Natural Gas Use in Alberta s Oil Sands Industry CERI North American Natural Gas Conference March 1, 2004 1 Outline Oil Sands Industry Overview Bitumen and Synthetic Crude Oil Supply Projections Oil Sands Industry Natural Gas Demand and Available Supply Implications Conclusions 2 CERI Natural Gas Conference 1
Huge Resource Base 350 300 Billion Barrels 250 200 150 100 50 174 259 0 AB Bitumen Saudi Oil Ultimate Potential Remaining Reserves 3 Source: Alberta Energy and Utilities Board; Oil & Gas Journal Substantial Production Oil Sands provided 35% of Canada s crude oil production in 2003 Mb/d % Conventional Light 918 36.8 Condensate 163 6.5 Conventional Heavy 543 21.7 Unprocessed Crude Bitumen 347 13.9 Synthetic Crude Oil 527 21.1 Total 2,498 100.0 4 Source: National Energy Board (Preliminary Data) CERI Natural Gas Conference 2
New Production Capacity Mining/Extraction Syncrude Stage 3 CNRL Horizon AOSP Jackpine True North Fort Hills In Situ Suncor Firebag ConocoPhillips Surmont Nexen/OPTI Long Lake CNRL - Primrose Wolf Lake Expansion 5 Note: Projects that are either under construction or approved. Many others are at various stages in the regulatory process. CERI Oil Sands Supply Outlook CERI Study No. 108 being released March 3, 2004 Bitumen and SCO Supply Projections 2004-2017 5 Cases Supply Costs In situ technologies Mining and extraction Upgrading Issues - including energy requirements, sources and costs Breakfast presentation, Calgary Petroleum Club, March 10, 2004 6 CERI Natural Gas Conference 3
Unconstrained Supply Projection 4,500 4,000 Gross Crude Bitumen Production - Mb/d 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Mining In Situ Primary 7 Source: CERI Study No. 108 Oil Sands Gas Requirements 1000 External Gas Requirements (Mcf/b) 250 400 80 Upgrader Hydrogen Today Added Future Upgrader Hydrogen Upgrader Fuel In Situ Mining 250 Thermal in situ projects are very large energy consumers Gas use depends on recovery performance Gas use for upgrading is higher for production of higher quality synthetic crude oil 8 Source: Oil Sands Technology Roadmap CERI Natural Gas Conference 4
Thermal In Situ Gas Use 2.5 Gas Use (Mcf/b) 2.0 1.5 1.0 0.5 Dry SOR Wet SOR 0.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Steam-Oil-Ratio (b/b) 9 Source: CERI Study No. 108 Gas Use Assumptions (Mcf/b) Low Case High Case Thermal In Situ 0.90 1.20 Mining 0.20 0.30 Upgrading 0.30 0.70 10 Source: CERI Study No. 108 CERI Natural Gas Conference 5
Oil Sands Gas Use Unconstrained Projection 4,000 Total Gas Use (Bcf/d) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2005 2008 2011 2014 2017 Low Case High Case 11 Source: CERI Study No. 108 Historical Canadian Natural Gas Production Bfc/d 18 17 16 15 14 13 12 Ladyfern East Coast Ontario Saskatchewan BC (Excluding Ladyfern) Alberta 11 1994 1995 1996 1997 1998 1999 2000 2001 2002 12 Source: CERI Study No. 107 CERI Natural Gas Conference 6
Projected Canadian Natural Gas Production 25 Bcf/d 20 15 10 5 BC Offshore NFLD NWT NS CBM WCSB Conv 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 13 Source: CERI Study No. 107 Implications Oil sands industry will compete for natural gas supply with other North American gas consumers Resultant strong natural gas prices will provide incentives for: Further efficiency improvements New recovery technologies Fuel substitution 14 CERI Natural Gas Conference 7
In Situ Recovery Technologies Proven Thermal Recovery Techniques Cyclic Steam Stimulation Steam Assisted Gravity Drainage Technology Improvements Low Pressure SAGD New Solvent-Based Recovery Processes Solvent Injection - VAPEX Hybrid Thermal Solvent Processes - SAGP, ES-SAGD, TSS-SAGD New In Situ Combustion Processes - THAI 15 Energy and Hydrogen Supply Options Energy Natural Gas Coke and other Bitumen Residues Coal Nuclear Hydrogen Natural Gas Gasification of Coke, Bitumen Residues or Coal Electrolysis of Water (Nuclear) 16 CERI Natural Gas Conference 8
Conclusions The Oil Sands Industry is very energy intensive provided by consumption of large quantities of natural gas Oil Sands Industry growth will contribute to strong growth in natural gas demand and upward pressure on natural gas prices High natural gas prices will drive industry efforts to improve efficiencies, develop new technologies and investigate/develop alternative fuels and sources of hydrogen 17 CERI Natural Gas Conference 9