Transcript Document

Oil Sands
Round Table
Calgary
September 26th , 2006
Will Roach
President & Chief Executive Officer
UTS Energy Corporation
Agenda

Oil Sands Introduction

Oil Sands Scale

Oil Sands Production Technologies

Oil Sands Challenges
Oil Sands Introduction
Canadian Oil Sands History
•
•
•
•
1875 Canada Geological Survey registers oil sands
1915 shipments to Edmonton for paving
1938 Abasand commercial production - 2,500 barrels
destroyed by fire in 1941 - not rebuilt
1950’s separation technology centrifugal force
• Strong interest results in dozens of exploration leases sold by
the government
•
•
•
•
1964 Esso starts Cold Lake; GCOS construction
1967 first GCOS (Suncor) production - 32,000 b/d
1978 first Syncrude production - 109,000 b/d
1993 truck and shovel technology adopted
• key to revitalizing the development outlook
•
2004 oil sands production reaches
1 million barrels per day
Alberta’s Oil Sands
What are Oil Sands?
•
A mixture of sand and other rock material containing
deposits of bitumen (a heavy viscous crude oil; API
gravity typically <10).
•
At room temperature, near solid state and must be
converted to upgraded crude (typically API gravity of
between 30 to 40).
Where are the Oil Sands Deposits?
•
Athabasca in NE Alberta;
•
Cold Lake in E-Central Alberta; and
•
Peace River in NW Alberta.
Alberta’s Oil Sands Deposits
Bitumen In-Place Volumes and Reserves
Initial Volume In-Place
1,629 Billion Barrels
113 Mineable
Established Reserves
178 Billion Barrels
35 Mineable
143 In Situ
1,516 In Situ
Mineable
In Situ
McMurray Formation Outcrop
Lateral Accretion Beds
Oil Sands Scale
Global Crude Oil Reserves by Country
300
264
Canada, with 175 billion barrels in
oil sands reserves, ranks 2nd only to
Saudi Arabia in global oil reserves
billion barrels
250
200
179
133
150
115
102
100
92
80
60
39
50
36
21
0
Saudi
Arabia
Canada
Source: Oil & Gas Journal Dec. 2005
Iran
Iraq
Kuwait
Abu Dhabi Venezuela
Russia
Libya
Nigeria
United
States
Top 10 World Crude Oil Producers in 2005
Russia
Saudi Arabia
USA
Iran
China
Oil sands growth
will move Canada
from #8 to #4 in
the world by 2015
Mexico
Norway
Canada 2005
UAE
Venezuela
0
Source: EIA & CAPP
2
4
6
Million Barrels per Day
8
10
Canadian Oil Production
Conventional, Oil Sands and Offshore
thousand barrels per day
5,500
5,000
4,500
4,000
3,500
Oil Sands Production:
2005 = 1.0 million b/d
2015 = 3.5 million b/d
2020 = 4.0 million b/d
Actual
Forecast
Offshore
Constrained
Case
3,000
2,500
Oil Sands
2,000
1,500
1,000
500
0
1980
Source: CAPP
Western Canadian Conventional Oil
1985
1990
1995
2000
2005
2010
2015
2020
Oil Sands Production Technologies
Oil Sands Production Technologies
Mining & Upgrading
Recoverable resource
= 65 billion barrels
Cyclic Steam
Process
Steam Assisted Gravity Drainage
Source: Syncrude
Oil Production
Steam Injection
Source: Imperial Oil
In-situ
Steam
Chamber
Recoverable resource
= 250 billion barrels
Steam Injection
Oil Production
Source: Shell Canada
Reservoir
Source: Petro-Canada
Oil Sands “Economics”
(drivers really)
Attractive Economic Fundamentals
Factors making oil sands investments appealing:

Mining projects are characterized by:





In-Situ projects are characterized by:




massive resources (measured in Billions of bbls rather than Millions of bbls);
essentially “no” exploration risk;
non-declining production profiles; and
extremely long reserve life (typically 40 to 50 years).
massive resources (measured in Billions of bbls rather than Millions of bbls);
low exploration risk (increased production risk relative to mining); and
extremely long reserve life (typically 40 to 50 years).
Both Mining and In-Situ have an attractive royalty regime.
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
$US per barrel
Crude Oil Prices 1975 – 2006
US $ per barrel (WTI)
80
70
60
50
40
30
20
10
0
U.S. Oil Production/Demand

U.S. oil production
reached a peak of
just under 10 million
b/d in 1970.

U.S. demand for oil
is increasing in the
country at
approximately 1-2%
per year.
Full Cycle Costs: Oil Sands versus Conventional
Total Notional
C$25.85/bbl
Site Restoration
$0.50
Sustaining Capex
$1.00
Energy:
OPEX
Natural
Gas
$8.00
Upgrading
$4.00
Extraction
$4.00
Mining
$4.00
Development
$4.25*
Finding
$0.10
Total
C$28.00+/boe
$??
$1.00
Abandonment
Sustaining Capex
$8.30**
OPEX
$18.70***
FD&A
F&D
Oil Sands (Fort Hills)
RLI 50 years
Conventional
RLI 10.5years****
* FHP Development Cost assumes: CAPEX $15B / Resource of 3.5B bbls.
Source FirstEnergy Capital Corp: **Average 2005 Western Canadian Opex per bbl; ***Average 2005 Western Canadian FD&A per
barrel (Proved plus Risked Probable); including Future Capital Costs, **** Average 2005 Western Canadian Reserve Life Index
Capital Investment in Alberta
35
30
Oil Sands
Conventional Oil & Gas
$ billions
25
20
15
10
5
20
04
20
05
E
20
06
F
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
0
Close to $60 Billion investment in oil sands projected for 2006-2010
Oil Sands Capital Costs Increases
Global Cost Increases Not Just Local
Capital $ per bbl/day
120,000
100,000
80,000
60,000
40,000
20,000
0
Production
Start Date
Suncor Millenium
Albian
Syncrude
- Aurora 2
& UE 1
NexenOPTI
CNRL Horizon
2001
2003
2006
2007
2008
Shell Muskeg &
Scotford
2010
Fort Hills Project and Technology Selection
Bitumen Production
Common
Paraffinic
Mine
Ore
Prep.
Extraction
& Tailings
Froth
Treatment
Pipeline
Naphthenic
Dedicated
HydroCracker
Upgrader
Delayed
Coker
Fort Hills Project will use naphthenic froth treating and
delayed coking upgrading technology
Upgrader Technology: Costs
SCO Yields
from Upgrader
HydroCracker
Capital
Costs
101 kbpd SCO
(paraffinic)
(+H)
Bitumen
100 kbpd o
r
Coker
Hydrocracker SCO
volume is
17%
HIGHER
(naphthenic)
(-C)
Operating
Costs
86 kbpd SCO
Capital
Intensity per
flowing barrel
of SCO for
Hydro-cracker
is 20-30%
HIGHER
Hydro-cracker
uses 45-55%
MORE natural
gas, thus Opex is
HIGHER
Hydro-cracker
on-stream time ~
5% LOWER than
Coker
Upgrader Technology: Capital Intensity
The following comparison is based on a notional 100 kbpd
bitumen to the upgrader:
FHP:
Mine
Coker
100 kbpd
Bit. Prod.
100 kbpd
Upgrader
86 kbpd
Total
Incremental Capital Intensity for Hydro-Cracker vs. Coker
per flowing barrel of SCO
HydroCracke
r
Mine
Bit. Prod.
105
100 kbpd
Upgrader
101 kbpd
Total
kbpd
0%
+20 to 30%
+25 to 35%
+20 to 30%
Difference in Capital Intensity for Hydro-cracker +20 to 30%
per flowing barrel of SCO
Oil Sands Challenges
Oil Sands Challenges
Challenges:

Use of land

Use of water

Use of natural gas

Infrastructure requirements

Workforce availability

Access to markets

Costs
Research and development is aimed at:

Sustainable resource development in an environmentally
responsible manner

Reducing costs
Oil Sands Production Technologies
Alternatives to Natural Gas
THAITM (Toe-to-Heel Air Injection)
Petrobank Whitesands Project
Multiphase Superfine Atomized Residue - DeerCreek
OrCrude Process - Nexen/OPTI Longlake
Suncor 3rd Upgrader - Coke Gasification
OXYGEN
WASTE WATER
PETROLEUM COKE
GASIFIER
CO2 CAPTURE &
SEQUESTER
SYNTHETIC
GAS
(CO, H2, CO2)
HYDROGEN
HYDROTREATORS
FUEL
BOILERS
STEAM & ELECTRICITY
Industrial Construction Projects
>100 MM Cdn (2004 Q1 – 2010 Q4)
Athabasca region
Leases 5, 8 & 52: 30% WI (46,170 acres)
Lease 311: 50% WI (11,520 acres)
Lease 437/438: 30% WI (12,968 acres)
Lease 14: 100% WI (7,067 acres)
Lease 634: 100% WI (1,280 acres)
Currently Operating/
Under Construction Mining Projects
Planned Mining Projects
VCI
VCI
VCI
Currently Operating/
Under Construction In-situ Projects
Planned In-situ Projects
Other Oil Sands Leases
ALBERTA
Mining Area
Oil Sands
Areas
Edmonton
Fort McMurray
Calgary
Mineable Area, AEUB
VCI