Good morning. My name is Sally and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectra Energy and Spectra Energy Partners second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

(Operator Instructions) Thank you. Julie Dill, Chief Communications Officer for Spectra Energy. You may begin your conference..

Thank you, Sally, and good morning everyone. And thank you for joining us today for our review of Spectra Energy and Spectra Energy Partners’ 2014 second quarter results.

With me today are Greg Ebel, CEO of both Spectra Energy and Spectra Energy Partners; Pat Reddy, Chief Financial Officer of both companies and Bill Yardley, President of our US Transmission business.

Bill has responsibility for a significant portion of the near-term expansion projects in our backlog and he is with us today to help field your questions related to US transmission. Pat will begin by sharing our financial highlights for the quarter.

Additional information on these results is detailed in both the Spectra Energy and Spectra Energy Partners’ earnings releases as well as the appendix to today’s presentation, all of which are available on the Investor page of our websites.

Next, Greg will update you on our strategic plans and priorities and the progress we’re seeing across the enterprise to deliver long-term shareholder value, and as always we’ll leave ample time for your questions following Greg’s remarks. Our Safe Harbor statement is contained within our presentation materials and available on our websites.

This disclaimer is important and integral to all our remarks, so I would ask that you refer to it as you review our materials. Also contained in our presentation materials are non-GAAP measures that we reconcile to the most directly comparable GAAP measures and those reconciliations are also available on our website.

So with that, let me turn things over to Pat..

Okay. Well thanks Julie and good morning all. As you’ve seen in our news release, our second quarter results are very much in line with our expectations and reflects strong performance from our core businesses. The story for the quarter is pretty straight forward.

First, we had increased earnings from expansions and asset additions like the New Jersey, New York pipeline. Our Express-Platte system to Sand Hills and Southern Hills natural gas liquids pipelines and the O’Conner (inaudible) plants, the DCP Midstream.

The USPS has contributed an incremental $34 million to Spectra Energy’s EBITDA this quarter compared with last year’s quarter with DCP adding about $5 million from their asset additions.

Second as we mentioned in our first quarter earnings call, we scheduled a major turnaround at our Empress processing plant that would take the plan out of service for about 45 days beginning in May.

This scheduled work resulted in lower revenues while the plant was down, and increased O&M for the quarter, the total effect of the turnaround at Empress was about $33 million at the EBITDA line.

In addition, we had significantly greater number of plant turnarounds with DCP Midstream compared with last year which reduced our equity earnings by approximately $8 million.

And third, the Canadian dollar was weaker this year down about 7% from the prior year quarter, The EBITDA contributions from our distribution in Western Canadian businesses were lowered by $15 million as a result. The effect of the currency translation as you know is virtually eliminated at the net income level.

In summary then, our results for the quarter are in line with our expectations and I’ll take a few minutes to walk you through the components.

For the quarter, Spectra Energy generated EBITDA of $627 million, $20 million lower than the previous year and Spectra Energy Partners delivered EBITDA of $353 million, $5 million higher than in the same period last year.

These results build on our very strong first quarter putting us well ahead of where we initially expected to be at this point in the year and they position us to exceed the full year 2014 plan we shared with you in February. I’ll elaborate on this in a few minutes before I close. Turning to distributable cash flow.

Spectra Energy, DCF is $277 million even though EBITDA is lower quarter-over-quarter, the higher distributions we received from DCP Midstream driven by a higher commodity prices and gathering and processing margins led to a 12% increase in distributable cash flow for the quarter. Distributable cash flow at SEP is $239 million for the quarter.

You recall that with the drop down of our remaining US assets into SEP in November of last year, we restated earnings but not DCF. With our strong DCF results year-to-date we continue to expect Spectra Energy’s coverage to be 1.5 times and SEP is to be 1.2 times on a full year basis.

In the appendix to our presentation you will find more detail associated with our distributable cash flow calculations. All-in-all we delivered a solid quarter with strong operational performance across all of our businesses. So let’s take a quick look at our EBITDA results by segment.

Let me start with Spectra Energy Partners which is comprised of our US transmission and liquids business. US transmission reported EBITDA 320 million up from $311 million in the second quarter of last year. Quarterly results reflect increased earnings from the expansions primarily on our Texas Eastern system.

Our liquids business generated EBITDA of $51 million compared with $40 million last year. 2014 results reflect a ramp up of our share of both the Sand Hills and Southern Hills NGL pipelines which were put into service in June of 2013.

Higher transportation revenues on the Express-Platte system as a result of increased tariff rates and higher contracted volumes also held. Spectra Energy received GP distributions from SEP $41 million in the second quarter and $79 million year-to-date. LP distributions for the quarter were $132 million with $262 million received year-to-date.

Our distribution segment reported EBITDA of $112 million for the quarter compared with $115 million in 2013. The modest reduction is due largely to considerably weaker Canadian dollar. The FX impact this quarter for our distribution business with $7 million.

Our Western Canada Transmission Processing segment reported EBITDA of $111 million compared with $157 million in 2013. Now as we discuss in our first quarter call, we had a plant major facility turnaround in the second quarter at Empress.

The total O&M associated with this turnaround was $25 million and while the Empress plant was down we also realized lower revenues of about $8 million for a total difference between quarters of $33 million. In addition, the FX effect of the lower Canadian dollar produced an $8 million for a total difference between quarters of $33 million.

In addition the FX effect at the lower Canadian dollar produced an $8 million decrease for the quarter. The Empress plant is back in service and we continue to expect it to deliver EBITDA of $80 million for the year. Our field services segment reported EBITDA of $54 million compared with $46 million in 2013.

The increase was primarily driven by higher volumes as a result of three new processing plants being placed into service and stronger commodity prices. The increases were partially offset by an $8 million increase in operating and maintenance costs resulting from the planned turnarounds mentioned earlier.

Additionally while the increased volumes and added revenues, the new assets placed into service also contributed to higher O&M. This segment also recognized an increase in interest expense for the quarter, primarily due to lower capitalized interest.

During the second quarters of 2014 and 2013 respectively, DCP’s realized NGL prices averaged $0.93 per gallon versus $0.82. NYMEX natural gas averaged $4.67 per MMBtu versus $4.09 and crude oil averaged approximately $103 per barrel versus $94.

DCP Midstream paid distributions of $78 million to Spectra Energy in the second quarter of 2014 with distributions through July of $179 million. So all-in-all we’re pleased with where we stand at mid-year.

Going back to our February plant roll out, you will recall that we targeted EPS for the year of a $1.40 and following historical patterns about half that amount would be earned in the second half of the year.

We’ve exceeded our initial expectations on a year to-date basis and we fully expect to achieve the back half of our financial forecast during the balance of the year. So borrowing any significant unplanned developments, we should exceed the targets laid out for you in February.

So with that, let me turn things over to Greg to talk about our growth projects, our priorities and the progress we’re making..

Thanks very much Pat and again thanks for everybody on the line on the webcast today. As Pat described, Spectra Energy’s second quarter results reflect the earnings and DCF FX of assets delivered in the services required last year.

Our expansion projects executed on time and on budget by our talented team are really fuelling growth and value for investors. You can see our momentum and the results reported this quarter, you see it in our year-to-date performance and you continue to see it as we execute on multiple growth opportunities.

As always, we’re looking ahead to continue to grow through a robust backlog of projects that provide investors with long-term attractive returns. We are dedicated to delivering on our commitment of investing in $35 billion of expansion projects between 2013 and 2020. And we are making great progress on our drive to $35 billion goal.

Just this past quarter, we moved six new projects underpinned by customer commitments totaling about $2 billion into execution. Those projects are NEXUS, Atlantic Bridge, Dawn Parkway 2016, two new expansions of the Sand Hills NGL line, Red Lake and Spraberry and our partial Ozark conversion with Magellan.

We’re operating in a unique opportunity rich environment in an extremely dynamic marketplace. So let me start by reviewing these projects and others we have in execution. NEXUS which will bring supply diversity to Eastern Canada by delivering Utica and Marcellus gas by the end of 2017.

Now as designed customer support necessary to move forward and we are doing just that. It will be anchored by commitments from Eastern Canadian and Midwest U.S local distribution companies as well as Appalachian producers. NEXUS provides Spectra Energy with an investment opportunity in the $700 million to $1 billion range.

The Atlantic Bridge project will further expand our Algonquin and Maritimes & Northeast pipeline systems. Connect the abundant natural gas supplies with markets in the New England states and Maritime Provinces. We have committed anchored shippers on board and the projects is slated to go into service in 2017.

We are pursuing additional shippers and when all is settled we will have an investment of at least $500 million with the possibility of up to $1 billion and we’re executing on our 2016 Dawn Parkway Expansion scheduled to go into service in late 2016.

Here again we have now secured customer commitments and intend to file the facilities application with the Ontario Energy Board later this month. CapEx associated with this project is approximately $400 million.

In the Permian, the Red Lake and Spraberry expansions of the Sand Hills NGL pipeline expand our reach in the fast growing production areas and position Sand Hills for continued future growth. Spectra Energy Partners share with these expansion will total approximately $70 million and will be fully in service by mid-2015.

We announced our first quarter call that we had entered into a long-term lease agreement with Magellan to convert a portion of our Ozark pipeline to a refined products pipeline by mid-2016. We’re on target to submit our FERC filing for this project in the third quarter of this year.

We’re also making great progress on the Sabal Trail pipeline into Florida which is you will recall will serve the growing needs of Florida Power and Light and Duke Energy for access the natural gas to fuel new power generation. We’re on track to submit our FERC application in October and to meet our in-service date of 2017.

We’re executing on the 2015 Dawn Parkway Expansion which will provide security of supply and allow Eastern Canadian LDCs to diversify their supply portfolio to enhance customer access to the Dawn Trading Hub, one of the top three physically traded natural gas market hubs in North America.

The expansion slated to go into service during the fourth quarter of 2015 provides customers the ability to ultimately access new supplies from the Marcellus and Utica through the NEXUS project.

The open project designed to deliver new incremental production from Utica to Marcellus to markets in the Midwest, Southeast and Gulf Coast received its notice of schedule from FERC, reaffirming that the project is on target to meet the planned 2015 in-service dates and will be placing two Texas Eastern projects into service during the last half of this year.

Team South and Team 2014. Team south which is expected to go into service ahead of its November 1st schedule will be the first of our many north or south projects in-service. We’re on the home stretch on Team 2014 with a targeted November 1st in-service date. Recall that this project creates capacity to the east and to the south of the Marcellus.

These projects underpinned by contracts with likes of CONSOL, Rice Energy, Chevron, EQT, total over $500 million in investments and they represent the first 600 million cubic feet a day of the 2.4 Bcf a day in projects that makes the Texas Eastern mainline by directional. That’s a quick snapshot of some of the projects we have in execution.

Others in that category like our Gulf markets project and aim our likewise proceeding on schedule and on budget and support our plans for significant DCF growth which will in turn advance dividends and distribution growth. You’ll be hearing more about these projects later in the year.

So let’s turn our attention now to the opportunities that will support growth in 2017 and beyond. Beginning with U.S transmission. We’re pursuing a number of immediate and very near term prospects, as the next 18 to 24 months provides exceptional infrastructure origination opportunities in the U.S.

There is a host of opportunities in the New England region, which is currently constrained in terms of access to affordable natural gas supply. Last month, we announced plans to further expand our Algonquin and Maritimes & Northeast systems.

This project would provide improved electric liability in New England by directly supplying about 60% of the region’s most efficient gas-fired generation. We’re also further advancing the bi-directional capabilities on our Texas Eastern system. In late July we commenced two new open seasons, Access South and Adair Southwest.

These two projects provide incremental firm transportation capacity from Appalachian shale for the markets in the Southern U.S. When these additional projects are complete by November 2017, the Texas Eastern System will be capable of providing 2.4 billion cubic feet per day of bi-directional capacity from Appalachian basin to the West Adair South.

And we announced an open season last week for another build on Texas Eastern to the East Appalachian market. As the Utica and Marcellus continue to grow, there continues to be producer interest in getting their supplies closer to the East Coast markets.

We’re continuing to pursue opportunities in the Gulf Coast related to both LNG exports and growing industrial demand. We also see the need for more pipeline infrastructure to serve electric generators and other customers in the Mid-Atlantic and South East U.S.

So our U.S transmission business has a lot of opportunities to pursue, but there are also substantial growth opportunities within SEPs liquids business.

We expect to deliver on a number of new promising organic growth opportunities on the Express-Platte system, projects to de-bottleneck the system which would increase utilization and attach new load and supply.

We’re pursuing about $100 million in combined near-term organic growth opportunities on Express-Platte, opportunities that will deliver attractive returns in the next couple of years.

And I’ll note that we’re seeing similar organic opportunities associated with our NGL pipelines similar to the Red Lake and Spraberry expansions that I highlighted earlier.

Additionally we have a number of long-term step out liquids opportunities and we have received sufficient expressions of interest to continue pursuing expansions of our crude oil business through the end of the decade.

Together with Questar Pipeline we’re continuing development work on the inline California Express project which includes a new rail terminal in Southern California and reactivation of an existing pipeline into the Los Angeles/Long Beach refining complex.

We expect that over the next several months we’ll select the preferred unloading terminal site and complete our engineering efforts and regulatory applications. If things proceed as planned the ICE project would go into service in early 2017. We likewise continue to make good progress on our larger longer-term liquids projects.

We have completed the preliminary environmental and engineering work for two in particular the Synergy Pipeline to further link growing oil sands production to the Edmonton-Hardisty hub and the twining of our entire Express-Platte system from Alberta to Illinois to bring growing oil sands supply to the Midwest and beyond.

We’re continuing productive discussions with producers and refiners interested in both of these projects. Turning to Western Canada, we remain on track to receive our Environmental Assessment Certificate by year end for our West Coast connector pipeline to serve BG Groups proposed LNG export facility in British Columbia.

Of course there are many LNG projects being developed in BC and so we also expect to participate in gathering and processing and pipeline expansions needed by various LNG developers and producers.

We’re already seeing a ramp up in producer activity in the Montney region of Western Canada and we’re in active discussions with potential customers to build Greenfield and brownfield gathering and processing facilities to be in service in 2018. Well lots going on and lots of good results.

And as you can see not only are we executing on projects you have seen on this map before we’re originating new ones, signing customer commitments and quickly responding to the fast paced market dynamics.

Let’s turn now to the priorities we shared with you at the beginning of the year and the progress that we’re making on these important areas of focus. We provided an in-depth view of our priorities during our first quarter call, so I just want to remind you that we’re well on track and confident that we will deliver on all of these by year end.

The team is making great progress and it’s heavily focused on achieving these key priorities. Here is what’s new for this quarter.

Spectra Energy Partners is advancing our execution projects safely and successfully and I shared with you our strong momentum in delivering projects into service, securing regulatory approvals and conducting the sitting, public outreach, design, engineering and construction aspect so critical to project success.

And so far we’ve secured about a third or well in advance of a third if not the half of the $3 billion commitment we made at the beginning of the year. We ramped up our existing contract volumes on the Sand Hills and Southern Hills NGL pipelines as we expected and we see additional opportunities ahead.

As noted we’re on track in the execution of our 2015 Dawn-Parkway project, we have customer commitment supporting the 2016 expansion and we expect regulatory approval from the OEB in early 2015.

And during the fall of this year we’re planning to initiate another open season to solicit customer interest or additional capacity on Dawn-Parkway system for 2017.

As I mentioned we’re advancing approval of the permits on the West Coast connector pipeline, we’ve completed some milestone environmental filings for the project continuing the important public outreach education engagement work associated with the project of this magnitude.

Again we’re confident that we will meet or exceed the full complement of our 2014 priorities by year end and we will continue to update you on that progress. As you heard today Spectra Energy delivered a second quarter in line with our expectations and in addition to strong distributable cash flow growth.

We’re pleased with our results for the quarter and pleased to be well ahead of our anticipated mid-year benchmark. We’re executing infrastructure projects that are critically needed and we continue to build our backlog of attractive strategic opportunities.

We’re intently focused on our drive to 35 goal and we know how competitive the environment is today but we believe we have what it takes to win.

An enviable, expansive North American asset footprint, diverse footprint, a proven ability to execute on projects and serve customers through safe reliable operations, low cost of capital that enables us to efficiently execute and compete and the financial strength and flexibility to move swiftly on emerging and evolving value creation opportunities.

We need it and we will intend to hit on every cylinder in our drive to 35, we’ll pursue Greenfield and brownfield expansions, utilize both our MLPs and investment grade balance sheets wisely and consider value adding M&A opportunities.

We know at the end of the day we’re chased with delivering attractive total shareholder returns and dividend and distribution growth our investor can count on. And as Spectra Energy and SEP continue to outperform our investors will share in that upside work. So with that let me turn things over to Julie, so we can take your questions..

Thank you, Greg. So we would like to hear from your now, so we will open up the lines for questions. So Sally, would you please provide instructions again on how folks can ask questions..

Certainly. (Operator Instructions) Your first question comes from the line of Christine Cho of Barclays. Your line is open..

Good morning..

Good morning. Congrats on moving the new projects into execution..

Thank you..

For NEXUS are you still thinking one day pipeline?.

Well Dill’s – but I think we’re actually thinking up to be in a half is actually where the project will come in but as mentioned I think where we’ve got know we can move forward but I’d expect to be in – Bill do you want to comment on that..

Yeah I agree. I think we’re going to move forward with the 1.5 Bcf project now which is our current scope, got the contract to support to the majority of that and of course you know we’re out for a supplemental open season to see if we can fill out the corners over the next few weeks..

When you say like majority of that is contracted, I am guessing its well over 50% I mean should we think between 50% and 70% I am just trying to get a sense.

And also if you could provide the split between LDCs and producers?.

Yeah. So your range is good and north of that actually and probably about 50-50 in a market pull from the LDC community and producer push..

Okay. And then what is the ownership going to look like that I think one of your partners had pulled out or it expired.

So is it going to be just you and DTE splitting it 50-50 or are you going to get another partner?.

Well I’d fully expect that when all is said and done that you will have the original three folks involved. And as you know increasingly our customer also are interested in holding a piece. I think that’s still developing Christine but and that’s why we said we expect probably $700 million to a $1 billion for investment for us.

So I wouldn’t read a whole lot into them MoUs expiring..

Okay.

And then can you give us the capacity increases that you are thinking for the Spraberry and Red Lake expansions on Sand Hills and what you are seeing in a place to drive that?.

Sure, let me get that for you Christine it’s about 500 million a day in total between the projects. And.

No, Pat I think you are thinking about the gas. The project – on Spraberry is about a 100,000 barrels a day and really Sand Hills isn’t incremental to or Red Lake isn’t incremental to Sand Hills it just helps fill it up earlier by really helping us connect into our Zia II plant..

Okay. So that’s what I was trying to get to, so it was actually like expansion on capacity or just like connecting to a new plant or something..

Connecting which obviously is important because that means that we can fill up Sand Hills faster, obviously you fill up Sand Hills faster there is an opportunity for further expansion..

But the Spraberry one is actual capacity expansion..

Correct..

That is about a 100,000 barrels a day on Spraberry..

And then the contract at least for the Spraberry it’s going to look similar to your initial?.

Yeah..

Okay. And then for your Texas Eastern, Access South and South West where is this exactly going in the South East and when you say final by directional capacities are you saying that you won’t be able to do any more of this physically or is this more a function of it’s going cost a lot more now and the rates won’t be competitive..

Yeah I think I’ll let Bill speak to that but in our last quarter there is concerns there wasn’t anything else I think we’ve proven this quarter there is plenty of other things to do.

But Bill do you want to?.

Yeah. So these are obviously right along the line.

So the Adair portion of the project probably 200,000 a day goes to Adair County in Kentucky and that’s an interconnect we’ve got with Columbia Gulf and basically what that’s doing is as the reversal or as the long line pipeline still up, we kind of field up Texas Eastern first because we go right from the Marcellus down to the Gulf.

Well there is some other pipelines like Columbia Gulf doing quite at the right places but we can use Texas Eastern to get there. So first one Adair is going to get a couple of hundred day into Columbia Gulf or redelivery to the Gulf.

Access gets down as far as Kazieczko, Mississippi where we’re interconnected with a handful of pipelines there again to spread gas out into the Gulf that’s going to be hopefully little over 300 a day.

So again very good capital efficient projects and no, I would say that we keep finding this sort of pocket capacity and well yeah, well prices sort of creep up overtime as the true open stuff gets sold out.

We do find ways to improve the existing system to move more out and honestly that’s what the next team project or the access to market project rather would do which is bringing up to a Bcf going East on Texas East..

Yeah. I think the real power that we’re identifying here Texas Asian is an incredible backbone that other people can’t replicate and we’re building out that backbone I would expect will continue to find ways to do that..

Do you have a preliminary cost for the Access South and South West project?.

So between the portion going to Adair and a portion going to Access, we’re probably between $300 and $400 million..

Okay. And then last one from me this is just more out of curiosity.

But how does this lease with Magellan, and why was it structured this way?.

Well you know Ozark was not being fully utilized so we’ve got a long term lease with them or will convert a portion of the pipeline and really what it is a volume then have to spend new capital on Greenfield.

So it’s your typical lease long term I think it’s seven or 10 years, 10 year lease so there is nothing magical to it Christine maybe I am missing where you’re trying to..

Well I guess are you going to spend the cost to convert it or is it going to be them?.

No, we’re spending the cost to convert it and then we’ll get a lease payment from them..

Yeah, we basically ready the pipe to get into product service to convert it from gas to products and then that’s a portion of the overall Magellan project and then there is still playing pipe out for gas service..

Yeah. And they are building the piece on that as well Christine. So I would yeah, we, I wouldn’t focus too much on the word lease I mean arguably it’s no different on us building other piping, pipeline..

Okay.

So like contractually, so just contractually it’s very similar?.

Yeah, absolutely..

Okay. That’s what I was getting it. Thank you..

Fair enough. Thank you..

Your next question comes from the line of Shneur Gershuni with UBS. Your line is open..

Hi. Good morning everyone..

Hi Shneur. Good morning..

Just a couple of quick questions here.

Not to drive on the projects that you just spoke about with Christine, but when I think about your drive to 35, I see that you’ve added 40 projects basically and if I remember correctly this 35 includes projects that have been put into service as well to, shouldn’t the number effectively go up a little bit with the new additions if something dropped off, if you can sort of give us a little bit color as to is it 35 plus a little now or something else is changed in the mix..

Yeah. I think if you go back what it was we put $6 million into service last year, $7 billion we are executing, so that gives you rough number $13 billion so you had 22 to go. We added six more of this project sorry this quarter and those call it $2 billion, $1.5, $2 billion of new projects.

So that helps fill it in further so I wouldn’t say the $35 billion increases at this point in time. We’ll see what happens going forward but that’s really kind of the buildup. So we’re fueling into the 35 billion..

Okay. Great. Secondly is that – I asked this question I realized you’ve done some drops DPM this year but I was wondering if strategically if you can talk about the potential for potentially accelerating drops as DPM has grown bigger it has an ability to handle more and so forth.

Is that something that you are considering is something that you are able to talk about a little bit?.

Sure.

I think at the beginning of the year we laid about a $1 billion of drop down with the potential of up to $1.05 and I think we’ve gone a little bit above 1 billion already this year we may do another one this year maybe not or maybe into the next year but I think your point is well taken we will continue to utilize DPM’s currency much as we do with SEP here with our U.S gas transmission business to grow and fund that growth.

So I don’t think it’s out the norm to think that there will be more activity at DPM on an ongoing basis and you will see bigger utilization of that vehicle overtime.

But we are already in excess of what we said we would do this year, we maybe, we may do a little bit more, but it may flop over in the next year, we’re not going to be driven by that calendar from that perspective..

Great. And just one final question. There has been a lot of projects proposed to bring gas into the North East and it’s been doing with markets made announced it recently as well too.

I was just wondering if you can sort of like step back and look at from a macro perspective, is there a risk that some of these projects don’t get done or conversely is there a robust enough demand effectively that will accommodate all of the projects or effectively being announced. I was just wondering if you can sort plan on that a little bit..

Yeah. Those are two separate questions and both the answer could be yes but in other words I think that they need all these projects that out there but there is a risk that some of them don’t get done.

I particularly think the greenfield projects post some very unique challenges in the North East and you’ve got to get complete right in the way you are going into territories or areas or communities maybe they don’t have the same experience with natural gas infrastructure and pipelines et cetera and we think that really does give advantage to those people that can do incremental builds, but also be make sure that they don’t have to use completely virgin territory in which to operate in.

And so from our perspective we for average projects brownfield than they are greenfield just to ensure that we can get them into service and build off the existing line so I mean you see that with New York, New Jersey project that we’ve done, the TEAM projects are similar examples of this.

There is obviously new pipeline that needs to go into New England, but we like having to build off our system I think virtually anything that is done in New England, will involve some development of Algonquin and Maritimes in North East regardless if it’s our bigger projects that move forward.

So I think that backbone is a critical piece but I think it’s all needed but I think you are right it may not all get done just because of political and other reasons..

When you say political, are there any states that worry you more than others from a Greenfield perspective is New York can be more challenging versus some of the other New England states just I was wondering if you have any thoughts there?.

No comment. I think importantly we serve about 60% of the generation needs in New England.

So some of this when I say politic it sort of means small people there is some lot of local politics which we spend so much time making sure that individuals and individual communities understand why, what benefits we’re providing and I think that played out really well in New Jersey, New York when local individuals and particularly after this winter saw the real benefit of having natural gas as opposed to relying on far more expensive resources of energy.

And I don’t think that was lost on New England Politician’s policymakers where LDCs and power producers and as such that’s probably going to win the day from a cost benefit perspective..

Great. Thank you very much. That’s all from me guys..

Thanks..

Your next question comes from the line of Carl Kirst with BMO Capital. Your line is open..

Hi Carl..

Thanks. Hey guys. Just a few maybe follow ups I’ll be starting on the Northeast side in part because with Atlantic Bridge I was sort of thinking in the $500 million you kind of now using a range of a $1 billion.

And I see that in context of maybe thinking about eventually an aim to for lack of the better words something that would serve a generation load.

And I guess my question here is do you see Atlantic Bridge sort of more incrementally to serve some of that generation or is Atlantic Bridge going to be whether it’s the 500 million or the billion investments still fundamentally backstopped by only seasonally?.

Yeah. I’ll have Bill speak to this I mean him and his team are really mailing these projects and I think you are right I think what the point was on Atlantic Bridge was at least $500 million and it may be bigger but thought you might but....

Yes I think Carl just starting from the top you know AIM is going to be put in the service in 2016 that’s 340,000 a day at about $1 billion.

The Atlantic Bridge we feel pretty comfortable with the folks that we have been talking to get good commitments that we actually think we’ll probably fall into more you know 150,000 to 200,000 a day range and yeah, we put the range out there in 500 million to a 1 billion I mean I would say we’re probably somewhere in the middle of the range again these are going to be all the LDCs for now simply because the process at the electric organizations are working through really haven’t yield it a whole a lot of fruit yet but to your point what we outlined in July what you I think are referring to as potentially and AIM 2 is a project that would focus on that component, the 60% of the generation the region that Greg referred to come 2018.

There may be LDCs in that project as well depending on what happens with other efforts..

Bill in order to I mean as you kind of that as a 2018 or perhaps maybe just at the gas generators are moving quite perhaps as swiftly as we like.

Do you have a sense of timing as to when they are going to settle down with their pipeline commitments I mean is that kind of end of year 2014, end of year 2015 how should we think about that?.

Yeah, I think you know I do plot them for getting together and for the – we are trying to move this process a lot because the way that it set up it’s not conducive for the generators to do this on the ground they need some help.

So, I when you think about its naturally going to take a little bit of time to get all of those parties together I do believe that there are some nice solutions on the table we talked to these folks weekly if not honestly almost every other day to try to figure out what the right solutions as a fine tune what we are looking at.

I would say I’d be surprise if we didn’t have some movement by the end of the year or early next..

Excellent.

And if I could do a follow-up on NEXUS just as we view and I think Christine has a lot of questions I think one though I just want to make sure we have seen a lot competitive pressure obviously in the area and should we think about with what you have contracted today? Should we think about that meeting sort of the minimum hurdle rates of your normal return on capital employed or is there still more that needs to be backfilled even though you know you have enough for instance to make it viable..

No I think you can assume that we have got enough to make it viable today and moving forward and meeting our typical type of return you’re right there is a lot of competition but this is different project than a lot of others right nobody else is actually going to the North and nobody else is actually gaining into Ontario and serving those markets so, I think there just as we talked in New England and over a year ago people were concerned and we have been working on this project for two years Carl right, so people were concerned Utica wasn’t ramping up, I think those concerns are going away so, feel very good about the returns and yes the competition is tough but there is a need for multiple projects and this one is quite unique and Bill I don’t if you want to speak to uniqueness of that as well..

Well yeah, just to add we are going from the Utica and really from the Marcellus as well so far with our sales right to where the markets want to go and using I think one of the benefits we got is we’ve got a greenfield component but in this again we are using existing facilities right away and of course back two system to get into Dawn so very doable by 2017, right..

Excellent, excuse me. Last question if I could maybe I’ll get back in queue, excuse me choked up..

Be safe..

Your next question comes from the line of Faisel Khan with Citigroup. Your line is open..

Thanks. Good morning..

Good morning Faisel..

Just a few questions actually one question on Petco so, between TEAM ‘14 and the South expansion and then the Gulf market expansion and open it seems like that’s 1.8 Bcf a day can you just clarify how much of that volume sort of gets directly on the Marcellus and Utica down to the Gulf Coast Louisiana and Texas and the reason I am asking is because you’ve seen basis in almost all the markets in the entire North East quadrant of the U.S.

sort of dip here in the summer and just wondering how much of that capacity you guys are building out is going to make it all the way down south sort of below the M2 markets..

Right I think there are only two of those really do that right Bill so, I don’t know about the volume..

Yeah, about 2 Bcf of the Texas Eastern mainline can will be reverse Yes 2017 all the way back to Kazieczko let’s say and from their trends out in the Gulf so, it depends on how you define Gulf but two 2 bcf makes it 2 for Gulf region the rest of it you know is sort of pockets getting to other pipeline that make it out of the Gulf or two other markets..

So, the 2 bcf a day by 2017.

So, as I am looking at the 2014 number so, the team 14 and I guess the South expansion that’s about 900 a day so, how much that by end of this year gets to the Gulf?.

By the end of this year we’ll have 600 ‘13, ‘14 and its TEAM South firm..

TEAM South..

For Gulf yes and then of course as we build out open in Gulf markets and now the project that Access South it builds up through 2015, 2016, 2017..

Okay. I understand. I mean the customer – how the customer demand is sort of evolving here I mean in New York City it used to be the place you wanted to get your gas to now it’s like – it’s kind of like I am not sure if you want to get your gas to the city because it’s not a great price.

So, I am just trying to figure how your customer sort of demand is evolving along these lines?.

To be honest it’s like the Gulf Coast was moved into South West Pennsylvania and the way we’re looking at it that the [inaudible] that we’ve got that runs in both directions moving out of there and now with NEXUS moving forward getting up into Michigan and Ontario.

You really sort of building an octopus you’ve got the big supply in the middle and you got to get legs out the existing ones are the easiest to do but then some others coming out so, from a customer standpoint whether it’s producer or LDC they are looking to tie a line into the Marcellus, Utica region..

Okay, understood.

And just one another question from me, on the ICE project so what are the sort of next critical sort of milestones for that project I mean at least for the regulators I mean what are they looking for and what do you have to deliver for that in the near term?.

Well it’s a couple of things we’re still firming up customer interest there are some other projects out there as you know at least one other although our belief is that there is room for both and the big one is determining unloading terminal site and moving forward on the regulatory approvals.

I would say customers want to be comfortable that regulatory approval and really that’s around environmental will be we’ve got a high level of confidence so, we have got to firm that up here over the next couple of months to make sure that we’re comfortable telling customers if we make commitment to them we will in fact deliver so, that’s really the next stage here still work to do on that one Faisel and as you know out of our $35 billion for the project I would represent a 100 million so it’s not a huge but I think I really think as you know I was probably more skeptical on this a to a year and now given everything that’s been done the interest that we are seeing and work that’s going I am optimistic about the project..

Okay, fair enough. I appreciate the time, thanks..

Thanks Faisel..

Your next question comes from the line of Brad Olsen with TPH. Your line is open..

Hi, good morning everyone..

Good morning Brad..

My first question maybe unsurprisingly at this point it is also kind of on NEXUS and the New England project that you’ve advanced.

Those projects are in direct competition with some big competitive projects from energy transfer In Kinder Morgan and Greg if you alluded to earlier both of those competitor projects are dependent on significant new build pipelines going through the North East having to acquire right away and go through a more rigorous regulatory process perhaps.

You’ve talked a little bit about the contract levels on NEXUS, I guess my question is, more broad across both of these projects.

Would you say that you’re scoping these projects in anticipation of perhaps being able to scoop incremental customers as potentially those competitive projects move more slowly through their right of way acquisition and regulatory approval?.

I think a little bit about, that’s so much in New England, New England we’re pretty solidly got those filled up I think with NEXUS there is a little bit of that.

I will say we’ve, I think we’ve put realistic schedules out there on those and so I think that’s important I have no idea what other people are saying and their contracts other than in terms of being able to meet those commitments and I think that will serve us well in terms of credibility delivering.

You mentioned that competitors Brad that’s no different in the competition we had in the last 30 years, they may have different names, but those are, our folks in the North East and throughout along Texas Eastern we have two really main competitors that we’ve had for a long time and obviously East Tennessee, and obviously we go against energy transfer on a regular basis.

So I don’t think there is anything unique about the competition I mean our key is we want to move projects forward when they hit our hurdle rates.

I will say on most of our projects when we look back, we wish we actually size the bigger I mean the open project frankly we would probably seated in twice the size on that project didn’t have customer commitments to do that twice the size but I can tell you a lot of people knock on the door for that kind of thing.

So I first meet the hurdle rate and if there is an opportunity to size it such that you can get all your regulatory approvals but also leave some opening, I think that’s a smart idea too.

The next 18 to 24 months are really the origination window that I think it’s going to drive much of people’s growth and activity through the end of the decade and that’s what we’re focused on doing..

Great.

And just maybe to dig a little bit deeper as you kind of think about the competitive dynamic specifically in that kind of Mid-Western market, it seems between press releases and market chatter it sounds the NEXUS customers list is really dominated by LDCs with maybe consolidating the one major producer commitment and the Rover customer sounds much more like it has no LDC support to speak of, but significant E&P support.

If Enbridge is kind of moving out of that position as of third JV partner, is there may be contemplated strategy to bring in energy transfer as a third partner and combining into a project that could be between two and three and maybe offer a more cost competitive solution?.

Well I think first of all I wouldn’t agree with the articulation that most of ours is LDC I think as Bill said earlier we would look it as 50-50 if not 60% producer and we do have a number of producers that have signed commitments to that, but all that being said I also don’t as I said before I would expect Enbridge would ultimately be involved and that’s their choice and I know they are trying to grow their gas business but we’ll see that’s the extent.

But however the projects do go different places both from a starting point and both from an end point as well we like our competitive advantage that we’ve got there we like to schedule that we’ve laid out and the momentum we’ll build on that and I never say never to anything, I mean our goal is to do what’s in the best interest of first and foremost our investors and secondly in a very close second if not tie for our customers.

And so if there is better solutions we’re always open to that on partnerships but I like where we are today and I think Bill and his team very much like where they are today and again not just LDC support..

Got it. On the Magellan JV, there is about a half day of capacity on Ozark as far as gas capacity goes out of the Fayetteville today. You mentioned that not all that capacity is being utilized.

Is the lease agreement that you have with Magellan going to de-rate any of that 500 million a day of gas capacity or is it something where with compression you’ll be able to preserve effectively all the capacity you have for when pipelines like SEP or the Fayetteville lateral when those start rolling off contracts or you are going to be in a position maybe to compete for Fayetteville volumes on Ozark as well?.

We’re taking, we’re going to lose that capacity although I am not concerned about that.

Actually in the piece that we’re losing I think it’ll still allows to serve various customers, but yeah, we will actually de-rate or our filing will be and I think that goes in next month or a little bit later and maybe that will actually take it out of gas, natural gas utilization and move it directly to refined product.

So it wasn’t something we could just do a work around it’s we need the pipe yeah....

We’ve talked to all the, there with a really handful of customers that were effective and they have options and then what’s remaining we feel is probably right size for our participation in the Fayetteville..

Great. That helps a lot. And final question which is a pretty big picture question on the Western Canadian side of things.

You guys have talked about relatively near term gathering and processing growth in Canada, maybe as near term as the next 12 months despite the fact that LNG projects seemed to kind of be towards the back half of the decade and maybe even getting pushed into early next decade.

I guess on the bright side, we’ve seen some enhanced completion techniques specifically in the Montney that guys like in EnCana seem to be getting maybe plus 50 to 100% IP rates on some of the wells that they’ve been completing here recently.

Have you begun to discuss the potential volume metric upside with producers and I know this is a difficult question to kind of get arms around especially this early in the game up there, but is there any way that we can think of potentially returns on existing assets increasing as we see completion methods improve even any uplift from LNG.

Is there a way that we can kind of think of in EBIT or in EBITDA number that you could see maybe adding onto what you are already able to generate up there as a result of these new improved completion techniques?.

Yeah. I would say our utilization are pretty good in very high level and we’ve seen that kind of to your point, we’ve seen a little bit of a rotation to the south from the north east to British Columbia as a result of what’s going on in the Montney and other regions.

So I don’t see a big upside to that piece, but that being said, I do see a full utilization of our plants that’s kind of tough from an EBITDA number from that perspective.

I think that’s far in excess of that as you point out, one people start to take a feel good about taking FID and LNG and some people have talked about at the end of this year and some others next year and again ‘16. That’s when they will start to have building gathering and processing facilities and that’s where we feel we have a real advantage.

So I don’t think it’s so much adding to or fully utilizing the plants we have, we largely have that other than a couple of places in the Horn. I think it’s really about the new builds that are going to drive and that will happen well in advance of the LNG, because remember as that production comes on, they got to find places to utilize that.

And you’ll see us probably in the next six months move forward with some pipe expansion on our pipeline system just to deal with the gas that’s being produced now in advance and separates from what happens from an LNG perspective..

Got it. Well that’s all from me. Thanks a lot guys..

Okay. Thank you..

Your next question comes from the line of Becca Followill with U.S. Capital Advisors. Your line is now open..

Good morning guys..

Good morning, Becca..

Really nice addition to the backlog and it’s incredible on what’s going on in the industry.

Does this change your guidance for 8% to 9% dividend growth at Spectra or if it doesn’t, what would, what change would you need to see in the backlog in order to up that?.

Well I think it’s sure give us a lot of and we already had a lot of confidence on the number I think as you know we start to put together our next round of three year plans we laid out a three year plan for the street, not everybody does that and we haven’t done that before. I think I’ll hedge a little bit on that question.

So let us get through our plants through the end of the year, but I will also say as I’ve mentioned in the past if we are doing better, I fully expect given the structure that we have or we want to pass some of that better onto investor.

So I think directionally I am on the same page as you are, but we need to get plans together and obviously it’s a discussion with the board, but as we get more and more of that 35 billion and the sooner we get it, that’s an opportunity for investors to realize the benefits as well.

There is a couple of really nice big pieces small and the Spraberry pieces some of the organic stuff I mentioned briefly with respect to Express-Platte those might only be 100, few $100 million, but they have very robust returns, because you are able to build off the existing backbone.

So let us get towards the end of the year back and come back and get that, we’ll get that momentum gone..

Thank you. That’s helpful.

And then second on the 2.4 bcf a day and residential bidirectional capacity on Texas Eastern, does that involve any turn back of capacity by customers?.

No ma’am. As you know we continue to see 98% plus, so I guess if you consider that small amount but as you know we then go out that and re-market at top rates..

Great. Thank you.

And I have missed it but I don’t – hear on any projects North Carolina associated with Duke RSP?.

Yeah, that’s obviously one we’re pursuing but I know that’s confidential and it’s not part of our $35 billion as you know it’s a new market we’re going into but my understanding is that Duke’s going to come to some conclusion on that in the next few weeks or months and they will make a decision on that but that would be a nice new market and that would be in advance of $35 billion if we got it but it’s not in that number right now..

Thank you.

And then last question is what’s the timing to make a decision on potentially 20 and Express-Platte?.

I think to be totally frank the amount of work that needs to be done there for us to take FID is probably 24 months away as you know that would be probably the single largest project we’ve ever done, well in excess at 100% level of $5 billion, so that’s not going to happen tomorrow.

But I do like the work that’s being done, I do like the interest by refiners and producers and we’re going to continue to push that one hard..

Great. Thank you guys..

Okay. Thanks Becca..

So this is Julie again and I am unfortunately going to have to bring the call to a close but we want to thank everyone for joining us today. As always you can give myself or Roni Cappadonna a call and we will be following up with folks that we know we left in the queue. So we’ll appreciate your attention and thanks for joining us..

This concludes today’s conference call. You may now disconnect..