Opportunities for the NGL Industry in the Oil Sands · • Dramatic growth in oil sands production • Addition of significant bitumen upgrading capacity in Fort McMurray and Fort

Opportunities for the NGL Industry in

the Oil Sands

Canadian Institute NGL Conference Calgary, Alberta

April 10, 2008

Tim StauftExecutive Vice President Aux Sable Canada

Slide 2

Outline

• Aux Sable: Past, Present and Future

• Oil Sands Industry Environment

• Midstream Opportunities

• Risks/Challenges

• ASC Key Initiatives and Projects

• Conclusions

Slide 3

Who Is Aux Sable/Sable Canada?Aux Sable is a private company owned by Enbridge, Fort Chicago and Williams

Aux Sable Liquid Products (ASLP, US affiliate) owns and operates 2.1 bcf/d world scale extraction/frac plant at terminus of Alliance Pipeline (Chicago area)

Sable Canada is owned by Enbridge and Fort Chicago

Sable Canada is developing fee-based businesses

Announced offgas alliance with Dow Chemical

Growth in Canada on Fort Saskatchewan siteFirst Canadian offgas project for BA Heartland Upgrader under construction (Aux Sable)Evaluating/developing other Fort Saskatchewan offgas and extraction projects (Sable Canada)

Slide 4

Aux Sable US Facilities

Slide 5

ASLP Channahon Facility

2.1 bcf/d capacity plant

Capable of extracting and fractionating approximately 87,000 bbl/d of spec NGL products (ethane, propane, normal butane, iso-butane, and natural gasoline)

Isomerization unit – to convert normal butane to iso-butane

16 spot rail loading rack

200,000 bbl/d of on-site storage (spec products and mix)

Access to multiple pipelines, products terminals, and refineries

Slide 6

Conventional Midstream Challenges

Conventional natural gas supply on the decline

Intra-Alberta natural gas consumption increasing

Reduction in natural gas flows past major export points (primary source of ethane)

CochraneEmpress

Natural gas quality, from NGL perspective, erodingCoal bed methane production increasing (high CO2)NGL content of natural gas declining

Regulatory uncertainty (NGL Inquiry, NCC)

Slide 7

Alberta Natural Gas Supply

Source: ERCB

Slide 8

Alberta Natural Gas Demand

Source: ERCB

Slide 9

Alberta Natural Gas Supply/Demand

Source: ERCB

Slide 10

Oil Sands Opportunity

Significant oil sands production growth expected

Upgrading of oil sands produces “off gas” streams

Off gas is typically higher NGL content than conventional gas

Alberta Government bitumen upgrading policyUpgrader credit, bitumen “in kind” royalties, other?

Environmental benefits (CO2 credits) from using processed vs raw offgas as fuel

IEEP credits for petrochemical C2/C2= consumers

Slide 11

Off Gas Risks/Challenges

Olefinic content / composition of off gas

Markets for “unique” products (olefin/paraffin mix)

Small scale of operation vs straddle plants

Isolated locations / distance from NGL infrastructure

Use of existing/new natural gas/NGL infrastructure

Fuel gas energy balance for upgrader

Reliability of off gas operations critical to upgrader

Slide 12

Canadian Crude Oil Supply

Source: CAPP

Slide 13

Potential Off Gas and C2+ Supply from

Alberta Upgraders

Source: ERCB applications and public data

-

100

200

300

400

500

600

700

800

900

1,000

2008 2009 2010 2011 2012 2013 2014 2015

Est

imat

ed O

ff G

as P

rodu

ctio

n (M

Mcf

/d)

-

50,000

100,000

150,000

200,000

250,000

Est

imat

ed C

2+ (b

bl/d

)

BA Energy CNRL Fort Hills North WestShell StatOil Suncor SyncrudeTotal S.A. Estimated C2+

Slide 14

Fort Saskatchewan Upgrader ActivityNORTHWEST UPGRADING & SYNENCO (< 2 KM)

FORT HILLS

PROVIDENT/WILLIAMS

BA ENERGY

ENBRIDGE

ATCO

SHELL

SUNCOR

GULFCHEMICALS TRANSCANADA

PIPELINES

CNTOTAL E & P CANADAAUX

SABLE

DOW

PETRO-GASBP

KEYERA

STATOIL

KING TECHMAPLE

RESOURCES

KINDER MORGAN

GEMINI CORPORATION

ACCESS

SUNCOR

CN

Slide 15

Aux Sable Heartland Facility

Slide 16

Heartland Phase 1 upgrader offgas 15 mmcf/d2,200 bbl/d of C2 (40% ethylene)2,000 bbl/d of C3

+

Startup matched with Heartland Upgrader (Q3/4 2009)

C2/C2= to Dow Chemical

C3+ to local/export markets

Residue gas returned to upgrader

All regulatory approvals received

Construction commenced in August 2007

Heartland Offgas Project

Slide 17

• Alberta conventional midstream business in decline

• Dramatic growth in oil sands production

• Addition of significant bitumen upgrading capacity in Fort McMurray and Fort Saskatchewan areas

• Increasing availability of off gas for C2+ extraction

• Processing of off gas presents unique challenges

• Aux Sable companies poised to expand off gas processing business, leverage on land position, off gas experience, extraction assets

Conclusions