Canadian Energy Research Institute
Pacific Northwest as a Gateway to Asia
Energy Export Opportunities
Peter Howard
President and CEO
Canadian Energy Research Institute
Pacific Northwest Gateway to Asia
October 28, 2014
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Canadian Energy Research Institute
Overview
Founded in 1975, the Canadian Energy Research Institute (CERI) is an independent, nonprofit research institute specializing in the analysis of energy economics and related
environmental policy issues in the energy production, transportation, and consumption
sectors. Our mission is to provide relevant, independent, and objective economic
research in energy and related environmental issues. A central goal of CERI is to bring the
insights of scientific research, economic analysis, and practical experience to the
attention of government policy-makers, business sector decision-makers, the media,
and citizens in Canada and abroad.
Core members of the Institute include the Canadian Government, the Government of
the Province of Alberta, and the Canadian Association of Petroleum Producers (CAPP).
In-kind support is also provided by the University of Calgary and the Alberta Energy
Regulator (AER).
All of CERI’s research is publically available on our website at www.ceri.ca
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The Canadian Energy Research Institute’s
Recently Released and Pending Studies
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Western Canada’s Energy Sector
2013 Expenditures: $63.8 billion
Royalties
2013 Expenditures: $54.8 billion
Royalties
Wages
Wages
Production
Production
Operation and Maintenance
Completion and Tie in
Operation and Maintenance
Construction
Conventional Drilling
Evaluation
Land Acquisition
Crown Land Sales
Land Acquisition
Crown Land Sales
Oil and Gas Drilling
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Oil Sands Developments
LNG : not for the
weak of heart
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Pacific Northwest
LNG Project
Energy project metrics:
North
American
NGLProgress
Pathways
•
1100 wells (2014-2018)
•
•
•
•
•
•
Vertical Depth: 1850 m
Horizontal Length: 1650 m
Rig Crew: 12-15 (302 People employed per site: PSAC)
Rig-in to Tear out: 28 days
Cost per well: $6.2 million (2014 $)
Economies of scale $3.1 million (2014 $)
$42Pacific
+ Billion CDN
•
7360 LNG
wells (2019-2038)
LNG Upstream
Exports:
Northwest
•
Gathering
Systems
Pipeline $ 6.5 billion CDN
•
Field Processing plants
LNG Facility $10 billion CDN
Assuming Montney Horizontal Well
Field Expenditures
• $3 billion for wells(2014-2018)
• $2 billion for field facilities (2014-2018)
• $26 billion for wells (2019-2038)
• $10 billion for field facilities(2019-2038)
Prince Rupert Gas Transmission
Pacific Northwest LNG
TransCanada Pipelines
Capital Cost $6.5 billion
•
Petronas
•
Japex
•
Indian Oil Corp.
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Pet. Brunei
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SINOPEC
Capital Cost $9-$11 Billion
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Asian market
Suppliers
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Competition to Supply LNG in the Asia-Pacific Basin
Qatar LNG
(8 Operating)
(Total 9.5 bcf/day)
(now 7.5 bcf/day)
Mozambique
Anadarko
Shell
Up to
(6.5 bcf/day)
West Africa
Indonesia
Malaysia
Others
Russia
Sakhalin Island LNG
(now 1.1 bcf/day)
Pipeline: 3.2 – 6.4 bcf/day
China
Korea
Japan
India
Australia Operating
Australia Under Construction
Australia Proposed
(now 2.5 bcf/day)
3.2 – 13.5 – 16.0 bcf/day
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Alaska LNG
Up to 3.5 bcf/day
Kitimat LNG
LNG Canada
Pacific Northwest LNG
West Coast LNG
Prince Rupert LNG
Woodfibre LNG
Up to 17 bcf/day
Jordon Cove
Oregon LNG
Sabine Pass
Freeport LNG
Cameron LNG
Dominion Cove LNG
Lake Charles LNG
Corpus Christi LNG
Up to 30 bcf/day
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North American Natural Gas Demand Pathways
Reference Case: LNG Export Potential to the Pacific Basin
60
50
40
BC LNG Projects
Lower 48
Sabine Pass (UC)
Freeport (UC Q4 2014)
Cameron LNG (UC Q4 2014)
2 Projects (AFID)
Up to 3.2 bcf/day
Maybe!
Oregon LNG (SC 2015)
Jordan Cove LNG (SC 2015)
United States Potential Liquefaction
BCFPD
Other supply sources
East Africa Potential Liquefaction
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Canada Liquefaction
United States Liquefaction
9.7 Bcf/day (75% to Asian Basin)
Australian Liquefaction
Middle East Liquefaction
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Asian LNG Demand
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Natural Gas
Liquids
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Terminology
LNG
= Liquefied Natural Gas
Methane
Ethane
Propane
Butane
LPG’s = Liquid Petroleum Gases
Propane
Butane
Diluent = Diluent/Condensate
Pentanes plus
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LPG :Lost Opportunity
Prince Rupert, BC
Kitimat, BC
Anacortes, WA
AltaGas, PetroGas, Idemitsu (30,000 b/d)
Port of Longview, WA
Sage Midstream (47,000 b/d)
Portland, OR
Pembina (40,000 b/d)
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Oil and Oil
Sands
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WCSB Crude Oil: “Where oh where should the oil go?”
North, South, East or West
OIL
OIL
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OIL
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Kinder Morgan Edmonton Rail Terminal to expand to 250,000 bbls/day
“The continued interest in this facility, and additional volume being contracted
for with this announcement, further demonstrates how important it is for our
customers to secure crude oil take away capacity using a variety of transport
options including both pipeline and railway capacity to ensure crude oil
reaches market”
John Schlosser: President Kinder Morgan Terminals
The company (TransCanada) is contemplating a “rail bridge” from the oil sands
area to a crude oil hub in either Cushing, Oklahoma or Steele City, Nebraska
where it can tap into south bound pipelines. (Daily Oil Bulletin)
Russ Girling: CEO TransCanada
Western Canada rail loading capacity will reach 1,350,000 bbls per day
by 2017
CERI
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WCSB Crude Oil Equivalent Volumes vs Transport System
Volume (bbls/day)
Study 141 Oil Pathways (July 2014)
8,000
7,500
7,000
6,500
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
8,000
7,500
7,000
6,500
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Existing Production(*)
Awaiting Approval
Rail Systems
TCPL Keystone XL
Under Construction
Announced
AB Clipper Exp I
Kinder Morgan TMX Exp
Approved
Existing Export Capacity
AB Clipper Exp II
Northern Gateway
* Includes existing Bitumen + Diluent + WCSB Conventional + Cold Bitumen production - Domestic Refinery needs (AB,SK)
CERI July 2014
“Given the current existing export pipeline capacity and accounting for the
proposed expansions to the Enbridge mainline and assuming a ramp up in rail
transport capacity from the current level of 120,000 barrels per day to
700,000 barrels per day by 2017, market access for Western Canadian oil and
oil sands volumes will be market challenged starting in 2017”
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Oil Sands Forecasts and Economic Impacts (Sept. 2014)
Economic Impacts for the period 2014 to 2038
•
“Oil Sands bitumen production (upgraded and non-upgraded) is forecasted to
grow from the current level of 1.98 million barrels per day (2013) to 3.7 million
barrels per day by 2020 and 5.2 million barrels per day by 2030. Conventional
Oil production will reach 1.5 million barrels per day by 2030”
•
“Total investment in new Alberta oil sands projects and re-investment
(sustaining capital) in existing oil sands projects will exceed $514 billion (2013
Canadian dollars). Operating revenue over the same period will exceed $2,506
billion (2013 Canadian dollars)
•
“The sum of initial capital, sustaining capital and capital required for
operations is expected to average $55 billion per year (2013 Canadian
dollars).”
•
“For every direct job (1) generated in the Alberta Oil Sands, 1 additional job is
generated by indirect association and 1.5 jobs by induced association, ALL in
Canada.”
•
“Oil sands related taxes (indirect, personal and corporate) will pay to the
British Columbia Provincial Government a total of $9.5 billion (2013
Canadian dollars)”.
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WCSB Hydrocarbon Developments: Crude Oil / Bitumen, LNG, LPG’s
Investment opportunity, Employment, GDP growth, Taxes, Royalties
HOWEVER The Gateway may be closing
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Canadian Energy Research Institute
Thank you for your time
Please visit us at
www.ceri.ca
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2013 Facts about Canadian Crude
Production:
•
•
•
•
•
•
•
2013/2008
Western Canada (AB,BC,SK,NWT) Conventional LIGHT Crude
Western Canada (AB,BC,SK,NWT) Upgraded Bitumen
Western Canada (AB,BC,SK,NWT) Condensate (C5+)
Western Canada (AB,BC,SK,NWT) Conventional HEAVY Crude
Western Canada (AB,BC,SK,NWT) Non-Upgraded Bitumen
Eastern Canada (NF/LAB,ON) Conventional LIGHT Crude
Total 2011 Production of Crude Oil and Equivalent
694,775 bbls/day
961,084 bbls/day
147,770 bbls/day
451,618 bbls/day
1,019,810 bbls/day
235,566 bbls/day
3,510,643 bbls/day
+ 30%
196,327 bbls/day
1,737,246 bbls/day
124,790 bbls/day
230,137 bbls/day
199,027 bbls/day
84,119 bbls/day
2,571,165 bbls/day
+ 44%
Exports:*
•
•
•
•
•
•
•
PADD I
PADD II
PADD III
PADD IV
PADD V
Non-US
Total US
(74% Light, 26% Heavy)
(21% Light, 79% Heavy)
(12% Light, 78% Heavy)
(17% Light, 83% Heavy)
(61% Light, 39% Heavy)
(67% Light, 33% Heavy)
(28% Light, 82% Heavy)
Imports:*
• Eastern Canada Light
• Eastern Canada Heavy
% of Imports
612,017 bbls/day
44,449 bbls/day
656,466 bbls/day
• Total Canadian Imports
(93%)
(7%)
* 2013 Average January to September
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2013 Facts about Canadian Natural Gas, NGLs
All volumes expressed as average day
Production:
•
•
•
•
Western Canada (AB) Marketable Natural Gas
Western Canada (BC) Marketable Natural Gas
Canada (other Provinces) Marketable Natural Gas
Total 2013 Production
9,740 mmcf/day
3,759 mmcf/day
620 mmcf/day
14,119 mmcf/day
Exports:
• To United States
8,800 mmcf/day
Imports:
• Pipeline gas from the United States and LNG imports
2,600 mmcf/day
Natural Gas Liquids:
•
•
•
•
Recovered Ethane
Recovered Propane
Recovered Butane
Recovered Pentanes +
200,000 bbls/day
145,000 bbls/day
64,000 bbls/day
101,000 bbls/day
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