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Enterprise Products Partners CEO Hosts Analyst & Investor Day (Transcript)

Enterprise Products Partners (EPD)

Analyst & Investor Day

April 17, 2013 09:00 AM ET


Randy Fowler - EVP and CFO

Michael Creel - President and CEO

Jim Teague - COO

Tony Chovanec - VP, Fundamentals and Supply

Bill Ordemann - Group SVP, Unregulated NGLs, Crude and Natural Gas Assets

Jim Cisarik - SVP

Jerry Cardillo - President, Enterprise Marine Services

Tom Zulim - Group SVP

Lynn Bourdon - Group SVP, NGL and Natural Gas Marketing

Leonard Mallett - Group SVP, Engineering

Terry Hurlburt - SVP, Operations and Environmental, Health, Safety & Training



Randy Fowler

Good morning. Welcome everyone to Enterprise’s Annual Analyst meeting. This is a conference call, I have to read the forward-looking statement but I am not going to do that, I'll just let you guys read on your own when Mike gets up here but we are going to kick it off here with Mike and Jim and Tony and then we are going to have a Q&A and there some break there. We are going to have plenty of time for Q&A actually throughout the morning as we have our list of speakers come up here and give you a lot of good detail information. So we are looking forward to it.

We are going to break the lunch around noon, try to shoot around noon. We are going to have lunch downstairs and probably wrap up around 1:30 p.m. to 1:45 p.m. today and then as we did last year, we are going to have management round tables, where you can access management on a more informal basis. I think it’s going to be side room here and then I guess that’s it. So we also, if you noticed on the table, we have a little flyer, a handout from the NAPTP on their activities, it’s a kind of a sheet that we use when we go to Washington and that’s also available on their website at naptp.org, okay. And I guess with that Mike, we will go ahead and get started, thank you.

Michael Creel

Thanks, Randy. Thanks for joining us. Great dinner last night, good wine, good people. A lot to talk about today and we have left room again for the formal Q&A and then over lunch today and after the presentation there will be time to meet with members of our team and get a little more insight.

Not that I need to remind everyone but we are the largest publicly traded energy partnership. We have an enterprise value about $72 billion; keep having to refresh that number which is a good thing. We went public 15 years ago, July 1998 with about $700 million assets. We have had a tremendous run in terms of growth, again as you know the first path of that period we did it mostly by acquisitions and for the last seven or eight years, it has been primarily by organic growth.

We think we have a very unique structure, very simple structure and we think that it provides long-term growth for us. It provides a clear understanding for our investors of how organized and we are focused on running a business as opposed to looking at a financial structure.

Our general partner sponsor owns 37% of the LP units, so closely aligned with the interest of the public unit holders, particularly since there are no IDRs. The GP sponsor intends to purchase at least $100 million worth of LP units this year. It's already purchased $25 million in the first quarter through the drip, just again demonstrating the support that they have for the partnership.

We have very consistent distribution growth, we have 44 distribution rate increases over the periods since our IPO and we have had 35 consecutive quarters where we have increased the distribution. We think that investors appreciate that and the fact that we increased distribution even in 2008, 2009 during the financial crises.

Again, we have a very simple organization structure and capital structure. Almost all of our debts on the balance sheet is 99.99, maybe not quite that much. But we have got two little pieces of both balance sheet debt that we inherited. It’s our practice to finance everything at the top level so everyone is (inaudible) and that there is no structural subordination of our debt holders.

What we have seen recently is a lot of partnerships that have been doing acquisitions getting very complicated, a lot of partnerships underneath them, a lot of inherent conflicts of interest and you can see from here that it could be very confusing for investors knowing where to invest, what they are investing in, what the conflicts of interests are, and we know that quite well because this was us.

Once upon a time, we had a lot of publically traded entities. It was very confusing, it really kind of distracted us from running the business and so we have simplified the structure considerably and today this is what you got. You have got one partnership, no IDRs, if you want to invest, it is pretty clear to understand where it is and for those of us running the business, you are not really looking at separate entities and trying to figure out where you want to grow, where you want to put an asset, you are really growing the fundamental business. We think investors appreciate the simplicity that we offer and frankly we think it’s the best way to make sure that management is aligned with the interest of public unit holders.

2012 was a busy year for us. We completed 26 major capital projects with the total cost about $3 billion and with that we are about 3.3% under-budget in total. We did sell some assets in 2012. We sold the remaining energy transfer equity assets that we owned for about $1.1 billion and we re-invested the proceeds from that sale in our organic growth projects. In our mind taking assets that yield 6%, 7% returns and reinvesting that in projects that have mid-teen returns adds a lot of value for our unit holders and frankly we've looked at assets that aren’t that meaningful to us, that aren’t core to us and try to figure out way to either monetize them or repurpose them.

In terms of operating milestones, we had record natural gas NGL pipeline volumes, NGL fractionation volumes and our fee-based natural gas processing volumes have grown quite substantially.

From the financial side, we had record gross operating margin $4.4 billion, distributable cash flow of $4.1 billion and including the $1.2 billion of proceeds from the sale of assets. We had a 5.6% increase in our cash distribution, 1.3 times distribution coverage which again excludes the proceeds from the sale of assets. So a very healthy distribution coverage in spite of the excess cash that we had from sales.

We retained distributable cash flow of over $700 million for reinvestment in the partnership. Again we do that because we think it reduces the frequency that we have to access the equity capital markets. If we are yielding in the 5% to 5.5% range then we can reinvest some of that cash flow in 15% assets, it can provide more value to our unit holders over time.

Our debt to adjusted EBITDA ratio was 3.6 times at the end of the year and just as a reminder, we are rated BBB+, BAA1 by S&P and Moody's, the only mid-stream MLP reinvestment grade.

And as a reminder, we would like to put this up because it looks good and it’s colorful but it also demonstrates that Enterprise has done quite well over this timeframe. If you look at the flashing blue light, oddly enough that Enterprise and for the first three months of this year for the 3, 5 and 10 year compound annual growth rate, we are at the top of the path. The orange box that you see is the Alerian MLP index kind of proxy for MLPs in general and so the message there is that MLPs have been a great investment over this long term and if you like MLPs then certainly Enterprise deserves a look.

2013, is going to be another busy year, seems like they're all busy and Leonard will tell you how busy he is, but we got $7.5 billion of capital projects that we've announced and that are currently under construction. We’ve got $2.2 billion of projects that we expect to begin service in 2012. So as you can see we're already looking forward at 2014 and '15 that assets will be placing in service then. We have our third natural gas processing train at Yoakum up and running, so it's producing like crazy. In fact all three of those trains are operating in excess of design capacity.

We've got about $4 billion and I think it's probably inching up to about $4.2 billion of CapEx that we expect to spend in 2013 on organic growth projects. This is a busy year and you'll hear more about each of these individual projects and how they add value to the total as we go on.

I've already mentioned the fact that we've received the ratings upgrade from S&P and Moody's. We have access to debt net and capital markets already this year to the tune of about $2.7 billion. Strong investor support in both the equity and the debt offerings, we're oversubscribed by over two times.

So we appreciate the support that we have in the investment community. We think that's going to give us a leg up in making sure that these projects that we're financing are backed by long term capital at really attractive rates. This should provide some pretty interesting accretion for our unit holders as these projects come online and frankly we can be more excited about the future. And we say that every year but I think even more so this year.

And with that let me turn to over to Jim Teague.

Jim Teague

Thank you, Mike. You'll note from the speakers today that Mike and I are the only ones who got the email on the dress code. Everybody else wore their coats and ties; I guess they're trying to show us up. What I'm going to try and do today is set the stage for the rest of the folks. And you see this map constantly, I don't think we ever. And you'll probably see it a number of times throughout the course of this meeting. And I think on the first stop, we say this a lot, and if you look at us compared to others what you see is a fully integrated value chain.

What we say is, we don't just go out and collect assets. I think that's why we like to build systems. And Mike said it, we don't manage a financial portfolio we manage businesses and we like the idea that what we have feeds on itself throughout the value chain.

The other thing is what we build or what we buy has to fit what we already have, we've been unbelievably disciplined in that regard and you don't see very many stranded assets on that map, maybe a few terminals here and there.

It's an unbelievable supply system in that it is tied to most of the key supply basins in the U.S. but I think what really differentiates this system is its ability to serve and used markets and you're going to hear a lot about that today. We've said it before but for some of you that haven’t heard it, that system is literally pipeline connected for natural gas liquids to every ethylene plant in the United States, there's nobody else who can say that.

Its pipeline connected to 90% of the refining capacity east of the Rockies. Now people can build pipelines into supply basins and some have done a nice job of that. But I think that market connectivity can't be duplicated, I don't think people can afford it. We've proven that we can repurpose assets and you're going to hear a lot about that today.

One that I left off of this is the Phoenix pipeline out in the Gulf of Mexico that was a critical component of our Lucius project that was a gas pipeline that we repurposed to crude oil. Everybody's read about Seaway, we repurposed Seaway, now we're looping it, the ATAX pipeline we're repurposing a good part of the TE products pipeline to bring ethane down and then Tom Zulim's going to talk about our Diluent project where we are repurposing another part of the TE products pipeline.

It's a platform for growth. We've done it through a lot of organic projects, we've done it through joint ventures and I don't know how many times I get questions from some of you guys about acquisitions. And just because we haven't made any, doesn't mean we haven't got our eye on the ball. It's just we get a bigger return now from organics but believe me we have the dream sheet should the valuations support it.

The theme today is kind of the Enterprise way and I'm probably going to stumble on this one. This was a slide that was put together by Bill Ordemann and Lynn Bourdon, as they were explaining to some of our businesses why we were going to reorganize in this manner. But this is the Enterprise way, and there's two key points to be made from this and then I’ll try to stumble through what Lynn will do much better with later.

But there's two key points, another word for that slide is teamwork. It says a highly integrated, three tightly integrated functions probably a better word is interdependent functions. The other point to be made from this slide is within Enterprise our people don't have their own book, there's only one book. So in the course of having that teamwork, we don't care where the money is made, Tom Zulim doesn't care if it's made in his terminals or if it's made in marketing as long as the money is made.

The way this works is we have asset managers and we've organized like this in NGLs, we've organized like this in natural gas and we're in the process of moving our crude department to this. We have asset managers, their job is to extend the value chain, enlarge the footprint in a manner that fits what we already have. So they're dealing with the third parties out there.

On the flip side is the marketing grid. Guess what, a lot of those asset's biggest customer is our marketing group, their job is to keep it full. Their job is to optimize around the opportunities that are inherent every day to make more money, and then that group in the middle is our distribution group. We do something other's don't. In many companies you'll see every asset guy has his own scheduler, in Enterprise we centralize that function and I'll give you an example, in NGLs that's centralized under Rudy Nix.

So those are the guys that implement what the asset managers put together and what the marketing guys put together and make it happen. All of these three groups work together as a team. If you look at a long term deal I will use a fractionator as an example. That asset group are the ones that are saying we need to build another train, we’ve got our Y-grade balances and we know who we're dealing with and we know what the potential is and we need to start the process of thinking about building another train.

In the meeting to discuss that there will be a marketing presence because those guys will be a customer of that train, so they're going to bring their input to the table and in that meeting will be our distribution people, typically Rudy griping about something. But in that meeting will be our distribution people and they're there to say, wait a minute guys, you don’t have the underlying infrastructure to support this and what they're bringing to the table is maybe you need a little more brain capability. But in the final analysis when we do the deal everybody's had their input and it's a consensus as to where we go and I frankly don't think anybody else does it like this. It's in our DNA. Because guess who drove this from the beginning and that’s how we do business today.

And then how the Enterprise way and Enterprise people matter and I am going to speak to the people in just a minute and I am not going to deliver this slide too much other than two points. As we go out to our producer customers, we have two things that we are pitching and we are driven by providing these services that are capable of one; making sure the product flows, flow assurance and we preach that and the other is we are focused on given a market choices. We are not going to take a producer to a single interstate, we are not going to take an NGL producer to a single cracker location, we are going to show them that when you come to us and we do a deal, we are going to make sure your product flows and we are going to make sure that you have some market choices with your product.

If we are talking to an end-user like a petrochemical company we are going to offer two things, we are going to offer supply reliability, it’s there when you want it and we are going to develop our supply flexibility. And you will see that as these guys go through their presentation, that’s what we are attempting to do.

I think having to compete with the system that is as integrated as ours that’s tied to as many supply basins as we are, that’s tied to as much end-use demand as we are tied to it’s got to be difficult for our competitors. But I think what really makes it difficult for them are our people. We are still a family when Mike and I get over we talked about $700 million in assets; we haven’t lost that same mindset. That DNA still permeates through elements of Dow Chemical you all know I am a retiree so come on. It still permeates through Enterprise, that’s who we are. We are still a family and I wish I could bring; what do we got 7,000 employees, now I wish I could bring all 7,000 employees in here and let you see how committed and how dedicated they are. I can’t so I brought a couple.

And I am going to embarrass them a little bit but Graham Bacon where are you? You got to stand up buddy, we are in a tie. I thought he is going to come in here and not make suit today. Graham’s a Senior Vice President and Graham is here as a representative because Graham represents over 3,000 field operating employees that are the most dedicated that I have ever seen and committed to running our assets reliably and safely. So stand your butt back up Graham, reliably and safely and they are committed to making it happen to keep it moving.

Now there is something else about Graham that I like. I am an old novel officer Graham is a commander in a naval reserve, so he is going to get a pension out of that he works for Terry Hurlburt. Graham has half of our operations. We have it split. Tom Burns has the other. But this guy has a calmness about him. He doesn’t get flustered. He has got his hand on the wheel and we have total faith that we don’t worry about our operations as long as Graham Bacon is there now, you can sit down Graham.

Joseph where are you? I have never seen Joseph in a tie. Joseph Tanner runs all of our trucking and for crude oil in South Texas and West Texas. He has got 300 people reporting to him. Whenever he is got a with contract trucks he is running 340 trucks. He is hauling about 200,000 barrels a day of crude oil in those 300; you do the math that’s pretty strong. He works 24/7. His wife will call him sometime at midnight and say Joseph you need to come home and she is not calling him at the bar, she is calling him at the office. So if you are going to compete with us you better get there early and stay late because Joseph Tanner does, thank you Joseph. How much that tie cost buddy boy?

Where is Laurie? Sitting at the back really as usual. Laurie’s different than Joseph. Laurie’s responsible for our fractionation business. By the end of the year this young lady will be responsible for a million barrels a day of fractionation. It’s not bad for a volleyball player from St. Edward's University in Austin. But Laurie can’t stay till midnight because Laurie’s got two kids and we are sensitive to that. so Laurie she has to go home at 5:30, 6:00, 6:30, because she has got two little kids to take care of and to get them fed and get the homework done and put them to bed. but I can tell you from emails I have gotten at 11 o’clock that laptop is out after those kids are put to bed and she still is doing our business to give you a return and your clients a return so if you are going to compete with Laurie you better get up early and you may go home on time but you better work late, thank you Laurie.

Where is Mike Smith? Mike is Senior Vice President of our unregulated NGL business and I am going to be quick on Mike, here is the bottom line on Mike Smith. we got him when bought the Mid-America Pipeline System and he was this little junior guy and we have watched him grow into what he is today but when we have a tough negotiation, he is the guy we want around because he will sit in that conference room 16 hours a day, seven days a week and he makes the party sit there and trust me when you sit there that long you start giving stuff up just to get the hell out of there. He is unflappable, he is even tempered, not like me, he is not volatile and we are delighted that we got him running that business.

Kevin? Where is Kevin? Okay, you can look at him and tell he is a weight lifter, I think that’s a prerequisite to be in engineering. Kevin’s in our engineering department. He is Vice President over pipelines and plants. When we have projects Kevin is the guy. He is one of the key parts of keeping those projects between the digits, keeping them on track making sure that they are completed on time.

He works real closely with that asset group as they develop the concepts for some of these projects. Kevin is a big reason why Mike said we were 3% under budget on what we brought in last year. Thank you, Kevin.

Danika are you here? I keep wanting to call her Danika; I don’t know why. Danika runs our TE products pipeline system. She is got about 5,500 miles of pipe, 350 employees. She is really coping with some difficult situations now because she is involved in running pipelines that we are repurposing. so she is running a pipeline right now it’s got refined products and propane in it that this time next year is going to have ethane in it. She's got about 24 million barrels of storage on that pipeline system, how many terminals Danika, seven, eight, ten but it’s been a challenge and we are delighted to have Danika doing that because she stays all over it. Incidentally I think you spent a little time in the CIA so we are real careful what we say around her.

And then there is one more that doesn’t expect this but I saw him here and I have to recognize him and that’s Daniel Boss, where is Daniel? Daniel is in our accounting group but Daniel is the guy that works closely with our marketing people to make sure that we are in compliance with our controls, that we are maintaining our flat price book. But the thing about Daniel he does it in a manner that he’s part of the team. We don’t call him Darth Vader any more we call him team mate.

I wish I could have brought all 7,000 because these guys represent who we are and ladies, who we are and what we’re about and more driven to make sure that we continue to grow and we continue to make our budget.

What we thought we do here is just talk a little bit about what we told you last year and what to expect this year. And last year we said that ATEX - we’re talking about ATEX at the time, I don’t think we’d completed it. When we’re talking about ATEX and Seaway, we saw they are going to be cornerstone projects. Well now we’ll tell that PDH plant, Jerry is going to talk about it, it's a cornerstone projects. He is going to talk to you about how it really adds to our chemical business.

Gulf Coast header system, Tom’s going to talk a little bit about it, that’s going to be a cornerstone. He’ll tell you what the upside is. One that is not on here that should be and Bill's going to speak to it and that’s what we’re going to do around our crude oil assets in particular as our ECHO terminal.

Last year we said, you know what it’s no longer just Shale gas, its Shale oil & gas and we’re benefiting from that with our Eagle Ford Crude Oil Pipeline, our Seaway Pipeline that Bill’s going to speak to you. These next two are together, wide gas to crude spreads we didn’t think they’re going to stay at 17% or whatever they were last year. But we said these things aren’t getting back to traditional norms and consequently you’re going to have a lot more petrochemical companies taking advantage of the cost position that the U.S. has and I’ll tell you, Tony will speak to all the announcements but what I can tell announcement you haven’t seen and people that are visiting us won’t understand the opportunity, there is still a lot out there that’s possible.

What all of the guys are going to talk to you about is when you bring all the supply, I’m a firm believer, price create demand. What they’re going to speak to is what we’re doing to penetrate that demand. We’ve got a real focus on, let's get the kind of connectivity in natural gas and crude oil that we enjoy in NGLs to the end user market.

This market we believe is evolving into an export market. Lynn will talk to you about what we’re doing in LPG and where we expect to go with that. What to expect and you'll get a lot of this from some of the guys, we’re going to grow our business in crude oil and I think Bill’s going to speak to that.

That ECHO terminal is a gem but we know what’s required to make it as successful as it can be. In petrochemicals Tom’s going to tell you we’ve always been the primary deliverer of feedstocks to the petrochemical industry we're not giving that up, I did a study one time and our assets delivered 80% of (inaudible) NGL feedstocks. We delivered 65% of feedstocks. We delivered a 100% of Shale chemicals feedstock, we delivered 50% of Exxon's NGL feedstock, we’re not giving that franchise up, and Tom will speak to that.

On exports, Lynn’s going to speak to you about LPG but I will tell you we think this market is evolving into a very large export market and we’re going to speak to some extent what we intend do and things like refine products in petrochemicals and who knows crude oil someday.

You can expect a significant growth from us continued, I didn’t think you can spend $4 billion a year continued growth from us on organic projects. You will see some JVs and you can rest assured we’re going to keep our eye on the ball should the right acquisition come along. But we’re not going to do anything stupid, we’re going to keep putting our money when we get the best return.

Our next speaker is Tony Chovanec. what we did three years ago is we recognized that good lord, we’ve got some reservoir engineers here that we’re not using as effectively as we should and we formed a fundamentals group and put Tony in charge of that we’ve got some people in there that understand refining a lot better than I do and understand petrochemicals and their job is to basically create Enterprises’ view.

They support the businesses much more than we ever thought possible. Sometimes we will take them out to see our customers, we sat down with CEOs of producing companies and CEOs with petrochemical companies to say this is what we see and more and more their creditability with those guys is going up.

So Tony is going to kind of tell you what we believe.

Tony Chovanec

Thank you, Jim. So, if you don’t remember anything else about my presentation today remember that I’m the guy that draws the red bean and gets to follow Jim Teague, so big shoes to fill. I’m responsible for fundamental analysis in supply pricing. Today I’m going to talk to you about the resource. A lot of it is Shale resource. I’m going to talk to you about the economics of the resource, what’s happening in drilling trends with the resource. I’m going to talk to you about some of the emerging plays and how they fit nicely with Enterprises' assets and last but not least, I’m going to speak to markets because that is the next most important thing for us to fill out to get the full value of this shale revolution.

I’m going to start with two slides that are really fundamental very basic and one is science oriented, it’s the science of the shales and then the other one is the economics. So, I’ll start with this one. I showed this last year and what we have on the slide is we have all the oil and gas wells that are ever produce in the U.S. plotted and again plotted between whether they're oil in the green or natural gas in the red.

On top of those wells we have ellipses that showed the most active shale plays and we say across the top of that slide it’s no coincidence. The reason it’s no coincidence is because these shales or the source rock for the conventional reserves that we’ve been drilling for years. So we used to have to go into traps and faults to find our hydrocarbons and now the technology has advanced such that we go right to the source rock to extract those hydrocarbons.

You’re going to be hearing more of, the last thing I did is we’ve superimposed Enterprises' asset base across the map. You’ll be hearing more about projects in around these exciting plays from our senior managers today.

The second fundamental slide that I’m going to show here relates to price and very simply I have done a graph with oil and natural gas prices. Starting in January of 2002, you see that price of natural gas and oil price is tracked each other pretty well, particularly when we got into the boom-boom days of early 2008 and then you see they crashed together.

But something happened in the 2009 frame and they disconnected. Oil started heading up and natural gas started heading down and that’s something that happened is what we all now know as the shale revolution.

That disconnection as we spoke about last year and as Jim has alluded to today is expected to remain. That spread is really good for what is the next phase of the shale revolution and that’s incremental demand not just locally but also globally.

So, with that spread that you see there, that spreads are driving producer behavior. It’s no surprise when you look at that spread that you see that natural gas rigs have fallen and that oil rigs have increased. You see this data it’s published every week by Baker Hughes.

But this next slide, you may be a little surprised from. On this one, we plotted just what’s going on in the natural gas rig counts from February, actually from January ’11 forward. And there you see that Lean Gas rigs were down 65%, it shouldn’t surprise you with what’s happened to natural gas prices, but lone behold you see Rich Gas rigs are down about 60%. When you see that other down there, think of traditional vertical rigs that you’re not surprised that they are down also.

So when you look at that you have to ask yourself “should we be concerned?” And I would say, “no, don’t be concerned because what’s causing this isn’t any flaws with the resource. What’s causing this is we have more resource right now than we have market”. So when we look at that, let’s take a deeper dive into some of these plays. There’s a lot going on in this slide, so let me just explain it to you. The bars, the orange bars are what we calculate is breakeven in the key plays across the country. The little yellow triangles are the best 25% of the producers in each of those plays. And then on top, I have taken and penciled in if you will, the amount of resource that we think that these individual plays are capable of producing when you need these break evens.

The way we calculated breakeven is a 20% before income tax return for these producers out of these plays, comes out of our reservoir group. We did not, so you know we did not include leasehold because it’s a very-very hard number to get your arms around and it’s largely already been secured by these folks. But there is some other things that this doesn’t tell you, you have to kind of thing through it. By the way I will do the math for you, on those numbers on the top. So, incremental gas production, very-very important; 25 to 50 BCF just in these plays; once we meet these breakeven. That’s what we believe their capability is and I will talk more to that in just a minute.

So if you look at how these bars run across the dollars there on the left, you see that almost all of these plays become profitable including their liquids production, become profitable at $4, in between $4 and $5. You also see that very few of them, we predict, need more than $5 to be profitable. But the other thing you see is it less than $3, if you are not in that top 25%. And think relatively, if you are not in that top 25% of producers, we have the best acreage in the plays and they are doing the best job, at the average gas price of $2.83 in 2012, we didn’t have a very good year.

So let’s look at this graphic and that is gas-oriented producers. So producers that are known to be gassy and not oily, and how their equities have performed since 2010 compared to the SMP. The SMP since 2010 is up some 45%. The average gas orient producers' equity price is down 30%, some of them as much as 60%. People like, I haven’t included their names, but they are all publicly traded, again think who is known to be a gas-oriented producer; and you can pick them out. Obviously, it hasn’t paid very well to be a gas producer. And I showed you the break evens before and I want you to keep this slide in mind because I am going to refer to this slide again when we talk about L&G.

We’ve showed this slide for a while, we’ve changed our analysis a little bit, but here is the story and what’s important on the slide. What are producers doing? What are these people doing now to get profitable because they have to do something and they are in the oil and gas business? So first and foremost, if you can, you are trying to get oily but not everybody can get oily. Oil acreage just isn’t available everywhere. It’s largely already spoken for, and you are the owner of natural gas acreage.

So they have moved from drilling lean gas to drilling rich gas, clearly, and if you see why, if you look at that middle column, we segregate our value here between lean, rich and super rich. Now, not just moving from lean to rich, those that can are moving to super rich. And when you think super rich think the Marcellus, think of acreage that’s 5+ GPM, 1250 kind of MMBtu natural gas. Or think closer to home, think of the Eagle Ford acreage that is similar type gas, super rich kind of gas, and look at the economics of it. And there is about $2 spread between lean gas and super rich gas. If these kinds of economics or the reason I am going to show you such a bullish NGL potential forecast here in just a minute.

Just a reminder on this slide, most of the gas that we produce comes from rich resources, either comes from rich gas wells or its oil well gas, and then you see that lean gas sliver there on top. That sliver was growing for a while as we drilled up the Shale lean acreage. We showed that, we are predicting that it shrinks a little, but not a whole lot but the bottom line is as we predict that rich gas is going to continue to dominate for years to come.

And that takes me to this next slide. The most important word on this slide is potential. This is what we believe the resource potential is but in order to realize this potential, these reserves need market. What I did on this, in the left hand column where I showed natural gas, I limited our natural gas production to what we believe its markets are going to be. And the reason why as I already showed you what we believe again, the size of the potential for resources on natural gas. So it would be odd for me to put it here on that slide because we all know now that natural gas reserves are on the shelf, so at its peak, waiting for market. I will talk about how I get to that market increase there of almost 20 BCF by 2020, in a few minutes.

But we are not expecting natural gas production to increase a whole lot between now, between 2012 and 2015 and the reason we are not, is, we had a really banner year for natural gas consumption in 2012 because of all the gas to coal switching. So I will move off the natural gas for a minute, and let’s talk about NGLs. Between yearend ’12 and yearend ’15, we believe there is the potential to produce another million barrels of NGLs in the US. We have not excluded from this number what ethane we think is being rejected or what ethane is going to be rejected. This is in the plays, that we follow. This is all out NGL production. We think there is another million barrels between 2015 and 2020. About half of this resource as you know is ethane. These numbers are up. Our forecast of this potential is up, and it’s up.

Well first and foremost, this time when we met last year, we were in the middle of the pretty big crash on natural gas prices that hung with us all year. So we averaged less than $3 in MMBtu for natural gas in 2012. The data and the science continues to get better particularly in the Marcellus. So we know a lot more about the Marcellus today and it’s very impressive. The other one is the Eagle Ford. The Eagle Ford just continues to exceed everybody’s expectation including our own to the upside.

And then last, but not least, producers are attempting to go rich and super rich in everything that they drill because the economics are so much better. The size of this resource potential is what drives many of the projects that our senior managers are going to discuss today and it’s going to drive many of the projects that we are going to see for years to come on both the supply and the demand side of the equation. The key to unlocking this value now in the U.S. is market demand and I will be talking about that also.

Sticking with the theme as to how big the resource is, here are places where we haven't; fully we don't believe we don’t believe we fully recognize the resource of lean gas potential. Using the term that I used last year, that's on the shelf available for the taking.

To give you a few names; the Marcellus lean section, the Eagle Ford lean, the Pearsall in South Texas, the Bossler in Louisiana, The San Juan Basin to name a few. These resources are enormous. And is there NGL upside? I have segregated on this map between oil and super rich and just normal rich but yes there is also NGL upside; I think that on places that are still in appraisal stage. Thinking and you will be hearing more about some of these today from our managers.

The Mancos, the Niobrara, the San Juan Basin, the Mississippi and Permian, South Texas resources besides the Eagle Ford offshore to name a few. Here on this slide I have taking a few of the emerging plays if you will or plays that haven't reached their full development potential. And I have listed for you the Enterprise assets that are in close proximity to those plays. So, these are plays different than say the Jonah Pinedale more mature plays are the Barnett or the Haynesville. Or even the Eagle Ford that are in full development; in the full development phase. These are plays that are either in the appraisal stage or beginning what we believe are the beginning of their development phase.

Sufficed to say that we think that there is a significant upside potential for our assets all the way from Appalachian to the Rockies. I want to spend a few minutes talking about natural gas demand. And what we think it’s going to be and where we think it’s going to be I am going to go ahead and do this here. We think somewhere between 11 and 20 bcf a day of incremental demand in the 2018 to 2020 timeframe.

Power generation; four to seven incremental Bcf a day is what we are predicting. On the industrial side, two to four 4 Bcf a day. Natural gas vehicles, half a b to a b and a half. LNG exports four to six, now this is a hot topic nowadays; conversion on the residential and commercial side half a b, to a b and a half. What I haven't included on this slide is gas to liquids which we believe has potential and incremental exports to Mexico which are highly likely to happen.

I'll draw a circle here around the Gulf Coast where we have very, very Gulf Coast centric assets. I do this just because later on in the presentation I am going to talk more about the Gulf Coast and how it looks to us and what all is going on. This next slide is a propane slide, but I have done it to talk about LNG. You can't pick up gas daily even the New York Times and not read an article about LNG and the potential for exports.

If I haven't done anything else thus far today, I hope I have convinced you that the resource is plentiful and it can be produced very, very efficiently. So, we get to think and we listen to all the rhetoric about LNG. And so what we did is we looked at propane because currently the U.S. is about 13% of the global propane trade and obviously Enterprise Products is a big player in that business. So we looked at propane and we looked at what just happened with propane to think through what happens with commodities. The yellow band there is; because propane is seasonal, that’s seasonally how propane inventories build. The green on top of the yellow there is how they built in 2012 so we came off of a really lousy winter for propane. The blue dashed line is we looked at EI data for total propane exports and we said what if we hadn’t exported? What were the volumes, what would the balances tempted to be?

It’s hypothetical but they would have been somewhere in the neighborhood of 125 million barrels of propane inventory. Clearly, that couldn't happen and we would have a train wreck long before we got there. If we would have trended that way it would have been a train wreck for producers but I will also believe it would have been a train wreck for the consuming community. Because I think we would have done irreparable damage to the NGL side of the business. And people that are spending billions of dollars and counting on those NGLs, those producers may not have been there for them.

Make no mistake about it, at Enterprise, we believe the exports in free markets are important to balance those markets but more importantly we believe that exports are important to keep the supplies coming. Relative to all the discussion around this topic, let me just say. Remember the slide I showed you on producers and what's happened to them in the equity markets. I would say that those producers and the capital markets that support them need some positive signals rather than negative signals in this regard relative to exports.

And next I would like to talk about oil; this is our own internal projection of what's going to happen to North American crude oil volumes. We predicted between 2008 and 2020 you are going to see somewhere 7 million to 7.5 million barrel increase in oil, in North America. Others are predicting a bigger number than this, you will some numbers in the 10 million to 12 million barrel range that could be right.

It’s not a really hard prediction to make because we are well on our way. We are probably about 3 million increment to this already. A lot of discussion about energy independence and that kind of thing and as you know we talk more in terms of energy security and what I will say before I leave this slide is when you look at what's going on. If you are a consuming nation, you are highly envious. And I think, if you are a producing exporting nation, you are stunned by what you see happening here.

This map shows our interconnectivity along the Gulf Coast and the refining customers that we are connected to. Start with it is the basis, just remember that all this infrastructure was built to import crude and to some extent to import refined products. While things are changing and they are changing rapidly. Most of the major refiners have either stopped importing light sweet; are they have said that within 18 months they think they generally will be off of waterborne light sweet imports. They are making improvements to handle more light sweet crude and they are making changes to be able to export more refined products.

Obviously our infrastructure and the things that are going on with our infrastructure, our Seaway reversal and its loop, our ECHO terminal, its connectivity to all the downstream refineries in Houston and onto the Beaumont part of the area, what’s going on, on our TE products pipeline. They are all playing a growing and more important role as these changes and flows happen.

In talking to you guys and ladies last night and again this morning probably the most common question I got is what's going to happen to all the light sweet and how much do we think it’s going to take to retool to be able to use the light sweet for the refiners and so on and so forth. I would like to tell that with an opportunity this big, that the answer is obvious but I don't think it’s obvious and I read just like you all to do and I follow all the publicly traded refiners and what they say and where they are spending their money. And some people say, oh it’s not really a big number, and they almost act like its magic. I don’t think it is magic but I do think it’s an opportunity and here is what I know about refineries because they are our customers. They are brilliant and when they see value outside their fence, they work hard to try to figure out how to get that value inside their fence. I think that’s what you are going to see over the next, call it three years. They understand the resource potential, make no mistake about it.

These are the kind of headlines about petchems. The petchems continue to not disappoint. They also understand the resource. The news out of the petrochemical community just gets better and better. The only complaint is it just can’t happen fast enough. Last year, we said, I think we said there would probably be three to four petchems on the Gulf Coast. Well this year Exxon announced a world scale at Baytown and Sasol has announced a world scale in Lake Charles. So, it just really adds to the list.

Also when you look at all the players in the petrochemical market, they be either, every time they have their analyst meetings or they have earning call or anything, they emphasize how committed they are to the feedstock supplies in the U.S. If you take somebody like Pinedale, we had their analyst day three weeks ago, they confirmed how committed they are, they went through their Gulf Coast projects and last but not the least they said we are doing everything, we can, not just a build but to build quicker and to augment how fast we get these online.

We think between now and call it 2018; 600,000 to 750,000 barrels incremental of ethylene will be used in these crackers either through conversions and new crackers coming on. And here is the reason why. We have a pretty simple cracking model where we compare globally what happens in crackers and what their economics look like. But I believe there are simple model that tells the story.

In 2005 for all intents and purposes, the U.S. was worst as far as cost in ethylene cracking. Well we've moved essentially from worst to first when you look at incremental cracking capacity and it’s because of the feedstock story. Clearly, you see, I have drawn the lines there that U.S. ethane cracker has a 40 cent advantage to an ethylene cracker cracking naphthalene in North West Europe. You take that $0.40 and you apply it against a billion and a half in account of your plant, at $600 million for one plant.

Jim Teague told us, started telling us about three years ago in staff meetings and I know he has told to all of you, he said I retired from Dallam, I am telling you these petrochemicals are not going to walk away from this opportunity when we always would talk about demand. Well, I believe the petrochemicals are proving him right and that right there is one.

This is a map that you probably haven’t seen. What I did here is I plotted our gas and our liquid systems on the Gulf Coast together and penciled in some facsimile of our NGL pipeline as our base-map for the rest of our talk here today.

Here are the customers that are connected. As Jim said, we are connected to everyone along the Gulf Coast and over 95% of the ethylene crackers in the entire U.S. Gulf coast is home to about 1.1 million barrel a day of petchem demand for ethylene. Remember those people have announced expansions and conversion and the reason you would expand and convert where you are is because you have existing infrastructure there. You have access to supply. You have access to pipeline, you have access to storage, so it make sense, that this is where you are going to expand. So as people expand, obviously we are connected to them. I guess the last thing is now you are going to have a nice ethane header.

But it’s not just petrochemicals that are expanding, other industries are expanding also. Methanol, steel, ammonia, glass anything that’s energy intensive. We keep a database of the major industrial expansions across the U.S. and so yesterday before getting and preparing for this I went in that database and I counted. I think I have counted 78 major industrial announcements across the U.S. Of those 78, 65 of them are in Texas or in Louisiana. I can’t think of a better asset map than this one to show how, we are fully capable of handling that load and remember this load is not just in NGL it’s also natural gas.

Here I have the major world scales, flying and there are six of them on Gulf Coast that had been announced. Jim has already alluded to, I won’t handicap, which ones and what their time is but I will tell you. Like I said before last year, I said three to four, now I say comfortably by 2020, in 2020 timeframe at least six along the Gulf Coast. A part of my job is customer information so I spend time with our marketing people and our business development people. I am talking to people that are going to build assets and that we are going to build the assets too.

Now, I'll tell you three years ago, we were spending lot of time with petrochemicals because there was a fair amount of noise around the shales and were they real and what was their staying power and so and so forth. Kind of a year after that, we were spending a lot of time with producers because producers were concerned, they didn’t really understand what happened downstream and where are there NGLs and NGLs has got to be such a bigger part of their book. We are back now, we are in the offices of the petrochemical, some of whose names aren’t on the pages here today because the petrochemicals globally from around the world are looking and saying this is really important, I want to be part of this. And they understand what its economic advantage is to.

The last thing I do here is I fly-in these LNG boats, talk a little bit about LNG trade for a minute. It’s a 30 Bcf a day market globally today. There are plans that are discussed for about 20 Bcf of export from the U.S., I don’t know which ones would be build, we are saying four to six.

The net markets in the hands of the Qataris and it’s in the hands of the Australians and it’s in the hands of the Malaysian, Indonesian, Algeria, some really big players that aren’t running out of natural gas. And it’s very expensive market I mean it’s expensive to produce it and it’s expensive to re-gas it, on both sides of the equation. So, that’s why I think and many experts believe that this market potential for the U.S. is limited but four to six Bcf is kind of the number I see the experts predicting, that's what Shale predicted the other day, eight Bcf out of the U.S. so it’s not an infinite market but it’s really important and we are very well situated to serve it.

So, in summary, I didn’t know that I talked so much about supply, but the supply story just keeps getting better. Shale Technology takes quantum leaps every year. If you think of what's happened to the natural gas rig count, so in 18 months it’s down over 50%. But natural gas production had moved, that’s the technology story. The gas resources are substantial and it sits on the shelf, we have been saying for a couple of years. The natural gas liquids, particularly ethane now are also approaching sort of the on the shelf status if you will, they need market.

Markets are expanding and we have talked about those here today but they can’t expand overnight, but they have an economic advantage to expand. We believe it’s very-very important to support exports. Exports playing a key role in balancing our markets but more importantly, exports play key role in keeping the supply coming.

On a crude oil supply side the numbers just get better and better, technology is being applied to crude oil. We're rapidly displacing imports and the U.S. has moved from being an importer of refined products to being an exporter.

Who know as Jim said, some day we may be exporting some crude oil. I can't think of a better system, a system that's better situated in our own portfolio to supply both the demand and the supply side of the equation and the needs for this shale revolution.

That's all I have today, I think we're going to questions and answers and then after questions and answers Bill Ordemann's going to speak who runs our non-regulated NGL assets, crude assets and off shore. Thank you.

Bill Ordemann

I was sitting back there looking at everybody was talking and I was reflecting on it a little bit I have worked with Jim and Mike now for a little over 15 years I think it is and I think today is the first. I think this is the first time I have got a tie on and they have not so I am usually not this formal. But the one thing you will notice I don’t have on this morning is the name tag and I think some of you who were with me at dinner last night I made the comment that I really need to make sure I give Sheila this name tag before I leave because I will forget it in the morning. And I didn’t give it to her and I did forget it. So what I have to do is stand up here and talk long enough so you all remember who I am by the end of the day.

Excellent I have been here since 14th year I have been with Enterprise looking back on I don’t know where the time went but the growth has been explosive I came over and did not know a lot about the company I said I was going to give it a year I do not know where that year went but 14 of them went by and it is just been a great story. I am responsible for four businesses at Enterprise. I am going to talk about three of those today unregulated NGLs which are primarily gas gathering processing fractionation pipelines and storage onshore crude oil and crude oil marketing which I think speaks for itself and then our offshore business and the Jim Cisarik can be kind enough to follow me up and talk about the fourth one which is natural gas services.

Unregulated NGL you guys met Mike Smith earlier this morning he runs this business for us and I think the theme here is shale production feeds the value chain in unregulated business. Jim hates this slide but I do not think there would be an Enterprise presentation without seeing it at least once this just talks about our midstream value chain. I am only going to show it one time but I think you will see that theme persist throughout my presentation this morning. As Jim puts it very-very simply we’re not a collector of assets, we’re builder of systems and I think you’ll see that as we go through all of these pieces of business, somebody talked about this morning. Now I could bring it up that to talk about their value chain, we gather gas in Wyoming, (Juan) gas gathering, it’s get processed up there in our pioneer gas processing plant. Those mixed NGLs flow down map into (inaudible) there they get fractionated, they get put in our stores there and then they flow into distribution system bet at Mid America, be at TE products or be at the Dixie pipeline that takes propane to the east coast and TE products to the North East.

So, if you’re using propane in New York, there is a good chance some other (inaudible) that was produced in Wyoming and flow through our value chain all way across the country. So, that’s how we do business.

So, I’m going to start with the value chain down the Eagle Ford. Jim Cisarik going to talk about the front end of this value chain which is the gas gathering and gas processing fees down that we’ve done in the Eagle Ford. So, I’m going to pick it up with tail giving the processing plants and talk what we’ve done on the NGL side. (inaudible) the hottest place in the country and we’ve booked a lot of new pipe down there to gathering the mixed NGLs and processing plants in Eagle Ford and feed Mont Belvieu and beyond with them and this project is virtually complete. We have one more pump to get in place and then we’re waiting on a third party plant at the very end of this line down in Katulah to come on service here in the next month or two and feed. But we’ll be doing a great job. we’ve invested well over half of billion dollars in this and it’s going to be pretty full as time goes on here in the next few years and you can see the amount of Y-grade up in the top left hand corner, that’s being produced from the Eagle Ford and a large portion of that is our New Yoakum plant, it’s north of a 130,000 barrels a day right now.

So as we take that a step further, take it into our Mont Belvieu Complex, understand some of you got to visit it yesterday, some of you have visited it before. But, I was kind of talking about the world class facility here. I started up with the saying A Word Class Facility and then I said no I think it’s The World Class Facility for fractionation, I don’t know if it’s paralleled anywhere. You’ll met Laurie Argo this morning, she runs the fractionation business and a lot of what’s going on Mont Belvieu.

I think for those of you who had visited and you look at it, you’ll see it’s a more than fractionators, we refer to it as complex. It’s got a lot of supporting infrastructure and I think that’s key. Anybody can build the fractionators fairly cheaply but if you don’t have the supporting infrastructure, the way to get Y-grade into the fractionators, the way to get products out of the fractionators, stores to support those products when the y-grade coming in that fractionators is really not worth of whole lot and I think that’s what our focus is here.

Jim showed you the Enterprise way model. We work very close with Rudy and his folks to make sure that when we build a new fractionator we have that supporting infrastructure to store and distribute those products out of the fractionator. I think couple of quick facts on here that I’ll just point out. At the end of the year we’ll have over 650,000, probably close to 700,000 barrels of fractionation capacity at Mont Belvieu, then well over 1 million barrels of fractionation capacity system wide if we include what we’ve got in West Texas and in Louisiana.

And then again, we think it’s a premier option and really that’s because interconnectivity. It’s the connects through Y-grade pipelines and the ability to access the storage and the distribution pipelines out of Mont Belvieu and toward the bottom you can just see the way our fractionation volumes have grown were actually expanding one of the legacy fractionators as we speak it on Mont Belvieu to get new incremental capacity out of it. So, it’s doing very well.

Continuing down at value chain, we get to the tail gate of the fractionator into our storage facility at Mont Belvieu. We think its largest NGL storage complex in the world, well over a 100 million barrels of storage and like 34 existing wells today. It’s more than just a storage complex, it’s actually 3, we have our north, west and east storage facilities and they’re separate but integrated and we’re spending quite a bit of money right now to integrate them even further, so they’re interchangeable and we can move things around and we can change service in wells and move things around between new storage facilities and without interruption to our customers.

We’re developing more wells as we speak we’ve got four major new wells under development. High rate wells that will support among other things our propane export business and really it’s the interconnectivity there I think that's important. We’ve have over a 100 pipelines interconnects there at Mont Belvieu and as Jim pointed out earlier, we're pipeline connected to every major petrochemical company on the gulf coast.

And this next slide is probably my favorite slide, Mike Smith gave it to me. What does interconnectivity look like? This is the manifold at our west storage facility and what you see there are pipelines crossing each other. so we get pipelines coming in, we get pipelines going out, we get connections to our wells and from our wells that we can interchange and we get back in for almost any place we want. So, I think that’s pretty impressive, and then you see pumps on the left and right of that, that’s what interconnectivity looks like. A lot of this was underground before we brought it above ground now and it’s just amazing to see what it looks like. It’s just one of the three storage facilities we have at Mont Belvieu.

So, continuing to walk down the value chain, I want to talk about our LPG export system. It’s more than just a dock, the word system is not there by mistake. It takes more than just a dock to be a successful in this export business. I think Lynn is going to speak to the activity a little bit later on and how much we’re exporting and where we’re exporting to and those kind of things but I just want to talk about the facility pretty quickly.

As we walk through this though, the first key component on the first two bullets there is supply. You've got to have very large supply of low-ethane propane, it’s a special propane, it’s not just normal HD5 propane that's shipped around the country, it has to be low in ethane so this ships can handle it. And we feel like we have over 200,000 barrels a day that supply of our fractionators and access to quite a bit more through our pipeline interconnects.

And then you have to have storage, you have to have more than one very high rate well, you have to have an extremely high rate well to be able to get the capacity you need to load ships. You have to have pipelines who connect that storage to the docks so you can load ships and you have to have the refrigeration and loading capacity at the dock to be able to load those ships and we just recently expanded our facility to be able to grow it 12,000 barrels per hour on loading ships and we think hopefully will allow Leonard, I think that here in a couple of weeks, we’re going to have the capability of jacking it to about 14,000 barrels an hour.

And then finally you have to have the dock availability and we work with partner oil tanking, and we’ve done some of our agreements feel like now we have expanded dock capability to be able to load the additional ships we’re talking about loading. And I think just at the end of the day we’ve been in this business for 30 years, we understand the business, we know how it works and I think we do very well on it.

And one piece I do want to mention before I leave this chart is, it’s titled LPG Export Systems. I’ve talked a lot about propane, I know there were some questions what we do export quite of bit of butane out of this facility as well. We have the capability of increasing our exports and are actually looking at incremental expansion right now to be able to load butane faster and try to get more butane out of the dock.

So, that’s going to follow through the NGL value chain. I wanted to talk about a couple more pieces in max business. West Texas, New Mexico we’ve heard about the Avalon Bone Spring bring shales, we have what I call an experience gathering system out there. it's quite out there quite a while, up in (inaudible) that’s on the northern half of that map in New Mexico and it overlays a lot of the rich gas production we’re seeing in the Avalon and Bone Springs. We also have a plant out there that we’re partners with Oxy that’s very underutilized, it’s about 200 million a day plant. It’s got about 180 million a day space available in it.

So we have a number of projects going on right now to expand the system, tied into the rich gas, and fill up that plant. And so we got over a $100 million in projects identified right now, that we are working on. To extend this, we envision that we will connect it with a system further down south to Waha system and expand our footprint as the drilling starts to march off in that area. And that’s not very impressive graph. You can see decline on that graph. But I can tell you we now have turned it around, and we are doing about 90 million a day today and growing. So I think it’s going to be a good story. We are not the biggest provider of midstream services down there. We have a couple of competitors that have larger systems than we do. But we feel like we have focus and we have the producers’ attention and we are also talking to a lot of those producers on the crude oil side as well because we have crude oil systems in that area. So we can provide some package services to them.

Then finally in the unregulated NGL part of the business, Tony talked about new and emerging shale plays. We have Mancos play at the San Juan basin. San Juan is an interesting basin. I think Tony brought up, to me it’s kind of in its third life now. It started out with conventional oil and gas. It moved to coal steam gas not too long ago. And now we are looking at this Mancos shale. This is kind of an oil window and a rich gas window, and I just love the footprint. We are in the early stages of this. Lot of the independents in drilling, couple of the big players out here, don’t have to drill because they’ve got the lease and sell-by productions. I think they are kind of waiting to see how the independents workout. But a lot of footprint here; reminds me lot about the Eagle Ford work, our assets in Texas. Later I don’t talk of the Eagle Fords, so we, in this case we can provide very early services to people because we have capacity. We can provide early services as we wait to see how this develops and then eventually expand and provide them further services.

So I will shift gears now into crude oil which is one of our newest businesses that came over when we acquired TEPPCO. I have been learning crude, drinking from the firehouse for the last year. And I think it’s one of the more exciting partners what we have got. Because I think right now it’s got a very inefficient market, and the assets are there, but maybe they are not pointed in the right direction and we got some repurposing and some new assets will be required. But every exciting and I think we got a lot of growth potential in this area. Some of you met Robbie Leffel last night at dinner. He runs that crude oil business.

Getting back to what Jim said, if you look at the combined math of our crude oil assets, again it’s a system, it’s not a collection. We are all tied together. We can get crude from west Texas all the way to the Gulf Coast, if we need to. We have a number of areas that we focus on. We focus on gathering crude in west Texas, over a 100,000 barrels a day. In that mid-continent area, the kind of Texas - Bahamas border, about 90,000 barrels a day. And our legacy south Texas system which is pretty Eagle Ford, gives about 90,000 barrels a day. And our new Eagle Ford system continues to ramp up and worth over a 150,000 barrels a day on it.

And something that’s missing on this chart. It was on at the last time I showed it. It has complemented very much of our large truck lead, you met Joseph (inaudible). He handles a lot of that. We have over a 400 trucks plus and contract trucks working. At any given time that gather crude and bring it to our assets, to unloading stations, where we put it in our pipe. And then our barge leaves. I think Jerry Cardillo is going to talk more about that we are using to get some of that crude on the water and movement around. So it’s complemented very much about those two assets that we have as well.

Going back to the Eagle Ford where most our growth has occurred. You can see the explosive growth in crude oil production on that upper left hand corner in the chart, over 500,000 barrels a day. And talking to Tony and our fundamental spokes we think that’s going to ride over a million barrels a day. Lot of potential there and we want to be a big part of that. We laid this new crude oil pipeline and gathering systems and it’s now complete. Brought it on last year, over a billion dollars of investment here, and essentially we are now looking at an expansion. It peaks here in another couple of years and then it will be sold out. The capacity be sold out on demand fees or revenue guarantees.

And we are now looking at an expansion of the system and see how we can get some more crude through it. You can do about 350,000 barrels a day today. We think we can take it up approaching 500,000 barrels a day with some minor capital, like for pumps and things. So we are looking at that pretty closely as we speak.

We extended our reach down here. We originally had plans to extend that, and contracts to extend our system from, Lyssy at the end of the Eagle Ford system that you see there down to Gardendale, and pick up some more crude and extend our reach and extend our value chain. And we got into some discussions with Plains. They had a project to build from Gardendale to Corpus Christi. And we said, why don’t we combine our efforts here? It looked like a really good opportunity to do a joint venture and optimize our capital and where we could both still come out with what we want to come out with it and more flexibility to the market.

So we combined those two projects. It will be coming on in phases as we go through this year. The last piece in the third quarter which will be piece from Three Rivers up the Lyssy and we just, like this is going to be a home run. We think this pipe is going to be full, and really make us a lot more money than had we gone out and done it on our own. So we are pretty happy with this joint venture project and extending our reach down there and actually giving more market flexibility and more people access to get into that pipe and head to Houston.

Seaway, a lot of discussion around Seaway. The pipeline that we repurposed. It’s actually been repurposed a couple of times in its life. It once was a gas pipeline. Then it became a crude oil pipeline, flowing south to north, bringing mainly imported crude up to Cushing. Now it’s flowing north to south bringing Mid-continent and Bakken and Canadian crude down from Cushing into the Gulf Coast markets. We formed the JV on this. We got a partner Enbridge. It’s a 50-50 joint owner in this, announced an expansion, we turned the pipeline around and did our first expansion. Now we're working on our second expansion which is to loop the entire line from Cushing down to the Gulf Coast about 512 miles, a new 30 inch pipe. We have two laterals that are in process right now. One is to run from the terminus down on the Gulf Coast, over to our new ECHO terminal that I will talk about in just a minute. And then another lateral that will run from ECHO terminal over to the Port Arthur area in refining market. So those are all well underway and during the year - next year we will be, or actually starting in the fourth quarter this year. We will be starting to bring those laterals on then bring that loop project on and expand the capacity significantly at Seaway. And I think we were, in total this project is a little bit over $2 billion with the joint venture. So we are pretty excited about it and the pipeline is doing well as we speak.

It takes us to ECHO. We think ECHO is going to be a special place as we continue to develop it. It’s a new player in the market. Some of you got to go there yesterday. It’s probably not as impressive today, as it will be in just a few years. Our intent is to make it a hub, to make it a place where people want to bring their crude. We are going to build new tanks. But most importantly, and I will talk with the tanks in a minute, but most importantly we are going to build connectivity. And we are working, engineering, get Kevin and another people working on it right now, to look at how we get connectivity and what it is going to cost us and how fast we can get connectivity from ECHO directly to all of the Houston area refineries. And we think that’s very important. We don’t want to rely on third parties for the success of ECHO. So we are look at that an it’s not a small project, but it’s not a huge project either.

And then we are looking at assets that we have joint ownership in, the Seaway has a pipeline that runs from Texas city up into the Houston market. And we think we can make that pipeline bi-directional so we can serve the Texas City refining market out of ECHO through that pipeline. It’s a very large line, a 36 inch line and well thank you John (inaudible) and I think we will operate that like we operate a lot of our NGL pipelines and bidirectional back service and we will be able to supply the Taxes City market.

And then finally with the new lateral that Seaway is building from ECHO over to the Port Arthur Netherland area; we think we will be able to access through some terminals over in that area. All of the refining capacity in that part of the country, so their goal here is to be able to access to Houston, Texas City and Netherland markets through ECHO and make it kind of the world class hub.

With that, we will also be looking at new pipelines coming in. We are in discussions with several companies now that want to tie their pipelines into ECHO in addition to our existing pipeline in Seaway. And we will be looking at that as well.

And then finally tanks, for those of you who were there yesterday. We have three tanks in place today; one is dedicated to a producer and two are dedicated to Enterprise marketing at present. We have three more just north of those tanks that are under construction and we have a permit in place that we believe is going to allow us to build between nine and 11 existing additional tanks; larger tanks than these, these are 250,000 barrel tanks. The next three will be two 250s and one 400,000 barrel tank. And then all the remaining tanks we're envisioning being 400,000 barrel tanks. So, we will be on the stage to build this out in the next couple of years and we are in active talks now with refiners and marketers and others to producers, to lease those tanks long-term and I think the connectivity is going to really be attractive and allowed us to get premium lease rates for those tanks. So, a lot of room to grow, we are looking at the ability to get some more land and carry it on from there. But it’s our intent that this is going to wind up being a world class hub by the time we are finished with it.

And I won’t spend a lot of time on this one but we are not ignoring our existing assets much like you saw in Carlsbad, in West Texas we have had a lot of I won’t call them incremental; some of them are a little more than incremental but a lot of expansions of our existing West Taxes system. We are investing money there, probably over $150 million in this area just over the last year or two and probably more to come to help serve the growing Permian production that we are seeing and other formations that you hear about out in the Permian area.

And then finally on the bottom right hand corner, we are still looking at repurposing. We are very excited about what we are hearing and seeing from the Wolfcamp and Cline shale. This is kind of the Northeast squadron of that map and we have some pipelines that go through there, one of which is the seminal pipeline which has two pipes going through there on the NGL side and we are actively looking at it right now and repurposing one of those NGL pipes as we bring a new Texas express pipeline on. We will be able to shift some of that NGL capacity up to that and maybe able to free up one of those seminal lines to bring crude from that area and take it down to the Gulf Coast; and we are in active discussions with a number of the producers out there right now to provide more services and now we also have a gas line, natural gas line that runs right through that area. And wouldn’t mind building some processing and take some NGLs out of there as well. So we are looking at kind of some packaged solutions for the producers in the Cline shale.

We also are very focused on our crude oil reform the supply and marketing side and I distinguished those two as supply as buying stuff and marketing as selling stuff, pretty straight forward but you can see the amount of growth we have. We have a major focus around our assets and also a major focus up in the Rockies where we are (inaudible) up in Billings Montana that runs that, and does a really good job without many assets, other than some trucks and other things that we up there to bring home a lot of dollars. But you can see the growth year-over-year and how explosive it’s been.

I will talk very briefly about these and I guess; you heard this from Jim but on the supply side, what we are all about is providing those producers with flow assurance and flexible access to the best markets and we do that through our trucks. You can see on the right, those are some of (inaudible) trucks. There are unloading stations are gathering systems and pipelines and our terminals to get that stuff gathered and give it access to the best markets. And you can see those lease purchase volumes and they range from producers where we buy thousands of barrels a day and tens of thousands of barrels a day to down to producers, where we buy five barrels a day. So covers the gamut of all that. And you can see the growth that we have done since we acquired Tefco in 2009 in that business.

But then on the marketing side, you heard Jim talk about it and what our focus is; again the provider end user customers with reliable, flexible and cost effective supply. So we are focused on both ends, and we are focused on the supply end and the marketing end. And there we use our terminals our pipelines and Jerry's barges to give them the best access we can and you can see our marketed volumes have grown pretty dramatically over the last few years.

That’s a picture on the top; I guess I should explain that it’s not obvious; the bottom one is probably more obvious, the top one is our Morgan's Point terminal where we have a dock facility right in here, here today we're putting both crude and NGLs on the water and looking at opportunities to expand that as time goes on.

And then last but not least, what I will talk about is the offshore. I like to refer to it as return from a condo; I think we have turned a corner now. As you will see from some of the numbers and date I will show you here in just a minute. Bill Galloway runs that business; he was here last night at dinner, he is not here today so hopefully some of you all got to talk to him. And I think the story is we are pretty bullish on the Gulf of Mexico as crude oil of providence. A providence going forward in the future. This is a group that , a forecast that was put together by Scott Jenkins group who is around here some place today and works for Tony and shows what we think could occur in the Gulf of Mexico from the best data that we have and our analysis. So we see a potential on an existing million barrels a day coming in from the Gulf of Mexico by the 2020 timeframe. It’s a little bit slower to develop out here. the projects tend to be big and what I like to refer to as chunky; they get a little incremental projects to get to this; you get a lot of big chances at the Apples and we are certainly looking at quite a few of those at present.

We think all of that’s going to be driven out of the deep water gulf. We think that the deep water gulf is going to be all about crude oil, there will be some gas opportunities and we have some assets and we can supply some help to people with gas but we are focusing more on crude oil. We have got a lot of development going in some of the prospects that we are already connected to and already provide services to. We got development drilling at Shenzi Atlantis, Caesar Tonga that are connected us and then we are chasing, gathering and long-term transport opportunities on a number of prospects that you see up there and I will apologize that Shannon though is spelled wrong. But we are working on those and even if we are unsuccessful with the gathering pieces of those, we do have our mainlines out there the Cameroon highway system and the presiding system that I will show you that we think are well positioned to get that oil even if it’s gathered by someone else. But we are out there actively pursuing probably six or seven prospects right now and these are things that aren't probably going to move the need for a couple of years but you got to get them in the front end and work them pretty hard. And we think we are positioned as well, as anybody to do that.

And then the bottom, well lastly return from a condo, we got 50 deep water rigs working today; and that's compared to 44 to the former condo. And we think there is at least another nine on their way into the Gulf before the end of the year. So, we are fairly bullish a lot more so than we were three or four years ago on the Gulf of Mexico and think we have a lot of opportunities there.

Again, I have talked and I think that our assets are well positioned particularly the Cameroon highway system and the presiding system, Cameroon highway runs from in this direction and serves the Houston in Port Arthur markets and then presiding runs up and serves into the Louisiana markets. So, we think; trying to get oil gathered and bring it up into those systems and create that extension of the value chain and I as well show you from this next project that we are working on today in the gulf that get this to work and so our Lucious crude oil export pipeline, this is in the Anadarko operated Lucious field and this is a story of both repurposing and extending our value chain.

We had an existing pipeline called the Phoenix pipeline that Jim mentioned that went up in this direction and transported natural gas out of the Red Hawk spar, and that gas depleted and so we had an asset that was after doing virtually nothing. So we are using 46 miles of that line that exists and extending it about a 100 miles to get out to the Lucious Field with our partner Genesis and you can see it has design capacity of over a 100,000 barrels a day.

We have already laid the pipe. We had a window in which we could get this pipeline shift, they all seem solitaire and we used that window, and a good weather window to get pipe laid, s right now we are doing some platform work, that I will show you in the next slide and come back in interconnect it up and time start up in July 2014. So then a capital risk out of this project and all of the weather risk is pretty much over with and we think we are clearly on schedule and probably little bit under-budget only at present.

This one would be the last one. So, look at me now because I don’t have nametag on. Again this is re-purposing, we are taking a platform that was owned by Poseidon and Poseidon Partners are essentially stripping a lot of the old equipment, it’s no longer needed off that platform. Beefing up the platform, cleaning it up, given a new paint job and putting a big new module up there which will be the terminus’ Lucious pipeline, we are trying to Poseidon and eventually tying also to Cameron Highway.

That was probably the last remaining big piece of the project that had a new risk to it all and we set that package over the weekend so that’s behind us too and we are moving on. So, that’s a pretty much the end of it, with that I turn it over to Jim Cisarik to talk about the natural gas services piece of the puzzle and then will be around for questions as the day goes on I guess.

Jim Cisarik

Thanks, Bill. Good morning, as Bill mentioned my name is Jim Cisarik and I have responsibility for natural gas assets in Texas and Louisiana as well as the business development relating to our natural gas business around these states. My presentation today will focus primarily on our Texas and Louisiana intrastate pipelines and our recently developed natural gas infrastructure expansions into what we see as really world-class natural basins in the states of Texas and Louisiana.

Our recent infrastructure of elements have not only provided us with new long-term, demand-based revenues but have also advantageously positioned our pipelines to serve what we are just now really starting the experience like you heard from Tony a new significant growing end use market demand along the Texas and Louisiana gulf coast.

I am going to spend a little time on this slide because it really sets up the components of my presentation on these pipes but you know in the enterprise world, we pride ourselves for being able to capitalize in changing environments because we believe change creates opportunities. So in our business, changes are impacts on supply, they impacts on demand and ultimately the pricing environment. For example, natural gas prices between 2003 and 2008 provided the incentive for producers explore for and develop these natural-gas bearing shales.

And I was thinking back the other day and it may be difficult for many of you to remember but just five years ago in June of 2008, the Henry hub average for the month $12.60, that’s five years ago. That doesn’t seem that far away. But noteworthy to a gas pipeline, basis spreads across Texas average close to $1 and the spread between Waha and Henry was even higher at $1.50.

So to a producer, the high price was basically what I like to call their price and what they needed is their incentive to explore and develop these gas-bearing shales and during this period, we were fortunate enough to commercialize our Sherman extension and Trinity river base laterals and basically those were 200 miles of large diameter pipeline projects through the core areas of the Barnett. In addition in 2009, we executed agreements with numerous key producers to build a 270 mile intrastate extension of our Acadian system into the Haynesville shale. These pipelines got build because producers needed flow assurance.

So, I like to call this drive and need for new infrastructure to produce a push. So these projects together with others facilitated the producers to develop the shales very rapidly. As you know gas production grew more importantly, they became confidence that the producing community had found in abundance of natural gas for this country to feed our demand for many years.

So as you know decreasing gas prices follow this perception and created challenges for many shale producers and perhaps some gas pipelines. However, our $100 crude was basically in my mind the next price in the producer’s sights and that created (inaudible) center for producers this time to develop the capability to extract large amounts of crude and super rich natural gas from these type shale formations.

So regardless in the environment we are in, we are kind of focus in Enterprise on four main things that we believe are paramount when expanding our assets. I kind of think of it is a, kind of a recipe with four key ingredients. First and foremost, we always start with our existing infrastructure. Similar with every expansion we start with something upstream or downstream from which we can use as a foundation to build upon.

Second, we combine that with our commercial and technical ingenuity which creates different flexible solutions for our customers and basically in other words, we don’t design projects simply to mirror what our competitors are doing and you will hear some of that today.

Third, we rely most importantly on project execution which basically means getting the project done on time and importantly under-budget. So when we do deals with our customers, they know we can perform timely, get it in on time and do it well.

And fourth, which is I think what we differentiate ourselves from our competition, we look beyond the term of the transaction and are always analyzing both the supply side and the demand side. So it’s not by accident that we have and will continue to point our large diameter pipeline projects towards the gulf coast natural gas demand.

So as evidence of what we have been able to do in this changing environment during the past three years, we built over 800 miles of large diameter pipeline in the Eagle Ford in the Haynesville. We have increased our long-term committed volume in our Texas and Louisiana pipelines by 2.1 billion cubic feet a day. To me that’s pretty extraordinary. During the time prices are spiraling down. Significantly increased long-term demand base revenues to these systems as well.

So all this during a time when gas prices touch below $2, a year ago April and the spreads we experienced across Texas in 2012 average basically less than $0.02, and from basically Waha at the Henry hub less than $0.07 last year. So basically a far cry from the $12 price environment and $1.50 spreads that we saw in 2008.

So those are the producer’s price. As always the price to the hydrocarbon, we actually get what I think are three prices from what I call this producer push. First, we added significant long term demand base revenues to our portfolio. Second we've added very large diameter and I stress very large diameter, high pressure expansions in the world scale natural gas supply basins which now give us direct access to these long term gas supplies. And our third prize is basically just now materializing, you know brought upon by this tremendous natural gas resource, the emergence of new end user demand growth is now developing.

As Jim said, price creates supply and supply breeds markets. So I feel if we're calling the production side the producer push, it's only appropriate to call it a market demand side, the end user pull, and I've been in this business for 30 years and I'll tell you I've never seen anything so significant on both sides. A simultaneous producer push and end user pull and our Texas and Louisiana natural gas pipelines are set up perfectly to take advantage of this impressive simultaneous growth.

So let me talk about Texas first, this is what we have in Texas. Our Texas gas pipelines traverse about 8,400 miles. We have a 103 pipeline interconnections and we're interconnected to 386 end users. This is a massive network and we have significant large diameter pipeline connectivity to three world class basins, the Eagle Ford, Barnett and a familiar name that we've heard for many years now the Permian which we believe is emerging.

Again this ongoing producer push for flow assurance has increased our subscribed capacity on these pipelines about 5.5 billion cubic feet a day of which almost 30% is now held by Eagle Ford producers. Most noteworthy, even though spreads across the state have been in single digits since 2011, our contracted demand based revenues have been increasing for the last several years and are expected to again increase in 2013, this time by 28%.

So as evidenced by the bar chart, even with the free fall of natural gas prices since 2008, throughput on our Texas natural gas pipelines has steadily increased. Even the Barnett continues to produce at 5.5 bcf a day and there's continued development within the area of our strategically routed pipelines driving additional producer sponsored expansions of our infrastructure into the basin to move this gas towards viable markets.

Like I alluded to on the last slide the Permian area is yet again making another emergence. We expect that area to yield significant quantities of crude and very rich natural gas as Bill Ordemann mentioned. Just a note of comparison which is kind of an interesting note, in the Eagle Ford producers are targeting two horizontal shale formations. In the midland basin which is the eastern side of the Permian they actually have four horizontal targets. So when you start setting that up, as right now we know the Eagle Ford is basically one of the hottest basins if not the hottest basin in the country, here you have an emerging basin for the six-seventh time in the Permian, midland basin has twice as many horizontal targets at Eagle Ford. So we're thinking some pretty robust producer development will be occurring there.

And you may recall my mentioning supply breeds markets, well we have 5 bcf a day, actually over 5 billion cubic feet a day of natural gas end use market, we're currently pursuing and let me stress this is not market that's been announced around Texas, this is the market that we are actually pursuing, working with end users, with those expansions et cetera.

So the majority of this 5 billion cubic feet a day requires large diameter, high pressure capability of delivering this natural gas and what our expand connectivity of these world scale natural gas basins, we are perfectly positioned to serve it.

You know the Eagle Ford's going to be a common topic today, you've heard from Tony, Jim and Bill so far and you'll hear some more on it, but this basin is the perfect example of how Enterprise uses the cohesiveness of our business lines and the focus of our value chain culture to provide comprehensive services to our customers. Depending on how you define an Enterprise business, you can almost count over a dozen of our Enterprise businesses touching the Eagle Ford basin.

But from a natural gas perspective we were perfectly positioned with our South Texas legacy pipelines and processing plants to accommodate the exponential ramp up of producer volumes throughout the trend. We've also installed nearly 500 miles of new gas pipeline which we have targeted and integrated with our legacy infrastructure, which significantly increases capacity and further enhances flow assurance and flexibility to our producing customers. And in particular, the flow insurance we also expanded our takeaway markets outlets downstream from our new Yoakum complex plant to about 1.8 million cubic feet a day.

Well we definitely can't get away from including a separate slide for our new Yoakum processing complex. Yoakum is definitely the new flagship of the Eagle Ford trend. We have long term producer sponsored contracts for over 900 million cubic feet a day and all three trains are now on commercial service is a credit to our engineering staff. You heard Bill and Mike both say it, performance of each of these trains is exceeding expectations processing up to over 1 billion cubic feet a day, 1,050 million cubic feet a day and producing over a 130,000 barrels of NGLs, making Yoakum what we believe the largest processing plant in North America in terms of NGL production.

This next slide exemplifies another great Enterprise story. To put this story in perspective, you have to go back into the late 70s where the Louisiana Parishes over which Acadian’s pipeline traverses were producing over 9 billion cubic feet a day and therefore supplying the majority of the region’s gas to the Louisiana Mississippi river corridor. However during the last 30 years area of production has declined to less than a 1 billion cubic feet a day, and really what it did, it forced us to turn Acadian over the last 15 or 20 years into an import header to serve our market rich system.

And then came the Haynesville. I don't know if there's any environment that we could have done this in other than the Enterprise environment, and we determined that this was our opportunity to attach a world class gas resource to that Acadian system and the way we did it was to offer producers a solution, one that incorporated my aforementioned four part recipe, in lieu of going to Paravilla, like other pipelined solutions we pointed our project to the south down into the Louisiana Mississippi river corridor, and at the same time it allowed us to contract long term what I call hurricane proof natural gas supplies to serve our end use markets in that river corridor.

Today Acadian has over 1,300 miles of pipeline, over 80,000 horsepower of compression, a 150 existing market connects and 70 pipeline interconnections. Throughput on Acadian has tripled since 2009 and our revenues have exponentially increased.

Once again our recent expansions of large diameter high pressure gas lines and the world class basin have exponentially grown our throughput and revenues while putting us in a perfect position to serve the new market demand expected on the Louisiana Mississippi river corridor.

Today we're pursuing over 1.7 billion cubic feet a day of new load growth in that core area of the Mississippi river area we serve and like we did in Texas we have directly connected a new world scaled natural gas resource to a growing market area.

So in summary, our Texas and Louisiana assets today connect four of the largest resources plays in North America and we connect each of these basins with very large diameter pipelines, capable of flowing significant volumes of gas at very pressures. Our Eagle Ford build out is nearing completion and our Yoakum processing plant is exceeding expectations.

Yoakum's efficiencies combined with connectivity to other South Texas plants, and increased takeaway offers producers flow insurance and most importantly room to grow. Even though the basis spreads of Texas have collapsed from 2008 levels, our Texas pipeline volumes continue to grow both contractually and volumetrically at attractive rates due to the Eagle Ford Permian and Barnett production growth, a perfect example that we can grow our natural gas business without needing large basis spreads across our assets. And lastly markets for natural gas along the Texas Louisiana Gulf Coast are expected to grow exponentially due to access and scale of these new natural gas resources.

So like Jim said earlier we give our end-use markets reliability of supply and flexibility and our Texas and Louisiana intrastate pipes combined now have nearly 10,000 miles of pipeline. We have over 500 existing end-user connections and 170 pipeline interconnects. And now with our tremendous reach and connectivity between these world class basins and new markets there are no better natural gas assets in these two states to serve this growing natural gas demand and we are definitely going to go after it.

So that concludes my presentation. We are going to have a Q&A and then a short break, is that right Randy? And then after that Jerry Cardillo is going to come up. He is in charge of our petrochemicals and marine business.

Randy Fowler

We are going to have a slight change in plans, because you guys have so many questions. We want to get it back on track. So we are going to take a break now. Back here in 15 minutes, 10:20. And we will lead off with Jerry and then the questions for Bill and Jim you can tack on before we go to lunch.

[15 minute break]

Hey, we are ready to get started. Yes we are.

Jerry Cardillo

So my name is Jerry Cardillo and I’m next in the agenda. I over see our Marine Services Group and our Petrochemical Group at Enterprise. And I’m going to start off with our Marine Group first and I’ll take you through a little bit about Enterprise Marine.

We’ve got 63 tugs and 131 barges today or in 2011 and at the end of year we’ll have 66 tugs and 137 barges and we provide transportation services for a variety of hydrocarbon products. This was an exciting year to Enterprise Marine. And I know most of you don’t know that, but it was. We signed our long term agreement with SeaRiver Maritime which is a unit affiliated with ExxonMobil.

We christened our flagship the Daniel (ph) and we made great strategy manage of technology, safety and training. And we have one of the younger fleets in the entire United States. Our average age of our equipment in under 2.5 years of age and that’s an important element when oil companies are chartering you.

Our demand continues to be extremely strong. Product flows and product movements continue to change. We had utilization over 90% and that’s with two to three tugs inch dry dock at all times. So basically we are running a 100% utilization.

Our company net strong demand has been a strong uptake in charter rates. We had charter rate increases of 7.3% for the period of 2011 - 2012 which more than doubled the increases we got in 2010 and 2011. So we had strong demand. We got strong charter rates.

Late 2011, we made a change in our compensation program and our manner of workforce. Previous administration, previous owner, he had a seniority based compensation system, and that just didn’t fit our culture. So we shifted that to an incentive-based compensation, tied to operational incidents and safety performance. And you can see in 2008, this business was at a recordable incident rate of 2.37 and you can see at the end of 2012 we were a 0.68. So incentive compensation works in the transportation business.

Our company net performance is the accomplishment of our home marine repair facility which is a barge repair facility, a tough place to work, to operate it over 900 days without a recordable incident or a loss time accident.

We continue to integrate this business with almost 10% of our fleet working for various enterprise groups. We are adding 11 barges and 9 tugs to our fleet and the last six tugs will equipped with Z-drive technology and I don’t expect anybody to know what that means. But if you have pleasure boat, you want to have stale shaft, you want to have a rudder, and you want to have a propeller. This is a jet, and it’s more efficient and it’s going to drive us to the next level of performance with our customer base. So we got 11 barges and 9 tugs being built.

And that’s really it for Enterprise Marine. I am going to transition into Enterprise Petrochemical and our petrochemical business and our marine business have both been very active. So over the years, those of you that have been here multiple years, you have heard us say we are not on builder systems. We are not a collective assets or builder systems.

So the Enterprise Petrochemical group is no different and I am not going to make any of you chemical engineers or chemists with this slide. That’s not my intension. But my intension here is to show you that we fit that footprint but we create synergies with this petrochemical group within Enterprise, within our own portfolio, all around integration and optimization.

So let me show you. We buy refinery grade propylene from refineries. We separate out this propane and propylene in our splitters. We make low-ethane propane and we immediately transfer it to Lynn Bourdon’s group and he sells it all over the world.

In our C4 business we take normal butane. We make isobutane and high purity isobutene. We bring it over to our isobutylene mix complex. We make MTBE or isooctane or high purity isobutylene. So in this business we are consuming normal molecules. In this business we are consuming and generating low-ethane propane from our splitter business. As we get into PDH and we will talk about that a little later, we are going to start consuming C3. So we are both consuming normal while we’re making propane. And that’s about the integration and optimization from the molecular side within our chemical business.

Although not quite as vast as our NGL or gas or crude connectivity, we are leader in the propylene sector, all driven by our infrastructure and connectivity that positions us as a market leader. As I said, we buy refinery grade propylene from U.S. refineries, we split out the propylene for both whole and merchant customers and we utilize our connectivity and infrastructure to deliver polymer grade propylene, and provide services, and capitalize on opportunities both domestically and internationally. Simply put, I kind of look at this as we have a championship franchise, totally integrated and it’s the Enterprise way.

And with the championship franchise if you got the infrastructure and you got the coach, you got the money, you got a successful business and we have all of that. So currently this infrastructure includes an RGP gathering systems that touches 17 refineries. We have a PGP delivery, polymer grade propylene delivery system that touches 19 customers soon to be 20. We are on track for our Splitter IV expansion which will be operational at the end of May, which is another 500 million pounds of manufacturing capability.

We have the only export terminal for this commodity in the United States. We have a PGP hub that is very, very active in trading and marketing and as most of you know and you’ve heard with, we are constructing our first world-scale PDH plant.

So let me talk a little bit about PDH and what this unit is. It’s going to be a 750,000 tonne unit which is 1.65 billion pounds. It’s going to be located in Mont Belvieu, Texas, similar, right next to the slide that Bill put up earlier, and it’s going to start up in August 2015. It is fully contracted with 15-year weighted average contracts on a no-commodity exposure basis to Enterprise.

They are all propane plus agreements and we are considering another facility based on customer demand that we are getting right now. We are not alone in this field as several other PDH plants have been announced including Dow, Formosa, Williams, and we know there are others considering investments in this sector.

But in addition to producing propylene at a significant cost advantage to today’s market, the addition of on purpose propylene will change the economic dynamics as it truly complements the lighter ethylene feedstock models used by end use chemical customers.

This chart shows the impact of what I’m going to refer to as the PDH gap, but it is the driving force behind the development of additional PDH plants. So what you will see here is cracker production in 2007 to the cracker production in 2012 of propylene and you will see that drop was, it went from 15 billion pounds to 10 billion pounds in five years.

And due to the increased natural gas and associated NGL products, this trend is expected to continue. So this is the CMAI/IHS data point. We are expecting propylene production from crackers to be steady but not increasing of any significance.

Secondly we expect FCC production, that’s the yellow bar there. We expect that to be fairly stable with slight growth as better conversions due to catalyst changes the refineries maybe slightly offset by some declines in gasoline manufacturing. And that leaves with what we call the PDH gap. So this gap, if you will, is expected to go from three to four billion pounds in 2012 to seven to eight billion pounds in 2020, and it’s going to be filled by own purpose propylene plants, primarily PDH.

And I often get asked everywhere I go, how many of these PDH units will get built. So I’m going to try to answer that question so you don’t have to ask me, just front run it. So what you’re really asking when you ask me that question, is you are asking me how much demand there is for PDH based propylene? That’s really what you are asking.

And what I’m going to tell you is that PDH capacity is going to be matched with underutilized propylene assets or new propylene derivatives. All propylene derivatives run at a 85% capacity today. They can't run at 100% because there is no enough propylene here. So the number of PDH plants that can be built in this country is going to depend on how much derivative consumption there is.

And I am also going to tell you a few other things. Enterprise’s infrastructure is so advanced, we can do things that nobody else can do in this propylene sector and we have the only complex that could repurpose existing splitters to integrate with front end propane dehydrogenation reaction.

We have the only PGP monomer export terminal. We have a robust delivery and storage infrastructure and as Jim said earlier, price creates demand. So, it's my honest belief that we have the infrastructure that allow Enterprise to participate and be successful in any market condition; regardless of how many PDH plants are built.

Now 1979; 1979, I was still in college; so you know Jerry wasn't here. The leaders of Enterprise at the time fractionated 600 million pounds a year of polymer grade propylene is what we call Splitter I. And in 2015, we are going to be up 70.3 billion pounds a year. So, in 34 years, we have taken this just very, very methodical step upward. And with growth comes infrastructure improvements which we have made both in deliverability and feedstock gathering.

But as we look ahead for the next five to 10 years, we see a need to transport polymer grade propylene from Texas to Louisiana. So, this red line right here is what we call our LuTex (ph) chemical grade propylene line. It is not an NGL line; it’s a chemical grade propylene line. And our plan going forward is to convert that; the green is obviously polymer grade to convert that to a polymer grade transportation pipeline, as we go forward.

Now our petrochemical group is not just a propylene business. Although, we have pretty good franchise; it’s just not a propylene business. We have a very valuable C4 business in this group. In 2013, it will be a strong contributor to our petrochemical operating margin.

So, I have stated before, integration and optimization to me is the Enterprise way. Our octane enhancement plant is on its way to having its best year in history. We continue to sell MTBE into the export markets and have over 80% of that plant hedged and our 2013 margins are above our 2012 margins with all of those hedges.

We also invested in a high purity isobutylene plant back in 2010. It’s another integrations that takes a byproduct from our manufacturing of MTBE that byproducts become high purity isobutylene in our high purity isobutylene plant. It’s diversified our portfolio and it’s provided steady margins to Enterprise. So we are very, very happy with both of these businesses.

So, what to expect in the future? Well as we go forward; just get it all up there. We will continue to grow strategically as a builder systems. With our marine business, we are going to see continued high demand for the next few years and those opportunities depend on our continued to focus on being a leader in safety and operational performance. That's how we are graded by our customers.

In our petrochemical business, we are going to repurpose certain assets to fit our new expanded footprint and we are going to explore the potential of developing improved octane enhancement capacity, on purpose isobutylene and expanding our high purity isobutylene market share. That's all on the C4 side.

Now, on the C3 side, we are going to complete Splitter I expansion in the next eight weeks, or less. We are going to complete PDH1 and regarding PDH2, we are just going to need to determine if when and where.

So, that's really all I have and if there is any questions, we are going to wait until we have a question-and-answer session afterwards at the prescribed time but what I would like to do is without further ado, I would like to introduce Tom Zulim who oversees our regulated and pipelines and assets and refined products.

Tom Zulim

Thank Jerry. Good morning I am Tom Zulim. And it’s good to be with you all again. As Jerry mentioned, I have got responsibility for Enterprise’s regulated NGL and refined product pipeline systems; what we generally call our regulated businesses and our refined products business which includes refined products marketing and unregulated refined products assets.

I will start with an overview of our regulated pipelines and some of the exciting projects and opportunities we have going on with these systems. Then I will cover some of what's going on the refined product side.

Overall though, we continue to execute on our Enterprise value chain strategy. As you have heard here, the Enterprise way of doing our business, to emphasize what this means from an Enterprise perspective, it means we build as you have heard repeatedly integrated systems that connect and feed our entire value chain. By creating integrated systems, we are able to offer our customers solutions along the entire midstream value chain, producers through the end-users and in doing so, we create value for Enterprise.

It also means that we have connections across our entire portfolio that allows us repurposing and extension options, where others may have to build from scratch; think Seaway, ATEX, Diluent Service as examples.

Here is a broad look at our NGL and refined products pipeline systems. 10 years ago, we barely had 2,000 miles of pipeline with FERC regulated movements on them. Today, we have more than 20,000 miles with FERC movements and is growing, serving nearly 120 origin locations and over 110 destination locations. These pipeline systems move more than 20 different products at a rate of almost 2 million barrels a day through 27 states. This year and next year are definitely the year of the pipelines for Enterprise.

Let's take a look at what's going on with our Western Y Grade expansions. First, our Mid America Rocky Mountain expansion. It’s adding 75,000 barrels a day of increased Y Grade capacity out of the Rocky Mountains. This project is completely anchored with 10 year ship repay transportation agreements. We are well into its construction and we expect it to be in service no later than the second quarter of next year.

The next three projects are joint-ventures that as an integrated system will gather Y Grade from the DJ and Niobrara basins in Eastern Colorado through North Texas and Western Oklahoma producing areas and deliver it into the Mont Belvieu fractionation complex, thereby also alleviating significant capacity constraints across Texas into Mont Belvieu.

All of these projects are anchored with 10 year ship repay transportation agreements. In addition, each one brings additional customers, volumes and value into the entire Enterprise portfolio. The first of the three parts moving North to South is the Front Range NGL pipeline. From the DJ Basin to Skellytown Texas, it will have an initial capacity of about 150,000 barrels a day, expandable to about 230,000 barrels. We expect it to be in service by the end of this year. It's a joint venture with excellent partners, all bringing strategic pieces to the project and ultimately a new project, that’s a great fit within the Enterprise portfolio.

The next part of the system is the Texas Express NGL pipeline from Skellytown all the way into Mont Belvieu. It will have an initial capacity of 280,000 barrels a day, expandable to 400 and it will be in service by the second quarter of this year. Again excellent partners, all bringing strategic pieces to the project and another new project that’s a great fit within our portfolio.

The last part of this system is what we call the Texas Express NGL gathering system. It will gather from and connect 15 gas plants to the Texas express pipeline. It will have a capacity of about 150,000 barrels a day and it will be in service by July of this year and this part of the system is being built and will be operated by our partner, Enbridge.

Now, let’s shift gears from Y-grade to purity ethane and I will show you what’s going on with our rapidly expanding Purity Ethane Systems. You will recall about this time last year, we had just recently announced the ATEX pipeline project. The project was borne by rapidly developing need of producers in the Marcellus in Utica basins to recover ethane both for gas quality purposes and for purity product value, and not just dispose of it but get it to the most liquid market there is for ethane and that’s Mont Belvieu.

Our response to this service need was to repurpose a major part of the TE pipeline system that we all know has been under a lot of pressure, from heavy south to north demand erosion and put it into a new service to move purity ethane north to south that benefits both the producers and Enterprise.

The 1230 miles ATEX pipeline system consists of over 400 miles of new mostly 20 inch pipeline and over 800 miles of the TE 16 inch and 14 inch pipeline reversed and reconfigured for Purity Ethane Service. Its initial capacity is up to 190,000 barrels a day, it’s anchored with 15 year shipper pay agreements that followed three successful open seasons and we expect it to be in service by January of next year.

You can see from this map, how our NGL pipeline systems all come together and what is the world’s largest NGL fractionation and storage complex i.e. Enterprise’s complex at Mont Belvieu view and the world’s largest ethane market, the Gulf Coast of the United States.

The ATEX pipeline with its purity ethane, the multiple Y-grade pipelines with contained ethane and other NGLs and the Gulf Coast ethane demand today exceeds over a million barrels a day and it’s climbing.

You saw this slide earlier in Tony’s materials. I put it in here simply to emphasize the growing demand for purity ethane on the Gulf Coast. Okay, so once you get the ethane to the world’s largest ethane market, how do you actually get it to the customer? Enterprise’s solution of course is a pipeline system, a Gulf Coast purity ethane pipeline, a 270 plus mile pipeline system dedicated to purity ethane service supplying Gulf Coast petrochemical complexes from Texas to Louisiana.

This project starts with our recently announced Aegis ethane pipeline. The Aegis pipeline will be anchored by Enterprise’s Mont Belvieu storage complex, the largest of its kind in the world and will extend eastward along the Gulf Coast into Louisiana connecting along the way several major Gulf Coast petrochemical facilities to what will be a dedicated purity ethane system.

Shipper commitments are already in excess of 165,000 barrels a day and climbing. Its ultimate capacity and the exact route will be determined as we finalize the more commitments around it. In a supplemental open season you may have seen, whose announcement is currently in progress to determine an additional demand.

As most of you know we have been talking about this project for about two years, primarily because we have been so bullish on Gulf Coast petrochemical economics, like our ATEX, Seaway, the PDH projects, we believe this project is extremely strategic because it perfectly marries the producers with the end use markets.

Another new and exciting business opportunity is providing transportation services for diluent quality natural gasoline, again using our Enterprise TE pipeline system. We are all aware of the growing demand for diluent to support Canadian crude oil production, Canadian source diluent won’t keep up with the expected demand and as you can see from this chart, we think this demand is significant.

With the expected increase in Gulf Coast natural gasoline production, we call all the Y-grade feeds in the Mont Belvieu, a large portion of which will be at Enterprise’s facilities. Enterprise’s TE pipeline is perfectly positioned to capture significant portion of this market and to be a principal transporter of diluent materials that ultimately get to Canada.

So Enterprise’s response to this service need is to move diluent quality natural gasoline from the Gulf Coast through the TE pipeline to new lateral pipelines and connections to what are today the principal pipeline southern lights and Cochin for diluent supply to Canadian oil production areas.

The project will involve new connection to both southern and Cochin in addition to other planned projects at Enterprise’s Mont Belvieu complex like gasoline treaters and degassing units. We expect our connection to southern lines to be operational as early as the fourth quarter this year and to Cochin by the second quarter of next year.

Our open season for this diluent service started earlier this month, closes tomorrow. This like other projects, we’re finding ways to repurpose our underutilized assets and meet growing demand in a very efficient and timely manner, ultimately bringing incremental value along the entire Enterprise value chain.

Now let me shift the gears again and I’ll comment briefly about our refined product business. It may be the last business I comment on but it’s certainly not the least. As we all know and as these charts depict, recent North American crude oil production has dramatically altered historical flows of refined products in the United States. Instead of the historical Gulf Coast to Midwest, the south to north flow products today want to flow north to south.

The TE pipeline is certainly seeing this pressure. And now refined products in the Gulf Coast and are increasingly looking for ways to reach pipeline markets other than the Midwest and most importantly for them to get to the water for exports.

This isn’t a very good map bit it depicts our southern complex as we call it for refined products, which is uniquely positioned to provide our Gulf Coast customers with flexibility and connections to major product pipelines and marine terminal facilities along the Gulf Coast.

The historical nature of the southern complex, keeping in mind it was a designed to feed the TE and the sentential pipelines to move products south to north, has seen the same pressure that the TE pipeline has seen for those kinds of movements.

More than a year ago, we started the process of repurposing our southern complex to provide new connectivity and greater directional capabilities, bidirectional capabilities to connect Gulf Coast refineries with the markets that they, both pipeline and waterborne export markets.

So far just the last year, our repurposing efforts have increased volumes on our southern complex by almost a 150% and as new oil both heavy and light hits the Gulf Coast, and refineries continue to retool and expand increasing their presence in global markets certainly, we believe there will be much more to come on the efforts around our southern complex. In fact right now we are working on further expansions, connections and a new large scale refined products export facility that will get our customers to the water for export across an Enterprise dock.

In closing, we are very proud of the accomplishments and support shown to us by customers or joint venture partners and the investment community. I'd say that there's not and probably never has been a company that has more pipeline activity going on than there is Enterprise right now. We believe that we're good listeners, good problem solvers, with a proven ability to think outside the box. This has led to our results, including strategic joint venture, joint ventures and repurposing of assets where beneficial to bring value and timely solutions to a very dynamic energy market today.

So with that I’ll turn it over to Lynn Bourdon, our group Vice President for NGL and natural gas marketing services among other things. Thanks Lynn.

Lynn Bourdon

Thanks Tom. Again I'm Lynn Bourdon, and as Tom said I've got responsibility for the NGL marketing, natural gas marketing, our petrochemical business and our marine business. Today you've heard about the magnificent set of assets that Enterprise has assembled and continues to develop and my discussion today is going to be about how we tie all of these assets together to leverage their capabilities and improve our base return.

Now Bill and I may have come up with a pretty looking slide to demonstrate the principle that Enterprise has, but Dan Duncan really put this in place in 1968 when he founded the company, and this is a principle that drives how we think, how we do business, how we operate and how we communicate amongst ourselves and with our customers.

Our asset organization is tasked with drawing and reconfiguring our assets to maintain competitive positions in the areas that we participate as well as extend into new areas to grow our business. In addition they're tasked with maintaining and managing the asset portfolio that we have.

Marketing's role is to drive the business forward by ensuring maximum asset utilization and capturing opportunities that exist in and around our assets both on a short term and a long term basis. And then Rudy's (ph) organization the distribution ensures that product movements take place to satisfy the requirements of both our customers and our own international needs and commitments, and in addition distribution plays a very strong role in making sure that we are optimizing the run rate of our assets and communicating not only across the two commercial organizations that we have, but also across the accounting operations and engineering functions as well.

On the marketing side across the company, we're now beginning to focus on the demand side of the equation. In the past several years we’ve seen a very strong focus on the supply side and we're now turning our attention very intensely on the demand side, and unlike other competitors Enterprise has a core belief that marketing improves the return on our assets. I'll be working today to provide you with a better view and more in depth view of how Enterprise marketing groups make this happen.

And while my comments today may focus on the NGL marketing and natural gas marketing side of things, they will echo what you've heard from the other commodity groups and our strategy, our approach and our execution.

This is a slide we've shown over several years and depicts the fees that our marketing groups pay to affiliated assets. We firmly believe that marketing enhances the value of our assets by taking an active role in ensuring that they stay busy. This slide demonstrates the results of the strong linkage between the assets and our marketing effort as we continue to increase the amount of money that we pay to our own assets.

While other companies take a more passive approach and rely on third parties to generate the income on their own assets, we don't. We take a very active role in ensuring that our assets are highly utilized as possible.

And we've seen example after example where another company just leases out the capacity of their asset to somebody else and yet watch those assets run at well less than capacity. Our marketing groups are expected to utilize any underutilized capacity to generate incremental returns.

Now I'm also showing here for the first time the same slide for the natural gas marketing group. We recently reorganized this natural gas business and we're having the same type of focus on this area and it was a key consideration in the way Bill and I reorganized the business and as you can see, we’re working hard to duplicate the same results that we experienced on the NGL side.

And the way we do this is through the use of defined marketing strategies, and strategies as we define them are really about identifying and capturing opportunities around our system, or in other words a specific activity around an Enterprise asset capability.

This makes our approach to marketing very regimented, and note I say our approach and not our actions. Our actions are very discipline, the difference being that we spend a great deal of time looking for ways to link and lever our various assets around each other, and once we've identified those ways, we work to institutionalize the activity required to make it happen.

And lastly back to my point on disciplined actions, these strategies ensure that we focus on specific opportunities rather than taking a needle in a haystack approach, a builder of systems and not just a collector of assets.

When you have system and not just a collection of assets, you can look at many different regions and products for opportunity and this gives you the ability to capture margins in multiple ways and not just through fee based services. For instance we can seek out nonstandard products in areas that are not served by our pipelines or even on the Gulf Coast and bring them into our system for processing and resell.

When you have a system you can think about opportunities that are multidimensional. In other words we're not limited to singular time or product solution sets but we're able to combine these with location to create more options to capture margins around these assets, and as I said earlier our approach is focused and disciplined with strict adherence to company controls and policies. We do not tolerate actions that are beyond authority limits or policy.

And finally a very important point for Enterprise is that we have a flat book policy. We do not take price risks unless explicitly authorized by Mike and only under controlled circumstances. And secondly we have a rigid risk control system which is run by Daniel that ensures that we maintain this flat book policy.

Each of our marketing strategies can be categorized along the lines of time, bases, regional, import or export or product upgrade and what I’ll try to do here is demonstrate the extent to which each of these strategies link multiple assets to generate value across the chain.

Obviously each opportunity can be unique and utilize other assets. The key is that we've institutionalized the concept of looking for specific opportunities and linking the deal around these assets, and as we train marketers on the use of the strategies, we emphasize that they must understand how to link the assets together to capture value.

And in order to do this, they have to have an understanding of all of the cost as one executes a strategy, and this is a fundamental aspect of our marketing training and how we focus on these opportunities.

The marketers are expected to understand the cost of executing every single strategy and this can be the cost to fractionate a product or in the lost opportunity of utilizing a pipeline's base or even storage. By having a system we can link our diverse assets with our marketing approach to meet various customer needs, thereby solving their problems, which is a key component of marketing.

One of our strategies is in the international side and we call it import/export. This strategy is built around utilizing our tremendous NGL gathering, processing, fractionation, storage and import export terminal system and linking it with the international market. This is our most complex strategy as it employees basically all of our various assets in every region in order to be successful and this goes back to Bill’s point about low ethane propane. The products required for this are special and not just in low ethane as the Japanese market requires a certain specification and Enterprise at this point is the only company who’s product is qualified to go on to the Japanese market.

As Tony explained earlier today, the production of NGLs is increasing in the U.S. due to the tremendous success our producers are having within the shale producing basin. This is resulting in prices for ethane and propane declining significantly relative to crude oil derived ethylene feedstocks, which in turn increased the competitiveness of U.S.-based ethylene producers on a global basis.

With ethylene plants focused on ethane consumption and propane production, growing late in 2009 we began exporting propane on an annual basis versus the traditional seasonal export activity we had experienced previously.

This growing surplus of propane combined with the shift towards latter feedstocks on a global basis created an opportunity that Enterprise was uniquely qualified to respond to. Late in 2009 Enterprise was the only U.S. Company who could export fully refrigerated propane and we began loading cargos in the summer of 2009 and we’ve not stopped loading at full rates except for a very brief period of time in October of 2011.

And as you can see in the chart on the left, the driver has been purely economics. This table shows the gross arbitrage between the price of propane in U.S. and the offshore market has been as high as $25 million for cargo. I will figure this thing out before I finish here.

And for all of those people who opposed natural gas exports as they believe that will raise the price here in the U.S., I’ll point out that as our exports have increased so too has the arbitrage between these two regions and the price of propane is still less than 50%. In fact in 2012 it was 44%, in 2011 it was 65%. So while we have increased our exports the price of propane relative to the price of crude oil has declined and stayed low while we have increased our exports. In 2013 we are still averaging 44% of crude oil.

And for the past several years something that once was unthinkable has happened. The U.S. has moved from one of the world’s leading importers to that as a significant exporter and in fact we believe in 2013 the U.S. will represent about 213% of the world’s total export product.

And Enterprise remains the U.S.’s largest leading company in the international LPG market and we have booked over 330 cargos through 2022. And lest anybody think otherwise, we are firmly committed to remaining the leading service provider for the export and import of NGL products in North America.

This slide gives you a little flavor of where the product that we export is going. And as you can see, most of the product stays close to home as we display supply that was previously coming from the North Sea, Africa and the Middle East as production in those regions has either declined or moves to a higher end market. And in the lower right corner I wanted to give you some perspective of the size of Enterprise and U.S. in terms of global position as a supplier to the international market.

As you can see, Enterprise alone in 2013 is expected to be the second largest propane exporter in the world and the U.S. in total will rival if not surpass Qatar as the largest exporter of propane in the world, and clearly in 2014 we will easily surpass Qatar as we will have a full year of our export expansion under our belt.

I want to switch gears a little bit and talk about the efforts in our natural gas marketing group. As we discussed earlier, we recently reorganized our natural gas business in order to ensure that it conformed to the Enterprise way and in doing so better position it to adapt to a changing landscape.

This new landscape has made it a harsh environment for asset like trading companies who rely primarily on large and volatile basis positions. As Tony and Jim alluded to earlier, the demand side of the equation is starting to ramp up just as the supply side has been increasing over the past few years.

The market we see developing is now one that is predicated on delivering a high level of service that only an asset-based company can provide. This means reliability, storage and supply diversity will become the hallmarks of the successful service providers and borrowed a phrase from Jerry’s marine business, this fits right into our wheel house.

So as you would expect this approach, or the approach that we are going to take in the natural gas marketing group is very similar to that of our other marketing groups. Focus on our customer needs, and the relationship with these customers to understand their needs, link our asset capabilities with customer needs to deliver what they want at competitive pricing, which means providing a bundled service offering that meets their needs and work towards the long term commitments and not short term wins that are unsustainable. And to grow our supply position, we have a fundamental belief that the more volume we control the more opportunities we will control,

And then Jim started off his discussion on the natural gas business with Texas to illustrate our significant asset position and opportunity and I want to start off with the Louisiana slide to illustrate a business model that we want to emulate across the other regions and namely Texas that we participate in and highlight changes it will make to achieve the similar level of success. This is an area that has the second largest concentration of industrial demand in the country and has over 1.2 Bcf a day of demand existing connected to our system.

The approach we used in Louisiana is one of a bundled service approach, the tide our links as reliable supply with asset capability and our customer’s expectations. Our view, just as with the NGL side is that if you are not a merchant player on your own system, you are essentially outsourcing your marketing function. And this can lead to disastrous results because many times your customers are going to equate bad service after getting bad service from their marketer.

So as we said before about being an active player, not only do we have more control over the utilization of the system, we are better able to be more responsive to our customer, have a better view of the market and more ability to ensure reliability of service that our customers expect.

And I call this the land of opportunity for Enterprise gas marketing. Our intent is to bring the Louisiana flavor and approach to the Texas market. With the changing landscape and unparalleled supply and pipeline position we intend to focus on increasing our market position in Texas. While we’ve always had a marketing presence in Texas, given our significant asset size, we are looking to reenergize the function to a new level.

Texas represents about 25% of the total U.S. industrial demand and we are tied into about 3.3 Bcf a day of power generation today. Today while our pipeline system provides transportation service to over 100 pipeline interconnects, and over 50 power plants our marketing activity represents just a small portion of these movements, and as Jim mentioned we are currently pursuing over 5 Bcf a day of new growth opportunities that we can tie into this system.

So we intend to grow our marketed volumes in Texas by combining our strong supply position with our asset position and along with customer needs to improve their service levels and generate additional margin around our assets. With the growth in industrial and power generation sectors along with this existing demand, we believe there is significant upside to increasing our marketing function around our Texas assets.

And with that I’m going to turn the podium over to Leonard Mallett who is our group Senior Vice President in charge of Engineering.

Leonard Mallett

Good morning. Leonard Mallett and I’m responsible for engineering and construction among a few other things that I’ll talk about a little later. To this point in the program we have talked a lot about projects and opportunities. Mike Creel mentioned $7.2 billion in active projects that we have going on.

My message to you this morning is that we have the people, we have the experience, we have the processes, we have the external resources to get all this done and thank god for caffeine right. All right, so when it comes to the Enterprise way, the Engineering group certainly has a method for doing projects that is somewhat unique.

Quick feasibility analysis is key for us and I’ll talk more about that in just a little bit. We have well a honed process for on time, on budget execution of projects. We’ll talk about that and then finally every engineering group has their process and their methods but there is just an overwhelming attitude of getting these projects done. Just to give done cultured to that I’ll talk more about very intense at Enterprise.

Our role, like most internal engineering departments is to provide quality, cost effective on time engineering constructions services to two groups. We have two customers and that is our commercial group and our operations group.

Our commercial group counts on us to be able to give them accurate information, cost information, schedule information. When we tell those guys that our project is going to be completed by X date, they forecasted the revenue. So, we need to make sure that that project is done by X date.

When they are approaching a client, a producer or shipper or whatever the case may be, those guys need to have confidence that back home both engineering and operations can deliver on what’s being promised.

Likewise, as a formal operator, I’m very sensitive to our operations customer. We have to be sure that we deliverer to our operations group safe, reliable and efficient assets and we do that all the time. Actually, our startups and everything sometime or intense but we work very, very closely with our operations guys. We have very smart people, very passionate people working through some of those issues.

Getting back to the quick feasibility analysis, I think this is strategic advantage for Enterprise and I like telling story because most of the technical people in the room will remember that Mr. Duncan, whenever we were in a meeting and we were evaluating some opportunity, he would look at the technical guys and ask us, how much does it cost to build this pipeline? How much does it cost to wash this well? How much is the tank foam cost? And it’s not a good career move to say I don’t know. And so we would really be hesitant to answer him because as engineers we immersed in details.

And what he was trying to get us to do is to think high level. His point to us was look guys, you know better than I know and he’s right, we do know better than he knows, because if you look at this chart, we have a lot of historical cost, we have timing data, we certainly have learned from our project experience and we can put that together quickly to help our commercial guys to evaluate these projects.

So what we did? Well, we developed a group of engineers that do primarily nothing but conceptual development and our commercial guy asking go to these CDEs, Concept of Development Engineers and work through the logistics associated with the project. They can take that and negotiate with producers and it’s done very quickly. And again, when you spend $4 billion a year, you have cost data. You have timing. So you see no things. So we unitize that and we use that to our advantage.

Like most engineering groups we have a well-honed process. We spent over a year working on our process. In fact Bill going to walk you through that so I won’t focus on it and I know that you can’t see the portion down there in the yellow, that’s okay because that’s top secret stuff and you guys don’t need to know what that is.

But what’s key here is we have four phases and we talked about the conceptual, our conceptual development engineers work on that, but we have our planning phase, our execution phase and finally closure and what I really want to talk about here is the importance of the planning phase.

Where most projects go left or go wrong is in the execution phase you find surprises and to us, they are no good surprises during the execution phase. It cost us more and it takes more time. So when we work with our operations group, we work with commercial guys and we do our detail planning, spend time at planning, it yields less surprises in the execution phase.

Another key element of our engineering process is communications, communications, communications. We have a lot of meetings, we walk through projects, we walk through PNIDs, we walk through flow diagrams, we spend a lot of time with these projects. I encourage my engineers to get up and go to the office and talk to the commercial guys, talk to the operations guys because email is just the most efficient way to miscommunication. And so we do a lot of collaboration, lot of talking and we really have had some success in the planning phase that yields a much smoother execution phase.

And the last point here is just this get it done culture. I’ve been working in this industry for 34 years next month and I joined Enterprise in 2005-2006 and I can tell you that there is no other place that has a more intense focus on getting the task done than I’ve seen at Enterprise. And it prevails to do the commercial guys getting the deal done, the engineers getting the project done and the operations guys commissioning that project.

And you can see on the source part here, we talk about some of the things that we’ve accomplished and that we have in planning and you’ve heard a numbers from the commercial guys, I won’t go through that.

What I want to focus on is just how we go about, our attitude when it comes to getting these things done. One of the things we don’t do is we don’t get tangled up in analytical do loops. We have the facts, we make decisions, we move forward. Either we’re going to do it or we’re not going to do it. There is no time spent just haggling over whether the project is real or not, same thing with cost and then scope. We do our analysis, we move forward.

Second point and I’ll talk about these second bullets at the same point. We hold ourselves in our contract as accountable and we act when our milestones aren’t being met and the point here is this that again, that cash flow is depending on us finishing that project on time.

The rate of return is depending on us to finish the net project on budget. And so when milestones aren’t been met we act. If a contract is not producing we may reduce the scope, bring in another contract and we have actually done that.

If the project manager is not performing up to speed because of experience we act. If commissioning is not going well, we act. And when I say we act, I do mean we, commercial operations and engineering, all hands on deck to get these projects moving. If I have a right of way issue with an industry partner, I can go to my commercial guys and they can help me get that right away.

On slides are just laced with some construction projects and I’ll go through some of those in just a little bit. We’ve talked about a lot of projects and I want to highlight a few of our accomplishments from 2012.

You heard a lot about our Yoakum facility and just to add a little color to what’s been said already’ we got funding for this project in July of 2010 and as you can see, 22 months later the first train came on and again cash is forecasted for these other dates and we were able to meet our dates.

We did have some lessons learnt on startup on Train I that made Train II and Train III go smoothly. Another point I want to make, when you talk about the Enterprise way from an engineering standpoint is we don’t lock ourselves in and we always leave room for expansion. This facility we have the power and utilities for future expansion. There is an AFE in GMQ for another 60 acres here. So we can build trains IV and V. Again, that’s just the Enterprise way.

This is beautiful facility. I love this. This is our west storage facility. Unfortunately we had a fire February 2011. 20 months later we rebuilt the entire facility. This is a very large storage facility 10 wells, 25 million barrels storage, and this was a facility that evolved over the time and some of you know that as these facilities evolve over time, you scab on pipe, you change services so and so forth. And so the existing facility was somewhat inefficient, had some dead legs those kind of things.

And so what we did was we brought all that pipe above ground as Bill mentioned. So over 30 miles in pipe racks. We have over 100,000 feet of cable and wire on pipe racks, and it is much easier for the operators to operate. It’s more efficient. It’s more effective. We have added new controls et cetera.

And just another little Enterprise way and I don’t tell my guys to do this but do you see this pipe racks, it crosses the railroad there. That pipe racks is at 50% capacity. That means I can have three or four or five more pipes on that rack.

The other thing it does is I don’t have to get a permit to drill across the railroad in the future. I will just lay pipe on that rack and move forward the next time the commercial guys comes up with an opportunity. And again that’s not something that I instruct my guys to do. That’s engrained in them. They know that look, let’s make sure we build for the future.

We talked a lot about Mont Belvieu and a point I want to make here, that we finished FRAC VI last year, but in the previous year we did FRAC IV and V, and this picture is dated. Some of you were at Mont Belvieu here this week and you saw towers up for FRAC VII and VIII.

Still a couple of points, we say we don’t box ourselves in and we look like we are boxed in but we are not. To the north and to the west, we bought 1900 acres and so we have room for expansion. Another point I want to make here is you see this pipe rack here? That thing is going to be at about 50% and we are putting a pipe on it now to take away products to our north storage facility from FRAC VII and VIII. The pipe is oversized such that if indeed we want to build more FRACs we can just put the product on that pipe.

Another major accomplishment again, just to add a little color, Bill talked about the Eagle Ford project but this is one that was two years from approval to reality, and it is more than just pipe. Each one of these facilities Lyssy, Milton, Marshall, Seally; in total they have 2.1 million barrels of storage. Again we built out the ECHO facility and we continue to work on the ECHO adding three tanks there.

Another significant accomplishment last year was the reversal of Seaway pipeline. And it sounds easy like the flow goals north, let’s make it go south or vice versa and there is a lot of work involved in that. So Cushing was a receipt facility and so when it becomes an origin facility, you need to increase the power there. So we had to increase the substation, increase the power there. We had to build a pump large enough to move 400,000 barrels a day on the Seaway pipeline south. We had to remove check valves. Check valves allow flow in one direction. So we had these remove them or flip them to do that.

And so phase one was completed in June and that allowed us to get the first phase done, I think that was 150,000 barrels a day coming south. Then phase II was to reverse all the intermediate pump stations on that system. And while we were doing that, we took advantage to upgrade our controls and add some motor controlled valve et cetera.

Okay, our most recent accomplishment was the doubling valve rate that the OTTI facility, and again some of you had the pleasure of going up to OTTI. Very difficult project, very congested area, not our property, and we shove 12,000 barrels an hour. We are actually doing 12,400 and in May we should be doing north of 14,000.

Okay. Now I want to move on to some of the projects that are underway and a lot of these were talked about but I just want a little bit color and give the status to these projects. So first of all I want to stop here and talk a little bit about right of way. Because the next set of projects, there are four or five pipeline projects.

And so 2013 is turning out to be the year the pipeline force. We are putting in over 2500 miles of large diameter pipe. And so when you put in 2500 miles of large diameter pipe, that is, I think we calculate it by 8000 tracks of land and each track of land doesn’t have just one landowner. Each track of land can have several landowners. So I was talking with our right of way lead yesterday about this and there will be 25,000 landowners that we have to contact to get this right of away purchased. And I can tell you as a project engineer, critical path here is right of way acquisition.

Construction is not easy but we control it. But once we get right of way, we feel a lot better about moving forward with our schedule. So right of way is definitely a critical path for us. And so there are three principals that we use in acquiring right of way.

One is to focus on the person. The other is to focus on the property and the third is price. And this is what we do. We teach our right of way guys to approach the landowners as if they would want to be approached, as if someone who is crossing their property, respect and dignity.

And second is the property. I want to make sure that that property, we leave that property in as good or better shape than when we got there. Third is price. Pay a fair price. Haggling takes time and it leads to will. So we don’t want a low ball, pay a fair price. And we have had success with that.

25000 landowners contacts, 8500 tracks, I will give you status in just a little bit. But where we have rights of condemnation, we don’t have to use the rights of condemnation with this approach. Very rarely do we have to use right of condemnation. And even when we do, very few of those cases, 1% probably goes to court who have been successful with that, and versus just trying to go in and not be patient with the landowners. It just really has helped us schedule quite a bit.

Okay, so the Seaway expansion, Bill mentioned our loop project. It is well underway and you will see by way of status we are probably at about 80% on right of way. We will start construction this fall and we feel pretty good about it. Our long ether pipe is purchased and so we are in pretty good shape there. Again this is to be completed in the first quarter of ’14.

The ATEX project that was talked about, this is an interesting one because in some areas here, where we had the right of domain in Ohio, I think it takes two years to go through that process. So we really didn’t have the right of way in that domain, so we were able to, as you can see 98% of the right of way we are showing that we are going to start construction in May, but we are actually jumping the gun there and we’ve got contractors out there a couple of weeks early. So we feel good about our progress with that and again this is the first quarter ’14 completion.

Texas Express, the construction is well underway. We have four different spreads going right now, both on the pipeline and we have six pump stations that are being worked on as well. And I don’t think we have any issues associated with finishing up in July.

Front Range, this is our little pipeline, 400 miles of 16 inch. Where we are with that is we have 90% of the right of way. We plan to start construction in May next month. We just finished the field bid process. We have the contractors on board and we will get those guys in there next month and end of year completion.

Bill talked about this project too. But just to add a little bit of color. We are working in 7000 feet of water at our deepest point and that poses some issues. Our pipe is an inch and a quarter thick and it’s not thick because of internal pressure, it’s thick because of external pressure, 7,000 feet of water.

What's left to do there is we have in connectors to raise the pipe, put our in connectors on, a couple of Y connectors. As Bill mentioned last week, we are working on some of the, we accomplished some of the top side work. So we have some more work to do but this project will be under budget and will be really well ahead of July 14th.

Lastly, in addition to capital projects, I have responsibility for pipeline integrity and the message here is that we have over 50,000 miles of pipe and we take pipeline integrity very, very seriously. In addition to what you see listed there, now that's what's required by regulation, the internal inspections, hydro-test, capacity protection, the make ready work that we do. But in addition to that, I would like to let you guys know that we go well above and beyond what’s required by the regulation.

For example, high consequence areas; you have to; the rules require you to do a certain amount of work in high consequence area. So, if your pipeline crosses a neighborhood or something sensitive, there is activities you have to do, tests, inspects, so on and so forth.

We will do that from barrow to barrow, we will do that for the entire pipeline. If the rules say, you need to correct an anomaly that's 30% deep, we will go 10%, that kind of thing. We will hydro test just to make sure. Again 50,000 miles of pipe, it’s important to us that we keep our employees and the public safe.

That's the story from engineering. And speaking of safety, I want to introduce Terry Hurlburt. Terry Hurlburt is our group Senior VP of operations and one of his primary responsibilities is safety.

Terry Hurlburt

Let’s see if I can find which way this goes here, wrong way okay. Yes, Jim asked me to do a safety moment before we start. We're doing one of those at each of our meetings in the corporate office and in the field every day to remind everyone in the company, not just the folks that are out in the field but everyone that safety is the most important thing.

And this month, if you don't know, it is distracted driving awareness month. Anybody here drive with their cell phone on, no okay, yes we all do. And it’s interesting because for years that's become a practice. We are all busy. We all take that time when we are driving to use that cell phone to make up for time we are not in the office or whatever.

There are studies now that show very clearly that we all thought we could multitask well; the brain can't multitask. The brain will jump from one job to another but it won't multitask. So if you think that you are talking on the phone and still driving safely, you are wrong. Very, very clear.

Obviously texting and driving and answering emails is even worse, right? Many cities and states around the nation are putting laws in place to make that illegal. We have taken the step of making sure that everyone in our field organization has to have wireless; by that its hands free type things for their phones. But even that, we are asking people now, if they are going to be on a conference call or any extended conversation; we want them to stop, get out of the truck, park it on to the side of the road, whatever and have the conversation. I do use my hands a little too much, my wife says.

That probably was taken wrong. Sorry about that. Anyway. Back to the safety. Don't drive distracted. That's probably the message of the day. Yes I’d better. Thank you, Jim. I already got myself in trouble. I was focusing on safety and we have been obviously as a company doing this for a very long time. Going back to Mr. Duncan, he made one statement that has stuck with me and many others in the company for a long time. But basically it’s a simple thing.

As Dan, I put things fairly simply sometimes but they are very complicated topics he said, no task is so important that could be done at the risk of safety. Very simple. And we have taken that to heart and have learned as a company that there are certain things we have to do to mitigate our risk and the things you have heard about last year from the safety moment we had then was cardinal rules.

The things that are so important that if you do them wrong, they have a potential to harm people and create serious injury, have a major gas release, whatever those kind of things that are very, very bad. We talked about things like lock out tag out which is isolating of energy sources. Entry into a holt, whether it be a ditch you are digging for a pipeline or inside a vessel, called confined space entry and hot work permitting, all things that are very, very common in field operations like this.

So, we have made those things that we follow religiously and have very strong programs in place to make sure that when people don't follow them. There is consequences and severe consequences. We have also worked to enhance training. We put a much larger training force in place to make sure people understand how to implement these things. And obviously, procedures are part of that.

So, probably the biggest thing to me was to make sure that with all this activity you have heard, and it’s amazing; I’ve been with the company 32 plus years and it’s a very exciting time. The last five, six, seven years, things have really, really come around for the company. And that just means Leonard gets to build stuff, the folks in the field get to start it up and operate it. Meanwhile, we get to maintain all the stuff that’s out there already right as we keep growing and growing.

So, people can get the idea that, maybe I don’t need to follow these safety rules, I have got to do things done. I have got to keep up with everything going on. That's never been the intention of management. It’s never been Dan’s intension. I know Mike and Jim have made it very clear in fact. We have helped to get that message out. I think that's one of the key things we’ve done in the last couple of years, is make it very clear from the top down; the folks that actually; we all work for, believe that's number one. That's core value of the company.

And as I talked about we commissioned last year, 27 major projects over $10 million in size, $3.25 billion and then beyond that we keep optimizing, expanding existing systems right to make them good for these new volumes.

This, we talked about last year but it’s worth re-emphasizing. We are focused on that narrow slice, that little grey I don’t know if I a pointer here for this little grey triangle in the middle. These are the incidents that largely are caused by cardinal rule violations, failure to follow those procedures. Those are the ones that lead to this, major things, bad things going wrong.

So, we make sure that we are focused very hard on that and when you do, we think the rest of the safety stuff kind of takes care of itself, because what you’re really trying to avoid, it is not the stuff out here.

This is I will call it a slips, trips, falls, scratches, cuts those kind of things that are important; that are important to the person it happens to especially, right if they got a minor injury, but here is the stuff that really matters and that's where the cardinal rules comes in; the training and making sure people understand it. Absolutely we are going to do those things as per our procedures.

And the good news is, here is the results. Over the last four years, you’ve seen this is total recordable incident rate and there is injuries per 100 employees approximately. It’s actually injuries per 200,000 hours but it is pretty close to 100 employees and we had a very good year last year and amongst probably the largest growth year we have had. So, we are very proud of that and that just sends the message that we are taking care of business, right?

As an operating group, as a field group, there is almost 4,000 employees that work in the field between my group, Leonard’s group and then beyond that all of the thousands and thousands of contractors that were responsible for the engineering group. So a lot of people who are exposed potential for injury. So we are happy with this record.

So what we are doing in 2013? We are actually working up something Jim said. He had chance to speak to a number of our groups and talk to them personally. One of things he said was I believe it this way, if you have safe operation, you are more reliable and if you are more reliable you have a safe place to work. So, we definitely take pride in that and the things we were focusing on, Lenard talked about safe design, safe construction and then followed up by safe operation and ongoing maintenance that we do.

We have very robust programs in all those areas and very honestly we are working hard to enhance those. It’s almost never ending processes right but you got to stay focused on it, got to make sure it’s a part of what you do every day.

And that’s the safety update.

Randy Fowler

Okay, for the rest of the agenda, I will go over the financial section and then I think Mike has a couple of closing remarks and then we will come back in and we will have some management roundtables, back downstairs where we just ate lunch. And so that we will be available to come back in and again you can go from table to table depending on which person you want to speak with but we will follow that up immediately after these closing remarks.

Getting started, the financial objectives that we have here are basically the same ones consistent with what we have done for the last several years. That’s for a strong balance sheet, liquidity, strong credit ratios to support investment grade credit ratings. As Mike mentioned earlier, we are now the highest rated publically traded energy MLP with a BAA1, BBB+ writing and very proud of that, very pleased with that.

We come in and do that and have some slides on this and in various ways we will talk about how we leveraged the investment cycle, our Wizzywig, what you see, what you get balance sheet. We will talk a little bit about interest rate exposure. We continue to come in always. With an MLP it’s about cash is key in business, that we will talk about returns on capital and cash, cost of capital, and then finally coming in and trying to strike that balance of how we manage our capital between retention of distributable cash flow and growing our cash distribution right to investors.

As far as from our credit ratio standpoint, this slide shows you our growth capital expenditures going back to 2008 and then the red line is our debt to EBITDA leverage over that period of time, where the last construction cycle if you would, back in 2008 we had peaked out with debt-to-EBITDA at about 4.5 times. And then as those assets came into service and started generating the EBITDA, then we were able to come in and work that leverage back down to the 4.8 times, back to where we finished last year at 3.6 times.

We have come in and done a number of things, to come in and manage our leverage during this construction cycle that we’re currently in, not only from the standpoint of the equity that we have raised, the distributable cash flow that we have retained, but also the proceeds from selling assets.

And I Mike hit on it earlier, we sold $2.2 billion worth of, what we would call non-core assets. These assets, if you would were probably on average, give producing unlevered cash returns for about 7% -- 7.5%, returns on capital.

And so if we could come back in and redeploy that capital at a 12.5% return, we were looking at being able to incrementally grow our distributable cash flow by $120 million without increasing the size of the balance sheet. If we come in, if we are able to successfully redeploy it at 15%, that’s a $170 million of incremental DCF, again without rolling our balance sheet.

As far as coming in, I think the amount of cash flow that we retain is something that has distinguished Enterprise from over the years, it’s a little bit of a hybrid approach if you would, from a MLP standpoint, somewhat similar to a C-Corp (ph) but we still have a higher payoff ratio than a C-Corp (ph) does. But what it will do is, come in and provide us additional flexibility as far as raising capital, both debt and equity capital and also insulates our partners from earnings volatility.

So if you come back in and really focus, while the slide set points out that we have retained $4.7 billion of DCF from 2008 to 2012, $2.2 billion of that are the proceeds from sale of assets. So if you just focus, if you would on the DCF, if you would, that was retained from operating cash flow, we retained about $2.5 billion since 2008.

On a Wizzywig (ph) balance sheet, again we try to stay away from financing assets at a single asset level or special purpose entities. We inherited along the way, if you would, I guess four projects that were financed at the asset level. The Evangeline pipeline that was part of the Acadian system, that debt has been retired. The Cameron Highway debt, we retired that debt as well.

So now the only two subsidiaries are joint ventures where we have debt again were inherited the joint ventures, one being the Centennial Pipeline that came in with the TEPPCO acquisition and then the Poseidon JV that came in with Gold Terra (ph) transaction. So if you would, 99.4% of our debt is on balance sheet. We think this is the right place to finance a company than expose our debt investors to single asset business risk.

In terms of maintaining liquidity, I think you see from this chart, in going back to the preceding chart, in 2009 our growth capital expenditures were $1.5 billion. The last couple of years growth CapEx has been $4 billion and you can see how over that period of time we come in and increased our liquidity, again to come in and give us financial flexibility, basically to come in and manage at their disruptions in the capital markets, where we can come in and, if you would, avoid raising capital when there is a lot of dislocation in the capital markets.

In the last bar on the far right, that is the liquidity as we disclosed it after we did our debt offering, the $2.25 billion debt offering that we did at the beginning of March, so if you would about $4.6 billion worth of liquidity after we received the proceeds from that transaction. Here in the first half of April we retired about $650 million worth of notes that were maturing. So if you adjust that for the maturity of those notes, you are probably looking at about $4 billion of liquidity pro forma that.

As far as strengthening our debt portfolio, our debt investors have been very supportive with us on what we tried to do as far as strengthening and if you would lengthening the life of our debt portfolio since 2009. If you go back to that period, actually year end 2008, we have really financed a little bit more on the short side where the average length of our debt maturity was less than eight years since that time.

So 2009 through 2013, we have raised about $11 billion worth of debt. Almost 49% of the debt has been in the 30 year maturity. So that's enabled us to come in and take that average debt maturity of our debt portfolio all the way out to 14.5 years. So, again I appreciate the support of our debt investors in allowing us to do that.

Again, you have heard these projects that all the guys have been going over we have talked about them being underwritten with 10, 15, 20 year contracts and we are trying to come in and if you would finance those projects with long term capital, so we can come in and preserve good accretion economics on those assets.

In terms of maturity schedule, this is really more for your reference purposes but this shows you the blue bars are our term debt maturities that we have coming up. We also put what the average interest rate is for those maturities coming up. 2013 already reflects that we have had maturities this year of $1.2 million. We don't have any additional maturities this year.

The gold bars if you would are the final maturity of our hybrid debt securities if they went to maturity. The dashed bars if you would back in 2016, ‘17 and ‘18 that actually would reflect; if you went off the first call date of the hybrids, how that would stack up from the maturity standpoint. The one thing that's not on here is our bank credit facility is a $3.5 billion bank credit facility and the maturity date on that is 2016.

And then finally, again, this reflects the similar stats from the previous slide; currently just because we just issued the debt that we did at the beginning of October, at the beginning of March, we are totally out of our bank credit facility. So, as we sit right now, and as we sit at the end of the first quarter, we were about 99%, fixed rate debt.

And, the investors, our debt investors over this period of time of coming back to 2009 and going forward; have come in and make good total returns, excess returns on the debt issuances that we've done including the one; the last two deals that we did in 2012 and 2013 have been able to come in and get an attractive return there. And I think this is another chart that we come in and really try to be responsible in the way that we raise equity capital.

And this shows if you would the total return of investors that invested in our follow-on offerings, every one of our follow-on offerings, going back to October 2002, we think we have generated attractive returns for investors over that time period.

And again, I think one of the things that we try to do in this period of, we do have a lot of growth capital projects that need to be funding. But we’re mindful about how we approach the capital markets both on the debt side and the equity side. But specifically, on the equity side, we try not to come in and do sloppy deals, be it coming in and over-sizing deals, trying to take, put too much equity securities into a market that maybe a little volatile or for that matter, coming in and overloading one single system and sort of getting a regurgitation of units. So, again trying to be responsible in how we raise equity capital and again trying to give the best opportunity we can to generate good total returns.

Coming in and looking at weighted average cost-to-capital; this is basically the same slide that we showed you last year. We just updated it for new numbers. First when we come in and think about our cash cost to capital and looking to the debt side, we frankly focus on a 50-50 structure, 50% debt, 50% equity and on the debt side, we really don’t come in and try those to say well, 20% of it is going to be short-term debt, so let's finance it and let's see what the short term debt costs look like.

We really come in and just say let’s assume a 10 year cost to capital. So if you would the 3.35% right that we have down there, that's actually the right that we had on our 10 year debt that we issued at the beginning of March which is if you would was at that time, I think the 10 year treasury was trading at about 2% and then added 130 basis point credit spread on there.

On the equity side, we come back in and again at this time the unit price was $60.29. We just declared our distribution last week with respect to the first quarter. We increased that for the 35th consecutive time to $0.67 which equates to $2.68 on an annual basis which would be about 4.4% on a yield.

But if you see what if we have got plugged in for year one, in year one we are assuming $2.74. So again we are assuming that you come in and consistently have distribution growth over this period of time and what we layered in here for this illustration was the assumption of $0.01 per unit, per quarter growth in the distribution rate overtime.

So, if you would the cost of equity goes from 4.78% in year one to 5.9% in year five, and, finally in year 10, 7.3%. Obviously one of the things that's missing in here is the cash cost of our incentive distribution rights because we don't have them. So pretty much, this is another Wizzywig (ph); what you see is what you get when you look at our yield.

And then finally, when you come in and you look at a weighted average cost to capital, we start out at about 4.08% in year one. If you come in and by the time you get to your 10, 5.3% and if your average it for the entire 10 year period, it averages about 4.7%.

So, what we have done here is we tried to come in and provide an illustration just to give you a sense of sort of where we are. And I think a period of time with the opportunities that we are seeing on the commercial side with building new energy infrastructure, matched up with this period of; from a standpoint historically of a lower cost to capital and so what we’ve done is between 2012, so last year through 2015 and all the projects that you have heard about, in total, that's $10.6 billion worth of growth CapEx.

So, we formed the matrix here, if you would to a degree and if you have an assumption that the un-levered returns on capital range from 10% to 17.5% for that portfolio, from the last page, the average cost to capital for the 10 years is 4.7%. That leaves you with an accretion percentage that can range from 5.3% in the case that we can only generate 10% return on these assets, all the way to 12.8% if we can generate a 17.5% return.

So, we came in and figured out what that indicative annual accretion would be in terms of dollars. Again, so we could range anywhere once these projects ramp-up, have a volumetric ramp-up; it’s not going to be there year one, but once you have the ramp-up of those projects, the annual accretion percentage could range from $560 million to almost $1.4 billion.

You apply that over our 915 million units, then the accretion per unit could range anywhere from $0.61 to $1.48 which based on our current distribution, you are talking about an increase of anywhere from 23% to 55% above what our current distribution rate is here.

So again, I think in a period of; being in this industry I think this is a special time, not only with what you have seen, with what the producers have been able to do with the shale plays, the needs that they had from the infrastructure side, the reasonable returns on capital that we can get on deploying assets, married up with this period that we are in; with relatively low cost to capitals, I think can really come in and create some pretty special accretion numbers.

And then finally, we thought we’d throw in this, the final slide, S&P 500 fun facts and Mike threw out earlier, we started off with $700 million worth of assets and now we’re almost $36 billion worth of assets.

When we started our Enterprise value was $1.2 billion. Now we are right at $71 billion and when we comp that against the S&P 500, we would rank 49th overall in terms of Enterprise value. If we come in and look in terms of energy companies and when we say energy companies were including the likes of Exxon, Chevron, Schlumberger, we would actually rank 7th between Occi and Anadarko and then finally if we came in and compared ourselves to the utility group in the S&P 500, we would be number two behind Duke and just ahead of Southern company. So, again, just a little fun facts there on where we would rank inside, this sort of snuck up on us a little bit but just to give you a little context to where we are.

And with that I’ll turn it over to Mike for closing remarks.

Mike Creel

You know certainly the Fun Fact slide is interesting and fun to look at but frankly being big is not what makes a different to us. It is creating value for our unit holders and I think we have been able to do that. Certainly the project that you have seen today should contribute to more growth in the future.

The things that we want to kind of wind up with is we’ve always said that we have a great set of assets, we are in the right spaces. It enables us to grow organically as opposed to doing acquisitions and I think after today’s presentation maybe you have a better appreciation of exactly how we are growing and the opportunity there in front of us.

As we have said we have got a proven track record of building big projects, completing them on-time, on-budget, making them operate safely and efficiently providing the best services for our customers and that continues to be our goal.

We have got $3.3 billion of assets that were put into service last year and the first quarter of this year, very excited about those that we have got lot more to come. We have got about $7.5 billion of growth CapEx that should go into service between now and 2015.

This is primarily fee-based business, it’s demand driven projects, good rates of return and the returns that Randy showed on the previous slides are just for the sake of math, they don’t really indicate the returns that we are going to see on our assets but suffice it to say that we are excited about the contributions those are going to make to our distributable cash flow.

We have shown you projects that we have between now and 2014, 2015. Those are projects that have been approved. They are under-construction and so that’s money that we are going to spend. People have asked us questions repeatedly in more of them yesterday and today, what happens after 2015?

We have got a lot of projects that we have already identified for 2014 and 2015. Frankly the CapEx run rate that we have seen, is probably what’s you are going to expect for the next several years and I think every year we are surprised by the amount of new organic growth projects with really good returns, fee-based demand driven and frankly we don’t see let up in that.

I think from an organizational standpoint, we are a bit unique in that our interests are completely aligned with those of public unit holders. We have a very supportive general partner, significant ownership by insiders. We are in here to create value. We are not here to do something in the short term and bail.

So we are not looking at two or three years out, we are looking at five, 10, 15 years out. That’s always been the way that Dan looked at it, that’s the way we looked at it. We are investors too and we care about the long-term value of those units.

Distribution growth has been very important to us. We have consistently increased distributions. 2008 was a kind of an interesting year for us at the end of the year when kind of everybody was feeling the pain at the financial markets and we were increasing our distributions.

We had investors and analysts were asking us why are you increasing your distributions? And our answer was because we can. And we thought it sent an important message to the investment community that we were able to increase distributions because we had a prudent balance sheet, we were conservative in the way that we increased distributions, the way we retained cash flow and so we were able to manage through those kind of market disruptions and one of the first firms that called us to say we think you guys are doing the right thing were the rating agencies, and they were concerned about our ability to tap the financial markets and they said what’s you are doing is demonstrating your confidence in the business and that in turn gives the market confidence and that gives us confidence in writing your debt because we know that you have access to the equity markets and that in fact turned out to be the case.

We do have a different way of looking at the business and as Leonard talked about how we go about developing projects, as Jim talked about how we are integrate all of the various business parts, the commercial groups, the engineering operations, the annual bosses area.

We are all working together as a team, you don’t see that in all companies much less all MLPs. We are all working to create value for Enterprise, not to create value for certain segment or a certain department within Enterprise. And we think that’s the way to grow the partnership for continued success. We are really excited about it. We have the best people in the business. They are hard workers, they are innovative, they like doing what they are doing and yes they work hard but they have fun doing it.

We certainly appreciate your support and with that let’s open it up to questions. I know that some of you may have questions for Randy, not only on the financial side but also with regards with Washington DC. So open it up. Randy?

Question-and-Answer Session

Unidentified Analyst

I just have a question on the gap of demand before all the crackers plants are built for the NGLs now till then. Are we going to have a glut or pricing, or which do we expect.

Tony Chovanec

You know what we think and let's just think about ethane because that's the one that’s most likely to make it into the crackers, is you're going to continue see ethane at least regionally rejected like you see today and clearly when you look at the NGL potential versus the markets, ethane in some areas it's not economically banished is probably going to stay in the gas train.

You know when we look at the overhang for propane last year, people were predicting as we came out of the lousy winter that we'd seen 90 million barrels plus of inventory and we in doing our numbers, based on what we saw on the export side of the market didn't see that happening and we said we said we didn't think it was going to happen.

So obviously on the propane side our export terminal is late but yet a good winter, it's whittling down and going to whittle down these balances. The other thing I will say about ethane and just want to mention it is we think there is potential that ethane will be exported out of the U.S. So, it's not going to come overnight but yes, you're going to continue to see regionally some ethane rejection.

Unidentified Analyst

And to the extent that you see propane exports take care of that glut, propane prices ought to come up which should kind of make ethane more preferable to running in the crackers and increase the use back now of some of the propane.

Tony Chovanec

Yes, but there's only other thing I wanted to mention and Tony talked about LNG exports and if you listen to some of what people say, they talk about if we export LNG we're going to raise the price and press our advantage. That's not experienced in propane. We're going to export 60 million barrels this year and it's selling at 40% of crude when traditionally it sold at 75% of crude.

Unidentified Analyst

Just following on the previous question, if you flip to your slide 11, so I'm just curious, so this gives review of and we talked about this a little bit over dinner last night, of supply potential assuming sufficient markets.

Tony Chovanec

For the NGL side.

Unidentified Analyst

For the NGL side, so I'm just curious, obviously there's some other factors that come into play here. can you comment a little bit how you would look at this, given there's a certain element of rejection on some of this and maybe if you could comment a little bit more on the heavy side because you're in effect showing butane potentially doubling in just a few years, a little more color on that.

Tony Chovanec

Let's talk about ethane again first, ethane currently is in rejection in some areas or non-recovery, hard to understand exactly what that number is because it's not reported, I've seen numbers as big as 250,000 barrels I think that number is large. But a 150-175 is probably a pretty good number, so regionally we think that's going to continue, where ethane won’t be recovered until there's more market.

Propane exports are going to soak up these balances we believe and we've soaked up a lot of the overhang with the winter here and to some extent price takes care of it, in that, what people were missing when they were predicting that we’d have 90 million barrels is they were missing as price came down what was going to happen inside the crackers, right.

So let's move to butane because you talked about that one, we know what happens to butane, largely it goes into motor fuels and for blending in that regard. We're making more motor fuels in the U.S. we're exporting more motor fuels in the U.S. so there's an opportunity for butane and we expect that to grow. We think refiners are going to grow inside their fences, they're going to make more gasoline they're going to export more.

But also nothing follows in a straight line and if butane prices get weak you're going to see the crackers come in and soak some of it up. And we're going to export it, we can export either one.

Unidentified Analyst

Do you see any sort of paradigm shift happening as it relates to the (inaudible) end use market to the extent that these guys are going to be spending billions of dollars investing in their facilities predicated on low NGL prices, so are they doing anything different to assure themselves of a. supply and b. to make sure that it's economic.

Tony Chovanec

I'll answer that with a real short comment, yes, they're expanding their capability in the U.S. So the kind of potential numbers that we show you here today, we show them. We talk about the resource with them, we talk about the science of the resource. Because we will make sure they understand it, Jim you have anything to add to that.

Jim Teague

What you're asking are they contracting differently? No. Should they? Probably. Well we'd love to. If you go up and look at how they contract in Alberta it's a cost to service thing, so effectively they're getting some premium to natural gas prices plus a capital recovery on the plants. I've heard talk of that. I know there are petrochemicals that would entertain the idea, but when the rubber hits the road, gas plus what?

Unidentified Analyst

This is a question follow up on the ethane oversupply. as Tony mentioned that we're rejecting somewhere around a 175,000 barrels a day right now and as production continues to increase, because ethane really could be zeroed out of a producers calculation and it would still be worth drilling that rich gas that you mentioned, do you have any thoughts besides exports and just cramming more ethane in to storage and leaving it in the gas stream, if we run out of the ability to reject, if stores get largely full, is there an outside the box solution some sort of ethane disposal that you think Enterprise will be able to provide the market with.

Tony Chovanec

The one safety valve that there is, is as propane values go up then you're going to bring propane out of the crackers and you're going to replace it with likely with ethane. So you know think in the neighborhood potentially of a 100,000 barrels a day in that regard, it's a pretty big number.

Unidentified analyst

Just to stay on the ethane for a second, the role from 900 to almost doubling in three years of the ethane production, you talked about there's a potential in the future to export ethane, you know we have rejection now, the crackers really are coming on to '17, so it's really not till 2018 or five years from now. Is there any hope for the ethane market in the next five to six years?

Unidentified Company Representative

It’s a first of all, let me say this, I think our crackers are large. As far as what their timing is going to be and one is going to be Exxon. They appear to have theirs fast track, so some people are saying well we are not going to see anything until 2018, let’s see I don’t know the answer. But I will answer that the same way I answered the last one in that one of the hopes is if you will, is that propane is going to be exported and propane will be exported and that’s going to make room in the cracker stack for additional ethane.

Tony Chovanec

Let me answer you first. We are not going to see $0.50 ethane margins like we had a year ago right. But Tony talked about how behind those refinery fence lines those guys are geniuses, they are equally as smart behind those petrochemical fence lines and this isn't a static demand. It will grow and if you listen Liondale, they are focused on expanding what they got which I think is pretty darn smart because I think the key is used more than anybody else quicker than anyone else. But we are going to rock along here for a while. and so one of the reasons we don’t have near as many (inaudible) contracts as we used to have, it’s one of the reasons we are delighted that we are bringing on the Eagle Ford assets that Seaway is cranked up now, that ATEX will be owned in the first quarter of next quarter. In terms of ethane exports fundamentally price creates demand and if the product is there and I am paying $1,200 a ton for Naphtha in Northwest Europe and I can buy this stuff at $250 a ton, it doesn’t happen overnight but I bet it's better than 50-50 that it will.

Unidentified Analyst

I have a few questions on some of the assumptions here. So for example, one, what is the decline rate you are receiving on the base production that we have in 2012? And secondly I know you adjusted your GAAP production numbers but what form does that assume? Are you assuming that one of the dry production areas we will just shut down completely because of the regular gas coming from the NGL focused areas?

Tony Chovanec

The decline rate varies greatly from reservoir to reservoir. Scott Jenkins who runs our reservoir group is here, so we can talk in the breakout session reservoir by reservoir but to answer your question, yes, we think that traditional lean gas reserves are going to continue to decline. Yes as a decline rate I think in the 10%, 12% a year. And again, we would expect that that’s going to continue. So you are not going to be out drilling conventional, not many conventional lean gas wells because the money is better somewhere else.

Unidentified Analyst

I have a sub bullet point here on slide 11 talking about an expectation for ethane exports approaching 100,000 barrels a day in 2015 to 2020 range. What are some of your assumptions about that? I mean how do you see that market developing and how do see Enterprise’s role as part of that?

Tony Chovanec

I am not going to tell you. We have people talking to us and there is a lot of interest. Whether it develops I don’t know but the ships have to be built because they are pretty special where is Mike or Lynn might be able to speak to that. But some is going to be exported up out of the Northeast, some is being exported into Canada. I think we are exporting some if I am not mistaken Tom, into Canada, up about Mid-America Pipeline System so that sum of it. But we think there is a potential to do waterborne and we know exactly what it would take to do.

Unidentified Analyst

Where do you think the opportunity might be for additional foreign crackers to be built in the United States whether it’s an Asian (inaudible) I know that your study right now says look it could be as much as six by 2020, how do you handicap other foreign players possibly coming in to the US, trying to take advantage of low cost (inaudible)?

Tony Chovanec

If you are a global petrochemical player and if you understand the feedstock opportunity in the US and you have money to spend and you want to grow, you got to be looking at the U.S. and I believe that they are.

Unidentified Company Representative

In other words we don’t know how to handicap it.

Tony Chovanec

Yes we got time for one more. We knew this is going to be hot topic.

Unidentified Analyst

Tony, a key component in your gas demand growth assumption is exports of LNG. I mean this seems to be a wildcard because it’s in the political arena. Do you view that there is more downside risk in your assumption than upside. Where are you with respect to other people? What is the consensus view? Isn’t this going to string out and we may not have the number of terminals you are assuming?

Tony Chovanec

Greg it’s political as you know we are not alone in our belief as to where LNG fits in and how important it is to the supply side of the equation. The Brookings Institute did a study and they testified before Congress here two or three weeks ago it’s a great study it’s available in the Internet if you maybe all want to read it. But maybe people don’t understand the size of the resource that I showed you today. But make no mistake about it that 25 to 50 Bcf a day at less than $5 is absolutely what our models show and I don’t think we are alone in that camp. That’s a tremendous resource. It would a shame to let it fall to waste here and not to close the value chain on it. So, I am hoping that we get to the right answer and let the market forces do their work. There is plenty. If we end up again eight Bcf a day is the highest number I have seen. Four to six is the one I see most often. It’s a small number compared to what’s available.

Randy Fowler

Okay, we are going to open it up for questions and again Bill and Jim Cisarik presented before the break. So they are fair game questions. Just is a reminder, we are going to have lunch here in a just a little bit. So you will have a chance to ask him embarrassing questions in a more private setting and then we have roundtables following the formal comments. So you have got multiple chances to ask questions but with that open it up. Daren?

Unidentified Analyst

Yes, I guess it’s probably more of a question for either Bill for Tom Zulim but I’m curious from an Enterprise prospective, how you guys are thinking about handling you know the condensate issue and you laid out a pretty good case for a lot of C5 going north to try and help our Tar Sands productions but you have got a tremendous amount of condensate coming that could be used for the same thing.

So do you get to a point where you try and leverage, that Gardendale de Corpus (ph) type footprint maybe do a splitter Corpus (ph) and explore the derivatives or is it a situation where you want to lever ECHOs connectivity in the Texas City or how do you think about handling the constant growth.

Bill Ordemann

I can tell you were looking hard at that right now. We got some other competitors out there they are essentially, look like they are building refineries, front end refinery. We are trying to decide does that make sense, how many cuts make sense, what are the markets for those cuts, and what we are trying to determine, I think I talked about this last night at dinner with some of the folks at my table is what are the properties in the condensate? What will it yield?

Because there is no sense in taking five cuts into something that is going to yield a minute amount of diesel or something like a distillate something that of that nature. So we have got a major sampling program going on in Eagle Ford area. I think we got 10 different samples we are evaluating at the moment. Jim Cisarik may be can even speak to in, I he is around because he is leading our effort on looking at what we do with condensate, we see it as an issue. There is going to be lot of it, it’s got to go somewhere and we want to be a part of that solution and we are probably half way into this and what we are going do and how we are going to do it.

Unidentified Analyst

And second question from me, last question for Jerry on C4, I am curious as you look at the butane market, is it a situation where you are just looking at butane dehydrogenation for butadiene and butylene production or is there an opportunity where you can capitalize on the normal to iso or may be export more isobutene or isobutylene to other northwest Europe markets and make more money that way? How does the butane market in all the possibilities make the most sense for you guys?

Jerry Cardillo

They all make sense for us. What’s your question?

Unidentified Analyst

How can you make the most money?

Jerry Cardillo

How can we make the most money? I think we are still in development of all those projects and I think it’s premature to answer that question.

Michael Creel

Darren, in Jerry’s defense we did coach him that this is going to webcast and not to disclose any non-public confidential information. Jim might be a little more forthcoming

Jim Teague

When you are 68 are more forthcoming. We are going to export more and Lynn may help on this. I think we are going to export more normal butane. Most of the parts of world, they don’t take just normal butane, it’s a mix of normal and iso. We see that as something that will help leverage our domestic position. So we think we will export more and we are putting ourselves in a position to do just that.

Unidentified Analyst

You have got a lot of plans to build lot of stuff, lot of very technical stuff. Are you ever concerned that you are going to be able to develop the people and have all the talent that you need to accomplish this and has that even been an issue in the past?

Michael Creel

Well obviously, we don’t do all the construction in-house. We hire contractors and we do a lot of projects and we have done for years and so one of the benefits of that is that you know the contractors, you get their A teams, you know who to call for what jobs. Internally I think that Leonard has a great system in bringing in new talent, grooming them, rotating them around, developing them, but clearly that’s one of the key things that we focus on and with the success that Enterprise has had, if other people are looking to get into our business, looking to do the same kinds of things, then our employees tend to be a bit at risk because they are valuable employees. So we do what we can do to train, to develop them, to bring in new talent and last but not least to keep them.

Jerry Cardillo

What we like to do is grow our own because our culture is not like a lot of others. You heard Leonard say it’s intense, he probably understated that and our ideal is only the outside hires we bring in are new hires are entry level. We have a heck of a strong bench across the board with some of our younger folks. We have been pretty active in recruiting them and then we try to, we gave them to toy box to play with.

Unidentified Analyst

I guess on the theme of repurposing assets, can you talk about other options you see for the Centennial pipeline?

Jim Cisarik

I wish I could. We are struggling, frankly I think as you may well say, you know we are struggling as to where we go with that. Tom can you help?

Tom Zulim

Yes, you know Jim, you looked at different things, everything from alternate products to reversing direction. Nothing has really come to fruition yet, but it’s obviously a pipeline that’s there in service, has a lot of capacity. So if opportunities around it develop; we will continue to take a hard look at it. But so far nothing has really stuck just yet but again it continues to be in service, it’s not moving much right now but it is in service for south to north for refined products, continues to be ready to move it if the demand arises.

Jim Cisarik

And we have had that experience with another pipeline that wasn’t moving much and that we had a partner that we and they just had different ideas on what to do. Ultimately the market kind of resolves that.

Tom Zulim

It’s called Seaway

Unidentified Analyst

Just a public question for Leonard, just curious when he was talking about doing development, the quick engineering for commercial purposes. So I was just curious what kind of buffer or range do you put into cost and schedule when you are thinking about going in the proposed transaction, just curious.

Jim Cisarik

I was going to answer that and say, that’s why they come in under budget because the asset based contingencies, but—

Leonard Mallett

You sound like one of our commercial guys. We get them very close. We developed our process, we purposefully didn’t want to label these projects with this is a 25% or 10% and so on and so forth. Each project based on its component, based on its complexity, we are able to talk to our commercial guys about look this is where we are, this is how close we are and we just talk them though what the spread is on the project.

Unidentified Analyst

And do you vary the spread depending on the complexity of the project.

Leonard Mallett

Yes, we do.

Michael Creel

And Leonard, this kind of goes into it, you might talk about steel cost, labor cost, those kind of things and what we’ve seen historically.

Leonard Mallett

Yes and the point Mike wants me to get to is that while we've been able to keep our costs pretty flat over the last three or four years, maybe 2%-3% on steel prices, labor prices again 2% or 3%, again sale bids on these projects that really kept costs pretty flat. To give you an example, the fracs at Mont Belvieu, since 2008 we've been able to keep our costs to below 5% increase, so frac seven and eight only cost about 5% more than the frac in 2008.

Unidentified Analyst

I just had a few, I jotted down there at the presentation, the first is on the LPG exports. The presentation says 12,000 barrels per hour. How soon will you move that to 14,000 barrels per hour and that 288,000 barrels per day kind of implies a 24 hour work day. So how many hours per day, how many days a month?

Michael Creel

We'll have it a 14 next month (inaudible) in May?

Leonard Mallett

Yes we got to 14 after they (inaudible).

Michael Creel

Make that May 1st 14,500 barrels an hour.

Unidentified Analyst

That's an hour and then how many hours a day?

Michael Creel

Let me put it in context and I’ll give it over to Lynn. I think a lot of you know I'm a Dell retiree and we had terminals, primarily import. We felt like if we were at a 70% utilization rate we were maxed out. 70% is not even high utilization at Enterprise. Lynn, how, and you might go through the two docks and how you work that.

Lynn Bourdon

Yes to answer your question it’s, we operate on a 24 hour a day basis and we try to schedule in as many vessels as we can. We've actually gotten down to a point now where we're only an hour and a half between the time we complete the loading of one vessel and start up the loading of another. The new deal that we have with oil tanking gives us access to two docks on a continuous basis and so as Jim said we really don't think we're fully utilizing the docks unless we're about 100% capacity, well, close to a 100%.

Unidentified Analyst

And then you also talked about the joint venture with the Plains and they have recently announced their Cactus pipeline. And just wanted to ask you about that, I think that's 200,000 barrels per day. Would you expect most of those volumes to go down to Corpus or would you expect just a small portion to find their way to Houston.

Lynn Bourdon

Well we hope some finds its way to Houston. I think the bigger story is we’re going to have to expand that pipeline.

Randy Fowler

That, I talked to Harry Poponis (ph) the other day and he said, I think we may have created the best mousetrap down there. That was a deal where Mike and I went to lunch with Greg and Harry and said this just doesn’t make sense and I guess over our lunch pretty well scratched out that concept of that joint venture and it’s I think for both of us, we got to say it's a home run, we like those folks.

Unidentified Analyst

And if you just have time for a couple more questions, you mentioned Morgan's Point and the possibility of expansions there. Could you just kind of put that in context, what the current activity is versus what you sort of envisioned in terms of your expansion in Morgan’s plan?

Michael Creel

Probably not to the extent you want me to but we’re pretty good at exporting LPG. Tom showed you we have a bidirectional, is that an 18 inch pipeline? 18 inch pipeline between Beaumont and Houston. We got ship docks in Beaumont that we're going to take a look at upgrading and then able to put in service and we have got a position at Morgan's Point that maybe ideal so that we're on both ends, we're not there yet, but that's the vision.

Unidentified Analyst

And then just the last question for me was the Aegis system. The header system concept has been out there a while and then there was the announced Aegis system. Just remind me, how did that differ from the original concept when you put out the release on Aegis, I think the original (inaudible).

Michael Creel

It really doesn't, I think, what Tom spoke to is what we're going to build new. The reality is we will have an ethane system that goes from Corpus Christi to the Mississippi river.

Unidentified Analyst

You had a bullet on potentially turning ATEX into just an ethane line but maybe moving other products. I am just wondering timing wise how does that work, how much additional cost is there is there extra capacity above the 190,000 barrels a day kind of how you think about the ATEX?

Leonard Mallett

Well there's extra capacity if you spend more money and I've got a meeting at 3 o' clock to find out exactly how much it costs and is it viable.

Unidentified Analyst

Anything upon timing and when you could…

Leonard Mallett

I don't.

Unidentified Analyst

And then the only…

Leonard Mallett

Probably before Williams can, get…

Unidentified Analyst

And then the other one was on Seaway, I'm just wondering if you can talk about how much of the volumes of contracted output from the existing pipe now and the expansion are to your own marketing group versus to sort of third parties. I'm just wondering how much sort of is worth WTI brand or WTI OLS spread risk you're taking on with that?

Bill Ordemann

I lost you somewhere in the middle of that question.

Michael Creel

I got the question Bill, let me take it. We have got a position from a marketing perspective on that pipeline, its five years and we will have it laid off.

Unidentified Analyst

Jim? Maybe this is the question suited for Lynn, but how do you look at the potential impact on the ethane price or spread in that gas. A large amount of vibrating NGL pipeline re-fractionation capacity comes on this year. Do you expect that, is there a chance that thing breaks away from the gas, and trades the discount. So far you've been able to reject enough to balance supply and demand, but does that change this year.

Lynn Bourdon

I don't think so, I think I mean if it goes below gas somebody will figure out how to leave it in gas. We're not rejecting to the extent we could for example, so we could reject more.

Unidentified Analyst

And then Bill, I think this question is probably best suited for you. You showed some pretty impressive crude supply purchasing year-over-year growth in that business on the volume side. As you get better pipeline capacity connected this year particularly out of the Permian, do you think that business continues to grow as a result of that or do you think that pressures that business at all?

Bill Ordemann

No, I think the more assets we get in place it's going us allow to us leverage our trucks and Joseph will be able to move a lot more crude into those assets as we get them closer to the production and I think we'll continue to grow that business as our day.

Unidentified Analyst

A question for Jerry, PDH units have been notoriously tough to start up, to run, they're a little bit finicky, how have you minimized risk in terms of your technology for getting this unit up and running and if you do have on screen time issues and inability, do you need the variance there?

Michael Creel

Jerry maybe Terry should answer that.

Jerry Cardillo

You want to answer that?

Terry Hurlburt

I think part of the answer is we're already running a very complex technology, which is very similar to the (inaudible) process is the other technology that will make propylene. We chose the loans process for our PDH for probably one main reason, it does have the ability to restart quicker after trip than the old process and can be made more reliable. Turnarounds are shorter. So up time we will be not much higher on that facility than a similar process and like I said I believe we have experience with similar very complicated processes. We also have the number of people in house that have actually run these before with other companies. So we think we are pretty well positioned for that.

Randy Fowler

Any other questions or you people getting hungry. Where you want to give, where we are going.

Michael Creel

Okay we are going to go down stairs and our lunch is set up for us in the restaurant. It is at the bottom of the stairs and we are going to go to a 1 o’clock and we are going to be back here and Randy is going to kick off our financial overview at 1:10 and then some closing remarks from Mike and then we will have the management round tables okay. So we are going to have lunch now and we will be back here at 1:10.

(Lunch Break)

Unidentified Analyst

Okay, I know you just gave it like as an example of putting like $10.8 billion of assets in place and earning $12 billion, hoping to have $15 billion. But if you don’t accomplish the $12.5 billion or $15 billion right after that, as time goes on and the assets mature, do you generally eventually move towards hitting the higher target on the range?

Randy Fowler

Randy showed those returns just because it’s a range. Probably our average return may be in that range, might be in the upper end of that. Certainly a regulated pipeline project, you would expect to see lower returns, lower double digit returns and often times we will build those projects that aren’t fully contracted.

So if we build a pipeline project, regulated return that may have 60% of capacity contracted, you may be looking at low double digit returns. Having said that as the project matures, we would expect to increase volumes and grow into that, higher end, may be the upper end of the range Randy was looking at.

One of the things that we focus on when we looked at projects and sanction them is that we look at cash-on-cash returns. We are not looking levered returns, tricks to kind of make us feel good about the project. We really want to make sure that it has the economics and we typically don’t include downstream economics. So while we may build a project that has 15% cash-on-cash return in itself, generally those plug right into our value chain and create more value than you see just from that one particular project. Jim, do you want to add something to that?

Unidentified Analyst

I think in the past you have had a percentage of your earnings come from fee-based versus commodity. Do you have any sense of that, but where are you now and where you are moving in the next couple of three years, fee based?

Randy Fowler

As far as the percent fee base, I think the estimate that we have for 2013 is 81% fee based and in context I think the final number for 2012 if you would was about 73% to 74%.

Unidentified Analyst

And where do you see that sort of two to three years out if you bring a project on?

Michael Creel

It would continue to go up because all the projects that you have heard about today are fee-base in nature and so we would think that would continue to increase. And to the extent that we have, people contracts left, producers really would prefer to have the uplift in the NGL prices and so as those contracts come up for renewals, they are likely to go more fee-based. In fact no producer wants to do or keep all contract these days.

Unidentified Analyst

And then sort of related question but you could argue you bring coverage tighter obviously as you made more fee-based, kind of just how you’re thinking about coverage over time versus moving more towards sort of secret model of the retain more cash, how you’re thinking through that?

Michael Creel

I’ll let Randy answer that but first I want to point out that the distribution increase he showed in that hypothetical slide, a penny a quarter for the next 10 years, that was just for illustrative purposes.

Randy Fowler

I had several hypothetical lines in there. I think a lot of it comes down as far as coverage is also what do we see as growth capital opportunities because again we’ll and continue to retain some level of operating cash flow to help fund that growth CapEx and again just that we don’t have to rely on the equity capital markets all the time. And one other thing, if in 2013, our fee-base is only 75%, that’s a good thing.

Unidentified Analyst

As a follow up question to that fee-based, all fee-based revenue, was it necessarily equal, at least in the investors’ eyes. I’m just curious, let’s just look at the current year 81% with 82% leverage that’s drawn out, what percent of that is take or pay type fashion where borrowing a nuclear bomb going off you’re getting the revenue versus have any volumetric risk associated that’s just getting paid on a fee-based.

Randy Fowler

I don’t think we have those numbers on our finger tips, no. But typically the regulated pipelines are going to be those that don’t have the long term taker-pay and the majority of what we’re building now has firm dedications.

Unidentified Analyst

So close up over time that percentage is raising as well.

Randy Fowler

Well, it’s a taker-pay, whether it’s a shipper-pay, whether it’s a (inaudible) equivalent payment on a fractionator and then they also typically would have escalators.

Unidentified Analyst

Mike, could you comment a little bit about the thinking what’s regard to ATEX pipeline and given, recently announced competing joint venture pipeline coming down from the North East?

Michael Creel

Well, I think Jim kind of answer that best in a somewhat non-committal way but certainly gave me the impression that it’s something we’re considering and that they said if we were to do something we could probably do it faster than Williams. A lot of it just depends on what producers are willing to commit to. Jim? Again, we are always looking at ways to repurpose assets and so if there is a problem between point A and point B, we are looking for a solution.

Unidentified Analyst

I was wondering on your rate-to-return that you see on your potential projects coming up, are you seeing rates-of-return starting to come down in terms of opportunities or is it pretty much maintained or going up even?

Randy Fowler

I think it depends on the type of asset. One of the good things about being in our position where we’re growing, primarily through organic growth projects is that we can look at what makes the most sense for us, is not just taking what the market hands us. Surely on the M&A side you’re looking at yields getting done at 20 times cash flow, our deals we’re not seeing that.

We do have instances where we could probably charge more than we are on contracts but it tends to encourage other people under the business and so we want to treat our customers fairly. It’s always been our position that we want to do something that’s a win-win, so that when we do a deal with a customer they are likely to comeback for the next deal.

Unidentified Analyst

Just a quick follow up, if you decided that you wanted to have an ethane pipeline become a Y-grade pipeline, did you have to do anything mechanically to reconfigure the pipeline or is it pretty easy to say okay its ethane, now we’re just going to start taking some liquids as well.

Michael Creel

I think for the pipe itself there is probably not much that needs to be done. If you are going from a propane to ethane you have got sealed issues but not from an ethane the other way Terry, unless I am wrong. But I think if you were to do something other than a purely ethane you might need a fractionator or a splitter at the end of the pipe.

Unidentified Analyst

So a follow-up to the other part of Ted’s question. So just looking at the indicative accretion side, that bottom line basically will tell you the indicative accretion, if we are not retaining Bcf. So when you kind of break this out and think about how much Bcf you need to retain, is there a sort of percentage of kind of forward looking CapEx that you say hey we want to fund that, if I guess was that internally.

Randy Fowler

I do not think it’s that formula based. I think what we look at is what is our capital needs going forward, what’s the economic and business climate look like, where are we in the construction cycle how many of those projects take 18 months to build versus six months and so it is really is a little squishier than that but we continue to believe that it makes sense to retain cash flow. We do not think that our investors are looking for us to blow out all the cash flow and turnaround and do three or four equity offering in a year.

So we are just trying to find the right balance and you saw today we got quite a bit under construction currently. We do look at that frequently as to what should we be doing with our distribution, are we still in the right track?

Somebody is going to take that to mean we are going to have a Board meeting in November and we are going to discuss whether to raise our distribution and that’s not the way we do it. We look at it from time to time and multiple times a year. But we don’t expect to see radical moves in our distribution.

Unidentified Analyst

I just have a simple question thinking about maintenance CapEx versus the organic CapEx you are doing and wondering, the average age of pipelines, you have seen Exxon have some problems and so this older stuff and I was just wondering, is there certain age of a pipeline where the maintenance has to step up or is there, I know they are long tailed assets but I’m just curious how we should model that looking forward as your stuff ages?

Michael Creel

Let’s pass that over to Leonard.

Leonard Mallett

I would say that Exxon pipe was built in early 40s was it?

Randy Fowler

Yeah the Exxon pipe was built in the late 40s and the jury is still out on exactly what happened. I will say our contract, our C2 pipeline is not as the same type of construction and there have certainly been (inaudible) a couple of times than we do our integrity inspection.

The age of the pipeline can give rise to additional maintenance cost, no doubt about it. But that’s not necessarily always the case. It just depends on how it was maintained maybe you have got it from the previous owner, they didn’t maintain it, as well as we want to do, that kind of thing.

So each pipeline, wasn’t inspected, kind of dictates just how much money we spent on it and by inspecting I mean we run an internal pealing, we will look at the anomalies and those kind of things. But those things are getting smaller too, that’s deteriorating. Did that answer your question?

Unidentified Analyst

Based on some of the production numbers that was shown earlier in the day about where we could be four or five years down the road, it seems like NGL exports are the way to go to relieving market at least and in that context my question is does it make sense for you guys to start looking at other geographies to put in your export facilities, example the Northeast as opposed to bringing it down to the Gulf Coast. Because it does not make sense from the producers standpoint $0.14 on your pile just to put on a boat to get to for instance Europe or Asia)?

Lynn Bourdon

We are going to get a Dow retiree up here to help answer that one. I think the question is if I got it right is does it make sense to look at other geographic areas for LPG exports and may that be Asia or something else?

Michael Creel

Well it makes sense to be able to look at maybe adding more export capability. We think the more cannel expansions going to open up the East, a lot more than we’ve seen in the past. So, Lynn I think that gives us much more opportunity going forward. We’re not going, I don’t see any prospects putting exports on the east coast to the west coast where we produce these steps on the Gulf Coast.

Unidentified Analyst

Randy, if you can give us a quick update from Washington, given that you have been up there recently? Thanks.

Randy Fowler

Yes, also on that front, really have been I guess fairly quite I guess Ways and Means Committee broke up into these 11 subgroups, Kevin Brady from the Woodlands is the if you were the leader in that subgroup, Michael Thomson is the democrat, that’s on the group the minority guy or co-chair whatever they are called on the committee and really the anecdotal comments that have come out of their interviews have really been all, I take it positive for MLPs, it’s been positive towards the MLP Parity Act, the Coons Legislation to expand the scope of MLPs to pick up wind and solar energy.

There were a couple of comments out of the administration I think the nominee of the Secretary of Energy was same kind of deal, saying positive things about the MLP Parity Act. Chu (ph), before he left gave a speech on some university of Georgetown speaker series where he was excelling the virtues of the MLP Parity Act and that MLP framework if you would have been very good for traditional energy and things that should be opened up for solar and wind.

So all in all, I think sort of though the comments have been constructive. Of note, Michael Thomson that’s on that energy subgroup, he was a co-sponsor with Ted Poe (ph) for the Coons Legislation, the house version of the Coons Legislation of the MLP Parity Act. So that’s really about all we have heard out DC.

Randy Fowler

If we are done with questions we can conclude this part and then we can go back down stairs where we had lunch and we will round table set up and you can attack us individually. Thanks so much.

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