Canada’s Oil Sands

Webber AcademyNovember 2013

Looking ForwardContinuing Responsible Growth

2

Oil Sands by Subject

3

Global Primary Energy Demand

Source: International Energy Agency – New Policies Scenario World Energy Outlook 2011

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2010 2015 2020 2025 2030 2035

million tonnes oil equivalent

Other RenewablesBioenergyHydroNuclearNatural GasOilCoal

Source: International Energy Agency World Energy Outlook 2012

Ongoing reliance on fossil fuels (share of energy consumption):2010: 81% 2035: 75%

4

Source: Cenovus

Oil Sands

Oil Sands – Resistance to flow

Source: Imperial Oil

0

1

10

100

1,000

10,000

100,000

1,000,000

Vis

cosi

ty @

Roo

m T

emp

erat

ure

(cP

)

Water

OliveOil

PancakeSyrup

Honey

Ketchup

Cold Lake Bitumen

PeanutButter

Atha-bascaBitumen

Light CrudeOil

Global Crude Oil Reserves by Country

26 25 2130

3748

8092

102

141155

173

265298

0

50

100

150

200

250

300Ve

nezu

ela

Saud

i Ara

bia

Cana

da

Iran

Iraq

Kuw

ait

Abu

Dha

bi

Rus

sia

Liby

a

Nig

eria

Kazh

akhs

tan

Chin

a

Qat

ar

Uni

ted

Stat

es

billi

on b

arre

ls

Source: Oil & Gas Journal Dec. 2012

Includ

es 169

billion

barre

ls

of oil s

ands re

serves

Restricted(81%)

Open to Private Sector

Oil Sands 56%

Other 44%

World Oil ReservesOpen to

Private Sector

Canada’s Oil Sands Resource

8

Natural exposure of the Oil Sands near Ft. McMurray

Courtesy of R.G. Skinner

Two Methods of Oil Sands Recovery

Pho

to: C

onoc

oPhi

llips

-S

urm

ont

Schematic: Devon - Jackfish

Drilling: 80% of reserves Mining: 20% of reserves

10

Canadian Oil Sands (Bitumen and SCO) & Conventional Production

11

0200400600800

1,0001,2001,4001,6001,8002,000

Jan-

2005

Jul-2

005

Jan-

2006

Jul-2

006

Jan-

2007

Jul-2

007

Jan-

2008

Jul-2

008

Jan-

2009

Jul-2

009

Jan-

2010

Jul-2

010

Jan-

2011

Jul-2

011

Jan-

2012

Jul-2

012

Thousand b/d

Eagle Ford (Texas)

N. Dakota

SK Light

AB Light

Light/Tight Oil Production

Sources: Eagle Ford : Railroad Commission of TexasN. Dakota: EIASK: Government of SKAB: ERCB

+ 1,000,000 b/d in 2 years

12

0

500

1,000

1,500

2,000

2,500

3,000

Canada Saudi Arabia Mexico Venezuela Russia Iraq Nigeria Colombia Kuwait Algeria

thou

sand

bar

rels

per

day

U.S. Imports of Crude Oil and Petroleum Products by Country of Origin

Petroleum ProductsCrude Oil

#1

Source: EIA, Jan-Dec 2012

Canada is the largest supplier of crude oil and of crude oil and petroleum products to the U.S.

0

500

1000

1500

2000

2500

3000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Jan

-Nov

Thou

sand

bar

rels

per

day

Venezuela

Canada

Mexico

KXL is intended to meet U.S. needs – especially for Gulf Coast Refineries

Source: EIA

Mexico’s imports are decreasing due to the natural decline of its

oil production

Mexico’s imports are decreasing due to the natural decline of its

oil production

Venezuela’s imports are decreasing due

to its political choice to focus on other markets such as China and Cuba

Venezuela’s imports are decreasing due

to its political choice to focus on other markets such as China and Cuba

2012 Canada and U.S. Demand for Crude Oil by SourceThousand Barrels per Day

15

Access to Markets – Pipeline Expansions in Development

WCSB Takeaway Capacity vs. Supply Forecast

Crude Oil Rail ExportsWestern Canada vs. North Dakota

18

• Opportunities:• Relatively quick• Flexibility • Less diluent• Use in both

directions

• Challenges:• Recent safety• Higher costs• Limited loading and

tank car availability

Source: Peter’s & Co. Limited = Sept 2013

0

2

4

6

8

10

12

14

China India EuropeanUnion

UnitedStates

Japan Korea

mm

b/d

Net oil imports in the New Policies Scenario

2005

2011

2020

2035

Changing Global Oil Import Needs

Source: IEA World Energy Outlook 2012, EIA

19

Canada’s Proximity Advantage to Asian Markets

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 marketsSource: Enbridge Pipelines

21

Environmental Performance

Environmental Performance

• Production§ GHG emissions§ Water – quantity & quality§ Land/tailings reclamation

• Pipelines, Rail§ Integrity & operations

• Marine, Tankers§ Prevention, response and

recovery – tankers/ports• Regulation and Monitoring§ Enhanced oil sands

monitoring – more sites, more transparency

§ Up to $50M/yr paid by industry

22

Global GHG Emissions

GHG emissions from oil sands:§ 0.14% of global CO2 emissions§ 7.8% of Canada’s GHG emissions§ 26% reduction in intensity from 1990

Global Emissions Canada’s 2%

Sources:1. United Nations Statistics Division (2009 Data)2. Environment Canada (2011 Data)

Other Oil & Gas4%

Electricity13%

Other Upstream11%

Emission Intensive & Trade Exposed

Industries11%

Agriculture10%

Transportation24%

Oil Sands7.8%

Waste & Others7%

Buildings12%USA

18%

European Union12%

Other26%

China25%

Russian Federation

5%

Australia/New Zealand

1%

India7%

Japan4%

Canada2%

North American GHG Emissions (2011)for Coal-fired Power and Oil Sands

0-15 mtonnes16-50 mtonnes51-100+ mtonnes

Legend

U.S. Coal fired power generating plants

Canadian coal-fired power generating plants

Canadian oil sands

Sources: U.S. DOE/EIA & Environment Canada

GA

TX

NC

MI

AL

MO KY

IN OH

NE

NM

ND

CO

SC

KS

IA

TN

WY

VA

MN

UT

OK

WI

AZ

AR

AK

LA

IL

NV

OR

MT

SD

NJ

NY

NH

MS

WV

FL

0 100 200 300 400 500 600

North Sea - Forties

Brazil - Tupi

Saudi Arabia - Arab Light

US Barrel Refined in the U.S. (2005)

Iraq - Kirkuk Blend

Cdn Oil Sands: Mining Dilbit (PFT)

Mexico - Maya

Venezuela Bachaquero

US - Mars

Cdn Oil Sands: Low SOR SAGD Dilbit

Iraq-Basra Light

Canadian Oil Sands: SAGD Dilbit

Nigeria - Bonny Light

Cdn Oil Sands: Mining SCO

US -Kern River

Venezuela - Petrozuata

kgCO2e per barrel of refined product

Well-to-tank

Refined productCombustion

The Oil Sands GHG Emissions ChallengeImproving to at least the emissions of Similar Crudes

Source: IHSCERA Oil Sands Dialogue Getting the Numbers Right 2012

+5%

U.S. Barrel Refined in the U.S. (2005)

+2%

25

Greenhouse Gas Emissions

• Carbon regulation § Alberta Regulation

• Covers 100% of oil sands• Mandatory 12% reduction• $15 carbon price since July 2007

§ Federal Regulation• Alignment with US (17% target

and vehicle emissions standards)• Coal sector done, moving ahead

with oil sector regulation in 2013

• Reducing GHG Emissions§ Using energy more efficiently

• Capturing CO2§ Governments investing over $3 billion –

partners with industry§ Shell Quest CCS proceeding

0

5

10

15

20

25

Oil Sands GHG Emissions/bbl

26%

g co

2 eq

./mj

1990 2011

26

Less Energy, Less Water and Less Land

• Accelerating innovation environmental performance in the oil sands§ Canadian Oil Sands Innovation Alliance (COSIA)

• Reduce water and energy§ Cogeneration – steam and electric power§ Solvent/steam injection§ Alternative well configurations for SAGD§ Electro-thermal technology

• Water reduction and recycle§ Use of saline (non-fresh) water for steam§ Faster waste water recycle§ Water technology development centre

• Land reclamation§ Faster Forests – 600,000 seedlings in 2011§ Winter wetland planting

Ceramic membranes for water treatment

Faster Forests

27

Jobs andEconomic Benefits

-

20.00

40.00

60.00

80.00

100.00

120.00

140.00

2010 M M J S N

2011 M M J S N

2012 M M J S N

2013 M M J S

US$

/bbl

World Edm Light Cdn Heavy

World vs. Canadian Oil Prices

29

Project Type Project Size(bbl/d)

Capital Cost Range$MM

Estimated Supply Costs$US WTI/bbl

In Situ SAGD 30,000 $750 – 1,500 $50 - $78

Standalone mine

100,000 $5,500 – 7,500 $70 - $91

Oil Sands Supply Costs

30

Source: ERCB ST98 - 2012

• Industry will invest $67 billion in Canada in 2013§ Largest single private sector investor in Canada

• Payments to governments average about $18 billion per year • Oil and gas accounts for 20% of value on Toronto Stock Exchange• Oil and Gas accounts for close to 18% of exports• Industry employs more than 550,000 in Canada (direct & indirect).

The Oil and Natural Gas IndustryA Key Driving Force in the Canadian Economy

Upstream Oil& Gas

AutoManufacturing

Forestry& Logging

Wheat &Barley

Uranium

31

Industry Capital Spending Cdn $billions

Note: Excludes spending on mergers & acquisitions

Western Canada2012 2013E 2014F $37 $39 $39

Western Canada2012 2013E 2014F $37 $39 $39

East Coast Offshore2012 2013E 2014F$2.4 $3.0 $3.5

East Coast Offshore2012 2013E 2014F$2.4 $3.0 $3.5

Oil & Gas Investment Spending:2012: $67 billion2013: $67 billion (estimate)2014: $68 (forecast)

Oil & Gas Investment Spending:2012: $67 billion2013: $67 billion (estimate)2014: $68 (forecast)

32

Northern Canada2012 2013E 2014F$0.1 $0.5 $0.7

Northern Canada2012 2013E 2014F$0.1 $0.5 $0.7

Oil Sands2012 2013E 2014F$27 $25 $25

Oil Sands2012 2013E 2014F$27 $25 $25

Suppliers across Canada

2400 American companies provide goods and services directly to the oil sands

3434

What’s in it for us?

Aboriginal Participation in Oil Sands Development

• Aboriginal Companies:

• value of contracts in 2010 = $1.3 Billion

• value of contracts 1998 – 2010 = $5 Billion

• Aboriginal Employees in permanent jobs in 2010 = 1,700+

• Contributions to Aboriginal communities in 2010 = $5.5 Million

• Aboriginal/Metis/non status consultation funding 2010 = $12.3 Million

Source: OSDG May 2011

Improving Environmental PerformanceGenerating Economic Benefits

Being Part of the Discussion

38

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