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Arctic Resources Company Northern Gas Pipeline Project Forrest E. Hoglund

Arctic Resources Company Northern Gas Pipeline Project Forrest E. Hoglund Chairman & Chief Executive Officer. Arctic Gas Pipeline. Most important energy project for North America – 44Tcf Two competing pipeline proposals – just like 1975 Politics make Florida in November look like kids play.

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Arctic Resources Company Northern Gas Pipeline Project Forrest E. Hoglund

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  1. Arctic Resources Company Northern Gas Pipeline Project Forrest E. Hoglund Chairman & Chief Executive Officer

  2. Arctic Gas Pipeline • Most important energy project for North America – 44Tcf • Two competing pipeline proposals – just like 1975 • Politics make Florida in November look like kids play

  3. Comparison of Options • Two Pipeline Option – ANGTS through Alaska plus Mackenzie Valley Pipeline • “Over the Top Route” – Prudhoe Bay to Northern Canada and up the Mackenzie Valley to Alberta – One Pipeline

  4. ANGTS & Mackenzie Delta Pipeline Routes Zama Boundary Lake

  5. ARC’s Northern Gas Pipeline Route

  6. Economic Comparison 2 – Line ApproachOver the Top ANGTSMackenzieTotalNorthern Route Capital Construction Cost ($ Billion): 10.0 + 3.5 = 13.5 7.8 Capacity (after ramp up) (BCFD): 4.0 + 1.2 = 5.2 5.2 Length to Edmonton, AB (± Miles): 2,140 + 1,350 = 3,490 1,700 Mountains to Cross (± Miles): 900 + 0 = 900 0 Wellhead Netback (Mcf): $0 to $0.20 $0 to $0.10 $0.75 to $0.90 (at $2.50/Mcf into Chicago)

  7. Politics Alaska Aggressively Supports 2 Pipeline Approach • Jobs, gas for Alaska, state pride • Passed State Law prohibiting the “Over the Top” pipeline route • Passed ban on “Over the Top” in House Energy Bill • May try same effort in Senate

  8. Problems with Alaskan Approach • ANGTS route uneconomic today w/o large subsidies • Result will be to make reserves low to no value and may cause stalemate like in 1975 • State makes $100 mm plus per year more with “Over the Top” route • Two pipeline approach causes conflict between U.S. and Canada • Alaska actions are a direct challenge to Canada, ANGTS can lower value of Canadian reserves

  9. Canadian Implications • Canada strongly interested in an economic route – Over the Top • Alaskan moves seen as threatening • Canada will have major say where pipeline goes – NEB hearings • Canada and U.S. interests are clearly aligned – one economic project

  10. Arctic Resources ApproachLowest Tariff – Fewest Obstacles • Best route – Best economics • Significant Aboriginal involvement • 100% Ownership • ARC is Program Manager • 100% Debt Financing • Consortium runs project

  11. ARC Approach • Obtain Aboriginal support • Canadian Aboriginal and Alaskan Municipal Entity files project with respective Canadian and U.S. regulatory authorities • U.S. and Canada come together on what the best project is • Major companies finally back most economic route • Consortium fully formed to carry project forward

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