OIL SANDS & NORTH AMERICAN ENERGY SECURITYFebruary 21, 2012Florida International University

Janet Annesley, Vice President

Canada is a Global Energy Player

#3Canada is third in the world in natural gas production.

#1Canada has the world’s largest uranium reserves.

#2Canada is second in the world in hydro-electricity generation.

#3Canada is 3rd to Saudi Arabia & Venezuela in crude oil reserves

Oil SandsResource, Production, Markets

The Global Energy Context

• Significant energy demand growth: Population, standards of

living

• Need all forms of energy: Increasing role for

renewables Continuing reliance on

hydrocarbons Increasing role for non-

conventional crude oil & natural gas

• Technology is a key lever for sustainable growth Production Cost competitiveness Environmental

performanceCurrent Policies Scenario 4

Global Crude Oil Reserves by Country

Source: Oil & Gas Journal Dec. 2010

25 20 1930

374660

92102

115

137

175

211

260

0

50

100

150

200

250

300

Saud

i Arabia

Vene

zuela

Cana

da Iran

Iraq

Kuwait

Abu Dha

bi

Russia

Libya

Nige

ria

Kazh

akhs

tan

Qatar

China

Unite

d States

billi

on b

arre

ls

Includes 1

70 billion barre

ls

of oil s

ands rese

rves

Restricted(79%)

Open to

Private Sector

Canada’s

Oil Sands56%

Other 44%

World Oil Reserves Open to Private Sector

5

Top 10 World Crude Oil Producers in 2010

0 2 4 6 8 10 12

Kuwait

UAE

Nigeria

Mexico

Canada 2010

China

Iran

USA

Saudi Arabia

Russia

Million Barrels per Day

Sources: U.S. Dept. of Energy, Energy Information Administration & CAPP

2025

Oil Sands Projects in Three Deposits

In Situ ProjectsMining ProjectsIn Situ ProjectsMining Projects

Fort

McMurray

Cold Lake

Fort Hills

Horizon

Joslyn Creek

Syncrude

Suncor

Muskeg River

Albian

Dover

MacKay River

Firebag

Hangingstone

Long Lake

Surmont

Christina Lake

(ECA)

Foster

Creek

Wolf Lake/Primrose

Hilda Lake

Cold Lake

Tucker Lake

Jackfish

Kearl

Lake

Jackpine

Peace River

Peace River

Seal

Peace River

Peace River

Seal

Northern

Lights

White Sands

Two Methods of Oil Sands RecoveryP

hoto

: Con

ocoP

hilli

ps -

Sur

mon

t

Schematic: Devon - Jackfish

Drilling: 80% of reserves Mining: 20% of reserves

8

Canadian Oil Sands and Conventional Production Forecast (2011-2025)

Atlantic Canada

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

thou

sand

bpd

Actual Forecast

In Situ

Mining

Conventional Heavy

Conventional LightPentanes/Condensate

9

Canadian & U.S. Crude Oil Pipeline Proposals

10

Canada’s Oil & Products Export to U.S.

16%16%

21%21%

15%15%

11

Potential Tanker Markets for Canadian Oil Sands Production

Prince Rupert/Kitimat

Los Angeles

Jose/La Cruz

3,840

ChinaPersian

Gulf

Japan

Taiwan

~ 8,600 N Miles

~ 4,500 N Miles

Prince Rupert/Kitimat

Jose/La Cruz

Los Angeles

Japan

Taiwan

Target Markets

~ 5,400 N Miles

1,400 N

Miles

Far East U.S West Coast

• •••

Japan

Taiwan

Korea

•

•

SantaCruz

• •

1,790

Competitive travel distances for Canadian supply to both markets

Source: Enbridge Pipelines12

Environmental Performance

Global Energy Related Emissions

GHG emissions from oil sands: just over 1/1000th of global GHG emissions 6.5% of Canada’s GHG emissions 29% reduction in intensity from 1990

Global Emissions Canada’s 2%

14

United States18%

China24%

OECD Europe17%

Non-OECD Europe & Eurasia

9%

Japan4%

India5%

Other19%

Canada

Australia/ New Zealand2%

Manufacturing, Commercial & Construction

11.5%

Residential5.9%

Transport27.5%

Industrial Processes & Waste9.9%

Agriculture & Forestry8.4%

Oil Sands6.5%

Other Fossil Fuel16.1%

Electricity & Heat Generation

14.2%

Sources:1. U.S. Dept. of Energy/EIA2. Environment Canada

Sources:1. U.S. Dept. of Energy/EIA2. Environment Canada

Full Cycle GHG Emissions

0

20

40

60

80

100

120

SaudiArabia

Mexico Iraq Venezuela Nigeria US GulfCoast

CaliforniaThermal

Oil SandsWtd. Avg

g CO

2e/M

J ga

solin

e

GHG Emissions fromProduction andRefiningGHG Emissions fromGasoline Consumption

Source: Jacobs Consultancy, Life Cycle Assessment Comparison for North America and Imported Crudes, June 2009

98 102102 106102 114 107104105

15

North American GHG Emissions (2009): Coal-Fired Power and Oil Sands

15 megatonnes50 megatonnes

100 megatonnes

FL

GA

TX

NC

MI

AL

MO KY

IN OH

NE

NM

ND

CO

SC

KS

IA

TN

WV

WY

VA

MN

UT

OK

WI

AZ

AR

AK

LA

IL

NV

OR

MT

SD

NJ

NY

NH

MS

Legend

U.S. Coal fired power generating plants

Canadian coal-fired power generating plants

Canadian oil sands

Sources: U.S. DOE/EIA & Environment Canada

Reducing Greenhouse Gas Emissions in Oil Sands

• Energy Efficiency Using less energy input Reducing energy waste/losses Capturing waste heat Cogeneration power/steam

• Improved recovery processes Lower temperature extraction Additives to reduce use of both

water and energy (steam) Use of electricity rather than steam Underground combustion rather

than steam

• Carbon capture & sequestration Most effective at upgraders

0

5

10

15

20

25

Oil Sands GHG Emissions/bbl

29%

g c

o2

eq

./m

j

1990 2008

Land Use and Reclamation in the Boreal Forest

662

662

1618

Water Use and Quality

Mining 2-4 bbl of water per bbl of oil 80-90% recycle Currently use 0.5 per cent of

the annual flow of the Athabasca river

To protect during low flow periods withdrawals are restricted

• Drillable (Insitu) 0.25-0.5 bbls of water per bbl

of oil 90-95% recycle No water from Athabasca

River Shift to using saline water

from sub-surface aquifers• Newer projects are using

100% saline water for steam

• Enhanced monitoring systems Science based, transparent,

credible Recent federal and provincial

government reviews to enhance monitoring

19

Environmental & Social Performance

• Focus on both crude oil / oil sands & natural gas

• Reputation = Performance + Communication Continuous performance improvement More effective messaging (breadth, channels, transparency) Improved industry collaboration

• Key concerns expressed regarding oil & gas development: Local / regional environmental & social impacts (air, land,

water, biodiversity) Global climate change Role of fossil fuels in future energy system

Royal Society of Canada ReportEnvironmental & Health Impacts of Canada’s Oil Sands Industry

• Science-based, independent analysis of the environmental aspects of Canada’s oil sands

• Addresses many of the issues and perceptions of oil sands development: Reclamation is not keeping pace, but

sustainable reclamation is achievable Water use does not threaten viability of

the Athabasca River No impact on Athabasca water

quality/ecosystem and no evidence of impact on human health in downstream communities

Tailings technologies are emerging, but tailings inventory is growing

GHG emissions per barrel are reducing but growing production creates a challenge in meeting international commitments

Minimal impacts on regional air qualityDecember 2010

Responsible Canadian Energy

• Oil Sands Report Principles &

Performance Measurement &

Reporting Transparency

Oil Sands Advertising -Communicating with the Public

To demonstrate that industry takes these issues seriously and what is being done by “real people” to address them.

Success Stories

Summary

• “3Es” Environmental performance Energy security & reliability Economic growth

• Competitiveness & social license are “must haves”

• Reputation = Performance + Communication Technology is key

performance lever

• We need to work together & we all need to step up!

A great opportunity for Canada and the U.S.……needs innovative, creative, committed, determined people to make it happen!