The Canadian pipeline industry transports 97% of crude oil and natural gas produced in Canada. It operates over 100,000 km of pipelines and expects to invest billions in expansion projects. Pipelines are underground and safe, transporting products with a 99.9998% safety record. The industry is committed to safety through monitoring, maintenance, damage prevention, and developing new technologies. Ensuring access to markets in the US and developing a national energy strategy are key priorities.

1. State of the Canadian Transmission Pipeline Industry July 10, 2011

2. Outline About CEPA Pipeline infrastructure in North America Our key issues and priorities Pipeline safety Damage prevention Market access National energy strategy

3. About CEPA Transport 97% of the crude oil and natural gas produced in Canada to markets across North America Operate over 100,000 kilometres of pipeline in Canada and the United States CEPA members expect to invest in multi-billion dollar expansion projects in the next 15 years

4. CEPA Members

7. Safe and Efficient Energy Highways Move 1.2 billion barrels of crude and refined products and 5.5 trillion cubic feet of natural gas each year Pipeline are underground and safe Ruptures on pipelines are rare Between 2002 and 2009 Ruptures on federally regulated pipelines averaged slightly more than one per year; a decline of 55% from the previous eight years Average annual volume released from liquids pipelines was just two litres for every million litres transported … 99.9998% of the product was transported safely

8. Canadian Industry World-Class Safety Record

9. Significant Failures Remain Low

10. Pipeline Monitoring and Maintenance Monitoring 24/7 monitoring at remote control centres using sophisticated computerized sensing and control systems Equipped with automated leak detection alarms and shut-down devices Regular visual surveys of pipelines by aerial and ground patrols Sophisticated “in-line” inspection tools (pigs) inspect the inside of pipes to identify changes Maintenance Preventative maintenance programs including constant pipeline excavations and repairs

11. Video of Inspection Tool

12. Key industry initiatives to ensure safety Committed to a safety culture Development of Integrity First program Apply effective management systems Damage prevention advocacy Converge on industry leading practices Develop and deploy appropriate advanced technology Advance national standards

14. External Damage: Growing Safety Risk Activity within close proximity to pipeline poses greatest risk to public safety External interference was the cause of six failure incidents and 40 damage incidents (no release of service fluid) on CEPA pipelines during the period 2002-2009 External interference was the fourth most common cause of failures All CEPA external interference failures during the period 2002-2009 were caused by third parties Increased public education is essential In spite of regular surveillance, not all activities on the ground can be controlled by pipeline operators

15. Damage Prevention Three key advocacy areas: Establishment of a 3 digit call number across Canada Introduce mandatory one-call across Canada Introduce financial penalties for parties undertaking un-authorized digging on or near pipelines

16. Market Access

17. Pipeline Development Issues Development of new pipeline assets is critical to open new markets for Canadian oil and gas New natural gas supply needs to be connected to existing pipeline systems The industry makes, and must continue to make, huge investments in pipelines to provide cost competitive infrastructure Infrastructure = Choice & Responsiveness = Energy Security

18. Market Access For the Canadian pipeline industry to continue to strive, it needs access to existing and new markets Canada is the number one supplier of oil and natural gas to the U.S. and must remain so Canada is the ideal energy partner for the US: business friendly, politically stable and has abundant source of energy strong, transparent regulation CEPA member safety track record is second to none Access to the Asian Pacific market is a key strategic outlet

19. Energy Infrastructure Investment Forecast $26 trillion USD – Global Energy Sector, next 20 years (IEA, 2009)

20. Pipelines: Delivering a Safe Source of Energy to the United States Source US Dept of Energy

21. 2009 Canadian Crude Oil and Equivalent Supply and Disposition (Thousand Barrels/Day) 78.6 218.9 PADD II PADD III PADD V PADD IV PADD I 30.2 1945.4 2,725.8 23.9 1.9 276.7 15.0 1167.3 252.8 51.5 68.6 372.9 365.4 106.2 47.7 417.0 179.2 BC AB SK MB ON Norman Wells Hibernia/Terra Nova Sable Canadian Production Source: NEB, EIA 3,214 622 3,672 8,440 1,723 2,696.4 Delivery of Canadian Production 809 Imports into Canada 2,034 Canadian Refining Capacity 432.7 QC NB/NL/NS/PE 503.8 536.4 476.7 128.3 450.3 66.6 Legend 91.8 31.4 13.8 Source: NEB October 2010 40.2

22. Pipelines: Delivering a Safe Source of Energy to the United States Source: US Dept. of Energy

23. Source: NEB 2009 Canadian Natural Gas Disposition – Distribution by Market (Billion Cubic Feet/Day) 14.8 Canadian Production 1.8 Delivery of Canadian Production 1.9 Imports into Canada Legend HENRY HUB October 2010 AECO HUB Prudhoe Bay Anchorage Norman Wells Whitehorse Prince Rupert Kitimat Prince George Taylor Rainbow Lake Zama Fort McMurray Lloydminster Edmonton Hardisty Sundre Kerrobert Cutbank Great Falls Kamloops Vancouver Anacortes Olympia Portland Seattle Spokane Empress Regina Winnipeg Cromer Gretna Mandan Clearbrook Thunder Bay Superior St. Paul Lockport Chicago Moosonee Timmins Sudbury North Bay Ottawa Montreal Quebec City St. John Halifax Port Hawkesbury St. John ’ s Portland Boston Philadelphia Warren Oakville Sarnia Nanticoke Detroit Toledo Canton Lima Catlettsburg Memphis Patoka Robinson Wood River McPherson El Dorado Ponca City Cushing Borger Tulsa Coffeyville Wynnewood Colorado City Tyler El Dorado New Orleans St. James Corpus Christi Three Rivers Freeport Houston Port Arthur Lake Charles Longview Big Spring Artesia El Paso Billings Casper Salt Lake City Sinclair Cheyenne Denver Guernsey/ Ft. Laramie Long Beach Los Angeles Torrance Bakersfield Santa Maria Avon San Francisco Sunray Western Canada 14.8 Total Canadian Consumption 7.8 East Coast Offshore 0.4 Imports From US 1.9 0.8 1.8 1.3 1.5 0.5 Oil Sands 1.2 1.3 1.0 0.2 Other US Export Points 0.6

24. The Opportunity Canada’s pipeline industry can be a key element in employment and GDP recovery Bringing new projects online near term = Lower costs for big projects Support for key industries Private sector projects bring a multiplier effect throughout the economy Investments made now ensure infrastructure is in place when investment reoccurs

25. The Regulatory Imperative Regulatory framework must deliver: Coordination between and within governments, including One project, one assessment consolidation for new projects Coordination of agencies and departments to eliminate duplication, streamline requirements, and share knowledge and expertise Timely and effective processes Balanced decision making, integrating environment and economy Using facts and expert decision making throughout the life of federally regulated facilities Clear accountability and transparency of government Effective Crown Consultation Fully addressed across departments and jurisdictions Separates assessment from economic negotiations

26. Our Asks Projects that are determined to be in the public interest must proceed responsibly Focus on outcomes Cost of those projects is managed so as not to burden Canadian consumers and investors with unnecessary cost Balance is needed to both protect the Environment and the Economy while meeting Energy needs (EEE) Development timelines are predictable and review processes are effective and efficient Invest in things that matter, not in things that don’t, and know the difference

27. National Energy Strategy

28. National Energy Strategy CEPA fully supports the development of a national energy strategy for the following reasons: Energy is a strategic asset Our energy sources need to receive the best value possible in an increasingly competitive global energy market The strategy needs to support the underlying attribute of the Canadian economy that we are a trading nation Need to balance economic, environmental and social expectations of Canadians Innovation, regulation, GHG emission reduction strategies and energy efficiency are key components to Canadian know-how

29. Other Key Issues Aging infrastructure Pipeline abandonment Project development costs Technological advances Rail vs. pipeline

30. For more information please contact: Philippe Reicher Vice President, Communications & Stakeholder Relations Canadian Energy Pipeline Association Suite 1860, 205 - 5th Avenue S.W. Calgary, Alberta T2P 2V7 Tel: (403) 221-8778 www.cepa.com