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Canadian Crude and the US Gulf Coast Market Calgary Gus Vasquez 10 October 2012

Agenda Cushing Storage and utilization WCS trade at Cushing USGC infrastructure updates Pipelines Terminals Heavy sour crudes at the US Gulf Canadian crude at the USGC maximizing value Copyright 2012 Argus Media Ltd. All rights reserved.

Cushing

Cushing capacity utilization 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 Copyright 2012 Argus Media Ltd. All rights reserved. 80.0% 75.0% 70.0% 65.0% 60.0% 55.0% 50.0% 45.0% 40.0% 35.0% 30.0% Q1 2005 Q2 Q3 Q4 Q1 2006 Q2 Q3 Q4 Q1 2007 Q2 Q3 Q4 Q1 2008 Q2 Q3 Q4 Q1 2009 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 2012 Q2 Q3 '000 bl %age Utilization Inventory '000 bl Utilization %

Canadian trade at Cushing Argus introduced its WCS Cushing assessment at the beginning of June Increased spot trade for WCS has allowed for a reflective assessment Cushing has proven to be an independent market from Hardisty Not dictated by the costs of transportation Volumes sold out of storage so not dependent on Hardisty availability Trade also done on a concurrent WTI basis Argus assessing the Cushing market for WCS against both CMA WTI and concurrent WTI basis Copyright 2012 Argus Media Ltd. All rights reserved.

WCS Cushing vs Hardisty WCS at Cushing WCS at Hardisty $/bl 6.000 8.000 10.000 12.000 14.000 16.000 18.000 20.000 22.000 24.000 26.000 28.000 30.000 32.000 Copyright 2012 Argus Media Ltd. All rights reserved.

Canadian trade at Cushing But Cushing is still seen as a middle step in reaching the USGC Other Canadian grades are also trading at Cushing Cold Lake, LSB and Midale mainly Pipeline developments will enable increasing volumes of Canadian crude to move south In time, a Gulf coast market is also likely to develop for WCS and other Canadian grades Copyright 2012 Argus Media Ltd. All rights reserved.

US Gulf Coast Infrastructure Update

Enbridge s Flanagan South Pipeline Project Capacity: 585,000 b/d Route: Flanagan, Illinois to Cushing, Oklahoma Operational: mid-2014 Generally adjacent to Enbridge s Spearhead pipeline Will add capacity to existing 190,000 Spearhead line Will move Canadian and Midcon crudes from Enbridge's 2.6mn b/d Mainline binational pipeline system Source: Enbridge Copyright 2012 Argus Media Ltd. All rights reserved.

Seaway pipeline update Capacity: 400,000 b/d Route: Cushing, Oklahoma to Freeport, Texas Operational: June 2012 Pipeline currently running at ~150,000 b/d Ramp up to 400,000 b/d by January Includes lateral pipes to ECHO terminal and from ECHO to Beaumont/Port Arthur Twin line of 450,000 b/d still slated for 2014 Source: Enterprise Copyright 2012 Argus Media Ltd. All rights reserved.

Magellan/Oxy BridgeTex pipeline project Capacity: 278,000 b/d Route: Colorado City, Texas to Houston, Texas Operational: mid-2014 Currently assessing commitments from open season in July Would move WTS and WTI into the USGC Will have ~1mn bl of breakout storage at Colorado City and ~1.4mn bl storage at East Houston Source: Magellan Midstream Partners Copyright 2012 Argus Media Ltd. All rights reserved.

Enterprise ECHO terminal 4.5mn bl crude storage in 2Q 2012 in Houston High storage demand prompting expansion to up to 6.5mn bl Receiving 350,000 b/d of crude from Eagle Ford Will link to Seaway pipeline by mid-2013 Will connect to Morgan s Point dock, allowing crude barging Source: Seaway Crude Pipeline Company Copyright 2012 Argus Media Ltd. All rights reserved.

Enterprise ECHO terminal delivery options 1.57mn b/d Houston refining complex 767,000 b/d Texas City refining complex 1.95mn b/d Beaumont/Port Arthur refining complex Open season underway for 200,000 b/d line from Echo to Beaumont/Port Arthur for early 2014 Nearly 2.9mn b/d additional USGC market (excluding above) Enterprise owns around 200 barges and tugs carrying crude, LPG and refined products. Owns dockside facilities at Houma, Bourg and Amelia, all in Louisiana Copyright 2012 Argus Media Ltd. All rights reserved.

Shell Ho-Ho pipeline reversal Source: Shell Will pressure sour values in Louisiana The reversal may result in Poseidon crude going into the Mars caverns at LOOP Even if this does not happen, Mars and Poseidon values will likely equalize Copyright 2012 Argus Media Ltd. All rights reserved.

Heavy Crudes at the US Gulf Coast

Heavy Imports into Padd 3 by country 35000 30000 25000 20000 15000 10000 5000 0 May 12 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 Jun 12 BRAZIL CANADA COLOMBIA ECUADOR MEXICO VENEZUELA '000 bl Source: EIA Copyright 2012 Argus Media Ltd. All rights reserved.

Mars spot market participants Mars Oct Sellers Mars Oct Buyers 1.61% 2.02% 2.42% 2.42% 2.42% 1.21% 1.61% 1.21% 18.56% 2.42% 2.83% 2.83% 1.61% 1.21% 1.21% 23.27% 4.04% 3.23% 4.44% 3.23% 4.84% 13.72% 3.58% 3.63% 6.12% 4.44% 17.62% 6.46% 11.70% 5.25% 7.01% 7.12% 9.93% 10.09% Copyright 2012 Argus Media Ltd. All rights reserved.

Emerging Markets

New crude movements WTS moving into the Houston area Pipeline capacity out of the Permian basin will nearly double by 2014 to reach 1.7mn b/d Currently around 800,000 b/d Eagle Ford being shipped from Corpus Christi to Houston and the US North East Sunoco and Carlyle Group recently chartered a 238,000 bl ship to shuttle crude from the US Gulf coast - Heading to 330,000 b/d refinery in Philadelphia, Pennsylvania - Shipments starting in October New Jersey s 250,000 b/d Bayway refinery has imported a cargo of crude from the US Gulf Copyright 2012 Argus Media Ltd. All rights reserved.

New crude movements WTI trading at Houston WTI expected to come down the Seaway pipe CME Group has proposed a Gulf Coast WTI futures contract at the ECHO terminal Canadian crude coming down the Seaway pipeline Volumes will increase at the USGC after expansion Capline from St James to Illinois now operating at well below its 1.2mn b/d capacity Around 200,000 b/d moving on the line Talk of reversal has been heard Copyright 2012 Argus Media Ltd. All rights reserved.

Capline pipeline inputs 700,000 600,000 500,000 400,000 300,000 200,000 100,000 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 b/d Source: Louisiana Department of Natural Resources (DNR) Copyright 2012 Argus Media Ltd. All rights reserved.

Conclusions WCS trade at Cushing has been profitable but the USGC remains the target destination Expanded capacity from Seaway will allow more WCS to move into the USGC starting early next year Currently, around 15pc of volume moving on Seaway is thought to be heavy Canadian crude WCS will probably displace imports of heavy sour grades from other countries Mexican, Colombian and Venezuelan crudes most likely to be backed out as a result Copyright 2012 Argus Media Ltd. All rights reserved.

Conclusions WCS has potential to realize higher value at the USGC ECHO terminal has direct access to ~2mn b/d of refining capacity in Houston area, most geared for medium to heavier grade slates Another ~1.8mn b/d of refining capacity in the nearby Port Arthur/Beaumont area Demand is currently high for blending with sweet domestic crudes There is a risk that the USGC could become awash with heavy sour crude Potential for sour value to dip on oversupply in future Copyright 2012 Argus Media Ltd. All rights reserved.

Update on Argus Canadian crude oil price indices Calgary Jeff Kralowetz 10 October 2012

Western Canadian Select (WCS)

Argus WCS volumes now higher than brokers

Argus WCS Strong volumes -- Argus WCS volumes higher than either broker for Oct 2012 trade -- Argus WCS has exceeded volumes on which WCC is settled in last 9 consecutive months On target Since launch, the average variance between Argus and blended index is 9 cents/bl Unbiased to buyers or sellers Since launch, Argus WCS trade month index above blended index in 10 months, below it in 16

Argus avg variance to blended brokers = 9c/bl

Syncrude light synthetic (SYN)

Argus SYN volume >brokers 3 of last 5 months

Argus SYN Strong volumes Argus SYN volumes higher than either broker in three of the last five months On target Since the beginning of 2011, the average of Argus trade month SYN indices is exactly equal to the average of blended broker trade month SYN indices Unbiased to buyers or sellers Since beginning of 2011, Argus SYN trade month index has been higher than blended index in 11 months, lower in 10 months, and exactly equal in one month

Average of SYN trade month = to blended brokers

Condensate

Argus Edmonton condensate On target In 26 months of ghost quote, the average variance between Argus unpublished and blended index is 0 Unbiased to buyers or sellers Unpublished VWA above blended index in 13 months, below it in 12, exact parity in 1 month Volumes still small subset of spot market volume; one or two additional reporting companies would allow launch of index

Argus Edmonton Condensate Argus C5 Assess (published)

Petroleum Transport Route rates for crude/ngl/refined products/biofuels Infrastructure news Maps/Analysis Arbitrages

Commitment to Canada Permanent office in Calgary since April 2010 Full-time Canada oil market reporter Adding staff in Canada Report Canadian markets as they trade

What Argus offers Certainty Argus has reported prices for 40 years; indices not dependent on where trade occurs Objectivity Only incentive is to offer the broadest, most accurate reflection of spot market value. More comprehensive market snapshot Brokered & non-brokered trades; volumes surpassing the brokers Independent view Argus is the only independent third-party price reporting agency offering price indices on Canadian crude

Any questions?

Jeff Kralowetz Canada Country Manager jeff.kralowetz@argusmedia.com 403 695 1799 144 4 th Avenue SW, Suite 1600, Calgary, AB T2P 3N4 Gus Vasquez Americas Crude Reporter gustavo.vasquez@argusmedia.com www.argusmedia.com Copyright notice Copyright 2012 Argus Media Ltd. All rights reserved. All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this presentation you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. Trademark notice ARGUS, ARGUS MEDIA, the ARGUS logo, FMB, ARGUS publication titles and ARGUS index names are trademarks of Argus Media Ltd. Visit www.argusmedia.com/trademarks for more information. Disclaimer All data and other information presented (the Data ) are provided on an as is basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law.