Pipeline Siting: The Challenges

Transcription

1 Pipeline Siting: The Challenges CSG-WEST Energy and Public Lands Committee Don Wishart EVP Operations and Major Projects TransCanada Corporation July 22, 2012

2 Forward-Looking Information This presentation may contain certain information that is forward looking and is subject to important risks and uncertainties. The words "anticipate", "expect", "believe", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward-looking information. Forward-looking statements in this presentation are intended to provide TransCanada security holders and potential investors with information regarding TransCanada and its subsidiaries, including management s assessment of TransCanada s and its subsidiaries future financial and operational plans and outlook. Forward-looking statements in this presentation may include, among others, statements regarding the anticipated business prospects, and financial performance of TransCanada and its subsidiaries, expectations or projections about the future, strategies and goals for growth and expansion, expected and future cash flows, costs, schedules (including anticipated construction and completion dates), operating and financial results, and expected impact of future commitments and contingent liabilities. All forwardlooking statements reflect TransCanada's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include, among others, the ability of TransCanada to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits, the operating performance of the Company's pipeline and energy assets, the availability and price of energy commodities, capacity payments, regulatory processes and decisions, changes in environmental and other laws and regulations, competitive factors in the pipeline and energy sectors, construction and completion of capital projects, labour, equipment and material costs, access to capital markets, interest and currency exchange rates, technological developments and economic conditions in North America. By its nature, forward-looking information is subject to various risks and uncertainties, which could cause TransCanada's actual results and experience to differ materially from the anticipated results or expectations expressed. Additional information on these and other factors is available in the reports filed by TransCanada with Canadian securities regulators and with the U.S. Securities and Exchange Commission (SEC). Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this presentation or otherwise, and not to use future-oriented information or financial outlooks for anything other than their intended purpose. TransCanada undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. 2

3 TransCanada is a Leading North American Energy Infrastructure Company One of North America s Largest Natural Gas Pipeline Networks 68,500 km (42,500 mi) of pipeline Average volume of 14 Bcf/d or 20% of continental demand North America s 3rd Largest Natural Gas Storage Operator 380 Bcf of capacity Canada s Largest Private Sector Power Generator 20 power plants, 10,900 MW Premier North American Oil Pipeline System 1.4 million B/d ultimate capacity Enterprise Value ~ $55 billion 3

4 North American Energy Infrastructure Development: Significant Need Cumulative Investment in Energy Supply Infrastructure by Region and Fuel OECD Pacific Other E. Europe/Eurasia Russia Middle East Other Asia India Power Oil Gas Coal Biofuels Africa Latin America OECD Europe China North America $ trillion SOURCE: International Energy Agency (IEA) World Energy Outlook

5 Progress on Energy Infrastructure Development Poor ASCE rating D+ U.S. Chamber of Commerce $1.1 trillion stalled 5

6 Regulatory Issues are Hurting Global Competitiveness CRITERIA U.S. WORLD RANKING CANADA SWEDEN Burden of Government Regulation 58th 48th 26th Efficiency of Legal Framework in Challenging Regulation 39th 11th 2nd Transparency in Gov t Policymaking 50th 11th 7th SOURCE: World Economic Forum (2011) The Global Competitiveness Report

7 The Public Perception Challenge 51% The Human Race Has Become An Environmental Plague On This Planet SOURCE: Greg Lyle, Innovative Research Group Inc., Understanding NIMBY

8 The Public Challenge: Sensational Headlines 8

9 The Public Challenge: Celebrity 9

10 The Public Challenge: Fear James Hansen NASA Scientist [Keystone XL] is the fuse to the biggest carbon bomb on the planet." Jane Kleeb Director, Bold Nebraska We are definitely playing Russian roulette with our land and water right now 10

11 Public and Landowners Supportive Sometimes some people have to be inconvenienced for the broader good 60% people agree SOURCE: Greg Lyle, Innovative Research Group Inc., Understanding NIMBY 2011 Have you experienced any issues with pipelines on your land? Do you have any concerns related to the presence of a pipeline on your property? Most landowners experienced no issues and have no concerns 83.4% SOURCE: The Praxis Group for CEPA, Landowner Telephone Survey, October % 27.9% 16.6% 11

12 Pipelines are the Safest Mode of Transportation Accidents per Billion Tonne-Kilometers Rail Water Pipeline SOURCE: U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics, National Transportation Statistics, 2011, 12

13 Pipeline Safety is Continuously Improving % volume transported safely Number of Spills per 1,000 Miles* 2.5 Barrels Released per 1,000 Miles* % reduction % reduction '01 '03 '05 '07 '09 0 '01 '03 '05 '07 '09 *3-Year Averages Ending in Year Shown SOURCE: Association of Oil Pipelines 13

14 Energy Related Catastrophic Events Increased Public Fear Gulf of Mexico Perception is Reality Kalamazoo San Bruno 14

15 Industry Credibility Telling the Story A minority of respondents have a favorable view Companies that operate oil pipelines SOURCE: Greg Lyle, Innovative Research Group Inc., Understanding NIMBY

16 Keystone XL Example Canadian Imports Foreign Imports Production Capacity PADD II* MMBbl/d U.S. $14 billion 1.4 million bbl/d WCSB and Bakken Crude Oil Supply Outlook History Forecast Bakken WCSB Bitumen Blend WCSB Upgraded Light 1.0 WCSB Conventional Heavy 0.5 WCSB Conventional Light PADD III* * millions of barrels per day SOURCE: 2012 EIA Actuals 16

17 U.S. Forecast Oil Demand Domestic Crude Production Other Domestic Production Consumption Net Imports U.S. Energy Information Administration Annual Energy Outlook

18 Keystone XL Rationale: U.S. National Interest INSERT CAPP FIGURE SOURCE: CAPP: Environmental Assessment and the Oil Sands April

19 Keystone XL Regulatory Process Exhaustive research and analysis at 45 months + 90 open houses 3 environmental impact statements (10,000 pages) FEIS August 2011 no significant impacts a degree of safety over any other... pipeline 19

20 Allegations-a-day Increase gasoline prices export corrosive bitumen collusion with DOS Ogallala Eminent domain 20

21 TransCanada: Respect for Landowners Virtually every property has easements 60,000 landowners 98% cooperatively negotiated Multi-generational relationships 21

22 Broader Keystone Implications: Economic Value, Environmental Risk, Canada-U.S. Relations The Crude Shuffle increases total net global GHG emissions between 7.1 and 19.0 million metric tons per year At $100 per barrel, 2010 oil export revenues from the U.S. are: Venezuela $27 billion BASE CASE CRUDE SHUFFLE Keystone Pipeline offsets ~200 tankers shipping into the U.S. Gulf Coast each year (a 20% decrease) Iraq $12 billion Nigeria $29 billion Algeria/Libya $11 billion SOURCE: Barr Engineering - Low Carbon Fuel Standard Crude Shuffle, Greenhouse Gas Impacts Analysis (June 2010) Russia $7 billion 22

23 Lack of Infrastructure Alternatives and Issues SOURCE: U.S. Energy Information Administration; November

24 before 24

25 after 25

26 before 26

27 after 27

28 Conclusion Must build critical infrastructure to be globally competitive North America needs more pipelines to benefit from domestic production Society poorly served by current processes All players have a role in improvement 28

29 Pipeline Siting: The Challenges CSG-WEST Energy and Public Lands Committee Don Wishart EVP Operations and Major Projects TransCanada Corporation July 22, 2012