BUILDING A WORLD OF DIFFERENCE®

Net Present Value (NPV) AnalysisNet Present Value (NPV) Analysis

June 10, 2008

BUILDING A WORLD OF DIFFERENCE®

B&V - 2 6/10/2008

Key Conclusions

4.5 Bcf/d TransCanada Proposal has Positive NPV Benefits to All Stakeholders

Tariffs for Smaller Pipeline Configurations Increase by 13% to 21% Relative to the 4.5 Bcf/d Proposal Base Case

NPV for Key Stakeholders Indicates Positive NPV for the Conservative Base Case

NPV Results are Sensitive to Many Factors with Commodity Prices being the Most Significant

Producer NPV Remains Positive with Low Market Price Assumptions

Production from Proven Reserves Drive Positive Stakeholder NPV

Smaller Initial Pipeline Capacity and Contract Period for Smaller Pipeline Configurations Reduce Reserve Risk Relative to the Proposal Base Case

BUILDING A WORLD OF DIFFERENCE®

B&V - 3 6/10/2008B&V - 3

Impact of the Gasline: Cash flows and NPV calculated are the difference between oil+gas and oil only operations.

Oil + Gas $$

Oil Only $

Cash Flows from Gas $

_

=

BUILDING A WORLD OF DIFFERENCE®

B&V - 4 6/10/2008B&V - 4

The NPV Modeling Approach Utilized by Black & Veatch

OUTPUTS

Cumulative NPV

Distributions

INPUTSMonte Carlo

Upstream Model

State NPV Model

MidstreamRate Model

Production Scenarios

Capital Costs

Price Model

Informational Outputs

Links Sheet

Timing / Scheduling

SOA NPV 4.5 BCF/d Pipeline

Mean=72.9

SOA NPV 4.5 BCF/d LNG

Mean=48.1

0%

20%

40%

60%

80%

100%

20 37.5 55 72.5 90

State NPV - $Billions

Prob

abili

ty

BUILDING A WORLD OF DIFFERENCE®

B&V - 5 6/10/2008

Overview of Natural Gas Price Assumptions Utilized in the NPV Analysis

Gas delivered to different locations has different prices: Henry Hub vs. AECO

Prices dependent on the supply/demand balance and pipeline infrastructure

Forecasts are required to evaluate the project from 2020 to 2045+

Relied on range of forecasts

EIA

Wood Mackenzie

B&V

Others

Wood Mackenzie is the base case for analysis

Independent market assessment

Projects an AECO price

BUILDING A WORLD OF DIFFERENCE®

B&V - 6 6/10/2008

Forecasted prices are “point” estimates, all dependent on a specific set of assumptions

None are expected to be on the dot “correct”

Price uncertainty and associated risks could be better illustrated using a forecasted price distribution:

Black & Veatch assumes that the majority of price risks comes from uncertainty in fundamental factors:

Understanding the Factors that Lead to Future Prices

Range of Price

Pro

babi

lity

• Finding & development costs• Technological improvement

• LNG imports• Power generation demand

• US industrial demand• CDN industrial demand

BUILDING A WORLD OF DIFFERENCE®

B&V - 7 6/10/2008Draft Work in Progress – Privileged and Confidential

Real Price Growth at AECO is Expected Under All Price Forecast Scenarios due to Increasing Costs

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

2008 2012 2016 2020 2024 2028 2032 2036 2040 2044

Nom

inal

$/M

MB

tu

Wood Mackenzie AECO Forecast

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

2008 2012 2016 2020 2024 2028 2032 2036 2040 2044

Nom

inal

$/M

MB

tu

Wood Mackenzie AECO Forecast

Estimated EIA AECO Forecast

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

2008 2012 2016 2020 2024 2028 2032 2036 2040 2044

Nom

inal

$/M

MB

tu

Wood Mackenzie AECO Forecast

Estimated EIA AECO Forecast

BV Base Case Forecast

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

2008 2012 2016 2020 2024 2028 2032 2036 2040 2044

Nom

inal

$/M

MB

tu

Wood Mackenzie AECO Forecast

Estimated EIA AECO Forecast

BV Base Case Forecast

BV P10

BV P90

BUILDING A WORLD OF DIFFERENCE®

B&V - 8 6/10/2008

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044

Bcf

/d

PBU/State Existing Point ThompsomState - Yet-to-Find Fed-Onshore

Production Assumptions: 4.5 Bcf/d Proposal Base Case

Yet-to-find production assumes a 50/50 mix of

State/Fed Onshore reflecting ratio of available

reserves

BUILDING A WORLD OF DIFFERENCE®

B&V - 9 6/10/2008

Positive Netbacks Are Expected Under All Price Forecasts

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

2020 2024 2028 2032 2036 2040 2044

Nom

inal

$/M

MB

tu

Nominal AECO Tariff

Wood Mackenzie AECO Price Forecast

EIA AECO Price Forecast

BV Base

BV P10

BV P90

Positive Netback

BUILDING A WORLD OF DIFFERENCE®

B&V - 10 6/10/2008

Cash flows from 4.5 Bcf/d Proposal Base Case

Producer$14824%

U.S. Gov$11619%

State of Alaska$26244%

TransCanada$6911%

Canadian Gov.$92%

Cash Flows to Stakeholders

($5.0)

$5.0

$15.0

$25.0

$35.0

$45.0

$55.0

2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 2041 2044

$ B

illio

ns

State of Alaska Aggregate Producer Trans Canada

Canadian Gov. US Fed. Gov.

BUILDING A WORLD OF DIFFERENCE®

B&V - 11 6/10/2008

4.0 Bcf/d Conservative Base Case Cash FlowsCash-flows to Stakeholders

($5.0)

$5.0

$15.0

$25.0

$35.0

$45.0

$55.0

2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 2041 2044

$ B

illio

ns

State of Alaska Producers Trans Canada

Canadian Gov. US Fed. Gov.

Producer$13725%

U.S. Gov$10719%

State of Alaska$24544%

TransCanada$5510%

Canadian Gov.$102%

BUILDING A WORLD OF DIFFERENCE®

B&V - 12 6/10/2008

3.5 Bcf/d Low Volume Sensitivity CaseCash-flows to Stakeholders

($5.0)

$5.0

$15.0

$25.0

$35.0

$45.0

$55.0

2008 2011 2014 2017 2020 2023 2026 2029 2032 2035 2038 2041 2044

$ B

illio

ns

State of Alaska Producers Trans Canada

Canadian Gov. US Fed. Gov.

Producer$11624%

U.S. Gov$9119%

State of Alaska$20944%

TransCanada$5211%

Canadian Gov.$92%

BUILDING A WORLD OF DIFFERENCE®

B&V - 13 6/10/2008B&V - 13

Expected State of Alaska NPV5 is $66.1 billion

$261.5

$147.6

$66.1$51.3

$31.5

$0

$50

$100

$150

$200

$250

$300

CashFlow

2% 5% 6% 8%

$ B

illio

ns (2

008)

Discount Rate:

Base Case

BUILDING A WORLD OF DIFFERENCE®

B&V - 14 6/10/2008B&V - 14

Price is a Key Driver to Variations in the NPV5 to the State of Alaska

P10

2% Capex; 2% Opex

P10

50% Decrease

PBU 3.5 BCF/d; No PT

100% Increase

P90

8.81%

P90

6% Capex; 5% Opex

$- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0

Production Scenarios

TransCanada Schedule

Pipeline Interest Rate

TransCanada Capital Cost

Upstream Capital Costs

Cost Escalation

Commodity Prices

State NPV5 ($Billion 2008)

Base Assumption

Wood Mackenzie

Prices

PBU 3.0 BCF/d; PT Blowdown

Base Case

4% Capex; 3% Opex

Base Case

Mean Capital

7.06%

SensitivityBase Case

P90P10

BUILDING A WORLD OF DIFFERENCE®

B&V - 15 6/10/2008B&V - 15

The impact from price uncertainty swamps estimated capital cost and schedule uncertainty.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0 $50 $100 $150 $200 $250

$2008 Billions NPV5

Pro

babi

lity

(%)

4.5 AECO w/ Price and TCSchedule-Cost Uncertainty4.5 AECO w/ only TC Schedule-Cost Uncertainty

Uncertainty analysis required the use of the lower

B&V forecasts. Results indicate no likelihood for a negative NPV to the State.

BUILDING A WORLD OF DIFFERENCE®

B&V - 16 6/10/2008B&V - 16

NPV for the State is Expected to be Positive Under all Price Scenarios

State NPV5

$66.1

$42.3

$56.5

$18.6

$118.2

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

WoodMackenzie

EIA 2008 BV Mean BV P10 BV P90

$ B

illio

ns (2

008)

BUILDING A WORLD OF DIFFERENCE®

B&V - 17 6/10/2008

Like the State, NPV for the Producers is Expected to be Substantial under Base Case Assumptions

$13.5

$1.6

$11.9

$5.2

$0.3

$4.9

$0.0

$3.0

$6.0

$9.0

$12.0

$15.0

AggregateProducers

YTF Proven Reserves

$ B

illio

ns (2

008)

NPV10 NPV15

Existing reserves provide the greatest amount of NPV benefit to the producers due to the low expected capital outlay required to flow into the Gasline.

YTF NPV is understated due to the analysis life of 25 years. If the analysis is expanded to 35 years, YTF NPV improves to $3.9 billion at a 10% discount rate.

BUILDING A WORLD OF DIFFERENCE®

B&V - 18 6/10/2008B&V - 18

Producer Sensitivity to Key Variables is Similar to the State

P10

2% Capex; 2% Opex

P10

P90

50% Decrease

6% Capex; 5% Opex

P90

P10

8.81%

P90

100% Increase

PBU 3.5 BCF/d; No PT

$(5.0) $- $5.0 $10.0 $15.0 $20.0

Production Scenarios

Pipeline Interest Rate

TransCanada Capital Cost

TransCanada Schedule

Upstream Capital Costs

Cost Escalation

Commodity Prices

Producer NPV10 ($Billion 2008)

Base Assumption

Wood Mackenzie

Prices

PBU 3.0 BCF/d; PT Blowdown

Base Case

4% Capex; 3% Opex

Base Case

Mean Capital

7.06%

Sensitivity Base Case

BUILDING A WORLD OF DIFFERENCE®

B&V - 19 6/10/2008B&V - 19

The producers have a very low likelihood for a negative NPV10 from low prices, no likelihood from cost scope risk.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-$10 -$5 $0 $5 $10 $15 $20 $25 $30 $35 $40

$2008 Billions NPV10

Pro

babi

lity

(%)

4.5 AECO w/ Price and TCSchedule-Cost Uncertainty4.5 AECO w/ only TC Schedule-Cost Uncertainty

Uncertainty analysis required the use of the lower

B&V forecasts. Results indicate less than a 5%

chance of a negative NPV10to the Producer.

Chance of negativeNPV10 is~ 5%

BUILDING A WORLD OF DIFFERENCE®

B&V - 20 6/10/2008B&V - 20

NPV for the Producers is Expected to be Positive Under all Price Scenarios

Producer NPV10

$13.5

$1.6

$9.3

$0.8

$12.2

$1.2$2.0

($0.5)

$2.5

$20.2

$2.5

$17.7

$11.9

$8.5

$11.0

($5.0)

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

Aggregate Producers YTF Proven Reserves

$ B

illio

ns (2

008)

Wood Mackenzie EIA 2008

BV Mean BV P10BV P90

Producer NPV15

$5.2

$0.6

($0.3)

$8.0

$0.5

$7.5

$0.3

$4.9$3.5

$0.1

$3.4 $4.6

$0.2

$4.7

$0.9

($5.0)

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

Aggregate Producers YTF Proven Reserves

$ B

illio

ns (2

008)

Wood Mackenzie EIA 2008

BV Mean BV P10

BV P90

BUILDING A WORLD OF DIFFERENCE®

B&V - 21 6/10/2008B&V - 21

Project Cash Flows are Favorable if Built Today

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044

Gas

Pric

e (R

eal $

/MM

Btu

)

4.5 Case Tariff (Approximate Real)

Wood Mackenzie AECO (Real)

BV AECO Base (Real)

BV AECO P90 (Real)

BV AECO P10 (Real)

Current AECO Forward Curve

Real prices are shown (no inflation) against the projected tariff based on today’s capital costs (no inflation). Today’s AECO forward market is $9.62/MMBtu.

BUILDING A WORLD OF DIFFERENCE®

B&V - 22 6/10/2008

Analysis of Impact of Price Levels - Flat Real Prices

Analysis investigated the impact of price levels on project economics

Flat real prices levels from $5/MMBtu to $10/MMBtu were considered for natural gas price at AECO

2.5% inflation assumed to estimate dollars of the day prices

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

Nom

inal

$/M

MB

tu

Real Flat $5 Real Flat $6 Real Flat $7

Real Flat $8 Real Flat $9 Real Flat $10

BUILDING A WORLD OF DIFFERENCE®

B&V - 23 6/10/2008

Price levels have a significant impact on Producer NPV. NPV10 remains positive with real prices in $5-$10/MMBtu range.

Aggregate Producer NPV10

$4.7

$7.7

$10.2

$12.5

$14.6

$16.5

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

4.5 AECO$5 Real

4.5 AECO$6 Real

4.5 AECO$7 Real

4.5 AECO$8 Real

4.5 AECO$9 Real

4.5 AECO$10 Real

$Bill

ion

2008

Aggregate Producer NPV15

$1.9$3.1

$4.2$5.1

$6.0$6.7

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

4.5 AECO$5 Real

4.5 AECO$6 Real

4.5 AECO$7 Real

4.5 AECO$8 Real

4.5 AECO$9 Real

4.5 AECO$10 Real

$Bill

ion

2008

BUILDING A WORLD OF DIFFERENCE®

B&V - 24 6/10/2008B&V - 24

YTF Gas Required to Keep Pipeline Full under Different Contract Periods and for Different Pipeline Capacities

% of Contract Volume Requiring YTF Gas

26%

15%

3%

28%

3%

21%

1%

15%

10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

25/25 20/20 15/15

Contract Period/Depreciation Life (years)

%

4.5 Bcf/d 4.0 Bcf/d 3.5 Bcf/d

BUILDING A WORLD OF DIFFERENCE®

B&V - 25 6/10/2008B&V - 25

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044

Rev

enue

/Cos

t ($

Bill

ions

)

4.5 Case Transportation Cost

4.5 Case Total Revenue

4.5 Case Total Revenue - 0 YTF GAS

Producer NPV is Expected to Remain Positive if No YTF Gas is Produced Producer NPV10

$13.5

$1.6

$0.0

$11.3$11.9

$11.3

$0.0

$3.0

$6.0

$9.0

$12.0

$15.0

AggregateProducers

YTF Proven Reserves

$ Bi

llion

s (2

008)

Base Case

0 YTF GAS

BUILDING A WORLD OF DIFFERENCE®

B&V - 26 6/10/2008B&V - 26

Production Assumptions: 4.0 Bcf/d Case

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044

Bcf

/d

PBU/State Existing State - Yet-to-Find Fed-Onshore

Yet-to-find production assumes a 50/50 mix of

State/Fed Onshore reflecting ratio of available reserves

BUILDING A WORLD OF DIFFERENCE®

B&V - 27 6/10/2008B&V - 27

Production Assumptions: 3.5 Bcf/d Case

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044

Bcf

/d

PBU/State Existing State - Yet-to-Find Fed-Onshore

Yet-to-find production assumes a 50/50 mix of

State/Fed Onshore reflecting ratio of available reserves

BUILDING A WORLD OF DIFFERENCE®

B&V - 28 6/10/2008B&V - 28

Expected Tariffs from the North Slope to the AECO Market

AECO Tariff

$4.73$5.33

$5.71

$-

$2.0

$4.0

$6.0

$8.0

$10.0

4.5 Bcf/d 4.0 Bcf/d 3.5 Bcf/d

Nom

inal

$/M

MB

tu

4.5 Bcf/d 4.0 Bcf/d 3.5 Bcf/d

BUILDING A WORLD OF DIFFERENCE®

B&V - 29 6/10/2008B&V - 29

TransCanada NPV8.8

$4.5$3.8 $3.6

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

4.5 Bcf/d 4.0 Bcf/d 3.5 Bcf/d

$ B

illio

ns (2

008)

4.5 Bcf/d 4.0 Bcf/d 3.5 Bcf/d

TransCanada NPV8.8 is Significant under Proposed Terms and Base Case Assumptions

BUILDING A WORLD OF DIFFERENCE®

B&V - 30 6/10/2008B&V - 30

State NPV5

$66.1$60.7

$51.6

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

4.5 Bcf/d 4.0 Bcf/d 3.5 Bcf/d

$ B

illio

ns (2

008)

The State’s NPV5 Project is Lower with Lower Project Capacity but Remains Significant

BUILDING A WORLD OF DIFFERENCE®

B&V - 31 6/10/2008B&V - 31

Producer NPV Shows a Similar Trend When Compared to the State and TransCanada

Aggregate Producer NPV10

$13.5$12.3

$10.5

$-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

4.5 Bcf/d 4.0 Bcf/d 3.5 Bcf/d

$ B

illio

ns (2

008)

Aggregate Producer NPV15

$5.2 $4.7$4.0

$-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

4.5 Bcf/d 4.0 Bcf/d 3.5 Bcf/d

$ B

illio

ns (2

008)

BUILDING A WORLD OF DIFFERENCE®

B&V - 32 6/10/2008

Why does a delay increase State NPV5?

Why does a delay increase State NPV5?

Prices increase

Progressivity for production taxes increases as prices rise

Production Tax in 2020 = ~25%

Production Tax in 2045 = ~50%

Could a delay cause a decrease in the State NPV5?

Yes, if prices increase at a lower rate than the baseline Wood Mackenzie prices, then a project delay would cause a decrease inthe State NPV5