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Opportunities for the NGL Industry in the Oil Sands

Opportunities for the NGL Industry in the Oil Sands. CGPA Conference Calgary, Alberta May 9, 2008. Tim Stauft Executive Vice President Aux Sable Canada. Outline. Aux Sable: Past, Present and Future Oil Sands Industry Environment Midstream Opportunities Risks/Challenges

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Opportunities for the NGL Industry in the Oil Sands

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  1. Opportunities for the NGL Industry in the Oil Sands CGPA Conference Calgary, AlbertaMay 9, 2008 Tim Stauft Executive Vice President Aux Sable Canada

  2. Outline • Aux Sable: Past, Present and Future • Oil Sands Industry Environment • Midstream Opportunities • Risks/Challenges • ASC Key Initiatives and Projects • Conclusions

  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 site • First Canadian offgas project for BA Heartland Upgrader under construction (Aux Sable) • Evaluating/developing other Fort Saskatchewan offgas and extraction projects (Sable Canada)

  4. Aux Sable US Facilities

  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

  6. C2 Ethane C3 Propane C4 Butane C5+ Pentanes Plus Natural Gas Processing 101 Upgrader Gas/Oil Well Gas/Oil Separator Gasoline Oil Diesel Kerosine Gas + Gas Liquids Remove Contaminants H2S CO2 Etc. Gas and Gas Liquids Gas Liquids Extraction Gas Liquids Fractionation Gas Liquids Gas Methane Gas to Consumers

  7. 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) • Cochrane • Empress • Natural gas quality, from NGL perspective, eroding • Coal bed methane production increasing (high CO2) • NGL content of natural gas declining • Regulatory uncertainty (NGL Inquiry, NCC)

  8. Alberta Natural Gas Supply Source: ERCB

  9. Alberta Natural Gas Demand Source: ERCB

  10. Alberta Natural Gas Supply/Demand Source: ERCB

  11. 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 policy • Upgrader 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

  12. 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

  13. Canadian Crude Oil Supply Source: CAPP

  14. Potential Off Gas and C2+ Supply from Alberta Upgraders Source: ERCB applications and public data

  15. Fort Saskatchewan Upgrader Activity NORTHWEST UPGRADING & SYNENCO (< 2 KM) KINDER MORGAN ACCESS FORT HILLS BA ENERGY PROVIDENT/ WILLIAMS ENBRIDGE KING TECH MAPLE RESOURCES SUNCOR SHELL CN ATCO SUNCOR STATOIL GULF CHEMICALS TRANSCANADA PIPELINES TOTAL E & P CANADA CN AUX SABLE PETRO- GAS BP DOW GEMINI CORPORATION KEYERA

  16. Aux Sable Heartland Facility

  17. Heartland Offgas Project • Heartland Phase 1 upgrader offgas 15 mmcf/d • 2,200 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

  18. Conclusions • 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

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