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Overview & Status

Overview & Status. July 18, 2001. Outline. Brief Overview Current Activity / Progress Government Engagement Issues Forward Plan. Joint Team Objectives. Assess the economic viability of the project Focus on route evaluation Cost and environmental considerations

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Overview & Status

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  1. Overview & Status July 18, 2001

  2. Outline • Brief Overview • Current Activity / Progress • Government Engagement Issues • Forward Plan

  3. Joint Team Objectives • Assess the economic viability of the project • Focus on route evaluation • Cost and environmental considerations • Prepare sufficient information to support potential permit applications Safe and Environmentally Responsible

  4. Fluor Veco NGL Extraction Facility: Removal of C2+ Gas Treatment Facility (Prudhoe Bay) : Removal of Acid Gases - CO2, H2S Compress / Chill gas to P/L entry conditions Natchiq Parsons Environmental / Regulatory – Canada Field studies AMEC Earth and Environmental Land – US Alaska American Reclamation Group Land – Canada (2) Scott Land and Lease Progress Land Services • Alaska to Alberta • Pipeline System (A-B) : • Buried, High Pressure, Chilled Pipeline • Intermediate Compression • Block Valve Stations • Intermediate Pigging Facilities Fluor Veco Land – US Lower 48 Alberta to Market Pipeline System (B-C) : New-Build and/or Expansion Wilbanks Resource Corporation The AlasCan Group Environmental / Regulatory – US Field studies URS Overall Project Scope

  5. The “Seven Lenses” of Evaluation • Economics • Environment • Gas Access • Jobs • Revenues • Safety • Timing

  6. Current Activity / Progress • Contractors On-Board (approx. 500) • Technical / Regulatory Work Proceeding • Defining Commercial Issues • Ongoing Discussions with Interested Parties • Hundreds of public/private meetings • Engaging Governments & Communities

  7. Current Technical Studies • Process Development • Acid Gas (CO2, H2S) Removal Technology • NGL Removal Processes • Pipeline Hydraulic Simulations (Over 1,000 Cases) • Pressure (1,750-3,000 psi) vs Diameter (42”-56”) • Comparisons of Compressor Drivers • Throughput and Expandability

  8. Compressor Stations vs. Throughput System Optimization Plot Example 50 45 40 35 44” 75 mile station spacing 48” 30 52” Compressor Stations 56” 25 (@2500 psig) 20 150 mile station spacing 15 10 5 0 0 1 2 3 4 5 6 7 Nominal Volume BCFD

  9. Current Technical Studies • Materials • Feasibility of High Strength Steel • Logistics • Port Surveys in Anchorage, Seward, Valdez and West Coast • Review of Potential Fabrication Site Locations • Trucking and Highway Analyses • GTP Sealift Analyses – Potentially Largest Ever • Construction Technology • Directionally Drilled River Crossings • Trenching Technology • Construction Equipment Requirements & Availability

  10. Regulatory / Environmental & Land Activities • Summer field work / center line studies • Cultural resource surveys • Land owner discussions • Beaufort Sea survey

  11. Government Engagement • Ongoing Discussions with Governments • US and Canadian Federal • State of Alaska • Canadian Provincial/Territorial/First Nations

  12. State Engagement Issues • Initiate dialogue between Producers and State of Alaska regarding fiscal stability / certainty • Objective is to have key terms understood prior to the January legislative session • Key discussion items • Valuation clarity (severance and royalty) • Pipeline vs Producer issues • Pipeline Ad Valorem certainty • Gas take-in-kind and nomination process • Project risk and long-term certainty June July Aug Sep Oct Nov Dec Agree ground - rules Working discussions Draft valuation, AVT contract terms Agreed terms pre - session

  13. Simplification of State Royalty, Severance Valuation • Common royalty and severance methodologies • Transparent pricing • Simplicity best way to minimize future concerns • Wellhead price for royalty and severance linked to Lower 48 with transportation differential • Define market price • Agreement on gas valuation terms • Concurrence with FERC/NEB tariff terms • Processing fees

  14. Wrap-up • We are fully engaged in a joint program to evaluate and progress a large, modern pipeline from Alaska to Canada and the lower 48 states • There is a growing market for Alaskan gas, but we must be cost-competitive to be a viable project • It is not yet clear that we can develop an economic project • It is premature to preclude any options at this point • Still targeting completion of engineering and route studies by year end

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