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Utica Midstream Discussion

Brent Breon

VP Business Development

April 2013

Today’s Discussion

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I.  The Formation of Blue Racer Midstream

II.  What is Midstream Services?

III. How Blue Racers Assets and Plans Meet the Utica Producer Needs

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Caiman Energy: Regional Experience

Caiman developed a large rich gas system in West Virginia from 2009-2012

Overview of Caiman Caiman Marcellus Focus Area

¡   Franchise system underpinned by 225,000 dedicated acres and minimum volume commitments for gathering and processing through contracts with high-quality producers

¡   Caiman signed its first contract with AB Resources in Q4 2009

¡   170 miles of gathering lines by year-end 2012

}  Over 50 miles of condensate gathering lines by year-end 2012

¡   Fort Beeler NGL Processing and De-ethanization Complex

¡   Moundsville Fractionation and NGL Processing Complex

¡   Over $1 billion invested in infrastructure by year-end 2013

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Dominion Resources Overview

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  Shale midstream execution expertise

  Rapid development of West Virginia Marcellus rich gas gathering, processing and fractionation system

  Private equity funding

  Committed capital for system expansions

  Strategically located assets throughout the Utica

  Experienced operations team

  100 years of continuous operations

  Appalachian NGL expertise

  Major local presence

The Right Combination

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Midstream Services for Utica Producers

US Natural Gas and Oil Production

The development of techniques to produce oil and gas from shales has dramatically increased midstream infrastructure needs across the US.

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For every $1 spent on upstream activity, a subsequent $.15 to $.35 needs invested in midstream infrastructure

US Natural Gas and Oil Production

Source for map: EIA, 2004.

The Marcellus, Eagle Ford, Bakken, Permian, Cana-Woodford, and Utica Plays will impact conventional sources of natural gas and NGL production but will require significant infrastructure build out

Marcellus

Cana-Woodford

Eagle Ford

Bakken

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Permian

Utica

Midstream Natural Gas Services

9 Source: Enterprise Products Partners

Midstream Natural Gas Services

Dry Natural Gas:   Meets interstate gas spec

  Below 1100 Btu

  Pipeline, compression, meter, and tap

Wet or Rich Natural Gas:   Does not meet interstate gas specs

  Over 1100 Btu

  Requires processing to remove heavy hydrocarbons

  Pipeline, meter, separation, cryogenic processing, and fractionation

  Creates the most value from production stream

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Midstream Natural Gas Services

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Services Utilized by Midstream:   Land Acquisition

  Right of Way Acquisition

  Environmental Permitting

  Pipeline Construction

  Gathering

  Condensate

  Oil

  Residue Gas

  Plant and Facility Construction

  Safety Trailing

  Reclamation

  Lodging and Catering

  Etc.

Gathering Pipeline

Pipelines gather natural gas, oil, and condensate to Processing Plant

Well Head Oil/Condensate

Natural Gas Gathering

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Cryogenic Processing

Cryogenic processing strips valuable NGLs from the gas stream

Rich Gas NGLs

Residue Gas Processing

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Fractionation

Fractionation separates the respective NGLs into discrete purity hydrocarbons

NGLs

Propane

Ethane*

Fractionation

Butanes

Pentanes+

 Volatile NGL  Market for ethane has strengthened as

petrochemicals have increasingly switched to ethane as a feedstock

 Various sources of demand:  25% - residential market  30% - petrochemical demand  35% - commercial/industrial/agricultural

  Iso vs. normal butane pricing and liquidity differences

 Petrochem feedstock  Ethanol blend stock

 Blend stock of motor gasoline  Highest priced NGL

14 * Ethane may be recovered or rejected by modern cryogenic processors.

The Right Choice

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The Right Combination

The Right Approach

The Right Assets

The Right Assets

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Gathering Assets   DEO and DTI rich gas

gathering lines   500+ miles of 8”-30”   In heart of Utica

Processing

  Natrium plant   200 MMcf/d cryo skid   Start-up April 2013   Expandable footprint   Residue line to Dominion

Fractionation/NGLs   36,000 Bbls/d fractionator

  Expandable to 59,000 BBls/d   C4 splitter   60-mile ethane pipeline

  Rail and truck loading   Barge access in Phase II

The Right Approach

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Reliability & Value

  Utilize existing assets for early flows

  Enhancing system capabilities

  Simple contract structures

  Provide full processing value

  Existing Natrium facility

  Third party plant connectivity

Delineation Phase Development Phase

Maximize Value to Producer

  Expand gathering lines to meet volume growth

  Strategically locate plants to maximize system flows and netbacks

  Pursue NGL and residue strategy

Provide full value and reliable takes during all phases

Why Delineate?

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Delineation mitigates risks and maximizes producer returns

Source: Ohio DNR. Wells that producers are drilling or have drilled.

Initial Results

  Over 200 wells drilled to date

  Concentrated early activity

  Encouraging results, but major questions remain

Outstanding Reservoir Issues

  Wet gas transition line

  Potential of the oil window

  Northern and southern extent of play

On-Going Economic Issues

  Processing spreads

  Impact on residue and NGL prices

  Sustainability of drilling plans

All Utica Wells

Why Delineate?

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Delineation mitigates risks and maximizes producer returns

Source: Ohio DNR. Wells that producers are drilling or have drilled.

Initial Results

  Over 200 wells drilled to date

  Concentrated early activity

  Encouraging results, but major questions remain

Outstanding Reservoir Issues

  Wet gas transition line

  Potential of the oil window

  Northern and southern extent of play

On-Going Economic Issues

  Processing spreads

  Impact on residue and NGL prices

  Sustainability of drilling plans

Excluding CHK and GPOR

Our Answer for Delineation

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Enhance system capacity with initial investments in strategic assets

  Construct Western Connector (Q3’13)

  Directly connect Noble, Washington, Guernsey, Tuscawaras

  Install 200 MMcf/d Cryo Skid (Q4’13 – Q1’14)

  Increases available processing to 400 MMcf/d total

  Available for firm and IT processing capacity

Delineation Phase provides producers with full value and reliable takes until full scale

development can be completed

Hasting Cryo: IT Capacity

Ready When You Are

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Blue Racer has approved Development Phase

construction and associated funding

  High volume trunk and gathering lines to committed acreage positions   Link new development to existing

infrastructure   Southern focus between Western System

and mainlines (Noble, Washington, Guernsey, Tuscawaras)

  Northern focus into mainlines and building gathering in NE OH and NW PA

  New processing complexes to maximize system hydraulics and capture premium values   Berne – TETCO   Petersburg – TGP, DTI, DEO   Lewis – TGP, DTI, DEO

  Increase optionality at Natrium   Residue expansion: TETCO, DEO, & REX   Propane connectivity with TEPPCO

Providing Value, Today and Tomorrow

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  Utilize existing infrastructure to delineate acreage throughout the Utica   500+ miles of pipeline

  200 MMcfd cryogenic processing plant

  36,000 Bbl/d fractionator

  Expand existing system capabilities with strategic investments   Western Connector

  Additional 200 MMcf/d cyro plant

  Expand gathering infrastructure in advance of development

  Provide optionality to deal with uncertainty

Blue Racer is positioned to help producers realize full value for their production while they delineate acreage today and develop acreage tomorrow