John Carruthers, Vice President Upstream Development Alaska Legislative Audit Budget Committee Alaska Senate Resources

1. John Carruthers, Vice President Upstream Development Alaska Legislative Audit & Budget Committee Alaska Senate Resources Committee June 17, 2004

3. 50% owner of Alliance Pipeline In service December 2000 1857 miles (888 miles in the US / 969 miles in Canada ) 36/42 inch diameter, high pressure, rich gas, 1.6 billion cubic feet/day 21 month FERC regulatory process, 24 month NEB process 42.7% interest in Aux Sable extraction & fractionation plant near Chicago 60% owner & operator of Vector Pipeline In service December 2000 348 miles (333 miles in the US / 15 miles in Canada) 42 inch diameter, gas,1 billion cubic feet/day 15 month FERC regulatory process Canada’s largest natural gas distribution company serving 1.7 million industrial, commercial and residential customers in Ontario, Quebec and New York State Enbridge operates the world’s longest crude oil and liquids pipeline system in Canada & U.S. The combined system is comprised of 9,300 miles of pipeline and delivers more than 2 million barrels of crude oil and liquids per day. Enbridge’s liquids pipeline system is tied to one of the world’s largest undeveloped oil deposits. Growth in the liquids pipeline will be driven by the $55 billion heavy oil development in Alberta. Our Gas Transmission business is our second platform and growing. Enbridge’s West-to-East strategy of developing Alliance and Vector should continue to play a critical role in supplying U.S. gas demands. Alliance delivers about 3% of US gas demand (15% of Cdn exports.) Our third platform is Gas Distribution. We distribute gas in Southern Ontario, Quebec, New Brunswick, Inuvik and upper New York State. We are Canada’s largest natural gas LDC. Enbridge Energy Partners and Enbridge Income Fund. We recognize that our industry is clearly both mature and capital intensive, therefore financing many infrastructure assets needs to be done at the lowest cost of capital available. Enbridge has transferred assets to these vehicles, and has benefited from monetization gains, allowing redeployment of capital into higher return, higher growth investments. And lastly, our fifth and final platform is our International Group. It’s a small portfolio of just two investments made carefully over 10 years. The objective of Enbridge International Inc. is to supplement Enbridge's North American business activities by securing participation in attractive foreign projects that utilize technical and operating expertise in liquids transportation.Enbridge operates the world’s longest crude oil and liquids pipeline system in Canada & U.S. The combined system is comprised of 9,300 miles of pipeline and delivers more than 2 million barrels of crude oil and liquids per day. Enbridge’s liquids pipeline system is tied to one of the world’s largest undeveloped oil deposits. Growth in the liquids pipeline will be driven by the $55 billion heavy oil development in Alberta. Our Gas Transmission business is our second platform and growing. Enbridge’s West-to-East strategy of developing Alliance and Vector should continue to play a critical role in supplying U.S. gas demands. Alliance delivers about 3% of US gas demand (15% of Cdn exports.) Our third platform is Gas Distribution. We distribute gas in Southern Ontario, Quebec, New Brunswick, Inuvik and upper New York State. We are Canada’s largest natural gas LDC. Enbridge Energy Partners and Enbridge Income Fund. We recognize that our industry is clearly both mature and capital intensive, therefore financing many infrastructure assets needs to be done at the lowest cost of capital available. Enbridge has transferred assets to these vehicles, and has benefited from monetization gains, allowing redeployment of capital into higher return, higher growth investments. And lastly, our fifth and final platform is our International Group. It’s a small portfolio of just two investments made carefully over 10 years. The objective of Enbridge International Inc. is to supplement Enbridge's North American business activities by securing participation in attractive foreign projects that utilize technical and operating expertise in liquids transportation.

4. Enbridge and Alaska Gas Pursuing greenfield project through NEB/CEAA process Only pipeline company with extensive experience in continuous and discontinuous permafrost construction & operations Most recent cross-border, large diameter, high pressure, rich gas pipeline experience Participated in both study & field trials in Alaska to examine state-of-practice of trenching in permafrost Creative solutions to capital and operating risks First company to negotiate incentive tolling agreement Competitive connections to growing U.S. markets (gas and liquids) through Alliance, Vector and Enbridge Pipelines Alaska has outlawed an “over the top” routing of a natural gas pipeline Enbridge remains interested in participating in a greenfield pipeline project We continue to meet with Alaskan producers regarding future pipeline development to move Alaska gas to market We are considering the possibility of an investment vehicle and the engagement of an American partner(s) on the development of a pipeline project. An Alaska natural gas pipeline would likely be the largest infrastructure project in history. There are huge opportunities for all parties but also huge risks. Those risks would like have to be managed through a consortium approach—the project would simply be too large for any one player. If pressed only: Enbridge would support a legislative framework such as the NPA that would facilitate the construction of an Alaska gas pipeline, however the exclusivity granted to Foothills through the Certificate of Public Convenience cannot be accepted. Alaska has outlawed an “over the top” routing of a natural gas pipeline Enbridge remains interested in participating in a greenfield pipeline project We continue to meet with Alaskan producers regarding future pipeline development to move Alaska gas to market We are considering the possibility of an investment vehicle and the engagement of an American partner(s) on the development of a pipeline project. An Alaska natural gas pipeline would likely be the largest infrastructure project in history. There are huge opportunities for all parties but also huge risks. Those risks would like have to be managed through a consortium approach—the project would simply be too large for any one player. If pressed only: Enbridge would support a legislative framework such as the NPA that would facilitate the construction of an Alaska gas pipeline, however the exclusivity granted to Foothills through the Certificate of Public Convenience cannot be accepted.

5. Substantial Northern Expertise Norman Wells Pipeline To first put things into historical perspective, there were many naysayers in the early ‘80’s who said that a crude oil pipeline could not be buried in the permafrost and successfully operate…… But we did it. We’ve owned and operated the Norman Wells pipeline since 1985. Almost 20 years of operating experience Substantial benefits to Northerners 18 employees -- all 18 are northerners; seven of which are First Nation and Metis (40%) Other Facts: 32 employees at peak of commissioning and initial start-up Construction cost $355 million on budget of $480 million ($100 million was a contingency reserve earmarked for unique northern construction issues - the reserve was NOT used) Operating today at about 25 - 30,000 barrels per day. Inuvik Gas Some people also said that a gas distribution system in the arctic circle wasn’t feasible. We did that too. We partnered with the Inuvialuit Petroleum Corporation and Alta Gas Services to bring gas to the people of Inuvik. C$44 million development (including field production facilities, 50 km pipeline and 25 km of distribution system) 8 staff, all of which are northerners, 6 are of aboriginal descent. (88%) It’s been a very popular move. Inuvik Gas “connected” its 667th customer in January 2004, on its second year anniversary from connecting its first customer. Inuvik Gas Ltd. may seem like a small project, but it is exactly the type of project that Alaska will want to look at in bringing gas distribution to the local communities. IGL was based on the similar concept done in Barrow AlaskaNorman Wells Pipeline To first put things into historical perspective, there were many naysayers in the early ‘80’s who said that a crude oil pipeline could not be buried in the permafrost and successfully operate…… But we did it. We’ve owned and operated the Norman Wells pipeline since 1985. Almost 20 years of operating experience Substantial benefits to Northerners 18 employees -- all 18 are northerners; seven of which are First Nation and Metis (40%) Other Facts: 32 employees at peak of commissioning and initial start-up Construction cost $355 million on budget of $480 million ($100 million was a contingency reserve earmarked for unique northern construction issues - the reserve was NOT used) Operating today at about 25 - 30,000 barrels per day. Inuvik Gas Some people also said that a gas distribution system in the arctic circle wasn’t feasible. We did that too. We partnered with the Inuvialuit Petroleum Corporation and Alta Gas Services to bring gas to the people of Inuvik. C$44 million development (including field production facilities, 50 km pipeline and 25 km of distribution system) 8 staff, all of which are northerners, 6 are of aboriginal descent. (88%) It’s been a very popular move. Inuvik Gas “connected” its 667th customer in January 2004, on its second year anniversary from connecting its first customer. Inuvik Gas Ltd. may seem like a small project, but it is exactly the type of project that Alaska will want to look at in bringing gas distribution to the local communities. IGL was based on the similar concept done in Barrow Alaska

7. Enbridge and Alaska Gas - Route

8. Conventional WCSB supply is expected to remain flat over the next few years before declining. Supply from CBM, East Coast and Mackenzie to maintain Canadian supply levels over next 10 years. Supply from WCSB expected to decline after 2015 opening up even more existing pipeline capacity into ex-Alberta markets. Intra Alberta demand is expected to increase due to Oil SandsConventional WCSB supply is expected to remain flat over the next few years before declining. Supply from CBM, East Coast and Mackenzie to maintain Canadian supply levels over next 10 years. Supply from WCSB expected to decline after 2015 opening up even more existing pipeline capacity into ex-Alberta markets. Intra Alberta demand is expected to increase due to Oil Sands

9. Ex-Western Canada Flows The slide shows the five main exits out of Western Canada All graphs have the same scale except for TCPL With the exception of TCPL, flows in the pipelines are close to capacity When there is a wet year on the West Coast, the dams are full and the need for gas-fired power generation is reduced. This swing can be 1.5 Bcf/d+/-. In wet years, there is generally a reduced need for WCSB gas into California / West Coast. In situations where there was a higher than normal demand for gas, such as a cold front in Eastern Canada and the US Northeast, the price in those market centres will increase, and that will encourage flows to the TCPL system. The slide shows the five main exits out of Western Canada All graphs have the same scale except for TCPL With the exception of TCPL, flows in the pipelines are close to capacity When there is a wet year on the West Coast, the dams are full and the need for gas-fired power generation is reduced. This swing can be 1.5 Bcf/d+/-. In wet years, there is generally a reduced need for WCSB gas into California / West Coast. In situations where there was a higher than normal demand for gas, such as a cold front in Eastern Canada and the US Northeast, the price in those market centres will increase, and that will encourage flows to the TCPL system.

10. Ex-Western Canada Contract Expiries

13. Ex-Alberta Pipeline Capacity Outlook – Key Points Alberta should have sufficient excess pipeline capacity to handle Alaska Gas via a phased approach – expect approx. 2.5 bcf/d of spare capacity through 2012-2015 More excess capacity expected to become available after 2015 as WCSB supply declines (full 5 bcf/d by 2018-2020) Alliance can add approx. 0.5 bcf/d of cheap capacity from new compression – will also lower tolls and improve netbacks into Chicago Actual throughput vs. contracted throughput on GTNW (PGT) significantly lower – could provide additional availability to support growing California demand Alaska Gas should help lower ex-Alberta tolls

16. Alaska NGL Considerations Natural Gas Liquids historically command premium over commercial gas – natural hedge against lower gas netbacks NGL processing must be considered in overall routing strategy to optimize costs and netbacks Alaska Producers all have major midstream / petrochemical interests served by reliable & affordable gas supply Alberta facing ethane shortage to feed existing petrochemical infrastructure Alberta possesses significant excess plant & pipeline capacity Cochin, Alliance and Enbridge Mainline deliver NGLs out of Alberta to US Midwest, Ontario and Quebec

17. Conclusions Enbridge increasing its presence in Alaska Filed application under Stranded Gas Act Pursuing a greenfield alternative from Alaska to Alberta Maximize returns for State and Producers through optimal market delivery options Alliance and Vector Pipelines experience Northern / Arctic experience - buried pipelines in permafrost Alignment of key stakeholders Continental solutions