1. Mayor’s Energy Task Force August 18, 2010

2. Agenda
New Legislation
New Entrants
Gas Storage
E & P Activities

3. New Legislation HB 369 - Creates Alaska Gas Development Corporation
In-state Pipeline plan to Legislature
July 1, 2011 due date
Address needs of Railbelt consumers (residential and commercial)
HB 280 Cook Inlet Incentives
Gas Storage
$1.50 / M Credit
10 year rent holiday, LIFO treatment
Investment Incentives
40% production tax credit on qualified capital
25% Income tax credit on qualified expenditures
HB 309 Jack-up Rig - 100%, 90%, and 80% credit (up to $25MM) on 1st three wells drilled from jack-up
Several Key issues on Gas storage proposals
1) Development timing
2) Amount of storage needed
3) Third party access
4) Regulatory framework
DNR engaged stakeholders
- Storage Developers
- Cook Inlet producers, Armstrong
- Utilities, Contract negotiation mediation
- RCA, public and private discussions
- Interruptibles, LNG plant, Agrium
CINGS is the largest proposal being currently in the planning stage
- Developed by ANR / TransCanada
- Enstar is anchor customer, CEA and ML&P?
- Little in the public record at this point
- Initial capacity of more than 10 BCF, expandable
- Tariffs estimated at about $3.00 / MCF
Nikolai Creek developer is Aurora
- Project proposed early last year
- Commercial storage
- Open season in 2009
- Not big enough for Enstar
- Well located for CEA
- Timing dependent on outcome of CINGS discussions
Ivan River is a 2 BCF capacity proposed private storage project for CVX
- Potential ability to store some gas this summer
- Withdrawals possible in winter

4. New Entrants to Alaska Apache - $34 B company, start-up 1954
S-48, Canada, Egypt, North Sea, Australia
Buccaneer Alaska
Linc Energy

5. Alaskan Clear & Equitable Share (ACES)
In 2007 the Alaskan Government introduced the ACES program to incent new entrants to explore within Alaska. This program takes the form of a rebate of between % of direct exploration costs and up to 55% on development costs. This is a significant incentive and substantially reduces the commercial discovery threshold.
On 19 April 2010 the Alaskan Legislature approved a significant amendment to Alaska’s AC ES program. The Governor
signed this legislation into law on May 10, Most significantly, the statutory amendments enacted with this legislation will establish a tax credit of up to US $25 million for new wells drilled into the pre-Tertiary strata of the Cook Inlet with a jack-up drilling rig. The new incentive provides for the following:
• If Buccaneer drills the first well in the Cook Inlet using a jack-up rig, it will be eligible to claim up to US $25 million of all drilling costs (including rig mobilization costs).
If it drills the second well, the claim will be US $22.5 million.
if its drills the third well, it is entitled to claim US $20 million. A company is eligible for only one of these incentives and is required to repay one-half (50%) the incentive equally over 10 years, but only if hydrocarbons are successfully produced.
On any subsequent well Buccaneer will still be eligible for the standard AC ES incentive of 45 – 65% of drilling and development costs.
The above incentives apply irrespective of the success of any well or development program.

6. Gas Storage Proposals CINGS, 11 BCF initial capacity
Nicolai Creek, 1 BCF
Several Key issues on Gas storage proposals
1) Development timing
2) Amount of storage needed
3) Third party access
4) Regulatory framework
DNR engaged stakeholders
- Storage Developers
- Cook Inlet producers, Armstrong
- Utilities, Contract negotiation mediation
- RCA, public and private discussions
- Interruptibles, LNG plant, Agrium
CINGS is the largest proposal being currently in the planning stage
- Developed by ANR / TransCanada
- Enstar is anchor customer, CEA and ML&P?
- Little in the public record at this point
- Initial capacity of more than 10 BCF, expandable
- Tariffs estimated at about $3.00 / MCF
Nikolai Creek developer is Aurora
- Project proposed early last year
- Commercial storage
- Open season in 2009
- Not big enough for Enstar
- Well located for CEA
- Timing dependent on outcome of CINGS discussions
Ivan River is a 2 BCF capacity proposed private storage project for CVX
- Potential ability to store some gas this summer
- Withdrawals possible in winter

7. CINGS SEMCO (Enstar parent) – formerly TransCanada
Initial Capacity 11 BCF expandable, $180 MM
Applications in to RCA, AOGCC, DNR
Initial deliveries during Winter 2012 / 2013
Customers, capacity, withdrawal, injection
CEA, 2.4 B, 35 MM/D, 27 MM/D
Enstar, 5B, 91 MM/D, 113 MM/D
ML&P, 0.6B, 10 MM/D, 10 MM/D
Several Key issues on Gas storage proposals
1) Development timing
2) Amount of storage needed
3) Third party access
4) Regulatory framework
DNR engaged stakeholders
- Storage Developers
- Cook Inlet producers, Armstrong
- Utilities, Contract negotiation mediation
- RCA, public and private discussions
- Interruptibles, LNG plant, Agrium
CINGS is the largest proposal being currently in the planning stage
- Developed by ANR / TransCanada
- Enstar is anchor customer, CEA and ML&P?
- Little in the public record at this point
- Initial capacity of more than 10 BCF, expandable
- Tariffs estimated at about $3.00 / MCF
Nikolai Creek developer is Aurora
- Project proposed early last year
- Commercial storage
- Open season in 2009
- Not big enough for Enstar
- Well located for CEA
- Timing dependent on outcome of CINGS discussions
Ivan River is a 2 BCF capacity proposed private storage project for CVX
- Potential ability to store some gas this summer
- Withdrawals possible in winter

8. Nicolai Creek Aurora Gas is developer Initial Capacity 0.7 BCF
Applications in to AOGCC, DNR
Initial deliveries during Winter 2011 / 2012?
Likely customer is a Utility
Several Key issues on Gas storage proposals
1) Development timing
2) Amount of storage needed
3) Third party access
4) Regulatory framework
DNR engaged stakeholders
- Storage Developers
- Cook Inlet producers, Armstrong
- Utilities, Contract negotiation mediation
- RCA, public and private discussions
- Interruptibles, LNG plant, Agrium
CINGS is the largest proposal being currently in the planning stage
- Developed by ANR / TransCanada
- Enstar is anchor customer, CEA and ML&P?
- Little in the public record at this point
- Initial capacity of more than 10 BCF, expandable
- Tariffs estimated at about $3.00 / MCF
Nikolai Creek developer is Aurora
- Project proposed early last year
- Commercial storage
- Open season in 2009
- Not big enough for Enstar
- Well located for CEA
- Timing dependent on outcome of CINGS discussions
Ivan River is a 2 BCF capacity proposed private storage project for CVX
- Potential ability to store some gas this summer
- Withdrawals possible in winter