Key Priorities and Challenges for Canadian Oil

Transcription

1 Key Priorities and Challenges for Canadian Oil Canadian Heavy Oil Association April 15, 2013 Greg Stringham 1 Photo: Cenovus Enabling Responsible Development 2

2 Global Primary Energy Demand 20,000 18,000 16,000 14,000 million tonnes oil equivalent Other Renewables Bioenergy Hydro Nuclear Natural Gas Oil Coal 12,000 10,000 8,000 6,000 4,000 2,000 0 Source: International Energy Agency New Policies Scenario World Energy Outlook Source: International Energy Agency World Energy Outlook 2012 Global Crude Oil Reserves by Country billion barrels Includes 169 billion barrels of oil sands reserves World Oil Reserves 80 Restricted (81%) Open to Private Sector Open to Private Sector Oil Sands 56% Other 44% Venezuela Saudi Arabia Canada Iran Iraq Kuwait Abu Dhabi Russia Libya Nigeria Kazhakhstan China Qatar United States Source: Oil & Gas Journal Dec. 2012

3 1. Global Market Disconnect WTI vs Brent Prices (spot) US$/bbl Jan-10 May-10 Daily Differential WTI Brent Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan North American Market WTI (Cushing, OK) vs Edmonton Par Light Both price benchmarks have been volatile recently US$/bbl Cushing Edm Par Monthly Discount to WTI US$7.05 in Jan 13 US$6.75 in Feb 13 US$1.16 in Mar 13 US$1.00 Apr 11 th (spot) Tight pipeline capacity amplifies volatility Jan-09 May-09 Sep-09 Jan May-10 Sep-10 Jan-11 May-11 Daily 3-Jan 2-Feb 3-Mar 2-Apr 2-May 1-Jun 1-Jul 31-Jul 30-Aug 29-Sep 29-Oct 28-Nov 28-Dec 27-Jan 26-Feb 28-Mar Sep-11 Jan-12 May-12 Sep-12 Jan-13

4 3. Light/Heavy Differential Canadian $ in Edmonton Light/Heavy differential is a quality discount as it takes costs/energy to convert heavy into light oil Cdn$/bbl Has widened since 2012 Jan 2013 = C$26.24 Feb 2013 = C$29.48 Mar 2013 = C$21.19 Apr 11 th (spot) = C$ Cdn Light/Heavy Diff Hardisty Edm -40 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Canadian Oil Sands (Bitumen and SCO) & Conventional Production Forecast

5 Light/Tight Oil Production Thousand b/d 1,800 1,600 1,400 1,200 1, ,000 b/d in 2 years Eagle Ford (Texas) N. Dakota SK Light AB Light Jan-2005 Jul-2005 Jan-2006 Jul-2006 Jan-2007 Jul-2007 Jan-2008 Jul-2008 Jan-2009 Jul-2009 Jan-2010 Jul-2010 Jan-2011 Jul-2011 Jan Canada and U.S. Demand for Crude Oil by Source Thousand Barrels per Day

6 U.S. Oil Demand and Sources of Supply U.S. Imports U.S. Other Liquids Production U.S. Crude Oil Production Source: U.S. Energy Information Administration Annual Energy Outlook 2013 Changing Global Oil Import Needs Net oil imports in the New Policies Scenario TRADITIONAL MARKET FUTURE MARKETS? mmb/d United States Source: IEA World Energy Outlook 2012, EIA China Japan Korea India European Union

7 Eastern Canada Importing 680,000 b/d Mostly light oil refineries Price differential World price imports are higher than domestic Transportation options: Pipelines: Line 9 reversal - Montreal TransCanada conversion Quebec city & beyond Rail Shipments have begun to NB Expanding quickly Ports: Montreal, QC Panamax Quebec, QC - Aframax St. John, NB VLCC + Portland, Maine US flag 13 United States South & East Canada to replace declining supplies from other countries Markets: Gulf Coast (heavy) Eastern Seaboard (light) Transportation options: Keystone XL Enbridge Flanagan South/Seaway Rail increasing quickly Shifting market due to tight oil surge Bottleneck in pipeline capacity from Cushing to Gulf Coast Light crude going east by rail and pipe/rail 14

8 Re-connecting to World Market Cushing, OK to US Gulf Coast Capacity and Timing West Coast of Canada Markets B.C. refineries Washington state California Asia Transportation Options: Enbridge Northern Gateway 525,000 b/d Kinder Morgan Trans Mountain 450,000 b/d Rail proposals 16

9 Access to Markets Pipeline Expansions in Development WCSB Takeaway vs Supply Forecast

10 Western Canada Crude Oil Rail Exports Q3/2012 = 70,000 b/d Q1/2013 ~ 120,000 b/d Q4/2013 ~ 200,000 b/d ~4% of WCSB production Opportunities: Relatively quick Flexibility different markets East Less diluent Use rail in both directions Challenges: Higher costs Limited loading and tank car availability 19 Oil Sands Environmental Performance

11 Environmental Performance Production COSIA GHG emissions Water oil sands/tight oil Land/tailings Pipelines Integrity & operations Marine Prevention, response and recovery tankers/ports Regulation and Monitoring Enhanced oil sands monitoring more sites, more transparency Up to $50M/yr paid by industry Greenhouse Gas Emissions Carbon regulation Provincial Regulation Covers 100% of oil sands Mandatory 12% reduction Carbon price since July 2007 Federal Regulation Alignment with US (17% target and vehicle emissions standards) Coal sector done, moving ahead with oil sector regulation in 2013 Reducing GHG Emissions Using energy more efficiently Capturing CO2 Governments investing over $3 billion partners with industry Shell Quest CCS proceeding g co2 eq./mj Oil Sands GHG Emissions/bbl 26%

12 Full-cycle GHG Emissions Oil Sands & U.S. Refined Crudes U.S. Barrel Refined in the U.S. (2005) Most Recent Oil Sands In Situ +5% Most Recent Oil Sands Mining +2% Avg US Barrel Refined in the U.S. (2005) Well-to-tank Refined product Combustion kgco 2 e per barrel of refined product Source: IHSCERA Oil Sands Dialogue Getting the Numbers Right 2012 Full-cycle GHG Emissions Oil Sands & U.S. Refined Crudes U.S. Barrel Refined in the U.S. (2005) Venezuela - Petrozuata US -Kern River Cdn Oil Sands: Mining SCO Nigeria - Bonny Light Canadian Oil Sands: SAGD Dilbit Iraq-Basra Light Cdn Oil Sands: Low SOR SAGD Dilbit US - Mars +5% Venezuela Bachaquero Mexico - Maya Cdn Oil Sands: Mining Dilbit (PFT) Iraq - Kirkuk Blend US Barrel Refined in the U.S. (2005) Saudi Arabia - Arab Light Brazil - Tupi North Sea - Forties +2% Well-to-tank Refined product Combustion kgco 2 e per barrel of refined product Source: IHSCERA Oil Sands Dialogue Getting the Numbers Right 2012

13 Jobs and Economic Benefits The Oil and Natural Gas Industry A Key Driving Force in the Canadian Economy Investing $61 billion in Canada in 2012 $21 billion to governments in 2011 (Royalties and Taxes) 20% of the value on Toronto Stock Exchange Approx. 18% of Canada s exports Employs more than 550,000 in Canada Upstream Oil & Gas Auto Manufacturing Forestry & Logging Wheat & Barley Uranium 26

14 Suppliers across Canada Real People, Real Issues

15 Improving Environmental Performance Generating Economic Benefits Enabling Responsible Development 30