00009alska/1 ALASKA GASLINE PORT AUTHORITY

00009alska/2 Alaska Gasline Port Authority n The Alaska Gasline Port Authority consists of three municipalities – North Slope Borough – Fairbanks North Star Borough – City of Valdez n The Alaska Gasline Port Authority consists of three municipalities – North Slope Borough – Fairbanks North Star Borough – City of Valdez

00009alska/3 Alaska Gasline Port Authority Board of Directors North Slope Borough Mayor George Ahmaogak, Chair Al Adams Richard Glenn North Slope Borough Mayor George Ahmaogak, Chair Al Adams Richard Glenn City of Valdez Mayor Bert Cottle Dave Cobb, Secretary John Kelsey City of Valdez Mayor Bert Cottle Dave Cobb, Secretary John Kelsey Fairbanks North Star Borough Mayor Rhonda Boyles, Treasurer Charlie Cole, Vice Chair Barbara Schuhmann Fairbanks North Star Borough Mayor Rhonda Boyles, Treasurer Charlie Cole, Vice Chair Barbara Schuhmann

00009alska/4 Alaska Gasline Port Authority’s Mission n The mission of the Alaska Gasline Port Authority is to enable the development of Alaska’s North Slope gas to the maximum benefit of all Alaskans.

00009alska/5 Evolution of the Alaska Gasline Port Authority n Preparation of the project development plan; engineering, procurement and construction plan; project cost estimate and alternatives analyses n Preparation of economic and financial models n IRS granting of federal income tax exemption n Preparation of the project development plan; engineering, procurement and construction plan; project cost estimate and alternatives analyses n Preparation of economic and financial models n IRS granting of federal income tax exemption

00009alska/6 The Project Team n Alaska Gasline Port Authority n Bechtel Corporation – technical and development support n Taylor DeJongh – financial analysis and formation n O’Melveny and Myers – development counsel n Walker Walker and Associates – general counsel n Alaska Gasline Port Authority n Bechtel Corporation – technical and development support n Taylor DeJongh – financial analysis and formation n O’Melveny and Myers – development counsel n Walker Walker and Associates – general counsel

00009alska/7 Advantages of a Y-Line n Combining a gasline to the lower 48 with a gasline to an LNG and/or GTL project will lower the cost of gas transportation down each branch of the line by approximately 33 percent

00009alska/8 Construction Cost n A single line to carry 3 bcf per day = $7.0 billion n A Y-line to carry 3 bcf to the Canadian border and 3 bcf to an LNG/GTL facility = $9.7 billion n A single line to carry 3 bcf per day = $7.0 billion n A Y-line to carry 3 bcf to the Canadian border and 3 bcf to an LNG/GTL facility = $9.7 billion = $4.85 billion

00009alska/9 Project Scope – Y-Line n Gas conditioning plant on the North Slope n 550-mile, 56-inch diameter pipeline from North Slope to Delta Junction n 150-mile, 44-inch diameter pipeline to Canadian border for interconnect to lower 48 n 256-mile, 46-inch diameter branch line to Valdez n Spur line to Anchorage from Glennallen n 15 million ton per year LNG plant, LPG fractionation plant and port facilities in Valdez n Gas conditioning plant on the North Slope n 550-mile, 56-inch diameter pipeline from North Slope to Delta Junction n 150-mile, 44-inch diameter pipeline to Canadian border for interconnect to lower 48 n 256-mile, 46-inch diameter branch line to Valdez n Spur line to Anchorage from Glennallen n 15 million ton per year LNG plant, LPG fractionation plant and port facilities in Valdez

00009alska/10 Cost of Y-Line for Two Projects n Construction cost – Conditioning plant (assuming no efficiencies from existing plant) $4.2billion – Pipeline (including the two branches)$9.7billion – LPG fractionation plant$450million – LNG plant and port facilities$3.65billion – Construction cost total$18.0billion n Construction cost – Conditioning plant (assuming no efficiencies from existing plant) $4.2billion – Pipeline (including the two branches)$9.7billion – LPG fractionation plant$450million – LNG plant and port facilities$3.65billion – Construction cost total$18.0billion (includes escalation and $1.8 billion contingency)

00009alska/11 Cost of Y-Line for Two Projects (Cont’d) n Soft costs – Interest during construction$4.9billion – Owner’s contingency$900million – Debt service reserve $1.0billion – Financing fees, working capital, etc. $1.0billion $7.8billion – Minus pre-completion revenue-3.2billion – Total financing required$22.6billion n Soft costs – Interest during construction$4.9billion – Owner’s contingency$900million – Debt service reserve $1.0billion – Financing fees, working capital, etc. $1.0billion $7.8billion – Minus pre-completion revenue-3.2billion – Total financing required$22.6billion (for both LNG project and pipeline to Alaskan-Canadian border for Lower 48 sales)

00009alska/12 Financial Results of the Y-Line n Producers: $2 billion to $3 billion per year n State – royalties, severance tax, and corporate income tax: $750 million to $980 million per year n Payment in lieu of property taxes: $114 million per year n All Alaskan Community Dividend: $111 million per year n Assistance to Alaskan communities to lower energy costs: $37 million per year n Producers: $2 billion to $3 billion per year n State – royalties, severance tax, and corporate income tax: $750 million to $980 million per year n Payment in lieu of property taxes: $114 million per year n All Alaskan Community Dividend: $111 million per year n Assistance to Alaskan communities to lower energy costs: $37 million per year

00009alska/13 Benefits of Port Authority Ownership n Guarantees maximum in state usage of North Slope gas n Income is tax exempt (IRS ruling) n Port Authority can access 100 percent project financing for the entire project n Port Authority’s required return on investment is substantially lower than a privately-owned project n Guarantees maximum in state usage of North Slope gas n Income is tax exempt (IRS ruling) n Port Authority can access 100 percent project financing for the entire project n Port Authority’s required return on investment is substantially lower than a privately-owned project

00009alska/14 Benefits of Port Authority Ownership (Cont’d) n Some debt would be financed with tax-exempt bonds n Port Authority is not subject to FERC regulation n Annual flow of revenue to state and local communities n Port Authority creates local ownership of gasline n Some debt would be financed with tax-exempt bonds n Port Authority is not subject to FERC regulation n Annual flow of revenue to state and local communities n Port Authority creates local ownership of gasline

00009alska/15 Benefits of Port Authority Ownership (Cont’d) n No need to give up state revenue (tax or royalties) to subsidize the project n More certainty of gas available for in-state usage and more control over price n No need to give up state revenue (tax or royalties) to subsidize the project n More certainty of gas available for in-state usage and more control over price Example: $3.00Chicago price per million Btu -1.20Transportation cost Alaska-Canadian border to Chicago $1.80Total wholesale price to Anchorage or Fairbanks communities Example: $3.00Chicago price per million Btu -1.20Transportation cost Alaska-Canadian border to Chicago $1.80Total wholesale price to Anchorage or Fairbanks communities

00009alska/16 ALASKA GASLINE PORT AUTHORITY