Albertas Energy Markets: Opportunities and Challenges Matthew Foss - - PowerPoint PPT Presentation

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Albertas Energy Markets: Opportunities and Challenges Matthew Foss - - PowerPoint PPT Presentation

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Albertas Energy Markets: Opportunities and Challenges Matthew Foss Alberta Department of Energy Economics and Markets Branch Presented to Economic Real Estate Forum May 2012 The Big Picture Key findings in the IEO 2011 Reference case:

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Alberta’s Energy Markets: Opportunities and Challenges

Matthew Foss

Alberta Department of Energy Economics and Markets Branch Presented to Economic Real Estate Forum May 2012

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The Big Picture

Key findings in the IEO 2011 Reference case:

  • World Energy consumption increases by 53% between 2008 and

2035 with half of the increase attributed to China and India

  • Renewables are the world’s fastest growing energy source, at 2.8%

per year, renewables share of world energy grows to roughly 15% in 2035.

  • Fossil fuels continue to supply almost 80% of world energy use in

2035.

  • Liquid fuels remain the largest energy source worldwide through

2035, but the oil share of total energy declines to 28% in 2035, as sustained high oil prices dampen demand and encourage fuel switching where possible and modest use of liquid biofuels.

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Source: Canadian Society for Unconventional Gas Source: Energy Resource Conservation Board, Petrel Robertson, Gas Technology Institute (GTI)

Alberta’s Natural Gas Resources

NGC: Natural gas from coal (CBM) GIP: Gas in Place is the total gas volume believed to be contained in the reservoir.

Alberta’s Natural Gas Industry is Well Placed with Abundant Resource Opportunities World Proved Natural Gas Reserves (Tcf):

  • Russia: 1,680
  • Iran: 1,046
  • Qatar: 896
  • Saudi Arabia: 276

141 Tcf 82 Tcf 100 Tcf

3 Global Natural Gas Production (Bcf/d):

  • United States: 59.1
  • Russia: 57
  • Canada: 15.5
  • Iran: 13.2
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Alberta’s Crude Oil Proved Reserves

Alberta’s Oil Sands represent more than half of the world’s oil resources that are

State owned

  • r controlled

Accessible Canada’s

Oil Sands

World Oil Reserves

Other Accessible Reserves

51% 49% Accessible Oil Reserves

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Alberta’s Crude oil and Natural Gas Activity

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Investment On the Rise

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Alberta P & NG Land Sales

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$- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000 2008 2009 2010 2011 Millions Bonuses AB BC SK MB

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Alberta Drilling Activity

  • Increasing horizontal drilling reflecting shift towards unconventional
  • il and gas development in shale and tight plays
  • Activity has shifted towards tight oil in Alberta

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Source: GeoScout

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Focus Areas

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Total Wells Drilled Jan - Feb 2011 = 1326 Jan - Feb 2012 = 1064

20%

Jan - Feb 2010 Horizontal Wells Drilled = 522 9% Jan - Feb 2011 Horizontal Wells Drilled = 478 Jan - Feb 2012 Vertical Wells Drilled = 542 36% Jan - Feb 2011 Vertical Wells Drilled = 848

Vertical Wells Horizontal Wells

Excludes oil sands wells

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Alberta Natural Gas Production Forecast (not including unconventional natural gas)

7 Global Production (Bcf/d)

  • United States: 59.1
  • Russia: 57
  • Canada: 15.5
  • Iran: 13.4
  • Qatar: 11.3

0.0 1.8 3.6 5.3 7.1 8.9 10.7 12.4 14.2 16.0 17.8 50 100 150 200 250 300 350 400 450 500

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Production and demand (bcf/d) Production and demand (106 m3/d)

Total marketable gas production & demand

Alberta gas removals Other Alberta demand Commercial demand Residential demand

2012 YTD Actual: Down 1.5% 2012 Forecast: Down 5.3%

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Alberta Conventional Crude and Oil Sands Production

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World oil production as of November 2011: 88.1 million barrels per day

Alberta’s total oil production: 2.05 million b/d

  • 0.700 of bitumen
  • 0.800 SCO
  • 0.460 conventional

Alberta’s Crude Oil Production is Ramping Up

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Conventional Crude Oil Production Forecast

Horizontal Drilling/Shale Oil Production to outperforming expectations

Source: Energy Resource Conservation Board

2012 YTD Actual: Up 17.2% 2012 Forecast: Up 10%

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Alberta’s Crude oil and Natural Gas Markets

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Current Alberta Natural Gas Markets

WCSB 14.4 Bcf/d US Rockies 10 Bcf/d Barnett & Haynesville 6 Bcf/d Marcellus 1 Bcf/d Gulf 15.8 Bcf/d

Bison

Source: Source: WoodMcKenzie 2009 ; ERCB 2010, Legend Light Blue– WCSB Gas Production Dark Blue – US Gas Production Market Bcf per Day PADD 1 0.26 PADD 2 2.87 PADD 3 0.00 PADD 4 0.40 PADD 5 1.26 Eastern Canada 1.76 Western Canada 1.07 Total 7.63

Alberta Disposition – 2010

Alberta production in 2010: 11.5 (bcf/d)

New Shale Gas Production Impeding on Alberta’s Traditional Eastern Markets 17

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Global Natural Gas Prices and LNG Infrastructure

Source: FERC. “World LNG Estimated April 2012 Landed Prices”. March 6, 2012.

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Current Alberta Crude Oil Markets

Source: CAPP – 2011 Crude oil Market Outlook

Market Alberta Exports (Barrels Per Day 000’s) PADD 1 59 PADD 2 1,167 PADD 3 78 PADD 4 218 PADD 5 106 Eastern Canada 252 Western Canada 47 Total 1,927

PADD 3 107 [8,928]

Currently, there is ample amount of pipeline to carry Alberta crude to its current market (PADD 2) However, refinery capacity and increased North American crude production are the limiting factors in PADD 2 for the future Increased heavy crude oil refining capacity Increasing supplies from Bakken, heavy crude from Alberta, and crude oil from PADD III

PADD 5 148 [2,730] PADD 1 62 [1,394] PADD 2 1,215 [3,711] PADD 4 238 [613] Eastern Canada 258 [398]

Crude Oil Demand from Western Canada (refinery capacity in parenthesis) Barrels per day 000’s

Alberta’s Crude Oil Market Limited to U.S. Mid West – Huge Potential in U.S. Gulf Coast

Enbridge Mainline Capacity: 2.3 m b/d (60% AB crude) 50% heavy/light crude Kinder Morgan TMX Capacity: 300,000 b/d (80% AB Crude) 80% light crude, 20% heavy, small amount of refined products Kinder Morgan Express Capacity: 280,000 b/d (98% AB Crude) 35% light crude, 65% heavy

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Global Crude Oil Prices

Alaska North Slope $121.39 Masa Venezuela $116.53 WTI USGC $104.08 Suez Blend $116.74 North Sea Brent $122.05 Japan Cocktail $116.26 Australia Cossack $124.45 Saharan Blend $121.08 ESPO $120.95 West Africa Strip $121.87 Colombia Cusiana $122.60 Arab Light $118.63

April 2012

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Current Alberta Refined Products Markets (Diesel, Gasoline and Jet Fuel)

PADD 5 PADD 3 PADD 1 PADD 2 Eastern Canada Exports Alberta Exports Global Imports

2.1 MBD

0.01 MBD

PADD 4

0.08 MBD

Source: EIA, 2011 data

Unlike Crude Oil, Alberta Has Limited Access to U.S. Mid West for its Refined Products

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Alberta Refined Products Refining Capacity

Source: StatsCan, Enbridge, Kinder Morgan

C B A A) Imperial – 187,000 B/D B) Suncor -135,000 B/D C) Shell – 110,000 B/D

36,000 B/D by pipeline; 14,000 B/D by truck 38,000 B/D by pipeline; 3,000 B/D by truck/rail

Alberta Refineries - Capacity

Trucked/Railed volumes are estimated

  • 20,000

40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2005 2011 Barrels Per Day

Gasoline

  • 20,000

40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 2005 2011 Barrels Per Day

Diesel

  • 5,000

10,000 15,000 20,000 25,000 30,000 2005 2011 Barrels Per Day

Jet Fuel

Alberta consumption Other province Consumption Alberta Production

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Thank You

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