Canadian Energy Research Institute           Economic Impacts of Oil Sands                  Development                 15...
Agenda   Who We Are and What We Do   Canadian Oil and Oil Sands   Economic Benefits   But…   What are Some of the Pro...
Canadian Energy Research InstituteOverview  Founded in 1975, the Canadian Energy Research Institute (CERI) is an independe...
2011-2012 Reports Released  Canadian Oil Sands Supply Costs and Development Projects (2011-2045) (March   2012)  Canadia...
2012 Reports Released (July/August 2012) Pacific Access Part I – Linking Oil Sands Supply to New and Existing Markets Pa...
2012-2013 Current Work   Potential Impact of Shale Gas Development in Quebec   North American Natural Gas Demand Pathway...
CERI Conferences CERI hosts three major conferences each year (Oil, Natural Gas and Petrochemicals)  attended by over 100...
“Western Canada’s Upstream Oil      and Gas Industry”                        Relevant • Independent • Objective           ...
Western Canada’s Oil and Gas Industry 2011 Expenditures: $68.1 billion                          2011 Expenditures: $45.3 b...
“CanadianOil and Oil Sands”                     Relevant • Independent • Objective       10                               ...
2011 Facts about Canadian CrudeProduction:    •   Western Canada (AB,BC,SK,NWT) Conventional LIGHT Crude     561,929 bbls/...
WCSB Conventional Oil Production ForecastRealistic Scenario (2010-2035)                        1,400,000                  ...
Western Canadian Oil Sands Potential                                                                                      ...
Western Canadian Oil Sands Potential                                                                                      ...
Options for Canadian Crude By Pipeline                                                                                  Ch...
“Economic Impacts of OilSands Staged Development”                      Relevant • Independent • Objective           16    ...
Input-Output (I/O) Logic    Oil    Steel   Trucks       Natural     Water   Engineering          Other   Sands            ...
Economic Impacts by UCMRIO 2.0    • There are two types of shocks:                                                    Impa...
How Does it Work?                $0.55 Oil Sands                                    $2.02 GDP                             ...
Economic Impacts of Alberta’s Oil SandsCase 1 - “No Expansion” Scenario    000 bbl/d     8,000    7,000    6,000          ...
‹#›
‹#›
Economic Impacts of Alberta’s Oil Sands - USCase 1 - “No Expansion” Scenario                Ports-to-Plains Alliance Membe...
“Let’s Talk About   Pipelines”                    Relevant • Independent • Objective       24                             ...
Economic Impacts of Alberta’s Oil Sands – CanadaCase 2 - Inclusion of the Keystone XL Pipeline (Incremental Impacts)  000 ...
Economic Impacts of Alberta’s Oil Sands - USCase 2 - Inclusion of the Keystone XL Pipeline (Incremental Impacts)          ...
Economic Impacts of Alberta’s Oil Sands - CanadaCase 3 - Inclusion of TMX Expansion (Incremental Impacts)  000 bbl/d  8,00...
Economic Impacts of Alberta’s Oil Sands - USCase 3 - Inclusion of the TMX Expansion (Incremental Impacts)                 ...
Economic Impacts of Alberta’s Oil Sands - CanadaCase 4 - Inclusion of Northern Gateway (Incremental Impacts)  000 bbl/d  8...
Economic Impacts of Alberta’s Oil Sands - USCase 4 - Inclusion of the Northern Gateway Pipeline (Incremental Impacts)     ...
Western Canadian Potential 000 bbl/d 8,000                                                                                ...
Economic Impacts of Alberta’s Oil Sands - CanadaComparison of CasesIncremental GDP Impacts      (Bln CDN$)   1,600   1,400...
Economic Impacts of Alberta’s Oil Sands - USComparison of CasesIncremental GDP Impacts by PADD Region   (Mln CDN$)    80,0...
“BUT”        Relevant • Independent • Objective 34                          www.ceri.ca
What are the Problems for WCSB OIL?  1. Canadian exports currently feed one market (flat demand and increasing domestic   ...
Problem WTI-Brent Differential  $135.00                                                                                   ...
Problem WTI-Brent Differential       Q3 2011           • WTI discount averaged $23 to Brent           • Canadian Crude (Co...
Future Problem WTI-Brent Differential                                    Pipeline Capacity Into and Out of Cushing        ...
Western Canada WTI-WCS Differential $135.00 $130.00                         WTI - WCS Differential ($/b) $125.00          ...
Problem WTI-WCS Differential     Q3 2011         • WCS discount averaged $17 to WTI (net approximately $10)         • Cana...
In Summary 1. The production from conventional sources in Western Canada is growing as    technology is able to unlock res...
Canadian Energy Research Institute     Thank you for your time        Please visit us at        www.ceri.ca               ...
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Economic Impact Beyond the Oil Sands - Dinara Millington

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Economic Impact Beyond the Oil Sands
The Alberta oil sands are obviously an economic boom for Fort McMurray and the surrounding area, but the economic impact stretches much further than that. Suppliers to oil sands development are located throughout the entire Ports-to-Plains region from Eastern Alberta to Mexico. Hear directly from researchers and businesses that create jobs in the Ports-to-Plains area by supplying the oil sands.

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  • BalanceProduction + 2,988,854Demand - 993,820Exports (raw) - 2,138,260Imports + 685,560Export Prod) - 327,915 (motor gas, middle distillate, heavy fuel oil, partially processed oil. Jet fuel)Balance + 214,419 (Diesel and/or asphalt exports might cover some or all of this)
  • just as Alberta receives the lion’s share of employment and GDP increases that result from continued oil sands activity, Albertans also pay the most taxes – more than 10 times the amount of oil-sands related taxes generated throughout the rest of the country. Over the next 25 years, Alberta will pay a total of $298 billion.Direct, indirect, and induced employment is projected to peak around 2022 and decline thereafter. Despite this, employment will remain relatively stable over the 25-year period, with an annual average number of created and preserved jobs of 111,000 or 8,349 thousand person years.-US impacts:
  • Economic Impact Beyond the Oil Sands - Dinara Millington

    1. 1. Canadian Energy Research Institute Economic Impacts of Oil Sands Development 15th Annual Ports-To-Plains Alliance ConferenceDinara MillingtonSenior Research DirectorCanadian Energy Research InstituteOctober 2-4, 2012Medicine Hat Relevant • Independent • Objective 1 www.ceri.ca
    2. 2. Agenda Who We Are and What We Do Canadian Oil and Oil Sands Economic Benefits But… What are Some of the Problems? Summary Relevant • Independent • Objective 2 www.ceri.ca
    3. 3. Canadian Energy Research InstituteOverview Founded in 1975, the Canadian Energy Research Institute (CERI) is an independent, non- profit research institute 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 research in energy and related environmental issues. A central goal of CERI is to bring the insights of scientific research, economic analysis, and practical experience to the attention of government policy-makers, business sector decision-makers, the media, and citizens in Canada and abroad. Core members of the Institute include the Canadian Government, the Government of the Province of Alberta, the University of Calgary, the Canadian Association of Petroleum Producers (CAPP) and the Small Explorers and Producers Association (SEPAC). In-kind support is also provided by the Energy Resources Conservation Board (ERCB). All of CERI’s research is publically available on our website at w w w .c e r i .c a Relevant • Independent • Objective 3 www.ceri.ca
    4. 4. 2011-2012 Reports Released  Canadian Oil Sands Supply Costs and Development Projects (2011-2045) (March 2012)  Canadian Energy: Pacific Access – Foreign Investment in the Oil Sands and British Columbia Shale Gas (March 2012)  Canadian Energy: Pacific Access – Oil Spills and First Nations: Exploring Environmental Land Issues Surrounding the Northern Gateway Pipeline (February 2012)  Canadian Energy: Pacific Access – Overview of Transportation Options (January 2012)  Overview of Eastern and Atlantic Canada’s Petroleum Industry and Economic Impacts of Offshore Atlantic Projects (November 2011)  Applicability Abatement Potential for the Alberta Oil Sands Industry and Carbon Capture and Storage (CCS) Applicability to Coal-fired Electricity Generation and Oil Sands (October 2011)  North American Natural Gas Market Dynamics: Global LNG – A Review (June 2011)  Economic Impacts of Drilling, Completing and Operation of Gas Wells in Western Canada (June 2011)  Economic Impacts of Drilling, Completing and Operating Conventional Oil Wells in Western Canada (June 2011) Relevant • Independent • Objective 4 www.ceri.ca
    5. 5. 2012 Reports Released (July/August 2012) Pacific Access Part I – Linking Oil Sands Supply to New and Existing Markets Pacific Access Part II – Asia-Directed Oil Pathways and Their Economic Impacts Pacific Access Part III – Economic Impacts of Exporting Horn River Natural Gas to Asia as LNG Natural Gas Liquids in North America: Overview and Outlook to 2035 Relevant • Independent • Objective 5 www.ceri.ca
    6. 6. 2012-2013 Current Work  Potential Impact of Shale Gas Development in Quebec  North American Natural Gas Demand Pathways (ICF/MARBEK, whatIf? Technologies)  Energy Metrics Handbook  Potential Transportation Options for Alberta Land-Locked Oil For a list of all CERI publications, please visit our website at www.ceri.ca Relevant • Independent • Objective 6 www.ceri.ca
    7. 7. CERI Conferences CERI hosts three major conferences each year (Oil, Natural Gas and Petrochemicals) attended by over 100 delegates from across North America. CERI 2012 Petrochemical Conference “Pathways to the Future” June 3-5, 2012 CERI 2012 Oil Conference “Achieving Super Power Status” April 23-24, 2012 CERI 2012 Natural Gas Conference “Going Global – Shifting the Focus of the Natural Gas Industry” February 27-28, 2012Dates and venues for our 2013 conferences can be found on our website. For further information, contact our Conference Manager, Deanne Landry, at403-220-2395 or dlandry@ceri.ca. Relevant • Independent • Objective 7 www.ceri.ca
    8. 8. “Western Canada’s Upstream Oil and Gas Industry” Relevant • Independent • Objective 8 www.ceri.ca
    9. 9. Western Canada’s Oil and Gas Industry 2011 Expenditures: $68.1 billion 2011 Expenditures: $45.3 billion Royalties Royalties Wages Wages Production ProductionOperation and Maintenance Operation and Maintenance ConstructionCompletion and Tie inConventional Drilling Evaluation Land Acquisition Land Acquisition Crown Land Sales Crown Land Sales 9 Oil and Gas Drilling Oil Sands Developments
    10. 10. “CanadianOil and Oil Sands” Relevant • Independent • Objective 10 www.ceri.ca
    11. 11. 2011 Facts about Canadian CrudeProduction: • Western Canada (AB,BC,SK,NWT) Conventional LIGHT Crude 561,929 bbls/day • Western Canada (AB,BC,SK,NWT) Upgraded Bitumen 846,112 bbls/day • Western Canada (AB,BC,SK,NWT) Condensate (C5+) 128,498 bbls/day • Western Canada (AB,BC,SK,NWT) Conventional HEAVY Crude 421,618 bbls/day • Western Canada (AB,BC,SK,NWT) Non Upgraded Bitumen 758,919 bbls/day • Eastern Canada (NF/LAB,ON) Conventional LIGHT Crude 271,778 bbls/day • Total 2011 Production of Crude Oil and Equivalent 2,988,854 bbls/dayExports: • PADD I (74% Light, 26% Heavy) 171,182 bbls/day • PADD II (21% Light, 79% Heavy) 1,439,447 bbls/day • PADD III (12% Light, 78% Heavy) 111,358 bbls/day • PADD IV (17% Light, 83% Heavy) 213,709 bbls/day • PADD V (61% Light, 39% Heavy) 167,295 bbls/day • Non-US (67% Light, 33% Heavy) 35,261 bbls/day • Total US (28% Light, 82% Heavy) 2,138,260 bbls/dayImports: % of Capacity • Atlantic Canada Conventional Crude 333,990 bbls/day (80%) • Quebec Conventional Crude 298,775 bbls/day (84%) • Ontario Conventional Crude 52,836 bbls/day (15%) • Total Canadian Imports 685,560 bbls/day Relevant • Independent • Objective 11 www.ceri.ca
    12. 12. WCSB Conventional Oil Production ForecastRealistic Scenario (2010-2035) 1,400,000 1,200,000 1,000,000 + 150,000 bbls/dayProduction (bbls/day) 800,000 600,000 400,000 200,000 0 British Columbia Existing Wells British Columbia New Wells Alberta Existing Wells Alberta New Wells Saskatchewan Existing Wells Saskatchewan New Wells Manitoba Production NWT Production Relevant • Independent • Objective 12 www.ceri.ca
    13. 13. Western Canadian Oil Sands Potential (000 bpd) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 Total In Situ Bitumen Volumes Total Mined Bitumen Volumes Relevant • Independent • Objective 13 www.ceri.ca
    14. 14. Western Canadian Oil Sands Potential (000 b/d) 6,000 5,500 5,000 Announced Awaiting Approval 4,500 Approved Suspended Under Construction Onstream 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 Relevant • Independent • Objective 14 www.ceri.ca
    15. 15. Options for Canadian Crude By Pipeline ChurchillSource: Canadian Association of Petroleum Producers, Crude Oil Forecast, Markets & Pipelines, June 2011 Relevant • Independent • Objective 15 www.ceri.ca
    16. 16. “Economic Impacts of OilSands Staged Development” Relevant • Independent • Objective 16 www.ceri.ca
    17. 17. Input-Output (I/O) Logic Oil Steel Trucks Natural Water Engineering Other Sands Gas Services inputs Oil Sands Industry Relevant • Independent • Objective 17 www.ceri.ca
    18. 18. Economic Impacts by UCMRIO 2.0 • There are two types of shocks: Impacts – Investment on Alberta – Operation Impacts Investments in Alberta Oil Sands on BC UCMRIO 2.0 Impacts Multipliers Operations in Alberta Oil Sands Impacts Impacts Impacts on the US Relevant • Independent • Objective 18 www.ceri.ca
    19. 19. How Does it Work? $0.55 Oil Sands $2.02 GDP $0.6 UCMRIO$1 Investment Compensation $0.20 Construction 2.0Oil Sands of Employees Multipliers $0.25 Other Investment & Manufacturing Operations Impacts $0.95 11.2 Oil Sands UCMRIO Employment$1 Operations 2.0 OpportunitiesOil Sands Multipliers $0.05 FIRE $0.42 Taxes Relevant • Independent • Objective 19 www.ceri.ca
    20. 20. Economic Impacts of Alberta’s Oil SandsCase 1 - “No Expansion” Scenario 000 bbl/d 8,000 7,000 6,000 Rail volumes 5,000 Mainline Expansion (2014) 4,000 3,000 2,000 1,000 0 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 AB Conventional Prodn SK Conventional BC Conventional MB Conventional NWT Conventional Diluent for Primary/Eor Existing&Under Construction US Bakken prodn Existing Export Operational Capacity Note(s): 1) Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen SCO available for export and diluent volumes required to move bitumen as per pipeline specifications. February 2, 2012 Relevant • Independent • Objective 20 www.ceri.ca
    21. 21. ‹#›
    22. 22. ‹#›
    23. 23. Economic Impacts of Alberta’s Oil Sands - USCase 1 - “No Expansion” Scenario Ports-to-Plains Alliance Member States GDP Compensation Employment Thousand Mln $CDN Mln $CDN person-yrs Colorado $3,305 $1,563 35 Kansas $2,008 $977 24 Montana $3,176 $1,504 32 Total Employment Impacts in US (2011-2035) Nebraska $593 $280 9 New Mexico $610 $214 7 North Dakota $209 $89 3 Oklahoma $1,368 $556 16 South Dakota $252 $98 4 Texas $12,935 $5,116 119 Wyoming $382 $98 3 Relevant • Independent • Objective 23 www.ceri.ca
    24. 24. “Let’s Talk About Pipelines” Relevant • Independent • Objective 24 www.ceri.ca
    25. 25. Economic Impacts of Alberta’s Oil Sands – CanadaCase 2 - Inclusion of the Keystone XL Pipeline (Incremental Impacts) 000 bbl/d 8,000 Canada AB SK 7,000 GDP (bln) $617 $583.2 $1.4 Tax Revenues (bln) $131 $121 $0.4 6,000 Keystone XL (2015) Employment (‘000 3,497 3,016 17 5,000 person-years) Mainline Expansion (2014) 4,000 3,000 2,000 1,000 0 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 AB Conventional Prodn SK Conventional BC Conventional MB Conventional NWT Conventional Diluent for Primary/Eor Existing&Under Construction US Bakken prodn Approved Approved-on Hold Awaiting Approval Announced KXL Addition Expansion of Enbridge mainline Existing Export Operational Capacity Note(s): 1)Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen and SCO available for export and diluent volumes reqed to move bitumen as per pipeline specifications. August 23, 2012 Relevant • Independent • Objective 25 www.ceri.ca
    26. 26. Economic Impacts of Alberta’s Oil Sands - USCase 2 - Inclusion of the Keystone XL Pipeline (Incremental Impacts) Ports-to-Plains Alliance Member States Incremental GDP GDP Compensation Compensation Employment Employment Thousand Mln $CDN Mln $CDN Thousand person-yrs Mln $CDN Mln $CDN Colorado $4,830 $2,293 person-yrs 53 Kansas PADD I $37,696 $3,171 $18,235 $1,513 417 35 Montana $6,430 PADD II $74,995 $35,897 $3,054 827 70 Nebraska $558 $265 6 PADD III $20,349 $9,231 216 New Mexico $544 $238 6 PADD IV Dakota $12,751 North $6,040 $206 $95 140 3 PADD V Oklahoma $26,358 $12,469 $566 $1,244 285 14 Total US Dakota $172,149 South $241 $81,872 $109 1,883 3 Texas $13,159 $5,974 138 Wyoming $316 $128 3 Relevant • Independent • Objective 26 www.ceri.ca
    27. 27. Economic Impacts of Alberta’s Oil Sands - CanadaCase 3 - Inclusion of TMX Expansion (Incremental Impacts) 000 bbl/d 8,000 Canada AB SK 7,000 GDP (bln) $308 $291 $0.64 6,000 TMX (2017) Tax Revenues (bln) $65 $60 $0.2 Keystone XL (2015) Employment (‘000 1,705 1,471 7 5,000 person-years) Mainline Expansion (2014) 4,000 3,000 2,000 1,000 0 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 AB Conventional Prodn SK Conventional BC Conventional MB Conventional NWT Conventional Diluent for Primary/Eor Existing&Under Construction US Bakken prodn Approved Approved-on Hold Awaiting Approval Announced TMX Expansion KXL Addition Expansion of Enbridge mainline Existing Export Operational Capacity Note(s): 1)Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen and SCO available for export and diluent volumes reqed to move bitumen as per pipeline specifications. August 23, 2012 Relevant • Independent • Objective 27 www.ceri.ca
    28. 28. Economic Impacts of Alberta’s Oil Sands - USCase 3 - Inclusion of the TMX Expansion (Incremental Impacts) Ports-to-Plains Alliance Member States Incremental GDP GDPCompensation CompensationEmployment Employment Thousand Mln $CDN Mln $CDN Thousand person-yrs Mln $CDN Mln $CDN Colorado $677 $320 person-yrs 7 Kansas PADD I $8,081 $410 $4,088 $199 93 4 Montana $636 $301 7 PADD II $10,393 $5,137 119 Nebraska $124 $58 2 PADD III Mexico $4,126 New $1,624 $128 $45 40 1 PADD IV Dakota $1,635 North $44$761 $18 18 0 Oklahoma PADD V $5,100 $287 $2,378 $116 54 4 South Dakota $53 $21 1 Total US $29,335 $13,989 324 Texas $2,691 $1,064 25 Wyoming $79 $20 0 Relevant • Independent • Objective 28 www.ceri.ca
    29. 29. Economic Impacts of Alberta’s Oil Sands - CanadaCase 4 - Inclusion of Northern Gateway (Incremental Impacts) 000 bbl/d 8,000 Canada AB SK Northern Gateway (2018) 7,000 GDP (bln) $374 $352 $0.9 6,000 TMX (2017) Tax Revenues (bln) $80 $73 $0.3 Keystone XL (2015) Employment (‘000 2,150 1,853 11 5,000 person-years) Mainline Expansion (2014) 4,000 3,000 2,000 1,000 0 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 AB Conventional Prodn SK Conventional BC Conventional MB Conventional NWT Conventional Diluent for Primary/Eor Existing&Under Construction US Bakken prodn Approved Approved-on Hold Awaiting Approval Announced Northern Gateway Addition TMX Expansion KXL Addition Expansion of Enbridge mainline Existing Export Operational Capacity Note(s): 1)Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen and SCO available for export and diluent volumes reqed to move bitumen as per pipeline specifications. August 23, 2012 Relevant • Independent • Objective 29 www.ceri.ca
    30. 30. Economic Impacts of Alberta’s Oil Sands - USCase 4 - Inclusion of the Northern Gateway Pipeline (Incremental Impacts) Ports-to-Plains Alliance Member States Incremental GDP GDP Compensation Employment Compensation Employment Thousand Mln $CDN Mln $CDN Thousand person-yrs Colorado Mln $CDN Mln $CDN $400 $847 10 person-yrs Kansas $502 $245 6 PADD I $11,228 $5,668 128 Montana $695 $329 7 PADD II Nebraska $13,388 $6,625 $176 $83 154 2 PADD III Mexico $5,624 New $2,214 $181 $65 55 2 PADD IV Dakota $1,998 North $65 $927 $28 22 1 Oklahoma $404 $166 4 PADD V $7,054 $3,290 74 South Dakota $77 $30 1 TotalTexas US $39,292 $18,724 $1,457 $3,683 433 33 Wyoming $105 $27 1 Relevant • Independent • Objective 30 www.ceri.ca
    31. 31. Western Canadian Potential 000 bbl/d 8,000 Looping/Expanding Existing Pipelines 7,000 Northern Gateway (2018) 6,000 TMX (2017) Keystone XL (2015) 5,000 Mainline Expansion (2014) 4,000 3,000 2,000 1,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 AB Conventional Prodn SK Conventional BC Conventional MB Conventional NWT Conventional Diluent for Primary/Eor Existing&Under Construction US Bakken prodn Approved Approved-on Hold Awaiting Approval Announced Northern Gateway Addition TMX Expansion KXL Addition Expansion of Enbridge mainline Existing Export Operational Capacity Note(s): 1)Operational Capacity is 95% of total design capacity. 2) Conventional crude volumes are net production volumes available for export (i.e., net of domestic demand). 3) Oil Sands volumes comprise of net bitumen and SCO available for export and diluent volumes reqed to move bitumen as per pipeline specifications. August 23, 2012 Relevant • Independent • Objective 31 www.ceri.ca
    32. 32. Economic Impacts of Alberta’s Oil Sands - CanadaComparison of CasesIncremental GDP Impacts (Bln CDN$) 1,600 1,400 1,200 1,000 Incremental Employment Impacts 800 (000 person-years) 600 8,000 400 7,000 200 6,000 0 Alberta Ontario British 5,000 Saskatchewan Columbia 4,000 Case 1 1,439.9 44.3 19.4 3.1 Case 2 583.2 18.6 8.3 3,000 1.4 Case 3 291.3 9.0 4.0 2,000 0.6 Case 4 352.3 11.4 5.1 0.9 1,000 0 Alberta Ontario British Saskatchewan Columbia Case 1 7,209 602 290 37 Case 2 3,016 252 123 17 Case 3 1,471 123 59 7 Case 4 1,853 155 76 11 Relevant • Independent • Objective 32 www.ceri.ca
    33. 33. Economic Impacts of Alberta’s Oil Sands - USComparison of CasesIncremental GDP Impacts by PADD Region (Mln CDN$) 80,000 70,000 Incremental Employment Impacts 60,000 (000 person-years) 50,000 900 40,000 800 30,000 700 600 20,000 500 10,000 400 0 PADD I PADD II PADD III 300 PADD IV PADD V Case 1 38,742 50,550 19,844 8,028 24,474 200 Case 2 37,695.9 74,994.6 20,349.4 12,751.2 26,358.2 Case 3 8,080.9 10,392.9 4,125.7 100 1,635.3 5,100.2 Case 4 11,227.6 13,388.1 5,624.5 1,997.7 7,053.7 0 PADD I PADD II PADD III PADD IV PADD V Case 1 447 580 195 88 258 Case 2 417 827 216 140 285 Case 3 93 119 40 18 54 Case 4 128 154 55 22 74 Relevant • Independent • Objective 33 www.ceri.ca
    34. 34. “BUT” Relevant • Independent • Objective 34 www.ceri.ca
    35. 35. What are the Problems for WCSB OIL? 1. Canadian exports currently feed one market (flat demand and increasing domestic supply). 2. Western Canadian oil/oil sands are land-locked and need transportation options in order to grow either new barrels to the US or Asia. 3. Alberta needs oil hydrocarbon growth in the face of a tanking gas market (Growth = GDP, Employment, Taxes, Royalties). 4. The Cushing Oklahoma bottleneck is affecting PADD II and Canadian market prices “negatively”. 5. Tightening Canadian pipeline capacity will  Affect Edmonton/Hardisty basis differential ($$$ left on the table)  Potentially slow development of the Oil Sands  Potentially slow development of Conventional Oil 6. Oil on Oil Competition for pipeline space and access to refineries  Competition with Alberta/Saskatchewan conventional oil developments  Competition with North Dakota Bakken oil developments  Competition with US Shales (Niobrara, Eagle Ford, etc.) Relevant • Independent • Objective 35 www.ceri.ca
    36. 36. Problem WTI-Brent Differential $135.00 $8.00 $130.00 $6.00 $125.00 $4.00 $120.00 $2.00 $115.00 $- $110.00 $(2.00) $105.00 $(4.00) $100.00 $95.00 $(6.00) $90.00 $(8.00) $85.00 $(10.00) $80.00 $(12.00) $75.00 $(14.00) $70.00 $(16.00) $65.00 $(18.00) $60.00 $(20.00) $55.00 $(22.00) $50.00 WTI - Brent Differential ($/b) $45.00 $(24.00) Europe Brent Spot Price FOB ($/b) $40.00 $(26.00) West Texas Intermediate (WTI) @ Cushing ($/b) $35.00 $(28.00) Jan-2005 Oct-2005 Jan-2006 Oct-2006 Jan-2007 Oct-2007 Jan-2008 Oct-2008 Jan-2009 Oct-2009 Jan-2010 Oct-2010 Jan-2011 Oct-2011 Jan-2012 Apr-2005 Apr-2006 Apr-2007 Apr-2008 Apr-2009 Apr-2010 Apr-2011 Apr-2012 Jul-2005 Jul-2006 Jul-2007 Jul-2008 Jul-2009 Jul-2010 Jul-2011 Jul-2012 Relevant • Independent • Objective 36 www.ceri.ca
    37. 37. Problem WTI-Brent Differential Q3 2011 • WTI discount averaged $23 to Brent • Canadian Crude (Conventional, SCO, Bitumen) Exports • 1,477,000 bbls/day to PADD II • 105,000 bbls/day to PADD III • 216,000 bbls/day to PADD IV • 157,000 bbls/day to PADD V Simple Math: 2,152,000 bbls/day times $23/bbl = $50 million per day (discounted Value) 2012-2013 “The Pipeline Solution” • Enterprise/ETP (Cushing to Houston) 400,000 b/d Q4 2012 • Enbridge/Wrangler (Cushing to Houston) (light crude) 2013 • Enbridge Monarch (Cushing to Houston) 350,000 b/d Q4 2013 • Houston to El Paso reversal (bypass Cushing) 200,000 b/d Q2 2013 • TCPL Keystone Market Link (Cushing to Houston) 150,000 b/d Q2 2013 Relevant • Independent • Objective 37 www.ceri.ca
    38. 38. Future Problem WTI-Brent Differential Pipeline Capacity Into and Out of Cushing 3,500,000 3,000,000 RISK 2,500,000 Capacity BPD 2,000,000 1,500,000 Total Flow Into Cushing Total Flow Out of Cushing 1,000,000 500,000 0 2011 2012 2013 2014 2015 2016 Year Relevant • Independent • Objective 38 www.ceri.ca
    39. 39. Western Canada WTI-WCS Differential $135.00 $130.00 WTI - WCS Differential ($/b) $125.00 West Texas Intermediate (WTI) @ Cushing ($/b) Risk of widening differential $120.00 $115.00 Western Canadian Select (WCS) @ Hardisty ($/b) Average Light - Heavy Differential ($/b) if new pipelines are delayed $110.00 $105.00 2005 - 2006 Median Differential ($/b) $100.00 2007 - 2008 Median Differential ($/b) $95.00 2009 - 2010 Median Differential ($/b) $90.00 2011 Median Differential ($/b) $85.00 Linear (Average Light - Heavy Differential ($/b)) $80.00 $75.00 $70.00 $65.00 $60.00 $55.00 Keystone Base and Production $50.00 $45.00 Alberta Clipper new ramps up $40.00 $35.00 capacity $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 Apr-2005 Apr-2006 Apr-2007 Apr-2008 Apr-2009 Apr-2010 Apr-2011 Oct-2005 Oct-2006 Oct-2007 Oct-2008 Oct-2009 Oct-2010 Oct-2011 Jul-2005 Jul-2006 Jul-2007 Jul-2008 Jul-2009 Jul-2010 Jul-2011 Jan-2005 Jan-2006 Jan-2007 Jan-2008 Jan-2009 Jan-2010 Jan-2011 Jan-2012 Relevant • Independent • Objective 39 www.ceri.ca
    40. 40. Problem WTI-WCS Differential Q3 2011 • WCS discount averaged $17 to WTI (net approximately $10) • Canadian Crude (Conventional, SCO, Bitumen) Exports • 1,477,000 bbls/day to PADD II • 105,000 bbls/day to PADD III • 216,000 bbls/day to PADD IV • 157,000 bbls/day to PADD V Simple Math: 2,152,000 bbls/day times $10/bbl = $21 million per day (discounted Value) 2012-2020 “The Pipeline Solution” • Keystone XL (Hardisty to Houston) 700,000 b/d 2016 • Trans Mountain Expansion (Hardisty to Vancouver) 450,000 b/d 2017 • Northern Gateway (Edmonton to Kitimat) 525,000 b/d 2019 • Line 9 Reversal (Sarnia to Westover, ON) 50,000 b/d Q2 2012 • Line 9 Reversal (Westover to Montreal ) 100,000 b/d ???? • Portland to Montreal Pipeline (Reversal) 400,000 b/d ???? Relevant • Independent • Objective 40 www.ceri.ca
    41. 41. In Summary 1. The production from conventional sources in Western Canada is growing as technology is able to unlock resources that were once thought to be difficult to extract. Nevertheless, oil sands will continue to dominate the future production growth in this region. 2. Presently, the crude pipeline capacity out of Western Canada is sufficient to transport production coming from on stream and under construction oil sands projects. Additional crude export capacity from Western Canada will be essential by as early as 2015. 3. Value of upgrading at the source in Alberta, Environmental Issues, Differentials, Refinery Configurations, Crude Competition, Politics, Energy Security. 4. Given that all oil sands development takes place in Alberta, it is clear that Alberta will be the largest beneficiary, followed by Ontario and then British Columbia. 5. In the US, PADD II (Midwest) is the biggest beneficiary from spin-off effects of Alberta’s oil sands development, followed by PADD I (East Coast) and PADD V (West Coast). Relevant • Independent • Objective 41 www.ceri.ca
    42. 42. Canadian Energy Research Institute Thank you for your time Please visit us at www.ceri.ca Relevant • Independent • Objective 42 www.ceri.ca

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