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Slide 1
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Midwest Fractionation Overview Platts NGLs Conference| September 24, 2013
President & CEO Bill McAdam
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Outline 1. Basics of Gathering, Processing, Fractionation, Storage
2. Overview of North American NGL Supply/Demand
3. What drove building of Midwest fractionation facilities?
4. What will drive expansion of Midwest fractionation?
5. Summary
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Natural Gas and NGL Value Chain Natural Gas Production
Processing & Treating
Natural Gas Transmissio
n
Straddle Plant
Natural Gas Transmissio
n
NGL Fractionation
NGL Storage
NGL Product Transportation
Natural Gas Storage
Residential/ Commercial/ Industrial
Power Plants
Natural Gas Distribution
Spec NGL Products
C2+ NGL Mix Transportation
Refined Products
Petrochem Industry
Residential/ Commercial
C2+ or C3+
C2+ or C3+
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Key Drivers to locate/build Facilities 1. Location of Raw Gas Production
2. Access to “salt” underground storage
3. Quality/Quantity of the Raw Gas
4. Natural Gas specs to transport processed Gas
5. Proximity to NGL mix takeaway systems
Truck, Rail, Pipeline
6. Proximity to NGL spec product customers
Fractionation primarily built close to end-user demand
Producers are faced with three primary decisions with regards to how best to handle their Raw (NGL rich) Gas:
1. Extract NGL Mix in field and transport to Fractionate in selected Market.
2. Extract NGLs, Fractionate in the field and distribute to local Markets.
3. Transport NGL rich gas to Market, Extract/Fractionate in this Market.
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Typical NGL Schematic
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C2 C3 C4s C5+ Total Supply (mmbpd) Gas Plants 1.2 0.8 0.5 0.4 2.9 Refineries - 0.6 0.1 0.0 0.7 Total Supply 1.2 1.4 0.6 0.4 3.6
Demand (mmbpd) Chemical feedstock 1.2 0.6 0.2 - 2.0 Heating/Commercial/Ind’l - 0.7 - - 0.7 Refinery (Gasoline Blending) - - 0.3 0.1 0.4 Heavy Oil Diluent - - - 0.2 0.2 Other, Net Exports - 0.1 0.1 0.1 0.3 Total Demand 1.2 1.4 0.6 0.4 3.6 Source: EIA, NEB, Petral, IHS
North American NGL Supply/Demand Snapshot: 2012
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Alliance Pipeline
Aux Sable
Rich Gas Shales will be Developed and Add to NGL Supply
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C2 C3 C4s C5+ Supply Direction Gas Plants UP UP UP UP Refineries - flat- flat- flat- Demand Direction Petrochemical Feedstock UP balance up up? Heating/Commercial/Ind’l - flat/down - - Refinery (Gasoline Blending) - - down down Heavy Oil Diluent - - up UP Dehydro (PDH/BDH), MTBE - UP ? - Net Exports - UP up -
Key Trends 1. NGL production up from Gas Plants (“oily” gas focus in shales) 2. Ethane balanced by increased Petchem feedstock demand 3. Propane balanced by increased exports, PDH 4. Butanes balanced by increased exports, MTBE
North American NGL Supply/Demand Trends 2013 - 2020
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Mont Belvieu
Conway
Sarnia (2.6 B lbs/Yr)
Fort Saskatchewan (2.6 B lbs/Yr)
Chicago
ENTERPRISE
ONEOK
COCHIN
ENBRIDGE
ALLIANCE
PTC Empress
Salt Storage
ENTERPRISE
Cochrane
AEGS
North American Ethylene Plants
Extraction Facilities
Ethylene Plant
Joffre (6.0 B lbs/Yr)
USGC (55 B lbs/Yr)
Clinton (1.1 B lbs/Yr)
Morris (1.3 B lbs/Yr)
Calvert City (0.4 B lbs/yr)
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North American NGL Infrastructure…in transition
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Key Midwest Areas Conventional (historic):
Conway area (Conway/Bushton/Hutchinson/Medford)
Edmonton/Fort Saskatchewan
Sarnia
Channahon
New Areas driven by Shale Plays:
Bakken (ND) other
Marcellus/Utica (PA/OH/WV)
Montney/Duvernay (AB/BC)
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Conway Area Location of Supply: KS, CO, WY, UT, ND
Supply Logistics: Primarily gathering pipelines from field extraction plants NGL mix (C2+)
Local Markets: Refiners
Regional Markets: a. C2 Crackers in IA, IL
b. Refiners in IL, IN
c. Propane markets in WI, IL, IN, MI
d. EP, NGL product markets in USGC (MB)
Facilities: no adjacent Extraction Capacity
515 kbd Fractionation Capacity (+)
5 kbd Isomerization Capacity
Storage: ~50 mmbbls
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Conway Area
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Edmonton/Fort Saskatchewan Area Location of Supply: AB, BC
Transport Source: Pipelines NGL mix (C2+, C3+) via Pembina, Plains, Keyera
Local Markets: Refiners in Edmonton, Petchems in FSK/Joffre,
Regional Markets: Refiners (SK, MT)
Propane markets in AB, BC, SK, US upper Midwest
Heavy oil blending
Facilities: 275 kbd Fractionation Capacity (+)
Storage: ~40 mmbbls
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Edmonton/Fort Saskatchewan Area
Major Straddle Plants Estimated Capacity (MMcf/d) Cochrane 2,500 Empress 9,700
Other 1,200 Total 13,400
Source: ERCB; Various Company Public Reports
Major Fractionators
(Fort Saskatchewan) Estimated Capacity (kbd)
Redwater (C2+) 65 (25/40)
Dow (C2+) 70 (35/35)
Keyera (C3+) 35 (C3+ only)
Plains (C3+) 50 (C3+ only)
Total 135 C2+, 85 C3/C4+
McMahon/Younger
Judy Creek
Fort SK
Edmonton
West Pembina
Caroline
Harmattan Cochrane
Empress
Waterton
AEGS
Alliance
Cochin
Pembina
Enbridge
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Sarnia Area
Location of Supply: AB, BC
Transport Source: Pipeline NGL mix (C3+) via Enbridge
(note: Cochin is essentially zero)
Local Markets: Refiners, Petchems in Sarnia
Regional Markets: a. Refiners in Ontario
b. Propane markets in ON, PQ, MI, US NE
Facilities: 150 kbd Fractionation Capacity (flat)
Storage: ~25 mmbbls
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Sarnia Area
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North Dakota: Bakken Area Location of Supply: Bakken Shale Oil/Gas
Transport Source: Gas Gathering systems from wellhead to field extraction, fractionation and/or “conditioning”
Local Markets: seasonal market for propane, some butane
Regional Markets: a. Rich gas to Chicago via Aux Sable/Alliance
b. C2 to Empress via Vantage (Hess)
b. Propane markets via truck or rail
c. C4/C5+ by rail to Alberta diluent market
d. NGL mix moved to Conway (pipeline via OneOK)
Facilities: 45 kbd Fractionation Capacity (+)
Storage: essentially 0 mmbbls
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North Dakota: Bakken Area
Palermo Conditioning Plant Prairie Rose Pipeline
Alliance Pipeline
Conditioning Plant
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Marcellus/Utica Area
Location of Supply: Marcellus/Utica Shale gas
Transport Source: Gas gathering, local extraction and fractionation (focused on C3 and C4+)
Local Markets: PA, OH, WV propane markets, Refiners
Regional Markets: a. Pipeline C2 to Sarnia via Mariner West
b. Pipeline C2/EP to USGC (being developed)
c. Pipeline C2+ to USGC (being developed)
Facilities: 100 kbd Fractionation Capacity (+++)
Storage: ~ 3 mmbbls (C3/C4 underground)
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Marcellus/Utica Area
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Chicago Area
Location of Supply: AB, BC, ND
Transport Source: High pressure rich gas via Alliance Pipeline
Local Markets: Chicago Refiners (iC4 for Alkylation, nC4 for winter gasoline), Lyondell Morris (C2),
Regional Markets: a. Lyondell Clinton (C2)
b. Propane markets IL,WI,IN,MI,OH,PADD IA&B
c. Diluent Market in Alberta (C5+)
Facilities: 102 kbd Fractionation Capacity (+)
10 kbd Isomerization Capacity
Storage: 0.5 mmbbls
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Chicago Area
Aux Sable NGL Extraction and Fractionation Facilities
Alliance Pipeline
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Aux Sable Operations
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Alliance Pipeline and Aux Sable
Alliance Owns and operates a 450 mile gathering system in NE BC and NW Alberta with 52 receipt
points starting at Highway, BC
Owns and operates a 1850 mile, 1.6 bcf/d, high pressure, rich gas transportation pipeline to Chicago, IL with 7 primary delivery points (Nicor, NGPL, Integrys, MW, Vector, ANR, ASLP)
Two receipt points in ND (Bantry (operating) and Tioga (under construction))
Aux Sable Owns Septimus Gas Plants (60 mmcfd) & Septimus Pipeline (operated by Crew)
Owns and operates the Palermo Conditioning Plant (80 mmcfd) and the Prairie Rose Pipeline (110 mmcfd) in ND
Owns and operates a 2.1 bcf/d world scale extraction/fractionation plant at terminus of Alliance (Channahon, IL)
Developed NGL access to end-use markets in US north-east, US mid-west and USGC via pipelines, rail and truck
Developed capability to offload NGL mixes via railcar from shale plays
“Gathering and Processing System”
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Alliance and Aux Sable Position in the NGL/Gas
Natural Gas Production
Processing & Treating
NGL Product Transportation
and Storage
Refined Products
Petrochem Industry
Residential/ Commercial
Natural Gas Storage
Residential/ Commercial/
Industrial Power Plants
Natural Gas Distribution
Exports
Value Chain
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Aux Sable Midstream Operations
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Gathering Systems Connected to ASM’s Palermo Conditioning Plant
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Aux Sable Canada Operations
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Simplified Process Flow Diagram
Inlet Composition Mol% C1 (Methane): 90.00% C2 (Ethane): 7.00% C3 (Propane): 2.00% IC4 (Isobutane): 0.40% NC4 (Normal Butane): 0.45% C5+ (Pentanes Plus): 0.15%
Total: 100%
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Aux Sable’s Channahon NGL Facility
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What drove building of current Midwest fractionation facilities?
1. Location of raw gas production
2. Proximity to salt storage
3. Local/regional need for one or more spec products
C2 in Alberta (Joffre/FSK), C2/EP for Equistar, C2 in Sarnia for NovaChem/EssoChem
seasonal propane markets in populated areas
iC4 for Alkylation, nC4 for gasoline blending
4. Aggregate NGL mix via pipelines to obtain scale for fractionation facilities
5. “Straddle” gas to extract NGLs at high gas volume points (Empress/Cochrane)
C2 to Joffre and C3+ mix moved to fractionation locations (FSK or Sarnia)
6. Aux Sable-Alliance rich gas system minimizes field extraction in production region, reduces effective cost of gas transport and centralizes extraction/fractionation in a demand location (Chicago)
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Midwest Fractionation Capacity by Location
Fractionation Location 2004 2012
Conway area 400 515
Edmonton/FSK 225 275
Sarnia 150 150
Channahon 85 102
Marcellus/Utica N/A 100
North Dakota 30 45
Total ~900 kbd ~1200 kbd
Source: PIRA, IHS, Various Company
All values shown in kbd.
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What will drive expansion of Midwest fractionation facilities?
1. Location of raw gas production
rich shale gas production has been the prime driver since 2005/2006 and will continue to drive facility needs in the future
2. Local/regional need for one or more spec products
Up to the saturation point
Need to address seasonal demand versus ratable supply without access to cost effective storage
Provide feedstock for “Midwest” petchems that want to expand on C2 feedstock
Isomerization facilities (new or expanded) may be harder to justify in face of flat demand from refiners and increasing iC4 in raw gas production
3. Conversion of existing pipeline infrastructure to move NGL mix to USGC fractionators will result when local markets are saturated
4. Leverage Aux Sable-Alliance rich gas system to minimize new field extraction in production region, reduce cost of gas transport and economically expand fractionation in Chicago
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Midwest Fractionation Capacity by Location
Fractionation Location 2004 2012 Estimated
Future Capacity
Conway area 400 515 575
Edmonton/FSK 225 275 325
Sarnia 150 150 150
Channahon 85 102 140
Marcellus/Utica N/A 100 475
North Dakota 30 45 60
Total ~900 kbd ~1200 kbd ~1,700 kbd
Source: PIRA, IHS, Various Company
All values shown in kbd.
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Summary Midwest Fractionation facilities will be expanded by about 500 kbd,
driven by growth in end-user needs Ethane demand to support petchem growth at existing or new sites
Overall Propane demand projected to be flat/declining in Midwest. Backing out supply delivered into PADD 1A and 1B will continue.
Refinery demands for iC4/nC4 projected to be flat or perhaps decline with lower overall demand and requirement to blend ethanol
C5+ demand for diluent in Alberta is growing
Midwest demand for spec NGLs is becoming saturated Focus is now turning on delivering y-Grade to USGC facilities versus further
expanding facilities currently under construction
Industry now looking to access international markets for C3/C4s
Expansion of ethane petchem industry will grow modestly in the Midwest with most growth concentrated in USGC