Canada’s Oil Sands: A World-Scale Hydrocarbon Resource

11th Annual Asia Oil & Gas Conference June 11-13, 2006

Canada's Oil Sands: A World-Scale Hydrocarbon Resource 1

1

Canada’s Oil Sands:A World-Scale Hydrocarbon Resource

11th Annual Asia Oil & Gas Conference“Balancing the Interests of Consumers and Producers”

11-13 June 2006Kuala Lumpur Convention Centre, Malaysia

R.B. (Bob) DunbarStrategy West Inc.

Calgary, Alberta, Canada

Photo courtesy Syncrude Canada Ltd.

2

Presentation Outline

OverviewBitumen Recovery TechnologiesBitumen UpgradingMarketsCostsOutlookChallenges



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Canada’s Oil Sands

Bitumen saturated sandsAt normal temperatures (10-200C) bitumen is:• In a semi-solid state• Similar to tar

Enormous Resource Base• World’s largest bitumen

deposit• Canada’s bitumen

reserves match Saudi Arabia’s conventional oil reserves

Photos courtesy Syncrude Canada Ltd.

4

Resources and Reserves

Initial volume in place (bitumen): 1,699 x 109 barrels

Initial established reserves: 178.7 x 109 barrels

Cumulative production:4.6 x 109 barrels

Remaining established reserves: 174.1 x 109 barrels

Source: EUB ST98-2005; Alberta’s Reserves 2004 and Supply/Demand Outlook 2005-2014; September 2005



5

Mineable and In SituResources and Reserves

Mineable Resources/Reserves< 75m depth to top of oil sands formationAthabasca only6% of IBIP; 20% of initial established reserves; 68% of cumulative production

In Situ Resources/Reserves> 75m depth to top of oil sands formationAthabasca, CL and PR94% of IBIP; 80% of initial established reserves; 32% of cumulative production

Source: EUB ST98-2005; Alberta’s Reserves 2004 and Supply/Demand Outlook 2005-2014; September 2005

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Athabasca Volume In-Place

Athabasca Wabiskaw-McMurray Oil Sands DepositBitumen pay criteria> 6% bitumen (mass)> 1.5 m

Source: EUB Alberta’s Reserves 2004 and Supply/Demand Outlook 2005-2014



7

In Situ Recovery Technologies

Primary RecoverySecondary RecoveryThermal Tertiary Recovery• Steam-Based Thermal Recovery Processes

Cyclic Steam Stimulation (CSS)Steam Assisted Gravity Drainage (SAGD)

• In Situ CombustionToe-to-Heel Air Injection (THAI)

Solvent-Based Tertiary Recovery• VAPEX • Thermal Solvent

Hybrid (Steam-Solvent) Processes

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Thermal In Situ Recovery

Cyclic Steam Stimulation(CSS)

Steam Assisted Gravity Drainage (SAGD



9

Surface Mining, Bitumen Extraction and Upgrading

Source: Athabasca Oil Sands Project

10

Albian Conveyors and Storage Silo




11

Albian Extraction Plant


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Upgrading

Approximately 2/3 of produced bitumen is “upgraded” to synthetic crude oil (SCO) before pipeline shipment to downstream marketsThe remaining 1/3 is blended with diluents before pipeline shipment to downstream markets

Synthetic Crude Oil:A mixture of hydrocarbons,

similar to light crude oil, that is derived by

upgrading crude bitumen or heavy oil




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Typical Upgrading Configuration

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Canadian Oil Production - 2005

530

434

834

524

157

Synthetic Bitumen Light Heavy Condensate

Alberta’s Oil Sands provided 39% of Canada’s “crude oil” production in 2005 (total 2,480 kb/d)

(all figures thousand b/d)

Source: National Energy Board; March 24, 2006

Total SCO and Bitumen 964 kb/d



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Bitumen Based Feedstocks to Refined Products

Bitumen Blends

Synthetic Crude Oil

Refined Petroleum Products

REFINERY

GasolineDieselJet FuelFuel OilsLubricantsAsphaltOthers

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Markets for Western Canadian Oil

CoreCoreMarketsMarkets

Tesoro-Anacortes

BP-Cherry Point

Tesoro-Mandan

Sinclair-RawlinsChevron

TexacoHolly

MAP-St.Paul

ConocoPhillips-Wood RiverNCRA-

McPherson

Sinclair-Casper

Imperial

Petro-CanadaShell Canada

ChevronTexaco-BurnabyHusky-Lloydminster

Coop-Regina

ExxonMobil

Cenex

ConocoPhillips-Billings

Shell-Anacortes

ConocoPhillips-Ferndale

Montana Ref-Great Falls

TesoroFlying J

Farmland-CoffeyvilleConocoPhillips-

Ponca City

Premcor-Lima

MAP-Catlettsburg

BP -ToledoExxonMobil-Joliet

Citgo-Lemont

Koch-Pine Bend Imperial-

Nanticoke

PetroCanada-Oakville

BP-Whiting

United-Warren

Frontier-El Dorado

ImperialShellSuncor

Salt Lake City

Suncor

Frontier-Cheyenne

Sinclair-Tulsa

Sunoco -Toledo

Sarnia

MAP-Detroit

MAP-Canton

Murphy-Superior

Valero

ExtendedExtendedMarketsMarkets

MAP-Robinson

Edmonton

ConocoPhillips - Borger

Husky-Prince George

NewNewMarketsMarkets

San Francisco

Los Angels

Houston

Source: Canadian Association of Petroleum Producers



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Beyond North America

Prince Rupert/Kitimat

Los Angeles

Jose/La Cruz

3,840

ChinaPersian

Gulf

Japan

Taiwan

~ 8,600 N Miles

~ 4,500 N Miles

Prince Rupert/Kitimat

Jose/La Cruz

Los Angeles

Japan

Taiwan

Target Markets

~ 5,400 N Miles

1,400 N

Miles

Far East U.S West Coast

• •••

Japan

Taiwan

Korea

•

•

SantaCruz• •1,790

Competitive travel distances for Canadian supply to both markets

Source: Canadian Association of Petroleum Producers

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Oil Sands Industry Supply Costs

Bitumen Supply Cost at Plant Gate

0

5

10

15

20

25

CHOPS CSS SAGD M&E

C$/

b (2

004)

2004 Study 2005 Study

Equivalent WTI Price at Cushing OK

0

5

10

15

20

25

30

35

40

CHOPS CSS SAGD M&E ME&U

US$

/b (

2004

)

2004 Study 2005 Study

Source: Canadian Energy Research Institute; CERI Oil Conference; May 2005



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Oil Sands Industry Outlook

Unadjusted Outlook• Assumes all existing and proposed

projects are developed and meet their scheduled startup dates

Adjusted Outlook• Project-by-project timing adjustments• Project-by-project probability assessment

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Unadjusted Bitumen Production

0

1,000

2,000

3,000

4,000

5,000

6,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Una

djus

ted

Bitu

men

Pro

duct

ion

(kb/

d)

Primary & ExperimentalPeace River In SituCold Lake In SituSouth Athabasca In SituNorth Athabasca In SituAthabasca Mining



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Adjusted Bitumen Production

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Adj

uste

d B

itum

en P

rodu

ctio

n (k

b/d)

Primary & ExperimentalPeace River In SituCold Lake In SituSouth Athabasca In SituNorth Athabasca In SituAthabasca Mining

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Adjusted SCO and Non-Upgraded Bitumen Supply

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Adj

uste

d SC

O a

nd N

on-U

pgra

ded

Bitu

men

(kb/

d)

Non-Upgraded BitumenSynthetic Crude Oil



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Adjusted Case CAPEX

Average Annual Capital Expenditures (2005-2020, US$2006 Real)• Thermal In Situ $1.4 Billion• Mining & Extraction $1.5 Billion• Upgrading $3.6 Billion• Total $6.5 Billion

Strategic Capital only – figures do not include sustaining capital

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Challenges Facing the Oil Sands Industry

Environmental• Air emissions –

GHGs and Criteria Air Contaminants

• Water use• Waste water

disposal• Land disturbance

and reclamation• Cumulative effects

Labour Availability & Productivity Capital CostsEnergy Use, Sources & CostsOthers



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Conclusions

Canada’s oil sands are one of the world’s largest hydrocarbon accumulationsThe industry is well developed and making a significant contribution to world oil supplyOil sands projects are economically attractive at US$30-35/b WTIThe industry faces many challenges but will overcome them and continue to grow

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Thank YouQuestions?

Strategy West maintains an up-to-date list of existing and proposed oil sands projects at www.strategywest.com


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Canada’s Oil Sands: A World-Scale Hydrocarbon Resource

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