Toronto Star Editorial Board. April 3, 2014

Transcription

1 Toronto Star Editorial Board April 3,

2 CAPP Scotiabank Investment Symposium April 3 & 4, 2014 ~90 companies ~600 investors Theme is Market Pathways Plenaries on transportation, LNG and provincial policies Oil & gas sector is the largest private investor in Canada $68 billion in forecast investment coast-tocoast ~20% of Toronto Stock Exchange 2

3 Global Primary Energy Demand The Reality Check Energy Demand Growth Population growth Standard of living 20,000 18,000 16,000 14,000 million tonnes oil equivalent Other Renewables Bioenergy Hydro Nuclear Natural Gas Oil Coal 12,000 All Forms of Energy, Developed Responsibly Ongoing high reliance on hydrocarbons Increasing role for renewables Shift to non-conv. oil & natural gas 10,000 8,000 6,000 4,000 2, Technology - Key Lever for Sustainable Growth Production Cost competitiveness Environmental performance Source: International Energy Agency New Policies Scenario World Energy Outlook 2011 Source: International Energy Agency World Energy Outlook 2013 Ongoing reliance on fossil fuels (share of energy consumption): 2011: 82% 2035: 76%

4 The Oil and Natural Gas Industry A Key Driving Force in the Canadian Economy Invested $67 billion in Canada in 2013 (largest single private sector investor consistently $60-70B per annum) $18 billion to governments per annum (royalties, land bonuses, taxes) Global rank: 5 th largest natural gas producer 6 th largest oil producer 3 rd largest oil reserves Employs more than 550,000 in Canada Upstream Oil & Gas Auto Manufacturing Canada s Energy Circumstance: A Resource-Based Export Economy Forestry & Logging Wheat & Barley Uranium 4

5 Ontario & the Oil and Gas Sector 7% of total oil sands jobs will be in Ontario. 317,00 natural gas jobs across Canada by Oil sands could potentially surpass Ontario s trade with traditional export market such as Hong Kong, China. - Former Ontario Finance Minister Dwight Duncan 5

6 Ontario Energy By the Numbers Oil and natural gas supplies 70% of Ontario s energy requirements. 6

7 Natural Gas

8 Natural Gas Power Generation in Ontario Affordable natural gas in Ontario s energy mix can lead to lower electricity rates for consumers. Opportunity to increase the use of natural gas in a variety of applications, including electricity generation. Lower energy costs and greater access to competitively priced electricity enhances the overall competitiveness of businesses and industries, resulting in economic benefits and employment opportunities. A cost-effective opportunity to add additional capacity to the electricity grid because they require less capital costs than alternatives, such as nuclear power, and they can be implemented more quickly. Cleaner-burning alternative because it burns 50 per cent cleaner than coal and emits far fewer pollutants.

9 Canadian Natural Gas - A foundation fuel Canadian - Job creator, large source of revenue for provinces and federal government, accounts for more than $15 billion in exports. Abundant More than 100 years supply at current production levels. Unconventional gas has fundamentally changed North America s supply picture, providing long-term security and reliability. Affordable - Used by over 6 million Canadian customers over 3.2 trillion cubic feet yearly to meet over 30% of our energy needs in homes, businesses, and industry; Canada s robust supply outlook provides increased confidence in future price competitiveness. Clean Efficient and clean-burning energy choice; fewer emissions than many other fuels; Important partner for renewables and emerging low-emission technologies. Versatile Can improve end-use efficiency, contribute to lower emissions, and provide flexible partner in power generation and transportation. Reliable - Comes from a variety of sources and supported by extensive storage and pipeline network. Safe - World leaders in complying with stringent safety standards and regulations at all stages of natural gas exploration, production, transportation, distribution and use. 9

10 Broader use of Natural Gas 10 Natural gas currently meets over 30% of Canada s energy needs in homes, businesses, and industry. Abundant supply outlook means more affordable energy choice over the long-term. Natural Gas Use in Canada Natural Gas Sales in Canada in 2010 = billion cubic metres Public Admin 0.7% Commercial and Other Institutional 13.6% Transformed into Electricity 10.1% Transformed into RPPs 0.8% Transformed into Steam 0.7% Residential 18.5% Producer Use & Non Energy Use 18.9% Agriculture 0.7% Motive Transportation 0.1% Pipeline 3.5% Source: Statistics Canada x Industrial 32.6%

11 North American Natural Gas Supply Outlook Shale gas supply a game-changer 100+ years supply Technology success (horizontal drilling, fracturing, completions) Implications: New producing regions Shifting S / D dynamics Changes in p/ l flows Emerging stakeholder challenges (env. & social)

12 North American Natural Gas Supply What does it mean for Canada? 12 Dramatic increases in supply and limited growth in demand has meant the lowest natural gas prices in North America in a decade Demand-supply picture changes outlook for the future and presents the Canadian natural gas industry with challenges Increasing shale gas supply creates greater competition for domestic North American market and much lower / more affordable consumer prices Growing US supply continues to redraw traditional market flows, as western Canadian gas supply is potentially displaced in eastern US and Canada Creates need to find new domestic & export markets for western Canadian gas supply Stiff competition from Alaska, Australia and other players in expanding Asian markets 100 Years + Supply Horn River Montney Canada s natural gas industry can add: 145,000 new jobs - direct, indirect, induced $1.3 trillion to Canadian GDP over next 25 years Source: CERI 2011

13 Infrastructure and Expanded Markets 13 Emerging markets represent the greater opportunity for Canadian exporters. Since the recession, these economies have accounted for roughly two-thirds of global economic growth and one-half of the growth in global imports, Mark Carney, Governor of the Bank of Canada, April 2, 2012 Existing natural gas transmission pipeline Infrastructure in Canada 72,000 km Transported 5.3 trillion cubic feet of natural gas in 2011 Natural Gas development critical to expanding markets Development of new pipeline assets is critical to open new markets New supply needs to be connected to new export markets Industry makes, and must continue to make, huge investments in pipelines to provide cost competitive infrastructure Timely regulatory decisions critical to competitiveness

14 CAPP Operating Practices for r Hydraulic Fracturing Guide development. Expected practice, but not mandated by CAPP. Inform / complement regulations. Contribute to safe, responsible operations.

15 15 Oil & Oil Sands

16 Global Crude Oil Reserves by Country World Oil Reserves Open to Private Sector billion barrels Restricted (81%) Open to Private Sector Venezuela Saudi Arabia Canada Iran Iraq Kuwait Abu Dhabi Russia Libya Nigeria Kazhakhstan China Qatar United States Oil Sands 56% Other 44% Source: Oil & Gas Journal Dec. 2012

17 17 Canadian Oil Sands (Bitumen and SCO) & Conventional Production

18 2012 Canada and U.S. Demand for Crude Oil by Source Thousand Barrels per Day W. Canada supplies 92% of Ontario s oil refinery feedstock Canada Mexico Saudi Venezuela per cent

19 Access to Markets Pipeline Expansion Projects Under Development Plus Significant Rail Expansion: ~1 million b/d by end-2014

20 20 Ontario Suppliers to the Oil Sands

21 21 Economic Benefits

22 Ontario Clean Tech Sector Opportunities Alberta Technology Fund & Climate Change and Emissions Management Corporation have enabled $1.2B to invest in GHG emissions reduction technology. 22 Science and Technology Canada collaborating with Ontario technology providers to match technology to industry needs, e.g. energy efficiency improvements, CO2 capture, water treatment.

23 Clean Tech Projects Tied to Ontario Lead Organization SDTC Funding Total Project Value CO2 Solution inc. $1,000,000 $5,881,558 Saskatchewan Power $2,682,900 $11,149,608 Corporation (SaskPower) InvoDane Engineering $2,467,125 $8,797,123 Ltd. N-Solv Corporation $10,000,000 $27,044,748 Pure Technologies Ltd. $1,000,000 $3,000,000 GHGSat Inc. $2,017,648 $6,193,614 Switchable Solutions $5,200,000 $15,600,000 Inc. Total $24,367,673 $77,666,651 23

24 Skilled Workforce Availability Workforce skills & capacity is key to competitiveness Significant projected shortfall Challenge arises from growth opportunity and demographics Canadians First : Training Mobility Under-represented groups Immigration: Numbers & skills Temporary (TFW) Permanent mix & #s Workforce supply and productivity is key to managing costs 24

25 Aboriginal Participation in Oil Sands Development Aboriginal Companies: Wood Buffalo & Lac La Biche contracts in 2012 = $1.8B Value of contracts over last 14 years = $8B Aboriginal Employees in permanent jobs in 2010 = 1,700+ Contributions to Aboriginal communities in 2011 & 12 = $20M Aboriginal consultation funding in 2010 = $12M Source: OSDG (OSCA)

26 Oil Sands Environmental Performance Context & Performance Improvement Opportunities Water Use 0.6% flow from Athabasca River (mining); new in situ projects 00% saline water; 80-95% recycle Performance Improvement Reduce overall use; waste water recycle; water technology development centre Water Quality No current evidence that oil sands are a threat to aquatic ecosystem Royal Society of Canada Performance Improvement Enhanced government monitoring system Land 0.02% of Canada s boreal forest disturbed by oil sands mining over 40 years (~ 800 sq. kms size of San Diego); ABMI (biodiversity monitoring) indicates living resources 94% intact Performance Improvement Reduce disturbance, accelerate pace of reclamation Tailings Ponds ~ 200 sq. kms (included in 0.02% above); largely a legacy issue Performance Improvement: Eliminate need for new ponds, accelerate drying time; accelerate reclamation pace GHG Emissions Oil sands 0.14% of global GHG emissions; 2011 emissions 55 mega tonnes (4.3% of 2011 emissions from US coal-fired power generation sector); similar GHG emissions to other heavy oils; 26% improvement in GHG intensity since 1990 Performance Improvement Reduce energy intensity of in situ recovery process; ongoing focus on energy efficiency; targeted application of CCS Environmental Monitoring Extensive monitoring system in place Performance Improvement Enhanced government-driven monitoring system being implemented ($50M per year funding from industry) 26

27 AK In Context.N.A. GHG Emissions (2011) - Coal-fired Power Plants & Oil Sands GHG Emissions from Oil Sands 7.8% of Canada s GHG emissions Accounts for 0.14% of global GHG s 26% reduction in intensity from OR MT ND MN Legend NV AZ UT mtonnes mtonnes 0-15 mtonnes WY NM CO SD NE KS TX OK IA MO AR LA WI IN IL TN AL MS MI OH KY WV SC GA FL NH NY NJ VA NC Canadian oil sands Canadian coal-fired power generating plants U.S. Coal fired power generating plants Sources: U.S. DOE/EIA & Environment Canada

28 Performance Improvement Opportunity Full-Cycle GHG Emissions Better Than U.S. Imports U.S. Barrel Refined in the U.S. (2005) Venezuela - Petrozuata US -Kern River Cdn Oil Sands: Mining SCO Nigeria - Bonny Light Canadian Oil Sands: SAGD Dilbit Iraq-Basra Light Cdn Oil Sands: Low SOR SAGD Dilbit US - Mars +5% Venezuela Bachaquero Mexico - Maya Cdn Oil Sands: Mining Dilbit (PFT) Iraq - Kirkuk Blend US Barrel Refined in the U.S. (2005) Saudi Arabia - Arab Light Brazil - Tupi North Sea - Forties +2% Well-to-tank Refined product Combustion kgco 2 e per barrel of refined product Source: IHSCERA Oil Sands Dialogue Getting the Numbers Right

29 + Canada s Oil Sands Innovation Alliance (COSIA) Vision.to enable responsible and sustainable growth of Canada s Oil Sands while delivering accelerated improvement in environmental performance through collaborative action and innovation. COSIA focus areas Land, water, GHGs, tailings, monitoring. COSIA Companies BP Canada Energy Company Canadian Natural Resources Limited Cenovus Energy Inc ConocoPhillips Canada Resources Corp Devon Canada Corporation Imperial Oil Nexen, A CNOOC Ltd. Co. Shell Canada Energy Statoil Canada Ltd Suncor Energy Inc Syncrude Canada Ltd Teck Resources Ltd Total E&P Canada COSIA first year results Globally significant legal agreements, sharing IP technologies shared ($900M development costs), 185 new projects launched. 29

30 30 Social License

31 Feelings about Energy Sources For each of the following types of energy, please indicate if your overall feelings are very negative, negative, neutral, positive, or very positive? Change in Positive from % positive in 2010 Not asked 23% positive in % positive in

32 32 Need slide from Evelyn Canadian Environmental Barometer Winter 2013 Public Support for the oil Sands

33 Do you use oil from Canada s oil sands? To the best of your knowledge, when it comes to your use of energy for transportation, for the movement of products you use, for heating and cooling, would you say you personally use oil from the oil sands very often, often, a fair bit, rarely, or never? Region Recall Canada s Energy Vote Intention Age Gender 2011 Vote TV Ad Recall Often A fair bit Rarely/Never 33

34 Social License Acceptance / support of public, key stakeholders, FNs, policy makers Assessed in context of societal values (energy, economic, environment, social) Governments grant permits but the public grants permission Larger than any one project or any one company Increasingly role of gov ts / industry to create conditions for success for specific projects Two dimensions to environmental / social conflict Local / regional Environment (air, land, water, biodiversity impacts) & social (noise, dust, activity levels, impact on local services, infrastructure & wages, local benefits, employment, etc.) Primary focus of landowners, communities, many FNs, local ENGOs, many in public. National / global (first oil sands, now shale gas) Global climate change (and related policy) + role of fossil fuels in future energy system.primary focus of most international ENGOs, some in the public.

35 What s Changed? Industry s Prior Approach Focus on local / regional issues near operations Do the right thing, expect to be recognized for doing right thing Low public profile for upstream oil and gas industry What has Changed? Social media / internet Focus on short term Lack of trust in institutions and business Increasing public concern about social inequality Risk aversion (or lack of understanding of risk) health, safety, environment Power of private / local interests (NIMBYism, BANANAism) Increasing activism by Aboriginal peoples Values-based conflict (e.g., climate)

36 36 CAPP s Social License Framework Performance + Communication & Outreach = Reputation/ Social License Performance Continuous environmental & social performance improvement (across the value chain)..including monitoring, timely & transparent reporting Clear line of sight to economic and social benefits to Canadians World class policy & regulatory system Solutions-oriented advocacy for balanced policy and regulation Communications & Outreach Communications / outreach grounded in performance improvement Evolving messaging, evolving channels, air & ground campaigns Requires leadership & collaboration.an industry challenge

37 Being Part of the Discussion Fact vs. 37

38 2010 CAPP OIL SANDS CAMPAIGN Technology, Environment, People

39 The Way Forward Responsible Growth Unprecedented growth opportunities in Canada s energy sector and unprecedented challenges to growth Communications & Engagement Continue to evolve messaging..grounded in performance, exhibit more pride Expand ground campaign Performance Accelerate industry environmental performance.foundational Evolve industry RCE program measurement, reporting, enabling tools Visibly support world class policy & regulation Ensure line of sight to benefits.along value chain, by jurisdiction Invite pragmatic critics to the solution space Requires strong industry leadership via collaboration / coalitions A marathon, not a sprint Others won t stand up for us if we won t visibly stand up for ourselves we all need to step up!

40 40 QUESTIONS AND COMMENTS

41 41 THANK YOU