title text here - aux sable americas feb 6 2014 final.pdf · overview ngl supply & demand ......

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Changing Dynamics in the NGL Marketplace

Argus Americas LPG Summit | Miami, Florida February 6, 2014

Vice President Commercial Development Aux Sable Liquid Products

Glenn Luce


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Slide 2

Overview NGL Supply & Demand

Infrastructure Response

Unlocking NGL Value (Alliance/Aux Sable)

Conclusions


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Slide 3

NGL Marketplace Transition The Game Changer – Directional Drilling and Enhanced Completion Techniques Outcomes: Unlocking of huge crude/natural gas reserves in North America

From a pricing perspective, incremental crude has been assimilated in the world market…with some tangential effects on the WTI/Brent differential

Incremental natural gas has had a more profound effect on North America pricing as more supplies hit the market

Overall effect is that crude is currently trading at a higher ratio to natural gas than the historical norm

Near term drilling programs are focused on crude and/or high NGL content natural gas

As NGL supplies continue to increase, petchems and exporters have taken note

Petchem industry now focused on lighter feedslates (conversions and greenfield plants)

Exporters actively engaged in the North American NGL market


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Slide 4

NGLs Bolstering Value of Producer Gas

Source: Alberta Energy; Aux Sable * Prices are in $US Dollars

2003 NGL Value – 29%

Sales Gas 71%

C2 11%

C3 10%

fC4 7%

C5+ 1%

Dec-03 Sales Gas: $4.10/mmbtu*

With NGL Value: $4.41/mmbtu*

2013 NGL Value – 49%

Sales Gas 51%

C2 7%

C3 21%

fC4 19%

C5+ 2%

Nov-13 Sales Gas: $3.08/mmbtu*

With NGL Value: $4.54/mmbtu*


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Slide 5

North American NGL Supply/Demand Snapshot: 2012

Source: EIA, NEB, Petral, IHS

C2 C3 C4s C5+ Total Supply (mmbpd) Gas Plants 1.2 0.8 0.5 0.4 2.9 Refineries - 0.6 0.1 0.0 0.7 Total Supply 1.2 1.4 0.6 0.4 3.6 Demand (mmbpd) Chemical feedstock 1.2 0.6 0.2 - 2.0 Heating/Commercial/Ind’l - 0.7 - - 0.7 Refinery (Gasoline Blending) - - 0.3 0.1 0.4 Heavy Oil Diluent - - - 0.2 0.2 Other, Net Exports - 0.1 0.1 0.1 0.3 Total Demand 1.2 1.4 0.6 0.4 3.6


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C2 C3 C4s C5+ Supply Direction Gas Plants UP UP UP UP Refineries - flat- flat- flat-

Demand Direction Petrochemical Feedstock UP balance up up? Heating/Commercial/Ind’l - flat/down - - Refinery (Gasoline Blending) - - down down Heavy Oil Diluent - - up UP Dehydro (PDH/BDH) - UP ? - Net Exports - UP up up

Key Trends 1. NGL production up from Gas Plants (“oily” gas focus in shales) 2. Ethane balanced by increased Petchem feedstock demand 3. Propane balanced by increased exports, PDH 4. Butanes balanced by increased exports

North American NGL Supply/Demand Trends 2013-2020


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Significant Ethane Demand Growth in US US Ethane Demand for Ethylene Production

(Existing Facilities + Announcements)

Source: Aux Sable, Company Reports


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U.S. Propane Export Capacity Growing Rapidly Historical and Forecast US Gulf Coast LPG

Export Capacity

Source: CIBC, Oil & Gas Journal, Company Reports.


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Slide 9

North American NGL Markets & Supply Areas


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Slide 10

Alberta

Source: Aux Sable; Various Company Sources


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North Dakota: Bakken Area

Palermo Conditioning Plant Prairie Rose Pipeline

Alliance Pipeline

Conditioning Plant

Vantage

Bakken NGL Pipeline

To Overland Pass/Conway


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Slide 12

Additional Gas Processing Capacity


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Alliance/Aux Sable Corridor


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Source: NDIC

North Dakota Production – Gas Processed and Flared


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North Dakota NGL Production Forecast

Source: NDIC


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Aux Sable Prairie Rose Pipeline 12” diameter, 83-mile, 120 mmcf/d pipeline delivers rich gas from the Palermo Plant to

the Alliance Pipeline near Bantry, ND. Pipeline can be expanded to 145 mmcf/d to handle additional volumes

Transports 10-15% of current Bakken gas production that otherwise might be flared or less efficiently handled through field facilities


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Utilizing Dense-Phase Transportation Alliance Pipeline is a high-pressure, dense phase system

Designed to transport dense phase natural gas. Allows for transportation of richer gas streams and NGL injections (up to 1,500 btu/cf)

Transporting NGLs within the gas stream provides for a higher energy value, or heat content, which reduces the volumetric transportation cost

Provides producers with a cost competitive means to access large, transparent, and premium growth markets for NGLs in the U.S. and Internationally.

Aux Sable has the exclusive rights to extract and sell the NGLs transported by Alliance. Once extracted, the component NGL products are sold to petrochemical, refinery, specialty chemical and propane heating markets throughout the Midwestern United States (Canadian APL Tariff)

Alliance Pipeline and Aux Sable have similar ownership


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Slide 18

Unlocking Value through Aux Sable via Alliance Pipeline Aux Sable owns and operates a 2.1 bcf/d world scale extraction/frac plant at the

terminus of Alliance Pipeline (Channahon, IL) capable of extracting and fractionating ~100,000 bpd of specification NGL products (ethane, propane, normal butane, iso-butane and natural gasoline)

Aux Sable Canada and Aux Sable Midstream perform supply functions for the Channahon plant and provide a fee-based energy processing infrastructure along the Alliance Pipeline corridor ― Owns Septimus Gas Plants (60 mmcfd) & Septimus Pipeline (operated by Crew)

― Owns and operates the Palermo Conditioning Plant (80 mmcfd) and the Prairie Rose Pipeline (120 mmcfd) in ND

― Offgas processing/fractionation facilities in Fort Saskatchewan, Alberta

― Developed NGL access to end-use markets in US north-east, US mid-west and USGC via pipelines, rail and truck

― Developed capability to offload NGL mixes via railcar from shale plays


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Slide 19

Channahon NGL Extraction Facility Extraction: (2) 1.05 Bcf/d extraction trains

Fractionation: C2+: 102,000 bpd Storage: 200,000 bbls onsite (9 spheres) 170,000 bbls at Monee, Il (underground)

Pipelines: Own and operate NGL Pipelines connecting to local refineries, Enterprise, and ONEOK.

Rail: 16 spot rail rack served by CN 150 Rail Storage Yard Opened

Truck: Propane Loading Terminal at Monee, IL Pipeline connections to ONEOK Truck Loading Terminal


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Aux Sable Provides Market Access and Value to Producers & Reliable NGL Supplies Downstream Producers are realizing the value of our services: CROCCOTA: “Access to United States markets for propane and butane that are larger

and more competitive than in Alberta. Avoid the potential oversupply of propane and butane in Alberta”

SUMMIT: “This agreement … allows us to immediately offer our existing and future customers improved natural gas processing economics for their rich associated natural gas production.”

ND GOVERNOR J. Dalrymple: “Aux Sable and Summit Midstream are playing an important role in our ongoing effort to reduce flaring and add value to our energy resources”


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Slide 21

Conclusions NGL supply continues to grow The NGL markets in North America continue to be oversupplied, creating challenges

and opportunities for producers to realize value.

Dense-phase transport provides producers with lower-cost alternatives Transporting NGLs within the gas stream provides for a higher energy value that

reduces the volumetric transportation cost.

Competitive alternative to access large, transparent, and premium growth markets for NGLs in the U.S. and Internationally.

Aux Sable provides premium value to rich gas producers Aux Sable has established a significant presence in North Dakota and is strategically

located to capture opportunities presented by associated gas that might otherwise be flared or less efficiently handled through field facilities.

Aux Sable is actively pursuing projects in Canada and the U.S. that will bring incremental NGL to market along the Alliance and Aux Sable footprint.


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Slide 22

Contact Information Glenn Luce Vice President, Commercial Development 815-941-5818 [email protected] Charlotte Raggett VP Supply & Marketing, and Chief Commercial Officer 403-508-5892 [email protected]

mailto:[email protected]



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