North American Oil and Gas Pipelines: Redrawing the Map

27th USAEE/IAEE North American Conference September 16 – 19, 2007

Stephen J.J. Letwin Executive Vice President

Agenda
Enbridge Overview Crude Oil Pipeline Story Natural Gas Pipeline Story New Pipeline Construction Risks

2

Energy Delivery Liquids and Natural Gas
Inuvik

• Liquids pipelines • Gas Pipelines • Gas Distribution

Norman Wells

Zama Fort St. John Fort McMurray Edmonton Hardisty Seattle Portland Clearbrook Superior Ottawa Casper Salt Lake City Chicago Kansas City El Dorado Cushing Wood River Patoka
Covenas OCENSA Bogotá

• Gathering & Processing • Wind Power • International
Regina

Montreal Toronto Buffalo

Saint John

Sarnia Toledo

Spain

Liquids Pipelines Gas Pipelines Gas Distribution
Houston

3

Crude Oil Pipline Story

4

North American Crude Oil Pipelines

5

Historical Flow Pattern

6

Western Canadian Oil Production
Market Unconstrained Case

(000 BPD) 6500 6000 5500 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 1998

Historical

Forecast
2007 CAPP Pipeline Planning Case 2007 Potential

(000 BPD) 6,500 6,000 5,500 5,000 4,500 4,000 3,500

Raw Bitumen Synthetic Light
Pentanes Plus

3,000 2,500 2,000 1,500 1,000 500

Conventional Heavy

Synthetic Heavy

Conventional Light
2000 2002 2004 2006 2008 2010 2012 2014

0 2016

7

Future Flow Pattern

+

+
8

Liquids Strategy Broadening Market Access
Norman Wells

Enbridge/Lakehead System Other Pipelines

Refineries:
Zama
Fort McMurray Tanker Port Edmonton Hardisty

Canadian Supplied No/Limited Cdn Supply

Puget Sound

Great Falls Billings Mandan Casper Sinclair

Clearbrook Superior Toronto St. Paul Chicago McPherson El Dorado Coffeyville Ponca City Cushing Wood River Buffalo Detroit Toledo Lima Canton Robinson Patoka Catlettsburg Tulsa Ardmore Memphis Montreal

Salt Lake City San Francisco Bakersfield Los Angeles Artesia

Cheyenne Denver

Borger/Sunray

El Paso Big Spring Houston Port Arthur Lake Charles Texas City New Orleans Freeport Corpus Christi

9

Liquids Strategy Major Projects Proceeding
Major Projects Proceeding Contract Terminaling
Fort McMurray Edmonton Hardisty Kerrobert Regina SOUTHERN LIGHTS REVERSED LINE 13 SOUTHERN LIGHTS LIGHT SOUR CRUDE (new construction) Cromer Gretna Clearbrook Montreal Superior Toronto Lockport
Flanagan

Cost

In-Service

Contract Terminaling Hardisty (Upstream) Stonefell (Upstream) $ 0.4B $ 0.1B $ 0.1B $ 0.2B 2008 2008 2007 2007-09

Regional Infrastructure

Cushing (Downstream) Other Regional Infrastructure Athabasca Waupisoo Southern Access Expansion Extension Spearhead Expansion
Sarnia Detroit
Canton Lima

$ 0.2B $ 0.5B

2007 2008

$ 2.2B $ 0.4B $ 0.1B $ 2.9B $ 1.4B $ 0.3B $ 8.8B

2006-09 2009 2009 2010 2010 2008

SOUTHERN LIGHTS (new construction)

Casper

Buffalo

Alberta Clipper Southern Lights Line 4 Total Capital

Chicago

Toledo

Contract Terminaling
SP E RH EA

AD

Wood River Patoka
ob i l

Catlettsburg

Cushing

Ex xo nM

Va lle y

Enbridge Liquids System Southern Access Alberta Clipper Southern Access Extension Spearhead Expansion

M
Cap li ne

Corsicana Beaumont

Houston

id

10

Natural Gas Pipeline Story

11

North American Gas Pipelines

12

Natural Gas Supply Changes
+
Alaska

+
Mackenzie

WCSB

Rockies

+
Increased Flow

+
LNG Midcon/ Permian

Appalachia

+

+
+

Decreased Flow Supply Increase Supply Decrease Increased LNG 13

+
GOM

+ LNG

+

+

Gas Pipelines Proposed/Under Construction

Rocky Mountain Express Midcontinent Express Ozark Express Gulf Grossing Clarity Others

14

Gas Strategy Asset Positioning
Inuvik

Alaska Pipeline

Mackenzie Delta

Fort St. John

Rabaska
Edmonton

Alliance Pipeline
Quebec City

Toronto Sarnia Chicago Kansas City

LNG
Gas Storage

Vector Pipeline

Enbridge Inc.
Pipelines Gas Distribution

Enbridge Energy Partners
East Texas Expansion
New Orleans Houston Neptune Shenzi

Enbridge Income Fund Potential Projects LNG 15

Pipeline Project Risk

16

North American Pipeline Construction
Potential Pipeline Requirements*
Miles of Pipe Year 2007 2008 2009 24" 432 453 80 30-36" 1434 1391 852 42-48" 929 1356 639 Total 2795 3200 1571

* Estimate as of Jan ‘07
17

New Pipeline Project Risks
Supply/Demand Construction costs Environment Competition Regulatory Operating

18

Supply: Drilling Linked to Pricing
US Gas Well Rig Count
1600 1400 1200 1000 800 600 400 200 0
Jan-01 J an-02 Jan-03 J an-04 J an-05 J an-06 J an-07

16 14 12 10 8 6 4 2 0

Lower 48 Gas Rigs

Natural Gas Price

19

Future supply linked to continued drilling
Typical Powder River Basin Natural Gas Decline Curve

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Year of Production

20

Construction Pressures
Steel
– High Chinese Demand

Pipe Mill Space
– 3,200 miles/year capacity for 24”+

Lay Costs
– Only 25 Spreads available

Right of Way
– Higher congestion, more vocal opposition

Workforce
– Retiring skilled labor not being replaced

21

Risk Strategies
Strong project management Joint Ventures Long term agreements Take or Pay Contracts Legislative stability

22

North American Oil and Gas Pipelines: Redrawing the Map
Stephen J.J. Letwin Executive Vice President Gas Transportation & international