Shale Revolution & Energy Transfer Partner’s Liquids ... · PDF fileShale Revolution &...

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Rick Cargile - President Midstream Gas/Electric Partnership Conference February 6, 2014 Shale Revolution & Energy Transfer Partner’s Liquids Transformation

Transcript of Shale Revolution & Energy Transfer Partner’s Liquids ... · PDF fileShale Revolution &...

Rick Cargile - President Midstream Gas/Electric Partnership ConferenceFebruary 6, 2014

Shale Revolution & Energy Transfer Partner’s Liquids Transformation

Legal Disclaimer

2

This presentation may contain statements about future events, outlook and expectations ofEnergy Transfer Equity, L.P. (ETE), Energy Transfer Partners, L.P. (ETP), Sunoco LogisticsPartners L.P. (SXL), Southern Union Company, and Regency Energy Partners LP (RGP)(collectively, the “Companies”), all of which are forward-looking statements. Any statement inthis presentation that is not a historical fact may be deemed to be a forward-looking statement.These forward-looking statements rely on a number of assumptions concerning future eventsthat are believed to be reasonable, but are subject to a number of risks, uncertainties and otherfactors, many of which are outside the Companies’ control, and which could cause the actualresults, performance or achievements of the Companies to be materially different. While theCompanies believe that the assumptions concerning future events are reasonable, we cautionthat there are inherent difficulties in predicting certain important factors that could impact thefuture performance or results of our businesses. These risks and uncertainties are discussedin more detail in the filings made by the Companies with the Securities and ExchangeCommission, copies of which are available to the public. The Companies expressly disclaimany intention or obligation to revise or publicly update any forward-looking statements,whether as a result of new information, future events, or otherwise.

All references in this presentation to capacity of a pipeline, processing plant or storage facilityrelate to maximum capacity under normal operating conditions and with respect to pipelinetransportation capacity and are subject to multiple factors (including natural gas injections andwithdrawals at various delivery points along the pipeline and the utilization of compression)which may reduce the throughput capacity from specified capacity levels.

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Shale Revolution Extending the Fiscal Cliff

The Real Stimulus Package

Jobs ~600,000Jobs ~600,000

Operators

Welders

Mechanics

Higher Wages

Truckers

1 Direct = 3 Indirect

Natural GasNGLs

Natural GasNGLs

AffordableClean

Abundant

Land OwnersLand OwnersROWROW

RoyaltiesRoyalties

Water RightsWater Rights

Land OwnersROW

Royalties

Water Rights

ManufacturingManufacturing

Electricity

Housing

Petrochemicals

Autos

Exports

InfrastructureInfrastructure

Hotels

Roads

Housing

Restaurants

EquipmentEquipmentSteelCompression

VehiclesRigs

TaxesTaxesProperty

State\Local\Fed

Sales Production

Shale Development Fueling the U.S. Economy

4

5

Oil & Gas Creating Jobs

* Nonfarm Payroll does not include farm, private household and non-profit employees

U.S. Leader in World Oil & Gas Production

6

7

Regional Net Supply Transformation (2013 – 2017)

Dynamic Imbalances in Gas/Hydrocarbon Flows & Infrastructure Consequences

Bentek

8

ETP Infrastructure Solutions

“Whack-A-Mole” (Eagle Ford an Infrastructure Desert)

9

Largest intrastate pipeline system in Texas

ET Fuels 36”

WAHA Oasis 36”

Houston Pipe Line

Katy

Carthage

HSC

Corpus LNG

PEMEXAgua Dulce

Bammel Storage 62 Bcf

ETP Texas Residue Gas Footprint

Freeport LNG

U.S. Gas Production

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66 Bcfd74 Bcfd

90 Bcfd

48 Bcfd

11

The Bridge to “Somewhere”

COAL

Natural Gas

NUCLEAR

Shale Revolution • LNG Exports• Mexico & Canada Exports• Industrial Growth (GTL, MEOH, Ammonia, Crackers, PDH, etc.)• Power Generation (Coal displacement – lower emissions)• NGL, Gasoline and Diluent Exports

OI L

RENEWABLES

Historical NGL Yield From Natural Gas Processing

12Source: Wells Fargo

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-141.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1.55

1.60

1.65

1.70

Gal

lons

of N

GL'

s pe

r MC

F of

Nat

ural

Gas

NGL YieldGPM will trend higher in 2014 given producer push to NGL-rich plays and build-out of NGL fractionation capacity

Gas Production is getting richer

Total U.S. NGL Supply

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65%66% 64% 64% 66% 66% 70% 72% 74% 75% 78%

25% 23%21% 23% 24% 23%

22%22%

20%19%

18%

10% 11%15% 13% 10% 11% 8%

6%6%

6%4%

2,648 2,759 2,665 2,725 2,712 2,688 2,711 2,894

3,065 3,208

3,457

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sep-13

Tota

l Dom

estic

NG

L Su

pply

(MB

bls/

d)

Imports Refinery Outputs Natural Gas Processing

Source: Wells Fargo

Domestic NGL supply has increased

U.S. NGL Production Grows By ~2 MMB/d

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MMB/d

Marcellus, 34,647 Utica, 0 Eagle Ford,

187,025

Permian, 327,734

Anadarko, 304,717

Rockies, 375,965

Other,960,911

2011 Production 2.2 MMb/d

Bakken,25,000

Marcellus, 466,052 Utica,

247,208

Eagle Ford, 871,703

Permian, 433,114

Anadarko, 536,068

Rockies, 423,907

Bakken, 599,163

Other,876,849

2023 Production ~ 4.5+ MMb/d 700 Mbpd

800 Mbpd600 Mbpd

200 MbpdSource: Bentek Energy

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

U. S. Raw Mix Production from Gas Plants

1 MMb/d1 MMb/d

1 MMb/d

+ Refinery NGL’s

Domestic NGL supply expected to grow

Total U.S. NGL Demand

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39%43% 42% 44% 44% 42% 43% 45% 46% 45% 45%

34%33% 33% 31% 31%

32% 30%28%

26% 24% 20%

25% 22%23% 22% 22%

22% 22%22%

21% 21% 22%2% 2% 2% 3% 3%4%

5%5%

7% 10% 14%2,685  2,733  2,648  2,707  2,770 

2,618 2,752 

2,872 3,045  3,141 

3,356 

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sep-13

Tota

l Dom

estic

NG

L D

eman

d (M

Bbl

s/d)

Exports Gasoline Blending Heating & Other Petrochemical Demand

Source: Wells Fargo

NGL domestic demand and exports are growing

U.S. Net Exporter of Hydrocarbons

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Net Exports            (MBpd)        NGL Production

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2007 2008 2009 2010 2011 2012 2013 2014‐200

‐150

‐100

‐50

0

50

100

150

200

250

300

350

Surplus NGL production is driving exports

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Improving U.S. Balance of Trade

Historical Composition Of NGL Field Production

18

36% 38% 38% 39% 40% 39% 40% 42% 42% 40% 37%

29% 29% 29% 29% 28% 29% 29% 28% 28% 30% 32%

10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 8%

8% 8% 8% 7% 7% 7% 7% 7% 7% 7% 10%

16% 15% 16% 15% 15% 15% 14% 13% 13% 13% 14%

0%

20%

40%

60%

80%

100%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Aug-13

% C

ompo

sitio

n of

U.S

. NG

L Fi

eld

Prod

uctio

n

Ethane Propane Normal Butane Iso Butane Natural Gasoline

Source: Wells Fargo

C2 Rejection

New ShaleGas ~50%

NGL BBL is getting lighter

Composition Of Ethane Demand

19

626689

639 666 653592 618

710763 761 786

61

86

6778 117

122

181

171167 172

199

687775

706744 770

714

799

881930 933

985

0

200

400

600

800

1,000

1,200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sep-13

Com

pone

nts

Of E

than

e D

eman

d (M

Bbl

s/d)

Export-driven ethane demand

Domestic ethane demand

Source: Wells Fargo

Ethane demand increasing2X

Maximum Domestic C2 Cracker Capacity

20Source: Wells Fargo

• Incremental 800 Mb/d C2 and 1.8 MMb/d y-grade by 2020– 300 to 500 b/d Ethane rejected or exported

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Max Cracking Capability for US Ethane(1000 BPD)

Low Probability New Plant

Fair Probability New Plants

High Probability New Plants

US Ethane Cracked inCanada

Conversions/Expansions/Restarts

Base C2 Cracking Capability

Surplus Ethane Export & Reject

Ethane demand growing

Composition Of Steam Cracker Feed Slate

21Source: Wells Fargo

43% 63%

57% 37%

1,816 1,729 1,755 1,768

1,568 1,523 1,581 1,617 1,584 1,633 1,668

0

400

800

1,200

1,600

2,000

2,400

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013TD Nov-13

Tota

l Dom

estic

NG

L D

eman

d (M

Bbl

s/d)

Ethane Propane Butane Naphtha Gas Oil

Cracker feed is getting lighter

Light Feeds As Percentage Of Total Ethylene Feedslate

22

40%

50%

60%

70%

80%

90%

100%

Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13.0x

10.0x

20.0x

30.0x

40.0x

50.0x

60.0x

Ligh

t Fee

ds A

s %

Of T

otal

Fee

dsto

ck

Cru

de O

il/ N

atur

al G

as R

atio

Crude Oil/Natural Gas Ratio (Left Axis)

Light Feeds as % of total feedslate (Right axis)

Source: Wells Fargo

Oil to Gas ratio and light feeds have increased

SteamCracker

Steam Cracking Product Slate Changing

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Natural GasLiquids

Oil RefineryOutputs

Propane

Ethane

Butane

Gasoline Blend

NaphthaLi

ght

Feed

stoc

ksH

eavy

Feed

stoc

ks Aromatics (C5+)

Propylene

Ethylene

Butadiene

Ole

fins

PDH & Export

Light feeds have increased and changed product slate

Net Ethylene Derivative Exports

24Source: Wells Fargo

43%

46%34%

36%

27%

15%

13%

12%11%

9%

17%

43%

31%32%

32%

31%

33%

31%

40%48% 48%

41%

13%23% 34%

33%

42%

52%

56%48%

41% 43%

42%

2,024

2,842

2,299

2,625

3,801 3,837

5,032

4,513 4,295 4,375

4,975

0

1,000

2,000

3,000

4,000

5,000

6,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sep-13

Net

Eth

ylen

e D

eriv

. Exp

orts

(MM

Ton

s / Y

r)

Polyethylene Vinyls Other

> 2X

Ethylene derivative exports have more than doubled

Historical Ethane-To-Crude Oil Ratio

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Jan-10 Apr-10 Jul-10 Oct-10 Dec-10 Apr-11 Jul-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-135%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

Etha

ne to

Cru

de O

il R

atio

(%)

Ethane to WTI Crude Ratio

Source: Wells Fargo

Excess ethane is making U.S. competitive

Energy Transfer Enterprise Structure

ENERGY TRANSFER EQUITY, L.P.(NYSE: ETE)

SUNOCO LOGISTICS PARTNERS, L.P.

(NYSE: SXL)

ENERGY TRANSFER PARTNERS, L.P.(NYSE: ETP)

REGENCY ENERGY PARTNERS L.P.(NYSE: RGP)

Blue denotes Publicly Traded Partnership

LP Interest, GP Interest, IDRs

LP Interest, GP Interest, IDRs

Gathering and Processing

Contract Compression

& Treating

Joint Ventures

Intrastate Transportation

and Storage

Interstate Transportation

and Storage

Midstream

NGL Transportation and Services

70% Interest30% Interest

Refined Product

Pipelines

Terminal Facilities

Crude Oil Pipelines

Crude Oil Acquisition

and Marketing

Standard Equipment Company

Sunoco, Inc.Retail

Marketing

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LP Interest, GP Interest, IDRs, Class H Units*

* Class H Units track 50% of the SXL GP and IDR economics

Energy transfer today -a leading midstream energy platform

ETP Assets

*Map is a general depiction of Energy Transfer assets

SXL Assets

RGP Assets

Eastern Gulf Crude Access Pipeline

Energy Transfer Projects

Mariner South

Trunkline LNG Export

Energy Transfer Asset Overview

Sunoco Retail Locations includes Distributers, Dealers, and Co-ops

PVR Assets

KEY ASSETS COMBINED

~ 62 Plants (2 under construction)

~176 Bcf Gas Storage

>90 MMBbls NGL\Oil Storage

3 Fractionators

~2 Bcfd LNG Import

> 4.0 MM HP Compression

~1.5 MMBpd Crude Oil

~ 5,000+ Retail Locations

Approximately 61,000 miles of crude oil, refined products, natural gas, and NGL pipelines

Recently Acquired by RGP; subject to close

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ETE’s Business Model Transformation

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2009 ~ 900+ Employees 2014 ~ 11,600 Employees

Dry Gas Liquids Rich

Midstream - Gathering & Processing

Lone Star NGL – Trans\Frac & Storage

LNG – import\export

Sunoco - Crude Oil & Refined ProductsLogistics\Retail

LoneStar\SXL – LPG export

Gas Transmission\StorageInterstateIntrastateStorage

ETE’s Business Model Transformation

Processing Capacity 0.3 3.0+ Bcfd

NGL Production 20 400+ Mbpd

NGL Transportation 0 520+ Mbpd

NGL Fractionation Capacity 0 250 to 350 Mbpd

Crude Oil Transportation

0 2,500+ Mbpd

2009 2015(est. based on developing projects)

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NGL, Crude & Purity Products Storage 0 90+ MMbbls

Natural Gas Liquid Production (2012)

30

0 100 200 300 400 500 600

CXTMWE

OneOkCopano

DevonETE

TargaWilliams

EPDDCPETE

MBPD

ETE 2013 ~200 Mbpd

ETE 2015 ~ 400 Mbpd(estimate based on developing projects)

ETE 2010 ~15 Mbpd

ETE 2011 ~70 Mbpd

* ETE includes ETP, SUGS, RGP

ETE 2012 ~95 Mbpd

Dry Gas Shale ==> Liquid Rich Shale

HoldCo (SUGS)

Chisholm PlantLaGrange ExpansionSpirit NGL

West Texas GatewayJusticeMt. Belvieu Frac #1Kenedy PlantJV Ranch Plant

Jackson #4Rebel PlantMivida PlantMariner EastMariner SouthTrunkline CrudeRio Bravo CrudeTW Phoenix Exp.FGT ExpansionMexico

Southern Union

REMChisholmLos BonitasDos HermanasSan CajosFreedom NGLLiberty NGL

Red RiverHaley Expansion

Sunoco

Louis Dreyfus

2011 1st Half 2012 2nd Half 2012 1st Half 2013

Jackson #1 & #2Godley #5Red Bluff PlantDubach Plant

2nd Half 2013

TLNG

2014-15 2010

TigerFGT VIII

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ETE Growth Execution - > $45B

2019

Jackson #3REM LoopMt. Belvieu Frac #2Permian ConnectorSEC ExpansionMariner West

PVR, Hoover,

Eagle Rock (pending)

Strategic M&A, thousands of miles of new pipe construction,repurposing pipe, 12 Plants, 2 Expansions and 2 Fractionators

113

150

200

200

250

290

400

488

1,160

1,325

1,340

1,523

0 500 1000 1500

Formosa

BWP

WES

HEP

Texstar

Southcross

TEAK

XOM

DPM

CPNO

ETP

EPD

90

113

120

488

525

623

760

0 200 400 600 800

Southcross

Formosa

ETP

XOM

CPNO

EPD

DPM

Eagle Ford Processing Capacity Up by 175%

Mbpd Mbpd

2010 – 2.7 Bcf/d Total 2014E – 7.4 Bcf/d Total

4.7 Bcfd New Capacity Producing ~ 550 Mbpd NGL

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33

La Grange Expansion 200 MMcfdChisholm 120 MMcfd

Freedom 8” & Liberty 12”75 Mbpd

Mt. BelvieuFracs 1 & 2200 Mbpd

Spirit 8”

Justice 20”340 Mbpd

REM 30” & 42”(Working Expansion)

W Texas Gateway 16”209 Mbpd

Kenedy200 MMcfd

Jackson800 MMcfd

Las Tiendas Treater300 MMcfd

ETP Eagle Ford Rich Gas Footprint

Formosa

Sweeny

Mt. Belvieu

San Cajos 30”

Las Bonitas24” & 30”

Chisholm 20”

Dos Hermanas 24”

Extending the vertical value chain, creating critical mass and operational flexibility

34

Jackson Plant Complex (4 – 200 MMcfd trains)

35

ETP LaGrange\Chisholm

CP ChemSweeny

Formosa

RGPWaha

RGP Coyanosa

RGPBone Springs

RGPHaley

RGP Tippett

RGPJal RGP

KeystoneRGP

Red Bluff

RGP Mivida

ETPGodley 1,2,3,5

ETP Kenedy

ETPJackson 1,2,3,4

Lone StarWest Texas Gateway 16”

(210 Mbpd)

Lone StarWest Texas Pipeline 12”

(140 Mbpd)

Lone StarMt. Belvieu Frac

(200 Mbpd)

ETPJustice 20”(340 Mbpd)

Energy Transfer Synergistic Footprint

ETPFreedom\Liberty

(75 Mbpd)

ETPRebel

Lone Star Mont Belvieu Complex

36

Frac I 100 MbpdDec 12’

Frac II 100 MbpdOct 13’

De-C2 100 MbpdQ1 15’Frac III 100 Mbpd

(site)

Mariner South - C3 & C4 Export/Import

C3 - 200 MBPD(C4 batching)

Mont Belvieu Facilities

Nederland Terminal

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• Joint project between SXL and Lone Star

• Will integrate SXL’s existing Nederland terminal and pipeline from Mont Belvieu with Lone Star’s Mont Belvieu fractionation and storage facilities

• Will create a world class LPG export/import operation in the Gulf Coast

• Expected Q1 2015 in-service date

• Initial capacity of 6 million barrels per month

• Nederland Terminal will provide 24-hour ship access in the Gulf Coast with a load rate of up to 30,000 barrels/hr

• Shell Trading US Company, STUSCO, has committed to the project as an anchor customer under a long-term, fee-based contract

Rio Bravo Crude Pipeline Project

Conversion of HPL gas pipeline • Convert 84 miles of 18” & 24” gas

pipelines to crude service • Construct meter stations, pump

stations, interconnects and 3 miles of new pipe

• Connect to Trafigura splitter and terminal at Corpus Christi

• Expected in-service Q3/Q4 2014

Capacity Lease Agreement• Leased 100% of system to Trafigura• 100 Mbpd of crude/condensate• 10 year agreement with renewal

option

Gas Pipeline Revenue• Gas transport revenue retained

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39

East Gulf Crude Access Project - Trunkline 30” Conversion -

Potential Scope

• Batched system with capacity of 420 Mbpd

• Repurposing approximately 574 miles of 30” pipeline

• Received FERC abandonment approval November 2013

• Anticipated in-service by mid 2016

Patoka

Boyce

Nederland

First direct crude oil pipeline to the Eastern Gulf Coast refinery market from the Midwest

Lake Charles

Nederland Terminal

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Lake Charles LNG

41

PROPOSED 3 TRAIN OPERATION DATES:• Train 1: March 31, 2019 • Train 2: December 31, 2019 • Train 3: September 30, 2020Capacity up to 16 mtpa – 2.6 Bcf/d from three trains• DOE approved non-FTA• Filed Draft RR No. 13 for Lake Charles LNG export project• Formal FERC application expected end of Q1 2014• Lake Charles LNG FID/Financial Closing expected Mid-2015

KEY PROJECT ATTRIBUTES:

COMMERCIAL TERMS:• Agreed on principal terms with BG on a “tolling basis” for a

minimum 25-year term• Rate established at final investment decision (“FID”) based on

estimated project costs• Additional upside from 3.1 Bcf/d long term transportation

arrangement with BG beginning in 2019 through 2044New Transfer Line New Facility Area

Proposed Facilities/BuildingsExisting Facilities

BG:• To design facility and

responsible for construction management

• Responsible for all project costs and performance

• Will operate the facility (including regas facility) beginning in 2016

Lake Charles LNG: (owned 60% ETE, 40% ETP)• Lake Charles LNG to own

and finance the project• Also can fund cost

overruns or direct BG to fund

SXL Marcellus-Utica NGL SolutionEnhanced NGL takeaway capability from Marcellus-Utica to export markets

• West 50 Mbpd purity C2 mid 2013 to Sarnia

• East 70 Mbpd EP mix to Marcus Hook– C3 2nd half 2014– C2 1st half 2015

• Future east build out to Marcus Hook

• Marcus Hook– LPG storage– Rail, truck and pipeline

distribution system for purity C3

– Export C2, C3 & C4 capabilities

Mariner EastE/P to Marcus Hook 70 Mbpd

Mariner WestEthane to Sarnia 50 Mbpd

Sarnia

Marcus Hook

42

Standard Equipment Company Expansion

New Office & Warehouse

Vessel & Skid Shop

New Assembly ShopEngine Overhaul & Rework

2X Packaging & Overhaul Capabilities

43

SEC Assembly Shop

Cat\Ariel 3616 Dual Drive 4750 HP

44

PEI Power – Scranton, PA

45

• ~75 to 80 MW facility• Steam turbine ~22.5 Mw• 2 - Mercury gas turbines ~9.2 Mw• PEI II LLC - LM6000 gas turbine ~ 43 to 50 Mw

• Landfill gas fuel ~15 MMcfd ~ 500 btu\cf• 6 miles 12” pipeline to Keystone (blue)• 18 miles 16” pipeline to Alliance (red)

• Tenn Gas Pipeline 16” ~1000 btu\cf

Mercury Turbines(location)

PEI II LLC JVLM 6000 turbine

Boiler & SteamTurbine

Conclusions

46

DOE LNG ExportRequests

Approved Pending

FTA 28 for 34 Bcfd 5 for 4 Bcfd

Non-FTA 5 for 7 Bcfd 22 for 28 Bcfd

Total 33 for 38 Bcfd 27 for 35 Bcfd Plus Canada ~20 Bcfd

• The shale revolution is the key to reinventing growth and is saving our economy

• U. S. is becoming more “energy secure” vs “energy independent”

• Natural gas is abundant, clean burning and affordable

• China and India GDP expected to grow 7 to 8% driving the demand for ethylene derivativeswhile U.S. is expected to grow 2 to 3%

• Exports will continue to increase and include LNG, C2, C3, C4, diluent, naphtha, gasoline,coal (126 Mtons250 Mtons in next 2 years), polyethylene and polyvinylchloride

• Activity expected to remain strong in the big 4 plays (Bakken, Permian – stacked plays,Utica\Marcellus and Eagle Ford)

• Gas will continue to displace coal for electric generation 2 to 6 Bcfd

• New supply basins will change directional flows and basis with new emerging markets (up to 20 Bcfd)on the Gulf Coast (electric generation, industrial growth, Mexico\Canada and LNG)

• All may get approved but how many will get developed

47

Conclusions (continued)• NGL production is expected to approach 5 MMb\d plus refinery NGL’s

• Ethane will remain in oversupply with rejection of 300 to 500 Mb/d over the next several years

• New ethylene crackers, PDH plants and exports will be crucial

• Export increases are expected to keep C3 and C4 in balance

• Ethane will follow Methane prices & C3+ is expected to follow crude oil

• If LNG exports drive natural gas prices up then rigs will return to dry shale plays

• Oil to Gas ratio increases are driving U.S. competiveness (historically 6/1 now >20/1)

• Oil to Gas ratio is expected to decline slightly below 20/1 making world scale GTL plants difficultas gas prices firm due to new growing demand and oil remains backwardated

• Shale production is changing PetChem’s and Refiner’s feedstock towards lighter ends andchanging the product slate resulting in less demand for naphtha and natural gasoline

– PDH plants and Metathasis will be needed to produce propylene– Butadiene could become short– Will Europe convert from naphtha cracking to ethane or propane?

• Canada expected to need more than 1 MMb\d of diluent (pentane, hexane and some butane)

ETP’s Liquids Transformation

• Transforming from one of the largest gas transmission companies in the nation to positioning to becoming one of the largest NGL producers and liquid transporters in the nation

• Fastest growing midstream company in the Eagle Ford Shale area investing over $3B

• ETP is successfully executing it’s strategy with:

– M&A of liquid rich assets

– Organic brown field growth

– Repurposing pipelines and assets

– System integration with it’s synergistic footprint to create critical mass

– Developing new take away capacity to new emerging markets

– Extending the vertical value chain…wellhead to exports

48

Summary

49

Natural Gas Industry has a very bright future!• Shale plays are driving the U.S. economy, are a critical piece to the US energy supply chain,

and are important to ETP Midstream’s business model and future plans

• Midstream has a challenge to unlock the bottlenecks choking the growth rate of the industry. ETP is developing solutions with it’s investment in gas, NGL and crude infrastructure.

• Different producing basins have a “last mole standing” piece of infrastructure challenge and ETP is well positioned to providing services

– Marcellus-Utica – NGL takeaway

– Eagle Ford – Residue gas takeaway

– Permian & Bakken – Crude Oil takeaway

• NGL infrastructure will eventually balance with demand but there will be gaps due to pace of execution, and access to international markets will be a key value driver (“Exports” will play a crucial role)

• New natural gas demand is growing along the Gulf Coast (coal switching for electric generation, industrial growth, Mexico and LNG) and ETP is well positioned to serve these new emerging markets