ALASKA HIGHWAY PIPELINEPROJECT UPDATE

Presentation to the

Alaska State Legislature Joint Committeeon

Natural Gas Pipelines

ALASKA HIGHWAY PIPELINEPROJECT UPDATE

Presentation to the

Alaska State Legislature Joint Committeeon

Natural Gas Pipelines

July 18, 2001

Agenda

Review ANGTS Advantages

Overview of Alaskan Benefits of ANGTS

Current Status

Withdrawn Partners Issue

Open Access

Potential State Participation

Potential Gas Delivery to South Central Alaska

Path Forward for ANGTS

Questions and Answers

Alaskan Northwest Natural Gas Transportation Company Corporate Ownership

Westcoast Energy Inc.

Foothills Pipe Lines Ltd.

TransCanada PipeLinesLimited

ANNGTC

ANGTS Advantages

Earliest Timing

Flexible Framework

Land Tenure

Best Route

ANGTS Advantages

Earliest Timing

ANNGTC/Foothills was selected by the United States and Canada to construct and operate the ANGTS and have secured the following: Federal Lands ROW Federal ROW on State lands FERC Certificate NEB Certificate US Corps 404 permits Yukon ROW British Columbia Map Reserve

Each of these components could be expected to require 18 to 36 months to secure after a green field application is submitted.

ANGTS Advantages

Flexible Framework

The ANGTS framework provides an existing, tested and accepted framework for expediting the delivery of ANS gas to the Lower 48

Canada has repeatedly reaffirmed its intention to fulfill its commitments reflected in the ANGTS framework

The ANGTS framework allows for updates to the existing U.S. and Canadian regulatory framework to modify the project, including initial required shipping capacity, the use of updated technology, environmental review, open access and negotiated rate structure

The ANGTS sponsors are committed to working with the State, ANS producers and other potential shippers to develop a project that achieves the commercial and economic objectives of all parties

YUKON

NWTB.C.

NUNAVUT

ALBERTA

SASKATCHEWAN

Whitehorse

Prudhoe Bay

Inuvik

Kingsgate

Monchy

Fort Nelson

Fairbanks

Boundary Lake

Beaver Creek

Gordondale

Caroline

ALASKA

ANGTS Advantages

Land Tenure

ALASKA Federal Grant

• 434 miles have been acquired of which–261 miles remain under Federal authority–173 miles have been transferred to the State

• 5 Compressor Station Sites and • 1 Meter Station Site has also been acquired

State Application• Approximately 200 miles under active application

• 2 Compressor Station Sites and • 1 Meter Station Site included in application

Other Lands• Approximately 110 miles to be acquired

YUKON • Foothills holds a grant of easement for the entire ROW in Yukon.

• Compressor Station sites, temporary and other permanent sites are protected as Reservations by Notation for the Project

NORTH B.C. • Foothills holds Map Reserves on all provincial Crown lands within this segment of the Project.

ANGTS Advantages

Best Routing

Best alternative for delivering Alaskan gas to the Lower 48 Can be constructed with proven technology Has been extensively reviewed Relies on existing infrastructure Will minimize adverse environmental effects Delivers gas to Alaskan consumers

ANGTS Advantages

Best Access to North American Pipeline Grid

Access to the North American grid enhances the success of the Alaska Highway Pipeline

Foothills, TransCanada and Westcoast have built and operate most of the gas pipelines in Canada

Offers expanded market opportunities for Alaska Gas

Foothills, TransCanada and Westcoast recognized as experienced, reliable and cost effective pipe builders and operators.

Alaskan Benefits

Based on $3 to $5 mmbtu gas price range over 25 years

Increase in Gross State Product $55 to $122 billion

Increase in employment 26,000 person years

Increase in state and local gov’t revenues $12 to $29 billion

Increase in gross revenues for Alaskan Producers $36 to $103 billion

Gross revenue gains to Gas Producers through earlier (3 years) connection $4 to $12 billion

Current Status

ANGTS Update

Finalizing state lands right-of-way

Negotiating a Memorandum of Understanding with Joint Pipeline Office

Continuing dialogue with: Government officials in Ottawa and Washington Aboriginal Communities ANS Producers ANNGTC Withdrawn Partners

Current Status

Discussions with Gas Producers/Shippers

Ongoing discussions with North Slope Producers

Contact with other interested parties such as exploration and development companies, power generators and power marketers

Current Status

Discussions With Aboriginal Communities

Continuing to build upon positive relationships Foothills has developed over two decades

Building support through discussion of the community benefits of pipeline development

Withdrawn Partners Issue

ANNGTC Withdrawn Partners have right to recover monies under certain circumstances

It is recognized that the Withdrawn partners issue needs to be addressed in the overall commercial resolution of this pipeline development.

This is an issue between ourselves and the Withdrawn partners

The process to re-enlist Withdrawn Partners has begun and although in the early stages, so far we have seen some encouraging signs.

Open Access

Alaska’s interests best served by continued gas exploration and development

Access to pipeline vital to E&P activity

Financing for the initial pipeline will require long-term shipping contracts

Additional future capacity provided by: Additional compression Looping Combination of both

Additional capacity will be available to all on an open access basis

As a pure pipeline service provider, it is in Foothills interests to provide expanded capacity to meet demand

Potential State Participation

We understand the State is looking at ways to directly participate in a pipeline development

There are several ways the State could participate in the ANGTS As a lender or guarantor As a shipper As an equity partner

ANNGTC/Foothills would consider discussion of these or other matters of interest to the State

Gas to South Central Alaska

Current gas demand in South Central is approximately 220 Bcf per year

This volume could be delivered via a 16-inch spur line connected to the ANGTS near Fairbanks

As a pure pipeline service provider, it is in Foothills interests to serve additional supply and market areas whenever it is economic to do so

Path Forward for ANGTS

Foothills

Continuing to work toward goal of commercial alignment with Producers and potential Shippers

Finalizing state lands ROW

Building support in Canada for two stand alone arctic pipelines

Recommendations to Joint Committee

Publicly encourage gas producers and pipeliners to bring collective strengths to the table and accelerate development of the ANGTS

Support the conclusion that only ANGTS meets the Governor’s goal of earliest possible start for the pipeline project

Questions