Taking Advantage of Value Added Upgrading Opportunities in Alberta: What’s in Store for Midstreamers?

Midstream 2007Telus Convention Center CalgaryApril 16, 2007

Tim StauftExecutive Vice President,Aux Sable Canada

Slide 2

Outline

1. Introduction – Who is Aux Sable

2. Industry Environment

3. Midstream Opportunities

4. ASC Projects

5. Risks/Challenges

6. Conclusions

Slide 3

Who Is Aux Sable?

� Aux Sable U.S. owns and operates a 2.1 bcf/d world scale extraction/frac plant at terminus of Alliance Pipeline (Channahon, IL)

� Aux Sable Canada performs supply function for Aux Sable U.S. (Channahon) plant and is developing a fee-based energy processing infrastructure business primarily in Alberta

� First Canadian offgas project for BA Heartland Upgrader is under construction

� Evaluating/developing other Fort Saskatchewan projects� Offgas processing/fractionation facilities

� Fort Saskatchewan ethane extraction plant

� Aux Sable companies are both private companies and are owned by Enbridge, Fort Chicago, and Williams

Slide 4

Aux Sable U.S. Channahon Plant

Slide 5

0

2

4

6

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Tcf

Residential demand Commercial demand Other Alberta demand Alberta gas removals

actual forecast

Total Alberta marketable gas production and demand

24% 25% 27% 35% 42%

Industry Environment

Source: EUB applications and public data

Slide 6

Industry Environment

Source: CAPP

Canadian natural gas production forecast

Slide 7

0.00

0.25

0.50

0.75

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Tcf

Alberta Coalbed methane production forecast

Industry Environment

Source: EUB applications and public data

Slide 8

Midstream Opportunities

Source: CAPP

Canadian Oil Production

Slide 9

Midstream Opportunities

Source: CAPP

Oil Sands Projects

Slide 10

Liquids Potential from Central Upgraders

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2008 2009 2010 2011 2012 2013 2014 2015

Liqu

ids

(bbl

/d)

-

100

200

300

400

500

600

Off

gas

(m

mcf

/d)

Entrained Liquids (bbl/d) Off-Gas Volumes (mmcf/d)

Source: EUB applications and public data

Slide 11

SHELL

SHELL?

TOTAL S.A.

TOTAL S.A.

DOW

BP

KEYERA

PRIVATE

PRIVATE

ENBRIDGE

OXY VINYL

ATCO

PRIVATE

PROVIDENT/ WILLIAMS

Alliance Pipeline

Heartland Pipelines

PETRO-CANADA

AUX SABLE

NORTHWEST UPGRADING & SYNENCO (< 2 km)

ENBRIDGE

ASC Projects

Slide 12

� Heartland upgrader offgas 15 mmcf/d� 2200 bbl/d of C2 (40% ethylene)� 2000 bbl/d of C3+

� Startup in Q3/Q4 2008

� C2/C2= to local ethane buyer

� C3+ to export markets

� Residue gas returned to BA

� All regulatory approvals received

� Equipment ordered, construction in spring/summer 2007

Heartland Offgas Project

Slide 13

Proposed Fort Saskatchewan Extraction Plant

� Process Alliance Pipeline gas at Fort Saskatchewan

� Capacity 1.2 bcf/d

� Ethane recovery

� ~85% ethane extraction

� ~35 mb/d of purity ethane

� Reinject C3+ for recovery at Channahon plant

� Land on Alliance right of way purchased

� Located adjacent to Dow and Shell

Slide 14

Risks/Challenges

� IEEP Implementation?

� CBM Impacts/WCSB Decline

� Cost Environment

� Timing on Oil Sands Development

� Income Trust Taxation Changes?

� Development of open access Alberta Hub

Slide 15

� Many Opportunities, however, may be challenging to implement

� Existing conventional gas infrastructure modifications likely involve volume risk mitigation

� May see rationalization of some existing plants

� IEEP Program will assist in investment decisions

Conclusions