Rockies Alliance Pipeline Open Season Presentation Alliance...CIG Historical & Forward Basis Source: ... (pipeline/station) • Design considerations ... Rockies Alliance Pipeline

Rockies Alliance PipelineOpen Season PresentationDenver – June 3, 2008Houston – June 4, 2008Chicago – June 5, 2008

Slide 2

Agenda

• Welcome and Introductions

• Rockies Alliance Pipeline (RAP) Offering

• Engineering & Construction

• Environment & Permitting

• Route Development & ROW Acquisition

• Open Season Details

Slide 3

Rockies Alliance Pipeline Route

Slide 4

Agenda







Slide 5

RAP New Facilities

• Proposed Pipeline Facilities! Wamsutter to Ventura: ~810 miles of 42 inch pipeline! Ventura to New Hampton: ~ 65 miles of 42 inch pipeline

(Alliance Pipeline interconnection)

• Proposed Compression Facilities! 6 compressor stations! Maximum discharge pressure = 1440 psig (MAOP)

Slide 6

Questar Overthrust Pipeline

• Questar Overthrust Pipeline (Overthrust) is a subsidiary of Questar Pipeline, a Rocky Mountain company with over 2,500 miles of pipe transporting over 3 Bcf/d.

• Overthrust is a 213-mile, 36”-diameter pipeline from Opal to Wamsutter with contracted capacity of over 1.4 Bcf/d. Overthrust has a concurrent open season proposing expansions of 1 Bcf/d from Opal to Wamsutter and 810 MDth/d from White River Hub (Meeker) to Wamsutter.

• With its positions in the Rockies, Questar Pipeline and its subsidiaries currently deliver to local distribution companies in Utah, Wyoming, Colorado, Idaho, New Mexico, Arizona and California.

Slide 7

Questar Overthrust Pipeline

• Lowest cost access to major supply points in the Rockies through an existing well-run pipeline system

• Proposed major expansions to increase supply availability • Low fuel requirements to move volumes• Access to Clay Basin Gas Storage via Questar Pipeline• Segmentation and nomination flexibility on the pipeline

Slide 8

RAP Contracted Facilities –Questar Overthrust Pipeline

RAP to contract for capacity on Questar Overthrust Pipeline to provide the following interconnections:

Opal area" Opal Plant # Pioneer Plant$ Blacks Fork Plant % Granger Plant& Multiple interstate pipelines

Wamsutter area" Echo Springs # Lost Cabin$ Multiple interstate pipelines

White River Hub (Meeker)" Enterprise# Multiple interstate pipelines

Cheyenne (direct to RAP)" Powder River pipelines# Multiple interstate pipelines

Slide 9

Alliance Pipeline

• Largest construction project in North America at the time - larger than Rockies Express! US$4.5B project delivered

on time and on budget! Largest project financing

in North American history! 2,311 miles from NE BC to

Chicago! Operational since 2000

Slide 10

Alliance Pipeline

• High pressure (1935 psig) 36” pipeline• Operating at full capacity (1.6 Bcf/d)• Consistently ranked # 1 in reliability and availability

across entire fleet of GE gas turbines worldwide • Environmentally responsible – low GHG emissions• Lead waste heat power generation – six compressor

station sites either operating or under development• Developed and implemented new US MAOP

standards• Industry leading safety record

Slide 11

RAP Contracted Facilities –Alliance Pipeline

RAP to contract for capacity on Alliance Pipelineto provide direct access to Chicago market:

• Alliance Pipeline Interconnection:! At New Hampton (~ 280 mi. upstream of Joliet)

• Expansion Facilities: ! 2 new compressor stations! Total ~ 40,000 installed HP

• Incremental Capacity:! 600 mmcf/d firm capacity

• Existing Interconnections:" Nicor & Midwestern# NGPL ' Peoples$ Vector ( Guardian% ANR

Slide 12

RAP Project, Goals & Strategy

• 1.3 Bcf/d firm transport capacity to Ventura and Chicago hub (expandable to 1.8 Bcf/d)

• Develop integrated pipeline solution to deliver Rockies gas to market

• Competitive rates to move Rockies gas to the Midwest region (North American gas transportation hub with over 35 Bcf/d of interconnected transport capacity)

• Brings together supply and market – financial balance• Optimize and utilize existing system capability• Back haul opportunities upstream on Alliance Pipeline

to access other markets

Slide 13

Market OutlookRockies Production vs Transmission Capacity

Rockies Production Net Export Pipeline CapacityExport Capacity + Local Demand

Source: Supply: Wood Mackenzie, Local Demand: EIA* Rockies production defined as WY, CO & UT.

Pipeline Export Capacity Shortfall

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Total ~ 8.75 Bcf/d Export Capacity REX NE

Trailblazer

El Paso Nat

Other

17%

3%

21%

19%

8%

32%MidwestREX

Gas TransKern River

5.00

6.00

7.00

8.00

9.00

10.00

11.00

12.00

13.00

(Bcf

/d)

Slide 14

CIG Historical & Forward Basis

Source: Platts 240M Forward Data – April 2008

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Jan-

05

Jan-

07

Jan-

09

Jan-

11

Jan-

13

Jan-

15

Jan-

17

Jan-

19

Jan-

21

Jan-

23

Jan-

25

Jan-

27

12M Ventura 12M Chicago

Ventura and Chicago Basis averages above $1.50/Dth

Slide 15

RAP Competitive Rates with Multiple Options

Fuel will be assessed on a system wide or postage stamp basis which is estimated to be approximately 2.5% and will be adjusted to reflect actual fuel requirements. Fuel charges associated with transport upstream of Wamsutter will be assessed separately.

15 Year Term - Negotiated Reservation Rates

Receipt Area VenturaAllianceMainline Chicago

VenturaCheyenneWamsutterOpal/Overthrust

White River Hubat Meeker

0.40 0.450.95 1.15 1.201.10 1.30 1.351.22 1.42 1.47

1.32 1.52 1.57

Delivery Area

Slide 16

Market OutlookMarket Basis vs RAP Rates

$1.68

$2.02

$1.45

$1.77

$1.30

$1.55

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Ventura Chicago

Forecast BasisHistorical BasisRAP Rates

$1.10

$1.35

Fuel Charges(2.5%x$8.00/DTH)

• Forecast Basis based on Platts 20 year monthly Forecast from 2008 to the end of 2028.• Historical Basis based on actual monthly indices for the past 5 years.• Reservation Rates based on proposed rates for 15 year contracts.

Slide 17

Agenda







Slide 18

Summary RAP New Facilities

• Pipe design parameters! Length: 875 miles! Pipe size: 42” OD! Pipe grade: X70! Design factor: 80% SMYS! Wall thickness: 0.540”/0.726”! Maximum Operating Pressure: 1440 psig (1935 psig Ventura

to New Hampton)

• Compression design specifics! Number of stations: 6! HP requirements: 10,000 – 36,000/station

Slide 19

RAP Preliminary Project Schedule

Slide 20

Preliminary Pipeline Construction Plan

Slide 21

Procurement – Pipe/Facilities

• Finalizing design• Short listing potential pipe mills

! North America! Overseas

• Finalizing specifications! Compressor stations! Meter stations

• Short listing potential compressor vendors

Slide 22

Industry Leaders/Experience

• Engineering and construction! Large diameter, long distance projects

• Design, construction, logistics, commissioning! High pressure! X70 pipe grade; fracture control design! Mechanized welding! Ultrasonic inspection! 80% SMYS design

• DOT (PHMSA) conditions! In Line Inspection (ILI)

• Environment award winners• Right-of-way acquisition and management

Slide 23

RAP Progress To Date

• Route selection! Identification of key routing matters! Identification of constructability considerations

• Compressor station locations• Preliminary discussions with

! Pipe mills (ID/OD coating mills)! Compressor vendors! Valve manufacturers! Construction contractors (pipeline/station)

• Design considerations• Construction planning

Slide 24

Agenda







Slide 25

Environment and RAP

• We have done this before! Large projects

• Alliance Pipeline Inc. – 888 miles / 36” / 1935 psig • Alliance Pipeline Ltd. – 1,423 miles / 36” and 42” / 1743 psig

! Recent Rockies projects• Overthrust Pipeline – 105 miles / 36” / 1440 psig• Questar Pipeline – 60 miles / 24” / 1440 psig• White River Hub – 3 Bcf/d / 30” / 1440 psig

• We have done it right! Acknowledged successes

• 2008 Earth Day award presented to Questar• 2007 SGA Environmental Excellence Award presented to Alliance

Slide 26

Alliance and Questar Synergies

• Regional expertise

• Proven ability to navigate environmental process in order to maintain project schedule! Alliance Pipeline: 2 countries, 3 provinces and 4 states - over

twice the scope of Rockies Alliance Pipeline! Built on schedule and on budget

• Reputation for following through on commitments

• Excellent relationships/reputation with FERC, Forest Service, BLM, and other regulatory agencies and stakeholders

• Recognized industry leaders

Slide 27

Keys to Success on RAP

• Early stakeholder identification and communication

• Early identification and resolution of environmental issues

• Develop strong support team of regional experts

• Maximize use of FERC’s Pre-Filing Process in order to shorten application approval time

Slide 28

RAP Progress To Date

• Scheduling! Cultural and environmental field surveys! FERC environmental process

• Routing! Rangeland – T&E, cultural sites, reclamation! Nebraska Sand Hills – unique ecosystems, reclamation ! Agricultural land – construction and reclamation plan! Rivers – Platte and Missouri

• Air quality

Slide 29

Agenda







Slide 30

Right of Way and RAP

• Similar scope! Managed acquisition,

construction and remediation activities on similar ROW with similar land use

• We know how to do it right! Landowner issues

and concerns! Unique land use and

soil issues! On time and on budget

Slide 31

Identified Issues

• Schedule! Survey support ! Accelerated acquisition

• Unique project issues ! Parallel construction! Pivot irrigation systems ! Drain tile systems

Slide 32

Keys to Success on RAP

• Good relations with landowners/affected stakeholders

• Knowledgeable agents/field staff

• Strong support from regional experts

Slide 33

Agenda







Slide 34

Open Season Details

• RAP Open Season ends June 16, 2008

• Targeted in-service November 1, 2011

• Capacity 1.3 Bcf/d expandable to 1.8 Bcf/d

• Term differentiated rate options of 10, 15, and 20 years with option for maximum recourse reservation rate or fixed negotiated reservation rates

• RAP has right to revise rates by November 1, 2008 if costs exceed US$4.1B

• Any rate increases are subject to negotiation and approval by shippers on or before November 1, 2008

• RAP to make determination of sufficient capacity subscription by March 31, 2009

• Shipper Board of Director approvals must be obtained by March 31, 2009

• RAP Board of Director approvals must be obtained by May 30, 2009

• FERC 7(C) application to be filed no later than April 30, 2010

Slide 35

Rockies Alliance Pipeline Open Season

Questions concerning RAP and this Open Season should be directed to:Alliance Pipeline:• Eric Besseling (403)-517-6551• Lorraine Lindberg (713)-821-1746

Overthrust Pipeline:• Shelley Wright (801) 324-2509• Gaylen Haag (801) 324-5133

E-mail:• [email protected]

Rockies Alliance Pipeline Open Season Presentation Alliance...CIG Historical & Forward Basis Source: ... (pipeline/station) • Design considerations ... Rockies Alliance Pipeline

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