1. ALASKA HIGHWAY PIPELINE PROJECT UPDATE Presentation to the Alaska State Legislature Joint Committee on Natural Gas Pipelines ALASKA HIGHWAY PIPELINE PROJECT UPDATE Presentation to the Alaska State Legislature Joint Committee on Natural Gas Pipelines July 18, 2001

2. Agenda uReview ANGTS Advantages uOverview of Alaskan Benefits of ANGTS uCurrent Status uWithdrawn Partners Issue uOpen Access uPotential State Participation uPotential Gas Delivery to South Central Alaska uPath Forward for ANGTS uQuestions and Answers

3. Alaskan Northwest Natural Gas Transportation Company Corporate Ownership

4. ANGTS Advantages uEarliest Timing uFlexible Framework uLand Tenure uBest Route

5. ANGTS Advantages Earliest Timing uANNGTC/Foothills was selected by the United States and Canada to construct and operate the ANGTS and have secured the following:  Federal Lands ROW  Federal ROW on State lands  FERC Certificate  NEB Certificate  US Corps 404 permits  Yukon ROW  British Columbia Map Reserve Each of these components could be expected to require 18 to 36 months to secure after a green field application is submitted.

6. ANGTS Advantages Flexible Framework uThe ANGTS framework provides an existing, tested and accepted framework for expediting the delivery of ANS gas to the Lower 48 uCanada has repeatedly reaffirmed its intention to fulfill its commitments reflected in the ANGTS framework uThe ANGTS framework allows for updates to the existing U.S. and Canadian regulatory framework to modify the project, including initial required shipping capacity, the use of updated technology, environmental review, open access and negotiated rate structure uThe ANGTS sponsors are committed to working with the State, ANS producers and other potential shippers to develop a project that achieves the commercial and economic objectives of all parties

7. YUKON NWT B.C. NUNAVUT ALBERTA SASKATCHEWAN Whitehorse Prudhoe Bay Inuvik Kingsgate Monchy Fort Nelson Fairbanks Boundary Lake Beaver Creek Gordondale Caroline ALASKA ANGTS Advantages Land Tenure ALASKA  Federal Grant 434 miles have been acquired of which –261 miles remain under Federal authority –173 miles have been transferred to the State 5 Compressor Station Sites and 1 Meter Station Site has also been acquired  State Application Approximately 200 miles under active application 2 Compressor Station Sites and 1 Meter Station Site included in application  Other Lands Approximately 110 miles to be acquired YUKON Foothills holds a grant of easement for the entire ROW in Yukon. Compressor Station sites, temporary and other permanent sites are protected as Reservations by Notation for the Project NORTH B.C. Foothills holds Map Reserves on all provincial Crown lands within this segment of the Project.

8. ANGTS Advantages Best Routing uBest alternative for delivering Alaskan gas to the Lower 48  Can be constructed with proven technology  Has been extensively reviewed  Relies on existing infrastructure  Will minimize adverse environmental effects  Delivers gas to Alaskan consumers

9. ANGTS Advantages Best Access to North American Pipeline Grid uAccess to the North American grid enhances the success of the Alaska Highway Pipeline uFoothills, TransCanada and Westcoast have built and operate most of the gas pipelines in Canada uOffers expanded market opportunities for Alaska Gas uFoothills, TransCanada and Westcoast recognized as experienced, reliable and cost effective pipe builders and operators.

10. Alaskan Benefits Based on $3 to $5 mmbtu gas price range over 25 years uIncrease in Gross State Product$55 to $122 billion uIncrease in employment26,000 person years uIncrease in state and local gov’t revenues$12 to $29 billion uIncrease in gross revenues for Alaskan Producers$36 to $103 billion  Gross revenue gains to Gas Producers through earlier (3 years) connection$4 to $12 billion

11. Current Status ANGTS Update uFinalizing state lands right-of-way uNegotiating a Memorandum of Understanding with Joint Pipeline Office uContinuing dialogue with:  Government officials in Ottawa and Washington  Aboriginal Communities  ANS Producers  ANNGTC Withdrawn Partners

12. Current Status Discussions with Gas Producers/Shippers uOngoing discussions with North Slope Producers uContact with other interested parties such as exploration and development companies, power generators and power marketers

13. Current Status Discussions With Aboriginal Communities uContinuing to build upon positive relationships Foothills has developed over two decades uBuilding support through discussion of the community benefits of pipeline development

14. Withdrawn Partners Issue uANNGTC Withdrawn Partners have right to recover monies under certain circumstances uIt is recognized that the Withdrawn partners issue needs to be addressed in the overall commercial resolution of this pipeline development. uThis is an issue between ourselves and the Withdrawn partners uThe process to re-enlist Withdrawn Partners has begun and although in the early stages, so far we have seen some encouraging signs.

15. Open Access uAlaska’s interests best served by continued gas exploration and development uAccess to pipeline vital to E&P activity uFinancing for the initial pipeline will require long-term shipping contracts uAdditional future capacity provided by:  Additional compression  Looping  Combination of both uAdditional capacity will be available to all on an open access basis uAs a pure pipeline service provider, it is in Foothills interests to provide expanded capacity to meet demand

16. Potential State Participation uWe understand the State is looking at ways to directly participate in a pipeline development uThere are several ways the State could participate in the ANGTS  As a lender or guarantor  As a shipper  As an equity partner uANNGTC/Foothills would consider discussion of these or other matters of interest to the State

17. Gas to South Central Alaska uCurrent gas demand in South Central is approximately 220 Bcf per year uThis volume could be delivered via a 16-inch spur line connected to the ANGTS near Fairbanks uAs a pure pipeline service provider, it is in Foothills interests to serve additional supply and market areas whenever it is economic to do so

18. Path Forward for ANGTS Foothills uContinuing to work toward goal of commercial alignment with Producers and potential Shippers uFinalizing state lands ROW uBuilding support in Canada for two stand alone arctic pipelines Recommendations to Joint Committee uPublicly encourage gas producers and pipeliners to bring collective strengths to the table and accelerate development of the ANGTS uSupport the conclusion that only ANGTS meets the Governor’s goal of earliest possible start for the pipeline project

19. Questions