relevant independent objective 1 pacific northwest as a gateway to asia energy export opportunities...
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Relevant • Independent • Objectivewww.ceri.ca1
Pacific Northwest as a Gateway to AsiaEnergy Export Opportunities
Canadian Energy Research Institute
Peter HowardPresident and CEO
Canadian Energy Research InstitutePacific Northwest Gateway to Asia
October 28, 2014
Relevant • Independent • Objectivewww.ceri.ca2
Canadian Energy Research InstituteOverview
Founded in 1975, the Canadian Energy Research Institute (CERI) is an independent, non-profit research institute specializing in the analysis of energy economics and related environmental policy issues in the energy production, transportation, and consumption sectors. Our mission is to provide relevant, independent, and objective economic research in energy and related environmental issues. A central goal of CERI is to bring the insights of scientific research, economic analysis, and practical experience to the attention of government policy-makers, business sector decision-makers, the media, and citizens in Canada and abroad.
Core members of the Institute include the Canadian Government, the Government of the Province of Alberta, and the Canadian Association of Petroleum Producers (CAPP). In-kind support is also provided by the University of Calgary and the Alberta Energy Regulator (AER).
All of CERI’s research is publically available on our website at www.ceri.ca
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The Canadian Energy Research Institute’sRecently Released and Pending Studies
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Land AcquisitionCrown Land Sales
Evaluation
Construction
Operation and Maintenance
Production
Wages
Royalties
Western Canada’s Energy Sector
Land AcquisitionCrown Land Sales
Conventional Drilling
Completion and Tie in
Operation and Maintenance
Production
Wages
Royalties
2013 Expenditures: $63.8 billion 2013 Expenditures: $54.8 billion
Oil and Gas Drilling Oil Sands Developments
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LNG : not for the weak of heart
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North American NGL PathwaysLNG Exports: Pacific Northwest LNG
Pacific Northwest LNG• Petronas• Japex• Indian Oil Corp.• Pet. Brunei• SINOPECCapital Cost $9-$11 Billion
Prince Rupert Gas TransmissionTransCanada Pipelines
Capital Cost $6.5 billion
Progress Energy project metrics:• 1100 wells (2014-2018)• 7360 wells (2019-2038)• Gathering Systems• Field Processing plantsAssuming Montney Horizontal Well• Vertical Depth: 1850 m• Horizontal Length: 1650 m• Rig Crew: 12-15 (302 People employed per site: PSAC)• Rig-in to Tear out: 28 days• Cost per well: $6.2 million (2014 $)• Economies of scale $3.1 million (2014 $)Field Expenditures• $3 billion for wells(2014-2018)• $2 billion for field facilities (2014-2018)• $26 billion for wells (2019-2038)• $10 billion for field facilities(2019-2038)
Pacific Northwest LNG ProjectUpstream $42 + Billion CDN
Pipeline $ 6.5 billion CDNLNG Facility $10 billion CDN
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Asian market Suppliers
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ChinaKoreaJapanIndia
Alaska LNG Up to 3.5 bcf/day
Kitimat LNGLNG Canada
Pacific Northwest LNGWest Coast LNG
Prince Rupert LNGWoodfibre LNG
Up to 17 bcf/day
Jordon CoveOregon LNG
Sabine PassFreeport LNGCameron LNG
Dominion Cove LNGLake Charles LNG
Corpus Christi LNGUp to 30 bcf/day
Australia OperatingAustralia Under Construction
Australia Proposed(now 2.5 bcf/day)
RussiaSakhalin Island LNG
(now 1.1 bcf/day)
Competition to Supply LNG in the Asia-Pacific Basin
Qatar LNG (8 Operating)
(Total 9.5 bcf/day)
(now 7.5 bcf/day)
MozambiqueAnadarko
Shell Up to
(6.5 bcf/day)
West AfricaIndonesiaMalaysiaOthers
3.2 – 13.5 – 16.0 bcf/day
Pipeline: 3.2 – 6.4 bcf/day
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20112012
20132014
20152016
20172018
20192020
20212022
20232024
20252026
20272028
20292030
0
10
20
30
40
50
60
United States Potential LiquefactionOther supply sourcesEast Africa Potential LiquefactionCanada LiquefactionUnited States LiquefactionAustralian LiquefactionMiddle East Liquefaction Asian LNG Demand
BCFP
DNorth American Natural Gas Demand PathwaysReference Case: LNG Export Potential to the Pacific Basin
9.7 Bcf/day (75% to Asian Basin)
BC LNG Projects2 Projects (AFID)
Up to 3.2 bcf/dayMaybe!
Lower 48Sabine Pass (UC)
Freeport (UC Q4 2014)Cameron LNG (UC Q4 2014)
Oregon LNG (SC 2015)Jordan Cove LNG (SC 2015)
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Natural Gas Liquids
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LNG = Liquefied Natural GasMethaneEthane Propane Butane
LPG’s = Liquid Petroleum GasesPropaneButane
Diluent = Diluent/CondensatePentanes plus
Terminology
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Anacortes, WA AltaGas, PetroGas, Idemitsu (30,000 b/d)
Portland, OR Pembina (40,000 b/d)
Port of Longview, WA Sage Midstream (47,000 b/d)
Prince Rupert, BC
Kitimat, BC
NE BC
NW, WC AB
Liquids R
ich
Shale
Resource
s
LPG :Lost Opportunity
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Oil and Oil Sands
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OIL
New Brunswick
OIL OIL
WCSB Crude Oil: “Where oh where should the oil go?”
North, South, East or West
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Kinder Morgan Edmonton Rail Terminal to expand to 250,000 bbls/day“The continued interest in this facility, and additional volume being contracted for with this announcement, further demonstrates how important it is for our customers to secure crude oil take away capacity using a variety of transport options including both pipeline and railway capacity to ensure crude oil reaches market”John Schlosser: President Kinder Morgan Terminals
Western Canada rail loading capacity will reach 1,350,000 bbls per day by 2017
CERI
The company (TransCanada) is contemplating a “rail bridge” from the oil sands area to a crude oil hub in either Cushing, Oklahoma or Steele City, Nebraska where it can tap into south bound pipelines. (Daily Oil Bulletin)Russ Girling: CEO TransCanada
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WCSB Crude Oil Equivalent Volumes vs Transport System Study 141 Oil Pathways (July 2014)
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,000
05001,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,0007,5008,000
Existing Production(*) Under Construction ApprovedAwaiting Approval Announced Existing Export CapacityRail Systems AB Clipper Exp I AB Clipper Exp IITCPL Keystone XL Kinder Morgan TMX Exp Northern Gateway
Volu
me
(bbl
s/da
y)
* Includes existing Bitumen + Diluent + WCSB Conventional + Cold Bitumen production - Domestic Refinery needs (AB,SK) CERI July 2014
“Given the current existing export pipeline capacity and accounting for the proposed expansions to the Enbridge mainline and assuming a ramp up in rail transport capacity from the current level of 120,000 barrels per day to 700,000 barrels per day by 2017, market access for Western Canadian oil and oil sands volumes will be market challenged starting in 2017”
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Oil Sands Forecasts and Economic Impacts (Sept. 2014)Economic Impacts for the period 2014 to 2038
• “Oil Sands bitumen production (upgraded and non-upgraded) is forecasted to grow from the current level of 1.98 million barrels per day (2013) to 3.7 million barrels per day by 2020 and 5.2 million barrels per day by 2030. Conventional Oil production will reach 1.5 million barrels per day by 2030”
• “Total investment in new Alberta oil sands projects and re-investment (sustaining capital) in existing oil sands projects will exceed $514 billion (2013 Canadian dollars). Operating revenue over the same period will exceed $2,506 billion (2013 Canadian dollars)
• “The sum of initial capital, sustaining capital and capital required for operations is expected to average $55 billion per year (2013 Canadian dollars).”
• “For every direct job (1) generated in the Alberta Oil Sands, 1 additional job is generated by indirect association and 1.5 jobs by induced association, ALL in Canada.”
• “Oil sands related taxes (indirect, personal and corporate) will pay to the British Columbia Provincial Government a total of $9.5 billion (2013 Canadian dollars)”.
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HOWEVER The Gateway maybe closing
WCSB Hydrocarbon Developments: Crude Oil / Bitumen, LNG, LPG’sInvestment opportunity, Employment, GDP growth, Taxes, Royalties
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Canadian Energy Research Institute
Thank you for your timePlease visit us atwww.ceri.ca
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2013 Facts about Canadian CrudeProduction:
• Western Canada (AB,BC,SK,NWT) Conventional LIGHT Crude 694,775 bbls/day• Western Canada (AB,BC,SK,NWT) Upgraded Bitumen 961,084 bbls/day • Western Canada (AB,BC,SK,NWT) Condensate (C5+) 147,770 bbls/day• Western Canada (AB,BC,SK,NWT) Conventional HEAVY Crude 451,618 bbls/day • Western Canada (AB,BC,SK,NWT) Non-Upgraded Bitumen 1,019,810 bbls/day • Eastern Canada (NF/LAB,ON) Conventional LIGHT Crude 235,566 bbls/day • Total 2011 Production of Crude Oil and Equivalent 3,510,643 bbls/day
Exports:* • PADD I (74% Light, 26% Heavy) 196,327 bbls/day• PADD II (21% Light, 79% Heavy) 1,737,246 bbls/day• PADD III (12% Light, 78% Heavy) 124,790 bbls/day• PADD IV (17% Light, 83% Heavy) 230,137 bbls/day• PADD V (61% Light, 39% Heavy) 199,027 bbls/day• Non-US (67% Light, 33% Heavy) 84,119 bbls/day• Total US (28% Light, 82% Heavy) 2,571,165 bbls/day
Imports:* % of Imports
• Eastern Canada Light 612,017 bbls/day (93%)• Eastern Canada Heavy 44,449 bbls/day (7%) • Total Canadian Imports 656,466 bbls/day* 2013 Average January to September
2013/2008
+ 30%
+ 44%
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2013 Facts about Canadian Natural Gas, NGLsAll volumes expressed as average day
Production: • Western Canada (AB) Marketable Natural Gas 9,740 mmcf/day• Western Canada (BC) Marketable Natural Gas 3,759 mmcf/day • Canada (other Provinces) Marketable Natural Gas 620 mmcf/day• Total 2013 Production 14,119 mmcf/day
Exports: • To United States 8,800 mmcf/day
Imports:• Pipeline gas from the United States and LNG imports 2,600 mmcf/day
Natural Gas Liquids:• Recovered Ethane 200,000 bbls/day• Recovered Propane 145,000 bbls/day• Recovered Butane 64,000 bbls/day• Recovered Pentanes + 101,000 bbls/day