2003 Natural Gas Market Needs
Ziff ConferenceOctober 29, 2002
Steve BeckerVice President, Gas Strategy
PowerPower
TransmissionTransmission
3
Start of a New Era
1. Replacing Market Services• how will industry rebundle services?
2. Expiring Pipeline Contracts• who will be the shippers?
3. Developing Arctic Gas• will capital decisions on Arctic pipelines occur in
this next era?
4
Start of a New Era
Supply Surplus1982-1992
WCSB Growth1992-2002
MatureInfrastructure
2002-2012
Pipeline Deregulation Expansions EmergingRegional Hubs
Marketer Aggregators Trading PhysicalContracting
Producer Supply Bubble Drilling &Mergers
Arctic GasExploration
5
Replacing Missing Middlemen
• Pricing• transparency• liquidity• financial derivatives
• Aggregation role as shippers on pipelines• Geographic arbitrage between pipeline interconnects• Increased utilization of existing facilities
Industry participants need to rebundle services to replicate efficiencies of the past decade
Services provided:
6
Rebundling Services:Regional Hubs will Emerge
NIT DAWN
Supply area to includeWCSB
Eastern market hub
Amalgamate pipeline interconnect points and create more price liquidity
CHICAGO
Western market hub
7
Pipeline Export Contract Profile
0
5
10
15
20
25
0
5
10
15
20
25Ex-AB Pipeline CapacityAvailable SupplyPGTAllianceNorthern BorderMainlineChicago Line
Annual contracts: variable cost netbacks, vibrant secondary marketDaily contracts: full cost netbacks, no secondary market
Annual or Daily Contracts?
8
Arctic GasKey Decision Milestones
0
5
10
15
20
25
30
0
5
10
15
20
25
30
Discovered
Undiscovered
Unconventional
Northern
Pipeline Capacity*
Capital decision for 2010
*Capital decision for 2008
Capital decisions on pipelines and success rates in WCSB will drive exploration activity
9
Arctic Gas - 4 Integrated Projects
ArcticNationalWildlifeReserve
Yukon FlatsWildlife Reserve
IvvavikNational
Park MackenzieDelta
ALASKA
YUKON
NORTHWESTTERRITORIES
MANITOBA
SASKATCHEWANALBERTA
BRITISHCOLUMBIA
WASHINGTON IDAHO
MONTANA
NORTHDAKOTA
Inuvik
Prudhoe Bay
Boundary Lake
Alberta/NWT
NUNAVUT
Kingsgate Monchy
Northern Gas Reserves
Mackenzie Valley Project
Alaska Highway ProjectAlaska Portion Yukon / B.C.
Alberta / Existing System
U.S. Pipelines
Alberta to Chicago
Integration provides flexibility and staging to meet market timing
10
Summary
• Industry landscape has changed
• We are entering a new era
• TransCanada is consulting with producers, marketers and end users
• Together, we will define and provide solutions for this new era