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Oil Sands 08 Review I

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Tue, 19 Aug 2008|

An expert panel addressed five questions crucial to the oil sands and heavy oil industry. 1. How should capital investment and the distribution of profits be adapted to: a) the need to expend energy to move oil sands or heavy oil out of the subsurface, and b) the transparency requirements of public ...

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And the brightest I like to thank our sponsors SAP and ingrained. And so we have -- three groups there were connecting here. One group is a course the panel itself the panel includes members. Of the -- Board of advisors to put together the conference program for the oil sands and heavy oil technologies conference. The second group is is the group here in Calgary in the audience we have here. In the third group is the Internet audience. At last count that was -- -- before we started. We had 89 but that number was climbing rapidly is an and that's normal and I'm in a webcast for the the Internet audience to grow during the course of -- event. I want to do is. Discussed. Important issues to the oil -- and agro industry. By -- of five questions. Those questions are -- distilled from an early version of -- -- -- Jim Hines -- A presentation that he he gave in the opening session of the of the conference they're not questions that have answers. They're just discussion starters. And what will do his. Use wrong. But -- one panelist for each question to lead. Lead the discussion we'll get fifteen minutes to each question. The panelists we'll take a couple minutes to make some to make some introductory comments. And then well we'll spin -- the discussion. To our other groups and the and the the and the panelists have a lot of discretion mr. What format they used in as we wanted to be who wanted to be freewheeling. And informal. And I think it I think it'll be be very interesting. I will remind the Internet audience that you can. -- did the format that you see on your screen to submit a question at any time I'll be monitoring the questions. From the back end -- -- discussion leaders out when I have a question I'll I'll let you know socially on no there's an Internet question. And hand so let me introduce the -- -- the panelist. It's just -- from left to right Jim behind you is with -- -- research and development. In Jim will be. Dealing with question number three and ensure the question -- -- the questions here in in in just a minute. Mike Freeman is with MIS Rocco. -- will be. Leading the discussion on question floor. -- -- -- -- -- -- -- -- Chung with well resources will be leading discussion on question two. Peter Michael there -- tundra solutions. Will be leading discussion of question five. Derek McDonald and Alston Canada will -- discussion of questioned -- A judge to come with console incorporated. Into -- this has with oil and gas journal. And Teresa Hansen is with power engineering magazine. And also like to introduce the questions I show them one more time we haven't shown them yet on the -- on the on the screen I'm not gonna take time to read them but them. If we can now. We can get the the question okay there's -- this question number wrong we might as well start with question number one so Derrick out it's all yours. From every question number man that I also distill -- down to my interpretation that and -- demand. It was a pet -- split -- defending. Other guidance as companies and also very good Anderson as. -- to continue -- -- it was us live funding requirements between their different levels of governments and the company's. Because with the the rapid expansion -- -- -- sends. We're seeing a lot of press strain on infrastructure. Shortage of of labor. In the province not only in February but also -- in and cities like Calgary and Edmonton I've been in Calgary for ten years I think on average. We about a hundred people what they moved in and that tenure period that's also. Has similar problems that we that we -- -- important revote on the fruits on off hospitals. Not enough wrong transportation. Schools. So. My take and this their first question again is. And again completed boot on the hard -- was the proper split we we hear a lot that. Especially when we talk about. Infrastructure. And also vote -- greenhouse gases. The more that the requirements for infrastructure and to reduce emissions how much. And what is the proper split between the government and and the companies and there's -- -- for a -- I think although all three players stakeholders such as. Federal provincial. And municipal governments as well as the companies to ensure that this development sustained. And I just gotten some some. Members over the last. Are doing with the -- -- investments and all that and ended up into government. Revenues. So if I looked at the last the years from 1997 -- -- 200659. Billion dollars has been invested by. Companies in in -- or a sense. And they expect -- right 2012 and then additional 100 billion dollars will be invested by companies in developing -- projects. Now. From this capital investment analyst who -- treated employment. Manufacturing not only himself group and outside of -- in fact 44%. Other employment generated during that 1997 to 202006. True it was. Achieved outside of Alberta. If I look that government. And also there's another set limits that from nineteen -- to predicting to you Tony Tony. Where there are. Looking at that government revenues. And government revenues are generated by either employment income tax corporate taxes juiced he. From the various projects when people -- manufacturing or during the construction work her head office work or engineering work. This -- that's gonna -- 123 billion dollars to government revenues. In the following splits. Surprisingly. The majority of the government revenues and I think this also includes royalty. Payments for oil sense when 1% hope that -- 123 billing goes to the federal government of Canada. 36%. Goes they'll -- -- government and the remaining 20% goes to other minutes bellies and and towns and cities. -- there is money being generated. Though -- that the companies were paying taxes and also well it's getting filtered into the of the -- -- guess the question is. Two -- are. This is the -- split. That people talk about should be companies be paying more. The bill for their infrastructures which I think. A large part they do do to help facilitate their projects. But on the other hand we look at that government revenues are there it is the money being -- group. And also is really sure how much of that should be reinvested back -- -- sensor as it is being used for general revenues. So I think that's that's great and just. Through them there for some comments and questions. On the question or or on my homes. Any any questions comments from the board. And I didn't hear you mention. The options that -- Norwegians have taken. Where instead of devoting my -- to today's expenses. They've established a trust account -- everyone wants to open trust account. At the option to preserve the temper well but this will generate. For those that are coming after -- I think the well put the government started. Heritage trust fund. Early seventies. Which probably wasn't -- does. Financially. -- -- could have been. Which has -- since been changed but still. Best friends generating. I guess assets for the future supposedly but still I think the government. -- taking the investment interest store returns every year sort of putting that into general revenues so it is not true. The that the basis is staying the same. This question that should that be I guess that has been brought up the -- -- there should be more money put into that rainy day fund. And I guess that's another question for for debate. As I said before it seems that it's not always dedicated to be used for the infrastructure or. Environmental -- economic issues related to -- In the questions on the on the infrastructure. I have down. Some other thoughts that that they had written down about. Most recently -- of course everyone's concerned about -- to greenhouse gases. I should say that the a -- government. Last last week announced four billion dollars of funding for technologies for. For both -- to capture two billion dollars was going into a fund to help develop technologies -- CO2 capture and sequestration. And another to -- -- -- was going into a fund for regional. Transportation issues and I think in -- do it the regional rail. -- -- Also get some cars off the road but maybe move people and transportation. Of the more efficiently so it's clear that. Government starting starting to respond. But I think the general -- that amongst or thoughts months peoples that. The new government or the company's. Should -- more responsibility for us maybe some of these fruits and who -- we see that through taxes and -- tax system. Governments are receiving companies are paying -- -- the question is that. Who is currently operating -- -- more efficiently doing. Requests from the Internet. -- Hello Hart and he had -- competition isn't. However also the questions I understood it was -- -- what we'll -- the oilsands compete with resilient or production which. I'm -- is real production also. Yeah okay let me let me -- I will tar sands production compete in -- head to head competition with Brazilian production. In a demand limited environment so smaller commercial question. And it could be for anybody. Sure we're -- just a quick comment. Although we all sent companies are basically price takers. The price of their products at internationally. So. As long as there seems to be a demand for of the product and we we clearly see that. Conventional oil is -- in decline in production so. It was lots of refineries in the US that don't have enough Pete -- because conventional oils -- are drawing up so they have to bring in. Ever Orioles which includes videos from California -- -- -- And after the Middle East. Again it's I think it's a total cost -- hopefully you waive in transportation costs they have to factor into that but. As I said. -- -- get. The product is virtually. If they can produce -- it's taken. Since the men -- this. Is -- there in the market. I have Clemens and his long you know as well what I understood the balls on the new -- you didn't feel. This -- -- -- that easy oil that we are talking about this also all oral and heavy -- And in it -- -- if you just looking up for a class BC ID what -- always Edwards competitive voters what they would do you. But on the other hand if you're looking at what we -- doing you know -- don't have technology why. This Amanda all booting it and would -- losing. Let to be my that we had to comply we'd probably -- -- -- stream that we're talking about your loss to -- Well as you know some of those offshore pile operation and -- -- he gave to -- are now. This do you along I've known best know technology out there. This do a little lending that need to be you know going to -- what are you sending going to would the last forty some years. So that is what -- -- right now. And I heard that -- are a lot of -- fundraising going on in the -- -- process to get people. Two to a busy -- up there and that you -- some -- -- Richmond. A political and is that I think when you look at production yep yep look at more than just a well it cost to record the at -- cost of production you have to also include transportation costs. -- Refinery market that it's intended so. We hear discussions that don't. -- sends it you know it's dirty views certain US. Constituents don't want to. Receive every. Greenhouse gas type. Intensity type -- but we also have to realize that. The transportation from Canada the US is relatively short so preclude that -- it's like -- you look at. Buying oil from Saudi Arabia transporting across the ocean into the US differences in the greenhouse gas -- -- whole life -- crosses you know. -- -- big a 100% down to you know 20% difference. So again people have to look out not only cost of production wouldn't cost of getting it to the refinery and that that mobilizes a lot of production. -- It may be that the question was motivated by the recently announced monster claim -- -- claim should say. That the Brazilians. Made. Bill potential -- -- to deliver oil onto the world scene. That someone might think -- the in the enormous number of barrels that that they claim could actually affect the price of oil the demand for oil is so immense. That. It's hard to CLU in that field it. Make a significant impact on the price of oil and and I must -- disagree with with my good friend mr. John. Deepwater developments. It -- -- Ross have. Are developed a very high level there's lots of technology they developed to extract oil from the -- of water that they've been talking down there. -- I didn't mention just doesn't of the preamble that currently heavy oil production -- it is about a million girls offered me. And based on the investment that I previously. Stated. They're hoping to get to the for a million barrels per day of output -- by twenty Tony. So and again when you combining natural gas exports -- and and well. Including heavy oil. Where the number one. Exports -- US however when you consider to a four million barrels per day that. Us -- that that's even 5% what do you ask Suze. So there's large demand. Time for one last question in this in this group in this one just came in on the Internet. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Medical pollution and so forth. -- -- Don't disagree with that statement. I think we're finding that. There is always a lag effect. It's hard for governments and and other. Institutions to pre -- necessarily. With the anticipation of future growth I think. The open government's playing a lot of catch up. With their infrastructure but again -- It's it's no different the people full support route but those same issues are here -- -- as well as and then -- And it's how do you manage rapid growth in you're expecting moderate growth so. I don't disagree with that that statement but it's. -- -- you. Effectively. And he would be nice to snap your fingers and so you know we've got more possible that -- roads but. Take some time and unfortunately we're. Nevada where. Google wants to boots up and -- Olympics and in -- its construction booming oilsands and got the rest of that's the word. Our expanding. India and China so -- that's taken. Are hidden to man you know. Cost of materials and cost of construction from in in western -- for sure.

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