Forecasting Oilsands Energy Demand

Steven Everett, Economic Analyst

Alberta Electric System Operator

2012 Itron Forecasters Forum / 10th annual EFG Meeting

May 10-11, 2012

What are Oilsands?

• Oilsands are a mixture of sand, water,

clay and bitumen

• Bitumen is oil that is too heavy or thick

to flow or be pumped without being

diluted or heated

• “Tar” sands is incorrect terminology; tar

is a petroleum byproduct

Source: Canadian Association of Petroleum Producers

Source: Suncor Energy

Oilsands are extensive

(149,000 sq mi)

(55,000 sq mi)

(1,900 sq mi)

(232 sq mi)

Area Land

(sq mi)

Alberta 255,541

California 155,959

Nevada 109,826

Florida 53,927

New York 47,214

Delaware 1,954

• Oilsands deposits area is about the size of Florida

• Estimated Recoverable Reserves: 175 billion barrels

• Alberta oilsands are the largest oil reserves in the world not controlled by a national oil company

Source: Government of Alberta

Value of Alberta Capital Projects ($ millions)

$0

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Telecommunications

Agriculture & Related

Forestry & Related

Mining

Chemicals & Petrochemicals

Biofuels

Other Industrial

Commercial/Retail & Residential

Oil & Gas

Tourism/Recreation

Residential

Pipelines

Commercial/Retail

Institutional

Power

Infrastructure

Oilsands

Oilsands Investment Dominates Alberta

Economy

Source: Government of Alberta, February 2012 4

Oilsands Extraction Technology

Mining

• Uses shovel and truck

combination to extract oilsands

(sand & heavy oil)

• Trucks deliver oilsands to

extraction facility which

separates bitumen from sand,

water & clay

• Bitumen is either upgraded into

synthetic light oil or blended with

diluent then shipped via pipeline

to market

In Situ (in place)

• Steam Assisted Gravity

Drainage (SAGD)

• Two parallel horizontal wells

are drilled, one above the other

• The top well injects steam

which heats the formation

allowing the bitumen to flow

into the lower production well

• Cyclic Steam Stimulation

(CSS) “Huff & Puff”

• One vertical well is drilled

• Steam is injected into the well

which heats the formation

• Once heated, the well is used

to extract the bitumen

Source: Canadian Association of Petroleum Producers

Challenges - Methodology

• Pre-2007, oilsands was modeled as part of industrial sector

• Rapid oilsands growth and increased data on oilsands sites prompted

industrial breakout into oilsands and industrial without oilsands

• Lack of historical oilsands data and rapidly changing technologies prohibit

econometric models

• Need to create forecast which can be used in transmission planning

Source: AESO

0

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Oilsands 18%

Farm 3%

Residential 13%

Commercial 20%

Industrial (withoutOilsands) 46%

Alberta Customer Sector Electricity Consumption

Methodology – What Data Do We Have?

• Project information

• Announced, applied-for, approved, in construction, etc.

• Third party production forecast

• Site-specific information

• Historical information

• Electrical Intensities

• Technology type

• Demand (MW and MWh)

• Production (barrels per day)

Oilsands Forecasting – Project Add-up vs.

Third Party Forecasts

• Very few projects have historically being built on schedule

• Projects ramp-up and typically produce below nameplate capacity

• Projects can be added or cancelled very quickly

Source: Conference Board of Canada, Oilsands Review, Company Reports

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Announced

Application

Approval

UnderConstruction

Existing

ConferenceBoard 2011Forecast

Oilsands Production Forecast

Source: Conference Board of Canada, Energy Resource Conservation Board (ERCB)

• Conference Board of Canada (CB of C) Oilsands Production Forecast Used

• CB of C has publicly available third-party forecast

• CB of C oilsands forecast is aligned with economic drivers used to forecast other sectors

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Oilsands Production Forecast

Mining In Situ

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CB of C 2011 CB of C 2012 IHS CERA ERCB

Oilsands Production Forecast Comparison

Conference Board of Canada oilsands production forecast is

checked against other forecasts

Source: Conference Board of Canada, IHS CERA, Energy Resource Conservation Board (ERCB)

Forecast revised

upwards in 2012

due to new projects

and cheaper natural

gas price forecast

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Ave

rage

kW

h /

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Average Oilsands Mining Electricity Intensity

Mining Intensity

Source: Energy Resource Conservation Board (ERCB), AESO

Spike caused

by new mine

ramping up

In Situ Intensity

Source: Energy Resource Conservation Board (ERCB), AESO

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Average Oilsands In Situ Electricity Intensity

New Technologies

Technological Change

• SAGD, CSS, and Mining are current main extraction technologies

• Prototype electricity-based extraction technologies are being tested

• E-T Energy’s ET-DSP (Electro-Thermal Dynamic Stripping Process) technology

Source: E-T Energy

• Electrodes are inserted into the bitumen formation

• Electricity flows through the bitumen between electrodes heating the bitumen

• Heated bitumen is pumped out

• Initial estimates suggest 4-10 times more electricity intensive than SAGD

New Technologies

Technological Change

• Thermal-Assisted Gravity Drainage

• Two horizontal wells, similar to SAGD, wells are also inductive heater wells that use electricity

• Initial estimates suggest 10 times more electricity intensive than SAGD

• Solvent-Cyclic Steam Assisted Gravity Drainage (SC-SAGD)

• Adds solvent injection to enhance SAGD

• Likely to be more electricity-intensive

Source: Cenovus Energy

Factors which increase intensities

• Additional motors

• Pumps

• Compressors

• Electrical Submersible Pumps (ESPs)

• Injectors (solvent, steam)

• New Technologies

• E-T Energy’s electrode technology (4-10X higher intensity)

• Electric heating coils

• Electric heating elements (Shell, AOSP)

• Inductive heating (10X higher intensity)

• In situ combustion (requires air injection instead of steam)

• Maintaining production

• Need more electrical equipment to keep production constant

• New production

• Electricity ramps up before production causing higher initial intensities

• Environmental

• Carbon Capture equipment

• Centrifuges

• Higher tailings ponds

• Water recycling

Factors which decrease intensities

• Variable motors

• Instead of two motors

• Well pairing communication

• When well pairings share heat/pressure, they can be optimized and can potentially lower intensities

• Improved tailings management

• Non-energy intensive solutions

Wildcard Technologies • THAI technology

• Injecting air, not steam

• In-situ upgrading (lighter oil is extracted)

Validation and Checks

Oilsands Forecast Process Overview

Database of all

known oilsands

projects

Third party

production

forecast

Electrical

intensity

assessment

Demand outlook

Apply delays,

ramping to

projects based

on status

Add up of projects

provides demand

outlook

Historical Data

Implied forecast

intensities

Electrical

intensity

comparison

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2012 AESO Oilsands Forecast

2012 AESO Forecast Historical

• Includes all known projects

• Is aligned with third-party outlooks of oilsands

• Is aligned with historical and expected electricity intensities

• Incorporates new technologies

2012 AESO Oilsands Sector Forecast

Source: AESO

Forecast Average Annual

Growth Rates:

• 2011-2017: 10.3%

• 2011-2022: 7.6%

• 2011-2032: 4.7%

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2012 AESO Customer Sector Forecast

Industrial (without Oilsands) Residential Commercial Farm Oilsands

Oilsands is fastest growing sector in Alberta

Source: AESO

Thank You!

steven.everett@aeso.ca