Outlook for Canadian Oil & Gas Industry Medicine Hat
September 15, 2011 Janet Annesley – Vice President, CAPP
The Global Energy Context •
•
•
Significant energy demand growth:
Global Primary Energy Demand
Population, standards of living Need all forms of energy: Increasing role for renewables Continuing reliance on hydrocarbons Increasing role for nonconventional crude oil & natural gas Technology is a key lever for sustainable growth Production Cost competitiveness
Environmental performance Current Policies Scenario
Canada is a Global Energy Player
#3 Canada is 3rd to Saudi Arabia & Venezuela in crude oil reserves
#1 Canada has the world’s largest uranium reserves.
#3 Canada is third in the world in natural gas production.
#2 Canada is second in the world in hydroelectricity generation.
A Comparison of Annual Revenues Major Canadian Product-Selling Industries
120
Revenues ($C Billions)
100 80
Upstream Oil & Gas
Autos Manufacturing
60
40 20
Forestry & Logging Wheat & Barley Uranium
0 Source: Statistics Canada, CAPP, Canadian Wheat Board, Natural Resources Canada, Canadian Nuclear Association, ARC Financial Corp.
4
Western Canadian Land Sales
3.0
BRITISH COLUMBIA
SASKATCHEWAN
ALBERTA
1.2
3.0
1.0
2.5
0.8
2.0
Yr-to-date = $1.8 billion
2.5
$ billions
$ billions
2.0
1.5
$ billions
Alberta record sale June 1/2011 $841mm
0.6
1.5
1.0
0.4
1.0
0.5
0.2
0.5
0.0
0.0
0.0 2007
2008
2009
2010
YTD 2011
2007
2008
PRIMARILY OIL
2009
2010
YTD 2011
2007
2008
2009
2010
YTD 2011
NATURAL GAS
Total Wells Drilled in Western Canada
28,000
24,000
2009
2010
Alberta
5,297
7,090
8,340
British Columbia
632
552
520
Saskatchewan
1,979
2,517
2,660
Manitoba
220
439
580
Dry/Susp. Gas Oil
2011E
2007 = 18,000
20,000
2008 = 16,100
16,000
2010 = 10,702
2011 E = 12,100
12,000
800 2009 = 8,137
2,700
8,000
4,000
8,600
0 2002
2003
Source – CAPP. Based on Rig Release
2004
2005
2006
2007
2008
2009
2010
2011 E
Oil-Directed Well Licences Issued in W. Canada (Cumulative)
10,000 9,000 8,000
Emerging “Tight Oil” Opportunities
7,000 6,000 5,000
2011
4,000 2010
3,000
2006 - 2008
2,000
2009
1,000 0 Jan
Source: Nickle’s DOB
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Gas-Directed Well Licences Issued in W. Canada (Cumulative) 18,000
Slowdown in gas / CBM drilling
16,000 14,000 12,000 10,000 8,000
2006
6,000 2007 & 2008
4,000
2009 & 2010
2,000
2011
0 Jan
Feb
Source: Nickle’s DOB
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Industry Capital Spending Cdn $billions
Oil & Gas 2009: 2010: 2011:
Investment Spending: $34 billion $42 billion (estimate) $46 billion (forecast)
Northern Canada 2009 2010E 2011F $0.2 $0.5
$0.3
Oil Sands 2009 2010E 2011F $11
$13
$16
East Coast Offshore Western Canada
2009
2009 2010E 2011F $20 $26 $27
$1.7 $2.5
Note: Excludes spending mergers & acquisitions
`09 `10E `11F AB BC SK
$12 $15 $5 $7 $3 $4
$17 $5 $5
2010E 2011F $3.0
Contribution to Upstream Revenue (% of Total Revenue by Commodity)
100%
As a Percent of Total Revenues
90%
80%
Natural Gas
70% 60%
Oil Sands
50% 40% 30% 20%
Crude Oil and Liquids
10% 0% 1990
1995
2000
2005
2010
2015
Source: CAPP, ARC Financial Corp.
10
North American Natural Gas – Supply Outlook •
Shale gas supply a gamechanger
•
Technology breakthroughs
•
New producing regions
•
Emerging stakeholder environmental concerns (footprint, water)
•
Shifting S/D dynamic
W. Canada Natural Gas Production
WCSB Field Receipts: 2008 – 15.7 bcf/d 2009 – 14.7 bcf/d 2010 – 14.3 bcf/d
18
billion cubic feet per day
17
2007 16
2008 15
2010 14
2011
2009
13 Jan
Source: FirstEnergy Capital
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Cdn. Natural Gas Production Forecasts (Recovery and Continued Low Price Cases) 20
Price Recovery Case
18
Mackenzie Delta
16
Eastern Canada
14
Bcfd
12
Horn & Cordova
10
Montney
8 6 4 2
CBM
Note: Prices recover to at least a level of $5.50/GJ
Conventional
0 2005
20
2008
2011
2014
2017
2020
2017
2020
Continued Low Price Case
18 16 14
Bcfd
12 10 8 6 4 2
Note: Prices do not exceed $4/GJ over the forecast period
0 2005
2008
2011
2014
N.A. Natural Gas Pipelines & 2010 Cdn. Exports to U.S. (bcf/d) Alaska Natural Gas Pipeline
Mackenzie Valley Pipeline
Proposed Kitimat LNG Project
Westcoast
Pacific NW 1.5 bcf/d
ANG/ Foothills
Northwest PGT PG&E
California 1.4 bcf/d SoCal
TransCanada Alberta (NGTL)
Alliance
Foothills Northwest Northern Border Kern River
Trailblazer
TransCanada Transmission Mainline
Northeast 2.0 bcf/d
Great Lakes
El Paso
IroquoisPNGTS
Central 4.1 bcf/d
ANR NGPL Panhandle Transwestern ANR El Paso NGPL
M&NE TQ&M
CNG
Texas Eastern Transcontinental
Algonquin
Global Crude Oil Reserves by Country
World Oil Reserves
Open to Private Sector
300 260 250
Open to Private Sector
Restricted (79%)
175
200
Other 44%
137
150
115
102
100
92 60 46
50
37
30
25
20
19
Source: Oil & Gas Journal Dec. 2010
at es
na Un
ite
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St
Ch i
at ar Q
an hs t Ka zh ak
ge ria Ni
by a Li
sia Ru s
Dh ab i Ab u
ai t Ku w
Ir aq
Ir an
Ca na da
Ve ne zu el a
0 Sa ud iA ra bi a
billion barrels
211
Oil Sands 56%
Canadian Oil Sands and Conventional Oil Production Forecast (2011-2025) 5,000 4,500
Actual
Forecast
4,000
Atlantic Canada
thousand bpd
3,500
In Situ
3,000 2,500 2,000
Mining
1,500 1,000
Conventional Heavy
500
Pentanes/Condensate
Conventional Light
0 2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
Access to Current and New Oil Markets Canadian & U.S. Crude Oil Pipeline Proposals
Environmental & Social Performance • Focus on both crude oil / oil sands & natural gas • Reputation = Performance + Communication Continuous performance improvement More effective messaging (breadth, channels, transparency) Improved industry collaboration
• Key concerns expressed regarding oil & gas development: Local / regional environmental & social impacts (air, land, water, biodiversity) Global climate change Role of fossil fuels in future energy system
Royal Society of Canada Report
Environmental & Health Impacts of Canada’s Oil Sands Industry
•
Science-based, independent analysis of the environmental aspects of Canada’s oil sands
•
Addresses many of the issues and perceptions of oil sands development: Reclamation is not keeping pace, but sustainable reclamation is achievable Water use does not threaten viability of the Athabasca River No impact on Athabasca water quality/ecosystem and no evidence of impact on human health in downstream communities Tailings technologies are emerging, but tailings inventory is growing GHG emissions per barrel are reducing but growing production creates a challenge in meeting international commitments Minimal impacts on regional air quality
December 2010
North American GHG Emissions (2009): Coal-Fired Power and Oil Sands AK
MT
ND MN
OR WY NV
SD
NH
WI
NE
MI
NY
IA
UT
IN
CO KS
MO
OH KY
NJ
WV
VA
IL
AZ NM
OK
NC
TN AR SC
Legend
AL
100 megatonnes 50 megatonnes 15 megatonnes
GA
TX LA
MS FL
Sources: U.S. DOE/EIA & Environment Canada
Canadian oil sands Canadian coal-fired power generating plants U.S. Coal fired power generating plants
Reducing Greenhouse Gas Emissions in Oil Sands 25
Oil Sands GHG Emissions/bbl
Energy Efficiency
Using less energy input Reducing energy waste/losses Capturing waste heat Cogeneration power/steam
20
g co2 eq./mj
•
39% 15
10
5
•
Improved recovery processes Lower temperature extraction Additives to reduce use of both water and energy (steam) Use of electricity rather than steam Underground combustion rather than steam
•
Carbon capture & sequestration Most effective at upgraders
0
1990
2008
Industry Communications & Engagement - A Portfolio of Activity • Communications & outreach: Advertising Media – mainstream, social Speeches & presentations National Oil Sands Dialogues Meetings & tours Responsible Canadian Energy Report Employees Educational materials (fact books, etc.)
• Directly by industry and via 3rd parties • Canada, U.S., Europe, Asia
Oil Sands Advertising Communicating with the Public To demonstrate that industry takes these issues seriously and what is being done by “real people� to address them.
CAPP TV – Success Stories
A Canadian Energy Strategy • •
• •
CAPP supports a Canadian Energy Strategy – clarify and communicate objectives, align resources, implement enabling policy. Proposed strategy: Growth in increasingly sustainable hydrocarbon production Growth in renewable energy Shifts in energy demand arising largely from energy efficiency and conservation.
Market forces are key determinant in decisions on energy supply, transportation and use Governments have an important role to play in developing and implementing enabling public policy:
•
Fiscal competitiveness Regulatory reform Diversification of markets Policy to encourage continuous improvement in environmental and social performance Lower carbon domestic energy supply and use Technology & innovation Energy efficiency and conservation Energy education Workforce of future
Recent CEMM at Kananaskis established positive momentum.
Summary • “3Es” Environmental performance Energy security & reliability Economic growth
• Competitiveness & social license are “must haves” • Reputation = Performance + Communication Technology is key performance lever We all have a role in communication / outreach
• We need to work together & we all need to step up! A great opportunity for Canada……needs innovative, creative, committed, determined people to make it happen!