Upstream Oil and Gas Industry Outlook

Transcription

1 Upstream Oil and Gas Industry Outlook Ben Brunnen November 3, 2015 Presentation to the Petroleum Services Association of Canada (PSAC)

2 2 Overview About Canada s Oil & gas industry Economic Context Competitiveness Pressures Market Opportunity Industry Priorities

3 3 About CAPP and Canada s Oil and Gas Industry Large and small producer companies and associate members Represent 90% of Canada s natural gas and crude production Largest private sector investor in Canada ($48 billion estimated in 2015) Annual government revenues average $17 billion Employ approx. 500,000 in Canada (direct & indirect) Canada is the 5 th largest producer of natural gas globally Canada is the 5 th largest producer of crude oil globally

4 4 Economic Context

5 00 01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 ' '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 15 Crude Oil and Natural Gas prices have declined significantly since June Crude Oil Prices (WTI NYMEX) $US per barrel Natural Gas Prices (AECO Daily Spot Price) $Cdn/mcf

6 Canadian Oil Sands (Bitumen & SCO) & Conventional Production

7 7 Alberta Unemployment Rates By Sector 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Statistics Canada (CANSIM Table ) Total, all industries Goods-producing sector Mining, quarrying, and oil and gas extraction Services-producing sector

8 Regional Alberta Unemployment YoY Source: Statistics Canada CANSIM Table

9 9 Industry Contribution

10 10 Industry Contribution

11 11 Employment and Supply Chain Annual Growth in Mining, Quarrying and Oil and Gas Extraction Banff-Jasper-RMH and Ath.- GP-Peace River 6.7% Calgary 5.3% Camrose-Drum. -0.1% Edmonton 8.4% Leth.-Med. Hat -9.1% Red Deer 4.1% Wood Buff.-Cold Lake 10.4%

12 12 $ billions Share of Revenues Payments to Province Royalties, Land Bonuses and Share of Provincial Revenues $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Royalties Land Sales Other Share of Provincial Revenues

13 13 Economic Impact 2015 Economic Impacts of oil and gas Industry in Alberta $70.1 Estimated Expenditures (billions) GDP (millions)* $85,892 Federal Taxes (millions) $6,196 Provincial Taxes Paid in Alberta, not including royalties (millions)** $5,055 Employment (FTEs) 421,810 Includes direct, indirect, and induced impacts of estimated conventional and oil sands capital and operating expenditures in Alberta in *Represents 28% of provincial GDP. Down from 40% in 2014 **Add Royalties, total govt revenues = $9.9 billion, 20% forecast GoA revenues. Down from 36% in 2014

14 14 Competitiveness Pressures

15 15 Our Biggest Client is our Biggest Competitor

16 16 North American Crude Oil Production Source: BP Statistical Review. Includes NGL s.

17 17 North American Natural Gas Production Source: BP Statistical Review. Includes NGL s.

18 18 Tight Oil Breakeven Prices and Reserves

19 19 Historical Oil Sands Labour Demand No new mines forecast over the foreseeable future. Oil sands labour demand shifting to maintenance. Start of a longer period of more stable employment

20 20 Alberta Wage Growth

21 Real Wage Growth 21 Oil and gas raises real wages across the economy. Employs Albertans across the province.

22 22 Opportunities

23 2014 Canada and US Refinery Demand Source: CAPP, CA Energy Commission, EIA, Statistics Canada

24 24 US$/bbl 2010 A J O 2011 A J O 2012 A J O 2013 A J O 2014 A J O 2015 A J Oil Prices Brent Spot WTI NYMEX Cdn Lt Swt WCS

25 25 Market Access Enbridge Mainline PADD IV Trans Mountain Express

26 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 $US/MM btu Natural Gas Prices Japan Europe North America Source: World Bank

27 27 New Market Opportunities for W. Canadian Gas Area of Oil Sands Deposit NGTL Westcoast PNG (Capacity approx: 110 MMcfd) Pacific Trail: Proposed (Kitimat LNG) Coastal GasLink: Proposed (LNG Canada) Prince Rupert Gas Trans: Proposed (Pacific Northwest LNG) Westcoast Connector: Proposed (Prince Rupert LNG) Potential LNG Export Demand Growing Oil Sands Demand Declining Traditional Market Demand

28 28 Canadian Production Status Quo Case and New Market Opportunity Case Status Quo Case New Market Opportunity Case *New Market Opportunity Case assumes favourable decisions on LNG projects in the near future with 3.5 Bcf/d of LNG exports by 2025.

29 Impact of declining commodity prices - Capital investment & Drilling Canadian capital investment down close to 50% over two years Drilling down close to 55% from 2014 Upstream still largest private sector investor in Canada Capital Investment by Industry (2014) $ billions Upstream Oil & Gas Utilities Transportation & Warehouse Manufacturing Real Estate & Rental & Leasing Source:: Statistics Canada 29

30 30 $ billion $ billion Capital Investment in Canada % = Year/year change Combined Capital Investment Oil Sands Conventional % -16% -33% -10% % -12% Conventional Oil Sands F 2016F F 2016F F 2016F

31 Industry Capital Spending Cdn $billions Northern Canada F 2016F $0.1 $0.5 $0.3 Oil & Gas Investment Spending: 2014: $81 billion 2015F: $48 billion 2016F: $42 billion Oil Sands F 2016F $34 $23 $21 Western Canada F 2016F $42 $21 $18 East Coast Offshore F 2016F $5.3 $3.3 $3.0 Note: Excludes spending on mergers & acquisitions 31

32 Total Wells Drilled in Western Canada Dry/Susp. Gas Oil Yr/yr Reduction in Drilling: % % F = 5, F = 4, F 2016F Source CAPP. Based on Rig Release F=forecast

33 33 Discussion