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The Canadian Oil Sands Woodrow Wilson Forum. October 17, 2005. Canada’s Oil and Gas Industry in the North American Energy Economy. Canada is the world’s 3rd largest natural gas producer Canada is the world’s 9th largest crude oil producer

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canada s oil and gas industry in the north american energy economy
Canada’s Oil and Gas Industryin the North American Energy Economy
  • Canada is the world’s 3rd largest natural gas producer
  • Canada is the world’s 9th largest crude oil producer
    • and moving up the list quickly with oil sands production increasing
  • Industry Overview
    • 500,000 jobs
    • C$35 Billion capital investment
    • C$20 Billion in payments to federal and provincial governments
    • #1 private sector investor in Canada
  • Canada is the largest supplier of energy to the United States

#1

#1

u s natural gas imports from canada
U.S. Natural Gas Imports from Canada

Canada’s exports dropped in 2003 due to a 1.7 bcf/day reduction in US demand

16.5%

16.8%

15.6%

16.2%

16.9%*

Source: U.S. DOE/EIA

Canadian Share of US Consumption

* Estimated full-year.

u s imports of crude oil and petroleum products by country of origin
U.S. Imports of Crude Oil and Petroleum Products by Country of Origin

Petroleum Products

Crude Oil

#1

Canada, is the largest (#1) supplier of crude oil and of crude oil and petroleum products to the US.

Source: EIA, 2004

industry capital spending cdn billions
Industry Capital Spending Cdn $billions

The oil & gas industry will invest over $39 billion in capital in Canada in 2006

Northern Canada

‘03 ‘04 ’05F ’06F

$0.3 $0.3 $0.5 $0.5

International

‘03 ‘04 ‘05F ’06F

$5.5 $10.4 $5.0 $6.8

Oil Sands

‘03 ‘04 ‘05F ’06F

$5.0 $6.2 $8.5 $8.8

WCSB

‘03 ‘04 ‘05F ’06F

$21.4 $24.5 $27.0 $29.0

East Coast Offshore

‘03 ‘04 ‘05F ‘$06F

$2.2 $1.9 $1.0 $0.7

Note:

Spending in Canada excludes spending associated

with mergers & acquisitions

International are acquisitions net of divestures.

slide8

Canadian Oil Sands History

  • 1875 Canada Geological Survey registers oil sands
  • 1915 shipments to Edmonton for paving
  • 1938 Abasand commercial production - 2,500 barrels

destroyed by fire in 1941 - not rebuilt

  • 1950’s separation technology centrifugal force
    • Strong interest results in dozens of exploration leases sold by the government
  • 1964 Esso starts Cold Lake; GCOS construction
  • 1967 first GCOS (Suncor) production - 32,000 b/d
  • 1978 first Syncrude production - 109,000 b/d
  • 1993 truck and shovel technology adopted
    • key to revitalizing the development outlook
  • 2004 oil sands production reaches

1 million barrels per day

global crude oil reserves by country

Includes 175 billion barrels

of oil sands reserves

Global Crude Oil Reserves by Country

Canada, with 175 billion barrels in Oil Sands reserves, ranks 2nd only to Saudi Arabia in global oil reserves

Source: Oil & Gas Journal Dec. 2004

oil sands projects in three deposits

Athabasca

Ft. McMurray

Peace River

Cold

Lake

Edmonton

Calgary

LEGEND

Denotes

SURFACE

MINEABLE

AREA

Oil Sands Projects in Three Deposits

Oil sands production now exceeds one million barrels per day

US$28 billion built from 1996-2004

Close to US$36 billion in new oil sands projects expected in 2005-2010

Encana

Synenco

Value Creation

(CNRL)

Bristol

(CNRL)

Centennial

(Conoco)

Petro-Canada

Imperial

Shell

CNRL

Syncrude

EM

Encana

Deer Creek

Shell

Husky

Suncor

Syncrude

Imperial

Petro-Canada

Cdn Coastal

(Devon)

Suncor

Petro-

Cda

Exxon

Mobil

Encana

Fort McMurray

total oil sands project production 2003 2015

3,000

Husky

2,500

Nexen/Opti

Conoco

2,000

Petro-Canada

CNRL

Thousand Barrels Per Day

1,500

Encana

Albian

Imperial/Exxon

1,000

Syncrude

Suncor

500

All Projects

0

2003

2005

2007

2009

2011

2013

2015

Total Oil Sands Project Production: 2003-2015
oil sands production technologies

SAGD Process

Oil Production

Steam Injection

Steam

Chamber

Steam Injection

Oil Production

Reservoir

Source: Petro-Canada

Oil Sands Production Technologies

Mining & Upgrading

Cyclic Steam

Process

Recoverable resource

= 65 billion barrels

Source: Syncrude

Source: Imperial Oil

In-situ

Recoverable resource

= 250 billion barrels

Source: Shell Canada

oil sands supply costs by recovery type includes capital operating royalty taxes and return
Oil Sands Supply Costs by Recovery Typeincludes capital, operating, royalty, taxes and return

Light Oil

Heavy Oil

* Surface mining, extraction & upgrading

Source: NEB - based on C$2003 converted @ US$0.80/C$

canadian oil production conventional oil sands and offshore

Actual

Forecast

Canadian Oil ProductionConventional, Oil Sands and Offshore

Oil Sands Growth:

2004 = 1 million b/d

2015 = 2.7 million b/d

Offshore

Oil Sands

WCSB Conventional Oil

Source: CAPP

environmental stewardship
Environmental Stewardship
  • Air
    • Monitoring programs
    • Reducing emissions
  • Water
    • Reduce, recycle and reuse
    • More efficient, 90+% recycle
  • Land
    • Reclamation and remediation
    • Directional drilling from single site to reduce impact
canada s oil sands challenges to achieve this potential
Canada’s Oil SandsChallenges to achieve this potential
  • Continuing to Lower Costs
    • Alternatives to natural gas for fuel – free it up for other markets
  • Workforce and Infrastructure
    • Ensuring adequate workforces – trades, technical, professional
    • Roads, Housing and Municipal services
  • Access to Markets – Pipelines/Refineries
    • Need new pipelines
      • Decisions needed now for pipelines in 4-5 years
    • Need new refineries, expansions and modifications
      • For many conventional refineries, oil sands is either heavier (bitumen blend) or lighter (upgraded crude) than their current feedstock
natural gas use in oil sands declining natural gas consumed per barrel of oil sands production
Natural Gas Use in Oil Sands DecliningNatural Gas Consumed per Barrel of Oil Sands Production

Source: Historical data from EUB

canadian and u s crude oil pipeline alternatives
Canadian and U.S. Crude Oil Pipeline Alternatives

ENBRIDGE GATEWAY

Fort McMurray

Asia

California

Anacortes

Growing oil sands production will require new pipeline capacity to existing and expanded markets

Edmonton

Hardisty

Burnaby

Anacortes

Montreal

Superior

TCPL KEYSTONE

Portland

Casper

Salt Lake City

San Francisco

Sarnia

Midwest

Chicago

California

Patoka

Potential

Pipeline Expansion Routes

Wood

River

Spearhead

Los Angeles

Cushing

Extensions to

New Markets

USGC

Houston

St. James

sec bitumen reserves disclosure for financial reporting
SEC Bitumen Reserves Disclosurefor Financial Reporting

Calculated Field Price, % of WTI

--- 2004 Average Bitumen Price at Cold Lake = 50% of WTI

Month

Data Source : Purvin & Gertz

topics for discussion
Topics for Discussion?
  • How can Canada and the US overcome the new constraints to oil sands growth? – workforce, infrastructure, rising costs
  • How and where to convert oil sands into petroleum products?
  • What can be done from the US to help with the workforce shortages?
  • Where will oil sands production be consumed?
    • If in North America, where?
    • What about offshore markets?
  • What needs to change in North America as the oil slate shifts to heavier oil?
  • Can US gasification technology free up natural gas for other North American markets?
    • How does this fit in a world of CO2 reductions?