Alberta s Oilsands: Manufacturing Opportunities for Canada. August 18, 2006

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1 Alberta s Oilsands: Manufacturing Opportunities for Canada August 18, 2006

World Crude Oil Reserves Ranked as the second largest crude oil reserve in the world, next to Saudi Arabia. 300 250 Billion barrels 200 150 100 50 0 S.

3 World Crude Oil Reserves Ranked as the second largest crude oil reserve in the world, next to Saudi Arabia Billion barrels S. Arabia Alberta Sources: Oil and Gas Journal Dec 2002 Iraq Venezuela Russia Mexico Alberta s s oil reserves contribute to 16% of total global reserves The Size of the Resource Reserves (2003) (Billion Barrels) Oil Sands In Place 1,629 Remaining Est. Rem. Ult. Pot l Conv Production is expected to reach 50% of Canada s crude oil output and 10% of North America s by 2010

Alberta Oil Production by Type 110,000 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 '000 Cubic Metres Heavy Light/Medium Synthetic Bitumen Other* - 1994 1995 1996 1997

4 Alberta Oil Production by Type 110, ,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 '000 Cubic Metres Heavy Light/Medium Synthetic Bitumen Other* * Other: condensate and pentanes Source: Statistics Canada Nature of the Resource 94% of Total In Place 80% of Recoverable 6% of Total In Place 20% of Recoverable

5 Long Term Targeted Cash Operating Cost per Barrel 1 Syncrude PetroCan/UTS/Teck Fort Hills Synenco/Sinopec Northern Lights Canadian Natural Horizon Shell/AOSP Muskeg River Suncor Source: Company documents 1) Adjusted to reflect a gas price of US$6.67/mcf, AECO differential of US$0.70/mcf and CDN/US FX rate of $0.80. Investment in Alberta s Oil Sands Investment Completed* $35 Proposed $80+ Trends are illustrative Incremental Capital Band Refineries, petrochemical, pipelines Cdn$Billions Strong growth Base Capital Band Mines/in-situ/upgrading (Strategic & Sustaining) 0 Weak growth *Completed 1996 to 2004 Source: CAPP, Media

Distribution of Major Capital Projects $2,896 Million $62,831 Million Over $133 billion as of March 2006 (includes $7.68 billion location non-specific) 36.

$4,245 Million $105 billion in Wood Buffalo and the QE2 Corridor Source: AED Inventory of Major Alberta Projects (IMAP) Hydrocarbon Upgrading Vision 2020

6 Distribution of Major Capital Projects $2,896 Million $62,831 Million Over $133 billion as of March 2006 (includes $7.68 billion location non-specific) 36.2% 53.9% $42,119 Million $3,517 Million $967 Million 3.6% 2.5% 3.0% 0.8% *Map based on February 2006 figures. $4,245 Million $105 billion in Wood Buffalo and the QE2 Corridor Source: AED Inventory of Major Alberta Projects (IMAP) Hydrocarbon Upgrading Vision 2020 Alberta will achieve a competitive hydrocarbon upgrading industry through refining and petrochemical plants that expand the market for Alberta s bitumen resource and produces higher value products in Alberta.

7 Announced Upgrading Projects Bitumen Upgraders in Alberta Company - Project Volume (bbl/day) Comment Suncor Syncrude Husky- Lloydminster Albian-Scotford 277,000 Existing 301,000 Existing 77,000 Existing 155,000 Existing Suncor 235,000 Expansion (Firebag and Steepbank) Syncrude 180,000 Phased Expansion Husky- Lloydminster 5,000 Expansion Albian- Scotford 150,000 Expansion w/plans for a total of 500,000 bpd Nexen/OPTI- Long Lake 70,000 New CNRL-Horizon 233,000 New - only phases 1 to 3 Synenco- Northern Lights 100,000 New - with 2 phased expansion BA Energy- Heartland 226,000 New - first phase 75,500 bpd. 3 phased expansion. Petro-Canada/UTS- Fort Hills 50,000 New Petro-Canada 135,000 Change refinery to upgrader/refinery Northwest Upgrading 150,000 New with 3 phased expansion Total Upgrading Capacity 2,344,000 Canadian Energy Research Institute Report published in August 2005 Assessed the economic impacts of Alberta s oil sands industry on economies up until Investment of just over $100 billion to 2020 Increase in GDP of $885 billion ($789 billion in Canada) Approximately 6.6 million person years of employment generated (5.4 million in Canada) Total government revenue of $123 billion Federal - $51 billion (41%) Alberta - $44 billion (35%) Others - $29 billion (24%)

8 Alberta's Labour Force: Over 400,000 new jobs will be created between 2005 and 2015 Over 314,000 new workers will enter the market in this time New jobs will exceed new workers with approximately 86,000 shortfall All sectors are seeing a tightening in the labour market * Source: Alberta Human Resources and Employment Alberta s Labour Market Shortages According to AHRE, as of December 2005: 33 of 53 occupational groups had an unemployment rate of less than 3 percent 56 percent of employers reported hiring difficulties 28 percent of employers had at least one position unfilled for over 4 months Occupations with a high vacancy rates include Professional Occupations in Physical Sciences, Oil and Gas Drilling, Servicing and Related Labourers Metal and Platework Fabricators and Fitters, Millwrights

9 Alberta s Labour Market Shortages Alberta Industry has been vocal that there are critical shortages of the following: Welders B Pressure Welders Plate-fitters Machinists Pipe-fitters Iron Workers Millwrights Engineers Technologists Industry is also crying out for unskilled workers to train!! Industry s Solutions Manufacturers are starting to seek out alternative solutions to increase capacity Automation Solutions Lean Manufacturing and focus on Process Improvements Revamped HR plans Increase in Immigration Migration from across Canada Chartered Flights from the Maritimes, Rotating Crews Subcontracting from Manufacturers Across Canada

10 Alberta Manufacturing Statistics In 2005, Alberta had the highest manufacturing growth rate in Canada. Manufacturing shipments increased 12.1% to an all time high of $59.4 billion In 2005 Average manufacturing unemployment rate was 3.3%, so far in 2006 it has been 1.8% (March) Industrial Machinery and Equipment shipments were up by 31% in 2005 to 5,320.1 million Metal Fabrication Shipments are expected to be up by more than 20% Lead times for many products have gone from weeks to months and months to many months. Sources: AED, Policy and Economic Analysis Div. Manufacturing and the Oilsands Oilsands development has been a key driver of growth in Alberta, increasing the demand for all products and services. There are three key industrial sectors supplying services and capital to the oilsands: Fabricated Metal Products Industrial Machinery and Equipment Engineering and Construction In particular, the following subsectors are seeing very heavy demand.

11 Structural Steel Fabrication Boilers, Pressure Vessels & Tanks

Metals (NAICS 331) 72 Fabricated Metal Products (NAICS

Transportation Equipment Mfg (NAICS 336) 176 Metal

Distribution of Companies by Number of Employees (2004)

12 Machine Shops Alberta Metal Fabrication Profile Revenue $6.57 Billion (2004) Number of Companies (2004) Primary Metals (NAICS 331) 72 Fabricated Metal Products (NAICS 332) 960 Companies 1,359 Employees 30,100 Transportation Equipment Mfg (NAICS 336) 176 Metal Service Centres (NAICS 4162) 151 Metal Fabrication Distribution of Companies by Number of Employees (2004) Number % of Total 85.0% 8.6% 6.1% 0.2%

13 Manufacturing Opportunities Opportunities to provide technology / automation solutions to offset the dependence on labour Unique solutions to compensate for high mix-low volume Opportunities to partner with Alberta fabricators to supply components to the following sectors: Structural Steel (CWB certified shops) Pressure Vessels, Tanks and Heat Exchangers (ASME u stamp) Machining (API certification) Turbines and Pumps for petrochemical applications Current Partnership Projects Successfully completed the NB partnership sessions in March and continuing to foster business relationships. Several joint initiatives underway in conjunction with CME, Industry Canada and several Provinces Targeted brochure explaining the oil sands in CME s 2020 magazine July /August 2006 Promotion of opportunities at regional events in Eastern Canada Launching of a B2B web portal which will allow eastern manufacturers the opportunity to connect with Alberta fabricators looking to sub contract ( Buyer Seller Forum (national) in Edmonton March, 2007 to bring together Alberta Buyers and Eastern Sellers Overall goal is to raise awareness of Oil sands opportunities for the rest of Canada

14 What Alberta Companies Expect Alberta fabricators and manufacturers do not have packages all prepared and ready for sub contract (in most cases) Dealing with Alberta industry requires building relationships to establish trust, then determining how you can play a role. Face to face will go a lot further than simply calling by phone. Alberta industry needs to know that you want to deal with them and not with their clients. Remember Alberta companies are very busy! How to Get Involved Continue to stay in touch with: Canadian Manufacturers and Exporters NOIA Newfoundland and Labrador Inovation Trade and Rural Development Check the website for program updates Check the CME website for updates Market Research at Come to Edmonton in March 2007 for the Buyer Seller Forum

15 THANK YOU

Alberta s s Energy Industry will the growth continue?

Alberta s s Energy Industry will the growth continue? Marcel Coutu President, Chief Executive Officer Canadian Oil Sands Limited, Manager of Canadian Oil Sands Trust O C T O B E R 2 4, 2 0 0 7 Forward-looking