Market Access for Land Locked North American Crude Oil TD London Energy Conference January 14, 2013 J. Richard Bird Executive Vice President, Chief Financial Officer & Corporate Development
Legal Notice This presentation includes certain forward looking information (FLI) to provide Enbridge shareholders and potential investors with information about Enbridge and management's assessment of its future plans and operations, which may not be appropriate for other purposes. FLI is typically identified by words such as "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Although we believe that our FLI is reasonable based on the information available today and processes used to prepare it, such statements are not guarantees of future performance and you are cautioned against placing undue reliance on FLI. FLI inherently involves a variety of assumptions, risks, uncertainties and other factors which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied in our FLI. Material assumptions include: expected supply and demand for crude oil, natural gas and natural gas liquids; prices of crude oil, natural gas and natural gas liquids; expected exchange rates; inflation; interest rates; availability and price of labour and pipeline construction materials; operational reliability; customer project approvals; maintenance of support and regulatory approvals for Enbridge’s projects; anticipated in-service dates and weather. Our FLI is subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval and support, construction schedules, weather, economic and competitive conditions, exchange rates, interest rates, commodity prices and supply and demand for commodities, including but not limited to those discussed more extensively in our filings with Canadian and US securities regulators. The impact of any one risk, uncertainty or factor on any particular FLI is not determinable with certainty as these are interdependent and our future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by law, we assume no obligation to publicly update or revise any FLI, whether as a result of new information, future events or otherwise. All FLI in this presentation is expressly qualified in its entirety by these cautionary statements. This presentation may make reference to certain financial measures, such as adjusted net income, which are not recognized under GAAP. Reconciliations to the most closely related GAAP measures are included in the MD&A filings and/or Supplementary Financial Information available on our website or in the slides that accompany this presentation, if applicable. 2
$45 Billion Energy Infrastructure Asset Base Norman Wells Zama Fort McMurray Edmonton Quebec City Hardisty Clearbrook Montreal Portland Superior Toronto 2011 2011 Toronto Casper Chicago Adjusted Adjusted Salt Lake City Patoka Earnings Earnings Cushing 17% 16% 62% 65% Houston Gas Distribution Liquids Pipelines Wind Power Generation Solar Power Generation Waste Heat Recovery Edmonton Geothermal Power Generation Power Transmission Fort St. John Edmonton Toronto Sarnia 2011 2011 Adjusted Adjusted Chicago Earnings Earnings 2% 19% Houston 17% Gas Pipelines Renewable Energy 3
Value Creation Track Record Enbridge Performance Relative to S&P/TSX Composite Index As at December 31, 2012 Enbridge Inc. 25% S&P/TSX Composite Index 20% Total Shareholder Return CAGR 19% 20% 16% 15% 9% 10% 7% 5% 1% 0% 1 Year 5 Year 10 Year North American 89% 100% 96% Peer Group Percentile 4
Dominant Transporter of Canadian Crude Oil US Imports 2012 1 MMbpd 2.1 Western Canada Enbridge 1.3 Other 0.8 Saudi Arabia 1.5 Mexico 1.0 Venezuela 0.8 Alberta Oilsands Fort McMurray Iraq 0.5 Edmonton Enbridge Trans Mountain Columbia 0.4 8% transports 63% of Nigeria 0.4 Hardisty W Corridor U.S. bound Western Kuwait 0.3 3% Express Canadian production 9% Brazil 0.3 Angola 0.3 Keystone 17% Others 1.1 Chicago Total 8.8 ENB ~ 15% Total US Imports 2012 Capacity MMbpd Enbridge 2.50 Keystone 0.59 Trans Mountain 0.30 Express 0.28 West Corridor 0.15 1 Average Q1/Q2 2012. Source: Enbridge, Energy Information Administration 5 2 Includes tanker shipments from Canadian east coast production
Global Light Oil Price Benchmark Outlook Brent Price Outlook (2011 dollars) 2013 - 2025 PIRA EIA $120 $115 U.S. Domestic Production Growth $110 USD per bbl $105 $100 $95 $90 Developing Country Demand Growth $85 $80 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: EIA “ Annual Energy Outlook 2013”, PIRA Energy Group 6
Western Canada/U.S. Northwest Supply Growth Forecast Western Canada Production Forecast Bakken Production MMbpd MMbpd 6.0 6.0 5.0 5.0 2.4 MMbpd 4.0 4.0 1.5 MMbpd 3.0 3.0 2.0 2.0 1.3 MMbpd 1.0 MMbpd 1.0 1.0 0.0 0.0 PIRA Energy Group Forecast CAPP Forecast 7
Landlocked Supply Price Discounts Pricing reflects December 2012 averages (Crude prices are in US$ per bbl) Edm Light Asia $81 $106 WCS $55 Bakken Light Brent $85 * $113 WTI $88 LLS Light Crude Brent Maya $110 * $113 Heavy Crude $91 8 NOTE: * Brent price is a landed price on US East Coast/ US Gulf Coast. Assumed tanker freight cost of US$2.00 per bbl.
Value Lever # 1 – Mainline System Oil Sands Edmonton Hardisty Kerrobert Regina Cromer Gretna Bakken Clearbrook Superior Montreal • Largest crude oil pipeline Sarnia Buffalo system in the world Detroit Chicago Flanagan Toledo • Value Leverage: Patoka – Scale Cushing – Product Segregation – Market Diversity – Premium Markets Houston – Established ROW 9
Value Lever # 2 – Alberta Regional System Imperial Oil Suncor • Largest operator in Alberta (Firebag) (Kearl) Athabasca Husky Suncor Terminal • Value Leverage: (Sunrise) (MacKay River) Nexen – Low cost expansion (Long Lake) ConocoPhillips Cheecham – “Bridging” of new projects (Surmont) Terminal Statoil Cenovus – Regional expertise (Christina Lake) (Leismer) Cold Lake – ROW access Alberta – Dual delivery hubs Edmonton Lloydminster Hardisty Hub Waupisoo Pipeline (up to 580 kbpd) Athabasca Pipeline (up to 600 kbpd) Athabasca Twin Pipeline (initially 450 kbpd) Woodland Pipeline Extension Project Connections Total Secured Capital = $3.4 B 10
Value Lever # 3 – Bakken Regional System Enbridge Mainline System • Largest operator in the Bakken Saskatchewan System (ENF) North Dakota System (EEP) Saskatchewan Bakken Expansion Project (EEP/ENF) • Value Leverage: – Sole gathering/collector system in Bakken core – Access to mainline multiple premium markets Weyburn Cromer – Contract and common carrier Steelman service Lignite Gretna Tioga – Established ROW Stanley Minot Berthold North Dakota Clearbrook Total Secured Capital = $0.8 B 11
Value Lever # 4 – Existing Mainline Extensions Fort McMurray Edmonton Hardisty Kerrobert Regina Cromer Gretna Clearbrook Superior Montreal • Value Leverage: Sarnia Buffalo Detroit Chicago – Market Diversity Flanagan Toledo – Established ROW Patoka Cushing – Mainline Joint Tolls Houston 12
New Market Access Initiative # 1 – Western U.S. Gulf Coast Access 4 # 4. Associated Mainline Expansions ($1.2B) • Expanding Line 67 from 450 kbpd to 800 kbpd • Expanding Line 61 from 400 kbpd to 560 kbpd # 3. Flanagan South Pipeline ($2.8B) • Enbridge Inc. 100% Chicago/ • Twin Spearhead Pipeline (36-inch pipeline, 591 miles) Flanagan • Initial capacity 585 kbpd, expandable to 800 kbpd • In-service mid-2014 3 # 2. Seaway Pipeline Twin + Lateral ($1.0B) Cushing • Enbridge Inc. and Enterprise JV 2 • Twin Seaway Pipeline (515 miles) • Initial capacity 450 kbpd, In-service mid-2014 # 1. Seaway Pipeline Acquisition + Reversal ($1.4B) 1 • Connectivity to Port Arthur (85 miles) • Enbridge Inc. and Enterprise JV • Initial capacity 150 kbpd, up to 400 kbpd by Q1 ‘13 • Reversal started May 2012 Port Arthur • Connectivity to ECHO Terminal in 2013 (65 miles) Houston Total Secured Capital = $6.4 B 13
New Market Access Initiative # 2 – Eastern Access Hardisty Regina Gretna Montreal Clearbrook Superior 4 1 Westover 4 Sarnia Chicago 5 Toledo 3 Line 5 Expansion 1 2 Spearhead North Expansion 2 Patoka Line 6B Replacement 3 Line 9 Reversal 4 Toledo Pipeline Partial Twin Cushing 5 Total Secured Capital = $2.7 B 14
New Market Access Initiative # 3 – Light Oil Market Access Hardisty Gretna Montreal Clearbrook Superior Canadian Mainline Terminal Capability ($0.6B) 1 Sarnia Sandpiper Project ($2.5B) 2 Toledo Chicago U.S. Mainline Expansion ($1.8B) 3 Flanagan a) Superior to Flanagan b) Chicago Area Connectivity Patoka Eastern Access Upsize ($0.5B) 4 a) Line 6B Expansion b) Line 9 Reversal Expansion Cushing Southern Access Extension ($0.8B) 5 Total Secured Capital = $6.2 B 15 15
Other New Market Access Initiatives Asia Pacific/West Coast Refinery Markets Canadian/U.S. East Coast Refinery Markets Eastern U.S. Gulf Coast Refinery Markets 16 16
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