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Economic Impact Beyond the Oil Sands - Dinara Millington

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Economic Impact Beyond the Oil Sands The Alberta oil sands are obviously an economic boom for Fort McMurray and the surrounding area, but the economic impact stretches much further than that. Suppliers to oil sands development are located throughout the entire Ports-to-Plains region from Eastern Alberta to Mexico. Hear directly from researchers and businesses that create jobs in the Ports-to-Plains area by supplying the oil sands.
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  • 1. Canadian Energy Research Institute Economic Impacts of Oil SandsDevelopment 15th Annual Ports-To-Plains Alliance ConferenceDinara MillingtonSenior Research DirectorCanadian Energy Research InstituteOctober 2-4, 2012Medicine Hat Relevant Independent Objective1 www.ceri.ca

2. Agenda Who We Are and What We Do Canadian Oil and Oil Sands Economic Benefits But What are Some of the Problems? Summary Relevant Independent Objective2 www.ceri.ca 3. Canadian Energy Research InstituteOverviewFounded in 1975, the Canadian Energy Research Institute (CERI) is an independent, non-profit research institute specializing in the analysis of energy economics and relatedenvironmental policy issues in the energy production, transportation, and consumptionsectors. Our mission is to provide relevant, independent, and objective economicresearch in energy and related environmental issues. A central goal of CERI is to bring theinsights of scientific research, economic analysis, and practical experience to theattention of government policy-makers, business sector decision-makers, themedia, and citizens in Canada and abroad.Core members of the Institute include the Canadian Government, the Government ofthe Province of Alberta, the University of Calgary, the Canadian Association of PetroleumProducers (CAPP) and the Small Explorers and Producers Association (SEPAC). In-kindsupport is also provided by the Energy Resources Conservation Board (ERCB).All of CERIsresearchis publically availableonour websiteatw w w .c e r i .c aRelevant Independent Objective 3 www.ceri.ca 4. 2011-2012 Reports Released Canadian Oil Sands Supply Costs and Development Projects (2011-2045) (March 2012) Canadian Energy: Pacific Access Foreign Investment in the Oil Sands and British Columbia Shale Gas (March 2012) Canadian Energy: Pacific Access Oil Spills and First Nations: Exploring Environmental Land Issues Surrounding the Northern Gateway Pipeline (February 2012) Canadian Energy: Pacific Access Overview of Transportation Options (January 2012) Overview of Eastern and Atlantic Canadas Petroleum Industry and Economic Impacts of Offshore Atlantic Projects (November 2011) Applicability Abatement Potential for the Alberta Oil Sands Industry and Carbon Capture and Storage (CCS) Applicability to Coal-fired Electricity Generation and Oil Sands (October 2011) North American Natural Gas Market Dynamics: Global LNG A Review (June 2011) Economic Impacts of Drilling, Completing and Operation of Gas Wells in Western Canada (June 2011) Economic Impacts of Drilling, Completing and Operating Conventional Oil Wells in Western Canada (June 2011) Relevant Independent Objective 4www.ceri.ca 5. 2012 Reports Released (July/August 2012) Pacific Access Part I Linking Oil Sands Supply to New and Existing Markets Pacific Access Part II Asia-Directed Oil Pathways and Their Economic Impacts Pacific Access Part III Economic Impacts of Exporting Horn River Natural Gasto Asia as LNG Natural Gas Liquids in North America: Overview and Outlook to 2035 Relevant Independent Objective 5www.ceri.ca 6. 2012-2013 Current Work Potential Impact of Shale Gas Development in Quebec North American Natural Gas Demand Pathways(ICF/MARBEK, whatIf? Technologies) Energy Metrics Handbook Potential Transportation Options for Alberta Land-Locked OilFor a list of all CERI publications, please visit our website at www.ceri.ca Relevant Independent Objective 6www.ceri.ca 7. CERI Conferences CERI hosts three major conferences each year (Oil, Natural Gas and Petrochemicals)attended by over 100 delegates from across North America.CERI 2012 Petrochemical ConferencePathways to the FutureJune 3-5, 2012CERI 2012 Oil ConferenceAchieving Super Power StatusApril 23-24, 2012 CERI 2012 Natural Gas Conference Going Global Shifting the Focus of the Natural Gas Industry February 27-28, 2012Dates and venues for our 2013 conferences can be found on our website. For further information, contact our Conference Manager, Deanne Landry, at403-220-2395 or [email protected] Independent Objective 7 www.ceri.ca 8. Western Canadas Upstream Oiland Gas IndustryRelevant Independent Objective8www.ceri.ca 9. Western Canadas Oil and Gas Industry 2011 Expenditures: $68.1 billion2011 Expenditures: $45.3 billionRoyalties Royalties WagesWagesProductionProductionOperation and Maintenance Operation and Maintenance ConstructionCompletion and Tie inConventional Drilling Evaluation Land Acquisition Land Acquisition Crown Land Sales Crown Land Sales9 Oil and Gas Drilling Oil Sands Developments 10. CanadianOil and Oil Sands Relevant Independent Objective 10 www.ceri.ca 11. 2011 Facts about Canadian CrudeProduction: Western Canada (AB,BC,SK,NWT) Conventional LIGHT Crude 561,929 bbls/day Western Canada (AB,BC,SK,NWT) Upgraded Bitumen 846,112 bbls/day Western Canada (AB,BC,SK,NWT) Condensate (C5+) 128,498 bbls/day Western Canada (AB,BC,SK,NWT) Conventional HEAVY Crude 421,618 bbls/day Western Canada (AB,BC,SK,NWT) Non Upgraded Bitumen 758,919 bbls/day Eastern Canada (NF/LAB,ON) Conventional LIGHT Crude271,778 bbls/day Total 2011 Production of Crude Oil and Equivalent2,988,854 bbls/dayExports: PADD I (74% Light, 26% Heavy)171,182 bbls/day PADD II(21% Light, 79% Heavy)1,439,447 bbls/day PADD III (12% Light, 78% Heavy)111,358 bbls/day PADD IV(17% Light, 83% Heavy)213,709 bbls/day PADD V (61% Light, 39% Heavy)167,295 bbls/day Non-US (67% Light, 33% Heavy) 35,261 bbls/day Total US (28% Light, 82% Heavy)2,138,260 bbls/dayImports: % of Capacity Atlantic Canada Conventional Crude 333,990 bbls/day (80%) Quebec Conventional Crude298,775 bbls/day (84%) Ontario Conventional Crude52,836 bbls/day (15%) Total Canadian Imports 685,560 bbls/day Relevant Independent Objective11www.ceri.ca 12. WCSB Conventional Oil Production ForecastRealistic Scenario (2010-2035)1,400,0001,200,0001,000,000 + 150,000 bbls/dayProduction (bbls/day) 800,000 600,000 400,000 200,000 0 British Columbia Existing Wells British Columbia New WellsAlberta Existing Wells Alberta New Wells Saskatchewan Existing Wells Saskatchewan New Wells Manitoba Production NWT Production Relevant Independent Objective12www.ceri.ca 13. Western Canadian Oil Sands Potential(000 bpd) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2007 2009 2011 2013 2015 20172019 2021 2023 20252027 2029 2031 2033 2035 2037 2039 2041 2043 2045 Total In Situ Bitumen VolumesTotal Mined Bitumen Volumes Relevant Independent Objective 13 www.ceri.ca 14. Western Canadian Oil Sands Potential (000 b/d)6,0005,5005,000 Announced Awaiting Approval4,500 ApprovedSuspended Under ConstructionOnstream4,0003,5003,0002,5002,0001,5001,000500- 2007 2009 2011 20132015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 Relevant Independent Objective 14 www.ceri.ca 15. Options for Canadian Crude By PipelineChurchillSource: Canadian Association of Petroleum Producers, Crude Oil Forecast, Markets & Pipelines, June 2011Relevant Independent Objective 15www.ceri.ca 16. Economic Impacts of OilSands Staged DevelopmentRelevant Independent Objective 16www.ceri.ca 17. Input-Output (I/O) LogicOilSteel Trucks Natural Water EngineeringOther Sands Gas ServicesinputsOil Sands IndustryRelevant Independent Objective17 www.ceri.ca 18. Economic Impacts by UCMRIO 2.0 There are two types of shocks:Impacts Investmenton Alberta OperationImpactsInvestments in Alberta Oil Sands on BCUCMRIO2.0Impacts MultipliersOperations in Alberta Oil Sands Impacts ImpactsImpacts on the US Relevant Independent Objective 18 www.ceri.ca 19. How Does it Work?$0.55 Oil Sands$2.02 GDP $0.6 UCMRIO$1 InvestmentCompensation$0.20 Construction 2.0Oil Sandsof EmployeesMultipliers$0.25 Other Investment &Manufacturing OperationsImpacts$0.95 11.2Oil SandsUCMRIO Employment$1 Operations2.0OpportunitiesOil Sands Multipliers$0.05 FIRE $0.42 TaxesRelevant Independent Objective 19www.ceri.ca 20. Economic Impacts of Albertas Oil SandsCase 1 - No Expansion Scenario000 bbl/d 8,0007,0006,000 Rail volumes5,000 Mainline Expansion (2014)4,0003,0002,0001,00002007 20082009 20102011 20122013 20142015 20162017 20182019 20202021 20222023 20242025 20262027 20282029 20302031 20322033 20342035 AB Conventional Prodn SK Conventional BC Conventional MB Conventional NWT ConventionalDiluent for Primary/Eor Existing&Under Construction US Bakken prodn Existing Export Operational Capacity Note(s): 1) Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen SCO available for export and diluent volumes required to move bitumen as per pipeline specifications. February 2, 2012 Relevant Independent Objective 20 www.ceri.ca 21. # 22. # 23. Economic Impacts of Albertas Oil Sands - USCase 1 - No Expansion ScenarioPorts-to-Plains Alliance Member StatesGDPCompensation EmploymentThousandMln $CDNMln $CDNperson-yrsColorado$3,305 $1,563 35Kansas$2,008 $977 24Montana $3,176 $1,504 32 Total Employment Impacts in US (2011-2035)Nebraska$593 $280 9New Mexico$610 $214 7North Dakota$209$89 3Oklahoma$1,368 $556 16South Dakota$252$98 4Texas$12,935 $5,116119Wyoming $382$98 3Relevant Independent Objective 23www.ceri.ca 24. Lets Talk About PipelinesRelevant Independent Objective 24www.ceri.ca 25. Economic Impacts of Albertas Oil Sands CanadaCase 2 - Inclusion of the Keystone XL Pipeline (Incremental Impacts)000 bbl/d8,000 Canada ABSK7,000GDP (bln) $617 $583.2$1.4Tax Revenues (bln)$131 $121$0.46,000 Keystone XL (2015)Employment (000 3,497 3,016 175,000 person-years)Mainline Expansion (2014)4,0003,0002,0001,00002007 2008 20092010 20112012 20132014 2015 201620172018 20192020 20212022 20232024 20252026 202720282029 20302031 20322033 20342035 AB Conventional Prodn SK ConventionalBC Conventional MB Conventional NWT Conventional Diluent for Primary/Eor Existing&Under Construction US Bakken prodnApproved Approved-on HoldAwaiting ApprovalAnnounced KXL AdditionExpansion of Enbridge mainline Existing Export Operational Capacity Note(s): 1)Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen and SCO available for export and diluent volumes reqed to move bitumen as per pipeline specifications. August 23, 2012Relevant Independent Objective25 www.ceri.ca 26. Economic Impacts of Albertas Oil Sands - USCase 2 - Inclusion of the Keystone XL Pipeline (Incremental Impacts) Ports-to-Plains Alliance Member StatesIncremental GDPGDP Compensation Compensation EmploymentEmployment Thousand Mln $CDNMln $CDNThousand person-yrs Mln $CDNMln $CDNColorado$4,830 $2,293 person-yrs 53KansasPADD I $37,696$3,171 $18,235 $1,513 417 35Montana $6,430PADD II$74,995 $35,897 $3,054 827 70Nebraska$558 $265 6PADD III $20,349 $9,231 216New Mexico$544 $238 6PADD IV Dakota $12,751North$6,040$206$95 140 3PADD VOklahoma $26,358 $12,469 $566$1,244285 14Total US Dakota $172,149South $241 $81,872 $1091,883 3Texas$13,159 $5,974138Wyoming $316 $128 3 Relevant Independent Objective26www.ceri.ca 27. Economic Impacts of Albertas Oil Sands - CanadaCase 3 - Inclusion of TMX Expansion (Incremental Impacts)000 bbl/d8,000CanadaAB SK7,000GDP (bln) $308$291 $0.646,000TMX (2017)Tax Revenues (bln) $65$60 $0.2 Keystone XL (2015)Employment (000 1,7051,471 75,000 person-years)Mainline Expansion (2014)4,0003,0002,0001,00002007 2008 20092010 20112012 20132014 20152016 2017 20182019 20202021 20222023 20242025 20262027 202820292030 20312032 203320342035 AB Conventional ProdnSK ConventionalBC Conventional MB ConventionalNWT Conventional Diluent for Primary/Eor Existing&Under ConstructionUS Bakken prodnApproved Approved-on Hold Awaiting ApprovalAnnounced TMX ExpansionKXL Addition Expansion of Enbridge mainline Existing Export Operational Capacity Note(s): 1)Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen and SCO available for export and diluent volumes reqed to move bitumen as per pipeline specifications. August 23, 2012 Relevant Independent Objective 27 www.ceri.ca 28. Economic Impacts of Albertas Oil Sands - USCase 3 - Inclusion of the TMX Expansion (Incremental Impacts)Ports-to-Plains Alliance Member States Incremental GDP GDPCompensation CompensationEmployment EmploymentThousand Mln $CDNMln $CDNThousandperson-yrsMln $CDN Mln $CDNColorado$677 $320 person-yrs 7Kansas PADD I$8,081 $410 $4,088$199934Montana $636 $3017 PADD II $10,393 $5,137 119Nebraska$124$582 PADD III Mexico $4,126New$1,624$128$45401 PADD IV Dakota $1,635North$44$761$18180Oklahoma PADD V$5,100 $287 $2,378$116544South Dakota $53$211 Total US$29,335$13,989 324Texas $2,691 $1,064 25Wyoming$79$200 Relevant Independent Objective 28 www.ceri.ca 29. Economic Impacts of Albertas Oil Sands - CanadaCase 4 - Inclusion of Northern Gateway (Incremental Impacts)000 bbl/d8,000CanadaAB SK Northern Gateway (2018)7,000GDP (bln) $374$352$0.96,000TMX (2017)Tax Revenues (bln) $80$73 $0.3 Keystone XL (2015)Employment (000 2,1501,853 115,000 person-years)Mainline Expansion (2014)4,0003,0002,0001,00002007 2008 20092010 20112012 20132014 20152016 2017 20182019 20202021 20222023 20242025 20262027 202820292030 20312032 203320342035 AB Conventional ProdnSK ConventionalBC Conventional MB ConventionalNWT Conventional Diluent for Primary/Eor Existing&Under ConstructionUS Bakken prodnApproved Approved-on Hold Awaiting ApprovalAnnounced Northern Gateway AdditionTMX ExpansionKXL Addition Expansion of Enbridge mainline Existing Export Operational Capacity Note(s): 1)Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen and SCO available for export and diluent volumes reqed to move bitumen as per pipeline specifications. August 23, 2012 Relevant Independent Objective 29 www.ceri.ca 30. Economic Impacts of Albertas Oil Sands - USCase 4 - Inclusion of the Northern Gateway Pipeline (Incremental Impacts)Ports-to-Plains Alliance Member States IncrementalGDPGDPCompensation Employment Compensation EmploymentThousand Mln $CDN Mln $CDN Thousand person-yrsColorado Mln $CDNMln $CDN $400$847 10person-yrsKansas$502 $245 6 PADD I$11,228 $5,668128Montana $695 $329 7 PADD IINebraska $13,388 $6,625$176$83154 2 PADD III Mexico $5,624New$2,214$181$65 55 2 PADD IV Dakota $1,998North$65 $927 $28 22 1Oklahoma$404 $166 4 PADD V$7,054$3,290 74South Dakota $77$30 1 TotalTexas US$39,292 $18,724 $1,457$3,683 433 33Wyoming $105$27 1Relevant Independent Objective 30www.ceri.ca 31. Western Canadian Potential 000 bbl/d 8,000 Looping/Expanding Existing Pipelines 7,000Northern Gateway (2018) 6,000TMX (2017)Keystone XL (2015) 5,000 Mainline Expansion (2014) 4,000 3,000 2,000 1,000 0 200720082009 20102011 20122013 20142015 201620172018 201920202021 20222023 20242025 20262027 20282029 20302031 20322033 20342035AB Conventional ProdnSK Conventional BC ConventionalMB ConventionalNWT ConventionalDiluent for Primary/EorExisting&Under ConstructionUS Bakken prodn ApprovedApproved-on Hold Awaiting Approval AnnouncedNorthern Gateway AdditionTMX Expansion KXL AdditionExpansion of Enbridge mainline Existing Export Operational CapacityNote(s): 1)Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net ofdomestic demand). 3) Oil Sands volumes comprise of net bitumen and SCO available for export and diluent volumes reqed to move bitumen as perpipeline specifications. August 23, 2012Relevant Independent Objective31 www.ceri.ca 32. Economic Impacts of Albertas Oil Sands - CanadaComparison of CasesIncremental GDP Impacts(Bln CDN$) 1,600 1,400 1,200 1,000 Incremental Employment Impacts 800(000 person-years) 6008,000 4007,000 2006,000 0 Alberta OntarioBritish 5,000 Saskatchewan Columbia4,000Case 1 1,439.944.3 19.4 3.1Case 2 583.218.6 8.33,000 1.4Case 3 291.3 9.0 4.02,000 0.6Case 4 352.311.4 5.10.91,000 0 Alberta OntarioBritishSaskatchewan Columbia Case 1 7,209 602 29037 Case 2 3,016 252123 17 Case 3 1,471 12359 7 Case 4 1,853 1557611Relevant Independent Objective32 www.ceri.ca 33. Economic Impacts of Albertas Oil Sands - USComparison of CasesIncremental GDP Impacts by PADD Region (Mln CDN$)80,00070,000Incremental Employment Impacts60,000(000 person-years)50,00090040,00080030,00070060020,00050010,0004000PADD I PADD IIPADD III300 PADD IVPADD V Case 1 38,742 50,55019,8448,028 24,474200 Case 2 37,695.9 74,994.6 20,349.412,751.2 26,358.2 Case 3 8,080.910,392.9 4,125.7 100 1,635.35,100.2 Case 4 11,227.6 13,388.1 5,624.5 1,997.77,053.70PADD I PADD II PADD III PADD IV PADD V Case 144758019588258 Case 2 417827 216 140285 Case 3 93 119 40 1854 Case 4 128154 55 2274Relevant Independent Objective33 www.ceri.ca 34. BUTRelevant Independent Objective 34www.ceri.ca 35. What are the Problems for WCSB OIL?1. Canadian exports currently feed one market (flat demand and increasing domestic supply).2. Western Canadian oil/oil sands are land-locked and need transportation options in order to grow either new barrels to the US or Asia.3. Alberta needs oil hydrocarbon growth in the face of a tanking gas market (Growth = GDP, Employment, Taxes, Royalties).4. The Cushing Oklahoma bottleneck is affecting PADD II and Canadian market prices negatively.5. Tightening Canadian pipeline capacity will Affect Edmonton/Hardisty basis differential ($$$ left on the table) Potentially slow development of the Oil Sands Potentially slow development of Conventional Oil6. Oil on Oil Competition for pipeline space and access to refineries Competition with Alberta/Saskatchewan conventional oil developments Competition with North Dakota Bakken oil developments Competition with US Shales (Niobrara, Eagle Ford, etc.)Relevant Independent Objective35 www.ceri.ca 36. Problem WTI-Brent Differential$135.00$8.00$130.00$6.00$125.00$4.00$120.00 $2.00$115.00 $-$110.00 $(2.00)$105.00 $(4.00)$100.00 $95.00$(6.00) $90.00$(8.00) $85.00$(10.00) $80.00$(12.00) $75.00$(14.00) $70.00 $(16.00) $65.00 $(18.00) $60.00 $(20.00) $55.00 $(22.00) $50.00WTI - Brent Differential ($/b) $45.00$(24.00)Europe Brent Spot Price FOB ($/b) $40.00$(26.00)West Texas Intermediate (WTI) @ Cushing ($/b) $35.00$(28.00)Jan-2005 Oct-2005Jan-2006 Oct-2006Jan-2007 Oct-2007Jan-2008 Oct-2008Jan-2009 Oct-2009Jan-2010 Oct-2010Jan-2011 Oct-2011Jan-2012 Apr-2005 Apr-2006 Apr-2007 Apr-2008 Apr-2009 Apr-2010 Apr-2011 Apr-2012Jul-2005Jul-2006Jul-2007Jul-2008Jul-2009Jul-2010Jul-2011Jul-2012 Relevant Independent Objective36www.ceri.ca 37. Problem WTI-Brent Differential Q3 2011 WTI discount averaged $23 to Brent Canadian Crude (Conventional, SCO, Bitumen) Exports 1,477,000 bbls/day to PADD II 105,000 bbls/day to PADD III 216,000 bbls/day to PADD IV 157,000 bbls/day to PADD VSimple Math: 2,152,000 bbls/day times $23/bbl = $50 million per day (discounted Value) 2012-2013 The Pipeline Solution Enterprise/ETP (Cushing to Houston) 400,000 b/d Q4 2012 Enbridge/Wrangler (Cushing to Houston) (light crude) 2013 Enbridge Monarch (Cushing to Houston) 350,000 b/d Q4 2013 Houston to El Paso reversal (bypass Cushing) 200,000 b/d Q2 2013 TCPL Keystone Market Link (Cushing to Houston) 150,000 b/d Q2 2013Relevant Independent Objective37 www.ceri.ca 38. Future Problem WTI-Brent DifferentialPipeline Capacity Into and Out of Cushing 3,500,000 3,000,000RISK 2,500,000Capacity BPD 2,000,000 1,500,000Total Flow Into CushingTotal Flow Out of Cushing 1,000,000500,0000 201120122013 2014 2015 2016 YearRelevant Independent Objective38 www.ceri.ca 39. Western Canada WTI-WCS Differential $135.00 $130.00 WTI - WCS Differential ($/b) $125.00 West Texas Intermediate (WTI) @ Cushing ($/b) Risk of widening differential $120.00 $115.00 Western Canadian Select (WCS) @ Hardisty ($/b) Average Light - Heavy Differential ($/b) if new pipelines are delayed $110.00 $105.00 2005 - 2006 Median Differential ($/b) $100.00 2007 - 2008 Median Differential ($/b)$95.00 2009 - 2010 Median Differential ($/b)$90.00 2011 Median Differential ($/b)$85.00 Linear (Average Light - Heavy Differential ($/b))$80.00$75.00$70.00$65.00$60.00$55.00Keystone Base andProduction$50.00$45.00Alberta Clipper newramps up$40.00$35.00capacity$30.00$25.00$20.00$15.00$10.00 $5.00Apr-2005 Apr-2006 Apr-2007 Apr-2008 Apr-2009 Apr-2010Apr-2011 Oct-2005 Oct-2006 Oct-2007 Oct-2008 Oct-2009Oct-2010Oct-2011Jul-2005Jul-2006Jul-2007Jul-2008Jul-2009Jul-2010 Jul-2011 Jan-2005Jan-2006Jan-2007Jan-2008Jan-2009Jan-2010 Jan-2011 Jan-2012 Relevant Independent Objective 39 www.ceri.ca 40. Problem WTI-WCS Differential Q3 2011 WCS discount averaged $17 to WTI (net approximately $10) Canadian Crude (Conventional, SCO, Bitumen) Exports 1,477,000 bbls/day to PADD II 105,000 bbls/day to PADD III 216,000 bbls/day to PADD IV 157,000 bbls/day to PADD VSimple Math: 2,152,000 bbls/day times $10/bbl = $21 million per day (discounted Value)2012-2020 The Pipeline Solution Keystone XL (Hardisty to Houston) 700,000 b/d 2016 Trans Mountain Expansion (Hardisty to Vancouver) 450,000 b/d 2017 Northern Gateway (Edmonton to Kitimat) 525,000 b/d 2019 Line 9 Reversal (Sarnia to Westover, ON) 50,000 b/d Q2 2012 Line 9 Reversal (Westover to Montreal ) 100,000 b/d ???? Portland to Montreal Pipeline (Reversal) 400,000 b/d ????Relevant Independent Objective40 www.ceri.ca 41. In Summary 1. The production from conventional sources in Western Canada is growing astechnology is able to unlock resources that were once thought to be difficult toextract. Nevertheless, oil sands will continue to dominate the future productiongrowth in this region. 2. Presently, the crude pipeline capacity out of Western Canada is sufficient totransport production coming from on stream and under construction oil sandsprojects. Additional crude export capacity from Western Canada will be essential byas early as 2015. 3. Value of upgrading at the source in Alberta, EnvironmentalIssues, Differentials, Refinery Configurations, Crude Competition, Politics, EnergySecurity. 4. Given that all oil sands development takes place in Alberta, it is clear that Albertawill be the largest beneficiary, followed by Ontario and then British Columbia. 5. In the US, PADD II (Midwest) is the biggest beneficiary from spin-off effects ofAlbertas oil sands development, followed by PADD I (East Coast) and PADD V (WestCoast).Relevant Independent Objective 41www.ceri.ca 42. Canadian Energy Research Institute Thank you for your timePlease visit us atwww.ceri.ca Relevant Independent Objective 42 www.ceri.ca

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