Climate May 7, 2015 Presentation to ROABA Overview Role of OSCA - - PowerPoint PPT Presentation

Current Economic Climate

May 7, 2015 Presentation to ROABA

• Role of OSCA
• Business environment and trends
• Working with change

Overview

OSCA’s Vision

To pursue innovative solutions that help to build thriving communities and shared value with our neighbours and enables the responsible growth of Canada’s oil sands. We facilitate engagement, build relationships and collaborate to create measurable socio-economic benefits.

OSCA’s Structure and Focus Areas

Aboriginal Relations

Strengthen relationships with Aboriginal communities by collaborating to enhance socio-economic

• pportunities

Regional Stakeholder Engagement Workforce

Work with other active groups to forecast employee numbers, identify required skills, and help to retain an adequate supply of trained workers in Alberta’s oil sands.

Infrastructure

Foster collaboration amongst stakeholders to help plan, prioritize, & promote the development of infrastructure by governments and industry in Alberta’s oil sands.

Community Well-Being

Maintain the social license to operate in affected communities while recognizing the responsibility to help promote sustainable development of Alberta’s oil sands.

OSCA Steering Group CAPP Oil Sands Executive Policy Group Oil Sands CEO Council

OSCA

OSCA Members and Mandate Area

• 23 oil sands companies with assets or interests in the Athabasca Oil

Sands Area.

OSCA’s Key Initiatives

Production Workforce Population

Healthy Society Task Group:

• Strong relations with AHS: on-line medical controls for patient transfers,

bio-hazard disposal program

• Industry best practices on short and long-term disability
• Improving Addictions & Mental Health services (working group)

Community Well-Being Sustainable Community Indicators Task Group:

• Joint models for planning and measuring sustainable communities

(Municipal, industry, stakeholders)

Property Tax and Assessment Task Group:

• Joint population forecast model (industry, municipality, Province)
• Municipal budgets, property assessments, taxation
• Municipal planning

OSCA’s Key Initiatives

Aboriginal Relations

Business Development Task Group

• One-on-one engagement with business
• Education on industry lifecycle
• Expanding opportunities

Education and Skills

• Developing an inclusive multi-sector forum

Sustainable Communities JIP

• Community capacity building through youth

OSCA’s Key Initiatives

Ground Transportation Task Group:

• High Load Corridor JIP
• AOSA Industry infrastructure

priorities

Infrastructure

Aviation Task Group:

• YYC east runway policy delaying industry charters
• JIP with NavCanada for improved navigation infrastructure

Camps Task Group:

• Bear Management & Safety JIP
• Survey of industry standards

Power and Co-generation Task Group:

• Electricity transmission reliability
• Fair provincial policy on co-generation

OSCA’s Key Initiatives Workforce

• Pilot JIP to increase supply of power engineers
• Improve workforce forecast models

OSCA’s Stakeholder Engagement Purpose:

• Work with regional stakeholders to identify, prioritize and

manage key socio-economic issues to improve outcomes.

• Identify opportunities for collaboration among stakeholders.
• Reaffirm industry’s commitment to building and maintaining

relationships, communication and dialogue. Areas of focus:

• Communities in the Athabasca Oil Sands Area (AOSA).

Engagement to date:

• Two sessions in each of Fort McMurray and Lac La Biche.
• 12 top priorities identified and being actioned.

Pressures on the Canadian Oil Industry

The Canadian Oil Industry

Geopolitics Social License Demand & Competition Market Access Aboriginal Relationships Crude Oil Supply/Demand Technology Environmental Performance Government Policy Skilled Workforce

Crude Oil Prices

Recent Oil Price Trend

Revised Oil Sands Capital Investment Forecast for 2015

Capital Investment in oil sands in 2015:

$25

BILLION

• 2015 capital investment in oil sands is forecast at

$25 billion compared to $33 billion last year – down 28%.

Canadian Pipeline Capacity vs 2014 Supply Forecast

Note: Access to markets via pipeline is essential despite current economic climate

Economic Forecasts for Q2 2015/16

Oil Price in WTI U.S.$/bbl

Date Organization Alberta Real GDP Growth 2015 Oil Price Q2 Oil Price 2016 April TD Bank 1.1% 42 70 May BMO 0.4% 52 avg 65 April ATB 0.8% 55 70 April CIBC

• 57

68 Mar. RBC 0.6% Modest growth

• Feb.

U.S. EIA:

• 55 avg

71

Challenging Environment

Oversupply:

• OPEC producing 31 M bpd – highest in four years
• U.S. production rose at 1.0 m b/d over past 3 years
• Canadian oil sands production increases
• Inventory storage is limited

World Oil Demand

• The forecast of global oil demand for 2015 has been raised by 90 kb/d

to 93.6 mb/d, a gain of 1.1 mb/d on the year. This increase on 2014's 0.7 mb/d growth follows cold temperatures in 1Q15 and an improving global economic backdrop.

• Global supply rose by an estimated 1 mb/d month-on-month in March, to

95.2 mb/d, as OPEC production recorded its highest monthly increase in nearly four years. Annual gains of a whopping 3.5 mb/d were split between OPEC and non-OPEC production

Challenging Times

• Industry revenues forecast to be down more than $50 billion in

2015, down from $150 billion in 2014

• 2015 industry budgets reduced significantly
• Approx. 14,000 natural resource sector jobs lost in Alberta

• Project schedules delayed or cancelled
• Projects moving from construction to operations

Member Company Q1 Results

Suncor Energy April 30 • Posted $341M loss in Q1 2015. 90% decline in

• perating profit.

Cenovus April 30 • Posted $686M loss in Q1 2015 Imperial Oil April 30 • Earnings down 55% over same time last year to $421M in Q1 2015. Royal Dutch Shell May 1

• Earnings down 56% over same time last year to

$675M in Q1 2015 Canadian Oil Sands Trust May 5

• Posted loss of $186M in Q1 2015. Down 46% over Q1
• f 2014.

Husky Energy May 5

• Posted Q1 2015 earnings of $191M, down from

$669M same time in 2014.

Oil Sands Production Increases – South Athabasca (capacity - bbl/day)

Company 2011 2012 2013 2014 2015 F

Blackpearl – Blackrod Pilot 800 CNRL – Kirby South 40,000 Cenovus – Christina Lake 40,000 40,000 40,000 40,000 Cenovus – Foster Creek 30,000 Cenovus – Pelican Lk Pilot 600 CNOOC Kinosis (K1A) 20,000 ConocoPhillips-Surmont Ph.2 118,000 Devon – Jackfish 2 and 3 35,000 35,000 Connacher – Algar Ph.1 6,000 Harvest Energy–Blackgold Ph.1 10,0000 Grizzly – Algar Lake 6,000 MEG Energy – Christina Lake Ph.2 55,000 Statoil – Leismer 10,000 TOTALS 46,400 40,000 135,000 137,000 168,000

OSCA Aboriginal Business Development Task Group

Purpose: Work to identify and build partnerships with Aboriginal businesses and associations to enhance business capacity, skills and knowledge and to support economic development

• initiatives. Current activities include:
• Connecting with key Aboriginal businesses and organizations to

build relationships and understand business needs and challenges to help foster success

• Developing information on the oil sands industry lifecycle and

what it means to local business

• Identifying present and future opportunities

For more information:

Reegan McCullough Executive Director E-mail: reegan.mccullough@oscaalberta.ca Phone: 780-790-1999

Thank You!