1. THE NORTH AMERICAN LNG OPPORTUNITY APEGGA, Calgary, Alberta

2. 2005 Petro-Canada2 Agenda  Who is Petro-Canada  Natural gas supply/demand outlook  LNG value chain components and economics  Cacouna Energy project  Conclusion and questions

3. 2005 Petro-Canada3 Downstream Five Core Businesses East Coast Oil North American Natural Gas International Oil Sands

4. 2005 Petro-Canada4 Natural Gas Supply/Demand Outlook

5. 2005 Petro-Canada5 U.S. Gas Demand > Domestic Supply Net imports Natural Gas Net Imports, 2003 and 2025 (Tcf) Pipeline LNG 0 5 10 15 20 25 30 1960197019801990200020102025 Source: EIA’s Annual Energy Outlook 2005 Tcf/year Net imports Consumption Production Natural Gas Net Imports, 2003 and 2025 (Tcf) Pipeline LNG

6. 2005 Petro-Canada6 Source: EIA’s Annual Energy Outlook 2005 U.S. Electricity Generation by Fuel, 2003 and 2025 (billion kilowatthours) Share of Gas-Fired Generation increases 50% What’s Driving U.S. Gas Demand? U.S. Electricity Generation By Fuel, 2003 and 2025 Share of Gas-Fired Generation Increases 50% billion kilowatt hours

7. 2005 Petro-Canada7 Source: TCF/Y 15 20 25 30 20052010201520202025 Growth in Alaskan production Growth in non--associated unconventional Growth in LNG imports Base production (all sources) LNG Helps Fill U.S. Supply Gap Source: EIA’s Annual Energy Outlook 2005

8. 2005 Petro-Canada8 Global Gas Supply And Consumption Consumption (BCF/D) Production (BCF/D) R/P Ratio (Years) N. America C & S America Africa Middle East Asia Pacific Russia & FSU Europe Source: BP Statistical Review of World Energy 76 73 10 11 13 55 50 30 18 57 72 79 36 31 44 7 14 97 23 27 261

9. 2005 Petro-Canada9 The Importance Of LNG “Access to world natural gas supplies will require a major extension of LNG terminal import capacity…. Without the flexibility that such facilities impart, imbalances in supply and demand will engender price volatility.” Alan Greenspan Testimony to U.S. House Energy Committee June 10, 2003

10. 2005 Petro-Canada10 LNG Value Chain Components And Economics

11. 2005 Petro-Canada11 LNG Value Chain Upstream LNG Transport Regas Marketing Liquefaction Capex $ MM Upstream Typical Investment (500 MMcfd / 3.5 Mt/yr)

12. 2005 Petro-Canada12 LNG Block Flow Diagram Natural Gas Acid Gas Removal Dehydration Mercury Removal Gas Wells Reception Liquefaction Condensate Stabilisation Fractionation Utilities Storage and Loading Condensate LNG LPG Acid Gas Treatment

13. 2005 Petro-Canada13 The Liquefaction Process

14. 2005 Petro-Canada14 Heat Exchanger

15. 2005 Petro-Canada15 LNG Carriers Photos courtesy of CH-IV International

16. 2005 Petro-Canada16 Shipping - A Critical Cost Factor DISTANCES (in nautical miles from Dataloy AS) QuebecGulf of Mexico Baltic3,7846,076 Nigeria4,9245,936 Qatar8,1139,753 Trinidad2,6842,232 Shipping costs for Quebec LNG regasification terminals will be $0.15 to $0.25 lower than the Gulf of Mexico Trinidad

17. 2005 Petro-Canada17 Re-gasification Process

18. 2005 Petro-Canada18 Existing And Proposed LNG Terminals In North America Source: FERC B A C D E

19. 2005 Petro-Canada19 Potential LNG Terminals In North America Source: FERC

20. 2005 Petro-Canada20 At What Market Price Is LNG Economical For North America? Source: EIA’s 2005 Annual Energy Outlook

21. 2005 Petro-Canada21 The Cacouna Energy Project

22. 2005 Petro-Canada22 Project Overview  Average send out capacity of about 500 MMcf/d  TransCanada and Petro-Canada share construction costs of about $660 million  TransCanada: facility operator with transportation expertise  Petro-Canada: LNG supplier with marketing experience and international upstream supply business

23. 2005 Petro-Canada23 Gros-Cacouna Terminal And Ship Artist’s Rendition Siting based on water depth and berthing capabilities, storage capacity and take-away pipeline capacity.

24. 2005 Petro-Canada24 Stakeholder Relations  Direct employment of 500 to 1,000 people during construction  30 to 50 long-term positions to operate facility  Regulatory approval process to take two years  Environmental impact statement filed in spring 2005  Public hearings in 2006  Community referendum supports project in September

25. 2005 Petro-Canada25 Market Advantage Northeastern Canada and United States Absorption Advantage

26. 2005 Petro-Canada26 Progress On Russian LNG Project  Gas grid to feed LNG export  Progress ● MOU – Oct. 2004 ● Feasibility report – May 2005 ● Commercial proposal – June 2005  Discussing Interim Development Agreement  Risk mitigation ● Project financing ● Gazprom partnership ● Reciprocal investment Vyborg Primors k

27. 2005 Petro-Canada27 Project Schedule  Sept 2004 – June 2005 Prepare and file regulatory applications  July 2005 – Q4 2006 Application review and approval process  2007 – 2009Design and construction  Q4 2009 Facility start-up

28. 2005 Petro-Canada28 Petro-Canada’s Capabilities  Solid operator of large projects  Track record of successful stakeholder relations  Relationships with suppliers around the world  Marketing expertise through upstream and downstream business  Strong partners with TransCanada Pipelines and potential suppliers like Gazprom

29. 2005 Petro-Canada29 Conclusions  LNG will be a critical supply source to meet growing North American demand  Siting of re-gasification facilities is based on economics and community acceptance  A Quebec LNG facility has better access to markets and lower shipping costs  Petro-Canada has the experience, capability and partners to bring LNG to North America