Canada’s Oil Sands

Canadian Association of Petroleum Producers

Valve Manufacturers Association Orlando, Florida

October 14th, 2011

Martyn Griggs – Manager Oil Sands, CAPP

Presentation Outline

• Global & U.S. Energy Future • Canada Oil Sands – Partner For

American’s Future • Oil Sands Overview

Markets and Pipelines Environmental Performance Technology Solutions Social License

• Summary • Q&A

The Global Energy Context

• Significant energy demand growth: Population, standards of living

• Need all forms of energy: Increasing role for renewables Continuing reliance on

hydrocarbons Increasing role for non-

conventional crude oil & natural gas

• Technology is a key lever for sustainable growth Production Cost competitiveness Environmental performance

Current Policies Scenario

Global Primary Energy Demand

The US Energy Context

• Need for all forms of energy: Increasing role for renewables Continuing reliance on

hydrocarbons Increasing role for non-

conventional crude oil & natural gas

Source: U.S. Dept of Energy, Energy Information Administration Annual Energy Outlook December 2010

Canada is a Global Energy Player

#3 Canada is third in the

world in natural gas production.

#2 Canada is second in

the world in hydro-electricity generation.

#3 Canada is 3rd to Saudi

Arabia & Venezuela in crude oil reserves

#6 Canada is sixth largest

oil producer in the world.

Canada’s Share of U.S. Imports – Crude Oil & Petroleum Products

0%

10%

20%

30%

40%

50%

60%

70%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

% Saudi Arabia% Mexico% Venezuela% Canada

Source: EIA 2010

Canada’s Energy: Partners for America’s Future

Jobs and Economic Growth Creating jobs across North America Robust economic relationships

already established cross-border

Energy Security Currently the largest supplier of

crude oil to the U.S. and growing Largest supplier of natural gas to

the U.S.

Environmental Sustainability GHG emissions, land and water Technological advancements Strong Government regulation

Canada’s Oil Sands: Partners for American Economy

• Our refinery is set up to process heavy crude, and 95 per cent of its feedstock is Canadian heavy crude, which includes oil sands oil. We probably couldn’t survive without it.

Dexter Busby, Director Government and Regulatory Affairs Montana Refining Company, Inc.

• “The oil sands are a national treasure for Canada and the

U.S. The resource is secure and comes from a friendly neighbor. In addition, much of the U.S. dollars spent on Canadian oil come back to America in trade.”

U.S. Senator Lindsey Graham

Preferred Use of Canadian Oil in Future

56% 25% 9% 3% 2%

0% 20% 40% 60% 80% 100%

National

A lot more A little more About the same A little less A lot less

If it were up to you, and America continued to need to import some oil, would you like to see America import a lot more of its imported oil from Canada, a little more, about the same amount as it does today, a little less, or a lot less?

Harris Interactive – April 2011 9

US Jobs and Economic Impacts from Canadian Oil Sands

• 465,000 new US jobs Increased demand for U.S. goods and services will result in the

creation of an incremental 465,000 jobs from 2011 – 2035.

• Output up by $45 billion/year On average, U.S. output of goods and services will increase by

$45 billion/year from 2011 - 2035 due to increased demand from oil sands activity

• US GDP growth from oil sands Demand for US goods and services will generate an incremental

$5.8 billion in 2015 to US GDP, $12.9 billion in 2020, $26.6 billion in 2025 and $42.6 billion in 2035.

Source: Canadian Energy Research Institute 2011

0.8

Alaska

1.2

Hawaii

21 - 40 Over 80

10 - 20 Under 10

Incremental US Jobs from Canadian Oil Sands by State 2011-2035

33.7

0.9 16 0.7

1.1

3.9

0.5 0.6

1.5 1.2

1.0

1.1

2.3

2.3

1.6

1.4

1.1

2.6 2.4

8.9

2.0

6.5

4.8

4.9

3.5

3.3

2.3

3.3

6.5

5.0

5.5

0.8

7.1

8.8

3.2

4.7 37.9

7.7

9.9

19

18.8

85.1

36.6

7.5

26.4

Thousand Person-Years

Source: Canadian Energy Research Institute – May 2011

18

14.5

13.3

10.6

Canada’s Oil Sands: Partners in the American Economy

Global Crude Oil Reserves by Country

Source: Oil & Gas Journal Dec. 2010

25 20 19303746

60

92102

115

137

175

211

260

0

50

100

150

200

250

300

Saud

i Ara

bia

Vene

zuela

Cana

da Iran

Iraq

Kuwait

Abu D

habi

Russ

iaLib

ya

Nigeria

Kazh

akhs

tanQata

rCh

ina

United

Stat

es

billi

on b

arre

ls

Restricted (79%)

Open to Private Sector

Oil Sands 56%

Other 44%

World Oil Reserves Open to

Private Sector

Two Methods of Oil Sands Recovery Ph

oto:

Con

ocoP

hillip

s - S

urm

ont

Schematic: Devon - Jackfish

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

14 14

Oil Sands Projects in Three Deposits

Peace River

Athabasca

Cold Lake

Edmonton

Calgary

Ft. McMurray

In Situ Projects Mining Projects

Fort McMurray

Cold Lake

Fort Hills

Horizon

Joslyn Creek

Syncrude

Suncor

Muskeg River Albian

Dover

MacKay River

Firebag

Hangingstone

Long Lake

Surmont

Christina Lake (ECA)

Foster Creek

Wolf Lake/Primrose

Hilda Lake Cold Lake

Tucker Lake

Jackfish

Kearl Lake

Jackpine

• Oil sands production now exceeds 1.5 million barrels per day

• $123 billion

built from 1997-2010

Peace River

Peace River

Seal

Northern Lights

White Sands

Industry Capital Spending Cdn $billions

Northern Canada

2009 2010 2011F

$0.2 $0.3 $0.3

Oil Sands

2009 2010 2011F

$11 $17 $19

Western Canada

2009 2010 2011F $20 $32 $32

East Coast Offshore

2009 2010 2011F

$1.7 $1.4 $1.5

Note: Excludes spending mergers & acquisitions

Oil & Gas Investment Spending: 2009: $34 billion 2010: $51 billion 2011: $53 billion (forecast)

Canadian Oil Sands and Conventional Oil Production Forecast (2011-2025)

Atlantic Canada

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

thousa

nd b

pd

Actual Forecast

In Situ

Mining

Conventional Heavy

Conventional Light Pentanes/Condensate

Access to Current and New Oil Markets

Canadian & U.S. Crude Oil Pipeline Proposals

Demand for W. Canadian Crude Oil – 2010 versus 2015 (kbpd)

Access to the West Coast (offshore markets)

Existing • Transmountain shipments

over the dock Jan – July 2011 = 45,000 b/d Peak April 2010 = 143,000 b/d

Future • Transmountain

TMX2 – 80,000 b/d TMX3 – 320,000 b/d Northern Leg – 400,000 b/d

• Enbridge Gateway – 525,000 b/d NEB application filed

Potential Tanker Markets for Canadian Oil Sands Production

Prince Rupert/Kitimat

Los Angeles

Jose/ La Cruz

China Persian

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

Far East U.S West Coast

• • • •

Japan

Taiwan

Korea

•

•

SantaCruz • •

Competitive travel distances for Canadian supply to both markets

Source: Enbridge Pipelines 21

Full Cycle GHG Emissions

0

20

40

60

80

100

120

SaudiArabia

Mexico Iraq Venezuela Nigeria US GulfCoast

CaliforniaThermal

Oil SandsWtd. Avg

g CO

2e/M

J ga

solin

e

GHG Emissions fromProduction and RefiningGHG Emissions fromGasoline Consumption

Source: Jacobs Consultancy, Life Cycle Assessment Comparison for North America and Imported Crudes, June 2009

98 102 102 106 102 114 107 104 105

Global Energy Related Emissions

GHG emissions from oil sands: just over 1/1000th of global GHG emissions 6.5% of Canada’s GHG emissions

Global Emissions Canada’s 2%

23

United States

China

OECD Europe

Non-OECD Europe & Eurasia

Japan

India

Other

Canada

Australia/New Zealand

Manufacturing, Commercial & Construction

Residential

Transport

Industrial Processes & Waste

Agriculture & Forestry

Oil Sands

Other Fossil Fuel

Electricity & Heat Generation

Reducing GHG Emissions in Oil Sands

• Energy Efficiency Using less energy input Reducing energy waste/losses Capturing waste heat Cogeneration power/steam

• 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

5

10

15

20

25

Oil Sands GHG Emissions/bbl

29%

g co

2 eq

./mj

1990 2009

Land Use and Reclamation

Oil Sands Tailings – Mining

• Accelerating reclamation • Minimizing future tailings

• Industry Tailings Collaborative Accelerate new technology

implementation

September 2010

Suncor Pond 1

Research on dry and consolidated tailings

Technology Solutions – Less Energy, Greater Recovery and Less Water

• Low energy extraction 35ºC instead of 80ºC = 1/3 less energy

• Underground combustion Petrobank Whitesands – THAI process

• Additives to reduce the need for both water and energy (steam) LASER (Imperial), SAP (Cenovus), N-Solv SC-SAGD (Laricina), SOLVE (Statoil/PTRC)

• Electricity instead of steam to warm the

heavy oil underground ET-Energy, Shell

Syncrude Low Energy Extraction – Aurora Mine

Petrobank THAI process

Solvent/steam processes (Laricina diagram) 27

Reputation / Social License & Oil Sands

Oil Sands Reputation / Social License = Performance + Communications

• “3E” policy framework

• Robust regional planning:

System-wide metrics

Effective monitoring

Transparent data

3rd party validation

• World class regulation

• Technology & innovation

• Collaboration

• Proactive

• Transparent

• Verifiable

• Visible leadership

• Broad portfolio:

mainstream

social media

directly & via 3rd parties

Canada, U.S., Europe, Asia

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 and the US…needs innovative, creative, committed, determined people to make it happen!