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The Canadian Oil SandsWoodrow Wilson Forum : 

The Canadian Oil Sands Woodrow Wilson Forum October 17, 2005

Canada’s Oil and Gas Industryin the North American Energy Economy: 

Canada’s Oil and Gas Industry in the North American Energy Economy Canada is the world’s 3rd largest natural gas producer Canada is the world’s 9th largest crude oil producer and moving up the list quickly with oil sands production increasing Industry Overview 500,000 jobs C$35 Billion capital investment C$20 Billion in payments to federal and provincial governments #1 private sector investor in Canada Canada is the largest supplier of energy to the United States #1 #1

U.S. Natural Gas Imports from Canada: 

U.S. Natural Gas Imports from Canada Source: U.S. DOE/EIA Canada’s exports dropped in 2003 due to a 1.7 bcf/day reduction in US demand 16.8% 16.5% 15.6% 16.2% 16.9%* * Estimated full-year. Canadian Share of US Consumption

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

U.S. Imports of Crude Oil and Petroleum Products by Country of Origin Petroleum Products Crude Oil #1 Source: EIA, 2004 Canada, is the largest (#1) supplier of crude oil and of crude oil and petroleum products to the US.

Industry Capital Spending Cdn $billions: 

Industry Capital Spending Cdn $billions Northern Canada ‘03 ‘04 ’05F ’06F $0.3 $0.3 $0.5 $0.5 Oil Sands ‘03 ‘04 ‘05F ’06F $5.0 $6.2 $8.5 $8.8 WCSB ‘03 ‘04 ‘05F ’06F $21.4 $24.5 $27.0 $29.0 International ‘03 ‘04 ‘05F ’06F $5.5 $10.4 $5.0 $6.8 East Coast Offshore ‘03 ‘04 ‘05F ‘$06F $2.2 $1.9 $1.0 $0.7 Note: Spending in Canada excludes spending associated with mergers & acquisitions International are acquisitions net of divestures. The oil & gas industry will invest over $39 billion in capital in Canada in 2006

Canadian Crude Oil Production by Region: 

Canadian Crude Oil Production by Region

Canadian Natural Gas Production by Region: 

Canadian Natural Gas Production by Region

Slide8: 

1875 Canada Geological Survey registers oil sands 1915 shipments to Edmonton for paving 1938 Abasand commercial production - 2,500 barrels destroyed by fire in 1941 - not rebuilt 1950’s separation technology centrifugal force Strong interest results in dozens of exploration leases sold by the government 1964 Esso starts Cold Lake; GCOS construction 1967 first GCOS (Suncor) production - 32,000 b/d 1978 first Syncrude production - 109,000 b/d 1993 truck and shovel technology adopted key to revitalizing the development outlook 2004 oil sands production reaches 1 million barrels per day Canadian Oil Sands History

Global Crude Oil Reserves by Country: 

Global Crude Oil Reserves by Country Source: Oil & Gas Journal Dec. 2004 Canada, with 175 billion barrels in Oil Sands reserves, ranks 2nd only to Saudi Arabia in global oil reserves

Oil Sands Projects in Three Deposits: 

Oil Sands Projects in Three Deposits Oil sands production now exceeds one million barrels per day US$28 billion built from 1996-2004 Close to US$36 billion in new oil sands projects expected in 2005-2010 Value Creation (CNRL) Deer Creek Syncrude Suncor Petro- Cda Shell Encana Encana Petro-Canada Suncor Imperial Exxon Mobil Encana Bristol (CNRL) Cdn Coastal (Devon) Synenco Husky Fort McMurray Shell CNRL Centennial (Conoco) Imperial Syncrude EM Petro-Canada

Total Oil Sands Project Production: 2003-2015: 

Total Oil Sands Project Production: 2003-2015

Oil Sands Production Technologies: 

Oil Sands Production Technologies Mining & Upgrading In-situ Recoverable resource = 65 billion barrels Recoverable resource = 250 billion barrels Cyclic Steam Process Source: Syncrude Source: Imperial Oil Source: Shell Canada

Oil Sands Supply Costs by Recovery Typeincludes capital, operating, royalty, taxes and return: 

Oil Sands Supply Costs by Recovery Type includes capital, operating, royalty, taxes and return Source: NEB - based on C$2003 converted @ US$0.80/C$ * Surface mining, extraction & upgrading Light Oil Heavy Oil

Canadian Oil ProductionConventional, Oil Sands and Offshore: 

Canadian Oil Production Conventional, Oil Sands and Offshore WCSB Conventional Oil Oil Sands Offshore Source: CAPP Oil Sands Growth: 2004 = 1 million b/d 2015 = 2.7 million b/d

Environmental Stewardship: 

Environmental Stewardship Air Monitoring programs Reducing emissions Water Reduce, recycle and reuse More efficient, 90+% recycle Land Reclamation and remediation Directional drilling from single site to reduce impact

Canada’s Oil SandsChallenges to achieve this potential: 

Canada’s Oil Sands Challenges to achieve this potential Continuing to Lower Costs Alternatives to natural gas for fuel – free it up for other markets Workforce and Infrastructure Ensuring adequate workforces – trades, technical, professional Roads, Housing and Municipal services Access to Markets – Pipelines/Refineries Need new pipelines Decisions needed now for pipelines in 4-5 years Need new refineries, expansions and modifications For many conventional refineries, oil sands is either heavier (bitumen blend) or lighter (upgraded crude) than their current feedstock

Natural Gas Use in Oil Sands DecliningNatural Gas Consumed per Barrel of Oil Sands Production: 

Natural Gas Use in Oil Sands Declining Natural Gas Consumed per Barrel of Oil Sands Production Source: Historical data from EUB

Canadian and U.S. Crude Oil Pipeline Alternatives: 

Canadian and U.S. Crude Oil Pipeline Alternatives Sarnia Fort McMurray Chicago Houston Los Angeles Patoka Montreal Burnaby St. James Portland Salt Lake City Superior Hardisty Edmonton Anacortes San Francisco Casper Potential Pipeline Expansion Routes Asia California Anacortes California USGC ENBRIDGE GATEWAY TCPL KEYSTONE Wood River Cushing Spearhead Extensions to New Markets Growing oil sands production will require new pipeline capacity to existing and expanded markets Midwest

SEC Bitumen Reserves Disclosurefor Financial Reporting : 

SEC Bitumen Reserves Disclosure for Financial Reporting --- 2004 Average Bitumen Price at Cold Lake = 50% of WTI Data Source : Purvin & Gertz Calculated Field Price, % of WTI Month

Topics for Discussion?: 

Topics for Discussion? How can Canada and the US overcome the new constraints to oil sands growth? – workforce, infrastructure, rising costs How and where to convert oil sands into petroleum products? What can be done from the US to help with the workforce shortages? Where will oil sands production be consumed? If in North America, where? What about offshore markets? What needs to change in North America as the oil slate shifts to heavier oil? Can US gasification technology free up natural gas for other North American markets? How does this fit in a world of CO2 reductions?