Energy Business Unit Ray Reipas Senior Vice President, Energy
Forward Looking Information and Resource Notice These slides contain certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information within the meaning of the Securities Act (Ontario). Forward-looking statements can be identified by the use of words such as anticipated, targeted and expect or variation of such words and phrases or state that certain actions, events or results may, could, should, would, might or will be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Teck to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements include estimates, forecasts, and statements as to management s expectations with respect to, the scope, timing, milestones, progress and expected results of, and production from, our energy projects, including but not limited to, the milestones for our Fort Hills project and the information on the Potential Development Schedule slide; life of mine projections; cost estimates; cash flow potential and goals for our energy unit. These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general business and economic conditions, interest rates, the supply and demand for, inventories of, and the level and volatility of prices of oil, natural gas and petroleum products, the timing of receipt of regulatory and governmental approvals for the development projects, the availability of financing for Teck s development projects on reasonable terms, power prices, market competition, the accuracy of the resource estimates and the geological, operational and price assumptions on which these are based, tax benefits, our ongoing relations with our employees, our ongoing relations with our partners or co-venturers, receiving permits and approvals on a timely basis, performance by customers and counterparties of their contractual obligations, and the future operational and financial performance of the company generally. The foregoing list of assumptions is not exhaustive. Events or circumstances could cause actual results to differ materially. Factors that may cause actual results to vary include, but are not limited to: adverse developments in business and economic conditions in the principal markets for Teck s products, in credit markets, or in the supply, demand, and prices for oil and commodities to be produced, changes in interest and currency exchange rates, failure of customers or counterparties to perform their contractual obligations, inaccurate geological or metallurgical assumptions, changes in taxation regimes, legal disputes or unanticipated outcomes of legal proceedings, unanticipated operational difficulties (including failure of plant, equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of materials and equipment, government action or delays in the receipt of permits or government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), political risk, social unrest, lack of available financing for Teck or its partners or co-venturers, and changes in general economic conditions or conditions in the financial markets. Certain of these risks are described in more detail in the annual information form of the company available at www.sedar.com and in public filings with the Securities and Exchange Commission. The company does not assume the obligation to revise or update these forward-looking statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events, except as may be required under applicable securities laws. Resource Information - contingent bitumen resource information presented is as at December 31, 2011. There is no certainty that it will be commercially viable to produce any portion of the contingent bitumen resources. For more information on Teck s contingent resources, including the contingencies that prevent the classification as reserves, please see Teck s annual information form dated March 5, 2012 available at www.sedar.com.
Building a New Business Unit Fort Hills Suncor 40.8% (operator) Total 39.2% Teck 20% Frontier Teck 100% Lease 421 Teck 50% Frontier Twin Lakes Wintering Hills (wind power) Suncor 70% (operator) Teck 30% Lease 421 Area Fort Hills 1
Adding Significant Near Term Value Value increase to next stage Value Creation Lease Acquisition Contingent Resource Development Ready Operations Timing (years) 3-5 3-4 4-5 30+ Resource Type Prospective Contingent Proved + Probable Projects Fort Hills Wintering Hills Operating 4-5 years Frontier 3-4 years Lease 421 4-5 years 2
Fort Hills Advanced Mining Project Shell Pierre River CNRL Horizon Frontier Fort Hills Resource 684 mmbbls of best estimate contingent bitumen resource net to Teck (20% WI) (3,420 mmbbls gross) Project Definition Major regulatory approvals in place for up to 190 kbpd Phase 1 designed for approximately 160 kbpd Truck and shovel mining operation Product planned to be partially deasphalted bitumen (saleable premium product) Potential exists to double production with Phase 2 3
Fort Hills Advancing To Sanction Current Status Project team in place Preparing cost focused schedule Site preparation & early works underway Managing long lead items Upcoming Milestones Project sanction - 2013 First bitumen production - 2017 4
Frontier Early Stage Mining Project Frontier Project 110 km north of Fort McMurray Integrates Frontier and Equinox projects into single Frontier Project Resource 2,824 mmbbls of best estimate contingent bitumen resource (increase of 1,414 mmbbls for Teck with SilverBirch acquisition) Production Partially de-asphalted bitumen Marketable premium heavy oil product 5
Frontier Consolidated Ownership SilverBirch Energy acquisition closed in April 2012 Frontier Project and Twin Lakes now 100% Teck owned Birch Mountains Frontier Twin Lakes 421 Lease Area Increase of 1,414 mmbbls of best estimate contingent bitumen resource for Teck Opportunity to explore new potential partnerships and other alternatives to move Frontier towards development Fort Hills Jorda n Reduced exposure to leases not amenable to mining SW Birch Mountains Frontier Twin Lakes SW Jordan 421 Lease Area Fort Hills 6
Frontier Designing for 277 kbpd Design Basis Truck and shovel operation Phased design, nominally 80 kbpd per phase South Development Area (Equinox) developed as 4 th phase at 40 kbpd Nominal production ~277 kbpd Life of Mine Main Development Area ~34 years South Development Area ~28 years Plant Start - First Oil Potential start-up in late 2021 PRM PRM ETA ETA 7
Frontier Comprehensively Addressing Environmental Aspects Frontier regulatory application includes the following features Advanced tailings management design Off-stream water storage to protect river ecosystems during low flows Seepage control using perimeter ditching, interception wells and barrier walls Fish habitat compensation lake Dry low NOx 1+ emission control technology Low emissions truck engine technology in place at start-up Comprehensive consultation program 8
Unprecedented Level of Collaboration Canada s Oil Sands Innovation Alliance (COSIA) - Twelve (12) Member Companies CNRL, Imperial, Shell, Suncor, Teck, Total, Cenovus, Nexen, Devon, ConocoPhillips, BP, Statoil Commitment Collaborate and innovate to accelerate improvement in environmental performance in the priority areas of: Tailings Water Land Greenhouse Gas Emissions 9
Frontier Permitting on Schedule Current Status Prefeasibility study complete Regulatory application filed - Q4 2011 Received supplemental information requests (SIRs) - July 2012 Federal review schedule received (up to 22.5 months) Upcoming Milestones Plan to submit SIR responses late 2012 Anticipated Regulatory Hearing - 2014/15 Feasibility study starting - 2014/15 Regulatory approvals - 2015/16 10
Lease 421 Potential Enhanced Acquired Lease 899 in Q1 2012 Increases contiguous land area by 34% Resource >80% of drill holes encountered oil sands with bitumen grades of 11-18 weight % Coarse grained ore with low fines content (10% - 12%) Project Definition Potentially mineable high grade oilsands deposit, with good processability Synergies with other nearby developments Canadian shield outcrop (construction material) VCI Lease 899 N 11
Comparative Oil Prices $160.00 $140.00 $120.00 Europe Brent Spot Price FOB (Dollars per Barrel) Cushing, OK WTI Spot Price FOB (Dollars per Barrel) Synthetic Crude Oil Price (US Dollars per Barrel) WCS Price at HardistyAlberta (Dollars per Barrel) $100.00 $80.00 $60.00 $40.00 $20.00 $0.00 Jan-2002 Jun-2002 Nov-2002 Apr-2003 Sep-2003 Feb-2004 Jul-2004 Dec-2004 May-2005 Oct-2005 Mar-2006 Aug-2006 Jan-2007 Jun-2007 Nov-2007 Apr-2008 Sep-2008 Feb-2009 Jul-2009 Dec-2009 May-2010 Oct-2010 Mar-2011 Aug-2011 Jan-2012 Jun-2012 Data from the US Energy Information Administration (EIA) for WTI and Brent, Alberta Energy for WCS and Canadian Oil Sands for SCO. 12
Planned Pipeline Capacity Keystone XL (Southern & Northern Legs) Routing Size Hardisty to Houston/P.A. 700-830 kbd WCS - Hardisty Timing 2015+ Enbridge Line 9 Enbridge Northern Gateway Routing Sarnia to Montreal & Portland Dock Routing Size Edmonton to Kitimat Dock 525 850 kbpd Size Timing 2013+ 100 250 kbpd Timing 2018+ Enbridge Gulf Coast Access Kinder Morgan TMX WTI - Cushing Routing Flanagan to Houston Routing Size Edmonton to Burnaby Dock 550 kbd Others Size 585+ kbd Timing 2014+ Timing 2017+ Brent/LLS - Seaborne Routing Size Cushing / West Texas to USGC 600 kbd total 13 Timing 2012+
Shipping Bitumen Rail vs. Pipeline 1) Pipeline 2) Rail Established markets Site specific Ability to handle large volumes Potential to divert oil to the best possible markets, ability to "dispatch" loads to different destinations Can transport with little or no diluent Comparable to pipeline netback on a mine gate basis 3) Historically 50 to 70 percent of WTI 14
Teck Resource > 3.5 Billion Barrels Teck Energy - Contingent Bitumen Resources Project Millions of Barrels Teck s Share Low Best High Low Best High Fort Hills 1 2,460 3,420 3,840 492 684 768 Frontier Project 2 1,795 2,824 3,163 1,795 2,824 3,163 Lease 421 Total 4,255 6,244 7,003 2,287 3,508 3,931 1 - Contingent Resources - GLJ Petroleum Consultants Dec 2011 2 - Contingent Resources - Sproule Unconventional Limited Dec 2011 15
Potential Development Schedule Projects Fort Hills Project 2011 2012 2013 2014/15 2016/17 Update Engineering Fort Hills Potential Sanction Phase 1 Bitumen Production Engineering & Construction Frontier Project Prefeasibility Study Application Filed Project Shaping Prefeasibility & Feasibility Study Potential Approval Prefeasibility Study Potential Project Potential Contingent Resource Lease 421 Area Exploration Programs 16
Wintering Hills Operating at Capacity Located near Drumheller, Alberta Ownership: 70% Suncor, 30% Teck 88 MW capacity (55-1.6 MW GE turbines) Commenced operation Q4 2011 - on time and on budget Generating approximately 300 GWh/year and 200,000 tonnes CO₂ equivalent offsets/year 17
Wintering Hills Performance 4,000 Power Production Weekly Production (MWh) (Actual) Weekly Production (MWh) (Budget) $100 $80 Alberta Power Prices - 2012 Wkly Effective Pool Price (Actual) Pool Price (Budget) 3,000 Production (MWh) 2,000 Pool Price ($/MWh) $60 $40 1,000 $20 0 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 18
Building a New Business Unit Three major oilsands mining projects at varying stages of development Significant production in 5 years ~30 kbpd Build out planned over the next 15 years Teck s share of production eventually 200 to 250 kbpd Cash flow potential approximately $2-3 billion* per year 300 250 200 150 100 50 0 Potential Production Profile (kbpd) * Order of magnitude estimate based on $100 oil price and expected bitumen discount and production costs 19