THE OIL, GAS AND OFFSHORE INDUSTRY IN CANADA

Transcription

1 THE OIL, GAS AND OFFSHORE INDUSTRY IN CANADA Fact Pack Swedish Trade Council in Canada September 2007

2 LIST OF ACRONYMS The acronyms that have been used throughout this Fact Pack are: TBO = Trillion Barrels of Oil BBO = Billion Barrels of Oil MBO = Million Barrels of Oil MB/D = Million Barrels of Oil per Day B/D = Barrels per day ft³/d = Cubic Feet per day CA$ = Canadian Dollars CAPP = Canadian Association of Petroleum Producers Note A: 1 cubic meter = 8.52 barrels and 1 cubic foot = 0.24 barrels Note B: A barrel of oil contains 159 litres, of which 40% is refined into gasoline. Diesel fuel, heating oil and jet fuel make up another 40% of the refined barrel. The remaining portion includes lubricants, asphalt, heavy fuel oils, refinery gases and petro-chemical feedstocks. Source: Canadian Petroleum Products Institute 1

3 CONTENTS Highlights History Oil Industry Gas Industry Opportunities Key Players References Appendix 2

4 HIGHLIGHTS OF THE OIL, NATURAL GAS AND OFFSHORE INDUSTRY Oil 2 nd in world oil reserves 84% of North America s proven reserves Only country to increase its oil production Natural Gas 3 rd largest producer of natural gas High potential/resources to produce gas from coal 2 nd largest exporter of natural gas Offshore Majority of reserves are found off the East Coast. East Coast produces up to 300,000 B/D West Coast and Northern Canada offshore are being explored Economic Impact 500,000 jobs created 12 of 13 Provinces and Territories active in the industry CA$ 109 Billion of Revenues in 2006 Driving force of many provincial economies Source: CAPP 3

5 CANADIAN RESERVES OF OIL, GAS AND OFFSHORE RESOURCES Mackenzie Gas Project West Coast Offshore Exploration Newfoundland: Terra Nova, Hibernia, White Rose and Hebron (new!). Offshore Exploration and Development Nova Scotia: Deepwater Oil and Gas Exploration Alberta Oil Sands and Crude Oil Deposits Note: represents Canadian Refineries Source: CAPP 4

6 CANADA RANKS 2 nd IN OIL RESERVES WORLDWIDE PRECEEDED ONLY BY SAUDI ARABIA Billion Barrels Saudi Arabia Canada Iran Iraq Kuwait Abu Dhabi Venezuela Russia Libya Nigeria United States China Source: Energy Information Administration Canada maintains 13.6% of the total world oil reserves. 5

7 CANADA RANKS 3 rd IN THE PRODUCTION OF NATURAL GAS WORLDWIDE Billion ft 3 / year Russia United States Canada United Kingdom Indonesia Algeria Iran Norway Netherlands Saudi Arabia Uzbekistan Turkmenistan Malaysia Source: CAPP/CIA Factbook The United States is the 2 nd largest producer of natural gas yet they heavily rely on Canada s production of natural gas.

8 CONTENTS Highlights History History Timeline Atlantic Canada Central Canada Western Canada Northern Canada Oil Industry Gas Industry Opportunities Key Players References Appendix 7

9 THE OIL AND GAS INDUSTRY HAS PLAYED A MAJOR ROLE IN PROVINCIAL ECONOMIES FOR OVER A CENTURY First Oil well located in North America. Located in Ontario. Oil found in Alberta, largest oil field at the time. Imperial Oil strikes oil in Alberta. Canada moves into the modern era of oil. First offshore exploration for oil in Newfoundland. First Oil Sands plant opened at a cost of $240 billion. 8 Liquid Natural Gas Import Terminals are proposed to be built First off coast discovery in New Brunswick. Ceased production in Oil discovered in the Northwest Territories. Oil discovered in Manitoba. Natural gas is discovered at Sable Island, Nova Scotia. First offshore discovery of gas for Nova Scotia. Natural gas is discovered in British Columbia. Construction begins on 2 of the 8 LNG Import Terminals. Source: CAPP 8

10 OFFSHORE OIL AND GAS IS A MAIN FORCE BEHIND ATLANTIC CANADA S STRONG ECONOMIC ACTIVITY Nova Scotia 130 exploratory wells drilled, 24 returned significant discoveries. The Sable Project produces 400 million ft³/d of natural gas and is the first major offshore development. National Energy Board estimates there are 25 trillion ft³ of natural gas offshore. New Brunswick Saint John has Canada s largest oil refinery. NB is still exploring and developing its resources. Up to 30,000 B/D were produced at Stoney Creek before it closed in Prince Edward Island 1 oil well has been drilled since Newfoundland and Labrador 129 exploratory wells drilled, 23 returned significant discoveries. 375,000 B/D produced from Hibernia and Terra Nova. Hibernia has helped supply American markets since CA$ 1.3 billion invested in exploration and development. CA$ 7 billion in revenues (2005). The Canadian Oil and Gas Industry is active in three of the four areas of Atlantic Canada. Source: CAPP, National Energy Board 9

11 CENTRAL CANADA PRESENTS HIGH PRODUCTION RATES YET HIGH CONSUMPTION RATES Quebec Ontario Manitoba Saskatchewan 3.5 million hectares allotted to Oil & Gas exploration. Focus is on the St. Lawrence lowlands. 3 proposed LNG import terminals awaiting approval to be built. Consumes 33% or 570,000 B/D of oil in Canada. Consumes 38% or 2.6 billion ft³/d of natural gas in Canada. Has 2,500 low producing oil and gas wells. 11,000 B/D produced MB provides 25% of its own oil consumption. 260 wells drilled (2005). Oil production increased 24% from nd largest oil producing province in Canada. 18% of total Canadian production. The industry invested $2.4 billion and received $8.7 in revenue (2005). Quebec, Manitoba and Saskatchewan have each increased production of Oil and Gas. Ontario s consumption rates are the highest throughout Canada. Source: CAPP, Natural Resources Canada 10

12 WESTERN AND NORTHERN CANADA ARE CREATING THE MOST OPPORTUNITIES Alberta Produces 68% of Canada s oil and 78% of its natural gas. 70% of AB s exports are from Oil and Gas. 1.7 to 2.5 TBO are trapped in the oil sands. 80% of Oil and Gas expenditures occur in AB. Oil and Gas accounts for more than 40% of the AB revenues. British Columbia 2 nd largest natural gas producer. 1,049 gas wells drilled in 2005: almost all were successful. 1,600 gas wells expected for The industry invested $4.6 billion for exploration and development in Northwest Territories, Nunavut & Yukon 19,000 B/D produced from Cameron Hills. 1.5 million ft³/d of natural gas from above the Artic Circle. Proposed 1,220 km Mackenzie Gas Pipeline will bring economic activity to NWT and AB. National Energy Board estimates 70 trillion ft³/d of natural gas have not been found. Large scale investment opportunities and returns are occurring in Western and Northern Canada as they play a vital role in Canada s Oil and Gas industry. Source: CAPP, National Energy Board 11

13 CONTENTS Highlights History Oil Industry Main Sectors Oil & Gas Industry Breakdown Extraction Methods Oil Sands Increased Development Gas Industry Opportunities Key Players References Appendix 12

14 THE CANADIAN OIL AND GAS INDUSTRY CONSISTS OF THREE MAIN SECTORS Low High Upstream Companies that explore for, develop and produce Canada's petroleum resources. Represented by the Canadian Association of Petroleum Producers, (CAPP). It includes more than 1,000 exploration and production companies as well as hundreds of associated businesses. Influence on Industry Midstream Oil and gas pipeline systems that connect producing and consuming areas. Other facilities extract sulphur and natural gas liquids, store oil and gas products and transport products by truck, rail or tanker. Downstream 19 refineries* throughout Canada, gas distribution utilities, oil product wholesalers, service stations and petrochemical companies. Where end users of gas and oil receive their needs. *Note: See Appendix A for the Top Ten Refineries and Appendix B for locations of all refineries The Upstream Sector is the driving force of the industry. The majority of upstream companies are situated in Alberta. Source: CAPP 13

15 HIGH LEVELS OF INDUSTRY RETURNS FROM CANADIAN OIL AND GAS OPPORTUNITIES Proven Oil Reserves Proven Natural Gas Reserves Reserves: BBO Production: 2.51 MB/D Exports: 1.58 MB/D Imports: 927,000 B/D Consumption: 1.72 MB/D Canadian Rankings 2 nd largest Oil Reserves 2 nd largest Exporter of Natural Gas 3 rd largest Producer of Natural Gas Reserves: trillion ft³/d Production: 17.1billion ft³/d Exports: 10.2 billion ft³/d Imports: 0 ft³/d Consumption: 6.8 billion ft³/d Source: CAPP, Canadian Petroleum Products Institute The Oil and Gas industry achieved revenues of CA$ 109 billion in

16 80% OF BITUMEN FROM OIL SANDS ARE TOO DEEP FOR SURFACE MINING AND REQUIRE IN-SITU EXTRACTION In Situ Thermal Recovery 80% of Oil Sands are below the normal mining capacity. In Situ involves drilling techniques that inject steam into the oil deposit. Steam heats the oil and lowers the viscosity of the bitumen making it easier for the oil to migrate to the production wells. The necessary bitumen rises to the surface, while leaving the sand in tact. Most Common Forms of In-Situ Steam Assisted Gravity Drainage (SAGD): The drilling 2 of horizontal wells parallel to each other. Steam drains from the top well into the bottom making the oil easier to extract. Cyclic Steam Simulation (CSS): Involves a repeated process of injecting steam, lengthy soaking and production from the steam wells. Surface Mining Open-pit mines are constructed when oil sands occur near the surface layers of the earth. The top layers of earth are removed exposing the ore body and the tar sand is excavated. The bitumen must be separated from the sand and cleansed. The recovery efficiency of open pit mining is approximately 90%. The industry seeks new technologies to increase the efficiency of extraction methods. Source: CAPP, Centre For Energy, Alberta Department of Energy 15

17 SURFACE MINING IS A MORE EFFICIENT METHOD TO EXTRACT BITUMEN FROM OIL SANDS IN COMPARISON WITH IN-SITU Surface Mining Reserves = 6,125 MBO Production = 383,000 B/D Recovery Rate = 90 +% Investments 2005 Mining = CA$ 6 Billion In-Situ = CA$ 4 Billion Total = CA$ 10 Billion In-Situ Reserves = 2,474 MBO Production = 609,000 B/D Recovery Rate = 20-65% Differences Between Extraction Techniques The surface mining reserves are higher than those of in-situ yet in-situ has produced more barrels per day in comparison with surface mining. Surface mining production is long term, more capital intensive yet it yields a higher rate of return for investors as more bitumen is successfully extracted. In-Situ is quicker, less costly yet it yields less successful returns of bitumen. More investments have occurred in mining throughout 2006 and are expected to again increase in 2007 (CAPP). 16

18 PRODUCTION FROM THE OIL SANDS WILL INCREASE AT A HIGHER RATE THAN CONVENTIONAL/CRUDE OIL IN THE FUTURE Conventional/Crude Oil Oil Sands Reason World Reserves: BBO. Currently ranked as the 8 th largest oil producer. 5.2 of 179 BBO are conventional crude oil and condensate. 2005: 2.5 MB/D produced. By 2015: 4.6 MB/D will be produced. Canada has 13.6% of world reserves. By 2015: Oil Sands will move Canada to 4th largest oil producer. 174 of 179 BBO are from Oil Sands. 2005: 1MB/D produced from Oil Sands. By 2015, 3.5 MB/D will be produced from Oil Sands. More efficient technologies enable easier extraction and production from the Oil Sands. A one percent improvement in recovery rate results in an additional 2.2 BBO for reserves + the economic benefits CAPP Source: CAPP, Energy Information Association 17

19 CONTENTS Highlights History Oil Industry Gas Industry Industry Overview Mackenzie Gas Project Opportunities Key Players References Appendix 18

20 WESTERN & NORTHERN CANADA ARE HELPING MEET THE HIGH CONSUMPTION NEEDS OF THE NORTH AMERICAN GAS MARKET EXPORTING Number 1 exporter of natural gas to the United States. Number 2 exporter of natural gas worldwide billion ft³ exported/d NEW METHODS 3 rd largest producer of natural gas RESERVES Canada is ranked 22 nd in world reserves of natural gas. Continued efforts to explore and develop natural gas on the East and West coasts. The East coast produces enough gas to meet their own needs. WESTERN & NORTHERN CANADA Coal Bed Methane: gas found in coal seams An estimated 494 trillion ft³ of gas within the coal beds of Alberta. Production of gas from coal is expected to largely increase in the near future. The Western Canadian Sedimentary Basin provides 98% of total Canadian natural gas production. The National Energy Board estimates there are 70 trillion ft³ of natural gas that has not been found north of the Northwest Territories. Western Canada accounts for the majority of gas exported from Canada to the United States. Source: CAPP, Centre for Energy, National Energy Board 19

21 MACKENZIE GAS PROJECT WILL LENGTHEN AND CREATE MORE AVAILABLE NATURAL GAS FOR NORTH AMERICA DEFINED: The project will create a 1,220 kilometer gas pipeline system along the Mackenzie Valley of Canada s Northwest Territories into Alberta. (see Appendix C for a detailed map). Aims to connect Northern onshore gas fields with North American markets. Has the possibility to provide 800 million ft³/d of natural gas. Forecasted cost of CA$ 7 billion; however, new reports state that it will cost upwards of CA$ 16 billion. The pipeline is expected to generate billions in revenue throughout Alberta. The pipeline will create numerous opportunities throughout Northern Canada and Alberta. Source: Mackenzie Gas Project REASON FOR IMPLEMENTATION: Demand for Natural Gas in North America is expected to grow by 16% by 2010, which equates to 11.1 ft³/d. Production from existing wells are declining, meaning that new supplies will be needed. 20

22 CONTENTS CONTINUED Highlights History Oil Industry Gas Industry Opportunities Capital Spending by Canadian Industry Opportunities Areas Development Opportunities Value of Opportunities Environmental Protection Key Players References Appendix 21

23 CAPITAL SPENDING FOR THE OIL SANDS IS GROWING WITHIN THE CANADIAN OIL AND GAS INDUSTRY Total: $45.6 Total: $44.7 Total: $45 Total: $32.9 $10.40 $11.60 $17 Oil Sands Billion CA$ $6.20 $24.50 $32.70 $31.60 $26.50 Northern Canada East Coast Offshore Western Canada Sedimentary Basin Source: CAPP There will be a $5.4 Billion increase in investments in the Oil Sands from 2006 to

24 ABOVE AVERAGE GROWTH IN ALBERTA LEADS TO MANY OPPORTUNITIES IN DIFFERENT SECTORS 50,000 new housing starts in 2006 CA$ 60.3 billion investment in 2005: 50% in Oil/Gas 26% in Non-Energy 16% in Housing 8% in Institutions Oil and Gas Industry in Alberta Growth Industries: Oil Sands, Utilities, Info. Technology, Business and Manufacturing Services 4.3% economic growth in a decade 2006, economy grew by 7% 9.1% increase in Fort McMurray s population from 2005 to 2006 Source: Alberta Government, Advantage Alberta Economic growth in Alberta is exceeding the ability to develop. 23

25 INFRASTRUCTURE PROJECTS ACCOUNT FOR 60% OF 802 MAJOR DEVELOPMENTS 802 Major Development Projects in Alberta The Oil and Gas industry is a main employer throughout Alberta; which is causing shortages in other industries, such as Infrastructure development. Alberta has begun to outsource engineering projects to out of country companies to help alleviate labour shortages. Infrastructure, 60% Agriculture, 1% Oil and Gas, 1% Retail, 11% Tourism, 14% Oil Sands, 7% Pipelines, 4% Power, 2% Note A : Infrastructure includes: Infrastructure, Residential and Institutional developments Note B: To view an inventory of projects in Alberta, follow: Infrastructure maintains the highest percentage of projects yet they are not developing quickly enough because of the lack of skilled workers. Source: Alberta Government, Alberta Employment, Immigration and Industry 24

26 OIL SANDS PROJECTS MAINTAIN THE HIGHEST VALUE OF NEW DEVELOPMENT PROJECTS IN ALBERTA The Oil Sands projects are helping contribute to the Province through the creation of long term employment, purchases of goods and services, and royalty payments to the provincial government. From 2006 to 2016, it is forecasted that CA$ Billion will be spent on new Oil Sands Projects. The peak of the spending is forecasted to occur in Value of Projects in CA$ Billions (March 2007) Oil Sands, $105, 64% Infrastructure, $29, 17% Pipelines, $7, 4% Mining, $2, 1% Power, $6, 4% Retail, $9, 5% Tourism, $7, 4% Oil and Gas, $2, 1% Source: Alberta Government Oil Sands projects are valued at 64% of all projects in Alberta and are driving the economic growth throughout the province. 25

27 ENVIRONMENTAL PROTECTION OFFERS POSSIBLE OPPORTUNITIES Green House Gas Protection Usage The largest and fastest growing source of green house gas emissions in Canada. Canada s rate of emissions has risen 21% since Upstream Oil and Gas companies spent upwards of CA$ 1.1 billion in 2002 on environmental assessments, planning and land reclamation. Major operators are embracing technologies that reduce the amount of water used to extract, produce and refine oil. Syncrude circulates up to 4,000 m³of water/hour. Canadians are becoming more concerned with environmental degradation from the oil and gas industry and desiring companies to be more proactive. O P P O R T U N I T Y Source: CAPP, Centre for Energy, Natural Resources Canada 26

28 CONTENTS Highlights History Oil Industry Gas Industry Opportunities Key Players References Appendix 27

29 TOP TEN COMPANIES OPERATING IN CANADA S OIL AND GAS INDUSTRY Company Head Office Company Description Net Rev. 06 CA$ Millions Calgary Calgary Calgary Calgary Calgary Calgary Calgary Calgary Montreal Fort McMurray Producer of crude oil, refiner, marketer of petroleum. Explore and produce natural gas/liquids and crude oil. Explore and produce oil sands and conventional oil. Natural gas producer and in-situ bitumen recovery. Oil sand recovery and renewable resource technology development. Heavy Oil, oil sands, conventional oil and gas, refining and exploration. Production and exploration of natural gas, heavy and light oil. Deep oil and gas exploration, production and pipelines. Refining, service stations, pipeline services and residential heating. A subsidiary of Valero Energy Corporation. Joint venture project; Canadian Oil Sands Limited owns 32%. 28 $24,788 $18,669 $14,806 $16,399 $13,450 $12,664 $10,398 $7,944 n/a $2,432

30 IN CONCLUSION, OPPORTUNITIES EXIST IN INDUSTRIAL SUPPLIES, INFRASTRUCTURE & ENVIRONMENTAL PROJECTS Alberta s Opportunity Environmental Responsibility Oil Sands Technology Alberta s economic growth is the highest in all of Canada. The province is the main pillar of the Oil and Gas industry in Canada. The province is outsourcing projects because it cannot keep up with the demand. Major developmental projects include: infrastructure, retail, tourism and pipelines. Creation of new technologies that minimize the effect on the environment through exploration, extraction and production of oil and natural gas are needed. New technologies must reduce waste materials and allow them to be recycled and reused throughout production processes. Major oil and gas companies are taking more responsibility to protect Canada s environment. 29 New technologies are being developed to increase the amount and efficiency of extracting the Oil Sands The oil sands are a major factor for Canada s competitiveness in the world Oil and Gas industry. The environment and its protection are a major topic of discussion throughout all of Canada which leads to new projects and developments. Canada has been the only country to increase its production of oil and gas. The Canadian oil and gas industry will continue to experience growth in the near future.

31 REFERENCES (1/2) Canadian Association of Petroleum Producers Suite 2100, 350 7th Avenue S.W. Calgary, Alberta Canada T2P 3N9 P: F: National Energy Board 444 Seventh Avenue SW Calgary, Alberta T2P 0X8 Alberta Government PO Box 1333 Edmonton, Alberta T5J 2N2 The Canadian Centre for Energy Information Suite 1600, Avenue SW Calgary, Alberta Canada T2P 3G3 Mackenzie Gas Project Avenue Fort Simpson, NT X0E 0N0 Telephone: (867) Fax: (867) The Canadian Petroleum Producers Institute Slater Ottawa ON K1P 5H9 T: F:

32 REFERENCES (2/2) Alberta Employment, Immigration and Industry 208 Legislature Building Avenue Edmonton AB T5K 2B6 Phone: (780) Fax: (780) Centre For Energy Suite 1600, Avenue SW Calgary, Alberta, Canada T2P 3G3 Natural Resources of Canada Alberta Advantage Invest in Canada CIA Factbook Energy Information Administration 1000 Independence Ave., SW Washington, DC

33 APPENDIX APPENDIX A APPENDIX B APPENDIX C APPENDIX D Top Ten Refineries In Canada Locations of refineries/upgraders operating in Canada Proposed pipeline route for the Mackenzie Gas Project Alfa Laval 32

34 APPENDIX A: TOP TEN CANADIAN OIL REFINERIES CURRENTLY OPERATING Company Location Capacity (B/D) Syncrude Irving Oil Shell Canada and Petro Canada Chevron Corporation Suncor Imperial Oil UIltramar Imperial Oil Imperial Oil Fort McMurray, Alberta Saint John, New Brunswick Montreal, Quebec Montreal, Quebec Fort McMurray, Alberta Montreal, Quebec Levis, Quebec Edmonton, Alberta Sarnia, Ontario 360, , ,000 each 235, , , , , ,000 33

35 APPENDIX B: LOCATIONS OF ALL CANADIAN OIL AND GAS REFINERIES/UPGRADERS CURRENTLY OPERATING 34

36 APPENDIX C: PROPOSED ROUTE FOR THE MACKENZIE PIPELINE 35

37 APPENDIX D SWEDISH COMPANY CURRENTLY OPERATING IN CANADA S OIL AND GAS INDUSTRY Alfa Laval Operating in Canada since Its main headquarters are in Toronto, ON and a Business Area and Service Center in Edmonton, AB. Currently has close to 400 employees located in Canada. Serves the Oil and Gas industry in the areas of Drilling, Production and Slop Oil. Drilling: offers developed mud cleaning and temperature control systems that prolong the life of drill systems. Production: offers heat exchangers to recover heat, or to cool, dry crude oil and water used in the production process. Slop Oil: offers specific equipment that regenerates slop oil (waste product) into oil that can be sold at a profit. Alfa Laval has worked alongside Syncrude Canada in the recovery of the oil sands. 36

38 WE ARE WHERE YOU ARE AND WHERE YOUR CUSTOMERS ARE Sweden: Headquarters in Stockholm 22 regional export advisers 55 Trade Commissioners regularly visit different parts of Sweden Abroad: 55 offices in 46 countries Through partners and networks we cover more than 100 countries 500 employees, 380 based abroad Turnover 500 MSEK Jointly owned by the Government and Industry 37