Canada’s Energy Futures 2011:Canada’s Energy Futures 2011:

Shifting TrendsShifting Trends

Preview of Key Results & Comparison Preview of Key Results & Comparison with Past Projectionswith Past Projections

Abha BhargavaAbha BhargavaMatthew HansenMatthew HansenBryce VanSluysBryce VanSluys

3030thth USAEE/IAEE North American Conference USAEE/IAEE North American ConferenceWashington, DCWashington, DC

October 9-12, 2011October 9-12, 2011Canada

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The NEBThe NEB

An independent quasi-An independent quasi-judicial regulatory judicial regulatory tribunal established in tribunal established in 19591959

Two primary functions:Two primary functions:– Regulatory mandateRegulatory mandate– Energy information Energy information

mandatemandate

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Energy Futures - BackgroundEnergy Futures - Background

Flagship product published since 1967Flagship product published since 1967– Approximately every 4 yearsApproximately every 4 years

Last Report in 2007, with reference Case Update in Last Report in 2007, with reference Case Update in 20092009– Presentation focused on comparing trends between 2007, Presentation focused on comparing trends between 2007,

2009 and 2011 projections2009 and 2011 projections Key ObjectivesKey Objectives

– Provide unbiased, relevant, comprehensive, expert analysis Provide unbiased, relevant, comprehensive, expert analysis on energy supply, demand and its economic implications on energy supply, demand and its economic implications and serve as a referenceand serve as a reference

– Provide stimulus for discussion with and amongst Provide stimulus for discussion with and amongst stakeholdersstakeholders

– Inform policy and business decisions of key risks and Inform policy and business decisions of key risks and uncertainties facing the energy futureuncertainties facing the energy future

NEB’s Integrated Energy NEB’s Integrated Energy Modeling FrameworkModeling Framework

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Key Inputs: energy prices, oil and gas drilling, supply costs, well productivity and decline rates, electricity unit

level characteristics, and other relevant projections

Crude Oil Model

Refinery Balances

Model

Natural Gas

Model

NGL Model

Informetrica Macroeconomic Model

Energy 2020 (Energy Demand,

Electricity)

2011 Energy Futures Methodology:2011 Energy Futures Methodology:Reference Case and Four Reference Case and Four

SensitivitiesSensitivities

Reference Case 2010-

2035

Fast and SlowEconomic Growth

Sensitivities

High and Low Price

Sensitivities

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Real GDP Oil Price (WTI, 2010 US$/bbl)

Gas Price (Henry Hub, 2010 US$/MMbtu)

AAG* 2010-2035

2020 2035AAG*

2010-2035

2020 2035AAG*

2010-2035

Reference Case 2.3% $102 $115 1.5% $6.00 $8.00 2.4%

Fast 3.2% $105 $121 1.7% $6.50 $8.90 2.8%

Slow 1.8% $100 $112 1.4% $5.60 $6.80 1.7%

High Price 2.3% $142 $155 2.7% $7.40 $10.70 3.6%

Low Price 2.3% $72 $85 0.3% $5.40 $6.40 1.5%

*AAG=Average annual growth

Five sensitivities represent a wide range of Five sensitivities represent a wide range of possibilitiespossibilities

At a glance: Canadian energy At a glance: Canadian energy demand, supply and trade, 2010-demand, supply and trade, 2010-20352035

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Energy supply at record levelsEnergy supply at record levels

Unconventional production grows for oil, gas and Unconventional production grows for oil, gas and electricity electricity – Oil Sands becomes the dominant source of production more Oil Sands becomes the dominant source of production more

than tripling by 2035than tripling by 2035

– Tight and shale gas makes up for declining conventional gas Tight and shale gas makes up for declining conventional gas production production

– Electric fuel mix becomes cleaner with changes to coal Electric fuel mix becomes cleaner with changes to coal capacitycapacity

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Canadian energy demand growth Canadian energy demand growth slows slows

Energy demand growth slows moderately compared Energy demand growth slows moderately compared to historyto history– Residential energy use is nearly flat over the projectionResidential energy use is nearly flat over the projection

– Industrial sector grows the fastestIndustrial sector grows the fastest

Changes in demand trends are the result of Changes in demand trends are the result of efficiency and conservation programs, and higher efficiency and conservation programs, and higher energy prices energy prices – Slowing economy and lower population growth are Slowing economy and lower population growth are

additional factors additional factors

Government programs result in biodiesel and Government programs result in biodiesel and ethanol demand increasing faster than other fuelsethanol demand increasing faster than other fuels

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Supply – Demand trends have Supply – Demand trends have implications for trade and implications for trade and

infrastructureinfrastructure Supply and demand trends will effect energy tradeSupply and demand trends will effect energy trade

– Oil – net oil available for export triplesOil – net oil available for export triples

– Gas – net gas available for export declines until Gas – net gas available for export declines until 2020, and flat for the remainder2020, and flat for the remainder

– Electricity – net electricity available for export Electricity – net electricity available for export nearly doublesnearly doubles

Supply side shifts (volume and location) will have Supply side shifts (volume and location) will have implications for infrastructure implications for infrastructure

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Oil Sands

Conventional

East Coast

Crude Oil: 2011 oil projections surpass past Crude Oil: 2011 oil projections surpass past projections projections

Natural Gas Production: lower gas prices, lower conventional (non-Natural Gas Production: lower gas prices, lower conventional (non-tight) production, varying tight gas projections, Mackenzie push-tight) production, varying tight gas projections, Mackenzie push-backs and varying LNG assumptionsbacks and varying LNG assumptions

    2010 2020 2030

AB Production (Bcf/d)

2007 11.97 8.89 4.95

2009 10.23 7.64  

2011 10.45 6.14 5.78

BC Production (Bcf/d)

2007 2.61 2.29 2.23

2009 3.06 5.92  

2011 2.99 7.04 9.36

WCSB Conventional (no tight, Bcf/d)

2007 11.03 7.91 4.77

2009 6.73 4.15  

2011 6.76 3.21 2.51

WCSB Tight (Bcf/d)2007 1.90 1.27 0.76

2009 4.88 6.48  

2011 4.90 6.86 8.30

BC Shale (Bcf/d)2007 0.00 0.00 0.00

2009 0.15 1.34  

2011 0.29 1.85 3.36

NWT (Bcf/d)2007 0.00 1.20 1.90

2009 0.01 1.20  

2011 0.02 0.95 1.20

LNG Imports (Bcf/d)2007 0.50 2.05 2.85

2009 0.14 0.50  

2011 0.66 0.80 0.98

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Electricity Generation: 2011 projections have similar Electricity Generation: 2011 projections have similar overall generation, with larger  shares of gas and overall generation, with larger  shares of gas and renewables, and less nuclear and coalrenewables, and less nuclear and coal

Demand growth similar to 2009 Reference Demand growth similar to 2009 Reference Case in aggregate, but sectors tell a Case in aggregate, but sectors tell a different storydifferent story

Residential Commercial Industrial Transportation

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Recent EIA AEO Projections: Recent EIA AEO Projections: Trends are shifting for the U.S. as Trends are shifting for the U.S. as wellwell

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ConclusionsConclusions

Significant shifts have occurred in the last 5 years in the Significant shifts have occurred in the last 5 years in the field of energy in North Americafield of energy in North America

While supply of natural gas has seen an upside While supply of natural gas has seen an upside potential, demand for energy has come downpotential, demand for energy has come down

Tight oil plays is another success story seen across Tight oil plays is another success story seen across North America, with production increasing at least in North America, with production increasing at least in the medium termthe medium term

Electricity sector is seeing a growing share of Electricity sector is seeing a growing share of renewables renewables

For copies of the Energy Futures projections, see For copies of the Energy Futures projections, see www.neb-one.gc.ca (includes detailed data appendices) (includes detailed data appendices)

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