The Canadian Oil and Natural Gas Industry Competitive Considerations in CO 2 EOR
Canada s Crude Oil and Natural Gas Industry! World s 3rd largest natural gas producer! World s 13th largest crude oil producer! Oil & gas trade surplus accounts for: " Close 50% of Canada s trade balance! Employment near 500,000 in Canada! Invest close to $25 billion in 2000 " Largest single private sector investor in Canada
Year 2000 in Review! Production: " Crude oil: 2.2 million barrels per day (record) " Natural gas: 6.3 trillion cubic feet per year (record)! Exports: " Crude oil: 1.4 million barrels per day " Natural gas: 3.5 trillion cubic feet per year! Drilled: 17,500 wells in Canada! Capital investment: C$25 billion! Payments to governments: $15 billion
40 35 30 25 20 15 (WTI NYMEX) $US per barrel Crude Oil and Natural Gas Prices since 1995 Crude Oil Prices 14.00 12.00 10.00 8.00 6.00 4.00 2.00 Natural Gas Price (AECO Daily Spot Price) $Cdn/mcf 10 1995 1996 1997 1998 1999 2000 2001 0.00 1995 1996 1997 1998 1999 2000 2001
2001F 20 000 16 000 12 000 8 000 4 000 0 Wells Drilled in Canada Wells Drilled in Canada 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Oil Bitumen Gas Dry 1990
Ultimate Potential of Natural Gas British Columbia 50 Tcf North of 60 175 Tcf Other Frontier* 89 Tcf includes other regions offshore east coast & west coast Remaining Produced Grand Banks and Scotian Shelf 63 Tcf Alberta 270 Tcf Saskatchewan 9 Tcf Source: NEB
2005 2004 North American Natural Gas Demand 29 27 25 23 21 19 17 Canada US Warm Winters Forecast Trillion cubic feet per year 15 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: U.S. D.O.E./EIA
Source: PSAC S.E. Alberta Gas Drilling - Western Canada 742 975 1068 399 580 546 N.E. BC N.W. Alberta 935 839 336 555 N.E. Alberta 1051 1999 2000 2001 910 981 558 Foothills Front 485 Central AB 161 3350 3709 2615 545 460 East Central Alberta 43 230 245 Central Sask. 842 1300 1528 S.W. Sask.
Ultimate Potential for Northern Natural Gas Alaska 237 Tcf Fairbanks Mackenzie Delta/Beaufort Sea Inuvik 64 Tcf Arctic Islands 94 Tcf 17 Tcf Norman Wells Mainland NWT & Yukon Proposed Gas Routes Alaska Natural Gas Transportation System Northern Pipeline Route Central Pipeline Route Mackenzie Valley Pipeline Dempster Lateral For illustrative purposes only
Labrador Sea Eastern Canada Development Access to Markets St. Anthony Basin Jeanne d Arc Basin White Rose Late 2004 Sable Offshore Energy Project 530 mmcf/d - 2000 630 mmcf/d - Tier 2 (2004) Anticosti Basin Magda len Basin Pt. Tupper St. John s Hibernia 150,000 b/d - 2000 150,000 b/d - 2001 Hibernia Scotian Basin Hebron Terra Nova Terra Nova start up - 2001 129,000 b/d - 2002 Deep Panuke 400 mmcf/d - 2005 Sable Oil Fields Ga s Fields Halifax Cohasset/ Panuke Site of recent PanCanadian gas discovery
Crude Oil! Maturing basin being extended by technology " Horizontal drilling " 3D Seismic " New drilling/recovery technology! Emerging basins " Oil Sands " Offshore East Coast! Technology is key
Comparative Conventional Oil Resources (Billions of Barrels) Mackenzie/Beaufort Sea 6.5 Remaining Produced British Columbia 1.2 Alberta 22.1 Other Frontier* 9.4 includes other regions offshore eastcoast & west coast Saskatchewan 7.4 Grand Banks & Nova Scotia offshore 5.3 Source: NEB
Comparative Oil Resources (Billions of Barrels) 350 Remaining Produced 300 250 200 150 100 Oil Sands Deposits: 300 billion barrels recoverable with current technology of a total 2.5 trillion barrels in-place 50 0 Conventional Oil Sands Source: NEB
Opportunity for Recovery Technology With current technology and economics, only 27% of Canada s total conventional oil in place (216 billion barrels) is recoverable. Produced 18 billion bbls (8%) Remaining In Place 158 billion bbls (73%) Recoverable 58 billion bbls (27%) Reserves 11 billion bbls (6%) Undiscovered 29 billion bbls (13%) Source: NEB
Western Canadian Crude Oil Production 000 barrels per day 3 500 3 000 2 500 2 000 1 500 1 000 500 0 Oil Sands Conventional 1985 1990 1995 2000 2005 2010 3 500 3 000 2 500 2 000 1 500 1 000 500 0 Source: CAPP
Oil Sands Projects in Three Deposits Peace River Athabasca Edmonton Calgary Fort McMurray Cold Lake Syncrude Suncor Albian (Shell) Gulf TrueNorth (Koch) PetroCanada Japan Canada Oil Sands Northstar ExxonMobil CNRL Pan Canadian Opti Deer Creek SynEnCo Alberta Energy Cdn Natural Resources (CNRL) Shell Imperial Oil Koch Alberta Energy Murphy Cdn Natural Resources Suncor Petrovera Husky BlackRock Numac Current production 580,000 bbls per day. $21 billion (Cdn) commercially approved - $11 billion in the ground. $30 billion additional potential announced - risk evaluations underway. Mining; Others InSitu Source: AOSD
Oil Sands - In Situ! 80% of 300 billion barrel resource! Current production of 260,000 b/d + diluent for pipeline! Too deep to mine! New technology developments: " Primary production " Cyclic steam " Steam Assisted Gravity Drainage " VAPEX Source: Suncor
Oil Sands - Mineable! 20% of 300 billion barrel resource! Current production of 319,000 b/d " Syncrude " Suncor " Albian (2002)! New technology developments: " Low temperature extraction " Hydro-transport Source: Syncrude
Upstream Oil and Natural Gas Capital Spending in Canada 30 25 billion dollars 20 15 10 5 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Industry Capital Spending ($Billions) Northern Canada 99 00 01F $0.2 $0.3 $0.4 International 99 00 01F $1.7 $2.1 $3.5 Oil Sands 99 00 01F $2.4 $5.0 $5.0 WCSB 99 00 01F $10.7 $14 $17.5 East Coast Offshore 99 00 01F $2.7 $1.8 $1.5
CO 2 EOR Economics! CO 2 Costs & EOR Netback: " Relatively large scale single project (over 50 mmcfd or 2,600 tonnes/day CO 2 ) " No cost for raw purchased CO 2 stream! CO 2 Costs : $/mcf CO2 Low Gas Price High Gas Price Purification 0.76 1.76 (Amine) Compression 0.50 0.77 Dehydration 0.10 0.21 Transportation 0.41 0.41 Total 1.77 3.15
CO 2 EOR Economics! CO 2 Unrisked Cash Flow : $/bbl oil Low Gas Price High Gas Price Gross Oil Revenue 40.00 40.00 Purchased CO2 (13.28) (23.57) Recycled CO2 (2.08) (3.68) Oil Opex (3.00) (5.00) Other Capex (6.00) (6.00) Cash Flow before Tax & Royalty 15.64 1.75
CO 2 EOR Competitive Considerations! Competitive Investment Opportunities: " Natural Gas - Conventional, East Coast, Northern, Coal Bed Methane " Oil - East Coast, Oil Sands " International E&D! Investment Decision Criteria : " Rates of Return competitive with other E&D opportunities, including adjustment for risk " One analysis shows netbacks can be extremely volatile! Fiscal Structure " Net profits royalty regimes have spurred significant investment in new areas with significant risk - e.g. Oil Sands, East Coast