The Changing Face of The Oil and Gas Industry in Canada

Relevant Independent Objective
www.ceri.ca
1
The Changing Face of the Oil and Gas
Industry in Canada
Canadian Energy Research Institute
Peter Howard, P.Eng
President and CEO

August 2012
Washington DC
www.ceri.ca
2
Agenda
Who We Are and What We Do
Lets Talk About Canadian Oil and Oil Sands
Lets Talk About Pipelines
But
Lets Talk About Western Canadian Natural Gas
Be Careful What You Wish For!

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3
Overview
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 CERIs research is publically available on our website at www.ceri.ca
www.ceri.ca
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 Canadas 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)

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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
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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

www.ceri.ca
7
CERI Conferences
CERI hosts three major conferences each year (Oil, Natural Gas and Petrochemicals)
attended by over 100 delegates from across North America.
Dates and venues for our 2013 conferences can be found on our website. For further information, contact our Conference Manager, Deanne Landry, at
403-220-2395 or dlandry@ceri.ca.
CERI 2012 Oil Conference
Achieving Super Power Status
April 23-24, 2012
CERI 2012 Petrochemical Conference
Pathways to the Future
June 3-5, 2012
CERI 2012 Natural Gas Conference
Going Global Shifting the Focus of
the Natural Gas Industry
February 27-28, 2012
www.ceri.ca
8
Western Canadas Upstream Oil
and Gas Industry
Land Acquisition
Crown Land Sales
Evaluation
Construction
Operation and Maintenance
Production
Wages
Royalties
Western Canadas Oil and Gas Industry
Land Acquisition
Crown Land Sales
Conventional Drilling
Completion and Tie in
Operation and Maintenance

Production
Wages
Royalties
2009 Expenditures: $41.4 billion 2009 Expenditures: $25.1 billion
Oil and Gas Drilling Oil Sands Developments
9
www.ceri.ca
10
Lets Talk About Canadian
Oil and Oil Sands
www.ceri.ca
11
2011 Facts about Canadian Crude
Production:
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/day
Exports:
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/day
Imports: % 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
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12
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cdn/US Multiplier
Normalized
WCSB Conventional Oil Production Forecast
Realistic Scenario (2010-2035)
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
P
r
o
d
u
c
t
i
o
n

(
b
b
l
s
/
d
a
y
)

British Columbia Existing Wells British Columbia New Wells Alberta Existing Wells
Alberta New Wells Saskatchewan Existing Wells Saskatchewan New Wells
Manitoba Production NWT Production
+ 150,000 bbls/day
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13
Western Canadian Oil Sands Potential
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045
('000 bpd)
Total In Situ Bitumen Volumes Total Mined Bitumen Volumes
SAGD and CSS Projects
Potential 3.3 mbpd
Mining Projects
Potential 2.1 mbpd
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14
Western Canadian Oil Sands Potential
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
('000 b/d)
Announced Awaiting Approval
Approved Suspended
Under Construction Onstream
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15
Options for Canadian Crude By Pipeline
Source: Canadian Association of Petroleum Producers, Crude Oil Forecast, Markets & Pipelines, June 2011
Churchill
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16
Economic Impacts of Albertas Oil Sands
No Expansion Scenario
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
3
0
2
0
3
1
2
0
3
2
2
0
3
3
2
0
3
4
2
0
3
5
'000 bbl/d
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
Mainline Expansion (2014)
Enbridge Line 61 +160,000 bpd
Enbridge Line 5 +50,000 bpd

Rail volumes (+50,000 to +200,000 bpd)
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0
50
100
150
200
250
300
350
400
450
2
0
1
1
2
0
1
3
2
0
1
5
2
0
1
7
2
0
1
9
2
0
2
1
2
0
2
3
2
0
2
5
2
0
2
7
2
0
2
9
2
0
3
1
2
0
3
3
2
0
3
5
Induced
Indirect
Direct
0
10
20
30
40
50
60
70
80
Canada
Direct employment 90,000 (2011)
growing to 125,000 jobs (2022)

Total Direct, Indirect, Induced employment
270,000 (2011) to 370,000 (2022)
United States
Total Indirect and Induced
employment 54,000 (2011)
growing to 71,000 jobs (2022)
Source: CERI, Pacific Access: Part I Linking Oil Sands Supply to New and Existing Markets
www.ceri.ca
18
Thousand
Person Years
GDP Compensation of
Employees
Employment
PADD I 38,742 19,604 447
PADD II 50,550 24,983 580
PADD III 19,844 7,814 195
PADD IV 8,028 3,740 88
PADD V 24,474 11,412 258
Total US 141,638 67,554 1,568
2011-2035
$CAD Million
Alberta
$1,440
Billion
0
200
400
600
800
1000
1200
1400
1600
GDP
$
C
D
N

B
i
l
l
i
o
n
s

Rest of Canada
$80.9 Billion
Ontario
55%
British
Columbia
24%
Quebec
12%
Saskatchewa
n
4%
Manitoba
3%
Rest of
Canada
2%

Total GDP Increase as a result of Oil Sands Investment & Operations 2011-2035

1. Ontario $44.30 billion 4. Saskatchewan $3.05 billion
2. BC $19.45 billion 5. Manitoba $2.93 billion
3. Quebec $9.59 billion 6. ROC $1.56 billion
Canadian GDP Impacts
United States Impacts by PADD
Source: CERI, Pacific Access: Part I Linking Oil Sands Supply to New and Existing Markets
www.ceri.ca
19
Thousand
Person Years
GDP Compensation of
Employees
Employment
Alabama 1,291 647 19
Alaska 521 113 3
Arizona 1,729 849 22
Arkansas 754 355 11
California 15,091 7,012 151
Colorado 3,305 1,563 35
Connecticut 1,703 839 15
Delaware 474 176 4
District of Columbia 475 292 4
Florida 5,139 2,498 69
Georgia 2,827 1,471 38
Hawaii 395 181 5
Idaho 378 193 6
Illinois 17,303 8,442 173
Indiana 2,446 1,216 30
Iowa 1,072 471 14
Kansas 2,008 977 24
Kentucky 1,216 599 18
Louisiana 3,493 1,115 27
Maine 340 178 6
Maryland 1,740 895 21
Massachusetts 2,567 1,463 28
Michigan 4,468 2,371 54
Minnesota 2,046 1,063 26
Mississippi 761 367 12
Missouri 1,728 918 25
Montana 3,176 1,504 32
Nebraska 593 280 9
Nevada 903 433 12
New Hampshire 430 238 6
New Jersey 3,545 1,801 35
New Mexico 610 214 7
New York 7,713 3,902 71
North Carolina 3,121 1,389 37
North Dakota 209 89 3
Ohio 6,662 3,358 77
Oklahoma 1,368 556 16
Oregon 1,382 650 18
Pennsylvania 4,058 2,097 50
Rhode Island 337 165 4
South Carolina 1,120 602 18
South Dakota 252 98 4
Tennessee 1,870 957 27
Texas 12,935 5,116 119
Utah 787 382 11
Vermont 173 90 3
Virginia 2,577 1,313 31
Washington 4,451 2,174 48
West Virginia 401 195 6
Wisconsin 7,308 3,590 79
Wyoming 382 98 3
Total US 141,638 67,554 1,568
$CAD Million
United States Impacts
by State

Source: CERI, Pacific Access: Part I Linking Oil Sands Supply to New and
Existing Markets (Appendix A)
www.ceri.ca
20
Lets Talk About
Pipelines
www.ceri.ca
21
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
3
0
2
0
3
1
2
0
3
2
2
0
3
3
2
0
3
4
2
0
3
5
'000 bbl/d
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 req'ed to move bitumen as per
pipeline specifications. August 23, 2012
Keystone XL (2015)
Alberta Oil Sands Projects Coupled with WCSB Conventional Oil
Inclusion of the Keystone XL Pipeline
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
3
0
2
0
3
1
2
0
3
2
2
0
3
3
2
0
3
4
2
0
3
5
'000 bbl/d
TMX Expansion KXL Addition Expansion of Enbridge mainline
Existing Export Operational Capacity
TMX (2017)
Keystone XL (2015)
Inclusion of TMX Expansion
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23
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
3
0
2
0
3
1
2
0
3
2
2
0
3
3
2
0
3
4
2
0
3
5
'000 bbl/d
Northern Gateway Addition TMX Expansion KXL Addition
Expansion of Enbridge mainline Existing Export Operational Capacity
TMX (2017)
Keystone XL (2015)
Northern Gateway (2018)
Inclusion of Northern Gateway
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24
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
3
0
2
0
3
1
2
0
3
2
2
0
3
3
2
0
3
4
2
0
3
5
'000 bbl/d
Northern Gateway Addition TMX Expansion KXL Addition
Expansion of Enbridge mainline Existing Export Operational Capacity
TMX (2017)
Keystone XL (2015)
Northern Gateway (2018)
Looping/Expanding Existing Pipelines
Full Potential
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25
BUT
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26
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.)
What are the Problems for WCSB OIL?
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27
Competition from the US Bakken
Oil Production Forecast and Transportation
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28
$(28.00)
$(26.00)
$(24.00)
$(22.00)
$(20.00)
$(18.00)
$(16.00)
$(14.00)
$(12.00)
$(10.00)
$(8.00)
$(6.00)
$(4.00)
$(2.00)
$-
$2.00
$4.00
$6.00
$8.00
$35.00
$40.00
$45.00
$50.00
$55.00
$60.00
$65.00
$70.00
$75.00
$80.00
$85.00
$90.00
$95.00
$100.00
$105.00
$110.00
$115.00
$120.00
$125.00
$130.00
$135.00
J
a
n
-
2
0
0
5
A
p
r
-
2
0
0
5
J
u
l
-
2
0
0
5
O
c
t
-
2
0
0
5
J
a
n
-
2
0
0
6
A
p
r
-
2
0
0
6
J
u
l
-
2
0
0
6
O
c
t
-
2
0
0
6
J
a
n
-
2
0
0
7
A
p
r
-
2
0
0
7
J
u
l
-
2
0
0
7
O
c
t
-
2
0
0
7
J
a
n
-
2
0
0
8
A
p
r
-
2
0
0
8
J
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l
-
2
0
0
8
O
c
t
-
2
0
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8
J
a
n
-
2
0
0
9
A
p
r
-
2
0
0
9
J
u
l
-
2
0
0
9
O
c
t
-
2
0
0
9
J
a
n
-
2
0
1
0
A
p
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-
2
0
1
0
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u
l
-
2
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1
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O
c
t
-
2
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1
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J
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n
-
2
0
1
1
A
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-
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0
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-
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1
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-
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1
2
J
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l
-
2
0
1
2
WTI - Brent Differential ($/b)
Europe Brent Spot Price FOB ($/b)
West Texas Intermediate (WTI) @ Cushing ($/b)
Differential Problem WTI-Brent
www.ceri.ca
29
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cdn/US Multiplier
Normalized
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 $15/bbl
= $32 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

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30
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cdn/US Multiplier
Normalized
Future Problem WTI-Brent Differential
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
2011 2012 2013 2014 2015 2016
C
a
p
a
c
i
t
y

B
P
D

Year
Pipeline Capacity Into and Out of Cushing
Total Flow Into Cushing
Total Flow Out of Cushing
RISK
www.ceri.ca
31
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cdn/US Multiplier
Normalized
Western Canada WTI-WCS Differential

$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
$55.00
$60.00
$65.00
$70.00
$75.00
$80.00
$85.00
$90.00
$95.00
$100.00
$105.00
$110.00
$115.00
$120.00
$125.00
$130.00
$135.00
J
a
n
-
2
0
0
5
A
p
r
-
2
0
0
5
J
u
l
-
2
0
0
5
O
c
t
-
2
0
0
5
J
a
n
-
2
0
0
6
A
p
r
-
2
0
0
6
J
u
l
-
2
0
0
6
O
c
t
-
2
0
0
6
J
a
n
-
2
0
0
7
A
p
r
-
2
0
0
7
J
u
l
-
2
0
0
7
O
c
t
-
2
0
0
7
J
a
n
-
2
0
0
8
A
p
r
-
2
0
0
8
J
u
l
-
2
0
0
8
O
c
t
-
2
0
0
8
J
a
n
-
2
0
0
9
A
p
r
-
2
0
0
9
J
u
l
-
2
0
0
9
O
c
t
-
2
0
0
9
J
a
n
-
2
0
1
0
A
p
r
-
2
0
1
0
J
u
l
-
2
0
1
0
O
c
t
-
2
0
1
0
J
a
n
-
2
0
1
1
A
p
r
-
2
0
1
1
J
u
l
-
2
0
1
1
O
c
t
-
2
0
1
1
J
a
n
-
2
0
1
2
WTI - WCS Differential ($/b)
West Texas Intermediate (WTI) @ Cushing ($/b)
Western Canadian Select (WCS) @ Hardisty ($/b)
Average Light - Heavy Differential ($/b)
2005 - 2006 Median Differential ($/b)
2011 Median Differential ($/b)
Linear (Average Light - Heavy Differential ($/b))
Risk of widening differential
if new pipelines are delayed
Keystone Base and
Alberta Clipper new
capacity
Production
ramps up
www.ceri.ca
32
Canada has Energy

North South East or West

If the Market Wants the Energy,
Canada Needs the Pipes
www.ceri.ca
33
Lets Talk About
Western Canadian Natural Gas
www.ceri.ca
34
United States Gas Pipeline Import/Export Forecast
CERI Realistic Case (Feb. 2012)
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
3
0
N
e
t

I
m
p
o
r
t

V
o
l
u
m
e
s

(
M
M
c
f
/
d
a
y
)
E
x
p
o
r
t
s

(
M
M
c
f
/
d
a
y
)

I
m
p
o
r
t
s
Canadian Exports to US Canadian Imports From US Net Exports
Too much GAS not enough DEMAND
Where is the Problem?
Net Canadian Exports
- 5 BCF/d
www.ceri.ca
35
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2005 2010 2015 2020 2025
WCSB Marketable Gas Supply
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
2005 2010 2015 2020 2025
TCPL Northern Pipeline
0
1,000
2,000
3,000
4,000
2005 2010 2015 2020 2025
TCPL Sarnia Import Volumes
-2,000
-1,000
0
1,000
2,000
2005 2010 2015 2020 2025
TCPL Niagara Net Flows
-14,000
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2005 2010 2015 2020 2025
WCSB Export Flows
Ontario / Quebec
Ontario/Quebec Import/Export Forecast
CERI Realistic Case
Mid Continent Gas
Rockies Gas
Connect to Sarnia
Marcellus Gas into Niagara
Marcellus Gas connect to
Iroquois to New York
OIL
Potential for Stranded
Gas Pipeline Assets
Conversion to Oil Service
www.ceri.ca
36
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cdn/US Multiplier
Normalized
AECO C Gas Price Forecast
Average WCSB
Well Supply Cost
Range
($3-$5.75/mcf)
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
3
0
2
0
3
1
2
0
3
2
2
0
3
3
2
0
3
4
2
0
3
5
$/MMBtu
AECO C Natural Gas Forecasts
AECO C(real2010$/MMbtu) EIA AEO 2012
CERI Speculative
External Consultant
2008 Gas
Wells
Completed
2010 Gas
Directed
Licences
2011 Gas
Directed
Licences
Montney (34)
Falher (17)
Duvernay (11)
Cardium (24)
Bluesky (17)
Notikewin (10)
Glaucontic (49)
Viking (16)
Lower Mannville (10)
2012 Gas
Directed
Licences
(Jan.-June)
www.ceri.ca
41
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cdn/US Multiplier
Normalized
Western Canada What Makes the Gas World Work
BC Montney Supply Cost example
$3.8 $3.8 $3.9
$3.4
$3.0
$2.5
$2.1
$1.7
$1.3
$1.0
$0.7
$0.4
$0.2
$0.8
$-
$0.7
$1.3
$2.0
$2.6
$3.2
$3.8
$4.3
$4.9
$5.4
$5.8 $6.2 $6.5
$4.5
$3.8
$4.5
$4.7
$4.9
$5.1
$5.3
$5.5
$5.7
$5.8
$6.0
$6.2
$6.4
$6.5
$-
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
$5.5
$6.0
$6.5
$7.0
$
/

m
c
f

Liquids Portion Gas Portion Revenue March 2012 Intra AB NIT Price ($/mcf)
With a Gas Price of $1.87/mcf a well needs a minimum of 60 bbls/mmcf (Liquids) to be economic
www.ceri.ca
42
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
$2.20
$2.40
$2.60
$2.80
$3.00
$3.20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Cdn/US Multiplier
Normalized
Western Canada Gas Well Development Forecast
Realistic Scenario: Future Forecast
Summer 2012: Gas Prices are forecasted to drop below $2.00/mcf (Henry Hub)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
22000
24000
26000
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
2
0
2
1
2
0
2
2
2
0
2
3
2
0
2
4
2
0
2
5
2
0
2
6
2
0
2
7
2
0
2
8
2
0
2
9
2
0
3
0
2
0
3
1
2
0
3
2
2
0
3
3
2
0
3
4
2
0
3
5
W
e
l
l

C
o
u
n
t

AB Conventional Vertical Wells BC Conventional Vertical Wells
SK Conventional Vertical Wells AB Conventional Horizontal Wells
BC Conventional Horizontal Wells SK Conventional Horizontal Wells
AB D&A Wells BC D&A Wells
SK D&A Wells BC Horn River
BC Montney AB CBM
Forecast
Price Recovery
($2 to $6/mcf)

Gas Directed
Activity Focused
on Liquids Rich
Plays
Price Destruction
($14 to $3/mcf)
$1.87/mcf (March 2012)
XXXX
www.ceri.ca
43
Horn River to Kitimat LNG Potential (2013-2035)
103
59
50
175
107
94
86
82
78
76
73
71
70
68
67
66
65
64
63
62
61
0 0 0
20
40
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1000.0
1100.0
1200.0
1300.0
1400.0
1500.0
1600.0
1700.0
1800.0
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180
190
P
r
o
d
u
c
t
i
o
n

V
o
i
l
u
m
e

(
M
M
c
f
/
d
a
y
)

W
e
l
l

C
o
u
n
t

New Wells Pre Build Production Volume
Over the next 25 years:
$27 billion on upstream Investment
$15 billion in upstream operating cost
$ 5 billion in terminal investment
$ 3 billion in terminal operations
$ 2 billion in Pacific Trail pipeline
$ ? Billion in Spectra pipeline expansions
www.ceri.ca
44
The Shale Gas Revolution!
The Conventional Oil Rebirth!
The Shale Oil Tsunami!
The Great NGL Surge*
*Bentek Energy LLC
Be Careful What You Wish For!
www.ceri.ca
45
Thank you for your time
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