Accessing the North American Energy Value Chain. Investing in essential assets

Transcription

1 Accessing the North American Energy Value Chain Investing in essential assets

2 Advancements in technology create opportunities North America is in the midst of a significant energy transformation Technology advancements are now providing commercially viable access to vast oil and gas resources Pipelines play a vital role in transporting energy resources to growing areas of demand These energy toll roads are essential to our economy and everyday life Upstream Midstream Downstream NGL products Refined products Refinery Oil field Liquid-rich gas NGL Fractionator NGL products Petrochemical plant Gas processing facility Dry gas Gas storage facility Gas field Dry gas Power plant Source: Tortoise

3 Upstream: and gas production growth The unconventional oil and gas transformation that has taken place over the last decade in North America has dramatically changed the energy landscape, thanks to advanced technologies unlocking immense sources of oil and natural gas. U.S. production outlook Production growth expected to continue at a strong pace for the next five years Million barrels/day e 2019e 2020e 2021e 2022e EIA historical Forecast Natural gas 6 Natural gas liquids (NGLs) Million barrels/day Billion cubic feet/day e 2019e 2020e 2021e 2022e e 2019e 2020e 2021e 2022e EIA historical Forecast EIA historical Forecast Source: BTU Analytics, EIA STEO (July 2018), EPD, IHS, Tortoise estimates, Tudor Pickering Holt and Wood Mackenzie as of 6/30/2018 The projections on this page are based on industry estimates and are no guarantee of future outcomes.

4 Midstream: North American pipeline build-out opportunity Pipelines are an integral link at the heart of the energy value chain. Significant new pipeline infrastructure build-out, and the capital to support it, are needed to efficiently connect areas of energy supply with demand. Infrastructure growth initiatives 2018e e Approximately $120 billion in pipeline and related projects Canada $32.6 billion Bakken $2.4 billion Rockies/Niobrara $1.3 billion Mid-Continent $12.3 billion Marcellus/Utica $21.5 billion Highlighted flows Gas Natural gas liquids Permian/Eagle Ford $12.3 billion Gulf Region $11.2 billion Source: company filings and Tortoise estimates as of 6/30/2018 Note: Total capital investment also includes miscellaneous other projects totaling approximately $27 billion. The projections on this page are based on industry estimates and are no guarantee of future outcomes. Midstream pipeline attributes Asset class fundamentals Essential assets Long-lived Stable recurring revenues Inelastic demand High barriers to entry Operating characteristics Critical assets that fuel the North American and global economies Economic lives > 50 years Generally operated with fee-based long-term contracts Transports energy commodities used for daily needs Capital intensive construction Monopolistic Regulatory oversight

5 Downstream: Distribution of energy to end users Demand expected to grow over the next 5 years both domestically and through increased exports Demand growth e Total expected demand growth of approximately 3.4 MMb/d Natural gas Total expected demand growth of approximately 20 Bcf/d NGLs Total expected demand growth of approximately 1.3 MMb/d 29% 38% 43% 71% 62% 57% Low cost, most complex refineries in the world provide competitive advantage Refinery capacity increased 1.3 MMb/d in last five years Significant international demand for U.S. light, sweet crude oil Power plants switching from coal to natural gas to reduce carbon footprints Increased industrial activity, where natural gas is a key input Growing exports of natural gas to Mexico and LNG to rest of world Petrochemical companies investing $164B domestically to take advantage of low-cost feedstock Exports of ethane, propane, butanes and natural gasoline are growing to rest of world due to competitive cost Source: Bloomberg, EPD, IHS, Tudor Pickering Holt and Wood Mackenzie as of 6/30/2018. Data is from e. The projections on this page are based on industry estimates and are no guarantee of future outcomes. LNG=liquefied natural gas

6 About Tortoise Tortoise specializes in essential assets and income investing. Essential assets serve critical needs in society while also providing essential needs in client portfolios, such as diversification and income. Through a variety of investment vehicles, Tortoise offers a wide range of solutions, focused on clients evolving needs. For additional information visit