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Today TransCanada is:

The largest natural gas transmission company in North America

The second largest natural gas storage operator

The largest private sector power company in Canada and

We are poised to become a significant player in oil transmission

Our scale and scope gives us a real competitive advantage in each business

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This map highlights the markets that Keystone will serve

When completed it will provide additional access to PADD II and either directly or through inter-connecting pipelines provide access to the largest refining market in North America, the US. Gulf Coast.

The U.S Gulf coast has over 4.0 million Bbl/d of refining capacity, with 1.7 million Bbl/d of that capacity capable of refining heavy oil.

US Gulf Coast refiners have been concerned about a shrinking supply of heavy crude from traditional sources such as Mexico and Venezuela.

Keystone will provide direct access to a secure source of Canadian crude

The Bakken Formation is the fastest growing U.S. oil play with production expected to increase 200,000 Bbl/d by 2015 and 500,000+ Bbl/d by 2020

Cushing Crude Oil Storage Hub is the largest in North America with over 47 million barrels of storage. Existing exit pipeline capacity is constrained

• Open seasons currently underway (Sept to Nov)

• Receipts of up to 100,000Bbl/d (Bakken) and 150,000Bbl/d (Cushing)

• Facilities to cost $140 million (Bakken) and $70 million (Cushing)

• Provides access capacity on Keystone Gulf Coast Expansion

• First direct link to Cushing and USGC

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I would like to start today by reinforcing the key benefits of the Keystone XL pipeline:

Energy Security:

•Keystone XL could directly offset 900,000 bpd that the U.S. currently imports from Venezuela (data from US DOE EIA)

•Keystone XL could offset 20% of current imports from OPEC (~4.5 million bpd – data from US DOE EIA)

Industry:

•Delivery of growing U.S. crude oil from the Bakken Oil Play to U.S. markets

• A report by the Energy Policy Research Foundation, Inc. found that increasing transportation efficiency and allowing Bakken producers access to new refining markets will have the added benefit of improving the well-head value for U.S. crude oil from the Bakken formation

•Delivery of Cdn crude oil to vital U.S. markets that are currently underserved by Canada

Additional permanent economic benefits “because of the savings stemming from a more reliable supply of oil to meet future needs”

EPRINC went on to say Keystone XL benefits U.S. refineries by supplying them with an efficient, secure supply of oil to support the 14 million barrels that are refined each day (10 million imported), and increasing operating margins for these American refineries - many of whom made expensive upgrades in complex facilities that need heavy oil.

EPRINC's report found that increasing transportation efficiency and allowing Bakken producers access to new refining markets will have the added benefit of improving the well-head value for U.S. crude oil from the Bakken formation.

Sources: Perryman report, Energy Policy Research Foundation, Inc. (EPRINC).

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Economic:

• 20,000 direct construction related jobs

• Indirect impact includes >118,000 construction related jobs (person years of employment)

• >$20 billion in spending (includes indirect economic activity)

Taxes:

• US$600 million in government revenue during construction

• US$5.2 billion - cumulative property taxes paid during operational life of the pipeline

Additional permanent economic benefits “because of the savings stemming from a more reliable supply of oil to meet future needs”

Project Labor Agreements reached with 5 Unions for a significant portion of US construction:

• Laborers International Union of North America

• International Brotherhood of Teamsters

• United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada

• AFL-CIO

• The International Union of Operating Engineers and the Pipeline Contractors Association

• Pipeline Contractors Association.

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Based on 2009 US crude oil imports (Source EIA)

Assumes $80 per barrel minus $20 per barrel costs for netback of $60 per barrel

Reasons for Country Inclusion:

•Venezuela: Hostility towards US

•Iraq: Politically unstable

•Nigeria: Corruption and Political Instability

•Algeria/Libya: Government instability

•Russia: Light corruption, still adapting to market freedom

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China accounts for 40%, India for 10%, and the Middle East for 16% of projected liquids consumption growth

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Total GHG emissions from the oil sands industry are equivalent to just 0.1 per cent of global GHG emissions. For comparative purposes:

• Mined oil sands represent about 0.007 to 0.016 per cent of Canada’s boreal forest.

• Mineable oil sands constitute about 0.09 to 0.16 per cent of the boreal forest.

• Forest fires on average impact annually about 56 times as much land as the area that has so far been affected by the mined oil sands.

• In Ontario, boreal forests flooded for clean hydro power represent an area 18 times the size of the mined oil sands.

Between 80 to 95 per cent of the water in major oil sands projects is recycled and re-used, including water from tailings ponds.

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According to a report by Cambridge Energy Research Associates (“Growth in the Canadian Oil Sands: Finding the New Balance”), the United States consumes crude oils with a wide range of lifecycle GHG emissions, some with emissions higher than those from the oil sands.Oil sands crude is 5 – 15 per cent more GHG-intensive than the US average on a well-to-wheel, or lifecycle basis.The oil sands producers have made progress in improving their per barrel environmental impact:

• Air: Oil sands GHG emissions per barrel have decreased by 33% since 1990• Water: 80% of the water used in a mature oil sands mine is recycled; 90% of water used in in-situ production is recycled; these recycling rates are 85% better than in 1973

• Land: 1821 parcels of land were reclaimed to the point that they were certified or released in 2008; up from 1005 in 2007

80% of emissions from crude oil are released from the tailpipe, regardless of their source. The well-to-wheels difference in emissions between oil sands crude and other sources are less than 10%.

*Assumes 55 percent of exports to the US are dilbit blends and 45 percent are SCO (source: NEB 2009 oil sands exports). This is a best estimate and not a precise number, as there are many types of blends and qualities of SCO that are exported. **Steam injection is used for production.

***Assumes SOR of 3.35.

12 percent loss of volume upgrading bitumen to SCO.

All SAGD crude production cases assume a steam-oil ratio of 3.

All oil sands cases marked "Dilbit", assume that the diluent is consumed in the refinery, with no recycle of diluents back to Alberta, and only 70 percent of the barrel is from oil sands.

All oil sands cases marked "Bitumen" assume that the diluent is recycled back to Alberta, and all of the barrel processed at the refinery is from oil sands

Well to Pump Well to Wheels % dif from "Avg. US Crude Consumed"Cdn. Oil Sands: SAGD SCO 170.6 554.6 14%Cdn. Oil Sands: SAGD Bitumen 161.6 545.6 12%Cdn. Oil Sands: Mining SCO 134.6 518.6 6%Cdn. Oil Sands: SAGD Dilbit 127.6 511.6 5%Cdn. Oil Sands: Mining Bitumen 125.6 509.6 5%Cdn. Oil Sands: Mining Dilbit 103.6 487.6 0%

Avg. Cdn. Oil Sands (2009)* 133.5 517.5 6%

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"An LCFS implemented in the U.S. results in a notable increase in greenhouse gas emissions due to the displacement of Canadian crude imports to the U.S. and re-routing of crude imports and exports to accommodate this displacement. … Nearby Canadian crude sources would be diverted to regions not affected by LCFS and replaced with supplies from distant parts of the world."

The net effect will be a doubling of GHG [greenhouse gas] emissions associated with changes in crude-transport patterns. It indicates an increase in global GHG emissions by 7.1 to 19.0 million metric tons per year, depending on the extent of resulting Canadian crude displacement."

The Crude Shuffle report used an “average” VLCC tanker capacity of 2 million barrels. Utilizing that assumption, the 1.1 million barrels/day of crude associated with Keystone and XL would require 200 tankers/year for transport.

(Average VLCC tanker capacity:2million barrels, Keystone + XL Capacity:1.1million barrels/day = 401.5million barrels/year or 200.75Average VLCC tankers/year

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Keystone does not threaten the viability of the Ogallala Aquifer

The Keystone XL pipeline would cross the Ogallala Aquifer for some 250 miles. To help put this number in perspective, there are currently almost 21,000 miles of pipelines crossing Nebraska, including almost 3,000 miles of hazardous liquid pipelines. Many miles of these pipelines co-exist with the Ogallala Aquifer.

In addition, natural oil deposits are also co–located with the Ogallala Aquifer. Seventeen Nebraska counties produce oil on top of this vast water resource. Oil is also produced on top of the Ogallala Aquifer in other states.

Keystone XL will use the latest satellite-linked, computerized leak detection and control systems. We monitor the pipeline 24/7, and if there’s ever a problem the flow can be stopped literally at the push of a button

Sandhills - The Sand Hills are an extensive and biologically significant ecoregion encompassing approximately 23,000 square miles in South Dakota and Nebraska. Soils are typically sandy and fragile, forming blowouts and bare dunes where vegetation is not properly managed

To help us better understand this special environment, during project scoping, TransCanada engaged in discussions with several regional experts on Sand Hills ecology and restoration at universities and government agencies, including experts at the University of Nebraska, the University of South Dakota, the Natural Resources Conservation Service (NRCS) and state road departments.

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