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Canada’s Oil Sands
June 2008
Industry Capital Spending Cdn $billions
Northern Canada
‘05 `06 `07E `08F
$0.5 $0.4 $0.5 $0.5
Oil Sands
‘05 `06 `07E `08F
$10 $14 $17 $20
WCSB
‘05 `06 07E `08F $33 $36 $31 $29
East Coast Offshore
‘05 `06 `07 `08F
$2 $2 $1 $1
Note: Spending in Canada excludes spending associated with mergers & acquisitions
Oil & Gas Investment Spending:2006: $53 billion (actual)2007: $50 billion (estimate)2008: $50 billion (forecast)
Oil Sands – Resistance to flow
Source: Imperial Oil
0
1
10
100
1,000
10,000
100,000
1,000,000
Vis
cosit
y @
Room
Tem
pera
ture
(cP
)
Water
Olive
Oil
Pancake
Syrup
Honey
Ketchup
Cold Lake
Bitumen
Peanut
Butter
Atha-
basca
Bitumen
Light
Crude
Oil
Global Crude Oil Reserves by Country
Source: Oil & Gas Journal Dec. 2007
21
3641
60
8792
102115
138
179
264
0
50
100
150
200
250
300
Saudi
Arabia
Canada Iran Iraq Kuwait Abu Dhabi Venezuela Russia Libya Nigeria United
States
bil
lio
n b
arr
els
Canada, with 173 billion barrels in oil sands reserves, ranks 2nd only to Saudi Arabia in global oil reserves
Oil Sands Production Technologies
Mining – oil sands less than 200 feet deep
Source: Canadian Centre for Energy Information
In situ – oil sands more than 200 feet deep Cyclic Steam Process
Steam Assisted Gravity Drainage
(SAGD)
Oil Sands – Mining and In Situ
Oil Sands Reserves Oil Sands Land Use
Mining
20%
In Situ
80%
In Situ
97.5%
Mining 2.5%
Oil Sands Projects in Three Deposits
PeaceRiver
Athabasca
ColdLake
Edmonton
Calgary
Ft. McMurray
In Situ Projects
Mining Projects
Muskeg River
Albian
Christina Lake
Cold LakeWolf Lake/Primrose
Hilda Lake
Cold Lake
Tucker Lake
Peace River
Peace
River Fort
McMurray
Fort Hills
Horizon
Joslyn Creek
Syncrude
SuncorMacKay River
Firebag
Hangingstone
Long Lake
Surmont
Foster
Creek
Jackfish
Kearl
Lake
Jackpine
Sunrise
Northern
Lights
Whitesands
Seal
(Blackrock)
Athabasca – Mining
Operator Project Existing or initial bpd
Potential bpd
Albian/Shell Muskeg/Jackpine 155,000 570,000
Suncor Main Operations 300,000 550,000
Syncrude Main Operations 300,000 600,000
CNRL Horizon (2008) 135,000 577,000
Imperial Kearl (2010) 100,000 300,000
Petro-Canada Fort Hills (2011) 165,000 190,000
Total E&P Joslyn Mine (2013) 50,000 200,000
Athabasca – In Situ Thermal
ConocoPhillips Surmont 25,000 100,000
Encana/ConocoPhillips Christina/Foster 50,000 400,000
JACOS Hangingstone (pilot) 10,000 60,000
OPTI/Nexen Long Lake/South 72,000 428,000
Petro-Canada MacKay River 33,000 73,000
Suncor Firebag 95,000 367,000
Total E&P Joslyn Creek 12,000 42,000
Devon Jackfish (2008) 35,000 70,000
Husky/BP Sunrise (2012) 50,000 200,000
Statoil Kai Kos Dehseh -2008 10,000 240,000
Cold Lake – In Situ Thermal
Shell Hilda Lake 10,000 20,000
CNRL Primrose/Wolf Lake 88,000 150,000
Imperial Cold Lake 140,000 170,000
Husky Tucker 30,000 40,000
Peace River – In Situ Thermal
Shell Peace River 12,000 100,000
Oil Sands Capital Costs IncreasesGlobal Cost Increases Not Just Local
0
20,000
40,000
60,000
80,000
100,000
120,000
Suncor -
Millennium
Albian Syncrude -
Aurora 2 &
UE 1*
Nexen-
OPTI
CNRL -
Horizon
Shell -
Muskeg &
Scotford
PCA/UTS
Fort Hills
Cap
ital
$ p
er
bb
l/d
ay
(up
gra
ded
)
ProductionStart Date 2001 2003 2006 2008 2008 20112010
*Syncrude includes base plant quality improvements and power
Capital Cost of 100,000 bbl/day project$3.3 billion $10-11 billion
Construction Workforce Outlook – Nov. 2007
Source: Construction Owners Association of Alberta (COAA) Nov 2007
Northwest
Syncrude
Suncor
CNRL
Albian
Fort Hills
PetroCanada
Nexen/OPTI
Imperial Oil
Total
Northwest
Environmental Challenges and Progress
• Environmental issues are at the top of minds and agendas
• The oil sands hears the challenges and needs to continue to demonstrate progress
• Key issues include:
Air – greenhouse gas emissions
Fresh (potable) water use
Land use and reclamation
Environmental Stewardship - Air
• Continuing to reduce GHG emissions
oil sands energy intensity reduced by 45% since 1990
Increasing energy efficiency
Starting CO2 capture, sequestration and EOR
• Oil Sands accounts for:
4% of GHG emissions in Canada
0.1% of global energy related GHG
United States22%
China20%
Europe17%
Eurasia9%
Japan4%
India4%
Canada2%
Australia1%
Other21%
Global Energy Related Emissions By Country
United States
China
Europe
Eurasia
Japan
India
Canada
Australia
Other
Oil & Gas ex OS
19%Oil Sands
4%
Electricity and Heat
Generation18%
Other Industry14%
Transportation27%
Agriculture
8%
Buildings6%
Solvent
& Waste4%
Canada's GHG Emissions By Sector Oil & Gas ex OS
Oil Sands
Electricity and Heat Generation
Other Industry
Transportation
Agriculture
Buildings
Solvent & Waste
Canada’s Greenhouse Gas PoliciesProvincial and Federal
• Alberta Government Legislation passed
Effective July 1, 2007
Requires immediate 12% reduction in emission intensity for large emitters
Compliance:• Physical Reductions
• $15/tonne CO2 levy into Technology Fund
• Offsets
• BC Government Carbon tax on end use
consumption
• Federal Government Takes effect in 2010
Reductions of 18% in emission intensity and 2% per year thereafter
Coal power and oil sands have higher targets
• Natural gas, then carbon capture equivalency
Full Cycle GHG Emissions by Crude Type
Source: T.J. McCann & Associates
Environmental Stewardship - Land
• Different impacts for mining and in situ
Mining requires longer time
• Ongoing and end of mine
In situ similar to conventional drilling – smaller surface footprint than mining
• Reclamation and remediation mandated
Reclamation plan must be filed and approved by regulator
Funding of liability required
Environmental Stewardship - Water
• Reduce, recycle and reuse
• Source of water by priority:
Recycle (85-90%+)
Non-potable (saline, brackish)
Fresh or groundwater
• Mining – Athabasca River
Currently use 1% of Athabasca river flow – could grow to 2%
Water management plan in place for low flow periods
• In situ
Existing have high recycle and moving to non-potable sources
New are drawing solely from non-potable or “saline” aquifers
CNRL Primrose/Wolf Lake Insitu Project
Oil Sands Production TechnologiesAlternatives to Natural Gas
THAITM (Toe-to-Heel Air Injection)Petrobank Whitesands Project
OrCrude Process - Nexen/OPTI Longlake
Multiphase Superfine Atomized Residue - Quadrise Suncor 3rd Upgrader - Coke Gasification
OXYGEN WASTE WATER PETROLEUM COKE
SYNTHETIC
GAS
(CO, H2, CO2)
GASIFIER
CO2 CAPTURE &
SEQUESTER
HYDROGEN
HYDROTREATORSBOILERS
STEAM & ELECTRICITY
FUEL
Oil Sands & WCSB Conventional Oil Production2008 Moderate Growth Case
0
1,000
2,000
3,000
4,000
5,000
6,000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Th
ou
sa
nd
Ba
rre
ls P
er
Da
y
Actual Forecast
Conventional Oil
Oil Sands In
Production and Under
Construction
Oil Sands Future
Potential
2007 Forecast
Oil Sands Production2007 = 1.2 million b/d2012 = 2.0 million b/d2017 = 3.0 million b/d2020 = 3.5 million b/d
PADD V
PADD IIIPADD I
PADD IV
PADD II
PADD: Petroleum Administration for Defense District
CAPP Refiner Survey and Market Outlook
[ Jan 2008 Total Refining Capacity – All Crude ]
2015 Potential Demand for W. Can crude
2007 Actual Demand for W. Can crude
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2007 2008 2009 2010 2011 2012 2013 2014 2015
Light Sweet Synthetic
Heavy
Conventional Medium Sour
Conventional Light Sweet
71
??
63
59
2,378
Thousand Barrels per Day
[2,646]
??
122 1,098
[3,622]
[7,990]
[1,627]
[598]
286
280
720
578
371
247
[613]
[385]
CAPP Pipeline Expansions and Proposals
1 Kinder Morgan TMX 1A Expansion
2 Kinder Morgan TMX 1B Expansion
3 TransCanada Keystone
4 TransCanada Keystone Cushing Ext.
5A Enbridge AB Clipper
5B Enbridge Line 4 Extension
6 Minnesota Pipeline Expansion
7A Enbridge Southern Access Expansion
7B Enbridge Southern Access Ext.
8 Enbridge Line 5 Expansion
9 Enbridge Line 6B Expansion
10 Enbridge Line 6C Expansion
11 Enbridge Line 9 Re-reversal
12 Portland Pipeline Reversal
13 Sunoco – to Philadelphia
14 Enbridge Pioneer (Opt 2)
15 Enbridge Eastern PADD II
16 Enbridge Pioneer (Opt 1)
17 ExxonMobil Mustang Expansion
18 Enbridge Spearhead Expansion (N/S)
19 Sunoco - to US Gulf Coast
20 ExxonMobil/Enbridge Texas Access
21 ExxonMobil/Enbridge Pegasus Exp.
22 Centurion Pipeline Reversal
23 TEPPCO/KM Chinook-Maple Leaf
24 BP No. 1
25 TransCanada Keystone XL
26 Altex Energy
27 Kinder Morgan TMX2 Expansion
28 Kinder Morgan TMX3 Expansion
29 TransCanada Alberta-California
30 Enbridge Northern Gateway
31 Kinder Morgan Northern Leg
32 Enbridge Gateway Condensate Import
33 Enbridge Southern Lights
34 Capline/Chicap
35 Enbridge N. Dakota
36 Enbridge Light Sour Line
Oil Sands – Challenges/Solutions
• Demonstrate environmentally responsible development
Greenhouse gas emissions – reduction, capture and storage
Water – minimize fresh water use, increase recycle and non-potable water use
Land – demonstrate reclamation for mining and tailings ponds
• Manage costs – capital, operating and labour
• Adequate Infrastructure – public and industry
• Expand existing and open new markets
Pipelines, value added upgrading, refineries
• Innovate and implement new technology
• Communicate - listen and respond
Actions speak louder than words