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The Future of Canadian Natural Gas andNatural Gas Liquids

Richard Dunn | Vice President, Regulatory and Government Relations

May 8 | 2012



1

The Future of Canadian Natural Gas and NGLs An Overview

Introduction to Encana

Extent of unconventional shale gas resource

Enabling technology

New focus on natural gas liquids

– Implications for propane sector



22

Encana CorporationVast Land Position: 11.7 Million Net Acres

Total Production2011 ActualNatural Gas (MMcf/d)Liquids (Mbbls/d)

3,33324.0

2012 ForecastNatural Gas (MMcf/d)Liquids (Mbbls/d)

3,100*28



33

Stakeholder engagement – Retainsocial license to operate

Responsible development – Operate safely with minimalenvironmental impact

Low cost focus - Advance resourceplay hub design and development

Liquids-rich production- Increaseexposure to oil and natural gasliquids

Partnerships - Attract third partyinvestments in undevelopedreserves and resources

Demand - Grow the market for North American natural gas

Encana CorporationCanadian Division Strategic Focus

Encana Land (Dec. 31, 2011)Total Canadian Division Net Acres: 8.5 MM

Greater Sierra

(inc. Horn River)

Cutbank Ridge

(inc. Montney)

Bighorn

CBM

Resource Play

Emerging Play

Duvernay



44

North American Gas ProductionSignificant growth from shale gas

0

10

20

30

40

50

60

70

80

90

Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20

Other Tight Gas CBM Shale

Source: Encana, IHS Energy

Total production grows from 70 Bcf/d in 2010 to 85 Bcf/d in 2020Bcf/d

43 Bcf/d

> 50%



5

North American Natural Gas Basins

Guarantees reliability and diversity of supply

North American Natural Gas Basins

C

Canadian Resource Estimates

700-1,300 TCF of TotalReserve

100 + year supply

Expanding developments in USput competitive pressures ondelivery of western Canadiannatural gas to traditional

markets in the north-easternUS and eastern Canada

5

Horn River

Montney

Barnett Fayetteville

Haynesville

Marcellus

Eagle Ford



Advancing Resource Play Hub

Concentrated resource

+ Pad drilling

+ Manufacturing process

= Resource play hub Represents ~15 square kilometres of reservoir accessed

from a single surface location.



Drilling and CompletionsManufacturing style operations

Significant logistical coordination and planning required for success



Field OperationsTypical Well Site



CAPP Guiding Principles for Hydraulic FracturingIncreasing transparency

Guiding Principles:

Protection of quality and quantityof fresh groundwater

Hydraulic Fracturing :

– Fracturing fluid additivedisclosure

– Baseline groundwater testing

– Wellbore integrity and qualityassurance

– Water sourcing and reuse

BC and AB have committed tomandatory online reporting



Courtesy MattersIt’s about doing the right thing

Proactive partnership between

Encana, its contractors, employeesand community

Government encourages companiesto have Social Responsibility Program

Encana program “Courtesy Matters” tominimize disturbances associated withdevelopment activities – Noise – Dust – Traffic

– Garbage – Know your neighbour

Vital to our social license to operate



The Difference Between Oil and GasOil is booming and gas is struggling

* Measuredbased onenergyequivalence

Canadian oil growth is continuing to thrive

Historically oil and gas price coupled,

Gas now trading at ~ 80% discount to historic relationship

Fixed price ratio Prices decoupled

$0

$5

$10

$15

$20

$25

Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

Gas

Price per MMBtu

Oil

Source: NYMEX oil, coal, and gas spot prices. Forward prices as of December 21, 2011.

Nymex

Strip Prices



Cutbank Ridge PartnershipDawson Creek Montney FDI example

Encana and Mitsubishiannounced a new partnershipagreement on February 17, 2012

– Includes 409,000 net acres ofundeveloped Montney lands inBC

– Under the agreement, Encanawill own 60% and Mitsubishi willown 40% of the Cutbank RidgePartnership

– Encana will be the managingpartner and operator

– Will create 14,000 ongoing jobs



Total Asian Natural Gas DemandFuture of LNGBy 2020, total forecasted Asian natural gas demand is 65 Bcf/d. Demand growth is

dominated by China and India, making up 55% and 12% of 2020 demand, respectively.

Other includes Singapore, Vietnam, Thailand, Indonesia, Bangladesh and Pakistan.

Source: BP, Encana, IEA, IMF, Japan Statistics Bureau, KEEI, National Bureau of Statistics of China, TaiwanBureau of Energy.

Bcf/d

0

10

20

30

40

50

60

70

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Korea Taiwan Japan China India Other

Forecast



14

Potential LNG ProjectsVarying stages of development

*Source: Globe and Mail

KitimatLNG

BC LNGCo-op

ShellConsortium

PrinceRupert

Progress/Petronas

Nexen/ InpexCorp.

Apache,Encana, EOG

Haisla FN(50%), 16additional

members

Shell, KOGAS,CNPC,Mitsubishi

Prince RupertPort Authority,BG Group

ProgressEnergy,Petronas

Nexen, InpexCorp

Export licensegranted

Export licensegranted

Studyingoptions

Studyingoptions

Studyingoptions

Studying options

Final Capacity:

1.4 bcf/d

Final Capacity:

250 mmcf/d

Final Capacity:

TBD(speculated tobe up to 3.6bcf/d)

Final Capacity:

TBD

Final Capacity:

TBD(speculated tobe up to 1.8bcf/d)

Final Capacity:

TBD



15

Duvernay Shale Significant Liquids Rich Shale Opportunity

Duvernay

Over $3.6 billion in land sales since 2009

Significant Alberta Unconventional Resource Opportunity

– Fairway (1,500 twp) resource potential estimated at 700 TCF gas in place,170 Bbbls liquids in place

– ~ 40 wells in play to date

Key risks include technical,economic, regulatory &access

– Deep horizontals, high temp &pressure - high-costtechnologies, on-going R&D

Government of Albertaaddressing risks through

– Shale Gas Royalty (DOE)

– Play based regulations (ERCB)

– Access planning (SRD)



16

From Wellhead to Market3-Stream Process Flow

Wellhead

Inlet Separator

Gas Plant

Field / FreeCondensate

75 bbl/d

Wet Wellhead Gas1 MMcf/d

Shrinkage ~ 10%

Liquids Rich Fluid

Sales Gas 0.9 MMcf/d

NGL Yields

- SHALLOW Cut

Ethane 0 bbl/d

Propane 10 bbl/dButane 5 bbl/dC5+ 10 bbl/d

Total ~ 25 bbl/d

NGL Yields

- DEEP Cut

Ethane 25 bbl/dPropane 20 bbl/d Butane 30 bbl/dC5+ 10 bbl/d

Total ~ 65 bbl/d



17

Canadian NGL Supply and DispositionPetrochemical demand is the only market for ethane

NGL Barrel(2011)

Product Mbbls/d Share

Ethane (C2) 230 37%

Propane (C3) 160 26%

Butanes (C4) 90 15%

Condensates 140 22%

TOTAL Supply 620 100%

Demand Type

Petrochemicals

Heating & Agriculture

Refineries

Exports

Oil and Gas

Supply Demand



18

Alberta Propane Demand BreakdownMajority of Propane is Exported to USA and Rest of Canada

30%

26%

14%

12%

10%

8%

Oil and Gas Extraction/Mining

Commercial and other Institutional

Manufacturing

Residential

Transport

Agriculture/Other

Propane Use in Canada

Source: Pervin and Gertz (2009)

24%

29%

47%

Alberta Demand

Rest of Canada Exports

USA Exports

Source: Encana Fundamentals, ERCB (2011)

Demand Breakdown



19

0

5

10

15

20

25

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Bcf/d

WCSB Conventional WCSB CBM Deep Basin

Horn River Montney Duvernay

Forecast

WCSB Natural Gas Production ForecastConventional Basin Supply Declining

Source: Encana



20

WCSB Supply & Demand OutlookExpected impacts on pricing

Ethane – Bakken gas and development of liquids rich playsleading to excess supply versus AB Petrochemical facilitiesdemand

Long term contracts drop from $2.50 to $1.00/GJ (premium to AECO)

Propane – Growing supplies and potential for less US demand

Decrease in price to support exports to US, ~70% → 50% of WTI

Butane - Demand growth from oil sands blending coupled withflat to declining production, means market to remain balanced

Maintain historical norm, ~70% of WTI

Condensate – Increasing oil sands production grows need forC5+ as diluent, demand to be met by increasing imports

On-going premium, ~110% of WTI

WCSB P S l /D d B l



21

WCSB Propane Supply/Demand Balance

Source: BCMEMR, Encana, ERCB, NEB, USITC

0

50

100

150

200

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Mbbls/d

WCSB Supply Line 6 Line 7 Max Demand +Exports

Forecast



22

Price FluctuationBalancing supply and demand

Industry’s shift in focus to liquids rich plays will continue to increase

supply of propane and other natural gas liquids in North America

– Storage in Canada and US is full and is putting downward pressure on

price – currently at 47% WTI

– Need to increase demand to shift price back to traditional levels(~65-70% WTI)

Pipeline bottlenecks in Midwest US are hampering ability to flow

propane to Gulf Coast for export

– Infrastructure is currently under construction to increase the

flow and allow for increased US exports

– New pipe capacity will ease the backlog of supply



23Source: Encana, EV Maps

Natural Gas LiquidsMajor NGL Pipelines

Mont

Belvieu

Conway

Sarnia

Marcellus

Western

Canada

Hobbs

South LA

Skelly

Medford

Midwest

Primary Hub

Secondary Hub

Flow Direction

Bakken

West

Rockies

Existing Pipeline

East

Rockies

Cochin

(Spec C3)

Enbridge

(All products)

Alliance

(Wet Gas)



24

Conclusion

Natural gas industry in a transition period – New technology has increased supply, driving price down

– Producers refocusing on liquids-rich plays to bolster theeconomics

Increased liquids production is creating new NGL supplies

– New supply is putting downward pressure on propane price

– Pipeline expansions underway to de-bottleneck the export route tothe Gulf Coast



25

In the interests of providing Encana shareholders and potential investors with information regarding Encana, including management's assessment of Encana's and itssubsidiaries' future plans and operations, certain statements contained in this presentation are forward-looking statements or information within the meaning of applicablesecurities legislation, collectively referred to herein as "forward-looking statements." Forward-looking statements in this presentation include, but are not limited to:achieving 2012 capital investment focused on liquids exploration and development, minimizing dry gas investment, including expanding NGLs extraction capacities,expected volume and percentage reduction of natural gas market supply and production in 2012, expected success of resource play hub development, projection for2012 capital investment to equal cash flow forecast minus anticipated dividends, prospects to generate oil and liquids reserves and production from several new playsand other plays, including number of wells to be drilled and the expectation to develop three to four key liquids resource plays from current land inventory and theexpected recoverable reserves and production from the same, completion of transaction agreements with Mitsubishi, including potential terms, closing date, amount ofinvestments, funding commitment and development of otherwise undeveloped natural gas properties, estimated amount of cash on balance sheet after closing of the

partnership agreement with Mitsubishi, estimates of reserves, economic contingent resources, estimated NGIP, and estimated number of net drilling locations, includingper key resource play, achieving NGLs extraction target and liquids production by 2015, including expected on-stream date of the extraction capacity expansion at theMusreau plant, achieving diversification to balance revenues between natural gas and liquids production, achieving successful exploration and development results inTuscaloosa, Utica/Collingwood, San Juan basin, DJ Basin Niobrara, Alberta Duvernay, Eaglebine, Mississippi Lime and Piceance Niobrara/Mancos areas, the effect ofthe company's risk management program, including the impact of commodity price hedges, projections contained in the 2012 Corporate Guidance (including but notlimited to estimates of cash flow, including per share, natural gas and oil and NGLs production, capital investment and its allocation, net divestitures, and estimated 2012sensitivities of cash flow and operating earnings), expected first natural gas production at Deep Panuke and expected production rate, the flexibility of capital spendingplans and the sources of funding therefore, ability to maintain investment grade credit rating and monitor future debt to debt adjusted cash flow, debt to adjusted EBITDAand debt to capitalization ratios, estimated reserve life index, expected growth of liquids production, estimated capital spending, exploration, and development in variousplays and anticipated production from the same, expectation to increase demand and create markets for natural gas and success of the company's initiatives, expectedonline date, export capacity and phases of the Kitimat LNG export facility, including achieving an uplift in natural gas price, and expectation for long-term future fornatural gas.

Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon whichthey are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general andspecific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause the company'sactual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied bysuch forward-looking statements. These assumptions, risks and uncertainties include, among other things: volatility of, and assumptions regarding natural gas andliquids prices, including substantial or extended decline of the same; assumptions based upon the company's current guidance; fluctuations in currency and interestrates; risk that the company may not conclude divestitures of certain assets or other transactions (including third-party capital investments, farm-outs or partnerships,which Encana may refer to from time to time as "joint ventures") as a result of various conditions not being met; product supply and demand; market competition; risksinherent in the company's and its subsidiaries' marketing operations, including credit risks; imprecision of reserves estimates and estimates of recoverable quantities ofnatural gas and liquids from resource plays and other sources not currently classified as proved, probable or possible reserves or economic contingent resources,including future net revenue estimates; marketing margins; potential disruption or unexpected technical difficulties in developing new facilities; unexpected cost increasesor technical difficulties in constructing or modifying processing facilities; risks associated with technology; the company's ability to acquire or find additional reserves;hedging activities resulting in realized and unrealized losses; business interruption and casualty losses; risk of the company not operating all of its properties and assets;counterparty risk; downgrade in credit rating and its adverse effects; liability for indemnification obligations to third parties; variability of dividends to be paid; its ability togenerate sufficient cash flow from operations to meet its current and future obligations; its ability to access external sources of debt and equity capital; the timing and thecosts of well and pipeline construction; the company's ability to secure adequate product transportation; changes in royalty, tax, environmental, greenhouse gas, carbon,accounting and other laws or regulations or the interpretations of such laws or regulations; political and economic conditions in the countries in which the companyoperates; terrorist threats; risks associated with existing and potential future lawsuits and regulatory actions made against the Company; and other risks anduncertainties described from time to time in the reports and filings made with securities regulatory authorities by Encana. Although Encana believes that the expectations

represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned thatthe foregoing list of important factors is not exhaustive. In addition, assumptions relating to such forward-looking statements generally include Encana's currentexpectations and projections made in light of, and generally consistent with, its historical experience and its perception of historical trends, including the conversion ofresources into reserves and production as well as expectations regarding rates of advancement and innovation, generally consistent with and informed by its pastexperience, all of which are subject to the risk factors identified elsewhere in this presentation.

Assumptions with respect to forward-looking information regarding expanding Encana's oil and NGLs production and extraction volumes are based on existing expansionof natural gas processing facilities in areas where Encana operates and the continued expansion and development of oil and NGL production from existing propertieswithin its asset portfolio.

Forward-looking information respecting anticipated 2012 cash flow for Encana is based upon achieving average production for 2012 of between 2.8 Bcf/d and 3.1 Bcf/dof natural gas and 28,000 bbls/d of liquids, commodity prices for natural gas and liquids based on NYMEX $3.25 per Mcf and WTI of $95 per bbl, an estimatedU.S./Canadian dollar foreign exchange rate of $1.00 and a weighted average number of outstanding shares for Encana of approximately 736 million.

Furthermore, the forward looking statements contained in this presentation are made as of the date hereof and, except as required by law, Encana undertakes noobligation to update publicly or revise any forward looking statements, whether as a result of new information, future events or otherwise. The forward looking statementscontained in this presentation are expressly qualified by this cautionary statement.

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