Tc Energy Corporation · TSX:TRP
Tc Energy — Investor Presentation (May 2016)
73 slides from Tc Energy's investor presentation, May 5, 2016
Slide 1: Joe Pollard, Director, Long Term Marketing
Joe Pollard Director, Long Term Marketing May 5, 2016
Slide 2: Acquisition of Columbia Pipeline Group – Strategic Rationale
Acquisition of Columbia Pipeline Group – Strategic Rationale • Premium natural gas pipeline and storage assets • Extensive position in the Marcellus and Utica shale regions • FERC regulated assets generate stable and predictable earnings and cash flow • US$7.3 billion portfolio of growth initiatives
Slide 3: Columbia Pipeline Group Asset Overview
Columbia Pipeline Group Asset Overview • Columbia Gas Transmission • 11,272 mile (18,141 km) FERC pipeline with average throughput of 3.9 Bcf/d • 286 Bcf of working gas storage capacity • Strong base business undergoing significant expansion to connect growing Marcellus/Utica supply • Columbia Gulf
Slide 4: Combined Natural Gas Pipeline Footprint
Combined Natural Gas Pipeline Footprint • One of North America’s largest regulated natural gas transmission businesses • 91,000 km (56,900 miles) of gas pipeline • 664 Bcf of storage capacity • Complements our existing regulated natural gas pipeline and storage assets • Long-term, fee-based contract
Slide 5: Acquisition Key Takeaways
Acquisition Key Takeaways • Acquisition creates one of North America’s largest regulated natural gas transmission businesses • Complements our existing assets • Adds to basin diversification and access to large markets • Provides another platform for continued organic growth • Agencies affirmed ‘A’
Slide 6: Marketing Fundamentals and Supply Update
Marketing Fundamentals and Supply Update May 5, 2016 Colin Strom Manager, Short Term Marketing & Optimization
Slide 7: Disclaimer: Forward Looking Information
Disclaimer : Forward Looking Information This presentation includes certain forward looking information to help current and potential investors understand management’s assessment of our future plans and financial outlook, and our future prospects overall. Statements that are forward-looking are base
Slide 8: Marketing Fundamentals & Supply Update
Marketing Fundamentals & Supply Update • GTN Overview • North American Supply & Demand • Supply Fundamentals • Market Fundamentals • Value Overview • Opportunities & Impacts to GTN Value 8
Slide 9: GTN Overview
GTN Overview ¢ TransCanada In business to deliver
Slide 10: Operating Parameters
Operating Parameters • Positioned to serve markets in California, Nevada, and the Pacific Northwest • Consists of 1,350 miles of pipeline • Capacity of 2.81 Bcfd at the U.S. border and 2.23 Bcfd at the California border • Long-term contracts extending out to 2023 • Volume throughput has been strong
Slide 11: North American Supply & Demand
North American Supply & Demand
Slide 12: North American Supply
North American Supply 2016 TransCanada Outlook 12
Slide 13: North American Demand
North American Demand 2016 TransCanada Outlook 140 120 LNG Exports Transport 100 Power Generation 80 Bcfd Industrial 60 Other 40 Residential 20 Commercial 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 13
Slide 14: Supply Fundamentals
Supply Fundamentals ¢ TransCanada In business to deliver w
Slide 15: Marcellus & Utica Production Forecast
Marcellus & Utica Production Forecast 60.0 50.0 40.0 Bcfd 30.0 41.7 43.1 43.4 20.0 38.5 39.6 40.6 36.0 19.1 33.1 15.9 29.0 23.4 10.0 11.7 8.3 5.3 3.0 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ACTUALS FORECAST MARCELLUS/UTICA FORECAST FORECAST 1 FORECAST 2 FO
Slide 16: San Juan & Permian Production Forecast
San Juan & Permian Production Forecast SAN JUAN PRODUCTION & FORECAST 3.5 3.0 3.2 3.1 3.0 2.5 2.7 2.6 2.5 2.0 Bcfd 1.5 1.0 2.2 2.0 1.9 1.8 1.7 1.6 1.6 1.5 1.5 1.4 0.5 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 SAN JUAN FORECAST FORECAST 1 FORECAST 2 FORECAST
Slide 17: Rockies Production Forecast
Rockies Production Forecast 12.0 10.0 10.3 10.1 10.0 9.4 9.3 9.4 8.0 Bcfd 6.0 8.6 8.2 4.0 8.0 7.8 7.8 7.7 7.7 7.8 7.8 7.9 2.0 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ROCKIES FORECAST FORECAST 1 FORECAST 2 FORECAST 3 ACTUALS 17
Slide 18: Western Canadian Production Outlook
Western Canadian Production Outlook 20.0 18.0 16.0 14.0 14.3 13.6 13.7 13.4 13.5 13.5 12.0 Bcfd 10.0 8.0 16.0 16.4 15.0 15.5 14.0 14.2 14.7 13.6 13.6 13.8 6.0 4.0 2.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 ACTUALS FORECAST WCSB FORECAST FORECAST 1 FORECAST 2
Slide 19: NGTL Supply Debottleneck
NGTL Supply Debottleneck • Rapid changes in WCSB supply created the need to address the system’s export capability • Successful open season will increase the firm subscription for export capability at the ABC gate (Coleman, AB) by ~150 MMcfd in Q3 2016 Source: TransCanada Presentation; May 5, 2016 1
Slide 20: Market Fundamentals
Market Fundamentals ¢ TransCanada In business to deliver
Slide 21: Demand Projections: Pacific Northwest & California
MMcF/D MMcF/D - - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 1,000 1,500 2,000 2,500 3,000 500 S 13 4,761 S 13 1,811 W 13/14 4,688 W 13/14 2,675 S 14 5,079 S 14 1,669 ACTUALS ACTUALS W 14/15 4,901 W 14/15 1,970 S 15 4,800 S 15 1,613 W 15/16 5,212 W 15/16 2,122 S 16 4,769 S 16 1,557 W 16/17 5,15
Slide 22: California Storage
California Storage PG&E HISTORICAL STORAGE BALANCE 250,000 200,000 150,000 MMcfd 100,000 50,000 199,617 189,944 194,317 199,460 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 5 YR - RANGE 2016 5 YR - AVERAGE 2015 SoCAL HISTORICAL STORAGE BALANCE 160,000 140,000 120,000 100,000 MMcfd 80,000 60,000
Slide 23: Hydro Outlook
Hydro Outlook Pacific Northwest & California • Stronger hydro conditions than 2015, but unseasonably warm temperatures are causing a quick runoff • Water supply forecasts continue to rapidly deteriorate with early runoffs depleting mountain snowpack • Early Q2 snowpack levels are falling to 25-50% o
Slide 24: Washington Snow Water Equivalent
Washington Snow Water Equivalent 24
Slide 25: Oregon Snow Water Equivalent
Oregon Snow Water Equivalent 25
Slide 26: Peak Summer Weather Forecast
Peak Summer Weather Forecast NOAA – June to August MDA Weather Services – June to August Source: NOAA and MDA Weather Services 26
Slide 27: Redwood Path Maintenance
Redwood Path Maintenance Redwood Path Maintenance Capacity Dates % of Max Maintenance Notes (MMcf/d) 20-Apr 2148 98% Delevan Station Maintenance 28-Apr 2091 96% Tionesta Station Maintenance 3-May 2073 96% Delevan Station Maintenance 4-May 2007 93% Gerber Station Maintenance 5-May 2088 97% Gerber Sta
Slide 28: New Market Demand Projections
New Market Demand Projections • Carty Lateral • New lateral to serve NW power generation • 175 MMcfd of lateral capacity and 75 MMcfd of GTN mainline capacity • 440 MW expected in-service for Q3 2016 • Jordan Cove & Pacific Connector • Just signed a 20yr agreement with Itochu Corp. (Japanese firm) •
Slide 29: Mexican Natural Gas Demand
Mexican Natural Gas Demand Gasoducto Rosarita North U.S. Southwest “pre-growth” export capacity 350 MMcfd Baja ~1.7 Bcfd being expanded to 5 Bcfd Costa Azul Olgilby El Paso 614 MMcfd Into NW Mexico El Paso 360 MMcfd Juarez, Samalayuca & Norte Crossing 900 MMcfd Waha to San Elizario 1.135 Bcfd CFE Pr
Slide 30: Current Volumetric Flow
Current Volumetric Flow Pacific NW Deliveries 1.400 1.200 1.000 0.800 MDthd KINGSGATE 0.600 0.930 3.000 0.804 0.775 0.400 0.600 0.200 2.500 - - - - - - - - - JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2.000 5-YEAR RANGE 2016 2015 MDthd 1.500 Malin Deliveries 1.997 1.990 1.946 1.942 1.000 2.500
Slide 31: Value Overview
Value Overview ¢ TransCanada In business to deliver
Slide 32: Daily Transportation Values to Malin
Daily Transportation Values to Malin 32
Slide 33: Forward Pricing
Forward Pricing AECO – Malin Value MALIN FORWARD VALUE $0.90 $0.80 $0.70 ($$$) PER DtH $0.60 $0.50 $0.40 $0.30 $0.20 $0.62 $0.67 $0.70 $0.78 $0.71 $0.63 $0.50 $0.50 $0.61 $0.60 $0.59 $0.58 $0.32 $0.34 $0.39 $0.50 $0.46 $0.45 $0.10 $- VALUE MAX RATE MALIN FORWARD VALUE $0.70 $0.60 $0.50 ($$$) PER DtH
Slide 34: Forward Pricing to Malin
Forward Pricing to Malin AECO (vs) Rockies $1.20 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.14 $1.00 $0.80 ($$$) PER DtH $0.60 $0.40 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.30 $0.20 $0.66 $0.57 $0.40 $0.03 $0.48 $0.03 $0.32 $0.03 $0.37 $0.00 $0.21 $0.01 $0.34 $- $(0.01) $(0.01) $(0.01) $(0.20
Slide 35: Dollars Above/Below Max Rate
Dollars ($$$) Above/Below Max Rate $- $0.50 $1.00 $1.50 $2.00 $(2.00) $(1.50) $(1.00) $(0.50) $0.27 $0.10 $0.18 $0.02 $0.07 $(0.09) $0.09 $(0.04) $0.15 $(0.12) Forward Pricing $(0.12) $(0.23) $0.38 W 16/17 $0.15 Canadian Dispatch Economics $0.35 $0.08 $0.30 S 17 $0.01 $0.20 $0.11 $0.13 W 17/18 $0.02
Slide 36: Opportunities & Factors Impacting GTN Value
Opportunities & Factors Impacting GTN Value
Slide 37: Opportunities & Impacts to GTN Value
Opportunities & Impacts to GTN Value • Supply fundamentals • Alberta eastern gate exports to NBPL and TCPL Mainline • NGTL export enhancements for Q3 2016 and potential 2018/2019 • Northwest loads • Flow displacements around Marcellus/Utica basins • Competition for supplies in the southwest and Mexi
Slide 38: GTN Annual Customer Meeting - NGTL Update
GTN Annual Customer Meeting - NGTL Update May 5, 2016 Jawad Masud – Director of Commercial West Markets for NGTL/Foothills
Slide 39: Forward Looking Information and Non-GAAP Measures
Forward Looking Information and Non-GAAP Measures This presentation includes certain forward looking information to help current and potential investors understand management’s assessment of our future plans and financial outlook, and our future prospects overall. Statements that are forward-looking
Slide 40: NGTL System
NGTL System • 32,000+ km of pipe – combined assets of NGTL and ATCO Pipelines • Over 1100 receipt and 1000 delivery points on system • Transports approximately 75% of WCSB production • Over 1000 Tcf of WCSB resource • 400+ Bcf of WCSB gas storage • > 50 Bcf/d of NIT trading liquidity • System Annual
Slide 41: WCSB Gas Supply
WCSB Gas Supply Historical Forecast
Slide 42: WCSB Wells Drilled and Remaining Resource Estimates
WCSB Wells Drilled and Remaining Resource Estimates WCSB Remaining Resource Estimates 1018 Montney Deep Basin Year Drilled 172
Slide 43: WCSB Supply/Demand & Export Flows
WCSB Supply/Demand & Export Flows Bcf/d WCSB Supply History Forecast Other WC Demand No LNG World? WC Oil Sands Demand Delayed LNG BC Coast ? LNG Exports WCSB Exports
Slide 44: NGTL System Receipt Flows
NGTL System Receipt Flows ? ? ? 2014/15 2015/16 Forecast Excluding Storage
Slide 45: NGTL System Intra Basin Flows
NGTL System Intra Basin Flows • Steady increase in intra-basin demand Daily Delivery • Predictable seasonal variations Annual Average • Further stimulus for oil related demand growth Forecast
Slide 46: East Gate – Historic and Current Flows
East Gate – Historic and Current Flows Bcf/d Bcf/d 2015 2016 2015 2016
Slide 47: EGAT – Firm Contracts and Capability
EGAT – Firm Contracts and Capability
Slide 48: WGAT - Flows
Becf/d WGAT - Flows 3.0 ABC + AB MONT 2.5 2.0 5 15 1.0 0.5 0.0 T T T T T Nov-10 Nov-11 Nov-12 Nov-13 Nov-14 Nov-15 . . T Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct ¢. TransCanada
Slide 49: West Path – Firm Contracts and Capability
West Path – Firm Contracts and Capability Capability Capability April 2016 (Bcf/d) Nov 2018 (Bcf/d) GTN 2.8 2.8 Foothills -BC 3.0 3.0 A/BC Border 2.3 2.8 Note: Values are estimated.
Slide 50: Working Gas in Storage Connected to NGTL System
Working Gas in Storage Connected to NGTL System Historic Maximum Inventory 69 Bcf Storage Locations If we continue to inject at the average rate of injection April 1-10 (856 mmcf/d), storage will reach the historic maximum before the end of June 2016.
Slide 51: Monthly Outage Forecast - April
Monthly Outage Forecast - April
Slide 52: Monthly Outage Forecast - April
Monthly Outage Forecast - April
Slide 53: NGTL System Settlements
NGTL System Settlements OM&A Sharing Mechanism • 2015 Settlement: 100% NGTL • 10.1% return on equity and 40% equity thickness • 3.17% composite depreciation rate + $5 MM • OM&A sharing mechanism with collars allocating risks/rewards 75/25 Sharing NGTL and Shippers • $220 million fixed OM&A threshold
Slide 54: NGTL Revenue Requirement and System Tolls
NGTL Revenue Requirement and System Tolls $mm +/- 2 ₵ * *2016 Interim Tolls
Slide 55: NGTL System Growth Through 2018
NGTL System Growth Through 2018 2015 Expansion Facilities 2016-2018 Expansion Facilities • ~$300 million capital additions • ~$5.3 billion capital additions • 28 km NPS 24 pipelines • Over 900 km NPS 20-48 pipelines • 3.5 MW compression • ~ 240 MW compression • 15 meter stations • Over 50 meter stat
Slide 56: Pipeline Integrity Program: Progressing as Planned
Pipeline Integrity Program: Progressing as Planned By end 2016: • ~ 9850 km assessed • 39% NGTL assessed (increase from 27% at the start of AAP) • $303 million in 2015 • Similar spend in 2016 ILI and Tether • Met all Commitments to date, on schedule for future commitments • Organizational realignmen
Slide 57: 2015 and 2016 Pipeline Integrity Program Overview
2015 and 2016 Pipeline Integrity Program Overview 2015 2016 17 Launcher/Receiver Pairs 16 Launcher/Receiver Pairs 66 Inline Inspections 65 Inline Inspections 500 Post ILI Digs/Repairs 400-600 Post ILI Digs/Repairs Launcher/Receiver/Mods Local or no impact Potential area/border impact Probable area/b
Slide 58: THANK YOU !
THANK YOU ! (@) TransCanada
Slide 59: Operational Highlights
Operational Highlights Paul Oliver USPL – Operations Control 59
Slide 60: Recap of Operations
Recap of Operations • GTN experienced its Peak Day on August 25th, 2015, with total physical deliveries of 2.2-MMDth. • There have been no unplanned outages resulting in nomination cuts on either GTN or Tuscarora since June 2010. 60
Slide 61: GTN Average Day System Throughput
GTN Average Day System Throughput 61
Slide 62: Tuscarora Average Day System Throughput
Tuscarora Average Day System Throughput 62
Slide 63: North Baja Average Day System Throughput
North Baja Average Day System Throughput 63
Slide 64: GTN Power Loads
—/ bo dale, Re MI R ie . _
Slide 65: GTN Power Plant Connections
GTN Power Plant Connections Carty Generating 6 5 (Proposed) 4 3 CS8 Carty Lateral (Proposed) Stanfield Coyote Springs Lateral CS9 Power Plants 1. Lancaster LLC 2. Rathdrum CT 3. Calpine HPP 4. Hermiston Generating 5. Coyote Springs I 6. Coyote Springs II 7. Klamath Cogen 8. Klamath Expansion Legend
Slide 66: Tuscarora Power Load
Tuscarora Power Load 66
Slide 67: 2016 GTN Maintenance Schedule
2016 GTN Maintenance Schedule Pipeline Integrity Digs A-Line EXT.02 MLV 8.4 September TBD 200 – MMcf/d (leaving 2,530-MMcf/d available) Pipeline Inline Inspection (EMAT) A-Line CS03 to CS06 July 11-15 800-MMcf/d (leaving 1,930 available) Compressor Station 14 MCC Upgrade MCC Replacement October (TBD
Slide 68: 2016 Maintenance Schedule Tuscarora & North Baja
2016 Maintenance Schedule Tuscarora & North Baja • No Maintenance Scheduled that will impact capacity 68
Slide 69: Questions
Questions Var ¢ TransCanada 69
Slide 70: Guest Speaker Mr Dennis Gartman
Guest Speaker Mr Dennis Gartman Editor/Publisher The Gartman Letter 70
Slide 71: GTN Shipper Meeting Business Development
GTN Shipper Meeting Business Development May 5, 2016
Slide 72: Trail West Pipeline
Trail West Pipeline Sumas • 106 mile, 30” pipe Victoria Northwest Pipeline • Supply receipt from GTN Sandpoint WAS HINGTON mainline near Madras Spokane Seattle • Delivery points into NW ID AHO Natural and Northwest Yakima Pipeline at Molalla Lewiston • Industrial developments Pasco Walla Walla Portl
Slide 73: The Integrated Project Concept
The Integrated Project Concept Sumas Kingsgate Transportation Segments 1 NWP Gorge Capacity 1 Stanfield 4 2 2 GTN Capacity Molalla 3 Trail Madras 3 Trail West Pipeline Capacity West 4 NWP Expansion Capacity: I-5 Corridor Malin Opal Ruby REX 73