Canada s Oil Sands Valve Manufacturers Association Orlando, Florida October 14 th, 2011 Martyn Griggs Manager Oil Sands, CAPP Canadian Association of Petroleum Producers
Presentation Outline Global & U.S. Energy Future Canada Oil Sands Partner For American s Future Oil Sands Overview Markets and Pipelines Environmental Performance Technology Solutions Social License Summary Q&A
The Global Energy Context Significant energy demand growth: Population, standards of living Need all forms of energy: Increasing role for renewables Continuing reliance on hydrocarbons Increasing role for nonconventional crude oil & natural gas Technology is a key lever for sustainable growth Production Cost competitiveness Environmental performance Global Primary Energy Demand Current Policies Scenario
The US Energy Context Need for all forms of energy: Increasing role for renewables Continuing reliance on hydrocarbons Increasing role for nonconventional crude oil & natural gas Source: U.S. Dept of Energy, Energy Information Administration Annual Energy Outlook December 2010
Canada is a Global Energy Player #3 Canada is 3 rd to Saudi Arabia & Venezuela in crude oil reserves #3 Canada is third in the world in natural gas production. #6 Canada is sixth largest oil producer in the world. #2 Canada is second in the world in hydroelectricity generation.
Canada s Share of U.S. Imports Crude Oil & Petroleum Products 70% 60% % Saudi Arabia % Mexico % Venezuela % Canada 50% 40% 30% 20% 10% 0% Source: EIA 2010 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Canada s Energy: Partners for America s Future Jobs and Economic Growth Creating jobs across North America Robust economic relationships already established cross-border Energy Security Currently the largest supplier of crude oil to the U.S. and growing Largest supplier of natural gas to the U.S. Environmental Sustainability GHG emissions, land and water Technological advancements Strong Government regulation
Canada s Oil Sands: Partners for American Economy Our refinery is set up to process heavy crude, and 95 per cent of its feedstock is Canadian heavy crude, which includes oil sands oil. We probably couldn t survive without it. Dexter Busby, Director Government and Regulatory Affairs Montana Refining Company, Inc. The oil sands are a national treasure for Canada and the U.S. The resource is secure and comes from a friendly neighbor. In addition, much of the U.S. dollars spent on Canadian oil come back to America in trade. U.S. Senator Lindsey Graham
Preferred Use of Canadian Oil in Future If it were up to you, and America continued to need to import some oil, would you like to see America import a lot more of its imported oil from Canada, a little more, about the same amount as it does today, a little less, or a lot less? A lot more A little more About the same A little less A lot less National 56% 25% 9% 3% 2% 0% 20% 40% 60% 80% 100% Harris Interactive April 2011 9
US Jobs and Economic Impacts from Canadian Oil Sands 465,000 new US jobs Increased demand for U.S. goods and services will result in the creation of an incremental 465,000 jobs from 2011 2035. Output up by $45 billion/year On average, U.S. output of goods and services will increase by $45 billion/year from 2011-2035 due to increased demand from oil sands activity US GDP growth from oil sands Demand for US goods and services will generate an incremental $5.8 billion in 2015 to US GDP, $12.9 billion in 2020, $26.6 billion in 2025 and $42.6 billion in 2035. Source: Canadian Energy Research Institute 2011
Incremental US Jobs from Canadian Oil Sands by State 2011-2035 0.8 Alaska 19 3.3 37.9 2.4 1.1 2.3 18 0.8 13.3 0.6 0.7 1.6 8.9 5.5 2.6 36.6 85.1 4.7 16 6.5 26.4 3.3 1.0 0.5 1.1 18.8 6.5 3.9 0.9 10.6 8.8 1.5 4.9 1.2 1.1 7.1 1.2 Hawaii 4.8 1.4 2.3 2.0 5.0 3.2 7.5 2.3 3.5 7.7 Thousand Person-Years 33.7 9.9 Over 80 21-40 10-20 Under 10 14.5 Source: Canadian Energy Research Institute May 2011
Canada s Oil Sands: Partners in the American Economy
Global Crude Oil Reserves by Country billion barrels 300 250 200 150 100 260 211 175 137 115 102 92 World Oil Reserves Restricted (79%) Open to Private Sector Open to Private Sector Oil Sands 56% Other 44% 50 60 46 37 30 25 20 19 0 Saudi Arabia Venezuela Canada Iran Iraq Kuwait Abu Dhabi Russia Libya Nigeria Kazhakhstan Qatar China United States Source: Oil & Gas Journal Dec. 2010
Two Methods of Oil Sands Recovery Photo: ConocoPhillips - Surmont Drilling: 80% of reserves Mining: 20% of reserves Schematic: Devon - Jackfish 14 14
Oil Sands Projects in Three Deposits Oil sands production now exceeds 1.5 million barrels per day Athabasca Ft. McMurray Peace River Peace River Seal Horizon Joslyn Creek Syncrude Dover MacKay River Fort Hills Kearl Lake Suncor Fort McMurray Northern Lights Muskeg River Albian Firebag Jackpine $123 billion built from 1997-2010 Cold Lake Edmonton Calgary Peace River Hangingstone Foster Creek Long Lake White Sands Surmont Christina Lake (ECA) Jackfish Cold Lake Hilda Lake Wolf Lake/Primrose Cold Lake Tucker Lake In Situ Projects Mining Projects
Industry Capital Spending Cdn $billions Northern Canada 2009 2010 2011F $0.2 $0.3 $0.3 Oil & Gas Investment Spending: 2009: $34 billion 2010: $51 billion 2011: $53 billion (forecast) Oil Sands 2009 2010 2011F $11 $17 $19 East Coast Offshore Western Canada 2009 2010 2011F $20 $32 $32 2009 2010 2011F $1.7 $1.4 $1.5 Note: Excludes spending mergers & acquisitions
Canadian Oil Sands and Conventional Oil Production Forecast (2011-2025) 5,000 4,500 4,000 3,500 Actual Forecast Atlantic Canada thousand bpd 3,000 2,500 2,000 1,500 In Situ Mining 1,000 Conventional Heavy 500 Pentanes/Condensate Conventional Light 0 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
Access to Current and New Oil Markets Canadian & U.S. Crude Oil Pipeline Proposals
Demand for W. Canadian Crude Oil 2010 versus 2015 (kbpd)
Access to the West Coast (offshore markets) Existing Transmountain shipments over the dock Jan July 2011 = 45,000 b/d Peak April 2010 = 143,000 b/d Future Transmountain TMX2 80,000 b/d TMX3 320,000 b/d Northern Leg 400,000 b/d Enbridge Gateway 525,000 b/d NEB application filed
Potential Tanker Markets for Canadian Oil Sands Production Prince Rupert/Kitimat Persian Gulf China Korea Japan Taiwan Taiwan Japan ~ 4,500 N Miles ~ 8,600 N Miles Los Angeles Los Angeles SantaCruz Jose/ Jose/ La Cruz La Cruz ~ 5,400 N Miles Far East Target Markets U.S West Coast Competitive travel distances for Canadian supply to both markets Source: Enbridge Pipelines 21
Full Cycle GHG Emissions 120 GHG Emissions from Production and Refining GHG Emissions from Gasoline Consumption 100 g CO2e/MJ gasoline 80 60 40 98 102 102 105 102 106 104 114 107 20 0 Saudi Arabia Mexico Iraq Venezuela Nigeria US Gulf Coast California Thermal Oil Sands Wtd. Avg Source: Jacobs Consultancy, Life Cycle Assessment Comparison for North America and Imported Crudes, June 2009
Global Energy Related Emissions Global Emissions Canada s 2% OECD Europe Non-OECD Europe & Eurasia Industrial Processes & Waste Japan Transport Agriculture & Forestry China India Oil Sands Canada Australia/New Zealand Residential Other Fossil Fuel United States Other Manufacturing, Commercial & Construction Electricity & Heat Generation GHG emissions from oil sands: just over 1/1000th of global GHG emissions 6.5% of Canada s GHG emissions 23
Reducing GHG Emissions in Oil Sands Energy Efficiency Using less energy input Reducing energy waste/losses Capturing waste heat Cogeneration power/steam g co2 eq./mj 25 20 15 10 Oil Sands GHG Emissions/bbl 29% Improved recovery processes 5 Lower temperature extraction Additives to reduce use of both water and energy (steam) 0 1990 2009 Use of electricity rather than steam Underground combustion rather than steam Carbon capture & sequestration Most effective at upgraders
Land Use and Reclamation
Oil Sands Tailings Mining Accelerating reclamation Minimizing future tailings Industry Tailings Collaborative Accelerate new technology implementation Suncor Pond 1 Research on dry and consolidated tailings September 2010
Technology Solutions Less Energy, Greater Recovery and Less Water Low energy extraction 35ºC instead of 80ºC = 1/3 less energy Underground combustion Petrobank Whitesands THAI process Syncrude Low Energy Extraction Aurora Mine Additives to reduce the need for both water and energy (steam) LASER (Imperial), SAP (Cenovus), N-Solv SC-SAGD (Laricina), SOLVE (Statoil/PTRC) Electricity instead of steam to warm the heavy oil underground ET-Energy, Shell Petrobank THAI process Solvent/steam processes (Laricina diagram) 27
Reputation / Social License & Oil Sands Oil Sands Reputation / Social License = Performance + Communications 3E policy framework Robust regional planning: System-wide metrics Effective monitoring Transparent data 3 rd party validation World class regulation Technology & innovation Collaboration Proactive Transparent Verifiable Visible leadership Broad portfolio: mainstream social media directly & via 3 rd parties Canada, U.S., Europe, Asia
Summary 3Es Environmental performance Energy security & reliability Economic growth Competitiveness & social license are must haves Reputation = Performance + Communication Technology is key performance lever We all have a role in communication / outreach We need to work together & we all need to step up! A great opportunity for Canada and the US needs innovative, creative, committed, determined people to make it happen!