ALASKA HIGHWAY PIPELINE PROJECT UPDATE Presentation to the

ALASKA HIGHWAY PIPELINE PROJECT UPDATE Presentation to the Alaska State Legislature Joint Committee on Natural Gas Pipelines July 18, 2001

Agenda u Review ANGTS Advantages u Overview of Alaskan Benefits of ANGTS u Current Status u Withdrawn Partners Issue u Open Access u Potential State Participation u Potential Gas Delivery to South Central Alaska u Path Forward for ANGTS u Questions and Answers

Alaskan Northwest Natural Gas Transportation Company Corporate Ownership

ANGTS Advantages u Earliest Timing u Flexible Framework u Land Tenure u Best Route

ANGTS Advantages Earliest Timing u 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 u The ANGTS framework provides an existing, tested and accepted framework for expediting the delivery of ANS gas to the Lower 48 u Canada has repeatedly reaffirmed its intention to fulfill its commitments reflected in the ANGTS framework u 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 u 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

ANGTS Advantages Land Tenure Prudhoe Bay ALASKA Fairbanks Beaver Creek YUKON ALASKA Federal Grant • 434 miles have been acquired of which – 261 miles remain under Federal authority – 173 miles have been transferred to Inuvik the State • 5 Compressor Station Sites and • 1 Meter Station Site has also been NUNAVUT acquired State Application • Approximately 200 miles under active application • 2 Compressor Station Sites and • 1 Meter Station Site included in application NWT Other Lands Fort Nelson • Approximately 110 miles to be acquired ALBERTA YUKON Whitehorse • Foothills holds a grant of easement for the entire ROW in Yukon. B. C. • 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. Boundary Lake Gordondale SASKATCHEWAN Caroline Kingsgate

ANGTS Advantages Best Routing u 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 u Access to the North American grid enhances the success of the Alaska Highway Pipeline u Foothills, Trans. Canada and Westcoast have built and operate most of the gas pipelines in Canada u Offers expanded market opportunities for Alaska Gas u Foothills, Trans. Canada 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 u Increase in Gross State Product u Increase in employment $55 to $122 billion 26, 000 person years u Increase in state and local gov’t revenues $12 to $29 billion u Increase in gross revenues for Alaskan Producers$36 to $103 billion u Gross revenue gains to Gas Producers through earlier (3 years) connection $4 to $12 billion

Current Status ANGTS Update u Finalizing state lands right-of-way u Negotiating a Memorandum of Understanding with Joint Pipeline Office u Continuing dialogue with: Government officials in Ottawa and Washington Aboriginal Communities ANS Producers ANNGTC Withdrawn Partners

Current Status Discussions with Gas Producers/Shippers u Ongoing discussions with North Slope Producers u Contact with other interested parties such as exploration and development companies, power generators and power marketers

Current Status Discussions With Aboriginal Communities u Continuing to build upon positive relationships Foothills has developed over two decades u Building support through discussion of the community benefits of pipeline development

Withdrawn Partners Issue u ANNGTC Withdrawn Partners have right to recover monies under certain circumstances u It is recognized that the Withdrawn partners issue needs to be addressed in the overall commercial resolution of this pipeline development. u This is an issue between ourselves and the Withdrawn partners u 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 u Alaska’s interests best served by continued gas exploration and development u Access to pipeline vital to E&P activity u Financing for the initial pipeline will require long-term shipping contracts u Additional future capacity provided by: Additional compression Looping Combination of both u Additional capacity will be available to all on an open access basis u As a pure pipeline service provider, it is in Foothills interests to provide expanded capacity to meet demand

Potential State Participation u We understand the State is looking at ways to directly participate in a pipeline development u There are several ways the State could participate in the ANGTS As a lender or guarantor As a shipper As an equity partner u ANNGTC/Foothills would consider discussion of these or other matters of interest to the State

Gas to South Central Alaska u Current gas demand in South Central is approximately 220 Bcf per year u This volume could be delivered via a 16 -inch spur line connected to the ANGTS near Fairbanks u 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 u Continuing to work toward goal of commercial alignment with Producers and potential Shippers u Finalizing state lands ROW u Building support in Canada for two stand alone arctic pipelines Recommendations to Joint Committee u Publicly encourage gas producers and pipeliners to bring collective strengths to the table and accelerate development of the ANGTS u Support the conclusion that only ANGTS meets the Governor’s goal of earliest possible start for the pipeline project

Questions