Canada’s Oil Sands – The Reality Building Trades – 2011 Canadian Legislative Conference

Ottawa - May 4, 2011

Dave Collyer, President

The Global Energy Context

• Significant energy demand growth: Population, standards of

living

• Need all forms of energy: Increasing role for

renewables Continuing reliance on

hydrocarbons Increasing role for non-

conventional crude oil & natural gas

• Technology is a key lever for sustainable growth Production Cost competitiveness Environmental

performanceCurrent Policies Scenario

Global Primary Energy Demand

Global Crude Oil Reserves by Country

Source: Oil & Gas Journal Dec. 2010

25 20 1930

374660

92102

115

137

175

211

260

0

50

100

150

200

250

300

billio

n ba

rrel

s

Includes 1

70 billion barre

ls

of oil s

ands rese

rves

State owned78%

Accessible

Canada’sOil Sands

World OilReserves

OtherAccessibleReserves

52%

48%

Accessible

Oil Reserves

Oil Sands Deposits & Projects

In Situ ProjectsMining ProjectsIn Situ ProjectsMining Projects

Fort

McMurray

Cold Lake

Fort Hills

Horizon

Joslyn Creek

Syncrude

Suncor

Muskeg River

Albian

Dover

MacKay River

Firebag

Hangingstone

Long Lake

Surmont

Christina Lake

(ECA)

Foster

Creek

Wolf Lake/Primrose

Hilda Lake

Cold Lake

Tucker Lake

Jackfish

Kearl

Lake

Jackpine

Peace River

Peace River

Seal

Peace River

Peace River

Seal

Northern

Lights

White Sands

Oil Sands Production MethodsP

hoto

: Con

ocoP

hilli

ps -

Sur

mon

t

Schematic: Devon - Jackfish

Drilling (80% Resource, 97% Land)Mining (20% Resource, 3% Land)

W. Canadian Oil Sands & Conventional Oil Production Outlook

May 2010

2011 Oil Sands

Capital ~ $15B

Access to Current and New Oil Markets

Canadian & U.S. Crude Oil Pipeline Proposals

Canada’s Share of U.S. Imports – Crude Oil & Petroleum Products

0%

10%

20%

30%

40%

50%

60%

70%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

% Saudi Arabia% Mexico% Venezuela% Canada

Source: EIA Jan-Dec 2010 8

Asian Market Potential for Canadian Oil Sands Production

Prince Rupert/Kitimat

Los Angeles

Jose/La Cruz

3,840

ChinaPersian

Gulf

Japan

Taiwan

~ 8,600 N Miles

~ 4,500 N Miles

Prince Rupert/Kitimat

Jose/La Cruz

Los Angeles

Japan

Taiwan

Target Markets

~ 5,400 N Miles

1,400 N

Miles

Far East U.S West Coast

• •••

Japan

Taiwan

Korea

•

•

SantaCruz

• •

1,790

Competitive travel distances for Canadian supply to both markets

Source: Enbridge Pipelines

Canadian & U.S. Jobs & Economic Benefits

• Construction & operations Upstream Pipelines Upgraders & refineries

• Employment Direct & indirect

• Supply of goods and services• Royalties & taxes • CERI economic benefits study (Canada only over 25

years) Economic impact generated $1.7 trillion Employment 11.4 million person-years Federal & provincial tax $300 billion

Alaska

Hawaii

16 - 30Over 40

10 - 15Under 10

Incremental U.S. Employment from Canadian Oil Sands by State 2011-2025

Thousand Person-Years

11Source: Canadian Energy Research Institute – April 2011 Preliminary

78%

58%

65%

79%

78%

74%

20%

38%

31%

12%

4%

2%

4%

4%

9%

18%

9%17%

0% 20% 40% 60% 80% 100%

BQ

Green

NDP

Liberal

Conservative

Total

To develop the oil sands with an effort to limit the environmental impacts

To stop the development of the oil sands altogether

To focus on maximizing the full economic benefits of the oil sands resource

Best Goal for Oil Sands

Which is the best goal when it comes to the oil sands?

Reputation / Social License & Oil Sands

Industry Reputation / Social License =

Performance + Communications

• “3E” policy framework

• Robust regional planning:

System-wide metrics

Effective monitoring

Transparent data

3rd party validation

• World class regulation

• Technology & innovation

• Collaboration

• Proactive

• Transparent

• Verifiable

• Visible leadership

• Broad portfolio:

mainstream

social media

directly & via 3rd parties

Canada, U.S., Europe, Asia

ADVERTISING

EDUCATION – ENERGY LITERACY

Environmental & Social Performance

• People• Air• Water• Land

Guiding Principles for Oil Sands Development

Oil Sands Water Use & Quality

Mining

Currently use 0.5 per cent of the annual flow of the Athabasca river (1/3 of City of Toronto water use).

80-90% recycle.

Withdrawals restricted during low flow periods (on-site water storage).

“No impact on Athabasca water quality/ecosystem and no evidence of impact on human health in downstream communities” (Royal Society, 2010 report).

• Drillable (Insitu) 90-95% recycle. No water from Athabasca River. Shift to using non-potable (saline)

from sub-surface aquifers. New projects are using 100% saline

for steam.

North American GHG Emissions (2009): Coal-Fired Power and Oil Sands

15 megatonnes50 megatonnes

100 megatonnes

FL

GA

TX

NC

MI

AL

MO KY

IN OH

NE

NM

ND

CO

SC

KS

IA

TN

WV

WY

VA

MN

UT

OK

WI

AZ

AR

AK

LA

IL

NV

OR

MT

SD

NJ

NY

NH

MS

Legend

U.S. Coal fired power generating plants

Canadian coal-fired power generating plants

Canadian oil sands

Sources: U.S. DOE/EIA & Environment Canada

Reducing Greenhouse Gas Emissions

• Energy Efficiency Using less energy input Reducing energy waste/losses Capturing waste heat Cogeneration power/steam

• Improved recovery processes Lower temperature extraction Additives to reduce use of

both water and energy (steam)

Use of electricity rather than steam

Underground combustion rather than steam

• Carbon capture & sequestration Most effective at upgraders

Oil Sands GHG Emissions/bbl

39%

g c

o2

eq./

mj

1990 2008

Royal Society of Canada ReportEnvironmental & Health Impacts of Canada’s Oil Sands Industry

• Science-based, independent analysis of the environmental aspects of Canada’s oil sands

• Addresses many of the issues and perceptions of oil sands development: Reclamation is not keeping pace, but

sustainable reclamation is achievable Water use does not threaten viability of

the Athabasca River No impact on Athabasca water

quality/ecosystem and no evidence of impact on human health in downstream communities

Tailings technologies are emerging, but tailings inventory is growing

GHG emissions per barrel are reducing but growing production creates a challenge in meeting international commitments

Minimal impacts on regional air quality December 2010

2010 CAPP OIL SANDS CAMPAIGN

Advertising - Getting the Word OutJoy Romero – Canadian Natural Resources Limited

http://www.youtube.com/v/ShqPwDWAuYM

Advertising - Getting the Word OutSteve Gaudet – Syncrude Canada

http://www.youtube.com/v/iXtHFPGXjlY

2010 Oil Sands Dialogues

• 13 OS CEOs, 8 cities, 160 participants

• Strong Building Trades representation in Canada & U.S.

• Input exceeded expectations

• Comprehensive report – “What We Heard”, “Our Response”

• Strong industry support for labour mobility and training

“The Ask”

• Enable oil sands related projects in Canada & U.S.

• Encourage a North American approach to energy strategy, addressing security & reliability

• Encourage & support balanced policy & regulation: Labor mobility & training Open borders for trade Non-discriminatory policy toward Canadian oil sands supply

sources Avoid unnecessary regulatory “creep” Equitable approach to climate policy Technology development & deployment

• Assist in communicating a balanced, pragmatic, fact-based message regarding Canada’s oil sands

• Rebut myths & misrepresentations about oil sands

Oil Sands - #1 Employer of Building Trades in Canada

Jobs, Economic Growth & Responsible Environmental Social / Performance