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Oil Sands Construction Outlook Outline

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					Oil Sands Outlook                                                                     September 17, 2003




                                    Oil Sands
                                    Construction Outlook

                                               Reed Construction Data
                                     Construction Industry Forecasts Conference
                                                 Toronto, Ontario
                                                September 17, 2003
                                                 R.B. (Bob) Dunbar
                                             Senior Director, Research
                                         Canadian Energy Research Institute




                                    Outline

                             CERI Overview
                             Introduction to Canada’s Oil Sands
                             Proposed Projects
                             Possible Constraints
                             Outlook
                             Conclusions

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                                    Canadian Energy Research
                                    Institute (CERI)

                             Independent non-profit Calgary-based
                             research institute founded in 1975
                             Sponsors
                                Provincial government
                                Federal government
                                Industry
                                University of Calgary
                                International associate sponsors


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                                    CERI Activities

                             Public Research            Conferences
                                Oil                     Training
                                Natural Gas             Publications
                                Electricity
                                                          Natural Gas Market
                                Energy -                  Watch
                                Environment
                                                          World Oil
                             Proprietary Studies          Bulletin/Quarterly
                                                          Geopolitics of
                                                          Energy

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                                    Related CERI Studies

                             Study No. 107: Current Supply and
                             Costs of Natural Gas in Canada
                                Released June 2003
                             Oil Sands Supply Outlook: Potential
                             Costs and Supply of Crude Bitumen
                             and Synthetic Crude Oil in Canada
                                Underway with completion December
                                2003

                                                                                 5




                                    Canada’s Oil Sands

                             “Non-Conventional” Oil
                                Bitumen saturated sands
                                At normal temperatures (10-200C) bitumen is:
                                     In a semi-solid state
                                     Similar to tar
                             Enormous Resource Base
                                World’s largest bitumen deposit
                                Reserves match light conventional oil reserves
                                in Saudi Arabia
                                Shallow reserves (<75m): surface mining
                                Deeper reserves(>75m): in situ recovery
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                                                                                                      Oil Sands
                                                                                                      and Heavy
                                                                                                       Oil Areas
                                                                                                                                           7




                                                            Bitumen vs. Saudi Crude
                                                            Reserves

                                                            300                                                                  261.8

                                                            250                                    174.4
                                      Billions of Barrels




                                                            200

                                                            150

                                                            100

                                                            50          4.3

                                                             0
                                                                    Canadian                AB Crude                       Saudi
                                                                  Conventional              Bitumen                     Conventional
                     Source: EUB Alberta’s Reserves 2002 and Supply/Demand Outlook 2003-2012; BP Statistical Review of World Energy 2003



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                                            Canada’s Oil Sands Industry

                                    Accounted for over 30% of Canada’s
                                    “crude oil” production in 2002
                                                                  103m3/d      103b/d         %
                                    Conventional Light              142.0         893       38.2
                                    Condensate                       25.2         158        6.8
                                    Conventional Heavy               88.0         553       23.7
                                    Crude Bitumen (net)              47.6         299       12.8
                                    Synthetic                        69.1         435       18.6
                                    Total                           371.7       2,338      100.0

                     Source: National Energy Board



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                                            Major Surface Mining Projects
                                            – Athabasca

                               Operator                           Upgrading   Capacity    Startup
                                                                               (kb/d)
                               Operating Projects
                               Suncor (w/ Millennium Expansion)     Yes         225        1967
                               Syncrude (w/ Stage 2 Expansion)      Yes         260        1978
                               AOSP (Muskeg River/Scotford)         Yes         155        2002

                               Proposed Projects
                               Suncor (Voyageur Expansion)          Yes       275-325    2005-2012
                               Syncrude (Stage 3/4 Expansions)      Yes         200      2005-2008
                               AOSP (Jackpine Mine)                 No          200         2010
                               CNRL (Horizon)                       Yes         270      2007-2011
                               True North (Fort Hills)              No          190       205-2008
                               Synenco (Northern Lights)            Yes          80         2007
                               Imperial/ExxonMobil (Kearl Lake)     No          200         2012

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                                    Major In Situ Projects –
                                    Athabasca

                          Operator                              Upgrading    Capacity       Startup
                                                                              (kb/d)
                          Operating Projects
                          EnCana (Foster Creek Phase 1)            No           25           2001
                          EnCana (Christina Lake Phase 1)          No           10           2002
                          Petro-Canada (MacKay River)              No           30           2002

                          Projects Under Construction
                          Suncor (Firebag Phase 1)                 Yes          37           2003

                          Approved Projects
                          Deer Creek (Joslyn Phase 1)              No           2            2004
                          ConocoPhillips (Surmont Phase 1)         No           25           2006
                          Nexen/OPTI (Long Lake Phase 1)           Yes          35           2006



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                                    Major In Situ Projects –
                                    Athabasca (continued)

                          Operator                              Upgrading Total Capacity    Startup
                                                                              (kb/d)
                          Proposed Projects
                          EnCana (Foster Creek Phases 2-3)         No          95          2007-2009
                          EnCana (Christina Lake Phases 2-3)       No           60         2004-2005
                          Suncor (Firebag Phases 2-4)              Yes         112         2006-2008
                          ConocoPhillips (Surmont Phases 2-4)      No           75         2009-2015
                          Nexen/OPTI (Long Lake Phase 2)           Yes          35            2006
                          CNRL (Kirby Phases 1-4)                  No           60           2006+
                          Deer Creek (Joslyn Phases 2-4)           No          70          2006-2011
                          Devon (Jackfish)                         No          35             2007
                          JACOS (Hangingstone)                     No           50            2007
                          Petro-Canada (Meadow Creek)              No          80             2006
                          Petro-Canada (Lewis)                     No            -              -



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                                                               Major In Situ Projects –
                                                               Cold Lake & Peace River

                          Operator                                                                              Upgrading               Capacity           Startup
                                                                                                                                         (kb/d)
                          Operating Projects
                          CNRL (Primrose & Wolf Lake)                                                                 No                     57             1996
                          CNRL (Others)                                                                               No                      6             1985+
                          Imperial Oil (Cold Lake Phases 1-13)                                                        No                     125           1985+
                          Shell (Cadotte Lake)                                                                        No                     12             1975


                          Proposed Projects
                          BlackRock (Orion)                                                                           No                     20            2005+
                          Husky (Tucker)                                                                              No                     30             2006
                          Imperial Oil (Cold Lake Phases 14-16)                                                       No                     30             2006




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                                                               Unconstrained Development –
                                                               Gross Bitumen Production

                                                       4,000

                                                       3,500
                            Thousand Barrels per Day




                                                       3,000
                                                                                                                                                         Announced
                                                       2,500                                                                                             Disclosure
                                                                                                                                                         Application
                                                       2,000
                                                                                                                                                         Approved
                                                       1,500                                                                                             Construction
                                                                                                                                                         Operating
                                                       1,000

                                                        500

                                                          0
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                                    Issues/Potential Constraints

                             Product Pricing
                                Global/North American Oil Prices
                                Marketability of Crude Bitumen and Synthetic Crude Oil
                             Capital Costs
                                Recent Cost Overruns
                                Suncor Millennium, AOSP, Syncrude Stage 3
                             External Energy and Feedstock Requirements
                             and Prices
                                Natural Gas
                                Alternatives
                             Environmental Impact

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                                    Constrained Development
                                    Assumptions

                          Classification            Probability           Delay
                                                       (%)               (years)
                          Operating                      100                0
                          Construction                   100                0
                          Approved                       75                 1
                          Application                    50                 2
                          Disclosure                     25                 2
                          Announced                      25                 2


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                                                               Constrained Development –
                                                               Gross Bitumen Production

                                                       2,500



                                                       2,000
                            Thousand Barrels per Day




                                                                                                                                                           Announced
                                                       1,500                                                                                               Disclosure
                                                                                                                                                           Application
                                                                                                                                                           Approved
                                                       1,000                                                                                               Construction
                                                                                                                                                           Operating

                                                        500



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                                                               Disposition of Crude Bitumen

                                                                Mine &
                                                               Extraction                                                   Upgrader
                                                                 Plant


                                                                                        Diluted Crude                                       Synthetic
                                                                                           Bitumen                                          Crude Oil


                                                                In Situ
                                                               Recovery                                                     Refinery
                                                                Facility
                                                                                                                                                         Refined
                                                                                                                                                        Petroleum
                                                                                                                                                        Products


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                                                                 Constrained Development –
                                                                 Synthetic Crude Oil Production

                                                       1,400

                                                       1,200
                            Thousand Barrels per Day




                                                       1,000
                                                                                                                                                              Announced
                                                                                                                                                              Disclosure
                                                        800
                                                                                                                                                              Application
                                                                                                                                                              Approved
                                                        600
                                                                                                                                                              Construction
                                                                                                                                                              Operating
                                                        400

                                                        200

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                                                                 Constrained Development –
                                                                 Net Bitumen Production

                                                       900

                                                       800
                            Thousand Barrels per Day




                                                       700

                                                       600                                                                                                    Announced
                                                                                                                                                              Disclosure
                                                       500                                                                                                    Application
                                                       400                                                                                                    Approved
                                                                                                                                                              Construction
                                                       300                                                                                                    Operating
                                                       200

                                                       100

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                                                         Approximate Capital Costs

                                                                                                                 Capital Cost
                                                                                                                   (C$/b/d)

                          In Situ Recovery                                                                              10,000

                          Mining and Extraction                                                                         20,000

                          Upgrading                                                                                     20,000



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                                                         Unconstrained Development -
                                                         Capital Expenditures

                                                 9,000

                                                 8,000

                                                 7,000
                            C$ Millions (2003)




                                                 6,000

                                                 5,000                                                                         Upgrading
                                                                                                                               Mining & Extraction
                                                 4,000                                                                         In Situ Production

                                                 3,000

                                                 2,000

                                                 1,000

                                                    0
                                                         2003   2004   2005   2006   2007   2008   2009   2010   2011   2012




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                                                         Constrained Development -
                                                         Capital Expenditures

                                                 4,500

                                                 4,000

                                                 3,500
                            C$ Millions (2003)




                                                 3,000

                                                 2,500                                                                         Upgrading
                                                                                                                               Mining & Extraction
                                                 2,000                                                                         In Situ Production

                                                 1,500

                                                 1,000

                                                  500

                                                    0
                                                         2003   2004   2005   2006   2007   2008   2009   2010   2011   2012




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                                                         Conclusions

                                                 Canada’s Oil Sands are already an
                                                 important source of North American oil
                                                 Canada’s Oil Sands have tremendous
                                                 potential
                                                 Development of this resource faces many
                                                 challenges
                                                 Annual capital expenditures of $2-5 billion
                                                 for new projects are expected over the
                                                 next decade


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