Spectra Energy Corp (Spectra Energy) owns and operates a large and diversified
portfolio of complementary natural gas-related energy assets and is one of North
America’s premier midstream natural gas companies. For close to a century, Spectra
Energy and its predecessor companies have developed critically important pipelines
and related energy infrastructure connecting natural gas supply sources to premium
markets. Spectra Energy operates in three key areas of the natural gas industry:
transmission and storage, distribution and gathering and processing. The midstream
sector of the natural gas industry is the link between the production of natural
gas and the delivery of its components to end-use markets, and consists of the
transmission and storage and the gathering and processing areas of the industry.
Based in Houston, Texas, Spectra Energy provides transportation and storage
of natural gas to customers in various regions of the Eastern and Southeastern
United States, the Maritimes Provinces and the Pacific Northwest in the United
States and Canada and in the province of Ontario in Canada. It also provides
natural gas sales and distribution service to retail customers in Ontario, and
natural gas gathering and processing services to customers in Western Canada.
Spectra Energy also has a 50% ownership in DCP Midstream, LLC, (DCP Midstream),
formerly Duke Energy Field Services, LLC, one of the largest natural gas gatherers
and processors in the United States. Spectra Energy’s operations are subject
to various federal, state, provincial and local laws and regulations.
Spectra Energy’s pipeline systems consist of approximately 17,500 miles of
transmission pipelines. The pipeline systems receive natural gas from major
North American producing regions for delivery to markets primarily in the Mid-Atlantic,
New England and Southeastern states, the Maritimes Provinces, Ontario, Alberta
and the Pacific Northwest. For 2006, Spectra Energy’s proportional throughput
for its pipelines totaled 3,248 trillion British thermal units (TBtu), compared
to 3,410 TBtu in 2005. These amounts include throughput on wholly-owned U.S.
and Canadian pipelines and Spectra Energy’s proportional share of throughput
on pipelines that are not wholly-owned. Spectra Energy’s storage facilities
provide approximately 265 Bcf of storage capacity in the United States and Canada.
DCP Midstream gathers, compresses, processes, transports, trades and markets,
and stores natural gas. DCP Midstream also fractionates, transports, gathers,
treats, processes, trades and markets, and stores natural gas liquids, or NGLs.
DCP Midstream is 50% owned by ConocoPhillips and 50% owned by Spectra Energy.
DCP Midstream gathers raw natural gas through gathering systems located in major
natural gas producing regions: Permian Basin, Mid-Continent, East Texas-North
Louisiana, Gulf Coast, South, Central and Rocky Mountain.
Competition
Spectra Energy’s U.S. transportation and storage businesses compete with similar
facilities that serve its supply and market areas in the transportation and
storage of natural gas. The principal elements of competition are rates, terms
of service and flexibility and reliability of service.
Western Canada Transmission & Processing businesses compete with third-party
midstream companies, exploration and production companies and pipelines in the
transportation of natural gas. The Company competes directly with other pipeline
facilities serving its market areas. The principal elements of competition are
rates, terms of service, and flexibility and reliability of service. Customer
demands for toll certainty and lower cost tailored services have promoted increased
competition from other midstream service companies and producers. Spectra Energy
believes it is able to offer a very competitive service offering along all of
these dimensions due to its scale, geographical presence in important supply
and market areas, financial stability and flexibility, and the strength of stakeholder
relationships. Moreover, the presence of our existing pipeline assets, right
of way, customer base and operations enables Spectra Energy to more quickly
and cost effectively add capacity and service for customers in core markets.
Spectra Energy’s reputation for customer service, project execution, stakeholder
relations, reliability and predictable rates further enhance its competitive
advantage. Taken as a whole, Spectra Energy believes its service offerings are
among the most competitive in the sector.
Union Gas is a regulated entity and is not generally subject to third-party
competition within its distribution franchise area, although a recent decision
of the OEB has permitted physical bypass of Union Gas’ facilities even within
its distribution franchise area. In addition, other companies could enter Union
Gas’ markets or regulations could change.
In gathering and processing natural gas and in marketing and transporting natural
gas and NGLs, DCP Midstream competes with major integrated oil companies, major
interstate and intrastate pipelines, national and local natural gas gatherers,
and brokers, marketers and distributors of natural gas supplies. Competition
for natural gas supplies is based primarily on the reputation, efficiency and
reliability of operations, the availability of gathering and transportation
to high-demand markets, the pricing arrangement offered by the gatherer processor
and the ability of the gatherer/processor to obtain a satisfactory price for
the producer’s residue gas and extracted NGLs. Competition for sales to customers
is based primarily upon reliability, services offered, and price of delivered
natural gas and NGLs.
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