CANADIAN OIL SANDS CONVENTIONAL OIL AND GAS PRODUCTION FORECAST, - - PowerPoint PPT Presentation

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CANADIAN OIL SANDS CONVENTIONAL OIL AND GAS PRODUCTION FORECAST, - - PowerPoint PPT Presentation

Jun 14, 2023 280 likes •619 views

CANADIAN OIL SANDS CONVENTIONAL OIL AND GAS PRODUCTION FORECAST, SUPPLY COSTS, EMISSIONS AND ECONOMIC IMPACTS CERI Breakfast Overview Allan Fogwill, President & CEO Bow Valley College - Calgary September 13, 2019 Flagship Breakfast

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CANADIAN OIL SANDS CONVENTIONAL OIL AND GAS PRODUCTION FORECAST, SUPPLY COSTS, EMISSIONS AND ECONOMIC IMPACTS

CERI Breakfast Overview Allan Fogwill, President & CEO Bow Valley College - Calgary September 13, 2019

www.ceri.ca

Flagship Breakfast Overview Sponsor:

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CANADIAN ENERGY RESEARCH INSTITUTE

Overview

Founded in 1975, the Canadian Energy Research Institute (CERI) is an independent, registered charitable organization 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 and environmental research of energy issues to benefit business, government, academia and the public. CERI publications include:

  • Market specific studies
  • Geopolitical analyses
  • Quarterly market reports (crude oil, electricity and natural gas)

In addition, CERI hosts a series of study overview events, executive briefings for organizations and an annual Petrochemicals Conference.

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CORE FUNDERS

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DONORS

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Ivey Foundation

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AGENDA

▪ Background ▪ Production Outlook ▪ Supply Costs ▪ Emissions ▪ Economic Impacts

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RECENT CHALLENGES IN THE CANADIAN OIL AND GAS INDUSTRY

  • Lack of market access to international and US markets
  • Ongoing judicial / regulatory hurdles for Line 3, Trans Mountain,

Keystone XL, Coast Gas Link

  • Differential between Western Canadian Select and WTI
  • Depressed AECO-C gas prices for producers
  • Changes in regulatory processes (EIA process, redesign of NEB)
  • Production and price risks from the upcoming regulation change

in the shipping industry regarding Sulphur levels

  • Depressed service industry due to reduction on drilling

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RECENT ACTIVITIES IN THE INDUSTRY

  • Oil and natural gas production keeps growing (+8.5% oil 2017-18,

4.1% gas 2017-18)

  • Canadian oil grows its presence in US (market share 39% to 48% in

total US imports), primarily because of oil sands

  • FID for LNG Canada (1.9 bcf/d ), possibility for 3.7 bcf/d in expanded
  • 300-million-barrel-reserves Bay Du Nord project approval (NL)
  • New propane export facilities: Altagas in service, Pembina close FID
  • PDH/PDP projects in Alberta: Interpipeline under construction,

Pembina close to FID

  • Differential between Western Canadian Select and WTI came to

“normal level” due to AB curtailment

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GLOBAL MARKET SUPPLY AND DEMAND

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Source: EIA

Source: EIA

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CANADIAN CRUDE OIL PRODUCTION

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500 1000 1500 2000 2500 3000 3500 4000 4500 5000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

('000bpd)

Atlantic MB SK AB BC NWT AB-Bitumen and SCO

8.5%

Source: Statistics Canada CANSIM Table 126-0003

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US CRUDE IMPORTS FROM CANADA

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55% 57% 59% 59% 59% 60% 62% 61% 66% 68%

  • 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

('000 bpd)

Light Sweet Light Sour Medium Heavy Sweet Heavy Sour

7.3%

Source: US EIA

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GROWING CANADIAN SHARE IN US MARKETS OIL IMPORTS

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Source: US EIA

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CANADA’S GAS PRODUCTION, EXPORTS AND IMPORTS

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Source: EIA Natural Gas Consumption, ARC Energy Institute

4.1%

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CURRENT CANADIAN GAS PRODUCTION

  • AB – 67%
  • BC - 30%
  • SK – 3%
  • NS – 0.4%
  • Changes
  • BC grows at 6%, AB at 2% annually
  • Deep Panuke decommissioned
  • Hydraulic Fracturing bans – QC, NS
  • Partial lifting of hydraulic fracturing ban - NB

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Source: CERI, EIA

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CANADIAN OIL SANDS PRODUCTION BY TYPE

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500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 MBPD Mining In situ Source: CERI, Canoils

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CANADIAN CONVENTIONAL CRUDE OIL PRODUCTION

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Source: CERI, BCOGC, AER, Government of SK, Government of MB, CNLOPB, PSAC, CAPP,

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NEWFOUNDLAND AND LABRADOR OIL PRODUCTION FORECAST

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Source: CERI, BCOGC, AER, Government of SK, Government of MB, CNLOPB, PSAC, CAPP

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TOTAL CANADIAN OIL PRODUCTION

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Source: CERI, BCOGC, AER, Government of SK, Government of MB, CNLOPB, PSAC, CAPP

  • 1,000

2,000 3,000 4,000 5,000 6,000 7,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Historical Outlook

('000 b/d) Non-upgraded Bitumen SCO AB-Oil AB-Pentane Plus and Condensate Production SK-Oil BC-Oil BC-Pentane Plus and Condensate Production MB-Oil NL-Oil

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TOTAL CANADIAN OIL SUPPLY AND PIPELINES

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  • 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039

'000 b/d Total Western CDN Conventional Export Supply SCO Dilbit Keystone XL Kinder Morgan TMX Expansion Enbridge Line 3 Restored Existing Export Capacity

Source: CERI, BCOGC, AER, Government of SK, Government of MB, CNLOPB, PSAC, CAPP, NEB, Canoils

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CANADIAN NATURAL GAS PRODUCTION

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Source: CERI, BCOGC, AER, Government of SK, Government of MB, CNLOPB, PSAC, CAPP

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BITUMEN SUPPLY COSTS

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SAGD 10% ROR (a) Expansion SAGD 10% ROR (a) Fixed Capital (Initial & Sustaining) $18.59 $9.67 Operating Working Capital $0.38 $0.20 Fuel (Natural Gas) $4.63 $4.63 Other Operating Costs (incl. Elec.) $7.07 $7.07 Royalties $7.04 $4.18 Income Taxes $2.21 $1.17 Emissions Compliance Costs $0.67 $0.67 Abandonment Costs $0.03 $0.01

$0 $10 $20 $30 $40 $50

Real 2018 CDN$/bbl

$40.61 $27.60

  • WTIeq. Costs:

SAGD – US$52.84 Expansion – US$45.88

Source: CERI, Canoils

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CONVENTIONAL OIL SUPPLY COSTS ($/bbl)

$71- $40 $68-$36 $81- $40

Montney Spirit River Duvernay Cardium Viking Bakken

$58-$31 $54-$25 $41-$25

$59

Legend: $X (Vertical)-$Y (Horizontal) $22 $40-$33

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NATURAL GAS SUPPLY COSTS ($/mmscf)

Horn River Montney Spirit River Duvernay Cardium Bakken

Legend: $X (Vertical)-$Y (Horizontal) $1.6-$1.7 $1.4-$1.3 $1.1-$1.4 $1.9-$0.9 $1.9 $4.6 $1.5-$1.5

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CO2 eq. EMISSIONS FROM OIL SANDS PRODUCITON (mtonnes/yr)

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CO2 eq. EMISSIONS FROM CONVENTIONAL OIL PRODUCITON (mtonnes/yr)

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CO2 eq. EMISSIONS FROM GAS PRODUCTION (mtonnes/yr)

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ECONOMIC IMPACTS – INVESTMENTS AND OPERATIONS - OIL

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ECONOMIC IMPACTS – INVESTMENTS AND OPERATIONS - GAS

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ECONOMIC IMPACTS – GDP - OIL

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ECONOMIC IMPACTS – GDP - GAS

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ECONOMIC IMPACTS – EMPLOYMENT - OIL

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ECONOMIC IMPACTS – EMPLOYMENT - GAS

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CONCLUSIONS

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  • Crude and oil sands producers continue to be challenged by

market access

  • Natural gas producers need to secure new markets
  • Natural gas market will affect NGLs production and petrochemical

investment

  • Concerns of lower competitiveness compared to the US?
  • Concerns of regulatory processes
  • Growth in oil and gas production is predicated on growth in

exports

  • Crude oil production growth will be driven by condensates and in-

situ oil sands projects

  • Natural gas production growth is dependent on the LNG projects
  • Costs of producing crude oil, bitumen, natural gas and LNG

remain competitive

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THANK YOU

Canadian Energy Research Institute ceri_canada Visit www.ceri.ca for the latest research