assessment, training and progression program Implementing technician trainee and supervisor training program to proactively address demographics EPCO, INC. 10

33 EPCO Environmental, Health, Safety & Training Focusing on compliance and continuous improvement: Achieving improved safety performance EPCO AGA GPA TRIR LTIR Implementing overall EHS Management System Focusing on motor vehicle safety (drive >50MM miles/year) Continuing EHS Assessment (internal audit) program and addressing findings Enhancing our Training organization EPCO, INC. 11

34 FERC Regulated NGL Pipelines Jim Collingsworth

35 MAPL, Seminole, Dixie, Tri-States, Wilprise and Belle Rose Pipelines 2

36 Overview FERC Regulated NGL Pipelines consists of several businesses Mid-America Pipeline Northern System Central System Rocky Mountain System Seminole Pipeline Company Dixie Pipeline Company Dixie Terminals and Storage Company Enterprise Terminals and Storage Company Tri-States Pipeline Wilprise Pipeline Belle Rose Pipeline Applicable to all FERC regulated NGL pipelines On July 1, pipeline tariffs will increase by ~5.26% which is expected to add an estimated $21 million per year in operating margin 3

37 MAPL & ETS Northern System 2,771 miles of common carrier pipeline transporting EP-mix, propane, butanes and natural gasoline from the Mid-Continent and Fort Satchanwan NGL hubs throughout the upper Midwest Sole supplier to two of the largest petrochemical complexes in the Midwest, providing MMBbls/year of E/P mix Delivers MMBbls/year of propane through 17 companyowned and 9 third-party terminals 4

38 MAPL & ETS Northern System (continued) Provides 6 8 MMBbls/year of butanes and natural gasoline to refineries in the Twin Cities area Business drivers for Northern System growth: Increasing demand for refined products will result in higher refinery run rates and / or expansions which will increase blend-stock shipments Growth in the ethanol market will increase natural gasoline shipments by MBbls/month 5

39 Northern System Rate Case Northern system has a FERC Cost of Service of $75.3 million/year In May 2005 and June 2006, MAPL increased transportation rates to increase revenues from the current $68.6 million/year Began collecting increased tariff subject to refund Shippers protested; FERC set the case for hearing Hearing concluded December 2007 Initial briefs filed on February 2008 Reply briefs to be filed March 2008 Administrative Law Judge has committed to rule by June 2008 Deferred revenue on that date estimated to be ~$35 million 6

40 Central System 2,252 miles of bi-directional pipe transporting demethanized mix, EP-Mix, propane, butanes and natural gasoline Bi-directional flow capability between Hobbs and Conway allows Shippers to capture the arbitrage between the Conway and Mont Belvieu markets Business drivers for Central growth: Higher natural gas and NGL prices have resulted in additional drilling activity and the processing of gas stream that was traditionally delivered directly into the residue market The result is an increase in the number of gas plants along the Central system which have led to four new plant connections within the last year Refiners have started pushing condensate out of the crude stream creating an opportunity to transport those volumes as NGLs Available condensate volume between Skellytown and Mocane is MBPD 7

41 Rocky Mountain System This pipeline is strategically positioned to benefit from the growth in Rockies natural gas and NGL production The largest capacity pipeline capable of transporting 275 MBPD of NGLs from Greater Green River, Piceance, Uintah and San Juan Basin Stable volume and revenue assurance provided from: Long-term Shipper Dedication Agreements A rate structure designed to encourage ethane recovery Flow rates in March have exceeded 263 MBPD Production forecasts from dedicated Shippers and / or captive Shippers indicate volume growth to ~365 MPBD by 2013 WEP II Expansion analysis is in process 8

42 Seminole Pipeline A C-corp, 90% owned by Enterprise and 10% owned by INEOS 540-mile northern segment transports up to ~180 MBPD of demethanized mix from West Texas and the Austin Chalk area to Mont Belvieu 635-mile southern section is a batch system moving ~150 MBPD of primarily purity products from the Mid-Continent and West Texas markets to Mont Belvieu 9

43 Dixie Pipeline Company and Dixie Terminals and Storage 1,370 mile pipeline from Mont Belvieu to Apex, North Carolina 220 MBPD of capacity with average daily flow rate of 102 MBPD Ownership 74% Enterprise 26% BP Growth initiatives Growth in the terminaling sector is expected to accelerate as terminal modification are approved and placed into service 10

44 Tri-States, Wilprise and Belle Rose Three FERC-regulated pipelines that are partially owned by Enterprise New plant connection on Belle Rose will add 10 MBPD in 3Q 2008 New plant connection on Tri-States will add 5 MBPD in 3Q 2008 Flow from BP s Thunderhorse production will increase Tri-States and Wilprise flows by 10 MBPD in

45 Petrochemical Services Gil Radtke

46 2008 Petrochemical Outlook Petrochemicals (billion pounds and growth) Ethylene US Global 2007 Demand % % 2008 Forecast % % Propylene 2007 Demand % % 2008 Forecast % % Domestic demand for propylene expected to decline in 2008 due to capacity rationalization. Increased polypropylene capacities in Central and South America will offset lower domestic demand for producers such as EPD that have access to export terminals. Source: CMAI

47 Petrochemical Services Overview Petrochemical segment consists of 5 businesses Butane isomerization (116 MBPD capacity) Propylene fractionation (currently 5.4 billion pounds or 80 MBPD, net capacity) Mont Belvieu hydrocarbon storage (104 MMBbls of usable capacity) Propylene and high purity isobutane pipelines Octane enhancement (currently 12 MBPD capacity) 3

48 Butane Isomerization Service Isomerization is the process of converting normal butane to high purity isobutane EPD has a combined capacity of 116 MBPD 57 MBPD (49%) is committed under long-term third-party processing contracts with escalation provisions on the fees and 20 MBPD is used as feedstock for our octane enhancement facility Variations in volumes are typically caused by plant turnarounds and spot opportunities, but overall results are very steady 4

49 Isomerization Services Enterprise provides long term toll processing to third party customers and Belvieu Environmental Fuels (BEF) Process normal butane into high purity isobutane for customers at fees ranging from 6 to 7 cpg, escalated High purity isobutane feeds the BEF Isooctane Facility Isomerization Customers N. Butane Enterprise Value Chain HP Isobutane to Customers to BEF Feedstock 5

50 Propylene Fractionation Propylene splitters take refinery-grade propylene (RGP) and fractionate it into polymergrade propylene (PGP) or chemical-grade propylene (CGP) and propane RGP is typically 60 75% propylene with the balance primarily propane RGP is referred to in barrels per day (BPD) of feed and PGP is referred to in millions of pounds (MMlbs) of production One barrel of propylene is equal to approximately 183 lbs. 6

51 Propylene Services Petrochemical Marketing purchases RGP and provides take-away service to over 20 refineries RGP is processed and Petrochemical Marketing sells PGP to Chemicals Industry LE propane production sold to NGL Marketing PetChem Marketing RGP Enterprise Value Chain LE Propane PGP NGL Marketing PetChem Marketing 7

52 Propylene Services (continued) Inside the Enterprise Value Chain BEF Isooctane Facility co-production utilized as feedstock NGL Marketing has optionality to: Sell LE propane production into export market Blending to HD5 propane for ethane product upgrade and sell into Dixie Pipeline or the Mont Belvieu and Louisiana markets Refineries Take-Away Service BEF Co-Product RGP RGP Mt. Belvieu RGP Splitters PGP LE Propane Chemicals Industry Mt. Belvieu Storage Product Blending Export Dock HD5 Propane Mt. Belvieu & Louisiana Markets 8

53 Propylene Assets We own and operate 4 PGP fractionation ( splitter ) facilities with approximately 5.8 billion pounds per year (87 MBPD) of PGP production capacity (our share is 4.9 billion pounds) Basell owns approximately 45% of Splitter 1 and leases this capacity to us TOTAL Petrochemical owns 33% of Splitter 3 and takes its share of production to its polypropylene facility in LaPorte, Texas All 4 facilities are located at our Mont Belvieu site and are integrated into our other facilities including underground storage We own a 30% interest in a 1.5 billion pounds per year (22.5 MBPD) CGP splitter in Baton Rouge, Louisiana EPD designed, constructed and operates the facility ExxonMobil has 70% ownership, is the business manager, supplies the feedstock and is the major customer 9

54 Combined Propylene Systems Texas Louisiana Exxon - Port Allen Westlake Basell Lake Charles Breaux Bridge Shell - Sorrento EPOLP Mont Belvieu Citgo Lake Charles Valero - St Charles Pierce Junction Morgan s Point Motiva Port Arthur TOTAL Port Arthur BP Texas City Valero Texas City Gulf of Mexico RGP CGP PGP Splitter Storage Refinery Petrochemical Plant 10

55 Mont Belvieu Storage Services Own and operate over 100 MMBbls of underground storage capacity at Mont Belvieu These storage facilities are interconnected by multiple pipelines to other producing and offtake facilities throughout the Gulf Coast, as well as connections to the Rocky Mountain and Midwest regions via the Seminole Pipeline and the TEPPCO mainline Focal point on the Gulf Coast for NGL and Olefins Very stable storage revenues from reservation fees (62%) and throughput fees (38%) 11

56 Mont Belvieu Storage Outlook Growth tied to petrochemical, refinery and NGL fractionation markets as well as imported NGL and our Western expansion Storage expansion tied to this growth, as well as new product storage opportunities for other products Well optimization plan will allow us to better utilize existing and future facilities In the process of laying 19 pipelines to improve the flexibility of our facilities 12

57 Octane Enhancement EPD owns a facility at Mont Belvieu that produces octane additives for motor gasoline Produced and sold isooctane in 2007 under contract at NYMEX RBOB plus pricing Allowed us to hedge our sales We expect to execute the same hedge program in 2008 Also produce isobutylene mix for use as an additive for lube oil blending This contract priced at normal butane plus 13

58 Isooctane Services Inside the Enterprise Value Chain Process high purity isobutane into isobutylene for sale into the specialty chemicals market (Lubrizol long-term sale) Isobutylene is further processed into isooctane for sale into the Gasoline-Component business BEF Gasoline co-product sold in Mont Belvieu or Louisiana markets RGP co-product utilized as feedstock for Propylene Splitters Isobutylene Specialty Chemicals Mont Belvieu Isooctane Motor-Fuels Market BEF Isomerization HP Isobutane Facility 100, 200, & 800 Gasoline MB & Louisiana RGP Propylene Splitters 14

59 Isooctane Only the second plant of its kind in the world Isooctane capacity: 12 MBPD Feedstock comes from our isomerization business Requires 2 gallons of highpurity isobutane to produce 1 gallon of isooctane Engineering work underway for the restart of sister facility at Morgan s Point with capacity to produce 9 MBPD of alkylate 15

60 Natural Gas Pipelines / Storage / Offshore James Lytal

61 Natural Gas Pipelines, Gas Storage and Offshore Jonah / Pinedale Onshore: Approximately 18,000 miles of gas pipelines and 28 Bcf of gas storage Offshore: Approximately 1,600 miles of gas pipelines, 900 miles of oil pipelines and 6 hub and 2 junction platforms Piceance San Juan Morrow and Delaware Shale Barnett Shale Bossier Natural Gas Storage Facility Offshore Platforms Third-party LNG Facility Natural Gas Pipelines Deepwater Gulf 2

62 Texas Intrastate Pipeline Waha Hub Sherman Extension Boardwalk Enterprise Texas Pipelines Barnett Austin San Antonio Carthage Hub Katy Hub Agua Dulce Houston Ship Channel Transport approximately 5 Bcf/d (gross) Connected to major cities and industrial complexes Connected to all the major hubs Waha Hub 1.6 Bcf/d of capacity Connected to 9 pipelines Supply source optionality Large basis differential between Waha and Houston Ship Channel 3

63 Texas Intrastate Pipeline Continued Growth Expansion of Existing Assets Completed in 2007 West Texas Expansion: increased Waha to Gulf Coast capacity by 120 MMcf/d CenterPoint Houston: acquired 54 miles of pipeline and integrated existing EPD infrastructure to obtain 20% of CenterPoint s requirements; full-year benefit in 2008 Presently under construction Sherman Extension: interim in-service 2Q 2008; full in-service 4Q 2008 Two new interconnects to Freeport LNG Header pipeline 2008 potential growth projects 150 MMcf/d Central Texas pipeline expansion 100 MMcf/d Southeast Texas pipeline expansion 4

64 Sherman Extension Project Barnett Shale Update New 1.1 Bcf/d, 178-mile pipeline extends EPD s Texas Intrastate System through growing Barnett Shale region to interconnect with Boardwalk s Gulf Crossing project near Sherman, Texas Currently constructing the pipeline Estimated completion date: 4Q 2008 Project is expected to be completed at or near the budgeted cost 9 existing/proposed processing plants Devon (2) Enbridge (2) Crosstex (2) Targa (1) DCP (1) Quicksilver (1) Existing plant volumes exceed 1 Bcf/d Additional growth of 3 Bcf/d is expected for this area of the Barnett Shale West Texas Shale Waha Barnett Shale DFW Austin San Antonio Agua Dulce Carthage Bossier HSC 5

65 Sherman Extension Project Barnett Shale Gas Play Jan 05 Gas Production (Bcf/d) Rigs Jan. 08 Est , Bcf/d Producers exceeding original expectations Technology continues to improve deliverability and recoveries Basin footprint is expanding Project originally anchored with long-term agreement with Devon Producing Wells In discussions with producers on long-term arrangements to fully subscribe the capacity 3,781 Low cost expansion to add MMcf/d 6

66 Waha Gathering and Treating Morrow Gas Play West Texas Shale Waha Gathering Enterprise Texas Pipeline Approximately 210 MMcf/d of revenue volumes flowing to EPD Anadarko and Chesapeake hold sizable acreage positions Active drilling with significant upside West Texas Shale Play Thicker than the Barnett Shale Chesapeake holds 815,000 net acres in the area Drilling activity and volume have begun to increase Plan to expand system and integrate into the Texas Pipeline System 7

67 San Juan Gathering and Processing Assets ma San Juan Rattlesnake Chaco New Mexico La Plata Gathering system Processing plant Treating plant Sandoval Colorado Jicarilla Apache Land Rio Arriba Area of Mutual Interest Record NGL prices along with strong natural gas prices, led to a 17% increase in margin over 2006 Fee on approximately 65% of volumes is based on percentage of gas price Provides a hedge to EPD gas fuel requirements Formed JV with Jicarilla Apache in late 2007 Need Department of Interior approval Jicarilla JV is expected to close in 3Q

68 Permian New Chaparral Gas Plant EOG Production Wolfcamp Play Existing Indian Basin Plant NGPL NGPL Existing Dew Point Plant EPNG EPNG New Chaparral Plant TW EPNG New 40 MMcf/d cryo plant at Carlsbad System (moving idle plant from Big Thicket system in East Texas) Supported by 7-year EOG gathering and processing commitment of their Wolfcamp gas Plant throughput maximized with system supply 9

69 Wilson Gas Storage Repairs at Wilson are complete Expect full working capacity of 6.7 Bcf by mid-2008 Growth plans Developing Wilson #5 cavern Create 5 Bcf by 2Q % contracted with CenterPoint deal (2.75 Bcf) New 30 pipeline will provide additional 400 MMcf/d capability into EPD pipelines; in-service April 2008 Excess pipeline capacity allows for additional 5 Bcf storage expansion at low cost 10

70 Petal Gas Storage Storage Gulf Crossing Southeast Supply LA MEP MS TGP Surface Heavy Cap Rock Salt Dome Destin AL Sonat Transco Petal Pipeline Current June 2008 Future Recent accomplishments Converted Petal #10 cavern to natural gas storage usage in August 2007 Added 1.6 Bcf of capacity Fully subscribed Nearing completion of Petal #8 cavern 5 Bcf working gas Projected to be in-service June 2008 Leased 3.2 Bcf of capacity Finalizing arrangements on remaining capacity 11

71 Petal Expansion Opportunities Gulf Crossing MidContinent Express Southeast Supply Header New storage capacity Filed with FERC on January 31, 2008 Seeking authorization to develop 2 additional caverns (5 Bcf each) In-service as early as Summer 2010 New interconnects Southeast Supply Header Capacity: 1 Bcf/d Summer 2008 in-service Access to Florida markets and Perryville Hub supplies and market Gulf Crossing Southeast Expansion Capacity: 2.2 Bcf/d 2Q 2008 in-service Access to Barnett and Woodford Shale supplies Mid-Continent Express Capacity: 1 Bcf/d March 2009 in-service Access to Barnett and Woodford Shale supplies 12

72 Independence Hub Recognition World deep-sea record setting Pipeline and riser (8,000 ft.) Platform (8,000 ft.) Subsea production (9,000 ft.) Record setting World s largest offshore gas processing facility (1 Bcf/d) World s longest mooring lines (twelve lines, 2.4 miles each) Deepest water depth installation for suction pile World s largest monoethylene glycol (MEG) reclamation unit World s deepest pipeline inline future tie-in subsea structure World s largest single order for subsea umbilical Award winning Co-recipient of the 2007 Excellence in Project Integration Award from the International Petroleum Technology Conference (IPTC) Honored in 2007 with the Five Star Award presented by Offshore Magazine 13

73 Independence Hub: Visibility to Growth Increased Cash Flows Currently averaging approximately 900 MMcf/d of natural gas through the platform and pipeline Average MMcf/d Jul Aug Sep Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb 2008* Monthly producer demand charges began in March 2007; gas began flowing in July 2007 Annual gross operating margin would be $214 million at full capacity of 1 Bcf/d ($44 million annual demand charge + $17 million/year for every 100 MMcf/d of gas) Natural gas flowing through Independence Hub and Trail represents an approximate 12% increase in GOM production * Adjusted for scheduled 1-day outage. Based on calendar days in operation. Source: Bentek Energy LLC 14

74 Independence Hub and Trail Project: Visibility to Future Growth West Delta 68 Independence Trail Independence Hub Current and planned drilling at existing fields 18 prospects (4 dedicated) with exploration plans 2007 lease sale added 80 blocks within a 50-mile radius of the Independence Hub platform 2008 lease sale added additional 43 blocks within the 50-mile radius Additional 113 blocks located more than 50 miles east but within the same prolific gas area Leasing activity reinforces future value of platform 15

75 Offshore Crude Oil Pipelines Average MBPD, Gross Start-up of Atlantis in December 2007 has significantly increased crude oil pipeline volumes Expect volumes to continue to increase with: Continued ramp up of Atlantis Expected to be at 200 MBPD by end of 2008 Ramp up of Genghis Khan at Marco Polo platform Start up of Neptune field 2Q 2008 Start up of Shenzi 2Q Jul 2007 Aug 2007 Sep 2007 Oct 2007 Nov 2007 Dec 2007 Jan 2008 Feb

76 South Green Canyon Area Growth Marco Polo Platform Constitution Caesar Genghis Khan K2 Tonga & West Tonga Marco Polo Shenzi Ramp up of Genghis Khan Recompletes in Marco Polo field Potential enhanced oil recovery project at K2 Constitution Oil and Gas Pipelines: potential subsea tieback of Caesar and West Tonga reserves Shenzi Pipeline Pipeline has been constructed Only tie-in work remains Expect to be on budget Projected in-service: 2Q 2009 Projected to ramp up to 100 MBPD Access to Cameron Highway and Poseidon 17

77 EPD s Offshore Growth Potential 2008 and Beyond EPD Platform Texas EPD Gas Processing Plant EPD Gas Pipeline EPD Oil Pipeline Louisiana Mississippi AL Houston Port Arthur Texas City Houma Cameron Highway Nautilus Poseidon Independence Hub Allegheny Anaconda Constitution Marco Polo Genghis Khan Shenzi Shenzi Lower Tertiary Wilcox Trend Kaskida Jack St. Malo Walker Ridge Atlantis 18

78 Offshore Activity Relative to EPD Assets Lower Tertiary Trend 2007 Lease Sales - $3.2 Billion, 1005 blocks 2008 Lease Sales - $3.7 Billion, 651 blocks 19

79 Summary Texas Pipeline Expect continued strong volumes and wide basis differentials Sherman Extension start-up in late-2008 San Juan: expect strong 2008 performance with higher natural gas and NGL prices Gas Storage Start up of Petal 8 (5 Bcf) in June 2008 Potential for additional Petal cavern(s) by Summer 2010 Wilson repairs complete; Wilson 5 (5 Bcf) in 2Q 2010 Offshore Full year of Independence Hub and Trail in 2008 Continued ramp up in crude oil volumes Lower Tertiary Trend could lead to investment opportunities Significant leasing activity shows deepwater trend will be active for many years to come 20

80 NGLs / Gas Processing / Imports & Exports / Gas Marketing Jim Teague

81 NGL and Natural Gas Services and Marketing

82 Strong NGL Industry Fundamentals MBPD 1,300 1,200 1,100 1,000 U.S. Steam Cracker Feedstocks Light-ends Hurricanes 1Q05 2Q05 3Q05 4Q05 1Q06 Ethane Butane 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Propane Ethylene 4Q07 Feb Billions of Lbs / Year 2007 was a strong year for NGLs characterized by record spreads Key factors are economy, GDP growth, plant operating rates and gas-to-crude price ratio Gas-to-crude ratio averaged 57% in 2007 vs. 78% historical average; currently at 50% Ethane extraction increases as ethylene production increases History has shown that industry flexibility to switch off ethane cracking diminishes as ethylene production remains at 53 billion lbs/year or higher Source: Pace Hodson Report 3

83 Ethylene Feedstocks Product Yields Economics of using one feedstock over another is dependent on the value of the co-products produced from each feedstock, as well as relative price of feedstocks Product yields for Ethylene Feedstocks (in weight %): Yield Ethane Propane N-Butane N-Gasoline / Naptha Gas Oils Ethylene 77% 40% 36% 30% 25% Propylene 2% 20% 20% 20% 15% C4 Olefins 2% 3% 10% 10% 10% Pygas 1% 2% 10% 20% 10% Fuel Gas 18% 35% 24% 20% 20% Pyrolysis Oil 20% 4

84 Sep-07 Nov-07 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-05 Nov Gas to Oil Ratio Gross Margin (Cents per Gallon) 10 - Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 (10) (20) Gas Gas to Oil to Oil Ratio Ratio ($/MMBtu) (%) Gas Processing Margin Gross Gas Processing Margin (0.20) 5

85 Reality What we are today was created five years ago What we will be in five years is being created today 6

86 History Eight years ago we built Lou-Tex NGL Pipeline and acquired Lou-Tex Propylene Pipeline Six years ago we acquired Diamond-Koch s propylene fractionator and NGL storage businesses Six years ago we acquired Mid-America and Seminole NGL Pipelines Five years ago we began the process of establishing a gathering and processing footprint in the Rockies Four years ago we acquired GulfTerra 7

87 Western Franchise Position Jonah Gathering Mid-America Pipeline Pioneer Plant Meeker Plant Hobbs Fractionator Acquired only NGL takeaway pipeline out of the Rockies in 2002: Mid-America / Seminole Committed more than $2.5 billion in growth capital Attractive long-term fundamentals (long-lived reserves, low F&D costs) Strengthening our western energy value chain with projects that have started or will soon begin operations 8

88 Project Update Jonah Gas Gathering Systems Jonah Gas Gathering System 6 th largest U.S. gas field based on 2006 proved reserves Dedications from EnCana, BP and others Currently gathering 1.06 Bcf/d Jonah / Pinedale Gathering System will be completely segregated by the 2 nd half of 2008 allowing for the different services required by producers All gathering contracts are long term 20 years to life-of-lease Phase V expansion project complete May 2008 with a total capacity of 1.35 Bcf/d at 300# wellhead pressure Currently 14 rigs in operation on dedicated lands Producers are having success drilling outside of the triangle and with lower wellhead pressures Currently in discussion with producers for expanded dedication areas and lower gathering system pressures 9

89 Project Update Pinedale Gas Gathering Systems Pinedale Gas Gathering System 4 th largest U.S. gas field based on 2006 proved reserves Dedications from Ultra, Shell and others Currently gathering 0.8 Bcf/d Pinedale expansion project complete by year end 2008 with a total capacity of 1.2 Bcf/d at 600# wellhead pressure Currently 23 rigs in operation on dedicated lands Producers are having success expanding the productive fairway, increasing reserves Currently in discussions with producers for expanded dedications and capacities Beginning discussions regarding lower gathering system pressures Jonah / Pinedale Gathering System will be completely segregated by the 2nd half of 2008 allowing for the different services required by the producers All gathering contracts are long term 20 years to life-of-lease 10

90 Project Update Pioneer Cryo Commenced operation February 1, 2008 Currently processing 520 MMcf/d and producing 21 MBPD of NGLs Contracted with dedications including EnCana, Ultra and BP Contract mix of fees with keep whole, and higher fees for NGL take in kind Expected to be full at 750 MMcf/d (and overflowing to silica gel facility) by 2010, producing approximately 30 MBPD of NGLs Negotiating additional processing contracts with Pinedale producers and the MMS 11

91 Jonah / Pinedale Growth Historical 20.0 Jonah Gas Gathering System Receipt Volumes Average Bcf/d Pinedale % Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 0 JONAH PINEDALE PINEDALE % 12

92 Rockies Piceance Basin Growth 1,400 1,200 1,087 1,250 1, MMcf/d Source: IHS Energy 13

93 Project Update Meeker Complex Facility includes inlet liquid handling, CO 2 treating, dehydration, hydrocarbon dew point control, cryogenic processing and residue compression Contracts with 9 of 12 top producers in the Piceance Basin and in advanced stages of negotiations with remaining three ExxonMobil Treating / Conditioning Plant under construction with expected October 2008 completion Executed White River Hub JV with Questar Currently estimating costs for constructing Meeker III 14

94 Piceance Gathering System 48-mile, 36 trunk line with capacity of 1.6 Bcf/d located through the heart of the Piceance Basin Wellhead gathering system and compressor station for Marathon contract, 4 20 and 250 MMcf/d capacity to be in service by year-end 2008 Gathering extension for Oxy contract to be in service by year end 2008 Interconnects to receive gas from Williams (2 locations) and Chevron Stand alone gathering system capacity of 200 MMcf/d for Exxon contract Have right of first refusal on EnCana Great Divide / Collbran Valley Gathering Systems Collbran Valley Pipeline Potential acquisition Great Divide Gathering System Buzzard Creek Pipeline 15

95 Piceance Basin Growth Projected (Contract / Negotiation Volumes Only) 2,600 MMcf/d 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1, Uncontracted - Under Negotiation Williams Gas Call ExxonMobil Oxy Marathon Chevron Antero Barrett EnCana Third Party EnCana Co-Owner EnCana Equity Producer based, risked case, forecast of contracted production (includes only dedicated portion of ExxonMobil) Uncontracted and under negotiation with Noble, Plains Exploration & Production, Delta Petroleum, XTO Source: Producer estimates 16

96 Piceance Basin Contracts Overview Meeker Plant Exxon Clear Creek XTO Contracted EnCana: entire Piceance Basin dedication, including all farm outs Exxon: 30,000 acres (Freedom, Piceance Creek Unit) Chevron Whiting Marathon & Berry Antero EnCana Oxy Marathon Antero Barrett Chevron OXY Barrett Cost Reimbursement Agreements with two producers for interconnects Noble Plains / Delta Advanced Negotiations with four producers 17

97 Project Update Hobbs NGL Fractionator Current throughput in excess of 75 MBPD Supply contracts with local refineries, petrochemical facilities and Mexico consume more than 65% of production Pipeline capacity to arbitrage Mid-West and Gulf Coast New pipeline to Odessa Ethylene Plant in service April

98 Western Value Chain Facility Jonah Gas Gathering EPD s Ownership % 19% Indicative Rates $ $ 0.25 MMBtu Pioneer Processing Piceance Creek Gathering 100% 100% $ $0.12 pg $ $0.06 MMBtu 4 Meeker Processing 100% $ $0.12 pg San Juan Gathering Chaco Processing 100% 100% 6 8% SJB Index 20% POP Mid America Pipeline Hobbs Fractionation & Storage (with access to local markets, Mexico, Mid-Continent) 100% 100% $ $3.04 Bbl $ $0.03 pg Seminole (inc in MAPL fee to MTBV) Mont Belvieu Fractionator Mont Belvieu Storage 90% 75% 100% $ 0.72 Bbl $ $0.03 pg $ $1.00 Bbl Mont Belvieu Distribution Pipelines Dixie, Ship Channel, South Texas, Lou-Tex, Import / Export Dock, TEPPCO Various Various 19

99 Natural Gas Marketing Strategies Complement and leverage the existing businesses Existing Enterprise assets are fully loaded Opportunities exist for expanding assets and new asset strategies Contract third party physical assets; storage and transport Approach like NGLs Expand our footprint beyond our asset base Provide value added services to targeted customer base Develop strong risk control processes Modest forward commitments always backed by assets Optimize across contractual commitments and assets daily 20

100 Natural Gas Marketing Building a Solid Foundation Began assembling Gas Marketing Team in Summer 2007 with internal and external candidates Key positions staffed or candidates identified Staffing consists of approximately 25 employees and expected to increase to about 30 by year end Currently installing best in class IT systems Deal Capture and Risk Management Developing extensive contract / counterparty base for liquidity and ease of transacting Building strong supply base with major producers in areas strategic to Enterprise Pursuing disciplined approach in building transport and storage asset base in strategic areas such as the Rockies, the Mid- Continent and the southeast 21

101 Natural Gas Marketing Team Sr. Vice President Gas Marketing Services C. Skoog (20+ years) Financial Trading/ Structural Risk L. Price (20+ years) Origination/ Develop T. Chovanec (25+ years) Physical Trading & Optimization (Open) IT/Process Improve E. Scheller (20+ years) 22

102 Vision North American Services and Marketing company that leverages our footprint in a manner that increases our profitability and creates additional opportunities for growth along our value chain 23

103 What are Services? Gathering, Processing, Transportation, Treating, Compression, Storage, Fractionation, Terminaling, etc. Enterprise has the ability to package and market almost any combination of services a customer may require 24

104 What is Marketing? Packaging of services that meet a customer s needs and brings value to both the customer and Enterprise Accomplished through building long term relationships in order to aggregate customers, both producers (supply) and consumers (demand), in a manner that creates options in the Enterprise system 25

105 Enterprise Fundamental Beliefs The more volumes one controls, the more opportunity one has to make money Contracts create volume control Contracts support assets and expand the asset base through inherent options Contracts lead to more contracts and contracts are part of one s asset base 26

106 Contracts Focus Our contract focus is on three key classes Producer Services Consumer Services Refineries Petrochemicals Retail Midstream Services Other midstream companies Traders 27

107 Enterprise Asset Base NGL Fractionation Plant NGL & Liquid Storage Facility Natural Gas Processing Plant Terminal EPD NGL & Liquid Pipelines Natural Gas Pipelines Import / Export Terminal Offshore Platform 28

108 NGL System Connectivity Gulf Coast Refinery Services ExxonMobil - Beaumont Flint Hills Corpus Christi 29

109 NGL System Connectivity Gulf Coast Petrochemical Services 30