1. The Canadian Oil Sands Woodrow Wilson Forum October 17, 2005

2. Canada’s Oil and Gas Industry in the North American Energy Economy Canada is the world’s 3rd largest natural gas producer Canada is the world’s 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 16%10% Share of U.S. imports 85%16% #1

3. U.S. Natural Gas Imports from Canada Source: U.S. DOE/EIA Canada’s exports dropped in 2003 due to a 1.7 bcf/day reduction in US demand 16.8% 16.5% 15.6%16.2% 16.9%* * Estimated full-year. Canadian Share of US Consumption

4. U.S. Imports of Crude Oil and Petroleum Products by Country of Origin Petroleum Products Crude Oil #1 Source: EIA, 2004 Canada, is the largest (#1) supplier of crude oil and of crude oil and petroleum products to the US.

5. Industry Capital Spending Cdn $billions Northern Canada ‘03 ‘04 ’05F ’06F $0.3 $0.3 $0.5 $0.5 Oil Sands ‘03 ‘04 ‘05F ’06F $5.0 $6.2 $8.5 $8.8 WCSB ‘03 ‘04 ‘05F ’06F $21.4 $24.5 $27.0 $29.0 International ‘03 ‘04 ‘05F ’06F $5.5 $10.4 $5.0 $6.8 East Coast Offshore ‘03 ‘04 ‘05F ‘$06F $2.2 $1.9 $1.0 $0.7 Note: Spending in Canada excludes spending associated with mergers & acquisitions International are acquisitions net of divestures. The oil & gas industry will invest over $39 billion in capital in Canada in 2006

6. Canadian Crude Oil Production by Region

7. Canadian Natural Gas Production by Region

8. 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 Canadian Oil Sands History

9. Global Crude Oil Reserves by Country Source: Oil & Gas Journal Dec. 2004 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

10. Oil Sands Projects in Three Deposits Oil sands production now exceeds one million barrels per day US$28 billion built from 1996-2004 Close to US$36 billion in new oil sands projects expected in 2005-2010 Peace River Athabasca Cold Lake Edmonton Calgary Ft. McMurray Value Creation (CNRL) Deer Creek Syncrude Suncor Petro- Cda Shell Encana Petro- Canada Suncor Imperial Exxon Mobil Encana Bristol (CNRL) Cdn Coastal (Devon) Synenco Husky LEGEND Denotes SURFACE MINEABLE AREA Fort McMurray Shell CNRL Centennial (Conoco) Imperial SyncrudeEM Petro- Canada

11. Total Oil Sands Project Production: 2003-2015

12. Oil Sands Production Technologies Mining & Upgrading In-situ Recoverable resource = 65 billion barrels Recoverable resource = 250 billion barrels Cyclic Steam Process Source: Syncrude Source: Imperial Oil Source: Shell Canada Oil Production SAGD Process Steam Injection Reservoir Oil Production Steam Chamber Steam Injection Source: Petro-Canada

13. Oil Sands Supply Costs by Recovery Type includes capital, operating, royalty, taxes and return Source: NEB - based on C$2003 converted @ US$0.80/C$ * Surface mining, extraction & upgrading Light Oil Heavy Oil

14. 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

15. Environmental Stewardship Air  Monitoring programs  Reducing emissions Water  Reduce, recycle and reuse  More efficient, 90+% recycle Land  Reclamation and remediation  Directional drilling from single site to reduce impact

16. Canada’s Oil Sands Challenges to achieve this potential Continuing to Lower Costs  Alternatives to natural gas for fuel – free it up for other markets Workforce and Infrastructure  Ensuring adequate workforces – trades, technical, professional  Roads, Housing and Municipal services Access to Markets – Pipelines/Refineries  Need new pipelines Decisions needed now for pipelines in 4-5 years  Need new refineries, expansions and modifications For many conventional refineries, oil sands is either heavier (bitumen blend) or lighter (upgraded crude) than their current feedstock

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

18. 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

19. SEC Bitumen Reserves Disclosure for Financial Reporting --- 2004 Average Bitumen Price at Cold Lake = 50% of WTI Data Source : Purvin & Gertz Calculated Field Price, % of WTI Month

20. Topics for Discussion? How can Canada and the US overcome the new constraints to oil sands growth? – workforce, infrastructure, rising costs How and where to convert oil sands into petroleum products? What can be done from the US to help with the workforce shortages? Where will oil sands production be consumed?  If in North America, where?  What about offshore markets? What needs to change in North America as the oil slate shifts to heavier oil? Can US gasification technology free up natural gas for other North American markets?  How does this fit in a world of CO2 reductions?