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Changing Regional Midstream andChanging Regional Midstream and Transportation Developments
Terry McGill Energy Summit 2009 Energy Market Challenges & Opportunities LSU Center for Energy Studies October 28, 2009
1
LEGAL NOTICE
Certain information during this presentation will constitute forward- l ki t t t Th ill i l d b t t il li it dlooking statements. These will include, but are not necessarily limited to, throughput volumes, financial projections, expansion or acquisition projects, external economics and competitive factors. These statements are based on certain assumptions made by managementstatements are based on certain assumptions made by management. Accordingly, actual results may differ materially from current estimates. You are referred to the Enbridge Energy Partners' SEC filings, including the annual Form 10-K, for a more detailed discussionfilings, including the annual Form 10 K, for a more detailed discussion of risk factors.
2#2
Liquids Pipelines
ENBRIDGE CONTINENTAL FOCUS
Normal Wells
Liquids Pipelines • Current mainline capacity of
approximately 1.9 million barrels per day (bpd)
Zama
Fort McMurray Fort St. John
Gas Pipelines • Alliance/Vector pipeline
system • Enbridge Offshore (Gulf ofFort McMurray
Seattle Saint John
M t lClearbrook
Edmonton
Hardisty
Cheecham • Enbridge Offshore (Gulf of Mexico)
• Midcontinent Gathering & Midstream
Saint JoPortland
Casper
Montreal
Salt Lake
Toledo
Buffalo
Ottawa
Sarnia
Superior Clearbrook
Chicago
Toronto Gas Distribution • Serving customers for 160
years • Approximately 1 9 millionCity Patoka
Cushing Wood River
Gas Distrib tion
Liquids Pipelines Gas Pipelines
• Approximately 1.9 million customers
Wind Farms • Four wind farms in-service
3
Houston
Gas Distribution
Wind Farms
Four wind farms in service • Largest wind farm has 190
mw capacity
Fundamentals that direct midstream Infrastructure
• Supply – Where are the producers in esting and de eloping?investing and developing?
• Demand – Where is the market for theDemand Where is the market for the gas?
P i Wh th d bt i• Price – Where can the producer obtain the best cost margins for production and market price for the gas?and market price for the gas?
4
SUPPLY: Top 25 Natural Gas Producing Countries
20
25
15
20
D U
C ED
10
20 08
T C
F PR
O D
0
5
ed S da an ay ia ia a r
na ia K ds an ia an p t
co A E na o
R us
si an
F e U
C an
a d Ira
N or
w a
A lg
er i
Sa ud
i A ra
bi
Q at
a
C hi
n
In do
ne si U
N et
he rla
n d
Tu rk
m en
is ta
M al
ay si
U zb
ek is
ta
Eg yp
M ex
ic U A
A rg
en tin
Tr in
id ad
& T
ob ag
5
T
Supply: U.S. Lower 48 Gas Production by Type
80
Lower 48 Gas Production Forecast
60
70
40
50
B cf
p er
D ay
20
30
0
10
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2020 2025
6
Conventional Tight Sands CBM Shale Gas
Source: PIRA, October, 2009
SUPPLY: U. S. Lower 48 Shale Plays
7
A number of new supply areas are emerging including Mid Continent and Gulf Coast
8
Gas transmission patterns are shifting to accommodate supply shifts.
Major Changes in Gas Flows 2008- 2015
•WCSB
0 8 B f/d
•0.7 Bcf/d
•Rockies •0.5 Bcf/d
•0.8 Bcf/d
•Marcellus 1 7 B f/d
•Midcon / Gulf Onshore
•Midcon / Gulf Onshore
I d Fl
•1.3 Bcf/d
•4.8 Bcf/d•0.5 Bcf/d
•East Coast LNG •0.5 Bcf/d
•1.7 Bcf/d
9
•Increased Flow
•Decreased Flow
4.8 Bcf/d
•1.9 Bcf/d
•Southwest
•GOM Offshore
Abundant supply is resulting in lower prices.
Comparison of Consultants Average Henry Hub Forecasts
12.00
14.00 Comparison of Consultants Average Henry Hub Forecasts
8.00
10.00
M M Bt u
4.00
6.00$/ M
0.00
2.00
10
2008 2009
Natural Gas Supply and Demand Imbalance
• U.S. is supply long at rate of 1.7 Bcf/d
• Storage is at record levels• Storage is at record levels.
• Rig count has fallen by 48% since October 2008 but production fell by only 2% in same period.
• Drilling in Haynesville is up 25%. HOWEVER
• Drilling in Marcellus is up 59%.
11
Producers drill where cost margins allow for best return on investment.
Now the most active Shale Play
Rig Counts in Shale Play AOI
200
140
160 180
200
80
100
120
20 40
60
0
Ja n-
08
Fe b-
08
M ar
-0 8
Ap r-
08
M ay
-0 8
Ju n-
08
Ju l-0
8
Au g-
08
Se p-
08
O ct
-0 8
N ov
-0 8
D ec
-0 8
Ja n-
09
Fe b-
09
M ar
-0 9
Ap r-
09
M ay
-0 9
Ju n-
09
Ju l-0
9
12
Haynesville NW LA Fayetteville Woodford Barnett
Haynesville has enormous potential
7.0
Haynesville/Cotton Valley(LA) Production Estimate
5.0
6.0
3.0
4.0
B cf
/d
0.0
1.0
2.0
Base Case Estimated Growth
13Data source: Bentek Energy, LLC
Low cost gas supply makes gas an attractive energy choice, creating opportunity for gas demand increases.
0 90 0 0 00 .2 0
4. 30
4. 30 4. 50 $5
.0 0
$5 .0
0
$5 .4
0
$5 .4
0
$5 .5
0
$5 .5
0
$5 .5
0
$5 .5
0
$5 .8
0
$6 .2
0 $7 .0
0
$6
$8
$3 .5
0
$3 .5
0
$3 .5
0
$3 .6
0
$3 .7
0
$3 .9
$4 .0
$4 .0 $4 .
$4 $4 $ 4
$2
$4
$0
T ex
as )
riz on
ta l)
ne sv
ill e
(C re
st )
et te
vi lle
ar ce
llu s
rn R
iv er
ad ar
ko )
B ar
ne tt
(F la
nk )
ge fr
ac )
-C or
e)
ha llo
w )
ag le
fo rd
Jo na
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r ( C
B M
)
ow G
as
n (C
B M
)
n (C
B M
)
A rk
om a)
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ac )
p B
as in
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D ee
p B
os si
er (E
.
ra ni
te W
as h
(H or
H ay
n
Pi ne
da le
Fa ye M a
H or
W oo
df or
d (A
na
Pi ne
da le
M on
tn ey
(8 s
ta g
Pi ce
an ce
(V al
le y
U in
ta (S E
a
Po w
de r R
iv er
A lb
er ta
S ha
llo
or se
sh oe
C an
yo n
R at
on
W oo
df or
d (A
M on
tn ey
(4 s
ta g
A lb
er ta
D ee
p
Pi ce
an ce
(H ig
h
14
D
G r P
H o
•Source: Morgan Stanley
Regional Supply Areas could provide economic stimulus to Gulf Coast Industry
• Natural Gas provides low cost feedstock.
• Lower U.S. dollar value makes U.S.
t dexport goods attractive.
• Gas Supply such as Haynesville Shale
id lHouston Chronicle, October 18, 2009 provides a close source and long term supply to industrial
15
supply to industrial consumers.
Industrial Facility Locations near Mississippi River and Gulf Coast
LaCrosse Pipeline`
16
Industrial Facilities
New midstream infrastructure will be required to develop new supply regions
17
New gas transmission assets will have a regional scope such as proposed LaCrosse Pipeline
18
LaCrosse Status
• Successful Non-binding Open Season CompletedOpen Season Completed
• Greater than 1 BCF/D of Interest
• Negotiating Preceden
