Mt. Hayes Liquefied Natural Gas Storage Facility Terasen Gas - - PowerPoint PPT Presentation

• Mt. Hayes

Liquefied Natural Gas Storage Facility Terasen Gas (Vancouver Island) Inc.

Stakeholder Workshop for the CPCN Application

June 27th, 2007 Coast Bastion Inn, Nanaimo BC

B-2

2

Overview

• Peak shaving storage facility located

near Ladysmith on Vancouver Island

• Design and operation similar to

current facility located on Tilbury Island in Delta BC

• Natural Gas is transported to facility

via existing pipeline system during summer months, stored as LNG and then sent out during winter peaking periods

• Current project based on 2004

proposal that was approved by the BCUC but subsequently deferred due to termination of Duke Point Power Project

Proposed LNG Storage facility

3

Proposed Mt Hayes Facility

Capacity 1.5 Bcf Liquefaction 7.5 MMcfd Deliverability 150 MMcfd Capital Investment $176 million Target In-Service Date 2011

4

Welcome – Workshop Agenda

Introduction Cynthia Des Brisay Director, Business Development & Resource Planning Project Overview and Description Guy Wassick, Project Manager Gas Supply Portfolio Cynthia Des Brisay TGVI System Benefits Edmond Leung Project Assessment Manager Economic Justification Dave Perttula Manager, Market Development Regulatory Process Review & Next Steps Tom Loski Director, Regulatory Affairs Questions / Discussion All

5

Terasen Inc, a Fortis Company

6

Terasen Utilities

Management Structure

Terasen Gas (Vancouver Island) Inc Terasen Gas (Whistler) Inc Terasen Gas (Vancouver Island) Inc Terasen Gas (Whistler) Inc Terasen Storage Inc Terasen Energy Services Inc LNG Storage Facility

Shared Services Agreements

Ownership Structure

Terasen Inc A Kinder Morgan Company Terasen Inc A Fortis Company Terasen Gas Inc Terasen Gas (Vancouver Island) Inc Terasen Gas (Whislter) Inc Terasen Gas Inc Terasen Gas (Vancouver Island) Inc Terasen Gas (Whistler) Inc Terasen Storage Ltd Terasen Energy Services Inc Terasen Gas Inc Terasen Gas Inc

7

Project Justification

• 2006 Integrated Resource Plan concludes Mt Hayes is a

cost effective long term resource for Terasen Gas

– Provides long term storage capacity to meet core market peak day growth on Vancouver Island and the Lower Mainland – Reduces dependence on storage facilities located in Washington and Oregon states to serve residential and commercial customers – Avoids transmission facility additions on the Vancouver Island transmission system and the Coastal Transmission System – On-System storage facility enhances reliability and security of supply – Allows the utilities to better manage future industrial and generation demand uncertainty (Island Cogen and Burrard Thermal)

8

Optimization and Allocation

• f Storage Capacity &

Deliverability

Benefits from Mt. Hayes Project

• System Capacity and Gas Supply

TGVI Gas Supply TGVI

• Mt. Hayes LNG

1.5 bcf 150 mmcfd

TGVI System Capacity

0.5 bcf 50 mmcfd

TGI Gas Supply

1.0 bcf 100 mmcfd

Guy Wassick LNG Project Manager

Terasen Gas (Vancouver Island) Inc.

Project Description & Overview

10

Project Description & Overview

• LNG Intro & General
• Site Selection and Public Consultation
• Environmental Assessment
• 2007 & 2004 Projects Comparison
• Mt. Hayes LNG Storage Facility
• Project Schedule & Cost
• Project Management
• Local Impacts

11

What Is LNG?

• LNG (liquefied natural gas) is natural gas

cooled until it condenses into a clear liquid.

• LNG is stored at -162o Celsius (-260o F)

at atmospheric pressure in a “thermos” like storage container.

• LNG takes up far less space – about

1/600th of its original volume as a gas.

• LNG (the liquid itself) is not flammable
• r explosive.
• When LNG is warmed it evaporates and

becomes a lighter-than-air gas and is flammable only when it occurs in a 5% to 15% concentration in air.

12

Types of LNG Facilities

• Peak Shaving:

LNG storage with liquefaction and vaporization capability; send out on peak days; connected to a pipeline system

• Terminals, Import & Export:

Large storage capacity and continuous operation;

–Export - liquefaction of a pipeline supply to load marine

tankers

–Import – receipt of marine tanker supply, with base load

sendout to a pipeline system

• Satellite Plants:

For peaking or smaller base load send out; supplied by truck transport; with vaporization capability only

• Transportation Fuel: Cars, trucks & buses

13

The LNG Industry

• There are over 240 LNG storage facilities operating in

the world.

• In North America there are approximately 110 peak

shaving facilities (3 located in Canada) and 4+ import/export terminals.

• LNG storage tanks are insulated tanks, operating at

atmospheric pressure and constructed of 9% nickel steel; no tank of this design has failed in service anywhere in the world.

14

LNG Facilities – North America

15

Tilbury Island (Delta, B. C.) “Peak shaving” LNG Plant (1970) - 0.6 bcf

16

Tilbury Island (Delta, B. C.) “Peak shaving” LNG Plant – 0.6 bcf

17

Major Components Of Peakshaving LNG

• Liquefaction

(freezer)

• Storage

(thermos)

• Vaporization

(hot water tank)

Preheater Boil-off Compressor LNG Vaporizers LNG Tank LNG Tanker Unloading & Loading to Transmission Pipeline System LNG Pumps Feed Gas Tail Gas Dessication Liquefaction

18

Site Selection Process

• Terasen Gas examined a strip of land 5 km on either

side of the main natural gas transmission pipeline from the Courtenay area down to the Langford area to locate a storage facility of up to 1.5 bcf.

• Based on this analysis, 25 potential sites were identified.
• Further analysis of slope, geotechnical characteristics,

view sheds and pipeline system hydraulics reduced potential sites to seven, then to three, and then finally the Mt. Hayes site was selected.

19

Final Site – Near Ladysmith

LNG Storage

• Proposed facility

– Storage 1-1.5 bcf – Send-out 100-150 mmcf/d – Liquefaction 5 – 7.5mmcf/d

• 6km NW of

Ladysmith, West of

• Mt. Hayes
• Located near load

center on Southern Vancouver Island

20

Storage Plant Location

21

Consultation Process

TGVI undertook a comprehensive public consultation process over a period of 12 months which included the following key elements.

• Letters to stakeholders
• Meetings with and presentations to stakeholders
• 2 focus groups
• 3 Open Houses
• CVRD sponsored Public Meeting
• Environmental and Social Review (ESR)
• CVRD Public Hearing

Site re-zoning approved by CVRD May 26/04

22

Consultation Process - Ongoing

TGVI has maintained communication with interested parties in the community, including direct contact with:

• Cowichan Valley Regional District
• Chemainus First Nation
• Cowichan Tribes
• Regional District of Nanaimo
• Municipalities of Ladysmith and Nanaimo

TGVI’s 2006 Resource Plan which identified the LNG Storage Project as the next major capital addition was widely communicated with TGVI stakeholders.

23

LNG Storage Facility Site Details

New zone is U-1, LNG Storage Utility

• 42.7 ha (105 acres) rezoned
• 12 ha (30 acres) facility fenced site
• 20 ha (49 acres), western and eastern buffers,

beyond rezoned area will be retained in forestry

• perations
• Total 82 ha (204 acres) will be owned or

controlled by TGVI

24

Private Property Purchased

Property to be purchased 142 ha

25

Rezoned Area

42 ha

Rezoned Area

26

Proposed Storage Plant Area

Plant area 12 ha

27

Land Owned or Controlled by TGVI

Exclusion Zone

Total area 82 ha

28

2007 & 2004 Storage Projects

2004 2007 Storage Tank Storage Volume 1.0 Bcf 1.5 Bcf

• Approx. Tank Height

40 m. 40 m.

• Approx. Tank Diameter

48 m. 60 m. Facility Facility Area 12 ha. 12 ha. Liquefaction Rate 5.0 mmcfd 7.5 mmcfd

• Max. Sendout Rate

100 mmcfd 150 mmcfd Comparison of Proposed Storage Facilities

29

Summary of Project Environmental Impact Significance

Impact Significance* Impact Topic Unmitigated Mitigated PHYSICAL ENVIRONMENT

• Geology and Soils

N N

• Natural Hazards

N N

• Water and Aquatic Systems

S N

• Air Quality and Climate

N N BIOLOGICAL ENVIRONMENT

• Vegetation

S N

• Wildlife

N N

• Fish and Fish Habitat

N N

*

N = Not Significant S = Significant B = Beneficial N/A = Not applicable, project design and construction standards incorporate these requirements U = Unknown due to lack of information

30

Summary of Project Environmental Impact Significance

Impact Significance* Impact Topic Unmitigated Mitigated HUMAN ENVIRONMENT

• Urban and Rural Settlement

N N

• Transportation

N N

• Forestry

N N

• Recreation

N N

• Archaeology

N N

• Aesthetics

N N

• Noise

N N

• Domestic Water Supply

N N

• Economic Effects

B B

*

N = Not Significant S = Significant B = Beneficial N/A = Not applicable, project design and construction standards incorporate these requirements U = Unknown due to lack of information

31

Summary of Project Environmental Impact Significance

Impact Significance* Impact Topic Unmitigated Mitigated FACILITY AND PUBLIC SAFETY

• Forest Fires

N/A N

• Seismicity

N/A N

• Facility Integrity

N/A N

• Pipeline Integrity

N/A N

• LNG Transportation

N/A N

• Site Security

N/A N CUMULATIVE EFFECTS

• Construction

N N

• Operation

N N

*

N = Not Significant S = Significant B = Beneficial N/A = Not applicable, project design and construction standards incorporate these requirements U = Unknown due to lack of information

32

Environmental Assessment: Key Human Impact Findings

• 3 km from facility to nearest dwelling
• Traffic effects on existing roads limited to

construction period

• Little impact on forestry or recreation
• Minimal aesthetics and noise impacts
• 3 kms to nearest dwelling
• Landscape is already heavily disturbed
• Unaffected domestic water supplies
• Outside of aquifer recharge areas

Location of the site in an isolated area mitigates most human and safety impacts

33

Environmental Assessment: Key Biophysical Findings

The site is privately owned and has already been disturbed, reducing impacts on physical and biological environment

• Site is mostly clearcut
• Site is geologically stable
• Aquatic and vegetation impacts can be mitigated
• Intermittent streams (non fish bearing) will be

channelized, a pond created, replacing the present bog

• No effect on fish
• Little effect on wildlife

34

2003 Site Photograph

• Mt. Hayes in background - view to east

Tank Location

35

Artist Rendering

36

Layers of Safety

• 1. Design to LNG specific standards, using

proven LNG technology and materials.

• 2. Isolation and containment systems in all

systems in the facility.

• 3. Safeguard systems – detection, shut-down,

fire-fighting; 24/7 on-site personnel and monitoring from gas control centre.

• 4. Separation distances per code requirements.
• 5. Proven operating, maintenance and emergency

standards and procedures.

37

Design/Safety Features

• Insulated, non pressurized, 9% nickel steel

inner tank (like a thermos)

• 100% secondary containment around tank
• Controlled buffer zone around facility
• Safeguard systems (eg: fire/smoke/gas

detection, automatic/remote control, manned full time) designed for isolation/containment and shut-down

• Fire water system, water deluge and dry

chemical extinguishers LNG facilities are designed to isolate segments, contain fluid and shut down.

38

Typical 9% Nickel Steel Tank Design

39

Application Projects

• LNG Storage Facility Project:

– Site Preparation, Pond, Power Line, Substation and Restoration – LNG Storage Facility (by EPC Contractor)

• System Facilities Project:

– Pipeline laterals – Gas measurement/odourization station – Reverse flow modifications on existing pipeline system

40

LNG Storage Facility Project Schedule

• Per Application – Schedule

ID Task Name Duration 1 BCUC 5.5 mons 2 Application Preparation 2 mons 3 Application Approval 3.5 mons 4 UPDATING PHASE 5 mons 5 LNG Facility EPC 5 mons 6 Contract Negotiation 2 mons 7 Design Development 2 mons 8 Geotechnical Evaluation 2 mons 9 Cost Development 3 mons 10 Owner's Project Work 3 mons 11 Power Line Update 2 mons 12 Site Prep Design/Contract 3 mons 13 ESR Update 2 mons 14 APPROVALS UPDATING 3 mons 15 OGC - Facility 3 mons 16 Prov Ministries - Permits 2 mons 17 DECISION TO PROCEED 0 mons 18 ONGOING COMMUNICATION 49 mons 19 LAND 3 mons 20 Exercise Site Option 0 mons 21 R-O-W Acquisition 3 mons 22 CONSTRUCTION 41 mons 23 LNG Facility Project Work 12 mons 24 Site Grading 4 mons 25 Road Improvements 3 mons 26 R-O-W Preparation 3 mons 27 Power Line 3 mons 28 LNG Facility EPC 37 mons 29 Facility EPC On-Site 30 mons 30 Commission & Test 3 mons 31 Final Acceptance 4 mons 32 FILLING 5 mons 33 Operation by TGVI 5 mons 34 RESTORATION 3 mons Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 2007 2008 2009 2010 2011

41

System Facilities Project Schedule

ID Task Name Duration 1 BCUC 5.5 mo 2 Application Preparation 2 mo 3 Application Approval 3.5 mo 4 UPDATING PHASE 3 mon 5 Design & Cost Update 2 mo 6 ESR Update 2 mo 7 OGC - Facilities 2 mo 8 Prov Ministries - Permits 2 mo 9 DECISION TO PROCEED - LNG 0 mo 10 DECISION TO PROCEED 0 mo 11 ONGOING COMMUNICATION 35 mo 12 LAND 3 mon 13 R-O-W Acquisition 3 mo 14 TGVI PROJECT WORK 40 mo 15 R-O-W's Preparation 3 mo 16 Pipelines 6 mo 17 Gas Msmt/Odour Faciity 6 mo 18 Reverse Flow Facilities 6 mo Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4 2007 2008 2009 2010 2011

42

2007 Pre-Construction Development

• Minimize capital costs and reduce uncertainty
• Communicate and prepare with stakeholders
• Confirm project schedule

Key Activities:

– EPC Contract negotiation and cost/schedule development – Update the cost estimates for non-EPC work – Update the Environmental & Social Review – Update the Geotechnical report for the 1.5 Bcf facility

43

LNG Storage Facility Project Costs

P10 P50 P90 1.5 Bcf LNG Facility $154.9 $165.0 $185.7 1.0 Bcf LNG Facility $116.3 $124.9 $140.8 P10 P50 P90 1.5 Bcf LNG Facility $155.7 $166.0 $186.8 1.0 Bcf LNG Facility $116.8 $125.7 $141.6 LNG Storage Facility Costs (Direct 2007$ millions) LNG Storage Facility Costs (AsSpent$ millions)

44

System Facilities Project Costs

P10 P50 P90 Pipelines $6.0 $6.4 $6.8 Msmt & Odour Stn $0.8 $0.8 $0.9 Reverse Flow Facilities $2.1 $2.4 $2.7 Project Management $0.1 $0.1 $0.1 Contingency $0.5 $1.0 $1.5 Projects for 1.5 Bcf Facility $9.5 $10.7 $12.0 Projects for 1.0 Bcf Facility $6.3 $7.1 $7.9 P10 P50 P90 Projects for 1.5 Bcf Facility $10.4 $11.6 $13.2 Projects for 1.0 Bcf Facility $6.9 $7.8 $8.7 System Facilities Costs (AsSpent$ millions) System Facilities Costs (Direct 2007$ millions)

45

Terasen Gas Project Management

Managing LNG Storage Facility and System Facilities Projects

• Terasen Gas team managing all the work;

– Project managers – Administrative functions (purchasing, financial, engineering, environmental, safety) – Operations (LNG and pipeline) – Communications

• LNG Facility

– Experienced EPC Contractor providing a turnkey facility – TGVI consultants for design and construction management

46

System Facilities Project Execution

Managed by the Terasen Gas project team;

• Individual projects are “typical” projects for

Terasen Gas and will be managed engaging;

– Internal engineering and project management resources – Local consultants, suppliers and contractors as required

• Similar process for TGVI directed work on the

LNG Storage Facility Project (site preparation, power line and substation, site work outside the facility fence).

47

LNG Storage Project Execution

EPC Contractor provides LNG engineering, procurement and construction execution expertise

– For non-LNG specific work, typically engage local consultants, suppliers and contractors, e.g.;

• Civil, electrical, mechanical, buildings subcontracts
• General construction support services
• Materials and supplies locally available
• Local labour and equipment resources

– For LNG specific construction, engagement of local construction resources directed by EPC Contractor’s LNG expertise;

• Local skilled trades and general labour

requirements

48

Socio-Economic Impacts

LNG Storage Facility Project will positively impact, and help to diversify, the existing economy.

Total construction expenditures $165 Million

• $50 M of local expenditures; $73 M in British Columbia
• 290 person-years of local employment (120 direct, 170

indirect/induced)

• 840 person-years of B.C. employment (180 direct, 660

indirect/induced) Facility operation provides;

• 9 full-time jobs
• $150,000/year in local goods and services expenditures
• Local property taxes

Gas Portfolio Benefits

50

Overview

• Sourcing Natural Gas

– Upstream Supply and Transportation Resources

• Overview of gas supply planning at Terasen Gas

– Meeting Future Peak Load Growth – Infrastructure projects have long lead times

• Regional Resource Options Available

– Current and Future – Best Fit for TGI/TGVI

• Market Valuation of Resources Options

51

Gas Supply Planning Criteria / Managing Risks

• Build supply diversity into portfolio
• Ideally have multiple suppliers, pipelines,

storage resources, supply basins.

• Attempt to limit exposure to problems

associated with a single source.

• Support regional infrastructure planning-

NWGA

• Work cooperatively with other utilities in the

region.

• Ensure adequate supply.
• Infrastructure projects have long lead times.
• Add resources that reduce price volatility.
• Manage price risk
• Store gas in summer
• Use financial tools (buy at fixed prices in

advance).

• Build a flexible plan

52

2006/07 TGI Normal and Design Load vs Supply Typical Resource Fit

• Create a portfolio to meet

Design Peak Day Requirements

• Baseload/Seasonal

Pipeline for average day supply

• Shorter-term pipeline

contracts and upstream storage for winter average day

• Market Area storage most

efficient for short term peaks Provide security of supply in event of failures Pipeline capacity sets a price cap

1 2 3 4 5 6 7 8 9 1 ,0 1 ,1 1 ,2 1 ,3 1 ,4 1 / 1 1 / 2 6 1 5 / 1 1 / 2 6 2 9 / 1 1 / 2 6 1 3 / 1 2 / 2 6 2 7 / 1 2 / 2 6 1 / 1 / 2 7 2 4 / 1 / 2 7 7 / 2 / 2 7 2 1 / 2 / 2 7 7 / 3 / 2 7 2 1 / 3 / 2 7 4 / 4 / 2 7 1 8 / 4 / 2 7 2 / 5 / 2 7 1 6 / 5 / 2 7 3 / 5 / 2 7 1 3 / 6 / 2 7 2 7 / 6 / 2 7 1 1 / 7 / 2 7 2 5 / 7 / 2 7 8 / 8 / 2 7 2 2 / 8 / 2 7 5 / 9 / 2 7 1 9 / 9 / 2 7 3 / 1 / 2 7 1 7 / 1 / 2 7 3 1 / 1 / 2 7 TJ/d

P e a k in g R e s

• u

rc e s M a rk e t A re a S to ra g e /S h a p e d P ip e lin e C a p a c ity P ip e lin e C a p a c ity D e s ig n N

• rm

a l

D e s ig n P e a k D a y

53

Meeting Future Demand Growth

• As peak day grows each

year need combination of pipe/incremental shorter duration resources…..

• Regional Issues

– Growth in peak day requirements is higher than average day. – All utilities in our region face need to add new resources to meet growth. – Availability of Shaped Resources vs baseload – Large infrastructure projects require longer lead times

1 2 3 4 5 6 7 8 9 1 ,0 1 ,1 1 ,2 1 ,3 1 ,4 1 / 1 1 / 2 6 1 5 / 1 1 / 2 6 2 9 / 1 1 / 2 6 1 3 / 1 2 / 2 6 2 7 / 1 2 / 2 6 1 / 1 / 2 7 2 4 / 1 / 2 7 7 / 2 / 2 7 2 1 / 2 / 2 7 7 / 3 / 2 7 2 1 / 3 / 2 7 4 / 4 / 2 7 1 8 / 4 / 2 7 2 / 5 / 2 7 1 6 / 5 / 2 7 3 / 5 / 2 7 1 3 / 6 / 2 7 2 7 / 6 / 2 7 1 1 / 7 / 2 7 2 5 / 7 / 2 7 8 / 8 / 2 7 2 2 / 8 / 2 7 5 / 9 / 2 7 1 9 / 9 / 2 7 3 / 1 / 2 7 1 7 / 1 / 2 7 3 1 / 1 / 2 7 TJ/d

P e a k in g R e s

• u

rc e s M a rk e t A re a S to ra g e /S h a p e d P ip e lin e C a p a c ity P ip e lin e C a p a c ity D e s ig n

D e s ig n P e a k D a y

54

Regional Resource Options

Upstream Supply/Storage Pipeline Capacity Market Area Storage On System Resources Pipeline Capacity

55

Market Area Storage Infrastructure On and Off System Alternatives

• Off System Storage

– JPS Expansion

• Up to 300 MMcfd
• One third contracted

for avg term 32 years

• Redelivery More

Expensive (30-50% of Firm NWP Rate)

– Mist Expansion

• Potential for Future

Expansions

• Issue of Redelivery
• On System

– Tilbury LNG Storage Expansion – Proposed Mount Hayes Storage

On System Storage

56

Valuation of Resource Alternatives

• Downstream storage value

based on

– Incremental JPS Storage based

• n recent expansion offering

– Redelivery based on discounted NWP TF1 transport rate

• Pipeline Capacity based on

– T-South tolls with and without mitigation – Mitigation based on full recovery

• f demand charges in winter

JPS + TF-1@30% JPS + TF-1@50% T-South (with mitigation) T-South (no mitigation)

Equivalent Cost for 10 Day Service

$180 $115 $131 $137

Annual Cost of Market Area Storage Deliverability to Huntingdon ($ per GJ)

57

The Need for Storage Resources

58

Gas Portfolio Summary

• New Resources required to meet future peak growth

and manage expiring contracts

Infrastructure projects have long lead times

• Pipeline Expansions

– No Expansion on T-South in the near term – No Expansion North of JPS scheduled

• Storage Expansions

– JPS Expansion and potential Mist Expansion – Firm redelivery will cost more than existing contracts

• On System resource better fit

– Security of Supply – Value of resource comparable to cost of Off System Market Area Storage and/or Westcoast Pipe

59

Valuation of Resource Alternatives

• Downstream storage value

based on

– Incremental JPS Storage based on recent expansion

• ffering

– Redelivery based on discounted NWP TF1 transport rate

• Pipeline Capacity based on

– T-South tolls with and without mitigation – Mitigation based on full recovery of demand charges in winter

JPS + TF-1@30% JPS + TF-1@50% T-South (with mitigation) T-South (no mitigation)

Equivalent Cost for 10 Day Service

$180 $99 $130 $132

Annual Cost of Market Area Storage Deliverability to Huntingdon ($ per GJ)

60

Transmission System Benefits

Edmond Leung Project Assessment Manager

61

Topics

• System Overview
• Load Requirements
• Resource Portfolio Options

– The pipeline and compression option – Local gas storage option

• Pipeline System Benefits from Local Gas Storage

62

63

Coastal Transmission System

FRASER VALLEY

• METRO

VANCOUVER

• COQUITLAM

Langley Comp Stn

Nichol-Coquitlam Loop

64

Coquitlam Stn Texada Stn Pt. Mellon Stn

TGVI Transmission System

65

Meeting Future Demand Growth

100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1 / 1 1 / 2 6 1 5 / 1 1 / 2 6 2 9 / 1 1 / 2 6 1 3 / 1 2 / 2 6 2 7 / 1 2 / 2 6 1 / 1 / 2 7 2 4 / 1 / 2 7 7 / 2 / 2 7 2 1 / 2 / 2 7 7 / 3 / 2 7 2 1 / 3 / 2 7 4 / 4 / 2 7 1 8 / 4 / 2 7 2 / 5 / 2 7 1 6 / 5 / 2 7 3 / 5 / 2 7 1 3 / 6 / 2 7 2 7 / 6 / 2 7 1 1 / 7 / 2 7 2 5 / 7 / 2 7 8 / 8 / 2 7 2 2 / 8 / 2 7 5 / 9 / 2 7 1 9 / 9 / 2 7 3 / 1 / 2 7 1 7 / 1 / 2 7 3 1 / 1 / 2 7 TJ/d

Peaking Resources Market Area Storage/Shaped Pipeline Capacity Pipeline Capacity Design

Design Peak Day

66

TGVI current System Capacity

• vs. Demand Projection

TGVI Design Day Forecast

50 100 150 200 250

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Year beginning November

Terajoules per Day TGVI Core Squamish Whistler VIGJV ICP

System Capacity

67

Pipe & Compression Portfolio

Coquitlam Stn Texada Stn Pt Mellon Stn Squamish Coquitlam Sechelt Dunsmuir Crofton Nichol –Coquitlam Loop in the Coastal Transmission System Watershed Loop

68

Coquitlam Stn Texada Stn Port Mellon Stn

Gas Storage Portfolio

• Mt. Hayes Storage

Coquitlam Squamish Dunsmuir

69

Gas Storage Benefit – Increase operational flexibility and efficiency

• Balancing

– Weather forecast error ranging from 1 to 3 oC – LNG to make up shortfall – No need to follow 3rd party nomination cycle

• Reduce line-pack requirement

– Currently relies on line-pack to meet transient demands, to manage pressure upset from unplanned compressor shutdown or valve closure – LNG can respond quickly with lower optimum line-pack

• Increase O&M windows

– Currently O/M windows requiring pipeline isolation limited by line- pack available to downstream customers – LNG would provide a secondary source of supply to extend O/M windows.

70

Gas Storage Benefit – Increase System Reliability

Coquitlam Stn Texada Stn Pt Mellon Stn

71

Gas Storage Benefit – Security of Supply

Coquitlam Stn Texada Stn Pt Mellon Stn

72

Pipeline System Benefits from Local Gas Storage

Summary

• Reduced system capital costs for both TGVI System and Coastal

Transmission System

• As a short duration resource (10 peak days) to match high peak

day growth

• Increase operational flexibility and efficiency (balancing, reduce

line-pack requirement, increase O&M windows)

• Increase system reliability
• Increase security of supply

73

Financial Justification and Rate Impact

Dave Perttula

74

Financial Evaluation Approach

• Components of the Financial Evaluation

– Cost of Service of the LNG Facility – Gas Supply benefits for gas customers of TGVI and TGI

• On-system storage services at competitive rates
• Reduced requirement to contract for storage in US Pacific Northwest

– TGVI System Benefits

• Future expansion requirements of the TGVI transmission system are

greatly reduced with the LNG facility.

– Potential TGI System Benefits

• Reduced future expansion of TGI CTS (some scenarios)

75

Storage Facility Cost of Service

• Storage Facility to be built, owned and operated by as part of TGVI

transmission and distribution system

• Incremental revenue requirement based on TGVI’s cost of service

methodology with adjustments

– Fair return for investment (TGVI ROE + 50 BP) – Adjusted depreciation schedule to reduce up front costs

2.1% 2.1% 2.1% 2.2% 2.2% 2.2% 2.3% 2.4% 2.5% 2.6% 2.8% 3.0% 3.1% 3.3% 3.5% 3.8% 4.0% 4.3% 4.6% 4.9% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 2 1 1 2 1 3 2 1 5 2 1 7 2 1 9 2 2 1 2 2 3 2 2 5 2 2 7 2 2 9 2 3 1 2 3 3 2 3 5 2 3 7 2 3 9 2 4 1 $M illions Adjusted Depreciation Straight Line Depreciation

76

Storage Facility Revenue Requirement

156 125 165 230 163 117 230 148 50 100 150 200 250 15 Year 25 Year 15 Year 25 Year Present Value Straight Line Depreciation Adjusted Depreciation

• ---------6.2% Discount Rate----------
• ---------10% Discount Rate----------

$Millions

77

Allocation of Cost of Service

TGVI Gas Portfolio TGVI Storage Facility $20.8 M TGVI System Capacity

Based on to 0.5 bcf 50 mmcfd

TGI Midstream

Based on 1.0 bcf 100 mmcfd

$12.6 M $1.9 M $6.3 M Annual Cost of Service Year 2015

Allocation to gas portfolios based on alternative peaking resource Allocation to system capacity compares to P&C Alternative Annual Revenue requirement based

• n Cost of Service

78

TGVI Portfolio Comparison Annual Cost

5 10 15 20 25 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 $ Millions LNG Portfolio Pipe & Compression Portfolio

Baseline Scenario Pipe & Compression vs LNG Portfolio

79

TGVI Portfolio Comparison

P&C Portfolio LNG Portfolio P&C Portfolio LNG Portfolio 115 21 72 15 230 163 (68) (48) (135) (97) 115 49 72 33

15-Year Evaluation Period

48 14 36 11 148 117 (45) (36) (90) (72) 48 27 36 21 6.20% 10% TGVI System Costs TGVI LNG Costs ($ Millions) 25-Year Evaluation Period TGVI Gas Supply Benefit Storage Revenues from TGI Storage Revenues from TGI Net Portfolio Cost Net Portfolio Cost TGVI System Costs TGVI LNG Costs TGVI Gas Supply Benefit

Baseline Scenario

80

Sensitivity Analysis

Scenario Assumptions Baseline Scenario

• LNG and TGVI System costs based on P50 Capital Costs and TGVI

Baseline Demand scenario (no firm service to ICP)

• Gas Supply Benefits based on JPS + discounted TF1
• TGI Revenues based on Storage & Delivery Agreement

Base + ICP Scenario

• LNG and TGVI System costs based on TGVI Base + ICP Demand

scenario which includes firm service to ICP

• All other assumptions same as Baseline Scenario

Low Core Demand Scenario

• LNG TGVI System Costs based on low core demand forecast and no

firm service to ICP

• All other assumptions same as Baseline Scenario

High Cost Scenario

• LNG and TGVI System costs based on P90 Cost Estimates and TGVI

Baseline Demand

• All other assumptions same as Baseline Scenario

Upside Case

• LNG and TGVI System Costs based on P10 Cost Estimates and TGVI

+ ICP Demand Scenario

• Gas Supply Benefits based on avoided WEI Costs
• TGI revenues the same as Baseline Scenario

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Net Portfolio Cost Comparison

$0 $20 $40 $60 $80 $100 $120 $140 $160 $ Millions Pipe & Compression Portfolio LNG Portfolio 25 Year 15 Year 15 Year 25 Year Baseline Scenario High Cost Scenario 115 49 48 27 135 74 57 43

82

20 40 60 80 100 120 140 160 180 Baseline Scenario Base + ICP Demand Scenario Low Core Demand Scenario High Cost Scenario Upside Scenario $ Millions Pipe & Compression Portfolio LNG Portfolio 66 69 32 61 87

Net LNG Benefit Net LNG Benefit Net LNG Benefit Net LNG Benefit Net LNG Benefit

Present Value @ 6.2%, 25 Year Evaluation Period

Sensitivity Analysis

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Levelized Allocated Average Delivery Cost Impact Baseline Scenario - Core Market

7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 8.0 8.1 $ / GJ 15 Year Evaluation Period 25 Year Evaluation Period Pipe & Compression LNG

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Allocated Average Delivery Costs Comparison

LNG LNG Pipe & LNG LNG Pipe & Approach 1 Approach 2 Compression Approach 1 Approach 2 Compression

Core Market 7.65 7.52 7.75 7.77 7.63 8.02 Firm Transport 0.96 1.14 1.17 0.94 1.13 1.17 Core Market 7.35 7.08 7.56 7.32 Firm Transport 0.83 1.07 0.85 1.08 Impact of Firm Service to ICP to 2018 Levelized Allocated Cost 2011 - 2032 ($/GJ) Baseline Scenario Levelized Allocated Cost 2011 - 2022 ($/GJ)

Comparison of Levelized Allocated Average Delivery Costs Excluding Gas Costs

85

Regulatory Process Review

Tom Loski

86

Request for approval from BC Utilities Commission

• Certificate of Public Convenience and Necessity

– Pursuant to Section 45 of the Utilities Commission Act – TGVI

• Storage Services Agreement

– Pursuant to Section 61 of Act – TGVI – Pursuant to Section 71 of Act – TGI

• Fair return on Equity
• Adjusted Depreciation Schedule

– Pursuant to Section 56 of Act – TGVI

• Development cost recovery
• Written hearing process

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Regulatory Process Steps Completed

1. Application Submitted to BCUC Tuesday, June 5 2. BCUC Procedural Order No. G-63-07 Friday, June 8 3. Public Notice Friday, June 15 4. Intervenor Comments on Procedure Monday, June 25 5. Workshop Wednesday, June 27

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Project Description & Overview

Questions?

TGVI MT. HAYES LNG STORAGE FACILITY WORKSHOP

Held in Nanaimo on June 27, 2007 At the Coast Bastion Inn Terasen Presenters and Attendees

• Stan Ballance
• David Bodnar
• Cynthia Des Brisay
• Bruce Falstead
• Carol Greaves
• Chris Hyland
• Rose Jacques
• Edmond Leung
• Tom Loski
• Don Wallace
• Guy Wassick