CERI 2011 Natural Gas Conference Supply, Supply, Supply and Demand February 28-March 1, 2011 • Calgary TELUS Convention Centre • Calgary, Alberta As world economies struggle to recover, and financial analysts still cannot agree whether recovery is at hand or a double-dip recession is more likely, the North American gas industry has woken to an entirely different situation. Only two short years ago, many asked the question: “Is the game changing”; now the industry understands that “this is an entirely new game”. Conventional resources are in decline – not only because of the difficulty maintaining gas delivery levels in the face of natural declines, but also because of the movement of capital and equipment to the next “gold rush” locations, the shale gas plays. Companies are now acquiring significant land positions in shale areas; where they hope to reduce supply costs and gain market presence by applying new manufacturing techniques and technology advancements. North America has moved into a gas supply bubble position, something not seen since the 1970s. If in fact the shale gold rush has begun but demand recovery remains sluggish, then the North American gas market could remain in a supply surplus position for many years to come. Is shale gas a good thing? Monday, February 28, 2011 7:00 – 8:00 am Registration and Continental Breakfast 8:00 am Introductory Remarks by Conference Co-chair 8:10 – 8:40 am OPENING KEYNOTE ADDRESS Alberta Government’s View on Policy Shifts That Will Affect the Gas Industry Alberta is faced with a unique challenge with respect to the natural gas industry. Conventional gas developments are perceived to be uneconomic at market prices below the $5/mcf range. The leading contributors to this situation are the basis differentials between markets, the heated Alberta job market, input costs, regulation costs, fragmented land positions, environmental concerns, and the difficulty in attracting investment. What is at risk if this situation continues - economic growth, investment opportunities, employment, and government resource revenues? Governments and regulators can assist in dealing with some of these issues. Session 1 (8:45 – 10:15 am) Gas Supply by Location Producers are still developing established reserves, the rigs are still drilling, and the gas is still flowing, but for how long is unknown. Competition drives the gas industry, and to grasp the economics we need to understand location related variables such as drilling costs, land access, royalties, capital, and rig availability. Alberta Conventional Defining the metrics that make the Western Canada Sedimentary Basin conventional gas plays economic again. Examining the Alberta Shallow Gas, Alberta Deep Basin, Alberta Mannville CBM resources, and the Alberta Plains! Texas Conventional Texas still produces 30 percent of the US gas supply, assisted by the Barnett shale which is now considered a conventional shale gas development. What metrics exist that makes Texas an attractive location for many companies? West Virginia West Virginia produces less than 2 percent of the US gas supply but the Marcellus has the potential to make the state one of the leading suppliers. What metrics are attracting money and resources to this location? 10:15 – 10:45 am Break Session 2 (10:45 am – 11:45 am) Next Generation of Gas Supply Canada’s Horn River, Montney, Utica, and possibly the Alberta Shales are contenders in size and potential, but what makes one resource economically different from another: land access, costs, royalties, competition, or location? What is different when comparing the US and Canadian shale gas plays and where does LNG fit into the mix? Canada Industry experts have suggested that Horn River has the potential to deliver six billion cubic feet per day to the marketplace. What needs to happen for this to come to reality? United States Driven by lower production costs, the US shale gas deposits are poised to grow to a production potential of 35 billion cubic feet per day by 2020. Can this challenge be met? 11:45 am – 12:15 pm Regulatory Changes to Unconventional Gas 12:15 – 1:30 pm Luncheon Session 3 (1:30 – 3:00 pm) The “Other” Players in the North American Gas Game! The northern gas suppliers in Alaska and Canada’s Northwest Territories have been waiting for pipeline access to southern markets, and the wait has been a long one. Behind pipe production, potential from these two sources totals close to 7 billion cubic feet per day and the undiscovered potential is equally impressive. Is this a race to be first in the market or has the opportunity passed with a risky looking future over the next decade? On a similar note, what presence could LNG have in North America and what about emerging technologies? Is the game too crowded? Mackenzie Valley Pipeline Will Canada’s northern resources finally be connected to market or is the Mackenzie Valley Pipeline just a pipe dream? Coal Gasification Coal remains a significant energy resource for North America. Can in-situ technologies renew the image of coal as an energy source? Gas Hydrates Japan, driven by security of supply issues, is moving forward with gas hydrate developments. Is it possible that this resource, which has always been viewed as 20 years away, will alter the gas dynamics again? 3:00 – 3:30 pm Break Session 4 (3:30 – 5:00 pm) Conventional and Unconventional Demand Natural gas is the cleanest of the hydrocarbon fuels. At a time when international concerns are focused on reducing greenhouse gases and when gas market prices are driven downward by abundant supply, new demands for natural gas may emerge. Natural Gas Use in Future Markets Gas-fired turbines are a hot, and possibly scarce, commodity in the United States as a result of greenhouse gas concerns and low market prices. The Ontario Government has pulled back one of the proposed gas-fired generators for the province. The competition in the electricity market between natural gas, wind/solar and renewables could affect the future gas demand, positively or negatively. What could the eastern Canadian future gas demand look like? Natural Gas and Its Role in Integrated Community Energy Systems As the industry continues its pursuit of new gas supplies and reducing emissions, is the environment still at the forefront of politicians’ and citizens’ concerns? We have a unique opportunity to plan for the future and optimize the use of natural gas for the next generations in our communities. How Can Natural Gas as a Fuel Play into the Canadian Heavy Duty Vehicle Market? Changing to CNG or LNG fuels can help the gas industry and the environment – a winning combination, but is it feasible? 5:00 – 6:15 pm RECEPTION Tuesday, March 1, 2011 7:00 – 8:00 am Registration and Continental Breakfast 8:00 am Introductory Remarks by Conference Co-chair 8:10 – 8:40 am KEYNOTE ADDRESS Natural Gas Possibilities for Canada: The Impact of Unconventional Natural Gas Session 5 (8:45 – 10:15 am) Looking into the Crystal Ball Industry dynamics are changing before our very eyes. Conventional gas is in decline but unconventional gas is taking its place. The old adage “the more things change, the more they stay the same” could very well apply to areas such as coal-fired generation, where CCS and other technological advancements may turn this carbon-rich energy source of the past into a compelling future option. An Independent Review of CCS Technology Return of Coal Does coal still compete in the energy game in an environment of greener technologies? Global and North American Demand 10:15 – 10:45 am Break Session 6 (10:45 am – 12:15 pm) The Industry Image “The new game” for natural gas is not just the same players, doing the same things in different locations. This game has a new set of sideline observers that focus on the environmental, financial and business practices. Environmental groups are now keenly focused on the energy industry. Local populations are now questioning truck activity, noise and the quality of their drinking water. School children are now asking why we are damaging the environment. How does industry separate fact from fiction? Environment Water, chemicals and sand: Perceptions on shale gas developments in North America. Regulatory and Environmental Matters from a Legal Perspective Reclamations In western Canada there has been in excess of a half-million wells drilled over that past 50 years. Today, less than 200,000 wells remain. The other wells have been abandoned and the land returned to its natural state. Is this enough or is more needed? 12:15 – 1:30 pm Luncheon Session 7 (1:30 – 3:00 pm) Executive Panel Discussion Natural gas supply appears to be slipping south of the border. What do we do now???? Confirmed Participants Include: James D. Brown; Executive Director, Advisory Services Ernst & Young LLP Mike Dawson; President Canadian Society for Unconventional Gas Dr. Duke du Plessis; Senior Advisor, Energy Technologies Alberta Innovates – Energy and Environment Solutions Dr. Carmen Dybwad; Chief Executive Officer IPAC-CO2 Research Inc. Michael Ekelund; Assistant Deputy Minister, Strategic Initiatives Division Alberta Department of Energy John Gorman; Vice President Halliburton Canada Dr. Brad J. Hayes; President Petrel Robertson Consulting Ltd. Dr. Robert Huebert; Associate Professor, Department of Political Science and Associate Director, Centre for Military and Strategic Studies University of Calgary Thomas Huffaker; Vice President, Policy and Environment Canadian Association of Petroleum Producers Edward Kallio; Director, Gas Consulting Ziff Energy Group Dan McFadyen; Chairman Energy Resources Conservation Board Alicia Milner; President Canadian Natural Gas Vehicle Alliance Barry Munro; Managing Partner, Calgary Ernst & Young LLP Richard Neufeld; Q.C., LL.B.; Partner Fraser Milner Casgrain LLP Robert J. Reid; President ·Mackenzie Valley Aboriginal Pipeline LP Thomas Sherman; Manager, Production Group BENTEK Energy, LLC R.W. (Bob) Taylor; Founding Partner Energy Futures Network Don Wharton; Vice President, Sustainable Development TransAlta Corporation David L. Yager; Chairman and Chief Executive Officer HSE Integrated Ltd.