Sahtu November 29, 2001 presentation

1
Mackenzie Gas Project Next Steps Toward
a Mackenzie Valley Natural Gas Pipeline APEGGA/C
SEM Joint District Meeting Luncheon Edmonton R.J
. Ottenbreit, PEng May 2003
2002-09-16 XP06432_7
2
Significant Discoveries - Onshore Gas

• Taglu - 3 TCF
• Discovered 1971
• 100 Imperial Oil
• Parsons Lake - 1.8 TCF
• Discovered 1972
• 75 ConocoPhillips Canada
• 25 ExxonMobil Canada
• Niglintgak - 1 TCF
• Discovered 1973
• 100 Shell Canada

3
Development Concept Overview

• Canadian onshore gas, three anchor fields
• Mackenzie Valley Pipeline
• Proven technology
• Minimize the environmental footprint
• Producer capacity of 800-1000 MCFD
• Aboriginal capacity up to 400-500 MCFD
• Accessible to others
• Utilizes ullage in existing pipelines
• liquids to Enbridge
• gas to TCPL

4
Mackenzie Gas Project - Phased Approach
Feasibility Study
Decision to prepare regulatory applications
Complete
Project Definition
Decision to construct

• concurrently assess external matters
• assess natural gas markets
• assess reserves
• little, if any, field work

3 - 4 years
Design and Construction

• engineering studies
• environmental field work
• public consultation
• northern benefits plans
• regulatory applications
• regulatory review process

3 - 4 years
Operations

• detailed design of facilities
• drill wells
• purchase goods and services
• construct pipeline and field facilities

25 years
gas sales

• potential expansion
• abandonment and reclamation

5
Project Definition Phase

• Agreed on way to proceed while awaiting APG
  funding
• Secured office space and began staffing project
  team with co-venturers
• Broadened communications and consultation
  activities
• opened representative offices in Fort Simpson,
  Norman Wells and Inuvik
• Awarded engineering contract and began conceptual
  engineering
• Initiated phased open season process with
  potential shippers
• Continued collecting baseline environmental data
• Developed Preliminary Information Package
• Started development of benefits plans, access and
  related arrangements
• Field work to study river crossings, permafrost,
  route refinement and granular sites

6
When Will Mackenzie Gas be Commercial?

• Development can only proceed when all these
  conditions exist
• Northern parties must be supportive of
  development, and in agreement with its benefits
• Outlooks for natural gas markets must be
  favourable
• Discovered onshore natural gas reserves must be
  large enough, and certain enough
• Investor economics on a standalone basis must
  be competitive with other opportunities, and
  sufficient for the risks involved (gas reserves,
  costs, gas markets)
• Facility plans and designs must ensure safe,
  reliable and environmentally responsible
  operations
• Regulatory approvals must be obtainable in a
  timely manner
• Stable and favourable fiscal terms
• Pipeline investment costs must be financeable