Alberta s Energy Resources

Transcription

1 Alberta s Energy Resources Alberta Department of Energy Government of Alberta February 2014 Economics & Markets

2 Outline Overview of Global Economic Trends (crude oil and natural gas) How is Alberta positioned to supply the world with energy? Alberta s crude oil and natural gas resource potential Alberta s markets Key emerging issues What does this all mean for Alberta?

3 Global Energy Trends Economics & Markets

4 Primary energy world consumption Million tonnes oil equivalent Up 1.8% in 2012 China + India = 90% of the increase OECD down 4 straight years (EU, U.S.) U.S. = Down 2.8% (18% of global total) Crude Production: Production up 2.2% in million barrels/day Saudi Arabia (13.3% global share) 11.5 million b/d, Russian Federation (12.8% global share) 10.6 million b/d, U.S. (9.6% global share) 8.9 million b/d Crude Demand: Demand up 0.9% in million b/d U.S. (19% global share) 18.5 million b/d China (11.7% global share) 10.2 million b/d

5 Primary energy regional consumption pattern 2012 Percentage China s share of global coal = 50.2% Asia in need of affordable energy Europe increasing coal consumption? New energy capacity = renewables Not efficient when intermittent

6 The Organization of the Petroleum Exporting Countries (OPEC), which includes Saudi Ariabia, Iran, Iraq among others, coordinates and unifies the petroleum polices of its member countries OPEC supplies 1/3 of the worlds total oil production The world has counted on OPEC to be the marginal supplier of oil OPEC s ability to supply is in question Economics & Markets

7 Of the Non-OPEC suppliers, there are three bright spots, and two of these three are in North America (landlocked) North America very limited in its ability to supply the rest of the world with crude oil! Economics & Markets

8 Gas production/consumption by region Billion cubic metres Production by region Consumption by region World natural gas production grew by 1.9% in 2012, led by the U.S. (+4.7%) the worlds largest producer. World consumption grew by 2.2% - below the historical average of 2.7% Largest producers in 2012: U.S. (681 billion cubic feet - 4.7% increase), Russian Federation (592 billion cubic feet - 2.7% decline), Middle East ( 548 billion cubic feet - 5.4% increase)

9 LNG demand in Asia Asia accounts for over 60% of total world LNG demand. Japan and Korea 75 per cent of all LNG imports to Asia take almost LNG Demand (2011) Middle East 2% World Asia S.&Cent. America 3% Europe and Eurasia 27% North America 5% Total Bcm (Source: BP Statistical Review of World Energy, 2012) Asia 63% 1 Billon Cubic Meter (BCM) = 35.3 Billion Cubic Feet (Bcf) Economics & Markets Thailand 1% China 8% Taiwan 8% South Korea 24% India 8% Total Bcm Japan 51%

10 North American Liquefied Natural Gas Prices Not Keeping Pace

11 How Can Alberta Supply the World with Much Needed Energy? Economics & Markets

12 Supply(10 3 m 3 /d) Supply (MMbbl/d) Rank Country Production 2012 (MMbbl/d) Alberta s Crude Oil Alberta Produced 2.5 Million Barrels per day in 2012 Rank Country Production 2012 (MMbbl/d) 1 Saudi Arabia Iran Russia UAE USA Kuwait China Iraq Canada Mexico Alberta supply of crude oil and equivalent actual forecast Nonupgraded bitumen Diluted Bitumen (heavy Crude Oil) Upgraded bitumen Pentanes plus Heavy Light and medium Economics & Markets Synthetic Crude Oil (light crude)

13 Million Barrels Per Day Million Barrels Per Day Million Barrels Per Day Alberta Synthetic Crude Oil Refining Capacity C A B D SCO Production 0.50 E Dilbit Production Bitumen Alberta Upgraders Current Capacity A. Suncor 357,000 B/D B. Syncrude 350,000 B/D C. CNRL Horizon 114,000 B/D D. Opti-Nexen 58,500 B/D E. Shell Scotford: 158,000 B/D Upgraders Conventional Production Source: Govt Alberta Fact Sheet April 2011; ERCB ST

14 Barrels Per Day Barrels Per Day Barrels Per Day Alberta Refined Products Refining Capacity Alberta Industrial Heartland- Operational Refining Capacities A) Imperial: 187,000 B/D B) Suncor: 135,000 B/D C) Shell: 110,000 B/D 36,000 B/D by pipeline; 14,000 B/D by truck A B C 200, , , , , ,000 80,000 60,000 40,000 20, , , , , , ,000 80,000 60,000 40,000 20,000 - Gasoline Diesel Jet Fuel 30,000 25,000 20,000 15,000 10,000 5, Alberta consumption Alberta Production Other province Consumption Source: StatsCan, Enbridge, Kinder Morgan

15 Current Alberta Crude Oil Markets Market Alberta Exports (Barrels Per Day 000 s) PADD 1 55 Crude Oil Demand from Western Canada (refinery capacity in parenthesis) Barrels per day 000 s PADD 2 1,237 PADD PADD PADD Eastern Canada 393 Western Canada 25 Total 2,271 Source: CAPP 2011 Crude oil Market Outlook PADD [3,261] Refineries here can Process Both Heavy and Light Crude Oil PADD [630] PADD [9,078] PADD 2 1,436 [3,775] Eastern Canada 795 [301] PADD 1 59 [1,142] Transportation fuels exported Alberta s Crude Oil Market Limited to U.S. Mid West Huge Potential in U.S. Gulf Coast Refineries here can only process light crude oil

16 Hardisty AB Heavy (TransCanada Keystone) New tight Oil Production AB Heavy (Enbridge) A Crude Bottlenecks: Point A (US Midwest): Pipeline ruptures, refinery maintenance, increased crude production B Point B (Major Storage Hub at Cushing): Increasing tight oil supplies (Bakken) and heavy crude from Alberta with limited pipeline capacity to new markets/tidewater Limited transportation infrastructure to carry production to Gulf Coast Refineries 9 million b/d of refining capacity in Gulf Coast (40% of total U.S.). Heavy crude from international sources into the Gulf has been falling in recent years Refineries in the U.S. Mid West and the U.S. Gulf Coast have spent billions in the past 10 years retrofitting their facilities to accommodate more heavy crude oil from Alberta

17 New Crude Oil Production from Oil (Shale) Plays Duvernay Cardium Eagle Ford Bakken Economics & Markets

18 The Need for More Pipelines Asia Pacific Market Access through Vancouver and /or Western U.S. ports Central Canadian Market Access Refinery and offshore worldwide markets through East Coast Source: Canadian Association of Petroleum Producers Economics & Markets 62

19 Crude Oil Access to the West: Enbridge Gateway Proposed: 525k bpd capacity. All crude oil (SCO, SynBit, DilBit) Proposed: Condensate line from Kitimat back to Edmonton (193k bpd)

20 Crude Oil Access to the West: Kinder Morgan TMX Proposed: Northern Leg (after 2016) +400k bpd - All crude oil no RPP s Existing: 300k bpd Proposed: 590k bpd expansionmostly crude oil and refined products Existing: 300k bpd Proposed: 450k bpd expansionmostly crude oil and refined products Remaining 75k bpd shipped off of Westridge docks to California Remaining 75k bpd shipped off of Westridge docks to California 150k (from the current 300k bpd) end up in Burnaby and North Washington 150k (from the current 300k bpd) end up in Burnaby and North Washington

21 TransCanada Keystone XL & Gulf Coast Project Existing: Keystone (591k b/d) Proposed: Keystone XL Hardisty to Cushing (700k b/d) Underway: Keystone XL Cushing to Gulf Now called Gulf Coast Project (700k b/d)

22 Enbridge Gulf Coast Access Project Existing: Canada Mainline System (2.5 million b/d with Lakehead) Existing Enbridge Line Proposed Enbridge Line Existing: Lakehead System (2.5 million b/d with Canada Mainline) New Coking Capacity: - WRB in Wood River - Marathon in Detroit - Motiva in Port Authur - BP in Whiting Existing: Spearhead System (2.5 million b/d with Canada Mainline) Underway: Flanagan South (600k b/d) Underway: Seaway Reversal (450k b/d) 2014

23 Enbridge Light Oil Market Access Program $6.2 Billion

24 TransCanada To Convert its Natural Gas Mainline to the East to Carry Crude $5 Billion 500,000 to 1 million b/d Refineries in East configured to process light crude Joint venture with Phoenix Energy Holdings to develop Grand Rapids pipeline ($3 billion, 900k b/d) to move oil sands from Dover MacKay River.

25 Alberta s Natural Gas Alberta Produced 9.8 Bcf/d in Rank Country Production 2012 (Bcf/d) Source: Energy Resource Conservation Board, Petrel Robertson GIP: Gas in Place is the total gas volume believed to be contained in the reservoir. Rank Country Production 2012 (Bcf/d) 1 USA Norway Russia China Iran Saudi Arabia Qatar Algeria Canada Indonesia 6.9 Economics & Markets

26 Domestic Market Opportunities Current Alberta production: 9 bcf/d expected to decline (not including potential shale gas development) Internal demand expected to increase on the heels of oil sands growth, however: oil sands growth assumes full market access oil sands consumed gas is an eligible cost for oil sands producers (i.e. offsets gas royalties paid) Petrochemical industry facing stiff competition in the U.S. Government Initiatives currently underway to help domestic demand drivers Value Added strategy GHG regs and shift to gas for power plants

27 Current Alberta Natural Gas Markets Under Siege! WCSB 13.6 Bcf/d Alberta production in 2012: 9.8 (Bcf/d) Alberta Disposition 2012 US Rockies 9.6 Bcf/d Bison Marcellus 6.5 Bcf/d Market Bcf per Day PADD PADD PADD PADD Legend Light Blue WCSB Gas Production Dark Blue US Gas Production Source: Wood Mackenzie; ERCB Barnett & Haynesville 11.3 Bcf/d Gulf 18.0 Bcf/d PADD Eastern Canada 1.54 Western Canada 1.34 Total 6.73 New Shale Gas Production Impeding on Alberta s Traditional Eastern Markets

28 Major North American Natural Gas (shale) Plays Horn River Montney Duvernay Marcellus Haynesille Eagle Ford Economics & Markets

29 Alberta Petrochemical Derivatives Exports Major Petrochemical Facilities in Alberta A) Shell Scotford B) Dow Chemical Ft Saskatchewan C) Dow Prentiss D) Nova Chemical/Dow at Joffre A B $2,000.0 $1,500.0 $1,000.0 $500.0 Polymers of Ethylene (Millions CAD) $ Asia: $763 million Europe:$25 million $1,500.0 $1,000.0 $500.0 $0.0 Ethylene Glycol (Millions CAD) C D $1,500.0 Polyethylene (Millions CAD)** $1,000.0 $500.0 Source: Stats Canada *Only includes Alberta s top 3 ethane-based export sales (polymers, ethylene glycol, and polyethylene) **Denotes combined sales of high and low density polyethylene $

30 Alberta Styrene Exports Styrene Facilities In Alberta A) Shell Scotford B) Nova Chemical (Joffre) $1,500.0 $1,000.0 Styrene (Millions CDN) $500.0 $ Alberta s polystyrene exports amounted to $166,348 in 2012, most of which went to markets in United States ($156,715 ).

31 Alberta Fertilizer and Related Product Fertilizer Facilities: A) Agrium (Industrial Heartland) B) Sherrit International (Industrial Heartland) C) CF Fertilizers (Medicine Hat) Exports $1,500.0 $1,000.0 $500.0 Fertilizer (Millions CDN) $0.0 $1, Urea (Millions CDN) $1,000.0 $500.0 $ $1,500.0 Ammonia (Millions CDN) $1,000.0 $500.0 The regional export figures for fertilizer-related products are the sum of Fertilizers and Ammonia. In 2012, Alberta exported fertilizer products to Latin American, Asian, and European countries but they not substantive ( $1.3 million CDN) $

32 Alberta s Methanol Exports Methanol Facilities in Alberta A) Al Pac Forest Products (Boyle)* B) Momentive (Industrial Heartland)* C) Celanese (Strathcona County, not operational) D) Enerkem (Edmonton)* E) Methanex (Medicine Hat) $150.0 $100.0 Methanol (Millions CDN) $50.0 $

33 Natural Gas Movement to the West LNG export projects: 4. Pacific NW LNG (Petronas/Progress)(2 to 3.6 Bcf/d) 5. BG (BG/Spectra)(4.0) Bcf/d Proposed: Pacific Trails (to Kitimat LNG) Capacity = 1 bcf per day Prince Rupert Gas Transmission: capacity=n/a (Petronas, TransCanada) 0.25 bcf per day of natural gas moves from AB into BC Proposed: $4 billion Coastal Gaslink (TransCanada) Capacity = 1.7Bcf/day LNG export projects: 1. Kitimat LNG (Apache/Chevron) (0.7 to 1.4 Bcf/d) 2. LNG Canada (Shell/Mistubishi, KOGAS/CNPC) (1.8 to 3.6 Bcf/d) 3. Douglas Channel LNG (LNG Partners,) (0.125 Bcf/d)

34 The Duvernay has a huge potential to support Alberta s petrochemical industry, oil sands and to supply Liquefied Natural Gas (LNG) exports PetroChina and ExxonMobil are two international companies with interests in the Duvernay. PetroChina plans to spend $4 billion in the area through its $2.2 billion joint venture with EnCana (December 2012), while ExxonMobil s $3 billion acquisition of Celtic in February 2013 gives it access to strong prospective acreages. Capital spending has already reached $3 billion in the Duvernay. The Duvernay is currently at an early stage of development and operators are working to address play-specific challenges such as high drilling costs.

35 Implications to Alberta and the Edmonton Regional Economy?

36 Implications for Alberta/Edmonton Region Global energy demand dominated by emerging economies (China and India) Alberta has an abundance of resources needs more transportation infrastructure to move these resources to new markets. The U.S. will continue to be our #1 trading partner. However, increased energy supply, environmental concerns and a flat outlook for energy demand in the U.S. may put Alberta at risk. Strong Western Canadian economy (oil sands), abundance of natural gas, and potential development of the Duvernay in North East Alberta will: keep servicing companies active (increased horizontal drilling) Could increase competitiveness of Alberta s petrochemical industry Keep three Edmonton based refineries busy (strong regional diesel demand) Support the need for the Sturgeon refinery (strong regional diesel demand)

37 GOA Initiatives - Fiscal Applicable to both crude oil and natural gas: New Well Royalty Rate (NWRR) The NWRR sets a maximum of 5% royalty rate within the first 12 months of production (50,000 barrels of oil equivalent or 500 million cubic feet of natural gas, which ever comes first) Emerging Resources and Technologies Initiative Coalbed Methane New Well Royalty Rate (CBMNWRR) Shale Gas New Well Royalty Rate (SGNWRR) Horizontal Gas New Well Royalty Rate (HGNWRR) Horizontal Oil New Well Royalty Rate (HONWRR) Innovative Energy Technologies Program (IETP) Drilling Royalty Credit Program (DRC)

38 GOA Initiatives - Fiscal Applicable to crude oil: Enhanced Oil Recovery (EOR) Deep Oil Exploratory Well Program Applicable to natural gas and gas products: Natural Gas Deep Drilling Program (NGDDP) Incremental Ethane Extraction Program (IEEP) Gas Cost Allowance (GCA)

39 GOA Initiatives Non Fiscal Away from home: Clean Energy to Asia Strategy Canadian Energy Strategy Oil Diversification Strategy International Energy Strategy Closer to home: Climate Change Strategy Joint Oil Sands Monitoring Plan Tailings Management Pipeline safety Land Use Planning

40 Thank You!