CERI Commodity Report Crude Oil

Transcription

1 February 2016 CERI Commodity Report Crude Oil The Present State of Canadian CO 2 Emissions Policies and Actions Jon Rozhon Half of global greenhouse gas (GHG) emissions originate from the US, China and the European Union. Other notable emitting nations include India and the Russian Federation; by comparison, as of 2011, Canada produced only 1.5 percent of the world total. 1 However, Canada is not a heavily populated country, home to only 0.5 percent of humanity, so when emissions are measured on a per capita basis, Canada outpaces 2 nd place US by a wide margin (see Figure 1). Numerous voices in the country have been raised to do something to reduce Canada s GHG emissions. Figure 1: Per Capita GHG Emissions, 10 Highest Emitting Nations recently suffered a stay by the Supreme Court on his Clean Power Plan that features a coal phase-out the court will review the legality of the strategy that would see GHG emissions from electric power generation eventually fall to 32 percent of 2005 levels by The recent non-binding Paris Agreement, to which both leaders agreed, recommends swift, significant action be taken to reduce GHGs. In the case of Canada, what is the current state of GHG emissions efforts throughout the nation? Following are synopses of various federal and provincial strategies. Federal Government of Canada it is early days in the Trudeau administration, and it is now in the process of setting a national target that we will work together [with provinces] to achieve. 3 It is expected that any national target will be based on the recommendations of the Paris Agreement and will include a nation-wide floor price for carbon. Besides working with the provinces, the government has announced a $2 billion Low Carbon Energy Trust to fund research into curbing emissions and has promised to phase-out subsidies for fossil fuel producing companies. Source: World Resources Institute At the time of writing, Prime Minister Trudeau and President Obama just concluded meetings in Washington, with climate change and GHG emissions high on their agenda. However, President Obama CERI Commodity Report Crude Oil Editorial Committee: Paul Kralovic, Dinara Millington, Megan Murphy, Jon Rozhon, Allan Fogwill About CERI The Canadian Energy Research Institute is an independent, not-for-profit research establishment created through a partnership of industry, academia, and government in Our mission is to provide relevant, independent, objective economic research in energy and related environmental issues. For more information about CERI, please visit our website at or contact us at info@ceri.ca. The meeting with President Obama has resulted in an agreement on oil and gas sector methane emissions (40 to 45 percent below 2012 levels by 2025), consensus on working on implementing the Paris Agreement as soon as possible, intention on expanding a variety of renewable energy sources, and greater collaboration on green energy research and development, among other things. 4 British Columbia British Columbia implemented a Climate Action Plan in 2008 that has been updated several times since. At the centre of the province s actions is the Revenue-Neutral Carbon Tax, which is presently set at $30/tonne of CO2eq. The revenues are directed towards lowering income and corporate taxes and apply to the purchase of hydrocarbons and coal. 5 The province was an early implementer of smart metering, with the goal of eventually taking advantage of the efficiencies that a smart grid could one day offer. Relevant Independent Objective

2 Page 2 British Columbia (along with Manitoba, Quebec, and Ontario) is a partner of the Western Climate Initiative (WCI) which intends to have all partners implement capand-trade emissions trading. To date, only the State of California and Quebec have implemented regulations based on WCI recommendations. Alberta Like British Columbia, Alberta has imposed a tax on large emitters, which is detailed in the Specified Gas Emitters Regulation enacted in The latest revision, also known as the Climate Leadership Plan, specifies that large emitters be required to reduce emissions intensity by 15 percent in 2016, with an increase to 20 percent by The carbon levy will increase to $20/tCO 2 in 2017 and $30/tCO 2 in Post-2018 the tax will increase with inflation. The new plan is based on emissions performance standards and a best in practice baseline. The government states the carbon price would cover 78 to 90 percent of provincial emissions, which would be the highest in Canada. The province expects the price will generate sufficient revenue to support a variety of green measures, such as R&D and new infrastructure. 6 The Alberta government has also committed to phasingout coal-fired electricity generation through its Clean Energy Plan. By 2030, coal will no longer be part of the energy mix in the province, replaced by cleaner-emitting sources of energy such as natural gas, wind, and solar power. They have also placed a 100 MT cap on oil sands emissions and methane leakage reduction. Saskatchewan Saskatchewan has indicated it will follow the Federal Government s lead on climate change and work with the other provinces to develop the legislative and regulatory tools needed to help identify and achieve provincial targets, recognizing both regional challenges and opportunities. 7 In the past, Saskatchewan has made some important steps in research and development (R&D) on GHG emissions mitigation. The Boundary Dam Carbon Capture and Storage project in Estevan, for example, came online in 2014 and will eventually capture approximately 1,000,000 tonnes of CO 2 per year, equivalent to taking 250,000 cars off the road. 8 Manitoba Manitoba announced in December 2015 its own Climate Change and Green Economy Action Plan, which is an initial effort to sketch out various ways to reduce emissions in the province. Manitoba is already one of the lowest-emitting provinces in Canada, with 98 percent of its electricity generation coming from hydroelectricity. 9 Of the few other electricity generation facilities, Manitoba has closed two coal-fired power plants and converted two others to natural gas. As mentioned previously, Manitoba is a partner in the WCI and therefore has made a commitment to the initiative to implement a multi-sector, market-based mechanism (i.e., cap and trade ) to reduce emissions. Ontario In late 2015 the Ontario government announced a new Climate Change Strategy with the goal of reducing greenhouse gas emissions to 80 percent below 1990 levels by The province intends to accomplish this in stages, first by reducing levels to 15 percent below 1990 by 2020 and then reducing to 37 percent below 1990 levels by Cap-and-trade will be a cornerstone of Ontario s efforts, as it plans to join Quebec and California in their system, and the province is also spending on R&D and developing its smart grid. Long a leader in low-ghg energy development efforts in Canada, Ontario has built a fleet of nuclear reactors and has subsidized much solar and wind power in the province through its Feed-in-Tariff (FIT) program. The province eliminated all of its coal-fired generation in The province points out that since 2003, Ontario s coal closure plan and renewable energy policies have put us on track to eliminate 30 megatonnes of greenhouse gas emissions in 2020 equivalent to taking up to seven million cars off the roads. 11 The high costs of these developments have caused electricity rates to increase significantly and have resulted in some public concern for the higher rates. From 2003 until 2015, blended electricity rates (taking into account on-peak and offpeak rates) increased 137 percent. 12 The present government is pushing green energy development further, announcing that the 2013 fleet of wind turbines and solar farms will be close to triple by Quebec Another leader in GHG emission reduction policy is the province of Quebec, which is the only jurisdiction in the WCI besides California that has implemented a cap-and-trade program. The province has high expectations for the plan, which it claims will considerably reduce Quebec s GHG emissions, covering close to 85 percent of them by 2015 and will generate more than $3 billion in revenues by Quebec benefits from its vast hydropower resources

3 Page 3 which account for more than 99 percent of its electricity generation and are minimal contributors to GHG emissions. In September 2015 Quebec updated its earlier greenhouse gas emissions targets. The plan now is to decrease emissions to 37.5 percent below 1990 targets by This represents a step away from potential hydrocarbon development in the province. A 2015 CERI study indicates that any new production of shale natural gas and oil in the promising Utica and Macasty basins would make it difficult for the province to reach its 2030 emissions reduction goals. 16 The hydrocarbons would need to be tied to emissions trading in order for there to be a likelihood of domestically-produced oil and gas within Quebec. Atlantic and Northern Canada The Atlantic provinces and the northern territories, with their low populations and minimal industrial bases, are not emitting anywhere close to the same levels of GHG s as the more industrialized regions of the country. But climate change and emissions are of concern, nevertheless. In fact, all of these provinces and territories have some sort of climate change policy in place, and because populations in these areas have already suffered from climate change effects such as melting snow pack or large weather events, these plans also include adaptation strategies. The summary below is by no means comprehensive, but indicates general measures and goals. Throughout the country, provincial governments and the federal government have plans in place to deal with GHG s. Slowly but surely numbers and deadlines are being applied to those plans. To realize these goals, however, significant investments will be required. Ontario is one of the few jurisdictions that has advanced its plans far enough that the public is seeing first-hand some of the cost impacts of GHG reductions; nevertheless, the government is pushing ahead with several green initiatives. That being said, there is still a long way to go before renewable energy, including hydroelectricity, approach the large role hydrocarbons play in Canada s energy mix. The following Sankey diagram (Figure 3) from the International Energy Agency offers a clear visual representation of how energy flows from renewables rank, as of Consider the amount of oil (purple) and natural gas (dark blue) produced as compared to biomass (light green), hydro (light blue), nuclear (dark green), and other (pink). Clearly, there is much to be done to build green infrastructure hydro dams, wind turbines, solar farms, and other projects (including, possibly, nuclear) to the point where it rivals the energy contribution hydrocarbons provide to Canada. One thing that this diagram does not show clearly is the amount of energy wasted between the import/production stage and final consumption. More than half of the energy produced is lost along the way, 17 so efficiency measures hold much promise; low-hanging fruit can still be harvested through efficiencies. Figure 2: Atlantic and Northern Canada GHG Goals and Measures Sources: Various government documents; David Suzuki Foundation

4 Page 4 Further debate regarding carbon management policies will continue as stakeholders consider the economic and environmental implications of moving away from oil and gas use. Figure 3: Canadian Energy Flows, 2013 Endnotes 1 Environment and Climate Change Canada. indicateurs-indicators/default.asp?lang=en&n=54c061b5-1 Accessed March 10, United States Environmental Protection Agency Changes to the regulation of greenhouse gas emissions in Alberta: the Government of Alberta announces first step in new climate change strategy. June 26, changes-to-the-regulation-of-greenhouse-gas-emissions-in-albertathe-government-of-alberta-announces-first-step-in-new-climatechange-strategy/ Accessed March 10, Globe and Mail. Trudeau in Washington. March 10, Accessed March 10, Government of British Columbia. Revenue-Neutral Carbon Tax. policy-legislation-programs/carbon-tax Accessed March 10, Government of Alberta. Climate Leadership Plan. Accessed March 10, Government of Saskatchewan. Climate Change. environment.gov.sk.ca/climatechange Accessed March 10, Boundary Dam Carbon Capture Project. ccs-projects/boundary-dam-carbon-capture-project/ Accessed March 10, Government of Manitoba. Manitoba s Climate Change and Green Economy Action Plan. Page 6. conservation/climate/pdf/mb-climate-change-green-economy-actionplan.pdf Accessed March 10, Government of Ontario. Page Government of Ontario. Page 8. Accessed March 10, Ontario sees hydro rates jump again. CBC, November 1, Accessed March 10, 2016; Accessed March 10, McKitrick, Ross and Tom Adams. How green energy is fleecing Ontario electricity consumers. Financial Post. October 29, Accessed March 10, Gouvernement du Quebec. Quebec: A leader in the fight against climate change! changementsclimatiques/index-en.htm Accessed March 10, Quebec sets bold new greenhouse gas reduction targets. CBC, September 17, quebec-greenhouse-gas-reduction Accessed March 10, Rozhon, Jon and Paul Kralovic. An Assessment of the Economic and Competitive Attributes of Oil and Natural Gas Development in Quebec. Canadian Energy Research Institute. Study No Accessed March 10, Canadian Council of Chief Executives. Energy-Wise Canada. Building a Culture of Energy Conservation. December P 2. Conservation-Paper-FINAL-December pdf Accessed March 11, 2016.

5 Page 5 US$/bbl WTI Spot - WTI Edmonton Crude - Brent Prices Light Price Price Differentials (US$/bbl) Differential WTI Brent US$/bbl US$/bbl WTI - Edmonton Light Price Differentials (US$/bbl) Differential WTI Edmonton Light Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Spot Prices WTI Brent Cdn.Light* H.Hardisty Year-to-Date Quarter-to-Date SOURCE: EIA. March 14, SOURCE: EIA. US$/bbl 120 WTI - Canadian WTI - Hardisty Heavy Heavy Benchmarks Price (US$/bbl) Differentials US$/bbl 45 NYMEX WTI Crude Forward Curve 4 contract months Jan Feb Mar-16 WTI Hardisty Heavy WCS Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb SOURCE: NRCan, EIA, Baytex. SOURCE: EIA, CERI. Relevant Independent Objective

6 SOURCE: EIA, CERI. SOURCE: NRCan. Page 6 NYMEX Petroleum Products CDN/US$ Exchange Rate US$/gal CDN/US$ RBOB Gasoline Heating Oil Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 NYMEX Prices Unleaded Gasoline Heating Oil Year-to-Date Quarter-to-Date March 14, Oil Demand Global in Selected Oil Demand Countries US Products Demand February February 2016 Y-on-Y change MMbpd % 52.0% % 40% 30% % 20% % 10% % 0% % 49.5% 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16-10% -20% Total Gasoline Jet Fuel Distillate Residual Propane Other Total OECD Total Non-OECD non-oecd Demand share SOURCE: IEA Oil Market Report. SOURCE: EIA Weekly Petroleum Status Report.

7 SOURCE: IEA Oil Market Report, CERI. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. Page 7 Global Oil Supply MMbpd Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 non-opec Supply OPEC Supply non-opec Share of Global Supply Canadian Oil Production by product Mbpd 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Q15 4Q15 1Q16 2Q16 3Q16 AB L/M/H AB Bitumen SK Other NGLs Synthetic 61.5% 61.0% 60.5% 60.0% 59.5% 59.0% 58.5% 58.0% 57.5% 57.0% Mbpd 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Mbpd 3,500 3,000 2,500 2,000 1,500 1, US Oil Production by region 3Q15 4Q15 1Q16 2Q16 3Q16 Alaska California Texas Federal GOM Other Lower 48 NGLs Other OECD Commercial Stocks by region Jan-13 Jan-14 Jan-15 Jan-16 OECD North America OECD Europe OECD Pacific Relevant Independent Objective

8 Page 8 MMb US Commercial Stocks January 29 - February 26, 2016 M-on-M Change Crude Gasoline Distillate Products Total MMb Canadian Stocks on Land 4Q14 1Q15 2Q15 3Q15 4Q15 SOURCE: EIA Weekly Petroleum Status Report. SOURCE: IEA Oil Market Report.

9 Page 9 World Supply and Demand Balance (MMbpd) Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 World Demand OECD non-oecd World Supply Non-OPEC OPEC NGLs OPEC Crude Supply - Demand OECD Stocks (MMbbls) Days Cover OPEC Crude Oil Production (MMbpd) Sustainable Production Spare Capacity vs Production Capacity Dec-15 Jan-16 Feb-16 Dec-15 Jan-16 Feb-16 Saudi Arabia Iran UAE Kuwait Qatar Angola Nigeria Libya Algeria Ecuador Venezuela Indonesia WTI Price Projections ($US/barrel) Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 High Price Case Reference Case Low Price Case Relevant Independent Objective

10 Page 10 Data Appendix

11 Page 11 A1: Historic Light Sweet Crude Futures Prices ($US per barrel) NYMEX Light Sweet Crude Last 3 Day Avg. When 12-Month Spread Close Average Near Mo. Strip Avg. (1-2 Mo.) Q Q Q Q Q Yr-on-Yr Chg % -39.2% -37.4% -33.1% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg % -40.2% -38.1% -33.1% A2: Historic Crude Product Futures Prices ( US per gallon) NYMEX Unleaded Gasoline NYMEX Heating Oil Last 3 Day Avg. When 12-Month Spread Last 3 Day Avg. When 12-Month Spread Close Average Near Mo. Strip Avg. (1-2 Mo.) Close Average Near Mo. Strip Avg. (1-2 Mo.) Q Q Q Q Q Yr-on-Yr Chg % -25.8% -26.7% -24.1% -44.6% -43.6% -42.9% -36.9% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg % -39.9% -38.0% -33.1% -53.2% -51.1% -46.8% -40.4% Notes (Tables A1 and A2): Prices are listed by contract month. Close: final contract close on the last day of trading. Last 3 Day Average Close: simple average contract close on last three days of trading. Average When Near Month: simple average closing price on trading days when contract was near month. 12-Month Strip Average: simple average of daily near 12-month contract closing prices in a given contract month. Spread: difference between one-month and two-month forward prices in a given period. Source: New York Mercantile Exchange (NYMEX). Relevant Independent Objective

12 Page 12 A3: World Crude Oil Contract Prices (FOB, $US per barrel) Saudi U.A.E. Oman U.K. Norway Russia Venez. Kuwait Ecuador Mexico Nigeria Indon. Arab Lgt Dubai Oman Brent Ekofisk Urals 1 T.J. Light Blend Oriente Isthmus Bonny Lgt Minas Q Q Q Q Q Yr-on-Yr Chg % -45.3% -45.6% -42.7% -42.1% -43.8% -53.1% -47.5% -45.8% -43.0% -43.2% -47.1% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg % -47.3% -48.2% -44.2% -45.6% -46.6% -55.8% -48.8% -47.4% -45.6% -44.9% -47.2% Notes: 1. Urals is Delivered price at Mediterranean. Contract prices are based on prices at the end of each month. Source: OPEC Monthly Oil Market Report. A4: North American Posted Crude Prices (FOB, $US per barrel) United States Canada ANS 1 Lost Hills Kern R. WTI WTS GCS Okla. Sw. Kans. Sw. Mich. So. Wyo. Sw. CDN Sweet 2 HH Q Q Q Q Q Yr-on-Yr Chg % -37.3% -42.9% -40.5% -43.9% -44.8% -40.5% -41.1% -46.2% -39.8% -30.7% -45.1% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg % -41.5% -40.2% -35.1% -39.4% -40.6% -35.1% -35.9% -42.5% -34.4% -30.7% -33.7% Notes: 1. ANS is Delivered price on US West Coast. 2. Edmonton Light Sweet prices are discontinued as of May 1, 2014 and replaced by the Canadian Light Crude blend which is traded daily on the Net Energy Index. 3. Hardisty Heavy. Posted prices are based on price at the end of each month. Sources: Oil & Gas Journal; Natural Resources Canada.

13 A5: Crude Oil Quality Differentials (FOB, $US per barrel) Light vs. Heavy Sweet vs. Sour Arab Lt Arab Hv Diff. Isthmus Maya Diff. CDN Sweet 2 HH 2 Diff. GCS WTS Diff Q Q Q Q Q Yr-on-Yr Chg % -47.9% -43.0% -49.0% -40.6% -52.9% -44.8% -43.9% A6: Crude Oil Spot Prices and Differentials (FOB, $US per barrel) Page 13 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg % -49.7% -45.6% -54.8% -37.3% -40.0% -40.6% -39.4% Notes: 1. Edmonton Light Sweet prices are discontinued as of May 1, 2014 and replaced by the Canadian Light Crude blend which is traded daily on the Net Energy Index. 2. Hardisty Heavy. Based on contract prices at the end of each month. Sources: OPEC Monthly Oil Market Report: Oil & Gas Journal; Natural Resources Canada. Spot Prices Differentials WTI Brent Dubai Urals Basket 1 WTI-Brent WTI-Dubai WTI-Urals WTI-Basket Q Q Q Q Q Yr-on-Yr Chg % -42.9% -45.1% -44.3% -45.9% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg % -44.1% -47.1% -46.4% -46.9% Notes: 1. OPEC-Reference Basket is average price of seven crude streams: Algeria Saharan Blend, Dubai Fateh, Indonesia Minas, Mexico Isthmus, Nigeria Bonny Light, Saudi Arabia Light and Venezuela Tia Juana Light. Source: OPEC Monthly Oil Market Report. Relevant Independent Objective

14 Page 14 A7: World Petroleum Product Spot Prices ($US per barrel) US Gulf Coast, Pipeline Rotterdam, Barges Singapore, Cargoes Gasoline 1 No. 6 3% 2 Jet/Ker. Gasoline 1 Gasoil Resid. 3 Gasoline 1 Gasoil Resid Q Q Q Q Q Yr-on-Yr Chg % -52.3% -42.1% -35.5% -41.6% -56.7% -32.1% -39.6% -50.9% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg % -58.0% -44.2% -38.1% -47.4% -58.5% -37.0% -45.9% -55.1% Notes: 1. Regular unleaded gasoline. 2. Waterborne 3. High Sulfur ( %) Residual Fuel Oil. Spot prices are based on average daily prices over a specific timeframe. Source: IEA Oil Market Report. A8: Product Spot Prices in Selected American Cities ( US per gallon) NY Harbor US Gulf Los Angeles Gasoline 1 No. 2 H.O. Distill. Gasoline 1 Jet Fuel Distill. Gasoline 1 Distill Q Q Q Q Q Yr-on-Yr Chg % -42.5% -42.5% -32.6% -42.1% -41.5% -17.8% -38.9% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg % -48.1% -48.0% -41.6% -44.9% -45.2% -50.1% -47.1% Notes: 1. Reformulated regular unleaded gasoline. Spot prices are based on average daily prices over a specific timeframe. Source: EIA Weekly Petroleum Status Report.

15 Page 15 B1: World Petroleum Supply and Demand Balance (million barrels per day) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total 1 Asia Non-Asia FSU Total 1 P. Gulf Non-Gulf Total 2 Total 3 Demand Q Q Q Q Q Q Q Q Q Supply Q Q Q Q Q Q Q Q Q Balance Q Q Q Q Q Q Q Q Q Notes: 1. Totals for OECD and non-oecd supply include net refining gains; specific regions/groupings within each do not. 2. OPEC demand is an estimate based on historical annual data. 3. Balance for World equals global stockbuilds (+) and stockdraws (-) for crude oil and petroleum products and miscellaneous gains and losses. Regional surpluses (+) and deficits (-) are balanced through net-imports and stock changes in the short-term, and net-imports in the longer term. Supply includes crude oil, condensates, NGLs, oil from non-conventional sources and processing gains. Demand is for petroleum products. Source: IEA Oil Market Report. Relevant Independent Objective

16 Page 16 B2: World Petroleum Production (million barrels per day) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total Asia Non-Asia FSU Total P. Gulf Non-Gulf Total Total Q Q Q Q Q Yr-on-Yr Chg. 1.8% 4.0% -6.0% 1.9% -9.8% -1.9% 0.8% -2.8% 6.8% -7.2% 5.9% 2.0% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. -1.0% 6.5% 2.1% 0.1% -11.8% -4.0% 0.8% -3.9% 7.4% -2.0% 7.6% 1.8% R/P Ratio Notes: 1. Production includes crude oil, condensates and NGLs. 2. Reserve-Production ratio is based on latest month production and British Petroleum reserve estimates. Sources: IEA Oil Market Report and BP Statistical Review of World Energy. B3: OECD Commercial Petroleum Stocks (million barrels) North America Europe Asia-Pacific OECD Crude Product Total Crude Product Total Crude Product Total Crude Product 1 Total , ,337 2, , ,020 1,401 2, , ,207 1,501 3,013 4Q , ,020 1,401 2,712 1Q , ,148 1,372 2,815 2Q , ,171 1,423 2,906 3Q , ,158 1,498 2,984 4Q , ,207 1,501 3,013 Yr-on-Yr Chg. 16.1% 6.3% 10.2% 15.7% 11.5% 12.2% 31.3% -1.8% 11.8% 18.3% 7.2% 11.1% Jan , ,058 1,410 2,760 Feb , ,096 1,377 2,761 Mar , ,148 1,372 2,815 Apr , ,158 1,382 2,842 May , ,171 1,425 2,905 Jun , ,171 1,423 2,906 Jul , ,161 1,434 2,914 Aug , ,162 1,490 2,976 Sep , ,158 1,498 2,984 Oct , ,194 1,469 2,987 Nov , ,183 1,503 3,004 Dec , ,207 1,501 3,013 Jan , ,209 1,509 3,034 Yr-on-Yr Chg. 14.9% 8.0% 10.9% 14.0% 8.6% 10.4% 12.7% -1.8% 5.3% 14.3% 7.1% 9.9% Notes: 1. Product includes only finished petroleum products. 2. Total stocks include NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons. All stocks are closing levels for respective reporting period. Source: IEA Oil Market Report.

17 Page 17 B4: OPEC Crude Oil Production and Targets (million barrels per day) Persian Gulf Non-Persian Gulf OPEC-11 OPEC-11 Arabia Iran UAE Kuwait Qatar Venez. Nigeria Libya Algeria Angola Ecuador Total 1 Target Iraq Q Q Q Q Q Yr-on-Yr Chg. 5.7% 3.2% 5.1% 0.2% -2.9% -2.5% -2.1% -40.3% -1.8% 2.3% -1.8% 4.0% 23.0% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 5.4% 13.4% 0.7% 1.1% -4.5% -0.4% -2.7% 24.1% 0.0% -1.7% 0.0% 6.0% 27.1% Quotas Over/Under % -3.6% 28.8% 27.5% -12.3% 19.1% 6.6% -75.5% -8.3% 15.8% 23.3% -5.4% Notes: 1. Does not include NGLs; OPEC production targets apply to crude oil only. 2. Iraq does not have an official OPEC target. 3. OPEC-10 production targets. 4. As of latest month. Source: IEA Oil Market Report. B5: OECD Refinery Activity Crude Input (MMbpd) - Utilization (percent) - Refining Margins ($US/barrel) North America Europe Asia-Pacific OECD Input Util. Margin 1 Input Util. Margin 2 Input Util. Margin 3 Input Util Q Q Q Q Q Yr-on-Yr Chg. 1.1% % 3.9% 7.8% 0.5% % 1.8% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg. 2.5% 52.5% 1.1% -4% -0.1% 3.8% 1.6% Notes: 1. Based on dated Brent being processed in average US Gulf cracking refinery. 2. Based on dated Brent in average Rotterdam cracking refinery. 3. Based on spot Dubai in average Singapore hydroskimming refinery. Source: IEA Oil Market Report. Relevant Independent Objective

18 Page 18 C1: US Petroleum Supply and Demand Balance (million barrels per day) United States 1 East Mid-West Supply Demand Net-Imp. Stk. Chg. Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 3.5% -0.5% -6.8% 13.1% -1.5% 5.1% -2.5% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 1.9% 0.1% -0.7% 14.0% 1.0% 3.2% -1.5% % of Total % 100.0% 2.9% 28.7% 25.3% 25.4% South-Central North-West West Supply Demand Balance Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 3.8% 0.4% 6.9% -4.9% -6.9% 4.9% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 1.8% -1.2% 3.8% -9.7% -6.1% 6.5% % of Total % 27.3% 7.3% 3.4% 9.0% 15.1% Notes: 1. Does not balance because of unaccounted for crude oil. Regional surpluses (+) and deficits (-) are balanced through net-imports/transfers and stock changes in the short-term, and net-imports/transfers in the longer term. 2. As of most recent month. Supply includes crude oil, condensates, NGLs, oil from nonconventional sources and processing gains. Demand is for petroleum products. Source: EIA Petroleum Supply Monthly.

19 Page 19 C2: US Petroleum Demand by Product (million barrels per day) Finished Petroleum Products NGLs Petroleum Gasoline Jet Fuel Distil. Resid. Total 1 Total Total Q Q Q Q Q Yr-on-Yr Chg. 1.3% 4.5% -6.1% -0.1% -0.6% -0.6% -0.5% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 1.3% 1.4% -8.0% 11.8% -1.0% 0.3% 0.1% Notes: 1. Total includes other finished petroleum products. 2. Total petroleum demand includes refinery feedstocks, additives/oxygenates and other hydrocarbons. Source: EIA Petroleum Supply Monthly. C3: US Petroleum Stocks (million barrels) Petroleum Stocks 1 Crude Oil Finished Products East Mid-West S-Cent N-West West U.S. Total 2 Gasoline Jet Fuel Distil. Resid. Total , ,760 1, , ,856 1, , ,015 1, Q , ,856 1, Q , ,908 1, Q , ,971 1, Q , ,001 1, Q , ,015 1, Yr-on-Yr Chg. 22.2% 15.8% 5.7% 8.5% 2.7% 8.5% 8.5% -7.1% 7.3% 18.1% 25.3% 13.3% Dec , ,856 1, Jan , ,874 1, Feb , ,878 1, Mar , ,908 1, Apr , ,935 1, May , ,958 1, Jun , ,971 1, Jul , ,969 1, Aug , ,991 1, Sep , ,001 1, Oct , ,009 1, Nov , ,022 1, Dec , ,015 1, Yr-on-Yr Chg. 22.2% 15.8% 5.7% 8.5% 2.7% 8.5% 8.5% -7.1% 7.3% 18.1% 25.3% 13.3% Notes: 1. Petroleum stocks include crude oil, finished products, NGLs, refinery feedstocks, additives/oxygenates and other hydrocarbons. 2. Includes Strategic Petroleum Reserves. 3. Total includes other finished petroleum products. All stocks are closing levels for respective reporting period. Source: EIA Petroleum Supply Monthly. Relevant Independent Objective

20 Page 20 C4: US Petroleum Net Imports by Source (million barrels per day) Region of Origin OPEC Canada Mexico Lat. Am. Europe Africa M.E. Total 1 Venez. S. Arabia Nigeria Total 2 P. Gulf Q Q Q Q Q Yr-on-Yr Chg. 1.6% % 19.0% 322.1% 26.1% 16.2% -6.8% 23.2% 26.0% 203.7% 15.1% 16.4% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 4.2% % 110.2% 202.9% -8.8% 33.9% -0.7% 45.2% 37.4% 32.0% 23.3% 34.8% % of Total % -2.0% 18.1% -7.1% 4.9% 38.7% 100.0% 19.3% 25.1% 3.0% 67.9% 38.9% Notes: 1. Total includes net-imports from Russia and Asia-Pacific region. 2. Total OPEC includes the other eight cartel members. 3. As of latest month. Source EIA Petroleum Supply Monthly. C5: US Regional Crude Oil Production (million barrels per day) PAD District U.S. Major Producers East Mid-West S-Cent N-West West Total Alaska Calif. 1 Louis. Texas G. of Mex Q Q Q Q Q Yr-on-Yr Chg. 6.7% 0.6% 8.1% 19.1% -5.8% 5.7% -2.9% -7.9% -8.9% 4.5% 15.4% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -1.5% 2.4% 5.0% 13.2% -8.6% 3.3% -8.4% -8.6% -9.4% 1.0% 13.6% R/P Ratio Notes: 1. California includes Federal Offshore crude oil production. 2. Gulf of Mexico includes Federal Offshore production adjacent to Texas and Louisiana. 3. Crude oil Reserve-Production ratio as of latest production month. Crude oil production does not include NGLs. Source: EIA Petroleum Supply Monthly.

21 Page 21 C6: US Refinery Activity Crude Input (MMbpd) - Utilization (percent) East Mid-West South-Central North-West West U.S. Input Util. Input Util. Input Util. Input Util. Input Util. Input Util Q Q Q Q Q Yr-on-Yr Chg. 4.1% -2.1% 2.6% 1.7% -1.9% 0.9% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 5.2% -0.9% 2.6% -1.2% -5.6% 0.6% % of Total 1 6.7% 21.7% 53.2% 3.6% 14.8% 100.0% Notes: 1) As of most recent month. Source: EIA Petroleum Supply Monthly. C7: US Refinery Margins ($US per barrel) NY Harbor Chicago US Gulf Los Angeles (East Coast Comp.) (WTI) (WTS) (ANS) Q Q Q Q Q Yr-on-Yr Chg % -6.0% 23.3% 232.4% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg % -71.8% -51.8% -85.2% Note: Based on specific crude being processed in average cracking refinery in a given area. As of February 2010, NY Harbor Arab Med. is now East Coast Composite. Source: Oil and Gas Journal. Relevant Independent Objective

22 Page 22 D1: Canada Petroleum Supply and Demand Balances (million barrels per day) Canada East West Supply Demand Net-Exp Stk. Chg. Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. 2.3% -5.3% 7.5% -18.8% -3.4% 3.8% -8.1% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 4.4% -9.0% 14.1% -2.4% -6.3% 4.8% -13.0% % of Total % 100.0% 6.3% 62.1% 93.7% 37.9% Notes: 1. As of most recent month. See notes for Table C1 for additional comments. Source: Statistics Canada s Energy Statistics Handbook. D2: Canada Demand by Product (million barrels per day) Finished Products NGLs Petrol. Gasoline Distil. Resid. Total 1 Total Total Q Q Q Q Q Yr-on-Yr Chg. -3.0% -7.4% -34.5% -4.0% 0.0% -2.9% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -4.8% -4.1% -95.3% -5.5% 0.0% -4.0% Notes: 1. Total includes other finished petroleum products. 2. Total petroleum demand includes refinery feedstocks, additives/oxygenates and other hydrocarbons. Source: Statistics Canada s Energy Statistics Handbook. D3: Canada Petroleum Stocks (million barrels) Finished Products Crude Oil Petrol. Gasoline Distil. Resid. Total 1 Total Total Q Q Q Q Q Yr-on-Yr Chg % -15.5% 8.0% -12.3% 1.0% -3.8% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg % -15.5% 8.0% -12.3% 1.0% -3.8% Notes: 1. Total includes other finished petroleum products. 2. Total petroleum stocks include NGLs, refinery feedstocks, additives/ oxygenates and other hydrocarbons. All stocks are closing levels. Source: Statistics Canada s Energy Statistics Handbook.

23 Page 23 D4: Canada Crude Oil Production (million barrels per day) Major Producers Canada Petroleum Type Alta. Sask. B.C. N.W.T. Atlantic Total 1 Light SCO Heavy Bitumen NGLs Q Q Q Q Q Yr-on-Yr Chg. 5.2% -1.4% 5.0% 1.1% -22.2% 2.6% -13.4% -2.1% -4.2% 18.0% -7.8% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 6.9% -1.6% -3.4% 4.7% -3.7% 4.7% -9.7% 2.5% -3.8% 18.2% -8.5% Note: Total includes small amounts of production from Manitoba and Ontario. Source: Statistics Canada s Energy Statistics Handbook. D5: Canada Petroleum Imports by Source (thousand barrels per day) Non-OPEC OPEC Imports Mexico U.S. U.K. Norway Total 1 Algeria Nigeria S. Arabia Venez. Total 2 P. Gulf Total Q Q Q Q Q Yr-on-Yr Chg % 58.9% -42.0% -1.1% -23.0% -53.1% -32.9% -5.1% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg % 0.0% 0.0% -99.9% -12.4% % 0.0% 0.0% % 0.0% -15.4% % of Total 3 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% Notes: 1. Includes all non-opec production. 2. Includes production by the other seven OPEC members. 3. As of most recent month. Sources: Statistics Canada s Energy Statistics Handbook. Relevant Independent Objective

24 Page 24 E1: World Drilling Activity (active oil and gas rigs) OECD Non-OECD OPEC World N. A. Europe Asia-Pac Total Asia Non-Asia Total 1 P. Gulf Non-Gulf Total Total , , , , , , , , ,337 4Q , , ,632 1Q , , ,950 2Q , , ,177 3Q , , ,187 4Q , ,033 Yr-on-Yr Chg % -27.5% -38.7% -57.8% -16.6% -17.9% -17.4% 2.1% -17.1% -4.7% -44.0% Feb-15 1, , ,986 Mar-15 1, , ,555 Apr-15 1, , ,268 May-15 1, , ,127 Jun-15 1, , ,136 Jul-15 1, , ,165 Aug-15 1, , ,226 Sep-15 1, , ,171 Oct-15 1, , ,086 Nov , ,047 Dec , ,966 Jan ,889 Feb ,748 Yr-on-Yr Chg % -16.7% -59.1% -54.4% -20.6% -28.5% -25.5% -3.7% -23.5% -10.9% -41.5% % of Total % 5.1% 0.5% 49.7% 9.9% 14.6% 24.5% 17.8% 8.0% 25.8% 100.0% Notes: 1. Does not include active rigs in the Former Soviet Union and onshore rigs in China. 2. As of latest month. Source: Baker Hughes, Inc. E2: North American Drilling Activity (active oil and gas rigs) United States Canada North America 1 East Mid-West S-Cent N-West West Total Land 2 Offshore Total Oil Gas Total , ,761 1, , , , ,861 1, , , ,170 4Q , ,911 1, , ,317 1Q ,380 1, , ,688 2Q ,008 3Q ,056 4Q Yr-on-Yr Chg % -59.9% -96.1% 127.9% 109.7% -60.6% -60.9% -47.7% -57.2% -62.5% -45.3% -60.0% Feb ,348 1, , ,711 Mar ,109 1, , ,304 Apr ,066 May Jun Jul ,049 Aug ,089 Sep ,031 Oct Nov Dec Jan Feb Yr-on-Yr Chg % -64.7% -66.7% -66.7% 323.1% -61.5% -61.9% -50.4% -41.8% -55.6% -65.5% -57.3% % of Total 3 3.0% 16.8% 36.6% 4.7% 15.1% 71.1% 67.6% 3.5% 28.9% 86.0% 14.0% 100.0% Notes: 1. Excluding Mexico. 2. Includes drilling on inland waterways. 3. As of latest month. Source: Baker Hughes, Inc.

25 Page 25 Geographical Specifications 1. The World: OECD is comprised of countries from three regions: North America (Canada, Mexico, US); Europe (Austria, Belgium, Czech Republ ic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, UK); and Asia-Pacific (Australia, Japan, New Zealand, South Korea). OPEC is comprised of Persian Gulf (Iran, Iraq, Kuwait, Qatar, Saudi Arabia, United Arab Emirates) and non-persian Gulf countries (Algeria, Indonesia, Libya, Nigeria, Venezuela). Non-OECD is comprised of countries from three regions: Former Soviet Union (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kirghizstan, Moldova, Russia, Crude Oil Qualities Producing API Country or Gravity Region F) Sulfur Content (%) BBLs/Metric Tonne Crude Stream Tapis Blend Malaysia Ekofisk Blend Norway WTI Texas GCS Gulf of Mexico Oklahoma Sweet Oklahoma Kansas Sweet Kansas Wyoming Sweet Wyoming ELS Alberta Brent Blend United kingdom Bonny Light Nigeria Oman Blend Oman Arabian Light Saudi Arabia Minas Indonesia Isthmus Mexico Michigan Sour Michigan WTS Texas Urals Russia Tia Juana Light Venezuela Dubai U.A.E Lost Hills California Cano Limon Colombia Arabian Heavy Saudi Arabia ANS Alaska Oriente Ecuador Hardisty Heavy Alberta Maya Mexico Kern River California Tajikistan, Turkmenistan, Ukraine, Uzbekistan); Asia (including non-oecd Oceania); and non-asia (Africa, Middle East, Latin America, and non- OECD Europe). 2. United States: East (PADD I) New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont); Central Atlantic (Delaware, Maryland, New Jersey, New York, Pennsylvania, and the District of Columbia) and Lower Atlantic (Florida, Georgia, North Carolina, South Carolina, Virginia, and West Virginia). Mid -West (PADD II) Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, and Wisconsin. South-Central (PADD III) Alabama, Arkansas, Louisiana, Mississippi, New Mexico and Texas. North-West (PADD IV) Colorado, Idaho, Montana, Idaho, Montana, Wyoming. West (PADD V) Alaska, Arizona, California, Hawaii, Nevada, Oregon, Washington. 3. Canada: East is comprised of Ontario, Manitoba, Quebec and the Maritime provinces (New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island). West is comprised of Alberta, British Columbia, Saskatchewan and the northern territories (NorthWest Territories, Nunavuut, and Yukon). Additional Notes 1. Petroleum and oil refer to crude oil and natural gas liquids (NGLs), whereas crude oil refers to its namesake and field condensates. Condensates derived from natural gas processing plants are classified as NGLs. 2. The spot price is for immediate delivery of crude oil or refined products at a specific location. Spot transactions are generally on a cargo by cargo basis. In contrast, a futures price is for delivery of a specified quantity of a commodity at a specified time and place in the future. 3. Crude oil sold Free-On-Board (FOB) is made available to the buyer at the loading port at a particular time, with transportation and insurance the responsibility of the buyer. Crude oil sold Cost-Insurance-Freight (CIF) is priced at a major destination point, with the seller responsible for the transportation and insurance to that point. A Delivered transaction is similar to a CIF transaction, except the buyer in the former pays based on the quantity and quality ascertained at the unloading port, whereas in a CIF transaction, the buyer accepts the quantity and quality as determined at the loading port. 4. Processing gain is the volume of which refinery output is greater than crude oil inputs. The difference is due to the processing of crude oil products, which in total have a lower specific gravity than crude oil. 5. Unaccounted for crude oil reconciles the difference between crude input to refineries and the sum of domestic production, net imports/exports, stock changes and documented losses (in the U.S.). 6. Totals may not equal the sum of their parts in the statistical tables due to rounding. For more information, please contact Dinara Millington at dmillington@ceri.ca. Canadian Energy Research Institute 150, Street NW Calgary, AB T2L 2A6 Relevant Independent Objective