Setting the Record Straight

Don Thompson

API Canadian Oil Sands Tour

August 6, 2009
Canada’s oil sands deposits

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U.S. Imports of Crude Oil and Petroleum
Products by Country of Origin

2
Market Demand for Western Canadian Crude Oil –
Actual 2008 vs 2015 Potential

3
Global Crude Oil Reserves by Country

4
1,000 Americans Polled on Canada’s Oil Sands

Q: Which of the following Q: Which of the following

countries is the United States’ countries has the SECOND
Largest oil supplier? largest supplies of oil?

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US Oil Imports

Canadian Oil can help meet the United States’ growing

energy needs.

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Setting the Record Straight

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Fort McMurray

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 Myth #1

It isn’t a lie if you don’t tell the whole truth

Photo credit:
National Geographic – March, 2009 edition

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The pictures National Geographic didn’t print

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Other photos National Geographic didn’t print…

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…Syncrude’s 300 Wood Bison…

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…the use of in-situ in oil sands extraction…

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…240,000 jobs linked to the oil sands…

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Canadian & U.S. Crude Oil Pipeline Proposals

15
 Refinery Expansions in the Midwest

Underway:
Whiting, Indiana – BP
2000 jobs during construction
80 permanent positions

Wood River, Illinois – ConocoPhillips/EnCana

3,000 jobs during construction
100 permanent positions

Planned: Possible:
Marathon in Detroit - $1.9 billion ExxonMobil – Joliet, Illinois
BP in Toledo, Ohio - $2.5 billion Marathon – Robinson, Illinois
Husky in Lima, Ohio Murphy Oil – Superior, Wisconsin

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Manufacturing Links

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Myth #2

Size matters

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Canada’s oil sands deposits

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The truth about Boreal Forest use

One-hundredth
of one per cent

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Myth #3

Let’s talk about birds

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Bird Mortality Study for the USDA Forest Service

500 million to over 1 billion birds are killed

due to collisions with human-made
structures.

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Myth #4

“Dirty Oil”

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Wells to Wheels

“This places them

within the general
range of crude oils
consumed in the
United States…”
Source: Cambridge Energy Research Associates
Inc. Growth in the Canadian Oil Sands Report
2009

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End users create most of the GHG emissions

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Myth #5

Climate change impact

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 Canada’s GHG Emissions by Sector

Oil sands= 4.6 %

Source: Environment Canada

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North American Carbon Footprint
Oil Sands and Coal

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Myth #6

Air pollution

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Annual Average Nitrogen Dioxide Concentrations in
Major North American Cities

5 year average Fort McMurray 5 year

average
Source: CASAhome.org

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Air Monitoring Station

www.wbea.org
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Myth #7

“Oil sands threaten downstream water

resources.”

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News Headline

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Headline: U of A Scientist says fish caught
in Lake Athabasca doesn’t have two mouths

“This is a known
and not unusual
phenomenon in
dead goldeye.”
Dr. Joe Nelson, University of Alberta

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Bitumen seeping naturally into the Athabasca River

www.ramp-alberta.org
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Water monitoring

“…no effects of local human activities were apparent

on water quality in the Athabasca River…”
Source: Regional Aquatics Monitoring Program (RAMP) 2007 Technical Report

www.ramp-alberta.org
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Myth #8

Tailing ponds are polluting the water

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 “The problem with the report, at least the way I see it is
structured, is it basically gives the impression that these
seepages (from tailings ponds) are turning into surface
run-off and going directly into the Athabasca River. That’s
just not the case.”

Preston McEachern, Section Head for Science Research and Innovation,

Alberta Environment

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Myth #9

The oil sands will drain rivers.

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 Perspective: Water use from Alberta river basins

Source: AENV state of the basin website

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Athabasca river flow compared to allocated withdrawals

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Oil sands and water use

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Life-cycle water use of various energy sources
Myth #10

Oil sands development creates chaos

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 The regulatory process

• Alberta
Environment
•Sustainable Resource Development

“…At the project level, government regulation of oil sands

activities is stronger than in many other oil-producing regions in the world.”
Source: Cambridge Energy Research Associates Inc. Growth in the Canadian Oil Sands Report 2009

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Oil sands geology

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Reclamation

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Reclamation pace in-line with approved
plans

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 Despite setbacks, oil sands production expected to
increase1

Actual Bitumen Production

Original Estimated Bitumen Production (January, 2008)
Adjusted Estimated Bitumen Production (January 26, 2009)

1Bitumen forecast for all Alberta oil sands projects – original estimate (January, 2008) and adjusted estimate per
public announcements (January 26, 2009)
Source: CAPP and Nichols Applied Management

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 Combined oil sands expenditures: historical and
estimated1

Capital: $12.8 Billion

Operating: $17.9 Billion

Actual Construction Capital Expenditures Original Estimated Construction Capital Expenditures (Jan. 08)
Actual Operating Expenditures Original Estimated Operating Expenditures (Jan. 08)
Adjusted Estimated Construction Capital Expenditures (Jan. 26, 09)
Adjusted Estimated Operating Expenditures (Jan. 26, 09)

12008 construction capital expenditure estimate for all Alberta oil sands projects, including related pipeline, upgrader
and co-generation projects – original estimates (January, 2008) and adjusted (January 26, 2009) per public
announcements.
Source: Construction Capital: CAPP and Nichols Applied Management, Operating Expenditure – Nichols Study
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 Athabasca Deposit Region – Operating Oil Sands Projects
(April 2009)
The Athabasca region is an important supply hub with a
current productive capacity of 1.2 million bpd…

Projects – Operating Bitumen Capacity

Barrels/day
Canadian Natural Resources mining/upgrading 135,000

ConocoPhiilps Surmont insitu Ph 1 25,000

Devon Jackfish Insitu Ph 1 30,000

Encana Christina Lake Ph 1A-1B 18,000

Jacos Pilot inistu 7,000

MEG Energy Pilot 3,000

Nexen Long Lake Insitu.Upgrader Phase 1 70,000

Petro Canada MacKay River insitu 30,000

Petrobank in situ pilot 2,000

Shell Muskeg River Mine 155,000

Suncor Base Plant mining/insitu/upgrading 350,000

Syncrude mining/upgrading 350,000

Total 1,175,000

Total bitumen production, operating projects :

• Bitumen Production Capacity – 1,200,000 bpd (Note previous slides were for all oil sands – this is just Athabasca)
• Upgrading Capacity– 835,000 bpd

Data source: Strategy West Feb. 2009 and Nichols Applied Management

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 Athabasca Deposit Region – Next Wave of Oil Sands
Projects (April 2009)

Despite the slowdown, an additional 500,000 bpd in

capacity is under construction…

Projects – Under Construction Status Est. Start Up Bitumen Est. Capex $

Production Capacity million
Barrels/day
Devon Jackfish Insitu Ph. 2 Construction 2011 35,000 1,225

EnCana Christina Lk. Insitu Ph. 1C Construction 2010 40,000 1,400

Imperial Kearl Phases 1-3 Construction 2012-2018 300,000 18,000

MEG Energy Christina Lk. Insitu Ph. 2A Construction 2009 22,000 770

Shell Exp 1 (Jackpine Mine Ph. 1A/MRM facilities) Construction 2010 100,000 6,000

Statoil Hydro Leismer Demo Insitu Construction 2009 10,000 350

Total 507,000 27,745

Total bitumen production, projects under construction:

• Bitumen Production Capacity – 500,000 bpd
• Capital Costs (based on industry averages): $27.7 billion

Data source: Strategy West Feb. 2009 and Nichols Applied Management

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 Athabasca Deposit Region – Oil Sands Projects in the
Pipeline (April 2009)
An additional 925,000 bpd of capacity is in
the pipeline and could get underway quickly…

Projects – In the Pipeline Status Est. Start Up Bitumen Est. Capex $

Production Capacity million
Barrels/day
Connacher Algar insitu Regulatory Approval TBD/target 2011 10,000 350

ConocoPhilips Surmont insitu Ph2 Regulatory Approval TBD/target 2013 75,000 2,625

CNRL Horizon Phase 2/3 mine/upgrader Regulatory Approval TBD 130,000 14,300

EnCana Christina Lk. Insitu Ph. 1D Regulatory Approval ~2012 40,000 1,400

Husky Sunrise in situ phase 1-4 Regulatory Approval 2013-2018 200,000 7,000

Nexen Long Lake Phase 2 insitu/upgrader Regulatory Approval TBD 70,000 5,950

Petro Canada Fort Hills mine Regulatory Approval TBD/target 2014 190,000 11,400

Petro Canada MacKay River Expansion in situ Regulatory Approval TBD/target 2012 40,000 1,400

Shell Expansion 2 Regulatory Approval TBD/target 2014 100,000 6,000

Suncor Firebag insitu Ph. 3 Construction (suspended) TBD /target 2013 70,000 2450

Suncor Voyageur Upgrader Construction (suspended) TBD /target 2011 N/A 11500

Total 925,000 64,375

Total bitumen production, projects with regulatory

approval and under active commercial consideration:
• Bitumen Production Capacity – 925,000 bpd
• Capital Costs (based on industry averages): $64.4 billion
Data source: Strategy West Feb. 2009 and Nichols Applied Management

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 Athabasca Deposit Region – A considerable backlog of Oil
Sands Projects remain under consideration (April 2009)
Projects – Planning Stages Status Est. Start Up Capacity Est. Capex $
Production Barrels/day million
Connacher Great Divide Expansion insitu Disclosed TBD 25,000 875

CNRL Kirby insitu Under Regulatory Review TBD 45,000 1,575

JACOS Hanginstone Commercial insitu Disclosed TBD 25,000 875

EnCana Christina Lk. Insitu Ph. 1E-F Disclosed TBD 60,000 2,100

Encana Borealis insitu ph 1 Under Regulatory Review TBD 35,000 1,225

Enerplus Kirby insitu Under Regulatory Review TBD 10,000 350

KNOC Black Gold Under Regulatory Review TBD 10,000 350

MEG Energy Christina Lk. Insitu Ph. 2B, 3 Under Regulatory Review TBD 185,000 6,475

Nexen Long Lake South insitu Under Regulatory Review TBD 140,000 4,900

Petro Canada MacKay River Expansion in situ Regulatory Approval TBD 40,000 1,400

Petro Canada Meadow Creekin situ Regulatory Approval TBD 80,000 2,800

Petro Canada Lewis in situ Disclosed TBD 80,000 2,800

Petrobank May River Ph 1 insitu Under Regulatory Review TBD 10,000 350

Petrobank May River insitu Expansion Disclosed TBD 90,000 3,150

Shell Expansion 3 -5 mine Under Regulatory Review TBD 300,000 18,000

StatoilHydro Leismer insitu Under Regulatory Review 2012-2014 30,000 1,050

StatoilHydro insitu expansion Under Regulatory Review TBD 200,000 7,000

Suncor Firebag insitu Ph. 4-6 Under Regulatory Review TBD 200,000 7,000

Suncor Voyageur South mine Under Regulatory Review TBD 120,000 7,200

Syncrude Aurora South mine Approval TBD 200,000 12,000

Total bitumen production,
TOTAL E&P Joslyn Mine Ph 1 Under Regulatory Review ~ 2015 100,000 6,000
projects being planned :
UTS Frontier Mine Disclosed TBD 160,000 9,600
• Bitumen Production Capacity – UTS Equinoex Mine Disclosed TBD 50,000 3,000
2,200,000 bpd
Total 2,195,000 100,075
• Capital Costs (based on industry
averages): $100.0 billion

Data source: Strategy West Feb. 2009 and Nichols Applied Management

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Balancing realities

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Setting the Record Straight
By Don Thompson
Disclaimer

This presentation contains forward-looking information. Actual results

could differ materially due to market conditions, changes in law or
government policy, changes in operating conditions and costs, changes
in project schedules, operating performance, demand for oil and gas,
commercial negotiations or other technical and economic factors.

For more information contact:

The Oil Sands Developers Group
617 – 8600 Franklin Avenue
Fort McMurray, AB T9H 4G8
Canada
Ph: 780-790-1999

E-mail: info@oilsandsdevelopers.ca

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