120911_energy
TRANSCRIPT
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Agenda
Who We Are and What We Do
Let’s Talk About Canadian Oil and Oil Sands
Let’s Talk About Pipelines
But… Let’s Talk About Western Canadian Natural Gas
Be Careful What You Wish For!
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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 Canada’s 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)
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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 ImpactsPacific Access Part III – Economic Impacts of Exporting Horn River Natural Gas
to Asia as LNG
Natural Gas Liquids in North America: Overview and Outlook to 2035
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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 Oil
For a list of all CERI publications, please visit our website at www.ceri.ca
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CERI Conferences
CERI hosts three major conferences each year (Oil, Natural Gas and Petrochemicals)
attended by over 100 delegates from across North America.
Dates and venues for our 2013 conferences can be found on our website. For further information, contact our Conference Manager, Deanne Landry, at
403-220-2395 or [email protected].
CERI 2012 Oil Conference“Achieving Super Power Status” April 23-24, 2012
CERI 2012 Petrochemical Conference
“Pathways to the Future” June 3-5, 2012
CERI 2012 Natural Gas Conference
“Going Global – Shifting the Focus of
the Natural Gas Industry” February 27-28, 2012
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“Western Canada’s Upstream Oil
and Gas Industry”
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Land Acquisition
Crown Land Sales
Evaluation
Construction
Operation and Maintenance
Production
Wages
Royalties
Western Canada’s Oil and Gas Industry
Land Acquisition
Crown Land Sales
Conventional Drilling
Completion and Tie in
Operation and Maintenance
Production
Wages
Royalties
2009 Expenditures: $41.4 billion 2009 Expenditures: $25.1 billion
Oil and Gas Drilling Oil Sands Developments9
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“Let’s Talk About Canadian
Oil and Oil Sands”
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2011 Facts about Canadian Crude
Production:• 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 Crude 271,778 bbls/day
• Total 2011 Production of Crude Oil and Equivalent 2,988,854 bbls/day
Exports:• 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/day
Imports: % of Capacity
• Atlantic Canada Conventional Crude 333,990 bbls/day (80%)
• Quebec Conventional Crude 298,775 bbls/day (84%)
• Ontario Conventional Crude 52,836 bbls/day (15%)
• Total Canadian Imports 685,560 bbls/day
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WCSB Conventional Oil Production ForecastRealistic Scenario (2010-2035)
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
P r o d u c t i o n ( b b l s / d a y )
British Columbia Existing Wells British Columbia New Wells Alberta Existing Wells
Alberta New Wells Saskatchewan Existing Wells Saskatchewan New Wells
Manitoba Production NWT Production
+ 150,000 bbls/day
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Western Canadian Oil Sands Potential
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045
('000 bpd)
Total In Situ Bitumen Volumes Total Mined Bitumen Volumes
SAGD and CSS Projects
Potential 3.3 mbpd
Mining Projects
Potential 2.1 mbpd
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Western Canadian Oil Sands Potential
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
('000 b/d)
Announced Awaiting Approval
Approved Suspended
Under Construction Onstream
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Options for Canadian Crude By Pipeline
Source: Canadian Association of Petroleum Producers, Crude Oil Forecast, Markets & Pipelines, June 2011
Churchill
E i I f Alb ’ Oil S d
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Economic Impacts of Alberta’s Oil Sands “No Expansion” Scenario
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
2 0 2 0
2 0 2 1
2 0 2 2
2 0 2 3
2 0 2 4
2 0 2 5
2 0 2 6
2 0 2 7
2 0 2 8
2 0 2 9
2 0 3 0
2 0 3 1
2 0 3 2
2 0 3 3
2 0 3 4
'000 bbl/d
AB Conventional Prodn SK Conventional BC Conventional
MB Conventional NWT Conventional Diluent 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
Mainline Expansion (2014)Enbridge Line 61 +160,000 bpd
Enbridge Line 5 +50,000 bpd
Rail volumes (+50,000 to +200,000 bpd)
E i I t f Alb t ’ Oil S d
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Economic Impacts of Alberta’s Oil Sands “No Expansion” Scenario
0
50
100
150
200
250
300
350
400
450
2 0
1 1
2 0
1 3
2 0
1 5
2 0
1 7
2 0
1 9
2 0
2 1
2 0
2 3
2 0
2 5
2 0
2 7
2 0
2 9
2 0
3 1
2 0
3 3
2 0
3 5
Induced
Indirect
Direct
0
10
20
30
40
50
60
70
80
CanadaDirect employment 90,000 (2011)
growing to 125,000 jobs (2022)
Total Direct, Indirect, Induced employment
270,000 (2011) to 370,000 (2022)
United StatesTotal Indirect and Induced
employment 54,000 (2011)
growing to 71,000 jobs (2022)
Source: CERI, Pacific Access: Part I Linking Oil Sands Supply to New and Existing Markets
E i I t f Alb t ’ Oil S d
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ThousandPerson Years
GDP Compensation of
Employees
Employment
PADD I 38,742 19,604 447
PADD II 50,550 24,983 580
PADD III 19,844 7,814 195
PADD IV 8,028 3,740 88
PADD V 24,474 11,412 258
Total US 141,638 67,554 1,568
2011-2035$CAD Million
Alberta
$1,440
Billion
0
200
400
600
800
1000
1200
1400
1600
GDP
$ C
D N B i l l i o n s
Rest of Canada
$80.9 Billion
Ontario
55%British
Columbia
24%
Quebec
12%
Saskatchewa
n
4%
Manitoba
3%
Rest of
Canada
2%
Total GDP Increase as a result of Oil Sands Investment & Operations 2011-203
1. Ontario $44.30 billion 4. Saskatchewan $3.05 billion
2. BC $19.45 billion 5. Manitoba $2.93 billion
3. Quebec $9.59 billion 6. ROC $1.56 billion
Economic Impacts of Alberta’s Oil Sands “No Expansion” Scenario
Canadian GDP Impacts
United States Impacts by PADD
Source: CERI, Pacific Access: Part I Linking Oil Sands Supply to New and Existing Markets
E i I t f Alb t ’ Oil S d
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Thousand
Person Years
GDP Compensation of
Employees
Employment
Alabama 1,291 647 19
Alaska 521 113 3
Arizona 1,729 849 22
Arkansas 754 355 11
California 15,091 7,012 151
Colorado 3,305 1,563 35
Connecticut 1,703 839 15
Delaware 474 176 4
District of Columbia 475 292 4
Florida 5,139 2,498 69
Georgia 2,827 1,471 38
Hawaii 395 181 5
Idaho 378 193 6
Illinois 17,303 8,442 173
Indiana 2,446 1,216 30
Iowa 1,072 471 14
Kansas 2,008 977 24
Kentucky 1,216 599 18
Louisiana 3,493 1,115 27
Maine 340 178 6Maryland 1,740 895 21
Massachusetts 2,567 1,463 28
Michigan 4,468 2,371 54
Minnesota 2,046 1,063 26
Mississippi 761 367 12
Missouri 1,728 918 25
Montana 3,176 1,504 32
Nebraska 593 280 9
Nevada 903 433 12
New Hampshire 430 238 6
New Jersey 3,545 1,801 35
New Mexico 610 214 7
New York 7,713 3,902 71
North Carolina 3,121 1,389 37
North Dakota 209 89 3
Ohio 6,662 3,358 77
Oklahoma 1,368 556 16
Oregon 1,382 650 18
Pennsylvania 4,058 2,097 50
Rhode Island 337 165 4
South Carolina 1,120 602 18
South Dakota 252 98 4
Tennessee 1,870 957 27
Texas 12,935 5,116 119
Utah 787 382 11
Vermont 173 90 3
Virginia 2,577 1,313 31
Washington 4,451 2,174 48
West Virginia 401 195 6
Wisconsin 7,308 3,590 79
Wyoming 382 98 3
Total US 141,638 67,554 1,568
$CAD Million
Economic Impacts of Alberta’s Oil Sands “No Expansion” Scenario
United States Impacts
by State
Source: CERI, Pacific Access: Part I Linking Oil Sands Supply to New and
Existing Markets (Appendix A)
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Alb t Oil S d P j t C l d ith WCSB C ti l Oil
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2 0 0
7
2 0 0
8
2 0 0
9
2 0 1
0
2 0 1
1
2 0 1
2
2 0 1
3
2 0 1
4
2 0 1
5
2 0 1
6
2 0 1
7
2 0 1
8
2 0 1
9
2 0 2
0
2 0 2
1
2 0 2
2
2 0 2
3
2 0 2
4
2 0 2
5
2 0 2
6
2 0 2
7
2 0 2
8
2 0 2
9
2 0 3
0
2 0 3
1
2 0 3
2
2 0 3
3
2 0 3
4
'000 bbl/d
AB Conventional Prodn SK Conventional BC Conventional
MB Conventional NWT Conventional Diluent for Primary/Eor
Existing&Under Construction US Bakken prodn Approved
Approved-on Hold Awaiting Approval Announced
KXL 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 req'ed to move bitumen as per
pipeline specifications. August 23, 2012
Keystone XL (2015)
Mainline Expansion (2014)
Alberta Oil Sands Projects Coupled with WCSB Conventional OilInclusion of the Keystone XL Pipeline
Alb t Oil S d P j t C l d ith WCSB C ti l Oil
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2 0 0
7
2 0 0
8
2 0 0
9
2 0 1
0
2 0 1
1
2 0 1
2
2 0 1
3
2 0 1
4
2 0 1
5
2 0 1
6
2 0 1
7
2 0 1
8
2 0 1
9
2 0 2
0
2 0 2
1
2 0 2
2
2 0 2
3
2 0 2
4
2 0 2
5
2 0 2
6
2 0 2
7
2 0 2
8
2 0 2
9
2 0 3
0
2 0 3
1
2 0 3
2
2 0 3
3
2 0 3
4
'000 bbl/d
AB Conventional Prodn SK Conventional BC Conventional
MB Conventional NWT Conventional Diluent for Primary/Eor
Existing&Under Construction US Bakken prodn Approved
Approved-on Hold Awaiting Approval Announced
TMX Expansion KXL 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 req'ed to move bitumen as per
pipeline specifications. August 23, 2012
TMX (2017)
Keystone XL (2015)
Mainline Expansion (2014)
Alberta Oil Sands Projects Coupled with WCSB Conventional OilInclusion of TMX Expansion
Alb Oil S d P j C l d i h WCSB C i l Oil
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2 0 0
7
2 0 0
8
2 0 0
9
2 0 1
0
2 0 1
1
2 0 1
2
2 0 1
3
2 0 1
4
2 0 1
5
2 0 1
6
2 0 1
7
2 0 1
8
2 0 1
9
2 0 2
0
2 0 2
1
2 0 2
2
2 0 2
3
2 0 2
4
2 0 2
5
2 0 2
6
2 0 2
7
2 0 2
8
2 0 2
9
2 0 3
0
2 0 3
1
2 0 3
2
2 0 3
3
2 0 3
4
'000 bbl/d
AB Conventional Prodn SK Conventional BC Conventional
MB Conventional NWT Conventional Diluent for Primary/Eor
Existing&Under Construction US Bakken prodn Approved
Approved-on Hold Awaiting Approval Announced
Northern Gateway Addition TMX Expansion KXL 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 req'ed to move bitumen as per
pipeline specifications. August 23, 2012
TMX (2017)
Keystone XL (2015)
Northern Gateway (2018)
Mainline Expansion (2014)
Alberta Oil Sands Projects Coupled with WCSB Conventional OilInclusion of Northern Gateway
Alb t Oil S d P j t C l d ith WCSB C ti l Oil
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2 0 0
7
2 0 0
8
2 0 0
9
2 0 1
0
2 0 1
1
2 0 1
2
2 0 1
3
2 0 1
4
2 0 1
5
2 0 1
6
2 0 1
7
2 0 1
8
2 0 1
9
2 0 2
0
2 0 2
1
2 0 2
2
2 0 2
3
2 0 2
4
2 0 2
5
2 0 2
6
2 0 2
7
2 0 2
8
2 0 2
9
2 0 3
0
2 0 3
1
2 0 3
2
2 0 3
3
2 0 3
4
'000 bbl/d
AB Conventional Prodn SK Conventional BC Conventional
MB Conventional NWT Conventional Diluent for Primary/Eor
Existing&Under Construction US Bakken prodn Approved
Approved-on Hold Awaiting Approval Announced
Northern Gateway Addition TMX Expansion KXL 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 req'ed to move bitumen as per
pipeline specifications. August 23, 2012
TMX (2017)
Keystone XL (2015)
Northern Gateway (2018)Looping/Expanding Existing Pipelines
Mainline Expansion (2014)
Alberta Oil Sands Projects Coupled with WCSB Conventional OilFull Potential
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“ BUT ”
Wh t th P bl f WCSB OIL?
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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 inorder 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 Oil
6. 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.)
What are the Problems for WCSB OIL?
Competition from the US Bakken
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Competition from the US Bakken Oil Production Forecast and Transportation
Diff ti l P bl WTI B t
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$(28.00)
$(26.00) $(24.00)
$(22.00)
$(20.00)
$(18.00)
$(16.00)
$(14.00)
$(12.00) $(10.00)
$(8.00)
$(6.00)
$(4.00)
$(2.00)
$-
$2.00
$4.00
$6.00
$8.00
$35.00
$40.00
$45.00
$50.00
$55.00
$60.00
$65.00
$70.00
$75.00
$80.00 $85.00
$90.00
$95.00
$100.00
$105.00
$110.00
$115.00
$120.00
$125.00
$130.00
$135.00
J a n - 2 0 0 5
A p r - 2 0 0 5
J u l - 2 0 0 5
O c t - 2 0 0 5
J a n - 2 0 0 6
A p r - 2 0 0 6
J u l - 2 0 0 6
O c t - 2 0 0 6
J a n - 2 0 0 7
A p r - 2 0 0 7
J u l - 2 0 0 7
O c t - 2 0 0 7
J a n - 2 0 0 8
A p r - 2 0 0 8
J u l - 2 0 0 8
O c t - 2 0 0 8
J a n - 2 0 0 9
A p r - 2 0 0 9
J u l - 2 0 0 9
O c t - 2 0 0 9
J a n - 2 0 1 0
A p r - 2 0 1 0
J u l - 2 0 1 0
O c t - 2 0 1 0
J a n - 2 0 1 1
A p r - 2 0 1 1
J u l - 2 0 1 1
O c t - 2 0 1 1
J a n - 2 0 1 2
A p r - 2 0 1 2
J u l - 2 0 1 2
WTI - Brent Differential ($/b)
Europe Brent Spot Price FOB ($/b)
West Texas Intermediate (WTI) @ Cushing ($/b)
Differential Problem WTI-Brent
P bl WTI B t Diff ti l
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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 V
Simple Math: 2,152,000 bbls/day times $15/bbl= $32 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 2013
Future Problem WTI Brent Differential
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Future Problem WTI-Brent Differential
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2011 2012 2013 2014 2015 2016
C a p a c i t y B
P D
Year
Pipeline Capacity Into and Out of Cushing
Total Flow Into Cushing
Total Flow Out of Cushing
RISK
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“Canada has Energy”
“North South East or West”
“If the Market Wants the Energy,
Canada Needs the Pipes”
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“Let’s Talk About
Western Canadian Natural Gas”
United States Gas Pipeline Import/Export Forecast
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Relevant • Independent • Objective www.ceri.ca34
United States Gas Pipeline Import/Export ForecastCERI “Realistic” Case (Feb. 2012)
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
2 0 2 0
2 0 2 1
2 0 2 2
2 0 2 3
2 0 2 4
2 0 2 5
2 0 2 6
2 0 2 7
2 0 2 8
2 0 2 9
2 0 3 0
N e t I m p o r t V o
l u m e s ( M M c f / d a y )
E x p o r t s
( M M c
f / d a y )
I m p o r t s
Canadian Exports to US Canadian Imports From US Net Exports
Too much GAS not enough DEMAND
“Where is the Problem?”
Net Canadian Exports
- 5 BCF/d
Ontario/Quebec Import/Export Forecast
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Relevant • Independent • Objective www.ceri.ca35
02,0004,0006,0008,000
10,00012,000
14,00016,00018,00020,000
2005 2010 2015 2020 2025
WCSB Marketable Gas Supply -1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
2005 2010 2015 2020 2025
TCPL Northern Pipeline
0
1,000
2,000
3,000
4,000
2005 2010 2015 2020 2025
TCPL Sarnia Import Volumes
-2,000
-1,000
0
1,000
2,000
2005 2010 2015 2020 2025
TCPL Niagara Ne t Flows
-14,000
-12,000-10,000
-8,000
-6,000
-4,000
-2,000
0
2005 2010 2015 2020 2025
WCSB Export Flows Ontario / Quebec
Ontario/Quebec Import/Export ForecastCERI “Realistic” Case
Mid Continent Gas
Rockies Gas
Connect to Sarnia
Marcellus Gas into Niagara
Marcellus Gas connect to
Iroquois to New York
OILPotential for Stranded
Gas Pipeline Assets
Conversion to Oil Service
AECO C Gas Price Forecast
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AECO C Gas Price Forecast
Average WCSBWell Supply Cost
Range
($3-$5.75/mcf)
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
2 0 2 0
2 0 2 1
2 0 2 2
2 0 2 3
2 0 2 4
2 0 2 5
2 0 2 6
2 0 2 7
2 0 2 8
2 0 2 9
2 0 3 0
2 0 3 1
2 0 3 2
2 0 3 3
2 0 3 4
2 0 3 5
$/MMBtu
AECO C Natural Gas Forecasts
AECO C(real2010$/MMbtu) EIA AEO 2012
CERI Speculative
External Consultant
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2010 Gas
Directed
Licences
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2011 Gas
Directed
Licences
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Montney (34)
Falher (17)
Duvernay (11)
Cardium (24)Bluesky (17)
Notikewin (10)
Glaucontic (49)
Viking (16)
Lower Mannville (10)
2012 Gas
Directed
Licences
(Jan.-June)
Western Canada What Makes the Gas World Work
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Western Canada What Makes the Gas World WorkBC Montney Supply Cost example
$3.8 $3.8 $3.9$3.4
$3.0$2.5
$2.1$1.7
$1.3$1.0
$0.7 $0.4 $0.2
$0.8
$-
$0.7 $1.3 $2.0 $2.6 $3.2 $3.8 $4.3 $4.9 $5.4 $5.8 $6.2 $6.5
$4.5
$3.8
$4.5$4.7
$4.9$5.1
$5.3$5.5
$5.7$5.8
$6.0$6.2
$6.4 $6.5
$-
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
$5.5
$6.0
$6.5 $7.0
$ / m c f
Liquids Portion Gas Portion Revenue March 2012 Intra AB NIT Price ($/mcf)
With a Gas Price of $1.87/mcf a well needs a minimum of 60 bbls/mmcf (Liquids) to be economic
Western Canada Gas Well Development Forecast
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Western Canada Gas Well Development ForecastRealistic Scenario: Future Forecast
Summer 2012: Gas Prices are forecasted to drop below $2.00/mcf (Henry Hub)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
22000
24000
26000
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
2 0 1 2
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
2 0 2 0
2 0 2 1
2 0 2 2
2 0 2 3
2 0 2 4
2 0 2 5
2 0 2 6
2 0 2 7
2 0 2 8
2 0 2 9
2 0 3 0
2 0 3 1
2 0 3 2
2 0 3 3
2 0 3 4
2 0 3 5
W e l l C o u n t
AB Conventional Vertical Wells BC Conventional Vertical WellsSK Conventional Vertical Wells AB Conventional Horizontal Wells
BC Conventional Horizontal Wells SK Conventional Horizontal Wells
AB D&A Wells BC D&A Wells
SK D&A Wells BC Horn River
BC Montney AB CBM
Forecast Price Recovery
($2 to $6/mcf)
Gas Directed
Activity Focused
on Liquids Rich
Plays
Price Destruction
($14 to $3/mcf)
$1.87/mcf (March 2012)
XXXX
Horn River to Kitimat LNG Potential (2013 2035)
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Horn River to Kitimat LNG Potential (2013-2035)
103
59
50
175
107
9486
8278 76
73 71 70 68 67 66 65 64 63 62 61
0 0 0
20
40
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1000.0
1100.0
1200.0
1300.0
1400.0
1500.0
1600.0
1700.0
1800.0
0
10
20
30
40
50
60
70
80
90100
110
120
130
140
150
160
170
180
190
P r o d u c t i o n V o i l u m
e ( M M c f / d a y )
W e l l C o
u n t
New Wells Pre Build Production Volume
Over the next 25 years:• $27 billion on upstream Investment
• $15 billion in upstream operating cost
• $ 5 billion in terminal investment
• $ 3 billion in terminal operations
• $ 2 billion in Pacific Trail pipeline
• $ ? Billion in Spectra pipeline expansions
Be Careful What You Wish For!
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“The Shale Gas Revolution!” “The Conventional Oil Rebirth!”
“The Shale Oil Tsunami!” “The Great NGL Surge”*
*Bentek Energy LLC
Be Careful What You Wish For!
Canadian Energy Research Institute