NORTHEAST B.C. COAL & ENERGY FORUM | OCTOBER 9, 2014

Brian MorseManager, Gas Supply

Recent Developments That Affect North American Gas Supply

NORTHEAST B.C. COAL & ENERGY FORUM | 2

Safe Harbor Statement

Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additional information contained in Spectra Energy’s Form 10-K and other filings made with the SEC concerning factors that could cause those results to be different than contemplated in today's discussion.

Reg G Disclosure

In addition, today’s discussion includes certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available on our website.

NORTHEAST B.C. COAL & ENERGY FORUM | 3

0

10

20

30

40

50

60

70

80

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mar

keta

ble,

Bcf

/day

US Gas Production and Consumption

Dry Production

Demand

Recap: U.S. Gas Supply & Demand

Source: EIA and other public data sources

NORTHEAST B.C. COAL & ENERGY FORUM | 4

0200400600800

1,0001,2001,4001,600

2007 2013

Iroquois (MMcf/d)

0

400

800

1,200

1,600

2007 2013

Minnesota (MMcf/d)

0

400

800

1,200

1,600

2,000

2,400

2007 2013

GTN (MMcf/d)

0200400600800

1,0001,2001,400

2007 2013

Niagara (MMcf/d)

0200400600800

1,0001,2001,400

2007 2013

Alliance & North Dakota (MMcf/d)

0

400

800

1,200

1,600

2,000

2,400

2007 2013

Northern Border (MMcf/d)

0

200

400

600

800

1,000

2007 2013

Sumas (MMcf/d)

Canadian Gas Exports to the U.S. (2007 vs. 2013)

SumasGTN Northern

Border Minnesota

Alliance& NorthDakota

Niagara

Iroquois

Source: Energy Information Administration

NORTHEAST B.C. COAL & ENERGY FORUM | 5

0

2

4

6

8

10

12

14

16

18

20

22

24

2007 2008 2009 2010 2011 2012 2013 2014

Raw

Gas

Pro

ducti

on, B

cf/d

Gas Production

AB

BC

Recap: Western Canada Production

13 Bcf/d

5 Bcf/d

Source: Alberta and B.C. Governments

NORTHEAST B.C. COAL & ENERGY FORUM | 6

Perspective on Horizontal Wells

Duvernay

Horn River

Montney

Calgary Skyline215 m

NORTHEAST B.C. COAL & ENERGY FORUM | 7

0 500 1,000 1,5002,000

Conventional

Liard

Cordova

Montney

Horn River

Tcf

Gas In Place Estimates - 2013

B.C. Resource Estimates

Montney (liquids-rich) gas production is growing in all three sub-regions of Western Canada, in step with gathering, processing and liquids extraction infrastructure development.

Source: Energy Briefing Note – The Ultimate Potential for Unconventional Petroleum from the Montney Formation of British Columbia and Alberta

0 500 1,000 1,5002,000

Conventional

Liard

Cordova

Montney

Horn River

Tcf

Gas In Place Estimates - 2014

NORTHEAST B.C. COAL & ENERGY FORUM | 8

0

500

1,000

1,500

2,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cum

ulati

ve F

eet D

rille

d, T

hous

ands

Fort Nelson Asset Area

2008

2009

2010

2011

2012

2013

2014

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cum

ulati

ve F

eet D

rille

d, T

hous

ands

Fort St. John Asset Area

2008

2009

2010

2011

2012

2013

2014

0

50

100

150

200

250

300

350

400

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cum

ulati

ve F

eet D

rille

d, T

hous

ands

Grizzly Valley Asset Area

2008200920102011

B.C. Drilling Response to Lower Gas Exports

Source: B.C. Government

NORTHEAST B.C. COAL & ENERGY FORUM | 9

Montney Production Responds to Drilling

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2007 2008 2009 2010 2011 2012 2013 2014

Raw

Gas

Pro

ducti

on, M

Mcf

/d

Montney Tight Gas Production

North Fairway BC

South Fairway BC

AB Fairway

BCAl

bert

a

Source: Alberta and B.C. Governments

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2007 2008 2009 2010 2011 2012 2013 2014

Raw

Gas

Pro

ducti

on, M

Mcf

/d

Montney Tight Gas Production

North Fairway BC

South Fairway BC

AB Fairway

1,630 MMcf/d

900 MMcf/d

650 MMcf/d

NORTHEAST B.C. COAL & ENERGY FORUM | 10

0

1

2

3

4

5

6

7

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034

Mar

keta

ble

Gas

, Bcf

/d

BC Montney Forecast

North-South Split Forecast

NEB BC Tight Gas Forecast

North Montney

South Montney

3.7 Bcf/d

2.8 Bcf/d

57% of B.C. Fairway acreage

43% of B.C. Fairway acreage

Source: National Energy Board (NEB), 2013

NORTHEAST B.C. COAL & ENERGY FORUM | 11

-

200

400

600

800

1,000

1,200

1,400

1,600

2007 2008 2009 2010 2011 2012 2013 2014

Raw

Gas

, MM

cf/d

Utica Region Gas Production

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2007 2008 2009 2010 2011 2012 2013 2014

Raw

Gas

, MM

cf/d

Marcellus Region Production

Utica is Established

MarcellusUtica

Source: EIA

NORTHEAST B.C. COAL & ENERGY FORUM | 12

Source: Wood Mackenzie, October 2011 via Nexen Investor Presentation 2012-07

Horn RiverMontney

Duvernay

BarnettMarcellusEagle Ford Haynesville

Relative Ranking of Established Gas Supply Sources in North America

*Supply Cost: Includes capital costs, operating costs, transportation, government take and a 10% return under full field development

NORTHEAST B.C. COAL & ENERGY FORUM | 13

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600

Brea

keve

n G

as P

rice

$/M

MBt

u

Tcf of Gas Available

North America Gas Supply Cost Curve

Source: 2011 MIT Study on the Future of Natural Gas, Figure 2.10

• North American gas supplies are large and have widely varying associated costs

• The recent shale gas supply surge has added large sources of supply with relatively low development costs

• There are approximately 900 Tcf available at a cost of supply of $4.00/Mcf, or less

Gas Price vs. Gas Supply

Quantity is not the issue... price is

Tcf of Gas Available

NORTHEAST B.C. COAL & ENERGY FORUM | 14

• 900 Tcf available at $4.00/Mcf or less

• Compared to U.S. and Canada’s cumulative gas demand

• Includes LNG exports and domestic growth in residential, commercial, industrial, and power generation demand

• Cumulative consumption does not reach 900 Tcf in the next 25 years

Source: U.S. Energy Information Administration and Canadian National Energy Board 2011 Forecast

How Much is 900 Tcf?

* LNG Exports assumes first exports of 6 Bcf/day in 2015, increasing to 20 Bcf/d in 2022, then flat

NORTHEAST B.C. COAL & ENERGY FORUM | 15

Proposed West Coast LNG ProjectsName Participants Size

Bcf/d Location Specific Pipeline

NEB Expo

rt Perm

it Obtained

West Coast Canada LNG Imperial Oil/ExxonMobil Canada 3.8 Prince Rupert Grassy Point or Tuck

Inlet Not determined

Aurora LNG Nexen (CNOOC), INPEX, and JGC 3.1 Prince Rupert Grassy Point or Digby Island Not determined

LNG Canada Shell Canada, PetroChina Company, Korea Gas Corp and Mitsubishi Corp 3.1 Kitimat Douglas Channel Coastal GasLink Pipeline (TCPL)

Prince Rupert LNG BG Group 2.7 Prince Rupert Ridley Island Westcoast Connector Gas

Transmission Project (Spectra Energy)Pacific Northwest LNG

Progress Energy, PETRONAS and Japan Petroleum Exploration Company 2.7 Prince Rupert Lelu Island Prince Rupert Gas Transmission

Project (TCPL)Jordan Cove Energy Project Veresen Inc. 1.6 Coos Bay,

Oregon North SpitExisting Fortis & GTN then new Pacific Connector Gas Pipeline (Williams & Veresen)

Kitimat LNG Apache Canada Limited and Chevron Canada Limited 1.3 Kitimat Bish Cove Merrick Mainline (TCPL) and Pacific

Trail Pipeline (Chevron)Oregon LNG Leucadia National Corporation 1.3 Warrenton,

Oregon Skipanon Peninsula Oregon Pipeline to existing Williams pipeline

Triton LNG AltaGas Limited, Idemitsu Canada Corporation 0.3 Kitimat or

Prince Rupert Floating facility Existing PNGWoodfibre LNG Project Woodfibre LNG Limited 0.3 Squamish Old pulp mill site Fortis and SpectraDouglas Channel LNG

Douglas Channel Gas Services, Haisla Nation, Golar LNG, LNG Partners LLC 0.2 Kitimat West bank of Douglas

Channel. Barge. Existing PNG

NEB Expo

rt Perm

it Pending

Stewart Energy LNG Canada Stewart Energy Group Ltd 3.8 Stewart Floating facility initially Not determined

Grassy Point LNG Woodside Energy Ltd. 2.8 Prince Rupert Grassy Point (on shore or floating) Not determined

Kitsault Energy Kitsault Energy 2.6 Kitsault Floating facility initially Not determinedDiscovery LNG Quicksilver Resources 2.6 Campbell River Elk Falls Mill site Not determined

Steelhead LNG Steelhead LNG Corp. andHuu-ay-aht First Nation 0.8 Port Alberni Sarita Bay Not determined

WesPac WesPac Midstream 0.4 Delta Tilbury Island Existing or expanded FortisWatson Island LNG

Watson Island LNG Corp and City of Prince Rupert small Prince Rupert Watson Island Not determined

NORTHEAST B.C. COAL & ENERGY FORUM | 16

B.C. LNG Locations

KitsaultStewart

Prince RupertKitimat

Campbell River

Port AlberniSquamish

Delta

NORTHEAST B.C. COAL & ENERGY FORUM | 17

Oregon LNG Locations

Warrenton

Coos Bay

NWPGTN

Proposed ConnectorMalin

NORTHEAST B.C. COAL & ENERGY FORUM | 18

Reaction to China RussiaGas Supply Announcement

Massive Russia-China gas deal to shake up LNG marketsThe Globe and Mail

Russia-China Natural Gas Deal to Set LNG Price FloorBank of America

Russia-China gas deal puts heat on BC’s LNG sectorVancouver Sun

Russia-China gas deal could squeeze economics of Canadian LNG projectsTD

Russia and China’s $400 billion natural gas deal is bad news for BC LNG.Canadian Business

The world does not need Canadian LNGformer Shell exec

China’s natural gas supply options greatly exceed market requirementsCanadaWest Foundation

3.8 Bcf/d x 30 years

NORTHEAST B.C. COAL & ENERGY FORUM | 19

0

10

20

30

40

50

60

70

80

90

2012 2013 Russian Gas Deal3.8 Bcf/d in 2018

Comparator:N.A. Gas Production

2014

Bcf/

d, M

arke

tabl

e G

as

Russian Gas Movement

LNG Exports to Asia

Exports to Europe & FSU

Consumption

Russian Supply Perspective

Source: Gazprom, Rosneft, Novatek, BP Statistical Review of World Energy

NORTHEAST B.C. COAL & ENERGY FORUM | 20

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2012 2013 Russian Gas Deal3.8 Bcf/d in 2018

2035Total China Energy Demand Forecast

Comparator:US & Canada

2013 Consumption

Mill

ion

Tonn

es O

il Eq

uiva

lent

China - Energy Consumption by Type

RenewablesHydroNuclearCoalGasOil

China Demand Perspective

Source: Energy Information Administration, BP Energy Outlook, International Energy Agency

NORTHEAST B.C. COAL & ENERGY FORUM | 21

New U.S. Demand Identified

GTL• High returns with methane feedstock prices low and liquid

products prices high• Smaller strategically placed projects expected to be funded• Proposed locations in Marcellus-Utica, Gulf Coast and

Rockies currently

Methanol• Used as a petrochemical feedstock and to produce gasoline• Low cost gas feedstock and rising demand worldwide for

methanol attract investment• Facilities planned in Gulf Coast area and West Coast for

export to China

Fertilizer• Producing ammonia and nitrogen requires natural gas for

hydrogen content and heat energy• Domestic demand is up and feedstock (gas) prices are down• Planned locations more spread out than GTL or Methanol

Transportation• Road, rail, and shipping industries gradually migrating to

natural gas fuel• Proposed facilities dedicated to large airports

GTL400 MMcf/d

13%

Magnitude3 Bcf/d Demand Growth (to 2018)

Methanol1,000 MMcf/d

33%

Transportation500 mmcf/d

17%

Fertilizer1,100 MMcf/d

37%

Recognized by: