Gas Supply / Gas Demand Outlook The Renaissance Esmeralda ...napca.com/webfiles/NAPCA - 2010 Convention-Ed Kallio Presentation… · 10ZG-1501-04 COPYRIGHT 2010 ZIFF ENERGY GROUP

10ZG-1501-04 COPYRIGHT 2010 ZIFF ENERGY GROUP

Gas Supply / Gas Demand OutlookThe Renaissance Esmeralda Resort & Spa

Indian Wells, California

Agenda• Shale Gas Outlook• Cost of Gas Supply • LNG & Kitimat• Alaska & Rex Pipeline• Oil Pipelines• Gas Demand

Edward Kallio, Director, Gas [email protected]

(403) 234-4275

April 9, 2010


Slide 2

How Unconventional Gas is Different:It’s ‘Engineered’ or ‘Manufactured’ with New Technologies

Fracture Truck

Reservoir

Vertical WellDual-Completion

2 Fracture

Horizontal WellMulti Stage

Fracture

Horizontal Pad Drilling28 Hz Wells / Pad

Multi Stage Fracture

Multi Stage Hydraulic Fracture Stimulation

Reservoir


Slide 3

Laramide Thrust

Belt

Laramide

Thrust Belt

Oui

chita

Thru

st B

elt

Appa

lach

ian

Thru

st B

elt

Shale Gas Basins

Devonian/ MississippianShale Fairway

Calgary

Denver

New Albany

Antrim

Ohio

Lewis

0

2

MMcf/d Marcellus

3.2

Map Source: SPE/Holditch Nov 2002, Hart Publishing, 2008Forecast: Ziff Energy

Shale Gas Initial Well Productivity, MMcf/d

10.0

0

2

4

6

8

10

MMcf/d Horn River

2.6

0

2

MMcf/d Woodford

1.4

0

2

MMcf/d Barnett

2.1

0

2

MMcf/d Fayetteville

8.0

0

2

4

6

8

10

12

14

MMcf/d Haynesville Shale

15+

3.0

0

2

MMcf/d Eagle Ford


Slide 4

Cost of the Natural Gas “Hamburger”

Total Total

PRICE:

COST:

$3.00 / Hamburger US$4.00 / Mcf Gas

$1.25

Beef Finding & Development0.50 2.50

Tomato Operating0.10 1.40

Lettuce Royalty & Production Taxes0.05 1.00

US$7.20

$ $

Cheese Return: 15% BIT 0.20 1.40

Pickle Overhead 0.15 0.40

Bun 0.25 Basis Differential 0.50

COST RECOVERY (2007): 2.4X 0.7X


Slide 5

New Gas Supply Cost Curve, Q4 2007

0

2

4

6

8

10

12

1 17 33 49 65 81 97 113 129 145 161 177 193 209 225 241 257 2730

2

4

6

8

10

12

FULL CYCLE COST:Cash Cost +Capital Cost+Overhead+Return

CASH COST:Operating ExpenseProduction TaxesRoyaltiesDifferential

US$/Mcf US$/Mcf

New Gas Supply Added

2008 Henry Hub Price$9.05

Canadian Plays

HH/09 $3.95


Slide 6

170+ Benchmarking Studies (1986 – 2010)

Netbacks(Corporate)

1989 -1996

8

NETBACKS

North AmericanFollow Ups

2000+

10+RFOC

1998+1998+

U.S. OFFSHORE StudiesGulf of Mexico

(Deepwater RFOC)(Shelf RFOC & F&D)

14F&D

RFOC RFOC

U.S. ONSHORE Studies

25+

’98

EastTexas

RFOC

’98

OnshoreGulf East

RFOC

’99

Rockies

RFOC

’99

Alaska

RFOC

’01, ’06

Gulf Coast

Onshore

RFOC

SouthTexas

’99, ’05

RFOC

SouthTexas

DRILLING

’02’02

Anadarko

RFOC

’96, ’98

Mid-Continent

RFOC

Permian

’96-’07

Custom

RFOC

2000+

RFOCRFOCRFOC

6

Heavy Oil (Canada)

1994-98, 2008

HEAVY OIL

BENCHMARKING

People Productivity(Head Office Staffing)

1991-95, 2001

8

2003(International)

PEOPLE

PRODUCTIVITY

BRAZ

IL

INTERNATIONALImproving Field Performance/ Best Practices

40+

1999+

ARGEN

TINA

VENE

ZUEL

A

COLO

MBIA

BOLIV

IA

TRINI

DAD

AUST

RIA

INDO

NESIA

INDI

A

BANG

LADE

SH

GERM

ANY

AUST

RALIA

CHIN

A

THAI

LAND

VIETN

AM

TURK

MENI

STAN

1997

GasMarketing

Costs

GAS

MARKETING

COSTS

1997

Energy CapitalProjectBench-marking

ENERGY CAPITAL

PROJECT

BENCHMARKING

1997(with

WMC)

Oil & GasHR

Bench-marking

OIL & GAS HR

BENCHMARKING

2003(with

TowersPerrin)

HRStudy

HR STUDY

Improving FieldPerformance (IFP)

(Canada)

16

1994+

IFP

Finding & Development Cost(Canada)

23

1987+

F&DCOST

MEXICO

COLO

MBIA

DRILL

ING

WesternCanadaDrilling

WESTERN

CANADA

DRILLING

2005(withSBC)

SAGD

DRILLING

2009

SAGDDrilling

GHG

2010

GHG


Slide 7

Ziff Energy Operations Analysis


Slide 8

Kinder/Sempra/ConocoPhillips1.8 Bcf/d US$4,900 MM

1,663 miles 42” pipeHeat Content 950 – 1,150

Rockies Express Pipeline

Princeton

PEPL

Opal

Cheyenne

Phase 1 – Apr. 2008

Operating SegmentsCurrently 500 MMcf/d750 MMcf/d later 2007

330 miles 42” pipe

Phase 2 - Jun 2009

Phase 3 – Nov 2009

Top 5 Firm Shippers:

EnCana – 500 MMcf/dConocoPhillips – 400 MMcf/dBP Energy – 300 MMcf/dSempra Energy – 200 MMcf/dUltra Resources – 200 MMcf/d

All 10 Year Contracts

Wamsutter

Meeker

Zone 1US$0.24/Mcf

Questar Overthrust 625 MMcf/d leased Option for 1.5 Bcf/d

Zone 2US$0.54/Mcf

Zone 3US$0.88/Mcf

Clarington

Missouri

Lebanon


Slide 9

Growing Oil Production

0

1

2

3

4

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 20300

1

2

3

4

MMBbl/d

In-Situ

MMBbl/d

Mining

Sunco r

( A t habasca)

Syncrude

C N R L Horizon

EnC ana

Imp erial C o ld Lake

C N R L C oP Surmont

N exen Long Lake

Husky Sunrise

Sunco r

East Coast Offshore 2%

Conventional Oil (Slow Decline)18%

57%

29%

14%

2.6

4.0

2.1

Shell A lb ian

Oil Sands(Strong Growth)

80%Imp erial Kear l4 Ot her M ining

4 1 Ot her Pro ject s

Growing 8.6%/yr


Slide 10

Proposed Western Canada Oil Export Pipelines

B.C. AlbertaSask. Manitoba

Fort McMurray

Anacortes

Edmonton

Hardisty

Montreal

Express

Enbridge

Rangeland

TransMountain

Kitimat

Kerrobert

Cromer

Gretna

Superior

Lewiston

Delavan

ChicagoFlanagan

Patoka

Sarnia

Cushing

To US Gulf Coast

Clearbrook

Prince George

ExistingEnbridgeKinder Morgan ExpressKM Trans Mountain

ProposedKM Trans Mountain – Anchor LoopKM Trans Mountain – TMX-2KM Trans Mountain – TMX-3KM Trans Mountain – Northern Leg Kinder Morgan – Express Option 1, 2Kinder Morgan – Chinook PipelineTransCanada - Keystone

Regina

WoodRiver

ProposedAltex - Altex SystemEnbridge – AB ClipperEnbridge – Line 4Enbridge – S Access Exp.Enbridge – S Access Ext.Enbridge – S LightsEnbridge – Gateway

ExistingPacific Energy Partners LP - Rangeland TransCanada - KeystonePegasus

Kinder Morgan – Express BulletTransCanada – AB-USCGTransCanada - AB-California

Potential


Slide 11

Keystone – TransCanada Oil Project

Portland

Chicago

Hardisty

Chicago

Patoka

Edmonton

Proposed Keystone

Liquids Line

TCPL Mainline

Enbridge

Liquids Line

Burstall

B.C.

Cushing

Proposed Keystone XLLiquids Line

Scotford

Montreal

Dawn

TCPL Mainline

Houston Port Arthur

Wood RiverSteele City

TimeQ3 2007Q2 20082009Q2 2010Q1 20112011Q1 2013

Activity Total CapacityApproved by NEB Sept. 2007Start ConstructionKeystone XL Regulatory ApprovalSystem in Operation 435,000 Bbl/dayKeystone XL Start ConstructionCushing Extension In-Service 590,000 Bbl/dayKeystone XL In-Service 1,100,000 Bbl/day

Expected Costs: US$ 12 Billion


Slide 12

4th International OperationsExcellence Seminar

October 13 & 14, 2010 Houston, Texas

Production Reliability: Achieving Operations

Excellence

World Class Speakers in 5 Sessions:• Executive Perspectives on Excellence• Production Operation Challenges• Future Production Challenges• Deepwater & Offshore Assets• Onshore Assets (Gas & Oil) with a focus on Unconventional Resources

Meet Sr. Operations Executives from North America & Around the Globevisit www.ziffenergy.com for regular updates


Gas Supply / Gas Demand OutlookThe Renaissance Esmeralda Resort & Spa

Indian Wells, California

Agenda• Shale Gas Outlook• LNG & Kitimat• Cost of Gas Supply• Alaska & Rex Pipeline• Gas Demand

Edward Kallio, Director, Gas [email protected]

(403) 234-4275

April 9, 2010

Gas Supply / Gas Demand Outlook The Renaissance Esmeralda ...napca.com/webfiles/NAPCA - 2010 Convention-Ed Kallio Presentation… · 10ZG-1501-04 COPYRIGHT 2010 ZIFF ENERGY GROUP

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