Transcript Slide 1

Energy Boom:
Why Canada will be a Global Leader
Derek Gates, CFA
Founder
SWM Oil Sands Sector Index TM
SWM Canadian Energy Income Index TM
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Executive Summary
• Global Demand for all sources of energy are expected to
increase by over 50% by 2030 from current levels (IEA,
World Energy Report 2008)
•
Canada is in a unique position to benefit from this trend
with world class reserves in many of the key energy
commodities such as crude oil, uranium, natural gas and
coal
• You will learn how profitable investing in the energy
sector will be over the next few decades and how you
can profit from this mega trend by investing in the key
growth sectors.
Global Demand for Energy
• Population growth and rapid industrialization of
China, India and the Middle East is driving
energy demand up
• Despite conservation and increased energy
efficiency, demand will grow by 1.6% per year
or by 45% from current levels by 2030
• Fossil fuels are still expected to represent over
83% of our energy needs in 2030
World Energy Use by Fuel Type,
1980-2030
Current Share
Of World
Total
50
History
45
Oil
40
Future Share
Of World
Total
Projections
39.7%
35
Oil
37.3%
Coal
25.4%
30
Natural Gas
25
23.3%
Natural Gas 19.9%
20
15
10
5
Coal
22.4%
Nuclear
8.2%
Nuclear
Renewable 3.7%
0
Hydro
1980
1985
1990
1995
Source: EIA, IEA – WEO 2008
Renewable
6.8%
Hydro
2.5%
2.6%
2000
2005
2010
2015
2020
8.1%
2025
2030
Failing to Plan and Invest
• Coal will become the dominant energy source
in the world
• After the crude oil and natural gas production
will peak, coal and oil sands will have to
substitute at the expense of the environment
• Nuclear, renewable and hydroelectric power
will be developed too slowly to avert economic
and environmental disaster
World Energy Use by Fuel Type,
1980-2030 Failure to Plan Scenario
Current Share
Of World
Total
50
History
45
Oil
40
Future Share
Of World
Total
Projections
Coal 37.9%
39.7%
35
Oil
30
24.9%
Natural Gas 23.3%
25
Natural Gas
20
19.9%
Coal
22.4%
Nuclear
8.2%
Nuclear
8.1%
3.7%
Renewable
6.8%
15
10
Renewable
5
Hydro
0
1980
1985
1990
1995
Hydro
2.6%
2000
Source: SWM Ltd. Projections ©
2005
2010
2015
2020
2025
2030
2.5%
Sustainable Energy Future
• Renewable energy such as wind, solar and
biomass must be developed faster
• Crude oil and natural gas production will peak
soon, coal and oil sands will have to substitute
while renewable energy is developed
• Nuclear power is an important addition to the
energy mix and should be used in combination
with energy extraction
Sustainable World Energy Use by Fuel Type,
1980-2030 Sustainable Development Plan
Current Share
Of World
Total
45
History
40
Future Share
Of World
Total
Projections
Oil
35
Oil
39.7%
Coal 24.2%
30
Natural Gas 23.3%
Renewable 20.4%
25
20
Natural Gas 19.9%
Coal 22.4%
15
Nuclear
8.2%
Renewable
3.7%
Hydro
2.6%
24.9%
Nuclear
8.1%
Hydro
2.5%
10
5
0
1980
1985
1990
1995
2000
Source: SWM Ltd. Projections ©
2005
2010
2015
2020
2025
2030
Global Crude Oil Production is at Peak
• Global supply for crude oil has been flat since 2004
• Producing oil wells are depleting by at 5.1% per year
globally (IEA – World Energy Outlook, 2008)
• Exploration and development costs for crude oil
continue to climb as new sources of easy to find and
extract oil becomes more scarce
• The quality of crude oil being extracted is declining,
refineries need to focus on bitumen and heavy oil
Source: Sustainable Wealth Management Ltd., IEA
World Oil Production
('000 boe/d)
90,000
80,000
70,000
60,000
Source: SWM Ltd. Projections © , IEA WEO 2008
P2007
2004
2001
1998
1995
1992
1989
1986
1983
1980
50,000
Major Producers are at a Plateau
Saudi Arabia Oil Production
Russian Oil Production
('000 boe/d)
('000 boe/d)
12,000
14,000
10,000
12,000
8,000
10,000
Russia
8,000
FSU
6,000
6,000
4,000
Source: SWM Ltd. Projections © , IEA WEO 2008
P2007
2004
2001
1998
1995
1992
1989
1986
1983
P2007
2004
2001
1998
1995
1992
1989
0
1986
0
1983
2,000
1980
2,000
1980
4,000
Our Friends are Tapped Out
Mexico Oil Production
4,000
UK Oil Production
('000 boe/d)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
3,500
3,000
2,500
2,000
1,500
1,000
Norway Oil Production
4,000
3,000
2,000
1,000
0
Source: SWM Ltd. Projections © , IEA WEO 2008
('000 boe/d)
('000 boe/d)
OPEC is Not Increasing Production
30,000
Middle East OPEC Oil
Production
25,000
('000 boe/d)
20,000
15,000
10,000
5,000
0
Iran Oil Production
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Venezuela Oil Production
('000 boe/d)
Source: SWM Ltd. Projections © , IEA WEO 2008
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
('000 boe/d)
Source: Sustainable Wealth Management Ltd., Bloomberg
Demand Grows,
Existing Production is Flat
MM boe/d
88
86
84
82
80
78
76
74
2003
2004
2005
2006
World Demand (boe/day)
Source: IEA WEO 2008, EIA Oil Market Report, SWM Ltd estimates
2007
World Supply (boe/d)
2008
New Global Oil Requirements 2009 - 2018
MM boe/d
MM boe/d
50
45
40
35
50
45
40
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
2009
2010
2007
2008
2011
2009
2012
2010
2013
2011
2014
2012
Needed for Demand Growth
Needed for Demand Growth
Source: Sustainable Wealth Management Ltd. projections
2015
2013
2016
2014
2015
2017
Needed for Depletion
Needed for Depletion
2016
2018
2017
Lack of Investment Opportunities
• Over $26 Trillion US$ of energy investment is
needed between now and 2030. Half to be invested
in power generation, half in energy production,
mostly in fossil fuels
• At least 75% of proven global oil reserves are
controlled by National Oil Companies (NOCs)
• Canada represents at least 55% of global reserves
that can be invested in privately
• New discoveries are very scarce, most known oil
and gas reserves are already being developed
Accepted Global Oil Reserves
( Billion Barrels of Oil)
300
267
250
200
150
179
138
115
104
100
98
87
60
50
0
Source: SWM Ltd. Projections © , IEA WEO 2008
41
36
30
21
16
15
12
SWM Adjusted Global Oil Reserves
( Billion Barrels of Oil)
200
180
179
160
140
133
120
100
80
60
74
68
66
60
56
42
40
20
0
Source: SWM Ltd. Projections © , IEA WEO 2008
30
27
21
16
16
12
12
Canada: The Future Oil King
• Canada will soon be recognized as having
the largest oil reserves in the world and will
become the largest oil exporter by 2030
• Geopolitically stable and the largest crude
exporter to the US (16% of all US imports)
• Oil companies are all independently owned
• Established industry which is open to foreign
investment
Oil Export Leaders 2007 to 2015
Top Oil Exporters 2007
Top Oil Exporters 2015
Saudi
Arabia,
17.7%
Rest of the
World,
27.3%
Rest of the
World,
22.5%
Russia,
16.2%
Kuwait,
3.8%
Angola,
3.9%
Norway,
4.2%
Angola,
3.9%
Algeria,
4.3%
Venezuela,
4.5%
Nigeria,
4.7%
Saudi
Arabia,
24.7%
Kuwait,
4.9%
UAE, 5.7%
Iran,
Norway,
5.6%
5.3%
Source: SWM Ltd. Projections © , IEA WEO 2008
Russia,
14.5%
Nigeria,
4.4% UAE, 4.6%
Kazakhstan
, 4.9%
Algeria,
5.1%
Canada,
7.1%
Oil Export Leaders 2030
Top Oil Exporters 2030
Top Oil Exporters 2030
IEA WEO 2008 Assumptions
Rest of the
World, 8.6%
Norway,
5.4%
Libya, 6.1%
SWM Estimates
Saudi
Arabia,
38.1%
Canada,
21.9%
Rest of the
World,
23.1%
Kazakhstan,
14.6%
Angola,
6.2%
Nigeria,
6.4%
Norway,
5.4%
Libya, 6.1%
Iraq, 8.3%
Angola,
6.2%
Algeria,
9.0%
Canada,
22.0%
Russia,
9.5%
Kazakhstan
, 12.8%
Source: SWM Ltd. Projections © , IEA WEO 2008
Nigeria,
6.4%
Iraq, 8.3%
Russia,
9.0%
Algeria,
9.5%
Saudi
Arabia,
11.6%
Production to continue for 100+ years
Reserves
Production
Rate (boe/d)
Years of Production
at Estimated
Production
Rates
Current Reserves
under
development
83.9 Billion
boe
1,150,000 boe/day
200
Total Proven
Reserves
174 Billion boe
Total Proven &
Probable
Reserves
305 Billion boe
3,600,000 boe/day
(IEA Estimate for 2018)
5,900,000 boe/day
(IEA Estimate for 2030)
Source: Sustainable Wealth Management Ltd. Estimates ©, IEA
132
142
Best Buying Opportunity in 4 Years!
Production is up over 50% since 2004 and
average oil prices have increased significantly.
Source: Bloomberg, Sustainable Wealth Management, Ltd.
Canada’s Other Energy
Resources – Nuclear
Source: World Nuclear Association
•
Canada is the world’s largest
producer of uranium, providing over
25% of world supply
•
Canada is second only to Australia
in terms of uranium reserves
•
Canada has its own nuclear power
plant design and producers 16% of
its electricity needs from uranium
Canada’s Other Energy
Resources – Natural Gas
•
Canada is the world’s third largest
producer of natural gas and the
largest supplier of natural gas to the
United States
•
Conventional reserves are 58 Tcf,
and Natural Gas from Coal could
add 200 Tcf to 550 Tcf
•
Tight gas and shale gas will add
another 500+ Tcf to Canada’s
natural gas reserves
Source: Canadian Society for Unconventional Gas, CAPP
Canada’s Other Energy
Resources – Coal
Source: Coal Association of Canada
•
Canada has about 10 Billion Tonnes
of Coal of which we produce about
100 Million Tonnes per year
•
Canada is one of the world’s largest
producers of coking coal for steel
production
•
We have a 100 year plus supply of
coal at our present consumption rate
Canada’s Other Energy
Resources – Hydroelectric
•
Canada is the largest producer of
hydroelectric power in the world,
representing over 13% of world
production
•
The is another 182,832 MW of new
potential power projects, 34,371
MW is practical in today’s economic
and environmental situation
•
Canada is the lowest cost producer
of hydroelectric power in the world
Source: International Journal on Hydropower and Dams, Government of Canada
Canada’s Other Energy
Resources – Wind
Source: Canadian Wind Energy Association
•
Current installed capacity provides
electricity to over 563,000 homes,
about 3% of world capacity
•
Canada’s has the world’s longest
coastline and some of the world’s
largest plain land areas, giving it one
of the largest potential wind resource
•
We have a 100 year plus supply of
coal at our present consumption rate
Canada’s Other Energy
Resources – Biomass
Source: Centre for Energy, Forestry Canada
•
Current installed capacity is 1,500
MW mostly using wood waste in the
forestry industry
•
Canada has 10% of the world’s
forests and a large agricultural
sector to provide feedstock
•
1,500,000 Canadian homes rely on
wood for home heating
•
Ethanol production from wheat, corn
and other sources could triple in the
near future from current production
of 175 million L per year
Contact Information
Derek Gates, CFA, CIM, CFP, FCSI
President & CIO
Sustainable Wealth Management Ltd.
Suite 224, 222 – 16th Ave NE
Calgary Alberta T2E 1J8
Phone 403 454-0881
Fax 403 454-0882