Canadian Oil and Natural Gas IPAA Midyear Meeting Greg Stringham June 16, 2005

Canadas Oil and Gas Industry in the North American Energy Economy Canada is the worlds 3rd largest natural gas producer Canada is the worlds 9th largest crude oil producer and moving up the list quickly with oil sands production increasing Industry Overview 500,000 jobs C$35 Billion capital investment C$20 Billion in payments to federal and provincial governments #1 private sector investor in Canada Canada is the largest supplier of energy to the United States 2004 Canadian Natural Gas Canadian Petroleum Ranking of importers to U.S. Share of U.S. consumption 15%10% Share of U.S. imports 85%16% #1

Top 10 Natural Gas Producers in 2004 Source: Oil & Gas Journal

Top 10 Crude Oil Producers in 2004 Source: EIA & CAPP Oil sands growth will move Canada from #9 to #5 in the world by 2015

Top 10 Crude Oil Producers in 2004 Source: EIA & CAPP Oil sands growth will move Canada from #9 to #5 in the world by 2015

U.S. Imports of Crude Oil and Petroleum Products by Country of Origin Petroleum Products Crude Oil #1 Source: EIA Canada, is the largest (#1) supplier of crude oil and of crude oil and petroleum products to the US.

Industry Structure of the Upstream Sector Based on Oil and Gas Production (boe) Majors - > 100,000 b/d Intermediates - 15,000 b/d Juniors - < 15,000 b/d

Total Wells Drilled in Canada 1990s Avg = 10,000 Wells 2000s Avg = 19,800 Wells Forecast 2005 = 23,000

Canadas Natural Gas in the Integrated North American Market

Canadian and U.S. Natural Gas Pipelines TransCanada Transmission Mainline TQ&M Westcoast Kern River Northwest Northern Border TransCanada Alberta (NGTL) NGPL ANR El Paso PG&E SoCal PGT Texas Eastern Panhandle Algonquin Transcontinental ANG/ Foothills NGPL Northwest Foothills El Paso Transwestern Trailblazer M&NE CNG Iroquois PNGTS Alliance Lakes Great

Western Canadian Gas Resources Conventional and New Sources Source: Alberta Energy & Utilities Board/National Energy Board, CERI

Western Canada Natural Gas Production Source: FirstEnergy Capital Production increased by more than 200 mmcf/d in the first quarter 2005 over last year

<30 mmcf/d mmcf/d >50 mmcf/d 2003 Top Natural Gas Wells Drilled Talisman Monkman: Dec 2004: 66 mmcf/d Shell/Mancal Tay River: Dec 2004: 30 mmcf/d test Sources: First Energy, Talisman, Shell

Exports to U.S. Canadian Demand Canadian Natural Gas Canadian Demand and Exports to US Source: CAPP Statistical Handbook

Canadian Natural Gas Productive Capacity – CERI Alternate Case Source: Canadian Energy Research Institute BC Offshore Nova Scotia Natural gas from coal/CBM North Newfoundland Western Canada Sedimentary Basin

Canadian Crude Oil and Oil Sands

Global Crude Oil Reserves by Country Source: Oil & Gas Journal Dec Includes 175 billion barrels of oil sands reserves Canada, with 175 billion barrels in Oil Sands reserves, ranks 2 nd only to Saudi Arabia in global oil reserves

Oil Sands Projects in Three Deposits Oil sands production now exceeds one million barrels per day US$28 billion built from Close to US$36 billion in new oil sands projects expected in Peace River Athabasca Cold Lake Edmonton Calgary Ft. McMurray Value Creation (CNRL) Deer Creek Syncrude Suncor Petro- Cda Shell Encana Petro- Cda Suncor Imperial Exxon Mobil Devon True North Encana Bristol (CNRL) Cdn Coastal (Devon) Synenco Husky LEGEND Denotes SURFACE MINEABLE AREA Fort McMurray Shell CNRL Centennial (Conoco) Imperial SyncrudeEM

Oil Sands Production Technologies Oil Production SAGD Process Steam Injection Reservoir Oil Production Steam Chamber Steam Injection Source: PetroCanada Mining & Upgrading In-situ Oil Sands Production now exceeds 1 million barrels per day Recoverable resource – 65 billion barrelsRecoverable resource – 250 billion barrels

Oil Sands Production – Mining and Upgrading Video – Courtesy of Shell Canada Ltd.

Oil Sands Supply Costs by Recovery Type Source: NEB. Based on C$2003 US$0.80/C$. * Surface mining, extraction & upgrading Light Oil Heavy Oil

Canadian Oil Production Conventional, Oil Sands and Offshore WCSB Conventional Oil Oil Sands Offshore Source: CAPP ActualForecast Oil Sands Growth: 2004 = 1 million b/d 2015 = 2.7 million b/d

Natural Gas Use in Oil Sands Declining Natural Gas Consumed per Barrel of Oil Sands Production Source: Historical data from EUB

Oil Sands Production Technologies Alternatives to Natural Gas Toe-to-Heel Air Injection – Whitesands ProjectOrCrude Process - Nexen/OPTI Longlake Multiphase Superfine Atomized Residue - DeerCreek Suncor 3 rd Upgrader - Coke Gasification OXYGEN WASTE WATER PETROLEUM COKE SYNTHETIC GAS (CO, H 2, CO 2 ) GASIFIER CO 2 CAPTURE & SEQUESTER HYDROGEN HYDROTREATORS BOILERS STEAM & ELECTRICITY FUEL

Canadian and U.S. Crude Oil Pipelines Canada is already well connected by pipeline to oil markets in Canada and the United States.

Canadian and U.S. Crude Oil Pipeline Alternatives Sarnia Fort McMurray Chicago Houston Los Angeles Patoka Montreal Burnaby St. James Portland Salt Lake City Superior Hardisty Edmonton Anacortes San Francisco Casper Potential Pipeline Expansion Routes Asia California Anacortes California USGC ENBRIDGE GATEWAY TCPL KEYSTONE Wood River Cushing Spearhead Extensions to New Markets Growing oil sands production will require new pipeline capacity to existing and expanded markets Midwest

Potential Tanker Markets for Canadian Oil Sands Production China Persian Gulf Japan Taiwan ~ 8,600 N Miles ~ 4,500 N Miles Prince Rupert/Kitimat Jose/ La Cruz Los Angeles Japan Taiwan Target Markets ~ 5,400 N Miles 1,400 N Miles Far EastU.S West Coast Japan Taiwan Korea SantaCruz 1,790 Competitive travel distances for Canadian supply to both markets Source: Enbridge Pipelines