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Northern Tier Discussion Deck Presentation


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Northern Tier Discussion Deck Presentation

  1. 1. Project North Star Discussion Materials
  2. 2. 1  SPP runs a significant volume of North Dakota Light (“NDL”) crude oil  Recent test runs indicate SPP can run XX% more NDL than it has historically  Neither NTE or SPP have shipping capacity in Enbridge’s Portal system proportional to our supply needs  Therefore, we are subject to “skimming” by marketers Situation Overview  SPP is a final market for NDL producers and has the potential to generate the highest netback to the well head  Trucking and shipping costs have been escalating due to infrastructure bottleneck  NTE’s BOD has approved the development and construction of pipeline from ND to MN sponsored by NTE  We would like for Oxy to become an anchor tenant NDL – WTI Historical Differential
  3. 3. 2 Bakken Rail Alternatives 1: Cushing • EOG unit train is 50,000 bpd unload • WTI Cushing basis is not optimal, but “clears” supply 2: Gulf Coast • Rail unload into Plains & NuStar = XXX,XXX bpd unload capacity • Ideal alternative – LLS has covered transportation burden this year 3: Bakersfield Rail switching, short lines, lack of service makes this difficult 4: Albany/PADD I • New market to Global’s Albany terminal—barged to Sun Philadelphia • Truck, rail, terminal to barge is expensive 5: Anacortes • Tesoro committed “space” to Rangeland’s Epping ND terminal • Estimated 20,000 bpd could land via rail to Anacortes Model Comments • High transportation costs make rail alternatives difficult • Service is not reliable, shortage of switch engines and destinations • The LLS premium temporarily covers rail transportation • As the arbitrage weakens, it pressures the cost of rail back to the lease in North Dakota $XX $XX $XX $XX $XX $XX Emerging rail from other fields competes for the same unload spots
  4. 4. Well Head 3rd Party Truck $X.XX/bbl 3rd Party Truck $3.00/bbl $1.50/bbl Transload Fee LR $3.50/bbl Gathering $0.71/bbl NTE Pipeline $2.40/bbl Saint Paul Park Refinery Cottage Grove Storage Gathering $.XX/bbl Tariff Minnesota P/L $X.XX/bbl Tariff Enbridge Portal $2.00 Shipper Margin + $X.XX/bbl Tariff Clearbrook Storage 3 Current Dynamics Rail Crude & Pipeline Supply Options Difference off WTI, $/bbl MPL Rail NTE P/L Third Party Truck X.XX X.XX X.XX Gathering Cost X.XX - X.XX Shipper Margin X.XX - - Transload Fee - X.XX - Pipeline Tariff X.XX - X.XX Rail Cost - X.XX - MPL Tariff X.XX - - SPP Delivered Cost (X.XX) (X.XX) (X.XX)