Market Access for Land Locked North American Crude Oil/media/Enb/Documents/Investor Relations... ·...
Transcript of Market Access for Land Locked North American Crude Oil/media/Enb/Documents/Investor Relations... ·...
TD London Energy Conference January 14, 2013
Market Access for Land Locked
North American Crude Oil
J. Richard Bird Executive Vice President, Chief Financial Officer & Corporate Development
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.
Legal Notice
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Toronto
Quebec City
$45 Billion Energy Infrastructure Asset Base
Gas Distribution
Norman
Wells
Zama
Fort McMurray
Portland
Casper
Montreal
Salt Lake City
Patoka
Cushing
Houston
Superior
Clearbrook
Edmonton Hardisty
Toronto
Chicago
Liquids Pipelines
Edmonton
Fort St. John
Houston
Chicago
Sarnia
Gas Pipelines
Toronto
Edmonton
Renewable Energy
2011
Adjusted
Earnings
65%
16%
17%
2011
Adjusted
Earnings
2011
Adjusted
Earnings
2011
Adjusted
Earnings
2%
62%
19%
17%
Wind Power Generation
Waste Heat Recovery
Solar Power Generation
Geothermal Power Generation
Power Transmission
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16%
20% 19%
7%
1%
9%
0%
5%
10%
15%
20%
25%
1 Year 5 Year 10 Year
Tota
l Sh
are
ho
lde
r R
etu
rn C
AG
R
Enbridge Inc.
S&P/TSX Composite Index
Enbridge Performance Relative to S&P/TSX Composite Index As at December 31, 2012
Value Creation Track Record
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89% 100% 96% North American
Peer Group Percentile
Edmonton
Fort McMurray
Chicago
Trans Mountain
8%
Express
9%
W Corridor
3%
Alberta Oilsands
Hardisty
Keystone
17%
US Imports 20121 MMbpd
Western Canada
Enbridge
Other
2.1
1.3
0.8
Saudi Arabia 1.5
Mexico 1.0
Venezuela 0.8
Iraq 0.5
Columbia 0.4
Nigeria 0.4
Kuwait 0.3
Brazil 0.3
Angola 0.3
Others 1.1
Total 8.8
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
2 Includes tanker shipments from Canadian east coast production
Enbridge
transports 63% of
U.S. bound Western
Canadian production
Dominant Transporter of Canadian Crude Oil
ENB ~ 15% Total US Imports
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Global Light Oil Price Benchmark Outlook
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Source: EIA “Annual Energy Outlook 2013”, PIRA Energy Group
$80
$85
$90
$95
$100
$105
$110
$115
$120
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
USD
pe
r b
bl
PIRA EIA
Brent Price Outlook (2011 dollars) 2013 - 2025
U.S. Domestic
Production Growth
Developing Country
Demand Growth
Western Canada/U.S. Northwest Supply Growth
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0.0
1.0
2.0
3.0
4.0
5.0
6.0
CAPP Forecast
1.5 MMbpd
Forecast Western Canada Production
MMbpd
2.4 MMbpd
0.0
1.0
2.0
3.0
4.0
5.0
6.0
PIRA Energy Group Forecast
Forecast Bakken Production
MMbpd
1.0 MMbpd 1.3 MMbpd
Landlocked Supply Price Discounts
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$91
WCS
Bakken
Light Brent
Maya
Pricing reflects December 2012 averages
(Crude prices are in US$ per bbl)
$106
$55
$110
LLS
WTI
$85
Light Crude
Heavy Crude
NOTE: * Brent price is a landed price on US East Coast/ US Gulf Coast. Assumed tanker freight cost of US$2.00 per bbl.
Edm Light
$81
$88
Asia
Brent
$113 *
$113 *
Value Lever # 1
– Mainline System
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Montreal
Gretna
Regina
Hardisty
Kerrobert
Superior
Toledo
Buffalo
Edmonton
Houston
Detroit
Clearbrook
Flanagan
Oil
Sands
Cromer
Cushing
Patoka
Chicago
Sarnia
Bakken
• Largest crude oil pipeline
system in the world
• Value Leverage:
– Scale
– Product Segregation
– Market Diversity
– Premium Markets
– Established ROW
Value Lever # 2
– Alberta Regional System
• Largest operator in Alberta
• Value Leverage:
– Low cost expansion
– “Bridging” of new projects
– Regional expertise
– ROW access
– Dual delivery hubs Lloydminster
Edmonton
Cold Lake
Hardisty Hub
Cheecham
Terminal
Nexen (Long Lake)
Suncor (MacKay River)
ConocoPhillips (Surmont)
Suncor (Firebag)
Alberta
Husky (Sunrise)
Imperial Oil (Kearl)
Waupisoo Pipeline (up to 580 kbpd)
Athabasca Pipeline (up to 600 kbpd)
Project Connections
Athabasca Twin Pipeline (initially 450 kbpd)
Cenovus (Christina Lake)
Statoil (Leismer)
Woodland Pipeline Extension
Total Secured Capital = $3.4 B 10
Athabasca
Terminal
Value Lever # 3
– Bakken Regional System
• Largest operator in the Bakken
• Value Leverage:
– Sole gathering/collector system
in Bakken core
– Access to mainline multiple
premium markets
– Contract and common carrier
service
– Established ROW
Gretna
Saskatchewan
Minot
Lignite
Weyburn
Cromer
Berthold
Steelman
Tioga Stanley
Clearbrook North Dakota
Enbridge Mainline System
North Dakota System (EEP)
Saskatchewan System (ENF)
Bakken Expansion Project (EEP/ENF)
Total Secured Capital = $0.8 B 11
Montreal
Gretna
Regina
Hardisty
Kerrobert
Superior
Toledo
Buffalo
Edmonton
Houston
Detroit
Clearbrook
Flanagan
Fort McMurray
Cromer
Cushing
Patoka
Chicago
Sarnia
Value Lever # 4
– Existing Mainline Extensions
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• Value Leverage:
– Market Diversity
– Established ROW
– Mainline Joint Tolls
New Market Access Initiative # 1
– Western U.S. Gulf Coast Access
Cushing
Houston
Chicago/
Flanagan
Port Arthur
1
3
2
# 1. Seaway Pipeline Acquisition + Reversal ($1.4B)
• Enbridge Inc. and Enterprise JV
• Initial capacity 150 kbpd, up to 400 kbpd by Q1 ‘13
• Reversal started May 2012
• Connectivity to ECHO Terminal in 2013 (65 miles)
# 2. Seaway Pipeline Twin + Lateral ($1.0B)
• Enbridge Inc. and Enterprise JV
• Twin Seaway Pipeline (515 miles)
• Initial capacity 450 kbpd, In-service mid-2014
• Connectivity to Port Arthur (85 miles)
# 3. Flanagan South Pipeline ($2.8B)
• Enbridge Inc. 100%
• Twin Spearhead Pipeline (36-inch pipeline, 591 miles)
• Initial capacity 585 kbpd, expandable to 800 kbpd
• In-service mid-2014
Total Secured Capital = $6.4 B 13
# 4. Associated Mainline Expansions ($1.2B)
• Expanding Line 67 from 450 kbpd to 800 kbpd
• Expanding Line 61 from 400 kbpd to 560 kbpd
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New Market Access Initiative # 2
– Eastern Access
Clearbrook
Superior
Sarnia
Chicago
Patoka
Toledo
Montreal
Westover
Hardisty
2
1
4
5
Cushing
Gretna
Regina
14
4
Total Secured Capital = $2.7 B
3
4
1
5
2
3
Line 5 Expansion
Spearhead North Expansion
Line 6B Replacement
Line 9 Reversal
Toledo Pipeline Partial Twin
New Market Access Initiative # 3
– Light Oil Market Access
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Hardisty
Clearbrook
Gretna
Superior
Flanagan
Cushing
Montreal
Sarnia
Toledo
Patoka
15 Total Secured Capital = $6.2 B
Chicago
2
1
3
4
5
Canadian Mainline Terminal Capability ($0.6B)
Sandpiper Project ($2.5B)
U.S. Mainline Expansion ($1.8B)
a) Superior to Flanagan
b) Chicago Area Connectivity
Eastern Access Upsize ($0.5B)
a) Line 6B Expansion
b) Line 9 Reversal Expansion
Southern Access Extension ($0.8B)
Other New Market Access Initiatives
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Canadian/U.S. East Coast
Refinery Markets
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Eastern U.S. Gulf Coast
Refinery Markets
Asia Pacific/West Coast
Refinery Markets
$35 Billion Growth Investment Plan
Enbridge Day Current
2012 – 2016 Enterprise Wide Growth Capital
Risked Unsecured
Highly Probable Unsecured
Commercially Secured
$35 B $35 B
$27 B
$18 B
$12 B
$3 B
$5 B $5 B
(Oct 2012) 17
An Industry Leading Growth Outlook
* Please refer to Non-GAAP Measures disclosure in news release. All figures are based on US GAAP reporting.
$0.00
$3.00
2011 2016e
Adjusted EPS* Growth
• Tilted Return Projects
• 2016 Risked Unsecured
• New Growth Platforms
• Sponsored Vehicle Drop Downs
Commercially Secured (as at Enbridge Day)
Highly Probable Unsecured
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Investment Merits Summary
• Exceptional array of attractive return investment opportunities
• Financial risk tightly managed
• Ample access to low cost conventional funding sources
• Sponsored vehicles further augment access to low cost capital, accelerate growth
Attractive investments low cost of capital
Industry leading growth
Substantial Valuation Upside
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