Western Conference of Public Service Commissioners

Natural Gas and the Provision of Electricity: Is there enough?

North America Market Growth:Forecasted to Reach 30Tcf by 2015

Key Drivers:• North American

economic growth

• Electric Power Generation

• e-world power requirements

• Clean Air Initiatives

• Climate Change

• Natural Gas is the Preferred Fuel

ANNUAL (Tcf)

23.9 25.328.2

32.536.0

1998 2000 2005 2010 2015

Industry Industry ProfileProfile

The CanadianThe CanadianOil and Natural Gas IndustryOil and Natural Gas Industry

Canada’s Oil andNatural Gas Industry

• World’s 3rd largest natural gas producer

• World’s 13th largest crude oil producer

• Oil & gas trade surplus accounts for:– Close 50% of Canada’s trade balance

• Employment near 500,000 in Canada

• Invest close to $25 billion in 2001– Largest single private sector investor in Canada

- 0.55- 0.55

+1.4+1.4

+ 2.7

+ 0.10+ 0.10

+ 0.3+ 0.3- 0.10

+ 2.5+ 2.5

Basin Supply Growth:

2000 - 2005 (bcf/d)

Canada: 2.8 bcf/d

US: 3.75 bcf/d

Total: 6.55 bcf/d

Approximately 45% Of New Gas Supply To Come From Canada - Major New Pipe Needed

Alaska and MacKenzie Delta gas assumed to come on beyond 2005.

Ultimate Potential of Natural Gas

RemainingRemaining ProducedProduced

North of 60North of 60

175 Tcf175 Tcf

BritishBritish

ColumbiaColumbia

50 Tcf50 Tcf

AlbertaAlberta

270 Tcf270 Tcf SaskatchewanSaskatchewan

9 Tcf9 Tcf

Grand BanksGrand Banks

and Scotian Shelfand Scotian Shelf

63 Tcf63 Tcf

Other Frontier*Other Frontier*

89 Tcf89 Tcfincludes other

regions offshore east coast & west

coast

Source: NEBSource: NEB

Western Canada - Gas Wells Drilled & Natural Gas Price

0

2000

4000

6000

8000

10000

12000

1970 1974 1978 1982 1986 1990 1994 1998

Wells

(bar)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Cd

n$

/m

cf

# Gas wellsPlantgate price

Source: CAPP& ARC Financial forecast

2001

Northeast B.C. Supply Basin:Record Year for Wells Drilled

• 50 Tcf Ultimate Potential

• 754 wells drilled

• 1,204,000 metres drilled

• Oil & Gas Incentive Initiatives

0

200

400

600

800

1990 1992 1994 1996 1998 2000

WE

LL

S

Wells DrilledWells Drilled

Northeast British Columbia Supply:Supply Numbers Reaching Record Levels

• Fort Nelson and southern NWT Area– very strong supply response– Fort Liard growth

• Fort St. John Area– ample processing capacity– shallow finds– growing interest

• Pine River Area– deep gas is economic– acid gas injection project– Plant full

FortNelson

Plant

BuckinghorsePlant

SikanniPlant

PineRiverPlant

JedneyPlants

Chetwynd

Aitken Ck.Plant

Boundary LakePlant

Fort St.John

HighwayPlant

Nova

Fort St. JohnGathering

Fort Nelson

Helmet/Peggo/PeshGatheringFort Nelson

Gathering

B.C.

YukonN.W.T.

Alberta

McMahon PlantCS 2

BRITISHCOLUMBIA

ALBERTA

N.W.T.YUKON

U.S.A.

Westcoast Energy

Plant (regulated)

Compressor Stn.

Pipeline

Gathering

Legend

Westcoast Gas Services

Plant (unregulated)

Fort LiardFort Liard

Fort NelsonFort Nelson

Fort St. JohnFort St. John

Pine RiverPine River

Top Natural Gas Wells in 2000/ 2001

Anderson - 27 mmcfd

Anderson - 19 mmcfd

Mobil - 18 mmcfd

NAL - 17 mmcfd

Burlington - 15 mmcfd

Petro-Canada - 15 mmcfd

Mobil - 15 mmcfd

Talisman - 13 mmcfd

Source: First Energy Can 88 - 14 mmcfd

Petro-Canada - 14 mmcfd

2001 Wells:

Murphy/Apache @ Ladyfern - 100 mmcf/d

AEC @ Ladyfern - 60 mmcf/dTethys/PetroCan @ Townsend- 11 mmcf/d

Frontier Supplies:Potential B.C. Terminus

11

Prudhoe Bay+2.4 Bcf/d - 2007/2008

Prudhoe Bay+2.4 Bcf/d - 2007/2008

Mackenzie Delta+1 Bcf/d - 2007/2008

Mackenzie Delta+1 Bcf/d - 2007/2008

Gordondale/Boundary Lake area

The Alaska Highway Pipeline Project:Incremental Supplies by 2007/2008

• 2700 km (Prudhoe Bay to Boundary Lake)

• 2.5 Bcf/d increasing to 4 Bcf/d

• Approval in-place

• In-service 2007/2008

• Producers:– BP– ExxonMobil– Phillips

1 0T r a n s C a n a d a

b a r t s t a d m t a s k f o r c e J u l 2 1 2 0 0 0

A N G T S

Y u k o n

A l a s k a

N u n a v u t

N o r t h w e s tT e r r i t o r i e s

B . C .

A l b e r t a

A N N G T C

F o o t h i l l s A N G T S

31 Tcf Proven 99 Tcf UltimatePotential

31 Tcf Proven 99 Tcf UltimatePotential

Currently -- 8 Bcf Production - Currently -- 8 Bcf Production - 7 Bcf Reinjection7 Bcf Reinjection

Currently -- 8 Bcf Production - Currently -- 8 Bcf Production - 7 Bcf Reinjection7 Bcf Reinjection

Mackenzie Delta:Incremental Supplies in 2007 to 2008

• 1760 km (Delta to Boundary Lake)

• 1.0 Bcf/d to 2.0 Bcf/d

• No Current production

• Producers:– Imperial– Gulf– Shell– Burlington– Petro-Canada– AEC– Anderson

2 0T r a n s C a n a d a

b a r t s t a d m t a s k f o r c e J u l 2 1 2 0 0 0

M a c k e n z i e V a l l e y

Y u k o n

A l a s k a

N u n a v u t

N o r t h w e s tT e r r i t o r i e s

B . C .

A l b e r t a

9 Tcf Proven (3 Tcf Off-shore)64 Tcf UltimatePotential

9 Tcf Proven (3 Tcf Off-shore)64 Tcf UltimatePotential

Natural Gas Supply Challenges

• Access to the resource• Timely approval processes• Rising costs - tax, F&D, land, power• High decline rates• Move to deeper areas

- Shorter drilling season - Higher risk - Size and availability of deep rig fleet - Gas plants constraints in deeper areas - More sour gas