Title Text Here - Aux Sable Dec 20… · Unlocking NGL Value in an Oversupplied Market NGL Forum | San Antonio, Texas December 5, 2013 President Tim Stauft . Slide 2 Click to edit

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Unlocking NGL Value in an Oversupplied Market

NGL Forum | San Antonio, Texas

December 5, 2013

President

Tim Stauft

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Overview

NGL Value Drivers

NGL Supply & Demand

Existing (Planned) NGL Infrastructure

Unlocking NGL Value

Conclusions

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NGLs Remain Critical to Drilling Decisions BUT ……

Sales Gas 66%

C2 10%

C3 10%

C4 6%

C5+ 8%

December 2002 Sales Gas - $4.94/GJ

Sales Gas 55% C2

8%

C3 15%

C4 10%

C5+ 12%


Sales Gas 47%

C2 7%

C3 11%

C4 15%

C5+ 20%


NGL Value – 53%

NGL Value – 45%

NGL Value – 34%

Source: Alberta Energy; Aux Sable

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Sales Gas 25%

C2 4% C3

7%

C4 13%

C5+ 51%

Dec-12 Raw Gas Composition

Field Condensate Is Driving Drilling Economics

C5+ Value – 51%

C5+ Value – 28%

C5+ Value – 28%

Source: Alberta Energy; Aux Sable

Sales Gas 35%

C2 5%

C3 12%

C4 10%

C5+ 38%


*Raw Gas Composition of Typical Montney Well*

Sales Gas 48%

C2 8%

C3 9%

C4 7%

C5+ 28%


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Bakken Crude Forecast vs Pipe Transport Takeaway Capacities

Source: NDIC

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Source: NDIC

North Dakota Production – Gas Processed and Flared

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North Dakota NGL Production Forecast

Source: NDIC

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North American NGL Supply/Demand Snapshot: 2012

Source: EIA, NEB, Petral, IHS

C2 C3 C4s C5+ Total

Supply (mmbpd) Gas Plants 1.2 0.8 0.5 0.4 2.9

Refineries - 0.6 0.1 0.0 0.7

Total Supply 1.2 1.4 0.6 0.4 3.6

Demand (mmbpd)

Chemical feedstock 1.2 0.6 0.2 - 2.0

Heating/Commercial/Ind’l - 0.7 - - 0.7

Refinery (Gasoline Blending) - - 0.3 0.1 0.4

Heavy Oil Diluent - - - 0.2 0.2

Other, Net Exports - 0.1 0.1 0.1 0.3

Total Demand 1.2 1.4 0.6 0.4 3.6

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C2 C3 C4s C5+

Supply Direction

Gas Plants UP UP UP UP

Refineries - flat- flat- flat-

Demand Direction

Petrochemical Feedstock UP balance up up?

Heating/Commercial/Ind’l - flat/down - -

Refinery (Gasoline Blending) - - down down

Heavy Oil Diluent - - up UP

Dehydro (PDH/BDH), MTBE - UP ? -

Net Exports - UP up -

Key Trends 1. NGL production up from Gas Plants (“oily” gas focus in shales)

2. Ethane balanced by increased Petchem feedstock demand

3. Propane balanced by increased exports, PDH

4. Butanes balanced by increased exports, MTBE

North American NGL Supply/Demand Trends 2013-2020

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Alberta NGL Infrastructure Growing

Source: Aux Sable; Various Company Sources

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North American NGL Infrastructure… in Transition

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Significant Ethane Demand Growth in US

US Ethane Demand for Ethylene Production (Existing Facilities + Announcements)

Source: Aux Sable, Company Reports

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U.S. Propane Export Capacity Growing Rapidly

Historical and Forecast US Gulf Coast LPG Export Capacity

Source: CIBC, Oil & Gas Journal, Company Reports.

With

announced

projects, U.S.

export

capacity to

increase

356%

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Utilizing Dense-Phase Transportation

Alliance Pipeline is a high-pressure, dense phase system

Designed to transport dense phase natural gas. Allows for transportation of richer

gas streams and NGL injections (up to 1,500 btu/cf)

Transporting NGLs within the gas stream provides for a higher energy value, or

heat content, which reduces the volumetric transportation cost

Provides producers with a cost competitive means to access large, transparent,

and premium growth markets for NGLs in the U.S. and Internationally.

Aux Sable has the exclusive rights to extract and sell the NGLs transported by

Alliance. Once extracted, the component NGL products are sold to petrochemical,

refinery, specialty chemical and propane heating markets throughout the

Midwestern United States (Canadian APL Tariff)

Alliance Pipeline and Aux Sable have similar ownership

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Unlocking Value through Aux Sable via Alliance Pipeline

Aux Sable owns and operates a 2.1 bcf/d world scale extraction/frac plant at the

terminus of Alliance Pipeline (Channahon, IL) capable of extracting and

fractionating ~100,000 bpd of specification NGL products (ethane, propane,

normal butane, iso-butane and natural gasoline)

Aux Sable Canada and Aux Sable Midstream perform supply functions for the

Channahon plant and provide a fee-based energy processing infrastructure along

the Alliance Pipeline corridor

― Owns Septimus Gas Plants (60 mmcfd) & Septimus Pipeline (operated by Crew)

― Owns and operates the Palermo Conditioning Plant (80 mmcfd) and the Prairie Rose Pipeline (120 mmcfd) in ND

― Offgas processing/fractionation facilities in Fort Saskatchewan, Alberta

― Developed NGL access to end-use markets in US north-east, US mid-west and USGC via pipelines, rail and truck

― Developed capability to offload NGL mixes via railcar from shale plays

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Aux Sable Operations

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Channahon NGL Extraction Facility

Extraction: (2) 1.05 Bcf/d extraction trains

Fractionation: C2+: 102,000 bpd

Storage: 200,000 bbls onsite (9 spheres)

170,000 bbls at Monee, Il (underground)

Pipelines: Own and operate NGL Pipelines connecting to local refineries, Enterprise, and ONEOK.

Rail: 16 spot rail rack served by CN 150 Rail Storage Yard Opened

Truck: Propane Loading Terminal at Monee, IL Pipeline connections to ONEOK Truck Loading Terminal

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Aux Sable Prairie Rose Pipeline 12” diameter, 83-mile, 120 mmcf/d pipeline delivers rich gas from the Palermo Plant to

the Alliance Pipeline near Bantry, ND. Pipeline can be expanded to 145 mmcf/d to handle additional volumes

Transports 10-15% of current Bakken gas production that otherwise might be flared or less efficiently handled through field facilities

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Alliance Aux Sable Value Proposition

Rich Gas Aux

Sable

Alliance

Trading

Pool

Chicago

Gas

(paid by

producer)

Alliance

Long-haul Toll

Aux Sable NGL incentives

competitive with WCSB market

Producer Value

Alliance

Receipt Toll

(paid by Long

Haul Shipper)

Rich Gas Gas

Purchase

Prairie Rose/

Tioga Toll

Allia

nce

US T

oll

Aux Sable Gas and NGL incentives

competitive with North Dakota market

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Aux Sable Provides Market Access and Value to Producers & Reliable NGL Supplies Downstream Producers are realizing the value of our services:

CROCCOTA: “Access to United States markets for propane and butane that are larger and more competitive than in Alberta. Avoid the potential oversupply of propane and butane in Alberta”

SUMMIT: “This agreement … allows us to immediately offer our existing and future customers improved natural gas processing economics for their rich associated natural gas production.”

ND GOVERNOR J. Dalrymple: “Aux Sable and Summit Midstream are playing an important role in our ongoing effort to reduce flaring and add value to our energy resources”

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Conclusions

NGL supply continues to grow

The NGL markets in North America continue to be oversupplied, creating challenges and opportunities for producers to realize value.

Dense-phase transport provides producers with lower-cost alternatives

Transporting NGLs within the gas stream provides for a higher energy value that reduces the volumetric transportation cost.

Competitive alternative to access large, transparent, and premium growth markets for NGLs in the U.S. and Internationally.

Aux Sable provides premium value to rich gas producers

Aux Sable has established a significant presence in North Dakota and is strategically located to capture opportunities presented by associated gas that might otherwise be flared or less efficiently handled through field facilities.

Aux Sable is actively pursuing projects in Canada and the U.S. that will bring incremental NGL to market along the Alliance and Aux Sable footprint.

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Contact Information

Tim Stauft, President

403.508.5868

[email protected]

Documents

Title Text Here - Aux Sable Dec 20… · Unlocking NGL Value in an Oversupplied Market NGL Forum | San Antonio, Texas December 5, 2013 President Tim Stauft . Slide 2 Click to edit