Wyoming Pipeline AuthorityOctober 2008

Sunstone Pipeline LLC

Agenda

1. Sunstone Pipeline Project

2. Route Details

3. Capital Costs

4. Transportation Rates

5. Value To Shippers

6. Project Progress

7. Project Schedule

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1. Sunstone Pipeline

• JV partnership among Williams Gas Pipeline Company, TransCanada

Pipeline and Sempra Pipelines & Storage Corp.

• Provides the lowest cost transportation service to the broadest

market– Pacific Northwest– California– Northern Nevada

• Lower risk than greenfield construction– Existing corridors, existing infrastructure, existing operators– Lower miles– Reasonable, scrubbed cost estimate

• Majority of the capacity subscribed

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2. Sunstone Route

4

OPALOPAL

CHEYENNECHEYENNE

MEEKERMEEKERDenverDenver

MALINMALIN

PowderRiver

PowderRiver

BigHornBig

Horn

WindRiverWindRiver

GreaterGreenRiver

GreaterGreenRiver

UintaUinta

PiceancePiceanceParadoxParadox

SandWashSandWash

Denver/JulesbergDenver/

Julesberg

WCSBWCSB

WillistonWilliston

AnadarkoAnadarko

NITNIT

Northern BorderFoothills

(Sask.)

NG

TL

GTN

Foothills

(B.C.)

Northwest Pipeline

TC Mainline

WAMSUTTERWAMSUTTER

STANFIELDSTANFIELD

Sunstone

RUBYRUBY

PG

&E RENORENO

Paiute

ELYELY

Tu

scarora

• 1.2 Bcf/d of capacity

• 598 miles, 42”

• 57,300 HP, 1440 MAOP

• 0.83% fuel (@ 90% LF)

• Largely parallels existing NWP and utility corridors

Mist

Jackson Prairie

3. Estimate Reflects Current Cost Trends

• Cost estimates in 2011 “as spent dollars”– Escalating steel prices and

contractor costs factored into the estimate

• Validation of costs & route– Williams recent and extensive

experience in the Rockies (i.e. Kern River Expansion)

– TransCanada engineers independently validated the Sunstone estimate

– Third party review

• Based on November 2011 start date

Engineering, Design & Project Management

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Line Pipe 746

Other Materials 68

Pipeline Construction 981Other Construction 73Land 49Environmental 29Line Pack and Commissioning 30Compression 201

Total Direct Costs 2,192

AFUDC and A&G 152

Total Project Costs ($millions)

2,344

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4. Proposed Rates

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$0.80

$0.85

Equal to or greater than 10 years but less than 15 years

Fixed Rate Option

10 Year Negotiated Rate

$0.75Equal to or greater than 15 years but less than 20 years

$0.72Equal to or greater than 20 years but less than 25 years

$0.69Equal to or greater than 25 years but less than 30 years

$0.6830 years or greater

Estimated Levelized Recourse Rates

($/Dth/d)

5. Competitive Option For PNW, Northern California and Northern Nevada Consumers

• Diversification: Replace high dependence on Canadian imports with access to Rockies production

• Reliability: As Canadian Supply declines, supply into western markets becomes the marginal market for Canadian producers

• Transport capacity to the PNW from Rockies currently at maximum utilization

• High efficiency transportation reduces fuel costs

• Access to storage at Jackson Prairie (22 Bcf capacity) and Mist (14 Bcf capacity)

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5. Sunstone Offers Rockies Producers Valuable Market Access

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5. Valuable Access For Rockies Producers

Sunstone features:

• Highest netback out of the Rockies– Lower cost to access Malin

• Of the two-thirds capacity already committed, 376 MMcfd represents long-term subscription from end-users, reducing producer commitment to launch project

• Lowest reservation charge, minimizes risk and financial commitment

• Term differentiated rate options without huge disparity among shippers maintains competitiveness for ALL shippers

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5. Valuable Access For Rockies Producers (continued)

Sunstone provides access to multiple markets and end-use meters:

• From Stanfield through interconnects with Northwest Pipeline and GTN

• Increase in electric generation loads fueling market growth– Electric generation loads counter-seasonal to California generation loads

• Downstream expansions proposed to serve PNW market growth

• No expansion required on GTN to serve Northern California and Northern Nevada– Currently 329 MDth/d available– GTN motivated to retain and expand customer base

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Sunstone Provides Access To Target Markets

• Sunstone provides

access to the broadest

market – 3.3 Bcfd currently flows into

PNW area from the Rockies and Canada

– Of which, 1.4 Bcfd flows into Northern CA and Northern NV via Malin

• 0.8 Bcfd expected

growth in PNW and CA

for 2008-2018 (Wood

Mackenzie)

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Source: Lippman Consulting, average deliveries, January, 2007 – May, 2008

Existing & Proposed PNW Gas-Fired Generation

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• 3.5 Gw of existing facilities served by NW Pipeline

• 2.9 Gw of existing facilities directly connected to GTN

• 3.2 Gw of new gas generation proposed

Major End-Use Markets Served by Northwest Pipeline & GTN

Northwest Pipeline

• Washington• Puget Sound Energy• Cascade Natural Gas• Avista Corp• PacificCorp (Chehalis

Power)

• Oregon• Northwest Natural• Portland General Electric• Avista Corp• Cascade Natural Gas

• Idaho• Intermountain Gas• Idaho Power

• Nevada• Southwest Gas• Sierra Pacific

GTN

• Washington• Avista Corp• Cascade Natural Gas

• Oregon• Avista Corp• PPM (Klamath Falls)• Cascade Natural Gas• Hermiston Power• Portland General Electric

• Nevada• Sierra Pacific

• California• PG&E• Sacramento Municipal Utility

District• Southern California

Gas/SDG&E• Conoco Phillips

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5. NW Region – Key to a Viable Project

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Historical Flows - NWP and GTN

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1/1

/20

05

3/1

/20

05

5/1

/20

05

7/1

/20

05

9/1

/20

05

11

/1/2

00

5

1/1

/20

06

3/1

/20

06

5/1

/20

06

7/1

/20

06

9/1

/20

06

11

/1/2

00

6

1/1

/20

07

3/1

/20

07

5/1

/20

07

7/1

/20

07

9/1

/20

07

11

/1/2

00

7

1/1

/20

08

3/1

/20

08

5/1

/20

08

Sch

ed

ule

d D

eli

ve

rie

s (

MD

th/d

)

Malin NW Region (WA, OR, ID,N.NV)

6. Project Progress On Track

• Route is essentially fixed, with formal approval process for

small reroutes

• Survey progress:– Wetland surveys complete by year end

– Cultural surveys complete by year end

– Paleontology surveys complete by year end

– Survey permission received from 82% of landowners

• Meetings with regulatory agencies continue to go well– Successful FERC pre-filing meeting on October 7

– Formal request for pre-filing scheduled for October 21

• Seven open houses scheduled for mid-November

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7. Schedule

• Conducted Open Season: March 17 – May 30, 2008

• Perform Biological and Cultural Surveys: Summer/Fall 2008

• NEPA Pre-Filing Request with FERC: October 2008

• Place Pipe and Materials Order: No later than May 2009

• FERC filing: Q2 2009

• FERC Certificate: Q2 2010

• Construction Start: Summer 2010

• In-Service Date: November 1, 2011

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These Economic Times…

• Three financially sound partners able to execute on

construction of a large pipeline project

• The silver lining:– Economic slowdown means pipe and construction costs may

drop before partners need to commit to these costs– For every drop of $100 per ton of steel, project saves $40

million

Sunstone Mantras

• Existing corridor

• Fewer miles

• Realistic cost

• Market diversity and size

• Lowest cost transportation

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