Ben Brunnen, Vice President, Oil Sands January 19, 2017 Upstream Oil and Gas Industry Outlook Presentation to Alberta s Industrial Heartland
2 About CAPP and Canada s Oil and Gas Industry Large and small producer companies and associate members Represent about 85% of Canada s natural gas and crude production Largest private sector investor in Canada ($53 billion in 2015) Annual government revenues average $15 billion Employ approx. 440,000 in Canada (direct & indirect) Canada is the 5 th largest producer of natural gas globally Canada is the 6 th largest producer of crude oil globally
3 About Canada s Oil and Gas Industry
4 Oil & natural gas are part of our every day life
Top 10 World Crude Oil Producers in 2014 Russia Saudi Arabia United States China Canada Iraq Iran United Arab Emirates Kuwait Venezuela Sources: U.S. Dept. of Energy, Energy Information Administration Crude oil including lease condensate. 0 2 4 6 8 10 12 Million Barrels per Day
Global Crude Oil Reserves by Country billion barrels 300 250 200 150 100 300 267 Includes 166 billion barrels of oil sands reserves 171 158 143 102 98 80 World Oil Reserves Restricted (80%) Open to Private Sector Oil Sands 50% Other 50 % 50 48 40 37 30 25 25 0 Venezuela Saudi Arabia Canada Iran Iraq Kuwait UAE Russia Libya United States Nigeria Kazakhstan Qatar China Source: Oil & Gas Journal Dec. 2015 & AER 2015
7 Canada s Oil Sands 167 billion barrels recoverable At current economics and technology Well over 100 years of production 20% of resource is mineable Just under 3% of oil sands land area 80% of resource is drillable 97% of oil sands land area
8 Oil Sands Area Comparisons 160000 142,200 Area (square kilometres) 120000 80000 40000 64,919 90,462 0 Defined Oil Sands Area Oil Sands Leased Area 4,802 Oil Sands Mineable Area 760 Oil Sands Disturbed Area (Mining) Protected Areas in Alberta
9 Economic Context
01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 14 15 16 01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 15 16 Crude Oil and Natural Gas prices 140.00 Crude Oil Prices (WTI NYMEX) $US per barrel 14.00 Natural Gas Prices (AECO Daily Spot Price) $Cdn/mcf 120.00 12.00 100.00 10.00 80.00 8.00 60.00 6.00 40.00 4.00 20.00 2.00 0.00 0.00
11 Economic Context: Oil Glut to Continue Through 2017 US Energy Information Administration anticipates production to exceed consumption till 2 nd half of 2017.
12 Economic Context: Prices Not Anticipated to Recover Quickly
Global North America Europe Latin America Middle East Russia/FSU Africa India/Asia/Australia Canada Global Investment Trends Upstream Sector 30% 25% 20% 15% 10% 5% 0% -5% -10% 2017/16 Source: Barclays Upstream Spending Survey 13
14 Investment and Production Forecast
15 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017F Capital Investment in the Upstream Sector 90 80 70 60 50 40 30 20 10 0 $ Billions Oil sands Conventional Capital Investment - YOY% Change 2016/15 2017/16 Oil Sands -30% -19% Conv. -35% +20% TOTAL -33% +3%
16 Canadian Production Eastern + Western Canada
17 Western Canada Oil Sands Production (Bitumen & SCO)
18 Western Canada Conventional Production
Total Wells Drilled in Western Canada 28,000 24,000 Dry/Susp. Gas Oil Yr/yr change in drilling: 2015: 49% 2016: -33% 2017: +20-40% 2015 2016E 2017F* 20,000 Alberta 2,891 1,850 2,230 British Columbia 515 340 400 16,000 12,000 8,000 4,000 Saskatchewan 1,617 1,210 1,450 Manitoba 208 100 120 * Based on 20% increase 2016E = 3,500 2017F = 4,200-4,900 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017F Source CAPP. Based on Rig Release
20 Market Opportunity
21 WCSB Pipeline Takeaway Capacity vs Supply Forecast
22 Canada and US: 2015 Crude Oil Receipts by Source
23 Western Canadian Crude Oil Demand: Actual 2015 and 2020 Forecast
24 Global Net Imports: 2014 to 2040
25 Our Biggest Client is our Biggest Competitor
26 Importing foreign oil into Canada
Infrastructure for Eastern Canada Gas Markets Source: GS3 Consulting 27
New Market Opportunities for W. Canadian Gas 28 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
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 $US/MM btu Global Natural Gas Prices 20.00 18.00 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 North America Europe Japan North America Europe Japan Source: World Bank
30 Discussion