Rockies Alliance PipelineWyoming Pipeline Authority MeetingCasper, WyomingOctober 21, 2008Gaylen Haag
Slide 2
Agenda
• Project Introduction • Project Owner Background• Connected Facilities• RAP Project Advantages• Supply & Demand Outlook• Proposed Negotiated Rates & Competitive Analysis• Project Details and Schedule
Slide 3
Rockies Alliance Pipeline “Bullet Line To Chicago”
Proposed In-Service Nov. 1, 2012
Opal to Wamusutter:• 213 miles• 36”• 1458 psig• Capacity of 1.0 Bcf/d• Expansion up to 1.3
Bcf/d
Meeker to Wamusutter:• 140 miles• 36”• 1440 psig• Capacity of 810 mmcf/d• Expansion up to 1.0
Bcf/d
Wamusutter to Joliet:• 1080 miles• 42”• 1440 psig• Capacity of 1.3 Bcf/d• Expansion up to 1.7
Bcf/d
Chicago
Slide 4
RAP Project Summary
• Bullet Pipeline from Rockies producing area to Chicago markets.
• Capacity of 1.3 Bcf/d, expandable to 1.7 Bcf/d.• 1080 miles of 42” inch pipe @ 1440 MAOP.• In-service date anticipated to be
November 1, 2012.• Estimated capital cost of $5.0 Billion.
Slide 5
Alliance PipelineLargest construction project in North Americaat the time - larger than Rockies Express US$4.5B project delivered
on time and on budget Project executed 1997-2000 2,311 miles from NE BC to
Chicago Operational since 2000 Operating at full capacity
(1.6 bcf/d)
Owned 50% by Enbridge and 50% by Fort Chicago
Slide 6
Alliance Pipeline Ownership Support – Enbridge – Pipeline Experience
Ottawa Saint John
Kansas City
SuperiorClearbrook
Zama
Fort McMurray
Montreal
Toronto
Buffalo
Regina
Hardisty
Patoka
CasperSalt Lake City
Houston
Toledo
Edmonton
Norman Wells
Fort St. John
Cushing
Inuvik
Chicago
WoodRiver
El Dorado
Gas Distribution
Liquids Transportation
Gas Transmission
Wind farms/developments
Rabaska
•12,000 miles of gas gathering and transmission
•Deliver nearly 70% of WCSB crude oil production to the US
•Canada’s largest LDC, Consumers Gas
•16 major pipeline projects under development or execution:
- Ranging between 20” to 42” Dia.
- Totaling 2,475 miles
- over $19B in projected capital
Slide 7
Questar Pipeline
• Questar Pipeline has become a major force in the Rockies
• Questar Pipeline’s strategic location provides the lowest cost options for expansion
• More than 2,500 miles of pipe with plans to add nearly 1,000 miles more
• Capacity commitments have grown on the system from 1.5 bcf/d to 3.5 bcf/d over the past four years
• Questar Pipelines E&P affiliate will be a major shipper on RAP
Slide 8
Questar Overthrust Pipeline• Overthrust is a 213-mile, 36”
diameter pipeline from Opal to Wamsutter with contracted capacity of over 1.4 Bcf/d
• Overthrust is economically expandable from Opal to Wamsutter.
• Overthrust is proposing to expand its system from Wamsutter to White River Hub (at Meeker).
• Overthrust is expected to be the major supply system to the Rockies Alliance Pipeline
Slide 9
RAP Contracted Facilities – Questar Overthrust Pipeline
Opal Blacks F
orkPioneerWilliams -Opal
Kern
Rive
r
NWP OTPL
CIG
Grange
r
Opal Blacks F
orkPioneerWilliams -Opal
Kern
Rive
r
NWP OTPL
CIG
Grange
r
White RiverHub
QPC NWP/Williams
Enterprise
REXWIC
CIG
Trans-Colorado
CIGWICREX
OTPL(White RiverLateral)
White RiverHub
QPC NWP/Williams
Enterprise
REXWIC
CIG
Trans-Colorado
CIGWICREX
OTPL(White RiverLateral)
CheyenneCIGPowder
MedicineBow
CheyennePlains
REXTrailblazer
REXWIC
RAP RAP
CheyenneCIGPowder
MedicineBow
CheyennePlains
REXTrailblazer
REXWIC
RAP RAP
Wamsutter
REXWIC
LostCabin
CIGWICREX
Echo Springs
OTPL
CIG
RAP
OTPL(White River Lateral)
Wamsutter
REXWIC
LostCabin
CIGWICREX
Echo Springs
OTPL
CIG
RAP
OTPL(White River Lateral)
RAP to contract for capacity on Questar Overthrust Pipeline to provide the
following interconnections:
Opal area Opal Plant Pioneer Plant Blacks Fork Plant Granger Plant Multiple interstate pipelines
Wamsutter area Echo Springs Lost Cabin Multiple interstate pipelines
White River Hub (Meeker) Enterprise Multiple interstate pipelines
Cheyenne (direct to RAP) Powder River pipelines Multiple interstate pipelines
Slide 10
Alliance Header Delivery CapabilityMeter Alliance SpareStation Contracted Station
Delivery Point Capacity Deliveries CapacityNicor 350 350 0NGPL 1,600 2 1,598Vector 2,000 381 1,619ANR 1,150 650 500Midwestern 650 3 647Peoples 600 588 12Guardian 1,150 14 1,136
Total 7,500 1,988 5,513
Downstream Receipt Capability *Downstream 2007 2007
Takaway Average SpareDelivery Point Capacity Utilization CapacityNicor 750 450 300NGPL 1,200 250 950Vector 1,033 919 114ANR 1,000 300 700Midwestern/Horizon 780 204 576Peoples 600 600 0Guardian 750 323 428
Total 6,113 3,046 3,067
* as reported by GPCM 08Q1 Base Case
RAP Connection to Alliance Pipeline
“Alliance, into interstates” and “Chicago city-gates” market indices, as reported in Platts Gas Daily, are very closely matched with 99.95% correlation over the past 5 years.
Slide 11
RAP Project Advantage• Integrated pipeline solution to deliver Rockies gas to
market with a seamless single rate service.• Optimizes and utilizes existing system capability.• Expansion capability from 1.3 Bcf/d to 1.7 Bcf/d.• Initial fuel rate = 1.42% (Wamsutter – Chicago).• Potential for an integrated “delivery hub” with Alliance
Pipeline for over 3 Bcf/d of combined flow.• Well established, highly liquid delivery point into
Chicago market.• Focused project team dedicated to meet shipper
needs and to deliver project on timeand on budget.
Slide 12
Growing Rockies Gas Supply
Bcf/d * Historical Data Source: PI / Dwights 2007
Accelerated Drilling Forecast
Historical Trend+ Pinedale SEIS
Slide 13
Production vs. Pipeline Capacity
Bcf/d
Ruby Pipeline 26 Years 1.1 BCF/D
Eastbound Expansion 20 Years 1.3 BCF/D
Accelerated DrillingHistorical Trend+ Pinedale SEIS
Export Capacity + Rockies Consumption 9.4
Export Capacity 7.8
$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
$9,000,000,000
$10,000,000,000
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
Value Lost On Shut-In Gas
Loss From Basis Differential
Value Lost On Local Gas
Surplus Production Impact on Rockies Value
Shut-In Gas
11.8 tcf total
11.8 tcf x $5.00 = $59 Billion
Gas Impacted By Basis
11.1 tcf total
11.1 tcf x $3.00 = $33 Billion
Gas Impacted By Basis
7.6 tcf total
7.6 tcf x $3.00 = $23 Billion
Total Lost Value@$3.00 Basis Differential / $5.00 Gas
$50 billion
$115 billion*Value Associated w/ $1.00 Basis Change
$19 billionNet Present Value (10.00%)
Slide 15
Surplus Production Impact on Rockies Value
Oct-01
Jan-0
2
Apr-02
Jul-0
2
Oct-02
Jan-0
3
Apr-03
Jul-0
3
Oct-03
Jan-0
4
Apr-04
Jul-0
4
Oct-04
Jan-0
5
Apr-05
Jul-0
5
Oct-05
Jan-0
6
Apr-06
Jul-0
6
Oct-06
Jan-0
7
Apr-07
Jul-0
7
Oct-07
Jan-0
8
Apr-08
Jul-0
8
Oct-08
Jan-0
9
Apr-09
Jul-0
9
Oct-09
($7.00)
($6.00)
($5.00)
($4.00)
($3.00)
($2.00)
($1.00)
$0.00
Cheyenne Plains Exp.
REX East to AudrainREX East to LebanonREX East to Clarington
Kern Expansion
Severe Cold Front
Katrina / Rita
Current Rockies Basis Blowout
Rockies Basis Blowout
Slide 16
RAP Negotiated Reservation Rates(Deliveries to Chicago)
Foot notes:
1. Fuel to be adjusted to reflect actual fuel requirements. Fuel charges associated with transport upstream of Wamsutter will be calculated as per Questar Overthrust Transportation Tariff.
2. Incremental rates from Opal to Wamsutter are as per the current Overthrust Recourse Rate.
3. Incremental rates from Meeker to Wamsutter are as per the Overthrust Open Season dated Feb. 29, 2008
10 Year 15 Year 20 Year
Wamsutter 1.50 1.42 1.35 1.55 1.42%
Opal/Overthrust 2 1.62 1.54 1.47 1.67 2.22%White R. Hub 3
At Meeker 1.72 1.64 1.57 1.77 2.22%
EstimatedFuel Rates 1Contract TermReceipt Area
EstimatedRecourse
Rates
Negotiated Rates
Slide 17
Transportation to ChicagoCompetitive Analysis
15 YR CONTRACT RATES 10 YR CONTRACT RATES
Meeker - Chicago Meeker - Chicago RAP Pathfinder CHEX RAP Pathfinder CHEX
Wamsutter Rate $1.42 $1.30 $1.61 Wamsutter Rate $1.50 $1.35 $1.68Meeker Rate $0.22 $0.21 - Meeker Rate $0.22 $0.21 -
Total Demand Charge $1.64 $1.52 $1.61 Total Demand Charge $1.72 $1.57 $1.68
Fuel Costs $0.17 $0.31 $0.26 Fuel Costs $0.17 $0.31 $0.26Assumed Fuel Rate 2.22% 4.18% 3.50% Assumed Fuel Rate 2.22% 4.18% 3.50%
Total Cost $1.81 $1.83 $1.88 Total Cost $1.89 $1.88 $1.94
Opal - Chicago Opal - ChicagoRAP Pathfinder CHEX RAP Pathfinder CHEX
Wamsutter Cash Rate $1.42 $1.30 $1.61 Wamsutter Cash Rate $1.50 $1.35 $1.68Opal Rate $0.12 $0.12 - Opal Rate $0.12 $0.12 -
Total Demand Charge $1.54 $1.42 $1.61 Total Demand Charge $1.62 $1.47 $1.68
Fuel Costs $0.17 $0.31 $0.26 Fuel Costs $0.17 $0.31 $0.26Assumed Fuel Rate 2.22% 4.18% 3.50% Assumed Fuel Rate 2.22% 4.18% 3.50%
Total Cost $1.71 $1.74 $1.88 Total Cost $1.79 $1.79 $1.94
Slide 18
Market OutlookCIG to Chicago Basis
• Forecast Basis based on Platts 20 year monthly Forecast from 2009 to the end of 2028.
• Historical Basis based on actual monthly indices for the past 4 years.• Reservation Rates based on proposed rates for 15 year contracts.
Slide 19
Project Details• Open Season ended June 16, 2008
Initial interest = 480,000 Dth/d of subscriptions• Follow-Up Open Season to be held in the near future.• Targeted in-service November 1, 2012
Based on execution kick off early 2009 Historic regulatory and permitting process defines critical path
• Capacity 1.3 Bcf/d expandable to 1.7 Bcf/d• Minimum contract requirements for kick off ~ 1.0 Bcf/d• Project Scope
Capital Cost ~ $5.0 Billion Length = 1080 miles Size and Pressure = 42” @ 1440 MAOP
Slide 20
RAP Project Schedule
Slide 21
Rockies Alliance Pipeline Contact Information
Questions concerning the RAP project shouldbe directed to:
Alliance Pipeline:• Eric Besseling (403)-517-6551• Lorraine Lindberg (713)-821-1746
Questar Overthrust Pipeline:• Shelley Wright (801) 324-2509• Gaylen Haag (801) 324-5133