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Canadian Natural Gas Outlook. Greg Stringham October 2006. Canadian Association of Petroleum Producers. 150 producer member companies Explore for, develop and produce natural gas, natural gas liquids, crude oil, synthetic crude oil, bitumen and sulphur throughout Canada

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canadian natural gas outlook

Canadian Natural Gas Outlook

Greg Stringham

October 2006

canadian association of petroleum producers
Canadian Association of Petroleum Producers
  • 150 producer member companies
  • Explore for, develop and produce natural gas, natural gas liquids, crude oil, synthetic crude oil, bitumen and sulphur throughout Canada
  • Members produce more than 95 per cent of Canada’s natural gas and crude oil
  • 130 associate members provide a wide range of services that support the upstream crude oil and natural gas industry
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 8th largest crude oil producer
    • and moving up the list quickly with oil sands production increasing
  • Canada is the largest supplier of energy to the United States

#1

#1

top 10 world crude oil producers in 2005

Oil sands growth will move Canada from #8 to #4 in the world by 2015

Top 10 World Crude Oil Producers in 2005

Production

Outlook

Stable

Growing

Stable

Stable

Stable

Stable

Declining

Growing

Stable

Growing

Source: EIA & CAPP

top 10 world natural gas producers in 2005
Top 10 World Natural Gas Producers in 2005

Canada is the 3rd largest producer of natural gas in the world.

Source: Oil & Gas Journal & CAPP

crude oil and natural gas prices
Crude Oil and Natural Gas prices

Crude Oil Prices(WTI NYMEX)

$US per barrel

Natural Gas Prices(AECO Daily Spot Price)

$Cdn/mcf

industry capital spending cdn billions
Industry Capital Spending Cdn $billions

The oil & gas industry will invest over $47 billion in capital in Canada in 2007

Northern Canada

‘04 ‘05 ‘06F `07F

$0.3 $0.5 $0.5 $0.5

Oil Sands

‘04 ‘05 `06F `07F

$6.2 $10.4 $11.0 $12.5

WCSB

‘04 ‘05 ‘06F `07F

$24.5 $32.7 $32.5 $33.3

East Coast Offshore

‘04 ‘05 ‘06F `07F

$1.9 $1.9 $1.0 $0.7

Note:

Spending in Canada excludes spending associated

with mergers & acquisitions

International are acquisitions net of divestures.

total wells drilled in canada
Total Wells Drilled in Canada

2007 = 25,000

2006 = 24,500

2000’s Avg

> 20,000 Wells

1990’s Avg =

10,000 Wells

Based on Rig Release

western canadian gas resources conventional and new sources
Western Canadian Gas ResourcesConventional and New Sources

Source: Alberta Energy & Utilities Board/National Energy Board, CERI

western canada exploration drilling set new record highs in q1 2006 q1 jan mar
Western Canada Exploration DrillingSet New Record Highs in Q1 2006(Q1: Jan-Mar)

Successful Natural Gas

Exploration Wells

Successful Crude Oil

Exploration Wells

Source: Nickle’s Daily Oil Bulletin

western canada natural gas production
Western Canada Natural Gas Production

2006

2005

2004

2003

Source: FirstEnergy Capital

natural gas wells drilled in western canada
Natural Gas Wells Drilled in Western Canada

Source: CAPP Statistical Handbook

industry average f d cost natural gas trailing 5 year moving average

Note:

Industry data shown on a 5-yr rolling average basis and based on reserve additions. Total capital is allocated as a portion of successful total well completions. Excludes Frontier and non-conventional activity since 1995. Includes natural gas liquids converted at 1 Bbl:6 Mcfe.

Industry Average F&D Cost: Natural Gas(Trailing 5 Year Moving Average)
top natural gas wells drilled 2002 2005

2002

2003

2004

2005

<10 mmcf/d

10-20 mmcf/d

>20 mmcf/d

Top Natural Gas Wells Drilled2002 - 2005
coalbed methane in canada
Coalbed Methane in Canada
  • Much of Canada’s CBM potential is in Alberta
  • Multiple coals underlay half of province
  • About 500 trillion cubic feet (Tcf) of gas in place (AGS)
  • Up to 167 tcf can be recovered in Canada, most from AB (CERI)
  • CBM expected to represent about 10+ percent of future Canadian natural gas production
coalbed methane wells drilled and production forecast
Coalbed Methane –Wells Drilled and Production Forecast

Coalbed methane wells drilled

Production Forecast

Billion cubic feet per day

Impact of gas prices below $4/mcf

Source: FirstEnergy & CAPP

natural gas from coal horseshoe canyon small footprint minimizes land use

Play under way

NGC wells similar to other shallow gas wells

Small footprint: often only 3m x 3m (10’ x 10’)

Natural Gas from Coal- Horseshoe CanyonSmall footprint minimizes land use

Source: CSUG

northern natural gas ultimate potential and proposed gas routes
Northern Natural Gas: Ultimate Potentialand Proposed Gas Routes

Mackenzie Valley Pipeline:

  • Regulatory Application

- NEB application October 7, 2004

- 22 regulatory agencies

- cooperation agreement in place

- environmental review underway

- engineering spending on-hold until regulatory and aboriginal lags are addressed

  • Project

- Costs: C$7.0 billion+

- Base Capacity - 1.2 bcf/d

- Range – 0.8 to 1.8 bcf/d

- On-stream date: 2011+

Arctic

Islands

45 Tcf

Alaska

115 Tcf

Mackenzie Delta / Beaufort Sea

61 Tcf

Fairbanks

Mackenzie Valley Pipeline

Inuvik

Alaska Natural Gas Pipeline

Mainland NWT

& Yukon

17 Tcf

Norman Wells

Alaska Natural Gas Pipeline:

  • Costs: US$20 billion

(Alaska – Chicago)

  • Capacity: 4.5 - 6.0 bcf/d
  • On-stream: 2012-2015

For illustrative purposes only

proposed canadian lng import terminals
Proposed Canadian LNG Import Terminals

Key LNG Issues:

  • Site Approval
  • Gas Supply Contracts
  • Connection to Market

1

2

3

5

4

7

8

6

Source: FERC

35

canadian oil production conventional oil sands and offshore

Actual

Forecast

Canadian Oil ProductionConventional, Oil Sands and Offshore

Oil Sands Production:

2005 = 1.0 million b/d

2015 = 3.5 million b/d

2020 = 4.0 million b/d

Offshore

Constrained

Case

Oil Sands

Western Canadian Conventional Oil

Source: CAPP

oil sands projects in three deposits

Peace River

Peace River

Cold Lake

Hilda Lake

(Orion)

Athabasca

Wolf Lake/Primrose

Cold Lake

Ft. McMurray

Peace

River

Tucker Lake

Edmonton

Cold

Lake

Calgary

Oil Sands Projects in Three Deposits

Fort Hills

Kearl Lake

Horizon

Joslyn Creek

Muskeg River

Albian

Syncrude

Firebag

MacKay River

Jackpine

Suncor

Fort

McMurray

Surmont

Hangingstone

Christina Lake

Long Lake

Jackfish

Foster Creek

In Situ Projects

Mining Projects

oil sands production technologies alternatives to natural gas

WASTE WATER

OXYGEN

PETROLEUM COKE

GASIFIER

CO2 CAPTURE &

SEQUESTER

SYNTHETIC GAS

(CO, H2, CO2)

HYDROGEN

FUEL

BOILERS

HYDROTREATORS

STEAM & ELECTRICITY

Oil Sands Production TechnologiesAlternatives to Natural Gas

THAITM (Toe-to-Heel Air Injection)

Petrobank Whitesands Project

OrCrude Process - Nexen/OPTI Longlake

Multiphase Superfine Atomized Residue - DeerCreek

Suncor 3rd Upgrader - Coke Gasification

purchased natural gas consumed in oil sands
Purchased Natural Gas Consumed in Oil Sands

2006 to 2015 increase

= 0.67 bcf/day

Source: Alberta Energy & Utilities Board

Reserves & Supply/Demand Outlook 2006

key canadian oil gas industry issues
Key Canadian Oil/Gas Industry Issues
  • Transportation Capacity
    • Natural gas pipeline capacity is sufficient until northern gas arrives
    • Growing oil production needs markets, refineries and pipeline capacity
  • Workforce
    • Workforce sufficient to enable planned growth
    • Local, national and North America resources will be needed
  • New Supplies
    • Coalbed methane, Northern Gas, LNG, etc.
  • Higher Costs
    • Moving to more unconventional and more costly resources
  • Access to the Resource
    • Environmental – land, water, air
    • Stakeholders, aboriginal, stewardship
  • Technology – research and innovation