Responsible Energy Development Capitalizing on the Benefits of shale gas and tight oil

development in Atlantic Canada

Core Energy Conference

October 8, 2014

Bob Bleaney

VP, External Affairs

Canadian Association of Petroleum Producers (CAPP) ● Represents large and small producers who

explore for, develop and produce natural gas, natural gas liquids, crude oil and oil sands throughout Canada

● Produce about 90 per cent of Canada’s natural gas and crude oil

● Members and Associate members generate revenues of about $120 billion per year

● Associate members provide a wide range of services that support the upstream crude oil and natural gas industry

● Key focus areas: Education Communications & outreach Policy & regulatory advocacy Industry performance

2

The Global Energy Spotlight on Canada

World-Class Capability

Public Confidence Performance Communication

World-Class Resource

Competitiveness Market Diversification Workforce

3

Global Primary Energy Demand

• Population growth • Standard of living

Energy Demand Growth

• Ongoing high reliance on hydrocarbons

• Increasing role for renewables

• Shift to non-conv. oil & natural gas

All Forms of Energy,

Developed Responsibly

• Production • Cost competitiveness • Environmental

performance

Technology - Key Lever

for Sustainable

Growth

Source: International Energy Agency – New Policies

Scenario

World Energy Outlook 2011

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

1990 2011 2020 2025 2030 2035

million tonnes oil equivalent

Other RenewablesBioenergyHydroNuclearNatural GasOilCoal

Source: International Energy Agency World Energy Outlook

2013

Ongoing reliance on fossil fuels (share of energy consumption): 2011: 82% 2035: 76%

4

Then 60-year supply and falling

Shale known but uneconomic to develop

Underground gas storage primarily traditional reservoir, operationally not very flexible

Pipeline capacity growing incrementally

Rising prices with several spikes

Now 100+ years supply and growing

Flourishing production, vast shale resources now accessible

Storage boom with more flexible salt-cavern facilities and additional market area storage

16,000+ miles of pipeline added since 2000

Plentiful supplies moderate prices and provide supply diversity

2001 – 2011: A Decade Makes a Difference North American Perspective

5

The Shale Gas Opportunity in Atlantic Canada

● Significant resource potential ● Industry has a proven track record of

responsible oil and gas development in Canada (including shale) 175,000 wells hydraulically fractured safely

● Significant potential economic benefits for shale gas industry activity $550 million spent on exploration, development

and production to date in NB NS Review Panel estimate of ‘lower medium

case’ potential (e.g., 100 wells per year): • $1 billion in annual investments • 750 – 1,500 FTE direct employees

6

Natural Gas and GHGs

● Natural gas is the cleanest-burning hydrocarbon Can be used in a variety of ways to help

reduce GHG emissions, including in the transportation and electricity generation sectors

Burns 50% cleaner than coal when used in power generation

● More than 20,000 households and businesses in Nova Scotia have been converted to natural gas Cumulative annual C02 reductions based on

these conversations are in excess of 100,000 tonnes (equivalent to removing 20,000 vehicles from the roads)

7

Source: DNR NB

Natural Gas Opportunities in Nova Scotia

Source: NS Power

8

NS Electricity Generation by Energy Source - 2012 ● 21% of Nova Scotia’s

electrical generation comes from Natural Gas

● Onshore natural gas could provide a safe and cost effective source of energy supply - while reducing GHG emissions.

Challenges for Shale Gas Development

● Onshore natural gas development relatively new in Atlantic Canada: Industry presence is new Using established technologies

● Broader public unfamiliar with companies, process and practices

● Misinformation is abundant: Need to focus on the fact-based and scientific

information on hydraulic fracturing

● Vocal opposition strong lobby effort in play by anti-

development groups Need a more balanced dialogue

9

Concerns have been heard:

● Water Source, use, treatment, disposal

● Fracture fluid additives Reporting transparency, type, amount,

treatment

● Environment Land, emissions, noise

● Health & Quality of Life Public health, socio-economic impacts, road

damage

… and these can be satisfactorily addressed Our industry has a strong record regarding safety and environmental performance

10

● CAPP supports the approaches taken by governments in Atlantic Canada to conduct reviews of hydraulic fracturing technology (NB, NS and NL) Participated actively in the NB and NS reviews and will do the same in NL Review in NB resulted in strong regulation and “go slow” approach Review in NS recommended similar “go slow” approach

● The recent Government of Nova Scotia decision to ban hydraulic fracturing should be reconsidered Does not reflect the Wheeler report recommendations, and is not respecting the

scientific evidence and Canadian experience that hydraulic fracturing is being done safely

Will result in lost opportunities for Nova Scotians Not necessary to ban fracing to address public concerns

● Urge governments to consider experience in Western Canada and the potential economic benefits of responsible development

Current Status and Industry Views

11

Building Understanding and Trust

● Performance:

• Continuous environmental & social performance improvement (across the value chain)…..including monitoring, timely & transparent reporting

• Clear line of sight to economic and social benefits to Canadians • World class policy & regulatory system • Solutions-oriented advocacy for balanced policy and regulation

● Communications & Outreach: • Sustained communications grounded in performance improvement • Strong focus on outreach & engagement

● Requires leadership & collaboration

12

Public Confidence Performance Communication & Outreach

= +

12

Communicating Our Approach Guiding Principles for Hydraulic Fracturing

1

2

3

4

5

Safeguard the quality and quantity of regional surface and groundwater resources, through sound wellbore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical.

Measure and disclose our water use with the goal of continuing to reduce our effect on the environment.

Support the development of fracturing fluid additives with the least environmental risks.

Support the disclosure of fracturing fluid additives.

Continue to advance, collaborate on and communicate technologies and best practices that reduce the potential environmental risks of hydraulic fracturing.

We will:

CAPP Hydraulic Fracturing Operating Practices

14

Communication Outreach: Processes, Practices & Responsibility

15

16

The Way Forward: Opportunity, Collaboration & Responsible Development

● Seizing the Opportunity Developing a competitive and reliable supply to

meet market demands Capture economic benefits and opportunities Market growth and diversification

● Building Public Trust and Understanding Industry performance, transparency and

communication Solid performance plus continuous improvement/

technological advances, and strong regulatory framework

Collaborating within sector, with government, stakeholders, and aboriginal communities

● Responsible Development is in everyone’s best interests

For More information

CAPP.ca Follow CAPP on Twitter:

@OilGasCanada

Like CAPP on Facebook: facebook.com/OilGasCanada

Become one of Canada’s Energy Citizens

www.energycitizens.ca

17

THANK YOU

QUESTIONS?

Bob Bleaney VP, External Relations

Bob.bleaney@capp.ca

www.capp.ca

18