Canada’s Energy FutureCanadian Responsible Investment Conference

Victoria – June 20, 2011

Dave Collyer, President

The Global Energy Context

• Significant energy demand growth:§ Population, standards of living

• Need all forms of energy:§ Increasing role for renewables§ Continuing reliance on

hydrocarbons § Increasing role for non-

conventional crude oil & natural gas

• Technology is a key lever for sustainable growth§ Production§ Cost competitiveness§ Environmental performance

Current Policies Scenario

Global Primary Energy Demand

Canada’s Energy Circumstances

• Abundant resources. • Energy development / production key economic

driver. • Competitiveness challenges.• Large exporter (particularly compared to OECD).• Regional diversity in energy production &

consumption.• High per capita energy consumption.• Relatively “clean” electricity generation sector.• Mixed track record on value added and “clean

tech”.• High level of connectivity with U.S.

Global Crude Oil Reserves by Country

Source: Oil & Gas Journal Dec. 2010

25 20 19303746

60

92102

115

137

175

211

260

0

50

100

150

200

250

300

Saud

i Arab

ia

Vene

zuela

Cana

da Iran

Iraq

Kuwait

Abu D

habi

Russ

iaLib

ya

Nigeria

Kazh

akhs

tanQata

rCh

ina

Unite

d Stat

es

billi

on b

arre

ls

Includ

es 170

billion

barre

ls

of oil s

ands re

serves

Restricted(79%)

Open to Private Sector

Oil Sands 56%

Other 44%

World Oil ReservesOpen to

Private Sector

Canadian Oil Sands and Conventional Oil Production Forecast (2011-2025)

Atlantic Canada

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

thou

sand

bpd

Actual Forecast

In Situ

Mining

Conventional Heavy

Conventional LightPentanes/Condensate

Canadian & U.S. Jobs & Economic Benefits

• Construction & operations§ Upstream§ Pipelines§ Upgraders & refineries

• Employment§ Direct & indirect

• Supply of goods and services• Economic benefits (CERI study - over 25 years)§ Economic impact generated $2.1 trillion (Canada) & $520 billion

(U.S.)§ Employment 11.7 million person-years (Canada) & 5.7 million

person-years (U.S.) § Federal & provincial tax ~ $400 billion; provincial royalties $300

billion

Canadian Public Opinion - Oil & Gas

Is it in Canada’s best interest to have a strong oil and gas sector?

78% - Yes, in Canada’s Interest

14% - Not in Canada’s Interest

8% - Don’t Know

78%

58%

65%

79%

78%

74%

20%

38%

31%

12%

4%

2%

4%

4%

9%

18%

9%17%

0% 20% 40% 60% 80% 100%

BQ

Green

NDP

Liberal

Conservative

Total

To develop the oil sands with an effort to limit the environmental impactsTo stop the development of the oil sands altogetherTo focus on maximizing the full economic benefits of the oil sands resource

Canadian Public Opinion

Which is the best goal when it comes to the oil sands?

Social License & Oil Sands

Oil Sands Social License =Performance + Communications

• “3E” policy framework

• Robust regional planning:

ü System-wide metrics

ü Effective monitoring

ü Transparent data

ü 3rd party validation

• World class regulation

• Technology & innovation

• Collaboration

• Proactive

• Transparent

• Verifiable

• Visible leadership

• Broad portfolio:

ü mainstream

ü social media

ü directly & via 3rd parties

ü Canada, U.S., Europe, Asia

Responsible Canadian Energy

• Oil Sands Report§ Principles & Performance§ Measurement & Reporting§ Transparency

Global Energy-Related GHG Emissions

GHG emissions from oil sands:§ ~ 1/1000th of global GHG emissions§ 6.5% of Canada’s GHG emissions

Global Emissions Canada’s Emissions

11

United States

China

OECD Europe

Non-OECD Europe & Eurasia

Japan

India

Other

Canada

Australia/New Zealand

Manufacturing, Commercial & Construction

Residential

Transport

Industrial Processes & Waste

Agriculture & Forestry

Oil Sands

Other Fossil Fuel

Electricity & Heat Generation

North American GHG Emissions (2009):Coal-Fired Power and Oil Sands

15 megatonnes50 megatonnes100 megatonnes

FL

GATX

NC

MI

AL

MO KY

IN OHNE

NM

ND

CO

SC

KS

IA

TN

WV

WY

VA

MN

UT

OK

WI

AZ

AR

AK

LA

IL

NV

OR

MT

SD

NJ

NYNH

MS

Legend

U.S. Coal fired power generating plants

Canadian coal-fired power generating plants

Canadian oil sands

Sources: U.S. DOE/EIA & Environment Canada

Reducing Greenhouse Gas Emissions

• Energy Efficiency§ Using less energy input§ Reducing energy waste/losses§ Capturing waste heat§ Cogeneration power/steam

• Improved recovery processes§ Lower temperature extraction§ Additives to reduce use of both water

and energy (steam)§ Use of electricity rather than steam§ Underground combustion rather than

steam

• Carbon capture & sequestration § Most effective at upgraders

0

5

10

15

20

25

Oil Sands GHG Emissions/bbl

29%

g c

o2

eq

./m

j

1990 2009

CAPP Climate Policy Principles

• Principles§ Balance - “3Es”§ Efficiency – efficient actions

§ Technology – stimulate investment§ Predictability & stability – support investment

§ Competitiveness – compatibility w/ major trading partners§ Distributional Fairness – share cost burden equitably

§ Harmonization – across jurisdictions in Canada

§ Administrative simplicity

• National carbon policy framework consistent with above principles

Canada’s Energy Future

“Parallel Paths Approach” - Prosperity from growth in responsible hydrocarbon production and renewable energy…….

Why?• Recognizes need for change• Recognizes Canadian reality• Takes “best of both” approach • Keeps options for future open• Provides an opportunity to find common ground among diverse interestsMarket- Based Principles• Primary reliance on market forces to drive energy production and

consumption (targeted intervention to address barriers to entry and enable market-based solutions)

• Costs of transformation of energy system should ultimately be borne by consumers making informed choices

Key Enablers for “Parallel Paths”

• “3E” policy framework – environment, economy, energy• New paradigm in technology & innovation - collaboration• Fiscal competitiveness and regulatory reform• Market diversification & growth (commodities + technology)• Unwavering commitment to continuous improvement in

environmental and social performance across the energy system

• Progressive shift to lower carbon domestic energy supply and use - enabled in part by a balanced, pragmatic carbon policy

• Action on energy conservation and efficiency• Broad and sustained commitment to energy education• A step change toward developing the workforce of the future

Royal Society of Canada ReportEnvironmental & Health Impacts of Canada’s Oil Sands Industry

• Science-based, independent analysis of the environmental aspects of Canada’s oil sands

• Addresses many of the issues and perceptions of oil sands development:§ Reclamation is not keeping pace, but

sustainable reclamation is achievable§ Water use does not threaten viability of the

Athabasca River§ No impact on Athabasca water

quality/ecosystem and no evidence of impact on human health in downstream communities

§ Tailings technologies are emerging, but tailings inventory is growing

§ GHG emissions per barrel are reducing but growing production creates a challenge in meeting international commitments

§ Minimal impacts on regional air qualityDecember 2010

0

20

40

60

80

100

120

Saudi Mexico Iraq Venezuela Nigeria ImportedWtd. Avg.

US GulfCoast

CaliforniaHeavy

Oil SandsAvg

g CO

2e/M

J ga

solin

e

GHG Emissions fromProduction and Refining

GHG Emissions from GasolineConsumption

Full Cycle GHG Emissions

Source: Jacobs Consultancy, Life Cycle Assessment Comparison for North America and Imported Crudes, June 2009

98 102 102 102 106 102 107

Range of CommonU.S. Imported Crude Oils

• On a life cycle basis, oil sands have similar GHG emissions to other sources of oil

• Full cycle emissions or “wells to wheels” is the appropriate measure to use in setting carbon policies

104 114