Canadas Oil Sands Addressing Concerns & Debunking Myths Pierre - - PowerPoint PPT Presentation

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Canadas Oil Sands Addressing Concerns & Debunking Myths Pierre - - PowerPoint PPT Presentation

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Canadas Oil Sands Addressing Concerns & Debunking Myths Pierre Alvarez November 2007 Canadian Association of Petroleum Producers 150 producer member companies who produce more than 95 per cent of Canadas natural gas and crude

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SLIDE 1

Canada’s Oil Sands Addressing Concerns & Debunking Myths

Pierre Alvarez November 2007

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SLIDE 2

Canadian Association of Petroleum Producers

  • 150 producer member companies who produce

more than 95 per cent of Canada’s natural gas and crude oil

Explore for, develop and produce natural gas, natural gas

liquids, crude oil, synthetic crude oil, bitumen and sulphur throughout Canada

  • 130 associate members provide a wide range of

services that support the upstream crude oil and natural gas industry

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SLIDE 3

Canada’s Oil and Gas I ndustry in the North American Energy Economy

  • Canada is the world’s 3rd

largest natural gas producer

  • Canada is the world’s 7th

largest crude oil producer

– and moving up the list quickly with oil sands production increasing

  • Canada is the largest supplier
  • f energy to the United States
  • Canada is the fifth largest

energy producer in the world

  • Canadian energy production

has increased by over 80% since 1980 2006

Canadian Natural Gas Canadian Petroleum Ranking of importers to U.S. Share of U.S. consumption

16% 11%

Share of U.S. imports

86% 16%

#1 #1

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SLIDE 4

500 1 000 1 500 2 000 2 500

Canada Mexico Saudi Arabia VenezuelaNigeria Algeria Iraq Angola Russia Virgin Islands Ecuador Unit ed Kingdom Norw ay

thousand barrels per day

U.S. I mports of Crude Oil and Petroleum Products by Country of Origin

Petroleum Products Crude Oil

#1

Source: EI A, Jan-Dec 2006

Canada is the largest supplier of crude oil and of crude oil and petroleum products to the US.

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SLIDE 5

Canadian Oil & Gas in California Source of California Supply

Canada 20% Domestic supply 80%

Natural Gas

I raq 7% Ecuador 8% Brazil 4% Other I mports 9% California 37% Other Domestic Supply 24% Canada 1% Saudi Arabia 10%

Crude Oil

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SLIDE 6

Global Crude Oil Reserves by Country

Source: Oil & Gas Journal Dec. 2006

22 36 41 60 80 92 99 115 136 179 260

50 100 150 200 250 300

Saudi Arabia Canada Iran Iraq Kuwait Abu Dhabi Venezuela Russia Libya Nigeria United States

billion barrels

I ncludes 174 billion barrels

  • f oil sands reserves

Canada, with 174 billion barrels in

  • il sands reserves, ranks 2nd only to

Saudi Arabia in global oil reserves

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SLIDE 7

Oil Sands – Resistance to flow

Source: Imperial Oil

1 10 100 1 000 10 000 100 000 1 000 000

Viscosity @ Room Temperature (cP)

Water Olive Oil Pancake Syrup Honey

Ketchup Cold Lake Bitumen Peanut Butter Atha- basca Bitumen

Light Crude Oil

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SLIDE 8

Top Ten Myths about the Oil Sands

  • 1. The oil sands are easy to produce and massively profitable
  • 2. The oil sands are subsidised
  • 3. Oil sands use dated & dirty technology
  • 4. Oil sands will consume all of North America’s natural gas
  • 5. Environmental guidelines for the oil sands are non existent
  • 6. Oil sands cause the majority of Canada’s air pollution
  • 7. Oil sands will use all of Canada’s water
  • 8. Oil sands mines can never be reclaimed
  • 9. Oil sands can meet the future supply of US demand

10.Oil sands is already a major oil supplier to California

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SLIDE 9

Myth # 1 The oil sands are easy to produce and massively profitable 20 000 40 000 60 000 80 000 100 000 120 000

Suncor - Millennium Albian Syncrude - Aurora 2 & UE 1* Nexen-OPTI CNRL - Horizon Shell - Muskeg & Scotford PCA/UTS Fort Hills

Capital $ per bbl/day (upgraded)

Production Start Date 2001 2003 2006 2007 2008 2011 2010

Capital Cost of 100,000 bbl/ day project $3.3 billion $10-11 billion

* Syncrude includes base plant quality improvements and power

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SLIDE 10

Myth # 2 The oil sands are subsidised

  • Government ownership in 1970’s has been sold
  • Capital cost tax deferral program has been discontinued
  • Same tax treatment as all corporations
  • 21% Federal + 10% Provincial
  • Recent royalty review has proposed even higher oil

sands royalty rates

  • Up to 40% royalty (in addition to tax)
  • Effective July 1st 2007 oilsands production pays large

final emitter levy

Oil sand projects operate in an open market on the same basis as all other industries

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SLIDE 11

Myth # 3 Oil Sands use dated & dirty technology

Mining & Upgrading

Recoverable reserves = 35 billion barrels

I n-situ

Recoverable reserves = 140 billion barrels

Source: Syncrude Source: Imperial Oil Source: Shell Canada

Cyclic Steam Process

80% more than 50 m deep 20% less than 50 m deep

Steam Assisted Gravity Drainage (SAGD)

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SLIDE 12

Myth # 4 Oil sands will consume all of North America’s natural gas

2 4 6 8 10 12 14 16 18 20

2006 2008 2010 2012 2014 2016

Bcf/ day

Oil sands gas demand Alberta natural gas production

Source: Alberta Energy & Utilities Board Reserves & Supply/Demand Outlook 2007

Purchased Natural Gas Consumed in the oil sands

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SLIDE 13

Oil Sands Production Technologies Alternatives to Natural Gas

THAI TM (Toe-to-Heel Air I njection) Petrobank Whitesands Project OrCrude Process - Nexen/ OPTI Longlake Multiphase Superfine Atomized Residue - DeerCreek Suncor 3rd Upgrader - Coke Gasification

OXYGEN WASTE WATER PETROLEUM COKE SYNTHETIC GAS (CO, H2, CO2) GASIFIER CO2 CAPTURE & SEQUESTER HYDROGEN HYDROTREATORS BOILERS STEAM & ELECTRICITY FUEL

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SLIDE 14

Natural gas intensity is declining

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70

1994 - 1997 1998 - 2000 2001 - 2003 New Technologies Thousand cubic feet per barrel

Natural Gas use in Oil Sands

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SLIDE 15

Myth # 5 Environmental guidelines for the oil sands are non existent

  • Most stringent environmental protection laws in

the world are in place

  • Must complete pre-development EI A
  • Must file and update and fund reclamation
  • Must continually monitor and report
  • Must reduce GHG emissions intensity
  • Limits on water use – 80-90% recycle rates
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Myth # 6 Oil sands cause the majority of Canada’s air pollution

Oil & Gas ex OS 19% Electricity and Heat Generation 18% Other industry 14% Transportation 27% Agriculture 8% Buildings 6% Solvent & Waste 4% Oil Sands 4%

Oil sands only account for 4% of GHG emissions

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Myth # 7 Oil sands will use all of Canada’s water

– Total Oil & Gas industry

  • Accounts for 7.2% of water allocated in Alberta
  • Actual use by industry is only 1/ 3 of allocated amount

– Oil Sands water use

  • Allocated 1% of Athabasca River flow
  • Actual use is much lower
  • 80-90% water recycle
  • I n situ shifting to use of saline water

– Emerging technologies are reduce industry’s

water consumption per-barrel

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Myth # 8 Oil Sands land can never be reclaimed

  • Oil Sands Land Use
  • Reclamation and

remediation mandated

  • Plans filed prior to

development

  • Funding of liability required
  • I n situ development
  • 80% of the resource
  • Directional drilling from single

site to reduce impact

  • Use of saline water
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SLIDE 19

Myth # 9 Oil sands can meet the future supply of US demand

5 1 0 1 5 2 0 2 5 3 0

2 0 0 5 2 0 1 0 2 0 1 5 2 0 2 0 2 0 2 5 2 0 3 0

m illio n b a rre ls/ d a y

U.S. Crude Oil & Refined Product Consumption

U.S. DOE/EIA Annual Energy Outlook February 2007 & CAPP

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I EA estimates of Global Demand and Oil Sands Supply in 2030

Oil Sands Supply 3% Global Demand 97%

Global Demand in 2030: 116 million barrels/ day Oil Sands production: 3-4 million barrels/ day

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Myth # 10 The Oil sands is already a major oil supplier to California

I raq 7% Ecuador 8% Brazil 4% Other I mports 9% California supply 37% Other Domestic 24% Canada 1% Saudi Arabia 10%

Sources of California crude oil

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SLIDE 22

Crude Oil Supply Sources to California Refineries

300 600 900 1 200 1 500 1 800 2 100

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 thousand barrels/ day

Foreign Alaska California

Source: California Energy Commission

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SLIDE 23

Canadian Oil Production Conventional, Oil Sands and Offshore

Source: CAPP

500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 5 000 5 500 1980 1985 1990 1995 2000 2005 2010 2015 2020 thousand barrels per day Western Canadian Conventional Oil Oil Sands Offshore

Actual Forecast

Oil Sands Production: 2005 = 1.0 million b/ d 2015 = 3.0-3.4 mm b/ d 2020 = 3.8-4.4 mm b/ d

Moderate Growth Case

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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

Wood River Cushing S p e a r h e a d

Extensions to New Markets

Growing oil sands production will require new pipeline capacity to existing and expanded markets

Midwest

ALTEX ENERGY TRANSCANADA KEYSTONE

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SLIDE 25
  • Additional information
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SLIDE 26

Global Energy-Related Emissions 2005

United States 22% China 20% Europe 17% Eurasia 9% Japan 4% India 4% Other 21% Australia 1% Canada 2%

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SLIDE 27

Global Coal + Oil Sands CO2 Emissions 2005 Total 11,387 m tonnes CO2

China, 4341 United States, 2142 Europe, 1356 Eurasia, 694 India, 791 Canada Oil Sands, 30 Canada Coal, 153 Japan, 417 Australia, 232 Rest of World, 1233