Transcript Presentation

Synergy Conference
October 28,2008
Industry Overview and
Outlook
Dave Collyer, President
Canadian Association of Petroleum Producers
Overview of Presentation
• The Energy Challenge
• Impact on Economy
• Energy Resources and Production Outlook
• Environment
• CAPP Priorities
• The Role of Synergy
The Energy Challenge
• Significant sustained growth in energy demand
 Driven by population growth and higher standard of living in
developing world
• Increasing reliance on unconventional
hydrocarbon resources
 Conventional basins declining
 Continuing reliance on hydrocarbons as predominant supply
resource
 We will need all forms of energy…it is an “and, and, and” outlook
• Increasing pressure on environment
 Air, water, land use
 CO2 is most immediate challenge
The Industry and Impact on the Economy
• Canada is the world’s 3rd largest natural gas producer
• Canada is the world’s 7th largest crude oil producer
• Ranking increasing with oil sands production growth
• Canada is the fifth largest energy producer in the world
• Invested $50 billion in 2007
• Largest single private sector investor in Canada
• 25% of value on Toronto Stock Exchange
• Employment near 500,000 in Canada (direct & indirect)
• Paid $24 billion to governments in 2007
 A national
industry producing national benefits
Industry Capital Spending
Cdn $billions
Oil & Gas Investment Spending:
2006:
$53 billion
2007:
$50 billion
2008:
$50 billion (forecast)
Northern Canada
‘05
`06
`07
`08F
$0.5 $0.4 $0.3 $0.5
Oil Sands
‘05
`06 `07
`08F
$10 $14 $18 $20
East Coast Offshore
‘05 `06 `07 `08F
WCSB
‘05 `06
$33 $36
`07 `08F
$30 $29
Note:
Spending in Canada excludes spending associated
with mergers & acquisitions
$2
$2 $1 $1
Canadian Natural Gas Production Outlook
25
Billion cubic feet/day
20
Horn River/
Montney
(Base Case)
15
BC Horn River & Montney (Base Case Incremental)
10
BC Horn River & Montney (Low Case)
Mackenzie/Beaufort Sea
Coalbed Methane
2000 – 2008:
Net Exports to U.S.
5
Nova Scotia Offshore
Average - 9.0 bcf/d
Conventional Gas
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sources: Production – CAPP
Net Exports – U.S. DOE/EIA
Global Crude Oil Reserves by Country
300
264
Canada, with 173 billion barrels in oil
sands reserves, ranks 2nd only to Saudi
Arabia in global oil reserves
billion barrels
250
200
179
138
150
115
102
100
92
87
60
41
50
36
21
0
Saudi
Arabia
Canada
Source: Oil & Gas Journal Dec. 2007
Iran
Iraq
Kuwait
Abu Dhabi Venezuela
Russia
Libya
Nigeria
United
States
Oil Sands & WCSB Conventional Oil Production
Thousand Barrels Per Day
2008 Moderate Growth Case
6 000
• Largest oil supplier to U.S.
• Oil Sands Production:
5 000
2007 = 1.2 million b/d
2012 = 2.0 million b/d
2017 = 3.0 million b/d
2020 = 3.5 million b/d
4 000
Actual
2007 Forecast
Forecast
Oil Sands Future
Potential
3 000
Oil Sands In
Production and Under
Construction
2 000
1 000
Conventional Oil
0
2002
2004
2006
2008
Source: CAPP Crude Oil Forecast, Markets & Pipeline Expansions
June 2008
2010
2012
2014
2016
2018
2020
Environmental Challenges - Conventional
• Water use
• Air quality
• Greenhouse gas emissions
• Land reclamation
Oil Sands – Key Challenges
• Raise the bar on environmental
performance
• GHGs/air pollutants
• water
• land & reclamation
Technology
a key driver
• Manage costs
• Timely infrastructure development
• Ensure market access
• Address public perceptions
• www.canadasoilsands.ca
Environmental Stewardship - GHGs
•
GHG emissions in context
•
•
•
•
•
•
Oil sands ± 15% higher than import
alternative (LCA)
Comparable to some other crudes
(Ven/Cal)
Oil Sands GHG intensity declining,
heavier import barrel
Oil Sands emissions reductions
•
•
•
•
Global Energy Related Emissions By Country
Europe
17%
China
20%
Eurasia
9%
Japan
4%
India
4%
Canada
2%
Australia
1%
Relative GHG intensity
•
•
Canada 2% of energy-related
emissions
Oil Sands 5% of Canadian GHG
emissions
0.1% of global energy-related GHG
emissions
Significant reductions in GHG emission
intensity (e.g. Suncor down 45% since
1990)
Increasing energy efficiency
CCS
Policy/regulation highly uncertain
United States
22%
Other
21%
Carbon Capture and Storage
• EnCana’s Weyburn
has operated as a
carbon capture and
storage facility for
seven years
• More than 10 million
tonnes of C02 are
stored at Weyburn
• This is the equivalent
of taking two million
cars off the road for a
year
Environmental Stewardship - Water
CNRL Primrose/Wolf Lake In situ Project
•
Reduce, recycle and reuse
•
Source of water by priority:
•
•
•
•
Mining – Athabasca River
•
•
•
•
Recycle (85-90%+)
Non-potable (saline, brackish)
Fresh or groundwater
Currently use 1% of Athabasca river
flow – could grow to 2%
Water management plan in place for
low
flow periods
No process water discharged to
Athabasca River
In situ
•
•
Existing have high recycle and moving
to non-potable sources
New are drawing solely from nonpotable or “saline” aquifers
Water Use
Devon Canada’s
new Jackfish
project uses
only saline
(non-potable)
water in its
operations
Environmental Stewardship – Land &
Reclamation
•
Different impacts for mining and
in situ
•
•
•
Reclamation and remediation
mandated
•
•
•
•
•
•
Mining requires longer time
• Ongoing and end of mine
• Syncrude has reclaimed 22% of
disturbed land
In situ similar to conventional drilling –
smaller surface footprint than mining
Reclamation plan must be filed and
approved by regulator
Funding of liability required
Includes tailings ponds
March 2008 – first oil sands
mining reclamation certificate
issued
First tailings pond will be
completely reclaimed in 2010
Increasing vigilance by ERCB
Oil Sands Land Impacts
 Reclamation & remediation mandated by regulator (including tailings ponds)
160000
% Reserves
Mining
20%
In situ
80%
140,200
% Land
2%
98%
Area (square kilometres)
120000
90,462
80000
64,919
40000
3,450
0
420
Defined Oil Sands Oil Sands Oil Sands Protected
Oil Sands Leased
Mineable Disturbed Areas in
Area
Area
Area
Area
Alberta
(Mining)
~0.1% of boreal forest in Canada
1.2 aerial extent of City of Los Angeles
CAPP’s Priorities
• Access to Resources
• Access to Markets
• Environment Policy & Competitiveness
• Communication and Engagement
The Public Policy Dilemma
Economic
Environment
Social
Challenge is to integrate within a very complex system
The Role of Synergy
• Public engagement is essential to enable positive and
productive relationships with stakeholders
• We must work to understand and address each other’s
needs and concerns
• Becoming more important
• Synergy provides a constructive vehicle for engagement
• Industry must remain committed to improvement in
environmental, health & safety, and social performance if
we are to meet the expectations of Canadians
• Reputation = Communication + Performance
 Keep up the good work!