NGL EXPORTS AND GLOBAL PETROCHEMICAL FEEDSTOCK COMPETITION

RESTRICTIONS ON USE: YOU MAY USE THE PRICES, INDEXES, ASSESSMENTS AND OTHER RELATED INFORMATION (COLLECTIVELY, DATA ) IN THIS PRESENTATION ONLY FOR YOUR PERSONAL USE. YOU MAY NOT PUBLISH, REPRODUCE, DISTRIBUTE, RETRANSMIT, RESELL, CREATE ANY DERIVATIVE WORK FROM AND/OR OTHERWISE PROVIDE ACCESS TO DATA OR ANY PORTION THEREOF TO ANY PERSON (EITHER WITHIN OR OUTSIDE YOUR COMPANY INCLUDING, BUT NOT LIMITED TO, VIA OR AS PART OF ANY INTERNAL ELECTRONIC SYSTEM OR INTERNET SITE), FIRM OR ENTITY. DISCLAIMER: PLATTS, ITS AFFILIATES AND ALL OF THEIR THIRD-PARTY LICENSORS DISCLAIM ANY AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE AS TO THE DATA, OR THE RESULTS OBTAINED BY ITS USE OR AS TO THE PERFORMANCE THEREOF. LIMITATION OF LIABILITY: IN NO EVENT WHATSOEVER SHALL PLATTS, ITS AFFILIATES OR THEIR THIRD-PARTY LICENSORS BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, TRADING LOSSES, OR LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE. THE DATA IS PROVIDED ON AN AS IS BASIS AND YOUR USE OF THE DATA IS AT YOUR OWN RISK. COPYRIGHT 216 BY PLATTS, MCGRAW HILL FINANCIAL, INC. ALL RIGHTS RESERVED. NO PORTION OF THIS PUBLICATION MAY BE PHOTOCOPIED, REPRODUCED, RETRANSMITTED, PUT INTO A COMPUTER SYSTEM OR OTHERWISE REDISTRIBUTED WITHOUT PRIOR AUTHORIZATION FROM PLATTS. PLATTS IS A TRADEMARK OF MCGRAW HILL FINANCIAL. Source: Lisa Frank

Key Takeaways A large spread between gas and liquids prices in the US led to rapid NGL production growth over the past five years. Exports have served as a relief value for much of the resulting oversupply. Midstream and shipping companies pursued investment projects expecting continued production growth, leading to an infrastructure overbuild. US NGLs have found new markets overseas, largely from petrochemical producers looking to move lower on the cost curve, but this demand is not limitless. Going forward, the outlook for US NGL exports will vary by product, region, and even individual terminal. Gas indexed pricing could make Marcus Hook ethane exports more competitive than USGC Mont Belvieu indexed barrels. LPG exports will be flat to declining in the short term and there may be greater competition between terminals for export volumes. 3 BENPOSIUM 216

HOW DID WE GET HERE? EXPORTS DRIVEN BY SUPPLY PUSH BENPOSIUM 216

Large spread between gas and liquids incentivized NGL production growth 25 2 $/MMBtu 15 1 5 Large Value Gap incentivizes: Increased drilling for liquids NGL demand/export projects Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 WTI Henry Hub Mont Belvieu NGLs Brent 5 5 BENPOSIUM 216 Source: Platts, Bentek

A tighter spread makes many US petrochemical and export projects less attractive $/MMBtu 25 2 15 1 Smaller Value Gap leads to: Decreased drilling activity Less attractive economics for NGL demand and export projects 5 Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 WTI Henry Hub Mont Belvieu NGLs Brent 6 6 BENPOSIUM 216 Source: Platts, Bentek

Growth of NGL production from gas plants expected to level off 5. 4. Liquids premium leads to 75% growth in 5 years US NGL Supply from Gas Plants Prior to ethane rejection but is expected to drop to 14% due to lower prices Mb/d 3. 2. 1.. 211 212 213 214 215 216 217 218 219 22 221 Ethane Propane Normal Butane Isobutane Natural Gasoline 7 BENPOSIUM 216 Source: Bentek Market Call: North American NGLs 2Q216

Recent NGL oversupply balanced mainly by increased exports and ethane rejection MMb/d 6. 5. 4. 3. 2. 1.. Domestic Demand vs. Oversupply 4% 35% 3% 25% 2% 15% 1% 5% % Ethane Rejection Domestic Demand Exports % Oversupply (Exports + Rejection) 8 BENPOSIUM 216 Source: Bentek Market Call: North American NGLs 2Q216

ALLEVIATING CONSTRAINTS BENPOSIUM 216

Rejection balanced the ethane market, pushed prices to the gas floor Mb/d Ethane Gas Production From Gas Plants (prior to rejection) vs. Petchem Demand 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 $/MMbtu 14 12 1 8 6 4 2 Ethane Prices vs. Natural Gas 1 BENPOSIUM 216 Gas Plants Petchem Henry Hub Natural Gas Mont Belvieu 1 Ethane

Canadian petchem producers are able to take advantage of low-cost US ethane by pipeline US Ethane/Ethylene Exports 1 8 Mb/d 6 4 2 Benposium 215 11 Source: Bentek, EIA 11 BENPOSIUM 216

Waterborne ethane exports require new terminal infrastructure Owner Project Name Location Ethane Capacity (Mb/d) In-Service Date Region Sunoco Logistics Marcus Hook Delaware, PA ~4 March 216 Northeast Enterprise Morgan s Point Houston Ship Channel, TX 2 3Q216 US Gulf Coast Sunoco Marcus Hook Enterprise Morgan s Point Source: Platts cflow 12 Source: Platts cflow 12 BENPOSIUM 216

Shipping capacity buildout will support waterborne export volumes Ship owner Name/End User Number of ships Unit capacity (cubic meters) Est. Unit Capacity (Mb) In-Service Date Delivered Evergas JS INEOS Insight 27,5 26 215 Evergas JS INEOS Intrepid 27,5 26 215 Evergas JS INEOS Ingenuity 27,5 26 215 Evergas JS INEOS Inspiration 27,5 26 216 Orderbook Evergas INEOS 4 27,5 26 215-216 Evergas INEOS 4 (2) 32, 31 218 Reliance/ Mitsui Reliance 6 87, 835 216-217 Navigator Gas Borealis 1 35, 325 216 Navigator Gas TBD 3 35, 31 216 Ocean Yield SABIC 3 36, 31 216 Hartmann Schiffahrts Oriental Energy 5 85, 82 217-218 13 13 BENPOSIUM 216 Source: Bentek, Wartsila, Reliance

Propane and butane oversupply pushed US from net importer to a net exporter 4 US LPG Net Imports Mb/d 2-2 -4-6 -8 Total Propane Imports Total Isobutane Imports Total Normal Butane Exports Net Imports Total Normal Butane Imports Total Propane Exports Total Isobutane Exports 14 14 BENPOSIUM 216 Source: EIA, Bentek

Global LPG price spreads have also narrowed as US supply floods market 3 25 Global Propane Prices Large spread between US and Asia/Europe demand markets incentivizes terminal buildout Cents/gal 2 15 1 5 Lower arbitrage opportunity with tight spread Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Mt. Belvieu Northwest Europe Japan FOB Saudi Arabia CP 15 BENPOSIUM 216 15 Source: Platts, Bentek

US LPG export volumes no longer constrained by terminal capacity Current Waterborne Export Capacity 3% 6% 91% East Coast USGC West Coast 218 Waterborne Export Capacity 5% 22% 73% East Coast USGC West Coast Company Project Name State Capacity (Mb/d) ISD Existing LPG Export Terminals 145 Enterprise Enterprise TX 13 NA Enterprise Enterprise Expansion I TX 12 213 Enterprise Enterprise Expansion II TX 5 215 Enterprise Enterprise Expansion III TX 233 215 Targa Galena Park TX 5 NA Targa Galena Park Expansion I TX 83 213 Targa Galena Park Expansion II TX 84 214 Sunoco Logistics Marcus Hook PA 17 NA Sunoco Logistics Marcus Hook Expansion I PA 4 215 DCP Midstream Chesapeake VA 8 215 Petrogas Ferndale WA 3 NA Sunoco Logistics Mariner South TX 2 215 Brownfield Expansions 275 Sunoco Logistics Marcus Hook Expansion II PA 275 217 Greenfield New Builds 287 AltaGas Prince Rupert BC 4 218 Occidental Chemical Ingleside TX 1 TBD Phillips 66 Freeport LPG TX 147 216 Cancelled 112 Waterside Energy WA Storage & Transfer WA 75 TBD Pembina West Coast Terminal OR 37 TBD 16 BENPOSIUM 216 Source: Bentek Market Call: North American NGLs 2Q216, NGL Facilities Databank

VLGC spot rates on the decline as more ships enter the market Cents/gal 8 7 6 5 4 3 2 1 VLGC Spot Freight Rates VLGC capacity was not enough to facilitate increased flows from the US to Asia, leading to high freight rates. The current fleet of VLGCs is about 221 vessels with 53 ships on order. New ship deliveries have driven down rates. The Panama Canal expansion could lead to further decreases. 17 BENPOSIUM 216 VLGC Freight Houston-Northwest Europe VLGC Freight Houston-Japan VLGC Freight Persian Gulf-Japan 17 Source: Platts, BW LPG

Propane and butane exports reached a record 962 Mb/d in January 216 per EIA data 1,2 1, Propane and Butane Exports Record high: 962 Mb/d Mb/d 8 6 214 Avg: 497 Mb/d 4 212 Avg: 197 Mb/d 2 - Propane Exports Normal Butane Exports Isobutane Exports 18 BENPOSIUM 216 18 Source: EIA, Bentek

FINDING OVERSEAS DEMAND BENPOSIUM 216

Ethylene production cost curve highlights US advantage from shale gas ethane $/MT Global Ethylene Cost Curve 1 9 8 CTO/MTO 7 6 5 SE Asia Naphtha NE Asia Naphtha WE Naphtha 4 3 2 1 Iran Ethane ME Ethane Saudi Ethane US Ethane US E/P Mix 2, 4, 6, 8, 1, 12, 14, 2 BENPOSIUM 216 Cumulative Capacity (' MT) Source: Platts Analytics

US cracker feedslate lighter; Europe, Asia remain naphtha dominated 1% US Steam Cracker Feedslate 5% % 1% 25 26 27 28 29 21 211 212 213 214 215 Ethane Propane Butane Naphtha European Steam Cracker Feedslate 5% % 21 BENPOSIUM 216 25 26 27 28 29 21 211 212 213 214 215 Ethane Propane Butane Naphtha Gasoil Source: Jacobs Consultancy s Hodson Report

European steam crackers were the first to receive US waterborne ethane shipments Company Location Country Ethylene Capacity (MMlbs/yr) Max Ethane Demand (Mb/d)* INEOS Rafnes Norway 1,213 32 INEOS Grangemouth UK 1,61 42 ExxonMobil Mossmorran UK 1,83 48 Borealis Stenungsund Sweden 1,378 36 SABIC Wilton UK 1,9 5 *Assumes a 95% utilization rate and 1% ethane feedslate Source: Bentek Market Call: North American NGLs, 2Q216 22 BENPOSIUM 216 22

Reliance and Braskem have also announced contracts to import US ethane Braskem purchased ethane from Enterprise for Camcari cracker Reliance contracted 72.5 Mb/d from Enterprise for 3 crackers Ethane Propane Naphtha Ethanol 23 BENPOSIUM 216 Benposium 215 23

Asia is now largest destination for US LPG exports Mb/d 1, 9 8 7 6 5 4 3 2 1 47% Export % to Region 216 YTD % 16% 14% 11% 7% US LPG Exports to Region 5% North America South America Central America Caribbean Europe Asia Africa 24 24 BENPOSIUM 216 Source: EIA data through March 216, Bentek. Note: North America includes Canada and Mexico

US LPG Exports to Asia and Europe Growing Mb/d 3 25 2 15 1 5 Latin America 2 22 24 26 28 21 212 214 1/1/216 YTD Venezuela Panama Honduras Dominican Republic Chile Brazil Mexico Mb/d 1 8 6 4 2 Western Europe Mb/d 45 4 35 3 25 2 15 1 5 - Asia Netherlands France UK Portugal Spain 25 BENPOSIUM 216 China Japan South Korea Singapore 25 Source: EIA data through March 216, Bentek.

China is now the largest destination for US LPG, mainly due to new PDH units Chinese PDH units Plant Propylene Output (mt/yr) Est. Propane Demand (Mb/d) ISD Tianjin Bohai Chemical 6, 23.2 Oct 213 Zhejiang Ningbo Haiyue 6, 23.2 July 214 Zhejiang Satellite Petchem 45, 17.5 Aug 214 Shaoxing Sanyuan Petchem 45, 17.5 Sept 214 Ningbo Oriental Energy I 66, 29.1 May 215 Yantai Wanhua 75, 25.6 Aug 215 Zhongjing Petrochemical 8, 35.3 216 Ningbo Oriental Energy II 66, 29.1 216 Hebei Haiwei Group 5, 22. 216 Fujian Meide Petrochemical 66, 29.1 217 TOTAL 6,13, 251.6 The US exported 111 Mb/d of LPG to China in 215. This has increased to 168 Mb/d in 216 YTD. 26 BENPOSIUM 216 Source: Bentek

Development of additional Chinese PDH challenged by lower margins $/MT 18 16 14 12 1 8 6 4 2 China Propane - Propylene Margin Low margins decrease utilization of existing units Propane - Propylene Margin Propane China Propylene China 27 BENPOSIUM 216 Source: Platts, Bentek

Asian and European crackers take more LPG when it is at a discount to naphtha Northwest Europe C3 to Naphtha Spread Japan C3 vs Naphtha 8 3 8 3 7 6 2 7 2 5 1 6 1 $/mt 4 3 2-1 $/mt $/mt 5 4-1 $/mt 1-2 3-2 Difference -3 2-3 Jan-15 May-15 Sep-15 Jan-16 May-16 Source: Bentek Difference Platts Propane CIF NWE 7kt+ Platts Propane Refrigerated CFR Japan 3-45 days Platts Naphtha CIF NWE Cargo Platts Naphtha MOPJ strip 45-75 Days 28 BENPOSIUM 216 Source: Platts, Bentek 28

WHAT HAPPENS NEXT? BENPOSIUM 216

Ethane exports will continue to move, but not all terminals are created equal Mb/d 35 3 25 2 15 1 5 - US Ethane Exports Pipeline to Canada Enterprise Marcus Hook Enterprise Morgan s Point Mont Belvieu index ethane contracts $/MMBtu 14 12 1 8 6 4 2 - Sunoco Marcus Hook Natural gas or naphthaindex ethane contracts Ethane vs Gas Price Forecast Henry Hub Mont Belvieu Ethane Source: Bentek Market Call: North American NGLs, 2Q216 3 BENPOSIUM 216

Global LPG price spreads have also narrowed as US supply floods market 3 Global Propane Prices Cents/gal 25 2 15 1 5 Lower arbitrage opportunity with tight spread Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Mt. Belvieu Northwest Europe Japan FOB Saudi Arabia CP 31 BENPOSIUM 216 31 Source: Platts, Bentek

Record LPG exports are not sustainable as stocks are lower and global price spreads have narrowed US LPG Exports US Propane/Propylene Stocks 12 12 1 8 1 8 Stocks drawn 4% MB prices rose 22% Mb/d 6 4 MMbbl 6 4 2 2 Capacity Bentek's Waterborne LPG Model EIA 5-year range 215 216 5-year average 32 BENPOSIUM 216 Source: Platts, Bentek 32 Source: EIA weekly estimates

Relative value of terminal capacity has fallen Cents/gal 12 1 8 6 4 2-2 Export Value = Destination Price - Freight - Mont Belvieu USGC Propane Export Value Constrained terminal capacity -4 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Houston - NW Europe High freight Houston - NE Asia Fewer constraints, lower spreads 33 BENPOSIUM 216 Source: Platts, Bentek

High terminal and cancellation fees distorting export economics in the short term cents/gal 25 2 15 1 5-5 Propane Firm Contract Economics Assumes 13 cents/gal terminal fee and 7 cents/gal cancellation fee Contract renegotiations? Difference Arab Gulf + Freight + US Cancellation Mont Belvieu + Fee + Frieght 34 BENPOSIUM 216 Source: Platts, Bentek

LPG terminal utilization rates to decline from previous highs LPG Exports vs Terminal Capacity Mb/d 1,8 1,6 1,4 1,2 1, 8 6 4 2 LPG Exports Forecast - 2Q215 LPG Export Forecast - 2Q216 Total US LPG Export Capacity 35 BENPOSIUM 216 Source: Bentek Market Call: North American NGLs, NGL Facilities Databank

USGC will face increased competition from Northeast when Mariner East 2 comes online West Coast Northeast 1, LPG Exports by Region 8 Mb/d 6 4 2-215 216 217 218 219 22 221 PADD 3 PADD 1 PADD 5 36 BENPOSIUM 216 Gulf Coast 36 Source: Bentek Market Call: North American NGLs 2Q216

A lower supply curve and domestic feedstock competition has changed the exports story Mb/d 37 BENPOSIUM 216 Total US NGL Exports Forecast Comparison 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 211 212 213 214 215 216 217 218 219 22 221 2Q215 2Q216 37 Source: Bentek Market Call: North American NGLs

THANK YOU! Kendall Puig Senior Analyst, NGLs and LPG T: 72.264.679 kpuig@spglobal.com BENPOSIUM 216