GROWING TOGETHER: Ontario’s role in Canada’s oil and gas...

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GROWING TOGETHER: Ontario’s role in Canada’s oil and gas supply chain

VICKI BALLANCEVice President, OperationsExplorers and Producers Association of Canada

MIKE GLADSTONEDirector, External Affairs, CanadaEnbridge

GARY G. MAR Q.C.President and CEOPetroleum Services Association of Canada (PSAC)

DAVID MCHATTIEVice-President Institutional RelationsTenaris

DAVID SWORDEnergy ConsultantCanadian Association of Petroleum Producers (CAPP)



DAVID SWORD Energy ConsultantCanadian Association of Petroleum Producers (CAPP)


QUESTION

THE WORLD’S BIGGEST OIL PRODUCER IS:1. Iraq2. Qatar3. Russia4. Saudi Arabia5. United States –ANSWER

Growing together:Ontario’s role in Canada’s oil and natural gas supply chain

4

5

Made in Ontario

In 2016-17 the oil sands companies alone spent $1.9 billion on supplies and services from 1,162 companies in Ontario.

This is

down 45 % since 2014-15.

Source: CAPP member data aggregated by CAPP, 2019

6Source: IEA, World Energy Outlook 2018, New Policies Scenario

Growth in the Global Energy Mix from 2017-2040

Economic growth and products driving demand

7

Top 10 World Natural Gas Producers in 2017

0 5 10 15 20 25 30

US

Russian Federation

Iran

Qatar

Canada

China

Norway

Australia

Saudi Arabia

Algeria

Trillion Cubic Feet per Year

Source: BP Statistical Review 2018 and CAPP

Canada, is the 5th largest producer of natural gas in the world.

Chart1

US

Russian Federation

Iran

Qatar

Canada

China

Norway

Australia

Saudi Arabia

Algeria

2017

Trillion Cubic Feet per Year

26.0701448393

22.5598149215

7.947046194

6.2362483979

5.657

5.2956645473

4.3728275619

4.0285383788

3.9540015454

3.2370281952

Sheet1

2017

US26.0701448393

Russian Federation22.5598149215

Iran7.947046194

Qatar6.2362483979

Canada5.657

China5.2956645473

Norway4.3728275619

Australia4.0285383788

Saudi Arabia3.9540015454

Algeria3.2370281952

Top 10 World Crude Oil Producers in 2017

Source: BP Statistical Review 2018 & CAPP)Crude oil including lease condensate.

Canada has the 3rd largest reserves in the world.

Chart1

MexicoMexicoMexico

KuwaitKuwaitKuwait

ChinaChinaChina

United Arab EmiratesUnited Arab EmiratesUnited Arab Emirates

CanadaCanadaCanada

IraqIraqIraq

IranIranIran

RussiaRussiaRussia

Saudi ArabiaSaudi ArabiaSaudi Arabia

United StatesUnited StatesUnited States

2017

Million Barrels per Day

2224

3025

3846

3935

4187

4520

4982

11257

11951

13057

Sheet1

country20172025

Mexico2224

Kuwait3025

China3846

United Arab Emirates3935

Canada41875247

Iraq4520

Iran4982

Russia11257

Saudi Arabia11951

United States13057

THE GLOBAL ENERGY PULSE

10

Economic Impacts of the Oil and Natural Gas Industry in Canada

11

Source: Statistics Canada, Prism Economics and CAPP, 2018

Environmental Protection Spending by Industry - 2016

12

Source: Statistics Canada, 2019



DAVID MCHATTIEVice-President Institutional RelationsTenaris


QUESTION

WHAT PERCENTAGE OF STEEL CONSUMED IN CANADA IS DEDICATED TO AUTO AND AUTO PARTS?

1. 10%2. 20%3. 35% –ANSWER4. 50%5. 60%


QUESTION

WHAT PERCENTAGE OF STEEL CONSUMED IN CANADA IS DEDICATED TO THE ENERGY SECTOR?

1. 10%2. 20%3. 35% –ANSWER4. 50%5. 60%

Manufacturing Committed to Canada’s Energy Industry

17

Agenda

Tenaris

Canada’s Energy Sector is Large on Global Scale

Opportunity to Connect Manufacturing and Energy Sectors Better

18

Serving the world's energy industry – In Canada, $1B Revenues employing 1,000 in 3 manufacturing locations and 5 service centres

Countries

18

Manufacturing facilities

5R&D CentersWorldwide

23,472Employees(2018)

Global Leader in Pipes for the Oil & Gas Industry

7.7US$ billionAnnual net sales(2018)

30CountriesServices and distribution network

Sales by Region

North America47%

South America19%

Europe9%

Middle East & Africa20%

Asia Pacific4%

19

Grande Prairie

Sault Ste. Marie

Nisku

Fort McMurray

RTFT Steel MillSorel-Tracy

Rio Tinto Fer et Titane (RFT) Havre Ste. Piere

Iron Ore to Steel Bar, transformed into a steel pipe, threaded and installed in a well

TenarisAlgomaTubes supply chain: adding value to Canada’s resource sector

20

WESTERN SEDIMENTARY

BASIN

ArcelorMittal DofascoHamilton

CalgaryArcelorMittal Pelletizing PlantSept-Iles

ArcelorMittal Mines Mont-Wright

TenarisPrudential supply chain: secure source of supply

Iron Ore to Hot Rolled Coil, transformed into a steel pipe, threaded and installed in a well

21

• We should all be aware that Canada is one of the largest producers of oil & natural gas

• But to produce oil & natural gas, manufactured goods are critical. This means that Canada is one of the world’s largest markets for these manufactured goods.

Canada’s Energy Sector is Large on Global Scale

Rank Apparent Consumption 2014 2016 20181 USA 6,490 2,080 4,960 2 China 3,300 2,616 3,634 3 Russia 1,699 1,984 2,391 4 Canada 1,112 459 745 5 Saudi Arabia 595 424 487 6 Brazil 350 148 272 7 India 254 246 228 8 Mexico 253 70 217 9 Oman 237 275 234 10 Kazakhstan 220 118 155 11 UAE 201 320 236 12 Thailand 197 129 116 13 Iran 158 100 150 14 Indonesia 157 48 56 15 Colombia 153 45 88 16 Iraq 153 39 94 17 Argentina 148 52 217 18 Egypt 146 92 107 19 Algeria 143 161 169 20 Venezuala 116 164 108 21 Australia 96 53 59 22 Kuwait 85 282 240 23 Malasia 81 29 25 24 Azerbaijan 79 47 64 25 Angola 75 22 38 26 Vietnam 72 51 52 27 Nigeria 59 37 32 28 Uzbekistan 57 26 40 29 UK 50 25 61 30 Norway 47 97 75

Global OCTG Market (Th tonnes, source Metal Bulletin Report)

22

Steel Is everywhere in energy development, here are the energy tubulars examples:

• Drilling, completion and production of oil and gas

• Transportation of oil and gas

• Process and power plants

Oil Country Tubular Goods

Line Pipe for Onshore and

Offshore applications

HydrocarbonProcessing

PowerGeneration

23

35% of Canada’s steel consumption is in the energy sector, equal to that of auto and auto parts

35%

35%

25%

5%

Energy

Automotive

Construction

Other Machinery & Equipment

Steel Consumption by Sector – Canada (Avg 2010-14)

• Cdn steel production/consumption $14B

• About $5B to the auto sector while an equal amount went to the energy sector

• The energy sector consumed over $500 Million in Canadian goods manufactured in Northern Ontario alone

• About $4B is steel pipes while the rest is: plate, coil, rebar, beams, etc used either directly or in further fabrication/construction for the energy sector

• Fabricated and manufactured products include buildings, water treatment facilities, boilers, wellheads, valves, processors, pressurizers, etc

24

Ontario Manufacturers for Canada’s Energy Sector are big and small

25

Canadian Drilling Activity in 2019 is now 30% lower than 2018 and much lower than 2014Drilling Rig Activity – Canada

26

Since 2013, TS employment in Northern Ontario has been cut in half

0

200

400

600

800

20192013 peak

-50%

Employee Count – TenarisAlgomaTubes

Other negative impacts include an import surge from Non-NAFTA sources and the US Section 232 Tariffs vs. Canada

27

Chinese Steel Means Increased GHG Emissions

01234

Canada

1.1 Tonnes CO2 / Tonne Steel

China

3.5 TonnesCO2 / Tonne Steel

2.4 Tonnesadditional tonnes of GHG per tonne of imported Chinese steel

*Calculations based on World Steel data

GHG Emissions per Tonne of Steel – China vs. Canada

South Korea emits double (+1.3 tonnes)

India emits double (+1.2 tonnes)

28

• Canada is one of the largest producers of oil & natural gas (the 3rd largest)

• But to produce oil and natural gas, an important volume of manufactured goods are critical – this means that Canada is one of the world’s largest markets for these manufactured goods

• Between 2010-2014 as much steel was used in Energy as Autos

• Northern Ontario generated over $500 Million in energy sector manufactured goods sales; for all of Ontario, it must be much more

• We all care about the environment and this concern should be a competitive advantage. Using Canadian manufactured goods that are produced using low carbon electricity it good for Canada. This connects Ontario/Quebec as manufacturing cores with our Western energy core.

Canada’s Energy & Manufacturing Sectors are Connected –there are more Opportunities Possible

Here is what you now know:

29

Thank you!



MIKE GLADSTONEDirector, External Affairs, CanadaEnbridge


QUESTION

ON AVERAGE, HOW MANY DAYS DOES IT TAKE FOR A LARGE PIPELINE TO BE APPROVED, IN CANADA AND THE US?

1. Canada – 681 days, US – 336 days – ANSWER2. Canada – 435 days, US – 378 days3. Canada – 550 days, US – 578 days


QUESTION

IN 2017, HOW MUCH DID CEPA’S MEMBERS SPEND IN ONTARIO TO OBTAIN PERSONNEL, SERVICES, SUPPLIES AND EQUIPMENT FROM LOCAL SOURCES?

1. $1.5 billion

2. $4.1 billion – ANSWER

3. $3.2 billion

C A N A D I A N E N E R G Y P I P E L I N E A S S O C I A T I O N

CEPA MEMBERS


ENBRIDGE

• Enbridge operates the world’s longest and most complex crude oil and liquids transportation system

• Enbridge’s three liquids pipelines deliver 96% of the province’s crude imports

• Enbridge’s natural gas transmission and midstream pipelines assets cover about 41,850 km in 31 American states, 5 Canadian provinces and offshore in the Gulf of Mexico

• Enbridge Gas is Canada’s largest natural gas distribution provider by volume and third largest by customer connections


ENBRIDGE – IN ONTARIO

• Enbridge’s three liquid pipelines deliver 96% of Ontario’s crude imports

• Enbridge’s Dawson Hub is one of North America’s most liquid natural gas trading hubs

• In 2018, over $2 billion invested in capital expenditures and operations

• More than $127 million paid in property and other taxes annually

• This helps to fund schools, hospitals and other priority investments.


THE ENERGY LANDSCAPE IN ONTARIONatural gas provides low cost, critical and reliable energy

* Enbridge’s 2017 Ontario LTEP Submission.

Ontario’s energy system reality: Natural gas provides more than twice the energy at less than half the cost of electricity

Notes: 1. Ontario Peak natural gas demand is 6.9 bcf/day

2. Avg. natural gas demand includes refill of storage

3. Peak electricity demand recorded in Summer 2006 (IESO)

Resilient

15,959

24,706

34,193

84,261

Avg ElectrcityDemand

PeakElectrcity…

Avg NaturalGas Demand

Peak NaturalGas Demand

Ontario Energy by Fuel Type

MW

40%

39%

1%3%

17%

Petroleum ProductsNatural Gas

Critical


CEPA MEMBER PIPELINE NETWORK

O Gas pipeline

O Oil pipeline


TRANSMISSION PIPELINES IN ONTARIO

Added $1.8B to Ontario’s GDP in 2015

More than 8,000 jobsin Ontario in 2015

Spent in Canadian communitiesin 2017

$4.1 billion


CANADA IS A TRUSTED TRADING PARTNER

• Canada is an exporting nation and trusted trading partner

• Opportunity: The world needs our oil and natural gas


GROWING TOGETHER

• Ontario remains a partner in enabling the growth of Canada’s energy industry through manufacturing, construction, finance, and technology.


QUESTION

THE AUTO SECTOR’S CONTRIBUTION TO CANADA’S GDP IS:

1. 6x larger than the Oil & Gas sector’s contribution

2. 3x larger than the Oil & Gas sector’s contribution

3. Equal to the Oil & Gas sector’s contribution

4. 3x smaller than the Oil & Gas sector’s contribution

5. 6x smaller than the Oil & Gas sector’s contribution – ANSWER


QUESTION

BILL C-48, THE OIL TANKER MORATORIUM ACT, WILL BLOCK WHICH VESSELS CARRYING PETROLEUM PRODUCTS:

1. Foreign tankers from waters anywhere off the coast of Canada;2. Foreign and Canadian tankers anywhere off the coast of Canada;3. Canadian tankers anywhere off the coast of Canada;4. Foreign tankers from waters off the coast of northern British Columbia;5. Foreign and Canadian tankers from waters off the coast of northern British Columbia;

or

6. Canadian tankers off the coast of northern British Columbia. – ANSWER

Barriers to Opportunity

Petroleum Services Association of Canada

May 4, 2019

Gary G. Mar, President and CEO

About PSAC

• National trade association

• Representing service, supply and manufacturing sectors

• 18 business subsectors, over 250 products and services

• Over 450,000 workers across Canada

45

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https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1210013401

Oil and Gas contributes more to Canada’s GDP and exports more than other sectors

47

0

100,000

200,000

Auto/PartsO&G

GDP (x1,000,000)

$161 B

$26 B

0

100,000

200,000

Auto/PartsO&G

Exports (x1,000,000)

$134 B

Source: Tenaris, 2019

$73 B

Capital is fleeing Canada

The Fraser Institute reports: “Canadians have increasingly looked to other countries to invest, with the amount Canadians invest abroad rising 74 per cent from 2013 to 2017. At the same time, foreign direct investment—investment from other countries into Canada—dropped a staggering 55.1 per cent from 2013 to 2017.”

48

Pipelines cancelled

• Northern Gateway, Energy East

49

Source: BOE Reporthttps://boereport.com/2016/01/13/b-c-supreme-court-hands-another-setback-to-northern-gateway-pipeline

Source: CBC https://www.cbc.ca/news/canada/new-brunswick/energy-east-

pipeline-completion-date-pushed-back-to-2020-1.3019311

https://boereport.com/2016/01/13/b-c-supreme-court-hands-another-setback-to-northern-gateway-pipeline/https://www.cbc.ca/news/canada/new-brunswick/energy-east-pipeline-completion-date-pushed-back-to-2020-1.3019311

Pipelines delayed

• Line 3, TMX, Keystone XL

50Source: CAPP, 2017

Competitive issues include U.S. tax changes

51

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https://www.cbc.ca/news/business/royal-bank-investment-ceo-1.4602161https://business.financialpost.com/news/economy/its-not-just-taxes-here-is-whats-really-killing-canadas-competitivenesshttps://business.financialpost.com/commodities/energy/oil-and-gas-firms-sound-alarm-as-capital-once-destined-for-canada-flees-to-more-competitive-u-s

Canada is losing $ billionsLoss to Canada:

$80 Million per day$92 Billion (2008–2020e)

5252

Source: Canada Action, 92 Billion https://www.canadaaction.ca/oil_discount

https://www.canadaaction.ca/oil_discount

Why are we losing billions?

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https://business.financialpost.com/opinion/canadians-are-realizing-foreign-groups-sabotaged-our-energy-economy-for-no-good-reasonhttps://calgaryherald.com/news/local-news/corbella-vivian-krause-should-become-a-household-name-across-Canada

Contrary to what you might see…

54Source: JWN Energy https://www.jwnenergy.com/article/2016/12/all-first-nations-crossed-trans-mountain-pipeline-route-support-project-kinder-morgan/

Source: Financial Post https://business.financialpost.com/opinion/we-are-first-nations-

that-support-pipelines-when-pipelines-support-first-nations

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Opportunity to Lift Developing Nations out of Energy Poverty

55

Source: India Climate Dialoguehttps://indiaclimatedialogue.net/2014/07/17/millions-die-indians-still-cook-wood-dung/

Image Caption: The burning of dung in cities is increasingly criticised as contributing to air pollution

- Times Newspapers Limited (UK), 2015

https://indiaclimatedialogue.net/2014/07/17/millions-die-indians-still-cook-wood-dung/

If We Care About Global Emissions, Canada should supply the world with energy

56Source: BP Report: Energy demand by region https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-region.html

https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-region.html

U.S. Oil and Natural Gas Production at Record Levels

57

Source: U.S. EIA – April 2019 Monthly Energy Review, Fig 1.1 https://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf

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INCREASING: Consumption, Production and ExportsDECREASING: Imports

https://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdfhttps://www.forbes.com/sites/judeclemente/2019/03/01/u-s-crude-oil-production-exports-hit-record-levels/#494a6a785a78

Bill C-69 Impacts Major Projects in All Industries

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Bill C-48: Oil Tanker Moratorium Act

59Source: Resource Workshttps://www.resourceworks.com/c48hearing

Canada’s West Coast Canada’s East Coast

https://www.resourceworks.com/c48hearing

Bill C-48: First Nations Support

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https://www.cbc.ca/news/politics/tasker-pro-pipeline-first-nations-c-48-1.4941165

Some questions you may want to ask

Where do you stand on Bill C-69?

Where do you stand on Bill C-48, the tanker ban?

Are you in favour of Canadian oil over foreign-sourced oil in eastern Canada?

Do you support Canadian oil and natural gas development?

federal candidates that come knocking at your door

61

Would you prefer oil by rail or by pipeline?

Are you in favour of these pipelines?

Trans Mountain Expansion (TMX)

LNG Canada/Coastal GasLink

A potential Energy East

Thank youFor more information, please visit

psac.ca

Petroleum Services Association of Canada


ANSWERS

VICKI BALLANCEVice President, OperationsExplorers and Producers Association of Canada


CLOSING



CONTACT US

FOR FURTHER INFORMATION

Please contact David Sword

mailto:[email protected]

Growing together: �Ontario’s role in Canada’s oil and gas supply chainGrowing together: �Ontario’s role in Canada’s oil and gas supply chainQuestionGrowing together:�Ontario’s role in Canada’s oil and natural gas supply chainMade in OntarioGrowth in the Global Energy Mix from 2017-2040Economic growth and products driving demandTop 10 World Natural Gas Producers in 2017Top 10 World Crude Oil Producers in 2017�THE GLOBAL ENERGY PULSEEconomic Impacts of the Oil and Natural Gas Industry in CanadaEnvironmental Protection Spending by Industry - 2016Growing together: �Ontario’s role in Canada’s oil and gas supply chainQuestionQuestionSlide Number 16AgendaServing the world's energy industry – In Canada, $1B Revenues employing 1,000 in 3 manufacturing locations and 5 service centres�TenarisAlgomaTubes supply chain: adding value to Canada’s resource sectorTenarisPrudential supply chain: secure source of supplyCanada’s Energy Sector is Large on Global ScaleSteel Is everywhere in energy development, here are the energy tubulars examples:35% of Canada’s steel consumption is in the energy sector, equal to that of auto and auto partsOntario Manufacturers for Canada’s Energy Sector are big and small Canadian Drilling Activity in 2019 is now 30% lower than 2018 and much lower than 2014Since 2013, TS employment in Northern Ontario has been cut in halfChinese Steel Means Increased GHG Emissions Canada’s Energy & Manufacturing Sectors are Connected – there are more Opportunities PossibleThank you!Growing together: �Ontario’s role in Canada’s oil and gas supply chainQuestionQuestionCEPA MEMBERSEnbridgeEnbridge – in ontarioThe Energy Landscape in OntarioCEPA Member �pipeline networkTransmission pipelines in ontarioCanada is a trusted trading partnerGrowing togetherGrowing together: �Ontario’s role in Canada’s oil and gas supply chainQuestionQuestionSlide Number 44About PSACCanadian Exports by IndustryOil and Gas contributes more to Canada’s GDP and exports more than other sectorsCapital is fleeing CanadaPipelines cancelledPipelines delayedCompetitive issues include U.S. tax changesCanada is losing $ billionsWhy are we losing billions?Contrary to what you might see…Opportunity to Lift Developing Nations � out of Energy PovertyIf We Care About Global Emissions, � Canada should supply the world with energyU.S. Oil and Natural Gas Production at Record LevelsBill C-69 Impacts Major Projects in All IndustriesBill C-48: Oil Tanker Moratorium ActBill C-48: First Nations SupportSome questions you may want to askSlide Number 62AnswersClosingContact Us

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