Arctic Resources Company Northern Gas Pipeline Project Forrest E. Hoglund Chairman & Chief Executive Officer

Arctic Resources Company Arctic Gas Pipeline 1.Most important energy project for North America – 44Tcf 2.Two competing pipeline proposals – just like Politics make Florida in November look like kids play

Arctic Resources Company Comparison of Options 1.Two Pipeline Option – ANGTS through Alaska plus Mackenzie Valley Pipeline 2.“Over the Top Route” – Prudhoe Bay to Northern Canada and up the Mackenzie Valley to Alberta – One Pipeline

Arctic Resources Company ANGTS & Mackenzie Delta Pipeline Routes Zama Boundary Lake

Arctic Resources Company ARC’s Northern Gas Pipeline Route

Arctic Resources Company Economic Comparison 2 – Line Approach Over the Top ANGTS Mackenzie Total Northern Route Capital Construction Cost ($ Billion): = Capacity (after ramp up) (BCFD): = Length to Edmonton, AB (± Miles): 2, ,350 = 3,490 1,700 Mountains to Cross (± Miles): = Wellhead Netback (Mcf): $0 to $0.20 $0 to $0.10 $0.75 to $0.90 (at $2.50/Mcf into Chicago)

Arctic Resources CompanyPolitics Alaska Aggressively Supports 2 Pipeline Approach Jobs, gas for Alaska, state pride Passed State Law prohibiting the “Over the Top” pipeline route Passed ban on “Over the Top” in House Energy Bill May try same effort in Senate

Arctic Resources Company Problems with Alaskan Approach ANGTS route uneconomic today w/o large subsidies Result will be to make reserves low to no value and may cause stalemate like in 1975 State makes $100 mm plus per year more with “Over the Top” route Two pipeline approach causes conflict between U.S. and Canada Alaska actions are a direct challenge to Canada, ANGTS can lower value of Canadian reserves

Arctic Resources Company Canadian Implications Canada strongly interested in an economic route – Over the Top Alaskan moves seen as threatening Canada will have major say where pipeline goes – NEB hearings Canada and U.S. interests are clearly aligned – one economic project

Arctic Resources Company Arctic Resources Approach Lowest Tariff – Fewest Obstacles 1.Best route – Best economics 2.Significant Aboriginal involvement −100% Ownership −ARC is Program Manager 3.100% Debt Financing 4.Consortium runs project

Arctic Resources Company ARC Approach 1.Obtain Aboriginal support 2.Canadian Aboriginal and Alaskan Municipal Entity files project with respective Canadian and U.S. regulatory authorities 3.U.S. and Canada come together on what the best project is 4.Major companies finally back most economic route 5.Consortium fully formed to carry project forward