north american oil and gas pipelines: redrawing the map stephen j.j. letwin executive vice president...
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North American Oil and Gas Pipelines: Redrawing the Map
Stephen J.J. Letwin Executive Vice PresidentStephen J.J. Letwin Executive Vice President
27th USAEE/IAEE North American Conference September 16 – 19, 200727th USAEE/IAEE North American Conference September 16 – 19, 2007
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AgendaAgenda
Enbridge Overview
Crude Oil Pipeline Story
Natural Gas Pipeline Story
New Pipeline Construction Risks
3
WoodRiver
Spain
Energy DeliveryLiquids and Natural GasEnergy DeliveryLiquids and Natural Gas
Ottawa
Saint John
Kansas City
Superior
Clearbrook
Zama
Fort McMurray
Montreal
TorontoBuffalo
Regina
Hardisty
Patoka
CasperSalt Lake City
Houston
Toledo
Edmonton
Norman Wells
Fort St. John
Cushing
Inuvik
El Dorado
SarniaChicago
Gas Distribution
Liquids Pipelines
Gas Pipelines
Seattle
Portland
OCENSA
Bogotá
Covenas
• Liquids pipelines
• Gas Pipelines
• Gas Distribution
• Gathering & Processing
• Wind Power
• International
4
Crude Oil Pipline StoryCrude Oil Pipline Story
5
North American Crude Oil PipelinesNorth American Crude Oil Pipelines
6
Historical Flow PatternHistorical Flow Pattern
7
Western Canadian Oil ProductionMarket Unconstrained Case
Western Canadian Oil ProductionMarket Unconstrained Case
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000
6500
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
(000 BPD)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500(000 BPD)
Conventional LightConventional Light
Synthetic LightSynthetic Light
Raw BitumenRaw Bitumen
Conventional HeavyConventional HeavyPentanes PlusPentanes Plus
Synthetic HeavySynthetic Heavy
ForecastForecastHistoricalHistorical
2007 Potential2007 Potential
2007 CAPP Pipeline 2007 CAPP Pipeline Planning CasePlanning Case
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Future Flow PatternFuture Flow Pattern
++
--
--
++
9
Liquids StrategyBroadening Market AccessLiquids StrategyBroadening Market Access
Cushing
Montreal
Toronto
Hardisty
Wood River
Catlettsburg
Casper
Mandan
Salt Lake CitySinclair
Cheyenne
Denver McPherson
Ponca CityTulsa
El DoradoCoffeyville
ArdmoreMemphis
Billings
Great Falls
ToledoDetroit
Chicago
Robinson
Corpus Christi
Houston Port Arthur
New OrleansLake CharlesTexas City
Freeport
Puget Sound
San Francisco
Bakersfield
Los Angeles
Borger/SunrayArtesia
El Paso Big Spring
St. Paul
Lima
Buffalo
Canadian Supplied
No/Limited Cdn Supply
Enbridge/Lakehead System
Other Pipelines
Refineries:
Tanker Port
Zama
Norman Wells
Fort McMurray
Edmonton
Canton
Superior
Clearbrook
Patoka
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Montreal
Toronto
Gretna
Regina
Hardisty
Kerrobert
Cromer
Superior
Toledo
SarniaBuffalo
Edmonton
Lockport
Cushing
Houston
Exxo
n M
obil
Cap
line
LimaCanton
Catlettsburg
Beaumont
Corsicana
Mid
Val
ley
Detroit
Patoka
Chicago
Casper
SPEARHEAD
Liquids StrategyMajor Projects ProceedingLiquids StrategyMajor Projects Proceeding
Clearbrook
Major Projects Proceeding Cost In-Service
Contract Terminaling
Hardisty (Upstream) $ 0.4B 2008
Stonefell (Upstream) $ 0.1B 2008
Cushing (Downstream) $ 0.1B 2007
Other $ 0.2B 2007-09
Regional Infrastructure
Athabasca $ 0.2B 2007
Waupisoo $ 0.5B 2008
Southern Access
Expansion $ 2.2B 2006-09
Extension $ 0.4B 2009
Spearhead Expansion $ 0.1B 2009
Alberta Clipper $ 2.9B 2010
Southern Lights $ 1.4B 2010
Line 4 $ 0.3B 2008
Total Capital $ 8.8B
Regional Infrastructure
SOUTHERN LIGHTS REVERSED LINE 13
SOUTHERN LIGHTSLIGHT SOUR CRUDE(new construction)
SOUTHERN LIGHTS(new construction)
Flanagan
Wood River
Enbridge Liquids System
Alberta Clipper
Southern Access Extension
Southern Access
Spearhead Expansion
Contract Terminaling
Fort McMurray
Contract Terminaling
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Natural Gas Pipeline StoryNatural Gas Pipeline Story
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North American Gas PipelinesNorth American Gas Pipelines
13
LNG
Natural Gas Supply ChangesNatural Gas Supply Changes
LNG
WCSB
Rockies
Midcon/ Permian
Appalachia
GOM
Alaska Mackenzie
Increased Flow
Decreased Flow
Supply Increase
Supply Decrease
++
+
+
++
-
-
Increased LNG
-
+
++
+
+
14
Gas Pipelines Proposed/Under ConstructionGas Pipelines Proposed/Under Construction
Rocky Mountain ExpressMidcontinent ExpressOzark ExpressGulf GrossingClarityOthers
15
Enbridge Inc.
PipelinesGas Distribution
Enbridge Energy Partners
Enbridge Income Fund
Potential Projects
Sarnia
Edmonton
Fort St. John
Chicago
Houston
Toronto
Quebec City
Gas StrategyAsset PositioningGas StrategyAsset Positioning
Inuvik
Alliance Pipeline
Mackenzie Delta
Alaska Pipeline
VectorPipeline
New Orleans
Rabaska
Kansas City
East Texas Expansion
NeptuneShenzi
Gas Storage
LNG
LNG
16
Pipeline Project RiskPipeline Project Risk
17
North American Pipeline ConstructionNorth American Pipeline Construction
Potential Pipeline Requirements*
Year 24" 30-36" 42-48" Total2007 432 1434 929 27952008 453 1391 1356 32002009 80 852 639 1571
Miles of Pipe
* Estimate as of Jan ‘07
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New Pipeline Project RisksNew Pipeline Project Risks
Supply/Demand
Construction costs
Environment
Competition
Regulatory
Operating
19
Supply: Drilling Linked to PricingSupply: Drilling Linked to Pricing
US Gas Well Rig Count
0
200
400
600
800
1000
1200
1400
1600
J an-01 J an-02 J an-03 J an-04 J an-05 J an-06 J an-07
0
2
4
6
8
10
12
14
16
Lower 48 Gas Rigs Natural Gas Price
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Future supply linked to continued drillingFuture supply linked to continued drilling
Typical Powder River Basin Natural Gas Decline Curve
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Year of Production
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Construction PressuresConstruction Pressures
Steel– High Chinese Demand
Pipe Mill Space– 3,200 miles/year capacity for 24”+
Lay Costs– Only 25 Spreads available
Right of Way– Higher congestion, more vocal opposition
Workforce– Retiring skilled labor not being replaced
22
Risk StrategiesRisk Strategies
Strong project management
Joint Ventures
Long term agreements
Take or Pay Contracts
Legislative stability
North American Oil and Gas Pipelines: Redrawing the Map
Stephen J.J. Letwin Executive Vice PresidentGas Transportation & international
Stephen J.J. Letwin Executive Vice PresidentGas Transportation & international