Peters & Co. Limited Lake Louise Energy Conference Impact of North American Crude Oil Supply Growth Bill Sanderson January 26, 2012
North American Crude Supply Impact About IHS-Purvin & Gertz Canadian Developments in the Global Context Impact of Shale Oil Production Crude Oil Prices and Differentials Copyright 2011 IHS Inc. All Rights Reserved. 2
About Purvin & Gertz Founded in 1947 energy consulting for 64 years Global presence with offices in: Houston, Calgary, London, Singapore, Dubai, and Moscow Consulting staff of Chemical Engineers/MBAs Join with 10-15 years prior industry experience Average of 22 years experience in the industries we serve Possess combination of technical and commercial experience Global company populated with global colleagues Acquired by IHS Inc. on November 10, 2011 Copyright 2011 IHS Inc. All Rights Reserved. 3 3
IHS-Purvin & Gertz Customer Value Proposition + Adding Purvin & Gertz to the IHS capabilities represented by Global Insights, CERA, CMAI and SRI Providing consulting and research capabilities across the energy through chemical value chain From below the Wellhead to Walmart Copyright 2011 IHS Inc. All Rights Reserved. 4 4 4
North American Crude Supply Impact About IHS-Purvin & Gertz Canadian Developments in the Global Context Impact of Shale Oil Production Crude Oil Prices and Differentials Copyright 2011 IHS Inc. All Rights Reserved. 5
Western Canadian oil supply is expected to increase by about 700 KB/D by 2015 from oil sands projects.. 4,000 3,000 Thousand Barrels per Day Oil Sands Tight Oil Conventional 2,000 1,000 0 1990 1995 2000 2005 2010 2015 Copyright 2011 IHS Inc. All Rights Reserved. 6
Canadian production is expected to contribute about one-third of non-opec production by 2015 4 3 2 1 0-1 -2-3 -4 Year-to-Year Change, Million Barrels per Day Non-OPEC OPEC 2000 2005 2010 2015 Copyright 2011 IHS Inc. All Rights Reserved. 7
Brent prices are expected to remain high driven by growing demand and long-term supply concerns 120 100 Dated Brent FOB, Dollars per Barrel Brent, Constant 2011 Dollars Brent, Current Dollars 80 60 40 20 0 2000 2005 2010 2015 Copyright 2011 IHS Inc. All Rights Reserved. 8
North American Crude Supply Impact About IHS-Purvin & Gertz Canadian Developments in the Global Context Impact of Shale Oil Production Crude Oil Prices and Differentials Copyright 2011 IHS Inc. All Rights Reserved. 9
Major North American Shale Oil Plays Bakken Niobrara Eagle Ford Source: Purvin & Gertz, Inc., National Energy Board Copyright 2011 IHS Inc. All Rights Reserved. 10
U.S. shale oil output is expected to reach 900,000 B/D by 2015 and surpass 1.4 million B/D by 2020 3,000 2,500 2,000 1,500 Thousand Barrels per Day Niobrara Eagle Ford Bakken High Case High Case 1,000 500 Base Case 0 2005 2010 2015 2020 Note: Chart does not include segregated condensate production from Eagle Ford. Copyright 2011 IHS Inc. All Rights Reserved. 11
Shale oil will account for a significant portion of North American crude oil supplies by 2020... 30 North American Crude Oil Supplies, Million Barrels per Day U.S. Lower 48 / Alaska U.S. Gulf of Mexico 25 Canadian Conventional Western Canadian Bitumen/SCO 20 Shale Oil (Base Case) Other N. American Imports U.S. Sweet Crude Imports N. American Production Crude Runs 15 Crude Production 10 5 0 1990 1995 2000 2005 2010 2015 2020 Copyright 2011 IHS Inc. All Rights Reserved. 12
Increases in Canadian crude oil pipeline takeaway capacity is needed promptly... 2000 Canadian Crude Supply Increment to 2010, Thousand B/D 1500 1000 High Low Gulf Coast Access KXL 500 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Additional pipeline capacity needed (2014 to 2016), depending on crude supply KXL & Enbridge Gulf Coast access look to meet need until end of decade Copyright 2011 IHS Inc. All Rights Reserved. 13
North American Crude Supply Impact About IHS-Purvin & Gertz Canadian Developments in the Global Context Impact of Shale Oil Production Crude Oil Prices and Differentials Copyright 2011 IHS Inc. All Rights Reserved. 14
WTI prices have recovered relative to international prices as takeaway capacity plans have firmed... 5 WTI less Dated Brent, Dollar per Barrel 0-5 -10-15 Pipeline Rail/Barge Trucking -20-25 -30 2009 2010 2011 2012 2013 2014 2015 Copyright 2011 IHS Inc. All Rights Reserved. 15
Crude oil prices expected to converge when North American take-away capacity meets market needs... 120 100 80 Crude FOB, Dollars per Barrel WTI - Cushing, Constant Dolars WTI - Cushing, Current Dollars Dated Brent, Constant Dollars Dated Brent, Current Dollars 60 40 20 0 2000 2005 2010 2015 Copyright 2011 IHS Inc. All Rights Reserved. 16
Canadian light/heavy differentials expected to narrow relative to USGC due to strong demand... 30 25 20 Forecast in Constant 2011 Dollars per Barrel SCO - Cold Lake Blend, Edmonton MSW - Cold Lake Blend, Edmonton LLS - Maya, USGC 15 10 5 0 1990 1995 2000 2005 2010 2015 2020 Copyright 2011 IHS Inc. All Rights Reserved. 17
Summary & Conclusions US shale oil developments will place continued pressure on the Midwest crude balance Logistical issues likely to persist for several years Gulf Coast Access/KXL seen as critical to handle supply growth Planning & approval of additional pipeline projects also needed Near-term narrowing of the Canadian light / heavy differential expected relative to the USGC Strong residue conversion capacity relative to supply Copyright 2011 IHS Inc. All Rights Reserved. 18
Thank You! Bill Sanderson Houston Steve Kelly Calgary Copyright 2011 IHS Inc. All Rights Reserved. 19