Using the Whole Natural Gas

Barrel

Benefits and Implications for Western Canada

Justin Riemer
Assistant Deputy Minister
Alberta Enterprise and Advanced
Education
Alberta and western Canada continues to
have significant feedstock opportunities

Sources:ERCB ST-98 Report and GoA data
Unconventional gas includes Coalbed Methane.
Shale Gas is in early stages of development and not included in these numbers.
Resource Reserves 2010 Production
Conventional Gas
Conventional NGLs (liquid)
-Ethane
-Propane
-Butane
-Pentanes plus
36.4 trillion cubic feet

712 million barrels
402 million barrels
222 million barrels
306 million barrels
3.8 trillion cubic feet

215 thousand barrels/day
136 thousand barrels/day
75 thousand barrels/day
127 thousand barrels/day
Unconventional Gas 2.4 trillion cubic feet

321 million cubic feet
Conventional Oil 1.5 billion barrels 168 million barrels
Oil Sands
-Bitumen
-Petroleum Coke
-Upgrading off-gas liquids

169.3 billion barrels


589 million barrels
64 million tonnes
18,000 barrels/day
Coal 33 billion tonnes 31.7 million tonnes
Unconventional gas includes Coalbed Methane.
Shale Gas is in early stages of development and not included in these numbers.

One of the Worlds Largest Resources
Feedstock Outlook is Sunny
Studies have assessed the feedstock opportunities available for
Albertas petrochemical industry.
Alberta is well positioned with significant quantities of competitively
priced feedstocks.
Traditional gas based feedstocks continue to provide the largest
potential.
Upgrader and refinery off-gas feedstock potential is also significant.


Petrochemical Industry Investment Provides
Significant Benefits to Alberta and Canada


Albertas Petrochemical Industry
Alberta is Canadas largest manufacturing location for Petrochemicals -
Value: $13.5 billion in products shipped
Four world-scale ethylene plants with a combined annual production
capacity of 9 billion pounds
Annual sales of $10 billion, exports of $5 billion to global markets
Primarily based on ethylene produced from natural gas based ethane
supplies
Operations are among the lowest cost in North America
Exports: $7.4 billion
Employment: over 7,700 direct jobs
Investment: over $10 billion from 1974 to 2011
NGLs Supply Chain Elements:
Covering the Value Chain Production (Composition)
Processing /Fractionation, Transportation, Demand and Pricing
Economic Impact of a Petrochemical Plant in
Alberta (National & Provincial Impacts)
Economic impact measures the impact of an activity from industry on
the structure of the region. It is measured in:
Total employment
Output
Value Added
Analysis was undertaken separately for the Construction phase
(2013-2016) and the Production phase (2017-2030)
Assumptions:
Construction phase
Capital expenditure estimated at $2.215 Billion CDN
Production phase
Value of output is based on the forecast of output volumes and IHS
forecast of market prices


Economic Impact of a Petrochemical
Plant
Canada - Value Add and Labour
Income Contribution (C$M)
Canada Employment
Contribution (FTEs)
Source: IHS CERA
Economic Impact of Petrochemical Manufacturing
System by Province
Construction Phase
Source: IHS CERA
Economic Impact of Petrochemical Manufacturing
System by Province
Production Phase
Source: IHS CERA
Alberta has Significant Petrochemical
Investment Opportunities

Recent Studies Prepared for Alberta on
Investment Opportunities
Petrochemical Feedstock Study (2011), Purvin & Gertz. Inc
C1 Derivative Chain Report (2011), IHS Global Inc.
C3 Derivative Chain Report (2011), IHS Global Inc.
Albertas Hydrocarbon Processing Opportunities: Derivative Projects
Identification and Attractiveness Assessment (2012), AIHA
NGLs & Petrochemical Market Outlooks: Implications for the Alberta
Economy (2012) IHS Global Inc.
Attractive Opportunities
Our studies have indicated that there are a number of attractive
investment opportunities for derivative project development in Alberta
today. Based on:
Methane
Ethane/Propane
Ethylene
Propylene

Derivatives Studies Provide Direction
C1 Derivatives:
Vinyl Acetate, Methanol to Olefins, methanol, and Ammonium Nitrate
have potential to be profitable when manufactured in Alberta.
C3 Derivatives:
It was found that Alberta, in the case of production of the following C3
derivatives, had the potential to be the most cost advantaged location in
the study.
Acrylic Acid, Acrylonitraite, Butyl Acrylate, Cumene, Isopropanol, Phenol,
Polypropylene, Propylene Glycol, and Oxide.
Investment Potential
Studies have indicated that based on ethane and propane
availability, Alberta is well positioned to expand petrochemical
production post-2015.
While today the value of NGLs may not provide sufficient economic
incentive for capital investments in new production, the Alberta
governments IEEP program helps to address this.
Medium to long term prices are expected to be stronger.


Competitiveness Challenges
Source: IHS CERA, Mar 2012 (Forecast is reflective of projects currently in our production outlook, totaling 3.0 million barrels per day of synthetic rude oil +
bitumen by 2020.)
Labour Challenges
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Labor Demand
Alberta power, pipeline, and mining
projects
Maintenance
Upgraders + CCS
Oil sands in situ
Oil Sands mining
Addressing Labour Challenges
Through a partnership approach we need to:
Encourage labour participation from underrepresented
groups (e.g. Aboriginals, Disabled, Mature Workers)
Engage employers in HR best practices (hire apprentices)
Facilitate interprovincial mobility
Collaborate on immigration policies (quotas, eligibility)
Enhance foreign credential recognition
Improve productivity and training
Change business models (use technology to automate
processes, support innovation)
Productivity
Productivity has been identified as a critical factor in Alberta and
Canadas competitiveness
Productivity growth in Canada and Alberta has been lagging almost
all other competing jurisdictions for more than a decade.
Canada and Albertas positions in productivity and competitiveness are
slipping significantly, and changing demographics (such as the aging
workforce) are accelerating that decline
Productivity Alberta, a private not-for-profit corporation, is industrys
connection to all things productivity in Alberta and beyond.
PA connects SMEs to tools, resources, and services that will help
improve their productivity and competitiveness
More info available at productivityalberta.ca
Infrastructure Challenges
Leverage and enhance the Alberta Natural Gas Hub.
Studies Prepared for Alberta on the Western Canadian Hub
Hub Current Situation Paper (2011)
Rationale for Western Canadian Natural Gas and NGL Hubs and an
Outline of Issues Associated with Enhancing Those Hubs (2011)
Identified a number of infrastructure related issues impacting
competitiveness in western Canada.
Changing geographic distribution of natural gas production in WCSB due
to shale gas production.
NGL extraction rights
Jurisdiction-centric viewpoints regarding natural gas and NGL
developments.
Overall system costs.
Increased use of natural gas in Alberta and west.


In Summary
Alberta Government Supports Value Add
Opportunities
Government departments are aligning strategies towards value add
policy
In the recent past government has created policy and programs to
help support the petrochemical industry (e.g. IEEP)
Alberta continues to have a strong feedstock position.
Recent studies have shown that based on ethane and propane
availability, Alberta may be well suited for expanding petrochemical
production post-2015.
And Alberta is in an excellent position for serving key export markets.

Thank you.