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BENPOSIUM 2012
DAVID G. SMITH – PRESIDENT & COO
Forward Looking Information
In the interests of providing Keyera Corp. (“Keyera” or the “Company”) shareholders and potential investors with
information regarding Keyera, including Management’s assessment of future plans and operations relating to the
Company, this document contains certain statements and information that are forward-looking statements or
information within the meaning of applicable securities legislation, and which are collectively referred to herein as
“forward-looking statements". Forward-looking statements in this document include, but are not limited to statements
and tables (collectively “statements”) with respect to: capital projects and expenditures; strategic initiatives; anticipated
producer activity and industry trends; and anticipated performance. Readers are cautioned not to place undue
reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon
which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, as well as
known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the
predictions, forecasts, projections and other forward-looking statements will not occur and which may cause Keyera’s
actual performance and financial results in future periods to differ materially from any estimates or projections of future
performance or results expressed or implied by the forward-looking statements. These assumptions, risks and
uncertainties include, among other things: Keyera’s ability to successfully implement strategic initiatives and whether
such initiatives yield the expected benefits; future operating results; fluctuations in the supply and demand for natural
gas, NGLs, crude oil and iso-octane; assumptions regarding commodity prices; activities of producers, competitors
and others; the weather; assumptions around construction schedules and costs, including the availability and cost of
materials and service providers; fluctuations in currency and interest rates; credit risks; marketing margins; potential
disruption or unexpected technical difficulties in developing new facilities or projects; unexpected cost increases or
technical difficulties in constructing or modifying processing facilities; Keyera’s ability to generate sufficient cash flow
from operations to meet its current and future obligations; its ability to access external sources of debt and equity
capital; changes in laws or regulations or the interpretations of such laws or regulations; political and economic
conditions; and other risks and uncertainties described from time to time in the reports and filings made with securities
regulatory authorities by Keyera. Readers are cautioned that the foregoing list of important factors is not exhaustive.
The forward-looking statements contained in this document are made as of the date of this document or the dates
specifically referenced herein. For additional information please refer to Keyera’s public filings available on SEDAR at
www.sedar.com. All forward-looking statements contained in this document are expressly qualified by this cautionary
statement.
2
Providing Essential Services to Producers
Keyera – One of Canada’s Largest Midstream Operators
» Natural gas gathering and
processing
– Focused in western part of Western
Canada Sedimentary Basin (WCSB)
» NGL facilities
– Fractionation, storage,
transportation and terminalling
» Marketing
– Propane, butane, condensate,
iso-octane
3
Track Record of Stability and Growth
Company Snapshot
4
Trading Symbols (TSX): KEY; KEY.DB.A
Common Shares Outstanding1: 76,727,195
Share Price2: $42.40
Market Capitalization2: $3.3B
Enterprise Value2: $3.8B
Trading Volume3: 302,545
Monthly Dividend: $0.17
Current Yield2: 4.8% 1 Basic shares outstanding at April 30, 2012. 2 Based on closing share price at May 9, 2012. 3 First quarter 2012 daily average.
Creating Value through Business Integration 5
Two Integrated Business Lines
Propane
NGL Infrastructure NGL Marketing
Gathering &
Compression
Sales
Gas
NGL
Mix
Raw Gas
Processing
NGL Storage
Terminalling
Butane
Condensate
End-use
Customers
Wholesalers
Refineries
Petrochemicals
» 52% of 2011 Operating Margin*
» Fee-for-service revenues
» Largely flow-through operating
costs
» Essential service for producers
Ethane
Liquids Business Unit
NGL Fractionation
* Non-GAAP measure. See Keyera’s Year End 2011 MD&A for a definition of Operating Margin.
AEF
Iso-octane
» 23% of 2011 Operating Margin*
» Fee-for-service revenues
» No frac spread exposure
» 25% of 2011 Operating Margin*
» Margin business
» No frac spread exposure
Gathering &
Processing
Gathering and Processing – Franchise Facilities West of 5th Meridian
» Large flexible gas processing plants
– Operate 15 of 17 gas plants
– Licensed capacity of 2.6 bcf/d
– NGL extraction
– Sweet and sour gas processing capability
» Extensive gathering systems
– Large capture areas create franchise regions
» Long life assets
» Fee-for-service revenues with no commodity exposure
6
NGL Infrastructure – Positioned for Growth
» Providing services to NGL & bitumen
producers at Canada’s energy hub
– Fractionating NGL mix into ethane,
propane, butane and condensate
– Storing NGLs, including diluent
– Transporting NGLs to and from the
Edmonton/Fort Saskatchewan hub
– Rail and truck terminalling to load and
offload NGLs and other liquids
– Manufacturing iso-octane
7
Fractionation
(80,000 bbls/d)
Storage
(10.9 million bbls)
Pipelines
(7) Rail Cars
(800+)
Sales Terminals
Rail & Truck Racks
(19)
Strategic NGL Infrastructure in Edmonton/Fort Saskatchewan
Edmonton Terminal
• Logistics & transportation hub
• Pipeline control centre
• Rail and truck terminal
• Above ground storage
• Multiple pipeline connections
• Oil midstream business
Fort Saskatchewan
• 30,200 bbls/d fractionation capacity
• Pipeline system to & from Edmonton
market hub
• 10.6 million bbls of underground
storage in 11 caverns
• Potential to add 9 additional caverns
• Storage expansion program underway
8
Adding Value along the NGL Value Chain
Strategic NGL Infrastructure In Edmonton/Fort Saskatchewan
9
Alberta Diluent Terminal
(ADT)
Alberta EnviroFuels
(AEF)
• Condensate & solvent distribution
terminal
• 20 car rail offloading
• 200 car rail yard
• Unit train capability
• Connected to CP and CN railways
• Above ground storage
• Ability to offload up to 50,000 bbls/d
• Truck loading & offloading
• Largest iso-octane plant in North America
• Produces up to 14,000 bbls/d iso-octane
from butane feedstock
• Pipeline connected to Edmonton
Terminal, ADT, Suncor refinery & Kinder
Morgan TransMountain Pipeline
• Rail & truck loading via Edmonton
Terminal (Q4 2012)
• 80 acres of undeveloped land
As U.S. Natural Gas Production has Grown, Canadian Production has Declined
Natural Gas & NGL Outlook – A Canadian Perspective
10
Source: Bentek
… But the Outlook Is Shifting
NGL Production Has Also Declined …
11
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0
50,000
100,000
150,000
200,000
250,000
2006 2007 2008 2009 2010 2011
Gas P
rod
. (mm
cfd)
NG
L (B
pd
) Alberta Natural Gas and NGL Production
NGL (Bpd) Gas Prod. (mmcfd)
Source: ERCB
Largest 70 plants in Alberta, including straddle and ethane extraction facilities
Canada’s Gas Development Is Beginning to Recover
Drilling Activity – Canada vs. U.S.
12
Source: Baker Hughes
2006 2007 2008 2009 2010 20112012YTD
Canada 361 215 220 119 148 140 138
U.S. 1372 1466 1491 801 943 887 695
0
200
400
600
800
1000
1200
1400
1600
Average Gas Rig Counts
Canada U.S.
» Drilling activity in Canada
declined earlier than in U.S.
– Decline driven largely by
changes to Alberta royalty
regime in 2007, which have
since been fixed
» Canadian rig count has
stabilized in recent years
» Rig counts mask recent
shift to higher productivity
horizontal wells, focused on
liquids-rich horizons
Canada’s Liquids-Rich Gas Development
» Renewed focus on liquids-rich
gas resource development in
WCSB
– Multiple well-understood
geological horizons
– High liquids content
– Improved Alberta royalty regime
– Application of technologies
– Access to available processing &
transportation capacity
» Tight gas plays – Cardium,
Glauconite, Montney
» Duvernay – significant potential
from deep shale
13
MONTNEY
CARDIUM
DUVERNAY
GLAUCONITE
Canadian Liquids-Rich Natural Gas – Competitive with U.S. Plays
0
20
40
60
80
100
120
140
160
180
200
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
U.S. Shale Plays WCSB Plays
Liquids Content
14
Breakeven Gas Price (US$/Mcf) Natural Gas Liquids (Bbl/Mmcf)
* Source: Peters & Co. Limited. Half-cycle break-even price, based on a 10% discount rate and full-year 2012 AECO-C: C$2.16/Mcf and C$95.39/barrel Edmonton par.
Canada Is (Still) Important to North American Energy Scene!
Canadian Natural Gas & NGL Outlook
15
» Canadian gas development will continue
– Substantial natural gas resource potential
– Economically attractive, with available processing & transportation
capacity
– Favourable regulatory environment
– Liquids-rich development focus
– Growing natural gas demand in western Canada, along with LNG
export projects, will compensate for declining exports to U.S.
» NGL production is expected to grow
– Implications for North American NGL markets will vary by product
Ethane
» Petrochemical feedstock (polymers, chemicals, plastics)
» Canadian pricing typically based on negotiated margin over
gas price under long-term agreements (no spot market)
» Declining volume extracted at border straddle facilities
» Few buyers
16
Propane
» Limited Canadian demand, primarily for heating fuel
» Approximately 60 to 70% exported to U.S.
» Significant seasonality of demand
» Strong demand for storage
17
Propane Distribution Challenges
18
• Midwest & eastern
markets served by
pipelines
• Cochin pipeline to be
“re-purposed” in 2013
• Western markets
reliant on rail supply
Butane
» Mostly consumed in Alberta (refineries, AEF, oil blending)
» Increasingly used as solvent by in situ bitumen producers
» Canadian supply shortfalls met by rail imports from U.S.
19
Condensate
»Used as diluent for bitumen production from Canadian oil sands
»Significant & growing demand requires imports from U.S.
»Edmonton/Fort Saskatchewan is condensate logistics hub
20
Diluent Required for Pipeline Movement
Bitumen Viscosity
21
0
1
10
100
1,000
10,000
100,000
1,000,000
Vis
co
sit
y @
Ro
om
Te
mp
era
ture
(cP
)
Water
Olive
Oil
Pancake
Syrup
Honey
Ketchup
Cold Lake
Bitumen
Peanut
Butter
Athabasca
Bitumen
Light
Crude
Oil
Source: BP
Diluent Demand Growth Driving Condensate Imports
Bitumen Production Growth Drives Increasing Diluent Demand
22
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
-
100
200
300
400
500
600
700
800
900
1,000
1,100
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Condensate
Demand Forecast – Risked (MBbl/d)
Bitumen
Production Forecast – Risked (MBbl/d)
Source: Peters&Co.
In-situ
(SAGD, CSS, other thermal)
Mining
(bitumen, upgraded)
In-situ
(SAGD, CSS , other thermal)
Mining
(bitumen)
Edmonton/Fort Saskatchewan is Key Condensate Logistics Hub
Keyera’s Condensate Logistics
» Keyera’s fractionation, storage,
transportation & terminal facilities
provide hub services for bitumen
producers
» Long-term fee-for-service
agreements with Imperial Oil and
Husky for Kearl and Sunrise oil
sands projects
» Condensate imports by:
‒ Rail
‒ Enbridge Southern Lights Pipeline
(2010)
‒ Kinder Morgan Cochin Pipeline
(2013?)
23
Meeting the Needs of Canadian Bitumen Producers
Condensate Infrastructure – Investing for the Future
24
» Keyera and Enbridge have signed MOU to pursue diluent transportation initiatives
» Soliciting interest from oil sands producers to support construction of:
− South Cheecham Rail and Truck Terminal – enable receipt of diluent or solvents via railcar (Keyera 50%/Enbridge 50%)
− Norlite Pipeline – diluent pipeline from Fort Sask. to Athabasca oil sands region (Enbridge 70%/Keyera 30%)
In Summary …
»Canada continues to be a key
part of shifting North American
gas & NGL supply/demand
fundamentals
»Keyera is well positioned for:
− Growing production of
Canadian liquids-rich gas &
associated NGLs
− Growing diluent & solvent
logistics needs for Canadian
oil sands development
25
For Further Information Contact:
John Cobb Director, Investor Relations
888-699-4853 [email protected]
KEYERA
600, 144 – 4TH AVENUE S.W.
CALGARY, ALBERTA
T2P 3N4
WWW.KEYERA.COM