A Perspective on Canada s Upstream Oil & Gas Sector

Transcription

1 A Perspective on Canada s Upstream Oil & Gas Sector 2010 Edmonton Real Estate Forum May 4, 2010 Dave Collyer President, Canadian Association of Petroleum Producers

2 Presentation Outline Current business environment Industry activity overview Natural gas business outlook Crude oil business outlook CAPP Priorities Summary

3 Business Environment

4 Global Energy Outlook Significant energy demand growth: Population, standards of living Need all forms of energy: Increasing role for renewables Continuing reliance on hydrocarbons (predominant energy supply source) Increasing role for nonconventional crude oil & natural gas Environmental challenges Technology is a key lever for sustainable growth Quadrillion BTU Other Nuclear Coal World Energy Demand EIA International Energy Outlook 2009 Natural Gas Liquids

5 Crude Oil and Natural Gas Prices Crude Oil Prices (WTI NYMEX) $US per barrel Natural Gas Prices (AECO Daily Spot Price) $Cdn/mcf '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 ' '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10

6 Payments to Governments by Upstream Oil and Gas Sector Municipal Taxes Bonus & Rentals Provincial Income Taxes Federal Income Taxes Crown Royalties Billion dollars E

7 Industry Activity Overview

8 Western Canadian Land Sales: Year-to-Date Bonus Bids $ billions Alberta British Columbia Saskatchewan

9 Total Wells Drilled in Western Canada F 2010F Alberta 11,150 5,570 7,300 28,000 Dry/Susp. British Columbia Saskatchewan 3,870 1,580 2,175 24,000 20,000 Gas Oil 2007 = 18,000 Manitoba , = 16,100 12,000 8,000 4, F = 8, F = 10,500 Oil wells ~40% of total completions Previous high in last ten years was 30% E 2010F Source CAPP. Based on Rig Release

10 Industry Capital Spending Cdn $billions Northern Canada 08 `09E 10F $0.4 $0.5 $0.5 Oil & Gas Investment Spending: 2008: $54 billion 2009: $35 billion (estimate) 2010: $42 billion (forecast) Oil Sands 08 `09E 10F $18 $11 $13 Note: Spending in Canada excludes spending associated with mergers & acquisitions WCSB 08 `09E 10F $34 $22 $26 `08 `09E 10F AB $21 $13 $15 BC $7.9 $6 $7 SK $4.8 $3 $4 East Coast Offshore `08 `09E 10F $1.3 $1.5 $2.5

11 Capital Investment in Alberta Oil Sands Conventional $ billions est frcst.

12 Opportunities in Alberta Crude Oil Unconventional oil - tight oil resources Enhanced oil recovery in mature fields - CO2, polymer Oil Sands Global scale and global focus Mining and drillable Natural Gas Conventional natural gas remains important Unconventional natural gas - shale gas, coal bed methane

13 Why is it Important? Benefits to Albertans of investment by the oil and gas industry:..$1 in investment generates $3 in value creation for Albertans Attract Capital Increases Standard of Living Jobs Taxes and Royalties Investment New Businesses

14 Natural Gas

15 Alberta Natural Gas Production WCSB Field Receipts: bcf/d bcf/d bcf/d billion cubic feet per day Sept was lowest gas production since mid Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: FirstEnergy Capital

16 N.A. Natural Gas Supply Outlook Shale gas supply a gamechanger Technology breakthroughs New producing regions Emerging stakeholder environmental concerns (footprint, water) Shifting S/D dynamic

17 Western Canada Resource Plays Source: TransCanada

18 Unconventional Natural Gas Technology - Horizontal Wells, Multi-Stage Fractures Source: Alberta Venture

19 Canadian Natural Gas Production Forecast 20 Previous Forecast 15 Billion cubic feet/day 10 5 Mackenzie Valley* Nova Scotia Offshore BC Horn River BC Montney Coalbed Methane Conventional Gas Assumes a price that renders production economic * Subject to commercial and regulatory approval Source: CAPP

20 Implications & CAPP Response Implications Emerging supply and demand imbalance in North America Pressure on competitiveness and basin economics in Western Canada Pipeline utilization issues: lower volume = higher toll Availability of new infrastructure: right place, right time Increasing focus on offshore exports CAPP Response A key driver in the Alberta Competitiveness Review Proactive efforts on pipeline settlements and rates Ongoing focus on alignment of supply and pipeline capacity.increasing focus on offshore markets Canadian Natural Gas Initiative

21 Crude Oil

22 Global Crude Oil Reserves by Country Includes 170 billion barrels of oil sands reserves World Oil Reserves State owned or controlled Accessible Oil Reserves Canada s Oil Sands 53% billion barrels Accessible Other Accessible Other Accessible Reserves Reserves 47% Saudi Arabia Canada Iran Iraq Kuwait VenezuelaAbu Dhabi Russia Libya Nigeria Kazhakhstan United States Source: Oil & Gas Journal Dec. 2008

23 Canadian Crude Oil Production Outlook Total Canadian Oil Production

24 Western Canadian Oil Production

25 Oil Sands GHG Emissions In Context

26 Oil Sands Communications Information/Education English, French, Norwegian, and German Information on environment, economics and energy Real examples of technology Websites Social Media Facebook, Twitter Come See For Yourself videos Website Youtube

27 Short Term Outlook for Crude Oil The Opportunity: Improving economy reviving projects - stronger oil prices and lower costs Projects under construction: Imperial Kearl Lake Shell Jackpine and Shell Upgrader (including Quest CCS project) Projects re-activated: Suncor Firebag Phases 3 and 4 Devon Jackfish Phase 3 application in 2010 Cenovus Christina Lake application for phases E, F, G ConocoPhillips/Total Surmount phase 2 Husky/BP Sunrise phase 1 Oil sands attracting foreign investment Enhanced Oil/Tight Oil opportunities: Technology-enabled plays such as the Bakken, Cardium and Viking attracting increasing interest (multi-frac horizontal wells) The Challenges: Potential for return of upward cost pressures Environmental performance Opposition to oil sands development..the off hydrocarbons agenda Developing offshore markets

28 CAPP Priorities

29 2010 CAPP PRIORITIES THE BIG 4 Alberta Competitiveness Review Fiscal Regulatory Industry Reputation: (Performance + Communications) x Time Alberta is Energy (also B.C. & Saskatchewan) Canadian Natural Gas Oil Sands Performance and Communications Responsible Canadian Energy Environment Policy & Regulation Pipeline Tolls

30 Summary

31 Summary Oil & Gas Sector Outlook Near term remains challenging: Emerging from economic downturn.but not out of the woods yet Crude oil outlook more encouraging; natural gas less certain Public expectations of industry/gov t continue to increase Ongoing opposition from ENGOs, other stakeholders Fundamentals sound for medium to longer term: Very large resource base (oil and gas) Canadian industry track record and capability Reliable supplier with good market access Industry leadership: Investing to create jobs & economic growth across Canada Environmental performance supported by strict regulations Developing / deploying technology as a key lever (environment & supply) Addressing public perception of industry Constructive engagement in public policy & regulation Require a balanced 3E approach to public policy