Session 1 2004 Oil and Gas Exploration Highlights –

Session 1: 2004 Oil and Gas Exploration Highlights – The Upstream Perspective Presentation to the Inuvik Petroleum Show June 15, 2005 Ian F.H. Scott GM Federal Legislation, Northern Canada & Pipelines Doc. 88063 Canadian Association of Petroleum Producers • We are the voice of Canada‟s Upstream Oil and Gas Industry – To enhance the well being and sustainability of the upstream Canadian oil and gas industry in a socially, environmentally and technically responsible and safe manner • 150 producer member companies – Explore for, develop and produce natural gas, natural gas liquids, crude oil, synthetic crude oil, bitumen and elemental sulphur throughout Canada • CAPP members produce more than 98 per cent of Canada‟s natural gas and crude oil • 125 associate members provide a wide range of services that support the upstream crude oil and natural gas industry Canada‟s Oil and Gas Industry in the North American Energy Economy • Canada is the world‟s 3rd largest natural gas producer • Canada is the world‟s 9th largest crude oil producer – Moving up the list quickly with oil sands production increasing • Industry Overview – – – – 500,000 jobs $30 Billion capital investment in 12 provinces and territories $16 Billion in payments to federal and provincial governments #1 private sector investor in Canada • Industry Priorities – Responsible development of Canadian resources through: • Efficient access to markets • Timely access to resources • Competitive fiscal and regulatory regimes Ultimate Potential of Canadian Natural Gas Trillion cubic feet Remaining Produced North of 60 175 Other Frontier* 89 includes other regions offshore east coast & west coast British Columbia 51 Alberta 207 Grand Banks and Scotian Shelf 63 Saskatchewan 9 Deepwater - Scotian Slopes 15 Industry Capital Spending (Cdn $billions) Northern Canada „02 ‟03 ‟04F ‟05F $0.3 $0.3 $0.5 $0.5 International „02 ‟03E ‟04F ‟05F $4.1 $7.1 $6.8 $5.9 Oil Sands „02 ‟03 ‟04F ‟05F $6.7 $5.0 WCSB „02 $15.9 „03 ‟04F ‟05F $21.4 $22.9 $24.6 $5.8 $8.5 East Coast Offshore „02 $1.9 ‟03 $2.2 ‟04F ‟05F $1.5 $1.2 Note: excludes spending associated with mergers & acquisitions Investment Spending in Western & Northern Canada (Cdn $billions) $24.4 $23.6 Northern Canada Oil Sands Rest of Canada $13.6 $6.4 $5.0 $2.4 $0.3 $0.8 $0.2 $0.3 $0.5 $6.1 1988 1999 2003 2004E Wells Drilled in Western Canada & Northern Canada 20,000 16,000 12,000 8,000 4,000 0 14 3,571 934 14,975 Northwest Territories British Columbia Saskatchewan Alberta 12,989 17,873 18,300 3,401 580 15 4,179 1,032 27 4,300 1 300 17 2001 2002 2003 2004E Sources: CAPP, Northern Oil & Gas & Nickle’s Key Issues facing the Canadian Oil and Natural Gas Industry • Access to the Resource – Timely access to the resource – Developing new technological solutions to make new resources accessible and economic – Continuing to demonstrate responsible environmental stewardship (land, water, air) • Access to Markets – Ensuring sufficient pipeline capacity to markets – Maintaining market based policies and open markets Competitiveness – Maintaining cost competitiveness – focus on reducing costs – Ensuring sufficient availability of human resources - build capacity – Fiscal certainty, clear roles and stability for industry under Devolution – Efficient regulatory processes • minimizing overlap and looking for single window approaches • Northern gas, oil sands,, natural gas from coal, etc. • Inter- Agency Coordination – Who is in charge? GNWT DFO Transport Canada Parks Canada ? INAC Aboriginal NEB Environment Canada “Regulatory” Framework - Northern Legislation affecting Oil and Gas Activities Migratory Birds Convention Act Navigable Waters Protection Act Aboriginal Land Claims TDG Act Federal Fisheries Act Species at Risk Act Oceans Act Canadian Environmental Assessment Act Canadian Environmental Protection Act Marine Conservation Act Canada Shipping Act Canadian Oil and Gas Operations Act NEB Act Mackenzie Valley Resource Management Act Canada Petroleum Resources Act Lost Opportunities -Inefficient Regulation Factors Influencing the Future of Canada‟s Oil and Natural Gas Industry • Government Leadership – Regulatory strategy • processes too complex • rationalization of legislation through greater co-operation among regulators to eliminate duplication – regulatory Roadmaps starting point • devolution – Embrace the tenets of the EACSR’s recommendations 66 to 69 – Non-renewable resources strategy • conflicting messages – want economic growth provided by oil and gas industry – restrictive land use plans – negotiation of access agreements major problem for industry • Processes too complex and overlapping Factors Influencing the Future of Canada‟s Oil and Natural Gas Industry • Improve cost competitiveness for Northern operations – Costs remain very high • Need for reliable, trained personnel and equipment – Long-term capacity is a serious issue – Cooperative approach to spending of education and training funds government, communities and industry – Lack of expertise on Boards Factors Influencing the Future of Canada‟s Oil and Natural Gas Industry • Recognition that industry is continuously improving environment, health, safety and social performance – Clarify approach to environmental assessment and establishment of protected areas – Recognize that industry is committed to continuously improving its environment, health, safety and social performance, e.g. CAPP Stewardship Program • • • • Social responsibility Responsible Development Continuous Improvement Research & Innovation In Conclusion • Opportunity – Economic growth and stability • Stewardship – Continuous Improvement • Recognize industry’s improvement in environmental protection and safety • Efficient/effective regulatory framework – Clear requirements – Timely processes – Rationalization • Government Leadership – Balance conservation with economic development