Joe Kiely

Vice President of Operations, Ports-to-Plains Alliance

Progressive 15

Fall MeetingApril 22, 2010

Ports-to-Plains Alliance

It’s about connections ….

A pipeline!

Why Does the Alliance Matter?

Nearly half of U.S. oil and gas productionSource: U.S. Department of Energy

Why Does the Alliance Matter?

Primary pipeline corridor for North America’s oil

Why Does the Alliance Matter?

7 of America’s top 10 wind statesSource: U.S. Department of Energy

Why Does the Alliance Matter?

America’s agricultural heartland.Source: U.S. Department of Agriculture

Why Does the Alliance Matter?

Percent Population Change – 2000-2009Source: U.S. Census Bureau

It’s about a Common Economy …Energy … Agriculture …Trade …Tourism …

It’s about an Energy Economy … Its Jobs!

Energy Sector as Jobs Provider• Oil and Gas Industry 9.2 million jobs• Alberta Oil Sands 343,000 new jobs in US – 2011-15• Electricity Generation 250,000 direct jobs• Ethanol Industry supports 220,000 jobs

Energy = Jobs

The American Economy Relies on Affordable, Reliable Energy• More than 3.7 million manufacturing jobs lost since 2007

• High energy prices a major factor• 4,200 trucking companies closed due to high diesel prices between 2Q 2007 and 4Q 2008 • 10 Airlines shut down due to high jet fuel prices in 2008 alone

• Over 360,000 jobs lost

Energy = Jobs

Oil & Oil & Oil & Oil Sands Oil SandsGas Gas Gas Development Development

Jobs GDP $B % GDP Jobs in U.S. Jobs New GDP $BMontana 34,210 3.3 8.90% 1,200 0.081North Dakota 27,914 2.8 9.60% 800 0.068South Dakota 19,942 1.5 4.60% 1,000 0.086Wyoming 71,063 8.4 29.40% 800 0.087Nebraska 49,784 5.1 6.80% 2,300 0.189Colorado 190,408 24.1 9.30% 6,000 0.583New Mexico 88,814 8.3 12.20% 2,000 0.179Oklahoma 348,627 47.8 31.30% 4,000 0.317Texas 1,772,335 293.8 24.20% 27,300 2.800

2,603,097 395.1 45,400 4.390

US Jobs Associated with Canadian Energy343,000

Energy Jobs along the Ports-to-Plains Corridor

PartnershipForEnergy.com

A Measure of the OpportunityRotary Rig Count Period %

10/ 2/ 2009 4/ 16/ 2010 Change ChangeAlberta 131 60 -71 -54.20%Colorado 39 51 12 30.77%Montana 4 8 4 100.00%Nebraska 1 2 1 100.00%New Mexico 46 49 3 6.52%North Dakota 47 95 48 102.13%Oklahoma 74 119 45 60.81%South Dakota 0 1 1 0.00%Texas 388 639 251 64.69%Wyoming 38 35 -3 -7.89%

768 1,059 291 37.89%67.27% of U.S. Total49.59% of Canada Total

Source: Baker Hughes

US Generation Mix (Thru to Nov. 2009)*

Nuclear20.2%

Other Renewables

3.9%Coal

44.4%

Hydroelectric6.9%Natural Gas

23.6%

Oil & Other1.0%

*From Energy Information Administration

Wind & Solar Facts

Wind Facts*:

United States wind power generation now totals 35,159 MW and is produced in 35 states

Powers close to 9.7 million American homes.

Capacity grew 39% between 2008 and 2009.

The American Wind Energy Association (AWEA) estimates 38 manufacturing companies were brought online, announced or expanded in the United States in 2009.

The United States ranks 1st in the world in wind power generation above China and Germany for 2009, per the Global Wind Energy Center (GWEC).

* Numbers provided by AWEA unless otherwise noted.

Wind & Solar Facts

Solar Facts*:

United States solar power generation now totals 8,775 MW

Powers close to 1.5 million American homes.

Capacity grew about 10% between 2007 and 2008

* Numbers provided by the Solar Energy Industries Association (SEIA) unless otherwise noted.

Utilization Dictates Transmission Rates (HPX)Utilization Dictates Transmission Rates (HPX)

$-

$5

$10

$15

$20

$25

30% 40% 50% 60% 70% 80% 90%

EF

FE

CT

IVE

$/M

WH

RA

TE

NM-AZ @ $5.00/kW-mo

CO-NM @ $4.00/kW-mo

WY-CO @ $3.25/kW-mo

RENEWABLES-ONLY MIX OF RESOURCES

TRANSMISSION LINE UTILIATION

TR

AN

SM

ISS

ION

RA

TE

$/M

Wh

How to Improve Transmission Utilization

• Geographic Diversity (wind in multiple locations)

• Blending wind with solar and other renewables

• Use of gas-fired generation for “firming” and meeting load

Local Market versus Export MarketLocal Market versus Export Market

• Estimated wind energy potential exceeds local needs.– NREL estimate of Ports-to-Plains states: 5 to 9 million MW– US installed generating capacity 2008 (all fuels) 1.1 million MW

• Everyone wants to export to either California or southeast• States are trying to be first to market:

– Competing with each other for economic development opportunities– Want to change transmission planning philosophy to focus on wind

export in addition to reliability• Export scenarios will put tremendous stress on existing transmission built

primarily to serve local load.• Electric system stability will limit installed wind generation installation to a

fraction of the theoretical capability.

What About Those Oil Sands? -- The OpportunityWhat About Those Oil Sands? -- The Opportunity

• There are 1.7 trillion barrels of oil in the Canadian Oil Sands

• Over half of this potential resides in the Athabasca McMurray Sandstone

• Only 20% can be mined – the rest is too deep

Ft McMurray٭

Fort McMurray

Oil Sands Reclamation: Before and After Oil Sands Reclamation: Before and After

2000 2006

Energy Development in AlbertaEnergy Development in Alberta• Alberta’s oil sands in context

Global Crude Oil Reserves by CountryGlobal Crude Oil Reserves by Country

Source: Oil & Gas Journal Dec. 2008

2130

3644

60

9299102

115

136

175

264

0

50

100

150

200

250

300

Saudi Arabia Canada Iran Iraq Kuwait VenezuelaAbu Dhabi Russia Libya Nigeria Kazhakhstan UnitedStates

billion b

arr

els

Includes 1

70 billion barre

ls

of oil s

ands rese

rves

OtherAccessibleReserves

OtherAccessibleReserves

OtherAccessibleReserves

State ownedor controlled

Accessible

Canada’sOil Sands

World OilReserves

OtherAccessibleReserves

53%

47%

Accessible

Oil Reserves

Significant Source of US SupplySignificant Source of US Supply

Bitumen underSAGD

Water

Cream

Olive Oil

Maple Syrup

Ketchup

Peanut Butter

Vis

cosi

ty (

cP)

Typical oil in the ground

Bitumen at virgin reservoir conditions

1

10

100

1,000

10,000

100,000

1,000,000

10,000,000

0 50 100 150 200 250

Temperature (deg C)

The Challenge: Viscosity

Oil Sands: In Situ Recovery Oil Sands: In Situ Recovery

Cyclic Steam Process

Steam-Assisted Gravity Drainage

In Situ Recovery:

• 80% of resource

• 45% of production

• No tailings ponds

• No water from the Athabasca River

Transportation CorridorsTransportation Corridors

Slide 29

Why Colorado? …

It’s about Domestic Trade … Over $10.47 billion

Domestic -- 2007

Rail Change

2002-2007

Truck Change

2002-2007Exports Rail TruckMontana 747 7% -100% 62%Nebraska 1,117 11% 0% 55%New Mexico 1,926 18% 0% 195%North Dakota 120 1% 0% 100%Oklahoma 420 4% 0% 75%South Dakota 227 2% 0% 21%Texas 275 3,304 34% -19% 46%Wyoming 2,337 22% 0% 111%Total ($m) 275 10,198 100% -34% 81%

10,473 73%

Why Colorado? …

It’s about North American Trade …

Mexico … Exports …

Truck …$788m up 32% since 2004

Mexico … Imports …

Truck …$694m up 23% since 2004

Why Colorado? …

It’s about North American Trade …

Canada … Exports …

Truck …$1.6b up 18% since 2004

Canada … Imports …

Truck …$1.1b up 35% since 2004

Why Colorado? …

Almost 73% of Truck Trade with Mexico goes through PTP Ports of Laredo, Eagle, Pass and Del Rio.

The market share of Colorado’s trade with Canada has increased 7.5% since 2004 through PTP Ports of Sweetgrass, Wild Horse, Raymond and Portal.

It’s about the rural heartland …

Most communities have little voice in Washington, D.C.

Most communities are a long way from their state capitals.

Most communities under 20,000 population

How can we be heard about …

The importance of connecting rural areas to markets

The value of freight corridors

The importance of a national transportation vision

How can we be heard about …

The expansion of these corridors

The value of Border Infrastructure to Commerce and Security

The importance of NHS High Priority Corridors connecting to new markets north and south.

How can we be heard about …

Opposition to legislation that limits the opportunities for expansion of rural highways

The opportunity for North American energy security

The need for a pilot project addressing truck permitting, weights and combinations

How can we be heard about …

All these items through a multi-state caucus!

How can we be heard about …

Joe KielyVice President of OperationsP.O. Box 9Limon, CO 80828P: 303-586-1787C: 719-740-2240joe.kiely@portstoplains.comwww.portstoplains.com