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Alberta & Oil Sands
Overview
National Conference of State
Legislatures
November 7, 2011
Alberta in the World
Alberta covers 255,285 miles2, an area slightly less than Texas
Ottawa 1,769 miles
Vancouver 507 miles
New York City 2,032 miles
Mexico City
2,469 miles
Anchorage 1415 miles
Alberta
Houston 1,875 miles
Alberta’s
Location
Geography
Greater Edmonton 1 million
Calgary 1 million
Red Deer 90,000
Lethbridge 85,000
Medicine Hat 61,000
Fort McMurray 89,000*
58% Land base is Forested
40% Land Base Prairie
Population (2010): 3.7 million
The Canadian Federation
Federal
Government
Provincial
Government
Natural Resources
(including oil/gas/minerals)
Health
Education
Social Services
Municipal Institutions
Gaming and Liquor
Environment
Defence
Foreign Affairs
Border Control
Navigation/Ports/Shipping
Employment Insurance
Banking
Treaty Indians
Environment
International Presence
Growth
Growth In Selected Indicators: 1999 - 2009
Per Cent Change
67.7
0.9
23.1
16.9
11.0
109.8
102.1
29.1
28.7
24.9
Investment
Exports*
GDP
Employment
Population
Alberta Canada
*Goods Exports
Source: Statistics Canada and Alberta Finance and Enterprise
Financial Position
Source: Conference Board of Canada
Provincial Net Financial Assets/Debt
As per percent of GDP (2010-2011)
-300
-200
-100
0
100
200
300
400
BC AB SK MN ON QB NB NS PEI NL
Net Interprovincial Migration 1981-2010 Total (Thousands)
Since 1981,
361,000 people
have moved to
Alberta from other
parts of Canada
0
5
10
15
20
25
30
35
40
45
19
81
19
86
19
91
19
92
19
93
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00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
Net International Migration to Alberta (Thousands)
International migration
reached 40,000 in
2008, including
temporary foreign
workers
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Canadian Top Export Sectors 2006-2010 Average (US$ Billions)
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Energy Exports
EU 27 China Japan Mexico South Korea
Norway India Brazil
Canada’s Exports 2006-2010 Average: Energy vs Total ($US Billions)
If Alberta were a US State-Export Comparison
Total International Goods Exports by State
2005-2010 Average (USD, Billions)
Rank State 2005-2010
Average Population (Millions)
Exports per Person
1 Texas $176.20 25.1 $7,007
2 California $134.00 37.3 $3,597
ALBERTA $77.70 3.7 $21,000
3 New York $67.60 19.4 $3,488
4 Washington $50.80 6.7 $7,554
5 Florida $48.00 18.8 $2,553
6 Illinois $47.20 12.8 $3,679
7 Ohio $40.40 11.5 $3,502
8 Louisiana $33.90 4.5 $7,478
9 Pennsylvania $30.70 12.7 $2,417
10 New Jersey $30.60 8.8 $3,480
If Alberta Were A Country - US Trade
50
57
64
65
78
79
130
185
327
387
494
0 100 200 300 400 500 600
Netherlands
Taiwan
France
United Kingdom
South Korea
Alberta
Germany
Japan
Mexico
China
Canada
2006-2010 Average Two-Way Trade ($US, Billions)
Total: US$75.6 Billion
Crude Oil, $37.7
Natural Gas and Gas Liquids, $13.6
Other Energy, $2.6
Petrochemicals, $6
Agriculture, $6.5
Forestry, $2.2
Manufacturing, $4.1
Metals and Metal Manufacturing, $1.8
Other, $1.6
Other, $21.6
Alberta's Global Exports in 2010 (US$ Billions)
Key Exports
Key Export Markets
United States 87%
China 27%
Japan 14%
Other Asia 20%
European Union
11% Mexico 7%
Other 7%
Other incl. Other Europe, Middle East, Africa
15%
Other 13%
Distribution of Alberta's Export Destination by Region in 2010
Asia Pacific
61%
Latin America
14%
US$10.
3
Alberta-US Trade
Alberta's Top 25 Export Markets in 2010 (Millions of US$) 1 Illinois (US) $ 18,654 14 California (US) $ 1,083
2 Washington State (US) $ 7,745 15 Tennessee (US) $ 925
3 Ohio (US) $ 4,897 16 Iowa (US) $ 922
4 Minnesota (US) $ 4,422 17 Pennsylvania (US) $ 829
5 Michigan (US) $ 4,157 18 Indiana (US) $ 802
6 New York (US) $ 3,689 19 Wisconsin (US) $ 739
7 China $ 2,706 20 North Dakota (US) $ 734
8 Colorado (US) $ 2,681 21 Mexico $ 723
9 Texas (US) $ 2,588 22 Oklahoma (US) $ 641
10 Montana (US) $ 1,712 23 Korea, South $ 523
11 Japan $ 1,461 24 New Jersey (US) $ 517
12 Kansas (US) $ 1,418 25 Arkansas (US) $ 500
13 Wyoming (US) $ 1,280
Oil Sands
Overview
260
211
175
137
115
101.5
92
60
46
37
30
25
20
19
13
10
Saudi Arabia
Venezuela
Alberta/Canada
Iran
Iraq
Kuwait
Abu Dhabi
Russia
Libya
Nigeria
Kazakhstan
Qatar
China
USA
Brazil
Mexico
World oil reserves (billions of barrels - established)
•SOURCE: Oil & Gas Journal, January 2011
•Only 21% of the world’s proven oil reserves are accessible to private sector investment (not state controlled).
•53% of the world’s open and accessible reserve are in Canada’s oil sands.
•Alberta (171)
What are the oil sands?
• Naturally occurring mixture of sand, clay, water and bitumen – a very heavy oil
• Bitumen is separated from the sand and upgraded to refinery-ready crude oil
Ownership and Regulation
• Project approvals by Alberta and federal government regulators
• Comprehensive regulatory regime for project development and operations
• Regulatory frameworks and monitoring being reviewed and updated
• Resource owned by Albertans and developed by private sector
Oil Sands and Pipelines
• Alberta independent regulator has 40+ years experience regulating pipelines
that move oil sands production.
• Pipeline performance data:
• no evidence transporting oil sands crude poses a greater risk to pipeline
safety than other crudes
• no indication that oil sands production increases internal corrosion
compared to other crude oils
• In Alberta, as is the case in the U.S., any product entering pipeline must
meet same regulatory standards (sulfur content, dissolved solids, etc,)
Where are the oil sands?
• Located in northern Alberta
Where are the oil sands?
• Located in northern Alberta
• Oil sands deposits underlie
54,903 square miles
Where are the oil sands?
• Located in northern Alberta
• Oil sands deposits underlie
54,903 square miles
• Surface mineable deposit
1,853 square miles
Where are the oil sands?
• Located in northern Alberta
• Oil sands deposits underlie
54,903 square miles
• Surface mineable deposit
1,853 square miles
• Land disturbed to date for mining
is about 232 square miles
• Less than 30% of mineable area
has been approved for mining
• Total minable area is about 0.15%
of Canada’s Boreal forest
Oil sands: In situ and Mining
•Mining
• 20% of resource
• 55% of production
• 80% of resource
• 45% of production
•Steam Assisted
Gravity Drainage
•Cyclic Steam
Process
•In situ
Economics of Production
Alberta Crude Production
0
0.5
1
1.5
2
2.5
3
3.5
4 1
99
8
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
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20
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17
20
18
20
19
20
20
Mill
ion
Bar
rels
Pe
r D
ay
Alberta Supply of Crude Oil and Equivalent
Non-Oil Sands
Oil Sands
(Bitumen)
Oil Sands
(SCO)
Source: ERCB ST98
Alberta Oil Sands Production Destination
0
0.5
1
1.5
2
2.5
3
3.5
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Millio
n B
arr
els
Per
Day
Other Markets
Alberta Demand
Source: ERCB ST98
United States
Energy Security
Sources of U.S. oil imports (2010)
Total U.S. Demand: 19.15 million bbl/d
Total Imports: 9.16 million bbl/d
SOURCES: US Energy Information Administration
National Energy Board (Canada)
ALBERTA
NOTE: Total does not add up to 100%
due to rounding
U.S. Liquid Fuels Consumption
SOURCE: U.S. Energy Information Administration, Annual Energy Outlook, April 2011
Oil is forecast to
be an important
part of the U.S.
energy mix for
years to come
Alberta’s oil
sands are a vital
part of the
forecast s for oil
supply and
imports
U.S. Energy Information Administration: U.S. Liquid Fuel Consumption 1970-2035 (millions of barrels)
0
20
40
60
80
100
120
20
08
20
09
20
10
20
11
20
12
20
13
20
14
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20
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27
20
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20
29
20
30
20
31
20
32
20
33
20
34
20
35
Millio
ns o
f B
arr
els
per
Day
US EIA Global Liquid Fuels Consumption Forecast
(Reference Case)
United States
Other OECD
China
Other Non-
OECD
Source: US Energy Information Administration Annual Energy Outlook 2011
Energy Security
• Oil sands often positioned as a separate topic, little
reference to broader questions of crude oil consumption,
security and supply
World Oil Production (Millions of Barrels per Day)
SOURCES: Production U.S. Energy Information Administration , 2010
Democracy Economist Intelligence Unit Democracy Index (Full Democracies)
1.39
1.44
1.61
1.79
1.99
2.08
2.13
2.37
2.41
2.45
2.46
2.75
2.81
2.98
3.48
4.25
4.27
9.69
10.13
10.52
0.00 2.00 4.00 6.00 8.00 10.00 12.00
United Kingdom
Qatar
Kazakhstan
Libya
Angola
Algeria
Norway
Venezuela
Iraq
Kuwait
Nigeria
Brazil
United Arab Emirates
Mexico
Canada
Iran
China
U.S.A.
Russia
Saudia Arabia
Major Oil Movement and Chokepoints
SOURCE: BP Statistical Review 2011
Bab el-Mandeb
•4 m bbl/d
•2 mile wide channel
•Terrorist attack on
tanker Limburg in
2002
Straight of Hormuz
•17 m bbl/d (40%
world total)
•4 miles wide shipping
lane
•Iran has threatened to
close in the past
Suez Canal
•2 m bbl/d
•2.3 m bbl/d Sumed
Pipeline through
Egypt also vulnerable
Bosporous
•2.9 m bbl/d
•½ mile wide
•Difficult navigation
Strait of Malacca
•14 m bbl/d
•Mideast oil to Asia
•1.7 miles wide at
narrowest point
•Piracy problem
A 30 day closure of the Straight of Hormuz would cost
the U.S. $75 billion in GDP
CNA Military Advisory Board October 2011
Crude oil pipeline delivery system
Intra-US Oil Sands Crude Movement
• 2011 volume roughly 2.5 times
greater than previous 5-year period
• Large volumes of oil sands derived
crudes are moving from Midwest to
Gulf Coast through
indirect/inefficient routes
Motivated by price differential
• Recent US EIA estimates:
Indirect/Older Pipeline 166k
bbl/d
Tanker/Barge 28,000 bbl/d
Truck/Rail Unknown, but may
exceed pipeline shipments
Gulf Coast Access and Midwest Consumers
SOURCE: Source: U.S. Energy Information Administration Refiner Gasoline Prices by Grade and Sales Type
http://www.eia.gov/dnav/pet/pet_pri_refmg_dcu_R30_a.htm
0
0.5
1
1.5
2
2.5
3
Midwest (PADD 2) Total Gasoline Wholesale/Retail Price by Refiners (Dollars per Gallon)
Gulf Coast (PADD 3) Total Gasoline Wholesale/Retail Price by Refiners (Dollars per Gallon)
• Impact on Midwest consumers often cited as argument against expanded Gulf
Coast access for Canadian crude
• Historical data that precedes significant oil sands exports shows little
correlation
United States
Economic Benefits
Economic impact in the U.S.
$0.90
$0.71
$0.37
$0.33
$0.37
$0.75
$0.50
$0.25
$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00
Canada
Mexico
Saudi Arabia
Venezuela
OPEC
European Union
Japan
China
For every dollar spent on imported goods in 2010, this is how much returned to the US through exports
• The value of Alberta crude oil
exports to the U.S. in 2010 was almost
$38 billion.
• 90% of $38 billion = $34 billion in
return U.S. exports to Canada.
Source: US Census Bureau and Statistics Canada
Sourcing
Oil sands development makes use of goods, services, labour and expertise from around the world
U.S. based companies and suppliers extensively involved
Recent survey of oil sands operators found 1,400 individual US companies supplying products
44
SOURCE: Economic Impacts of Staged development of Oil Sands Projects in Alberta (2010-2035), Canadian
Energy Research Institute (CERI), June 2011
• Oil sands development will, on
average, contribute between
$8.4 billion and $15.9 billion
per year to the U.S. economy
between 2010 and 2035.*
Economic impact in the U.S.
Oil sands and U.S. jobs
• Oil sands development
will support an average
93,000 to 175,000 U.S.
jobs per year between
2010 and 2035
• The total earnings of
these workers will
average from $4 billion to
$7.5 billion per year
SOURCE: Economic Impacts of Staged development of Oil Sands Projects in Alberta (2010-2035), Canadian
Energy Research Institute (CERI), June 2011
Oil Sands
Environmental Regulation
Carbon Capture and
Storage (CCS)
Carbon Capture and Storage (CCS)
• Key element of Alberta’s
Climate Change Strategy
• $2 billion for large-scale CCS
projects—among the largest
single capitalized funding
investments by any jurisdiction
in the world
• Public funding will accelerate
the development of projects
and encourage investment from industry
to make large-scale CCS projects viable
• Alberta’s geology ideal for CCS
CCS Projects CO2 Storage Potential
CCS Projects
Swan Hills Synfuels
• Converts coal into
synthetic gas
underground and then
into low-emissions
electricity with captured
CO2 used in enhanced
oil recovery
• Alberta government
committed $285 million
• 1.3 million tonnes
of CO2 captured and
stored each year
CCS Projects
Project Pioneer • TransAlta, Capital Power,
Enbridge
• Fully integrated project at
TransAlta’s 450 MW Keephills
3 coal fired power plant
• $436 m (Alberta) +
$343 m (Canada) +
$5 m (Australia) =
$784 million committed
• 1 million tonnes
of CO2 captured and stored
each year
CCS Projects Quest Project
• Shell Canada, Chevron
Canada, Marathon Oil Sands
• Fully integrated CCS project
at the Scotford oil sands
upgrader
• $745 m (Alberta) + $120 m
(Canada) = $865 million
committed
• 1.2 million tonnes of CO2
captured and stored each
year
CCS Projects
Enhance - Alberta Carbon Trunk Line • 240 km [149 mile] pipeline
transporting CO2 from the Agrium fertilizer complex and North West oil sands upgrader for use in enhanced oil recovery
• $495 m (Alberta) + $63 m (Canada) = $558 million committed
• 1.6 million tonnes of CO2 captured and stored each year (initially)
Oil Sands,
Climate Change &
Emissions Management
Oil Sands and GHGs Globally
The oil sands in a carbon
constrained world…
CANADA = 2% of global
GHG emissions
Oil sands = 0.15% of global
emissions
Oil sands carbon intensity is
decreasing, while the carbon
intensity of ‘conventional’ sources
is going up The challenge:
as production increases,
so do total emissions
Alberta’s oil sands account for
0.15% of global GHG emissions
Alberta’s GHG Emissions in Context
Climate Change: Life-cycle GHG Emissions
0
20
40
60
80
100
120
Saudi Mexico Iraq Venezuela Nigeria Imported
Wtd. Avg.
US Gulf
Coast
California
Heavy
Oil Sands
Avg
g C
O2e/M
J gaso
line
GHG Emissions fromProduction and Refining
GHG Emissions from GasolineConsumption
Source: Jacobs Consultancy and Lifecycle Associates, Life Cycle Assessment Comparison for North America and Imported Crudes, July 2009
98 102 102 102 106 102 107
Range of Common
U.S. Imported Crude Oils
On a life-cycle basis,
oil sands have
similar GHG
emissions to other
sources of oil
104 114
Provincial Emissions Profile
Oil Sands
18%
Power Plants
47%
Other
13%
Gas Plants
8%
Heavy Oil
7%
Chemicals
7%
Total Province – 2008 •Industry > 70%
Large Facilities – 2008 •Account for >50% of Provincial
Regulatory Context – Alberta Approach
• Manage the Risk
We need to start now, with focus on practical, stretch but achievable objectives
Adjust policies as needed and as we further understand the reduction opportunities
• Reductions at source requires some policy certainty for industry
New technology a big part of the long-term solution
Large investments being made now – expensive to retrofit; investment is often for 40 years+
Market instruments needed to bridge the gap between current emissions and long-term solutions
Its all about carbon pricing
• Consumers must be part of the solution
Confronting Global Issues:
Alberta’s Climate Change Plan
Send Price Signal /
Technology Fund
Investment
Rising Price /
Commercialization
of Low Carbon
Technologies
Broad Deployment
of Low Carbon
Technologies
growing demand
Renewable Energy and Bioenergy
Primary goal: Reduce greenhouse gas emissions by 37Mt (2050)
Bioenergy:
• $239 million allocated to bioenergy programs
Renewable Electricity:
• 2028 MW (an increase of +70% since 1998)
• 15.7% of installed capacity
• Wind = 805 MW (forecast 4,000 MW by 2017)
• Hydro = 900 MW
• Biomass = 323 MW
Renewable Fuels Standard:
• 2% biodiesel blend with diesel
• 5% ethanol blend with gasoline
• 25% less GHG emissions than
equivalent fossil fuel
Strategy - Complementary Measures
• Consumers - $2 billion GreenTrip – commitment to public transit
projects
- Incentives for energy efficiency
- Building Codes
- Energy Efficiency Act
Climate Change Law
• In 2007, Alberta became
the first jurisdiction in North America
to regulate large industrial GHG
emissions.
• 12% GHG intensity requirement
• Three compliance options:
1. Physically reduce emissions
2. Purchase accredited Alberta offset
3. $15 dollar/tonne towards
technology fund that supports
development and application of
transformative technologies.
RESULTS (through
2010):
– 23.8 million tonnes
of emissions avoided
– $257 million into the
Climate Change and
Emissions Management
Fund
– $133 million invested in
clean energy projects
Tillage
Tillage
Tillage Tillage
Wind
Wind
WindWind
Landfill Gas
Landfill Gas
Landfill Gas
Landfill Gas
Biomass Energy
Biomass Energy
Biomass Energy
Biomass Energy
Energy Efficiency
Energy Efficiency
Compost
CompostCompost
EOR
EOR EOR
Acid Gas Injection
Acid Gas Injection Acid Gas Injection
Hydro
Hydro Hydro
Wastewater ManagementWastewater Management
Nitric Acid AbatmentNitric Acid Abatment
BiofuelBiofuel
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2007 2008 2009 2010
Cre
dit
s (
K t
on
ne
s)
Compliance Year
Offsets Submitted 2007-2010
• As of March 31st 2011, $257 million contributed to the fund
• Announced nearly $133 million in funding for clean technology initiatives in last 16 months.
• 3 RFPs approved
• Fourth RFP – Cleaner Energy and Carbon Capture (closed in July)
• Fifth RFP – Small Medium Enterprise (announced in July)
• Support innovations that can be applied worldwide with the potential of
game-changing outcomes – but must have Alberta application
• Leverage 4:1 – more than $ 465M total project investment
• Expect >$1B worth of projects by end of next year
• Funds are renewed annually – approx. $60-80M
Alberta’s Climate Change Fund
Oil Sands
Water, Air and Land
Oil Sands Environmental Management
Water Quality Monitoring
Limits on Water Withdrawals
No Discharge Policy
Air Quality Assurance Greenhouse
Gas Targets
Mandatory Reclamation
Suncor. Photo by: David Dodge, The Pembina Institute
Responsible Water Use
• Strict limits on water use
• Total water use by mining operations
was ~1% of average river flow
in 2010;
• oil sands projects
recycle 80-95% of water used
• Comparing 2010 and 2008, mining
operations used ~20% less water
from the river but produced ~18%
more bitumen
• Zero-discharge policy
for process-affected waters
Water use for transportation fuels (net gallons of water to produce one gallon of fuel)
SOURCE: US-DOE, Argonne National Laboratory, January 2009
1.9 - 9.8
3.4 - 6.8 2.5 - 5.8 2.6 - 6.2
0
5
10
15
20
25
30
35
40
45
50
Corn ethanol Switchgrass ethanol Gasoline (US conventional crude)
Gasoline (Saudi conventional crude)
Gasoline (Canadian oil sands)
10
324
Water monitoring ongoing for…
more than 40 years in Athabasca region
Dr. Preston McEachern, Alberta Environment
Bitumen
seeps
naturally
into the
Athabasca
River
Tailings Ponds
• Ponds are used to manage tailings while solid wastes settle and to store water for recycle.
• > 85% of a company's water needs for extraction may come from recycle pond water, significantly reducing the amount of fresh water used.
• They are not without challenges
clays that contribute to fluid fine tailings (MFT)
residual bitumen and solvents
Amount of time required to settle and allow the water to be recovered
Management of Tailings Ponds
Footprint of
Tailings Ponds
In 2010, the footprint of tailings was ~ 170 km2 (23% of total active footprint) .
~ 15% of the footprint has been reclaimed
~ 38% of the footprint has process water at the surface
The first tailings pond in the oil
sands region was reclaimed in
September 2010
Management of Tailings Ponds
Managing Today • Directive – faster
reclamation;
less fluid tailings
• Ongoing reclamation at
several tailings ponds
Vision for the Future
• Zero growth in tailings
• Development and
adaptation of new
technologies
• Demonstration of both
remediation and
reclamation success
Suncor Pond 1 (Reclaimed 2010)
Air Quality Health Index
• Joint federal-provincial system providing
hourly information about air quality in more
than 20 communities across the province
• Designed by health and environmental
experts
• Measures and reports on common air
pollutants that could impact human health
• Uses a scale from 1 to 10 to assess whether
there is a health risk posed by air
www.environment.alberta.ca/apps/aqhi/aqhi.aspx
Sixteen real-time stations
operate 24 hours a day,
365 days a year in oil sands
area
Land Reclamation
• Reclamation to equivalent pre-development state requirement of project approvals
• Funds based on estimated cost of reclamation must be provided to province from developer $946 million held in 2010
• ~ 716 km2 (275 square miles) of land have
been disturbed by oil sands mining activity, ~ 72 km2 reclaimed
• Only 1 km2 is certified ?? Final stage in extensive provincial process
ensuring restoration meets provincial
standards
Includes years of monitoring
• Moving to progressive reclamation
standards
Alberta was the first province in
Canada to legislate land reclamation
in 1963.
Wetland Reclamation Potential
Research demonstrates the reclamation potential of wetlands.
2000 2006
Photos: Suncor Reclamation
Draft Lower Athabasca Regional Plan
• Cornerstone of cumulative effects management
approach for majority of the oil sands region
• Proposed new conservation areas add to existing
parks and protected areas
Total of 20,000 km2 (7700 square miles) of land
would be legislatively protected from new industrial
development
Would result in the largest swath of protected
boreal forest in North America
• Similar limits would be established for water, air
and regional biodiversity.
• Currently undergoing consultation, including:
First Nations, General Public, Environmental
Groups & Industry Proposed LARP Conservation Areas
Thank You!
