CERI Commodity Report Crude Oil

Transcription

1 February 2017 CERI Commodity Report Crude Oil Regulating Crude Oil Production in the US Dinara Millington In the United States, extraction of oil and gas is generally regulated by the individual states through statutes and common law. Federal and constitutional law apply as well. The environmental regulations are enforced by the US Environmental Protection Agency (EPA). The EPA is entrusted with protecting human health and natural environment air, water, and land. The EPA works with other federal agencies, state and local governments, and Indigenous tribes to develop and enforce regulations under existing environmental laws. The EPA, which is responsible for researching and setting national standards for a variety of federal environmental programs, delegates the responsibilities for issuing permits and monitoring and enforcing compliance to states and tribes. Where national standards are not met, the EPA can issue sanctions and take other steps to assist the states and tribes in reaching the desired levels of environmental quality. Programs not delegated to the states are managed through the EPA's regional offices. Regulation of oil and gas drilling and production are largely left to the states, except for federal offshore waters, where operations are regulated by the Bureau of Ocean Energy Management. 1 The names and organizational structure of the state agencies overseeing oil and gas extraction vary. For example, in Texas, oil and gas are regulated by the Texas Railroad Commission, in Oklahoma by the Oklahoma Corporation Commission, and in North Dakota by the Industrial Commission. In Colorado and Wyoming, the agencies are the state Oil and Gas Conservation Commissions. what extent, state regulations preempt local controls. The result varies state-to-state. States require a drilling permit before a well begins drilling. Requirements to receive drilling permits generally include minimum setbacks from lease or unit boundaries, and adequate casing and cementing programs. States generally require permits for, or notices of, major work done on a well, and periodic reports of oil and gas produced. When a well reaches the end of economic production, it must be plugged per the terms of a plugging permit. Where the onshore oil and gas rights are owned by the federal government, as is the case for much land in the western US, the various permits must also be obtained from the Bureau of Land Management as well as the state, which may have different requirements than the equivalent state permits. According to the US Energy Information Administration, the top five oil producing US states, based on the most current available data, 3 are: Texas (3.15 million barrels per day (MMbpd)), North Dakota (0.94 MMbpd), Alaska (0.52 MMbpd), California (0.49 MMbpd), and New Mexico and Oklahoma (0.42 MMbpd and 0.41 MMbpd, respectively). Offshore Gulf of Mexico produces more than any state except Texas (1.73 MMbpd). Figure 1: Field Production (MMbpd), December 2016 Local municipal control of oil and gas operations is up to debate. 2 The key legal issue is generally whether, or to CERI Commodity Report Crude Oil Editorial Committee: Ganesh Doluweera, Paul Kralovic, Dinara Millington, Megan Murphy, Allan Fogwill Source: US EIA, Crude Oil Production 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. Relevant Independent Objective

2 Page 2 Texas Texas leads in crude oil reserves, production, and in crude oil refining capacity. The state has more than onethird of the US crude oil reserves. 4 Although the reserves are found in several geologic basins around the state, the largest fields are in the Permian Basin of West Texas, where 19 of the nation's top 100 oil fields are located. 5 Texas produced more crude oil than any other state and exceeds even the federal offshore producing areas. With 29 petroleum refineries that can process more than 5.4 million barrels of crude oil per day, Texas leads the nation in crude oil refining capacity as well. Thirty percent of the US total refining capacity is in Texas. 6 Most of the state's refineries are clustered near ports along the Gulf Coast, including the nation's largest refinery in Port Arthur. Many of the Texas refineries are complex facilities that use additional refining processes beyond simple distillation to yield larger quantities of lighter, higher-value products, such as motor gasoline. With that capability, Texas refineries can process a wide variety of crude oil types. The Railroad Commission of Texas (RCC), through its Oil and Gas Division, regulates the exploration, production, and transportation of oil and natural gas in Texas. Its statutory role is to (1) prevent waste of the state's natural resources, (2) protect the correlative rights of different interest owners, (3) prevent pollution, and (4) provide safety in matters such as hydrogen sulfide. The division accomplishes these goals by permitting and reporting requirements; by field inspections, testing programs and monitoring industry activities in the field; and through programs to remediate abandoned wells and sites using fees and taxes paid by industry. 7 The RCC and the Texas Commission on Environmental Quality (TCEQ), formerly, the Texas Natural Resource Conservation Commission (TNRCC), have entered into a Memorandum of Understanding clarifying jurisdiction over oil field wastes generated in connection with oil and gas exploration, development, and production. North Dakota The state is the second largest crude oil producer and ranks second in crude oil reserves after Texas. 8 Production was modest until the exploration of the Bakken formation in western North Dakota in the Williston Basin, an area of several hundred thousand square miles that includes parts of North Dakota, South Dakota, Montana, and the Canadian provinces of Manitoba and Saskatchewan. 9 The US Geological Survey has estimated that more than 7 billion barrels of technically recoverable oil are in the Bakken and Three Forks formations in the Williston Basin; much of that oil is in North Dakota. About one-fifth of the nation's 100 largest oil fields, as measured by reserves, are in North Dakota. North Dakota has been the nation's second largest crude oil-producing state, after Texas, since By 2015, cumulative crude oil production in the state had reached almost 3.4 billion barrels. The North Dakota Industrial Commission (NDIC), through its Oil and Gas Division (OGD), is the regulatory agency for oil and gas exploration and production activities in North Dakota. Their mission is to encourage and promote the development, production, and utilization of oil and gas in the state in such a manner as will prevent waste, maximize economic recovery, and fully protect the correlative rights of all owners to the end that the landowners, the royalty owners, the producers, and the general public realize the greatest possible good from these vital natural resources. The North Dakota Department of Health (NDDH) Environmental Health Section (EHS) has the responsibility to safeguard the quality of North Dakota's air, land, and water resources. 11 Alaska Alaska, the largest US state by area, is one-fifth the size of the Lower 48 states and it is the only state with territory north of the Arctic Circle. The North Slope contains 6 of the 100 largest oil fields in the US and one of the 100 largest natural gas fields. Alaska's Prudhoe Bay field remains among the 10 largest oil fields in the nation. However, production from the North Slope has fallen to less than 500,000 bpd from its peak of 2 MMbpd in Oil exploration and drilling are prohibited in the Arctic National Wildlife Refuge and in other environmentally-sensitive areas in the state. The Trans-Alaska Pipeline System transports crude oil from the frozen North Slope to the warm-water port at Valdez, on Alaska's southern coast. The pipeline, with a capacity of 2 million barrels per day, has seen the throughput drop to less than 1 million barrels per day since Alaskan crude oil is transported by tanker primarily to refineries in Alaska, California, and Washington. On March 24, 1989, the Exxon Valdez tanker struck Bligh Reef and spilled 257,000 barrels of crude oil into Prince William Sound. As a result, changes

3 Page 3 were made by industry and regulators in tanker construction, navigation technology, and crew training. The state has five operating refineries. The Alaska Oil and Gas Conservation Commission (AOGCC) regulates the drilling for and production of oil and gas resources, the principles of oil and gas conservation, and the underground injection for both waste management and enhanced recovery. The AOGCC is an independent, quasi-judicial agency of the State of Alaska. The Alaska Department of Natural Resources (ADNR), Oil and Gas Division, is responsible for leasing state lands for oil and gas exploration. The agency implements programs that encourage exploration and development activities on state and private lands. The Alaska Department of Environmental Conservation (ADEC) administers a wide array of programs to protect human health and safeguard the natural environment. 12 Oklahoma Oklahoma is in the heart of the Mid-Continent oil region, a vast oil- and natural gas-producing area extending northward from Texas and flanked by the Mississippi River to the east and the Rocky Mountain states to the west. Oklahoma holds about 4 percent of the US proved petroleum reserves and produces typically between 3 and 5 percent of total crude production. One of the 100 largest oil fields in the United States is a south-central Oklahoma oil field that was discovered in The state's oil industry experienced declining production from the mid-1980s until 2005, when crude oil production in Oklahoma hit its lowest point since Production has rebounded in recent years with the advent of tight oil and, by 2015, was more than two and a half times the 2005 level. Oklahoma crude oil provides the feedstock for the state's refineries, which have a combined distillation capacity of more than 511,000 bpd nearly 3 percent of total US refining capacity. The city of Cushing, in central Oklahoma, is known internationally as the designated delivery and pricing point for the US benchmark crude oil, West Texas Intermediate (WTI). The Oklahoma Corporation Commission (OCC), through the Oil and Gas Division, assists the domestic oil and gas industry, protects and preserves the environment, and conserves the natural resources. General environmental protection regulations are administered by the Oklahoma Department of Environmental Quality (DEQ). 13 Oil Industry at a Crossroads How much oversight over crude oil activity that these state and federal agencies will have under the new US administration remains to be seen, but it is indicative that the United States oil and gas industry is at a historical crossroads. US oil and gas industry associations welcome changes in the policy making tone at the White House and look forward to the renaissance of the industry. 14 According to the current US administration, the US will be liberalizing its oil and gas activity, in particular offshore resources and infrastructure projects such as Keystone XL and Dakota Access pipeline. The American Petroleum Institute (API), the US oil industry lobby group, advocates to re-examine the regulatory onslaught and retract many of the 145 regulations and other executive actions implemented by President Obama that are restricting oil and gas activity. It will also push for quick approval of energy infrastructure, increased access for oil and gas drilling, and reduction in taxes. 15 Endnotes Houston Chronicle, Bills seek to restore local control over oil and gas drilling, March 27, U.S. EIA, December 2016 Crude Oil Production by US State. 4 U.S. EIA, Crude Oil Proved Reserves, Reserve Changes, and Production, Proved Reserves as of 12/31, Annual, U.S. EIA, Top 100 U.S. Oil & Gas Fields (March 2015), p U.S. EIA, Number and Capacity of Petroleum Refineries, Atmospheric Crude Oil Distillation Operable Capacity, Annual (as of January 1), Railroad Commission of Texas, 8 U.S. Energy Information Administration (EIA), Crude Oil Production, Annual, 2015, accessed February 9, North Dakota Geological Survey, "Overview of the Petroleum Geology of the North Dakota Williston Basin" 10 U.S. EIA, Crude Oil Production, Annual, index.cfm 14 Oil&Gas Journal, Oil and gas groups welcome White House s change in tone. March 13, Financial Post, Anxiety is building as Canada and U.S. energy policies head in opposite directions. business.financialpost.com/news/energy/anxiety-is-building-as -canada-and-u-s-energy-policies-head-in-opposite-directions

4 Page 4 US$/bbl WTI Spot - WTI Edmonton Crude - Brent Prices Light Price Price Differentials Differentials (US$/bbl) Brent-WTI Differential WTI Brent US$/bbl Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar US$/bbl WTI - Edmonton Light Price Differentials (US$/bbl) Differential WTI Edmonton Light Feb-14 Feb-15 Feb-16 Feb-17 Spot Prices WTI Brent Cdn.Light* Cdn. Heavy* Year-to-Date Quarter-to-Date SOURCE: EIA. March 13, SOURCE: EIA. US$/bbl 120 WTI - Canadian WTI - Hardisty Heavy Heavy Benchmark Price (US$/bbl) Differentials US$/bbl 60 NYMEX WTI Crude Forward Curve 4 contract months Differential WTI WCS Jan 09, 2017 Feb 08, 2017 Mar 08, Feb-14 Feb-15 Feb-16 Feb-17 SOURCE: NRCan, EIA, Baytex. SOURCE: EIA, CERI.

5 SOURCE: EIA, CERI. SOURCE: NRCan. Page 5 NYMEX Petroleum Products CDN/US$ Exchange Rate US$/gal 2.00 CDN/US$ RBOB Gasoline Heating Oil Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar Feb-14 Feb-15 Feb-16 Feb-17 NYMEX Prices Unleaded Gasoline Heating Oil Year-to-Date Quarter-to-Date March 13, Oil Demand Global in Selected Oil Demand Countries US Products Demand February February 2017 Y-on-Y change MMbpd % 52.5% % 100% 80% % 60% % 40% % 20% % 50.0% 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 0% -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. Relevant Independent Objective

6 SOURCE: IEA Oil Market Report, CERI. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. SOURCE: IEA Oil Market Report. Page 6 Global Oil Supply MMbpd Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 non-opec Supply OPEC Supply non-opec Share of Global Supply Canadian Oil Production by product Mbpd 6,000 5,000 4,000 3,000 2,000 1, Q16 4Q16 1Q17 2Q17 3Q17 AB L/M/H AB Bitumen SK Other NGLs Synthetic 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 3Q16 4Q16 1Q17 2Q17 3Q17 Alaska California Texas Federal GOM Other Lower 48 NGLs Other OECD Commercial Stocks by region Jan-14 Jan-15 Jan-16 Jan-17 OECD North America OECD Europe OECD Pacific

7 SOURCE: EIA Weekly Petroleum Status Report. SOURCE: IEA Oil Market Report. Page 7 MMb US Commercial Stocks January 27 - February 24, 2017 M-on-M Change Crude Gasoline Distillate Products Total MMb Canadian Stocks on Land 4Q15 1Q16 2Q16 3Q16 4Q16 Relevant Independent Objective

8 Page 8 World Supply and Demand Balance (MMbpd) Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 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-16 Jan-17 Feb-17 Dec-16 Jan-17 Feb-17 Saudi Arabia Iran UAE Kuwait Qatar Angola Nigeria Libya Algeria Ecuador Venezuela Gabon OPEC. Excl. Iraq Iraq Total OPEC WTI Price Projections ($US/barrel) Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 High Price Case Reference Case Low Price Case

9 Page 9 Data Appendix Relevant Independent Objective

10 Page 10 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. 71.1% 68.1% 52.2% 43.4% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. 71.7% 75.0% 74.3% 56.8% 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. 38.0% 39.6% 39.9% 33.6% 52.8% 54.4% 53.5% 46.7% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Yr-on-Yr Chg. 44.0% 46.0% 54.2% 44.3% 50.7% 53.3% 57.3% 51.0% 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).

11 Page 11 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. 19.9% 18.6% 19.3% 13.3% 11.3% 13.2% 39.0% 23.5% 25.7% 16.8% 13.5% 16.4% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 86.4% 84.8% 78.7% 69.6% 67.7% 73.9% 120.0% 97.4% 102.8% 95.6% 71.3% 73.6% 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 CDN Heavy Q Q Q Q Q Yr-on-Yr Chg. -1.9% 19.2% 21.0% 20.5% 23.6% 24.5% 20.5% 21.0% 25.9% 27.5% 16.8% 23.5% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 10.5% 71.6% 85.7% 70.9% 85.6% 90.2% 70.9% 72.6% 97.6% 83.4% 80.1% 78.1% Notes: 1. ANS is Delivered price on US West Coast. 2. As of August 2016, Edmonton Light Sweet is referred to as Canadian Sweet. 3. As of August 2016, Western Canadian Select is referred to as Canadian Heavy. Posted prices are based on price at the end of each month. Sources: Oil & Gas Journal; Natural Resources Canada. Relevant Independent Objective

12 Page 12 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 1 CDN Heavy 2 Diff. GCS WTS Diff Q Q Q Q Q Yr-on-Yr Chg. 19.9% 24.3% 16.8% 24.4% 16.8% 23.5% 24.5% 23.6% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 86.4% 98.2% 95.6% 88.7% 80.1% 78.1% 90.2% 85.6% Notes: 1. As of August 2016, Edmonton Light Sweet is referred to as Canadian Sweet. 2. As of August 2016, Western Canadian Select is referred to as Canadian Heavy. Sources: OPEC Monthly Oil Market Report: Oil & Gas Journal; Natural Resources Canada. A6: Crude Oil Spot Prices and Differentials (FOB, $US per barrel) 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. 17.1% 12.9% 18.6% 13.5% 19.8% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 75.8% 69.6% 85.5% 73.9% 85.8% 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.

13 Page 13 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. 17.2% 38.5% 12.8% 8.4% 12.7% 50.1% 5.9% 10.9% 36.6% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 65.8% 125.1% 61.2% 61.3% 66.7% 140.8% 57.7% 73.4% 110.9% 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. 14.0% 17.9% 15.9% 17.1% 13.3% 18.4% -5.6% 14.8% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. 46.2% 60.7% 56.8% 64.9% 59.0% 61.0% 81.0% 61.7% Notes: 1. Reformulated regular unleaded gasoline. Spot prices are based on average daily prices over a specific timeframe. Source: EIA Weekly Petroleum Status Report. Relevant Independent Objective

14 Page 14 B1: World Petroleum Supply and Demand Balance (million barrels per day) OECD Non-OECD OPEC World Americas Europe Asia Ocean. 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.

15 Page 15 B2: World Petroleum Production (million barrels per day) OECD Non-OECD OPEC World Americas Europe Asia Oc. Total Asia Non-Asia FSU Total P. Gulf Non-Gulf Total Total Q Q Q Q Q Yr-on-Yr Chg. -2.1% 1.1% -10.6% -1.8% 5.8% -2.5% 3.2% 2.3% 7.7% -16.3% 2.2% 1.2% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. -1.3% -0.6% -2.3% -1.2% 6.9% -0.3% 1.8% 2.4% 2.3% -15.8% -1.5% -0.2% 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) Americas Europe Asia Oceania OECD Crude Product Total Crude Product Total Crude Product Total Crude Product 1 Total , ,020 1,401 2, , ,208 1,502 3, , ,175 1,498 2,982 4Q , ,208 1,502 3,015 1Q , , ,235 1,509 3,046 2Q , , ,208 1,529 3,052 3Q , ,176 1,556 3,060 4Q , ,175 1,498 2,982 Yr-on-Yr Chg. 0.6% 0.4% 0.6% -6.2% -0.7% -2.2% -6.9% -2.5% -4.7% -2.7% -0.3% -1.1% Jan , , ,210 1,536 3,054 Feb , , ,225 1,522 3,052 Mar , , ,235 1,509 3,046 Apr , , ,207 1,510 3,025 May , , ,215 1,525 3,050 Jun , , ,208 1,529 3,052 Jul , , ,205 1,572 3,101 Aug , , ,181 1,578 3,086 Sep , ,176 1,556 3,060 Oct , ,196 1,522 3,047 Nov , ,181 1,521 3,026 Dec , ,175 1,498 2,982 Jan , ,208 1,504 3,030 Yr-on-Yr Chg. 1.1% -1.3% 0.6% -1.8% -3.3% -2.4% -1.9% -1.3% -2.2% -0.2% -2.1% -0.8% 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. Relevant Independent Objective

16 Page 16 B4: OPEC Crude Oil Production and Targets (million barrels per day) Persian Gulf Non-Persian Gulf OPEC-12 Arabia Iran UAE Kuwait Qatar Angola Nigeria Libya Algeria Venez. Ecuador Gabon Total 1 Iraq Q Q Q Q Q Yr-on-Yr Chg. 3.6% 31.8% 8.3% 2.9% -3.0% -8.5% -20.7% 42.5% 0.9% -10.9% 0.0% 4.8% 1.8% 7.9% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Yr-on-Yr Chg. -2.3% 19.4% 4.3% -4.2% -9.0% -5.7% -18.8% 81.1% -4.5% -13.5% -3.6% 0.0% -2.5% 4.3% Notes: 1. Does not include NGLs; OPEC production targets apply to crude oil only. 2. Iraq does not have an official OPEC target. Source: IEA Oil Market Report. B5: OECD Refinery Activity Crude Input (MMbpd) - Utilization (percent) - Refining Margins ($US/barrel) Americas Europe Asia Oceania OECD Input Util. Margin 1 Input Util. Margin 2 Input Util. Margin 3 Input Util Q Q Q Q Q Yr-on-Yr Chg. -2.7% 46.9% 0.5% 1.0% 3.4% 90.1% -0.6% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg. -0.1% 47.1% 2.8% -12% 4.2% -50.2% 1.7% 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.

17 Page 17 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. -1.9% 2.0% 8.7% 20.6% -0.9% -4.0% 4.0% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -2.6% 2.2% -2.2% 17.4% -1.8% -6.5% 5.4% % of Total % 100.0% 3.5% 27.6% 24.3% 26.2% South-Central North-West West Supply Demand Balance Supply Demand Balance Supply Demand Balance Q Q Q Q Q Yr-on-Yr Chg. -2.0% 3.7% -3.5% 5.5% -1.0% 0.3% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -1.6% 4.9% -5.7% 1.0% -1.5% -0.1% % of Total % 28.0% 7.0% 3.4% 9.1% 14.8% 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. Relevant Independent Objective

18 Page 18 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. 0.5% 3.6% 4.7% 15.8% 2.4% 0.3% 2.0% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 1.8% 4.5% 6.7% -2.7% 3.3% -0.9% 2.2% 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 , ,015 1, Q , ,052 1, Q , ,077 1, Q , ,048 1, Q , ,031 1, Yr-on-Yr Chg. 1.5% -2.2% 2.1% -2.2% -3.9% 0.8% 0.2% 0.6% 6.3% 2.9% -1.5% 1.4% Dec , ,015 1, Jan , ,041 1, Feb , ,045 1, Mar , ,052 1, Apr , ,063 1, May , ,079 1, Jun , ,077 1, Jul , ,062 1, Aug , ,063 1, Sep , ,048 1, Oct , ,050 1, Nov , ,054 1, Dec , ,031 1, Yr-on-Yr Chg. 1.5% -2.2% 2.1% -2.2% -3.9% 0.8% 0.2% 0.6% 6.3% 2.9% -1.5% 1.4% 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.

19 Page 19 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. 11.6% 3750% -11.8% -53.2% 163.4% 6.7% 8.7% -13.3% -9.5% 180.3% 11.6% 5.8% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. 6.3% 575% -17.6% 7.2% 104.1% 9.6% -2.2% -19.0% -9.9% 83% 9.1% 8.2% % of Total % -13.6% 15.2% -7.8% 10.2% 43.3% 100.0% 16.0% 23.1% 5.5% 75.8% 43.1% 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. -7.0% -9.2% -6.1% -13.2% -2.5% -6.9% 2.1% -6.3% -9.9% -7.2% -4.0% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -4.3% -9.5% -4.4% -10.6% -3.5% -5.8% -0.4% -6.3% -8.9% -6.2% -1.1% 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. Relevant Independent Objective

20 Page 20 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. -5.6% 7.2% 0.1% 0.1% -7.3% 0.0% Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yr-on-Yr Chg. -6.3% 1.3% 1.3% 0.5% -2.0% 0.3% % of Total 1 6.3% 21.9% 53.8% 3.6% 14.4% 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. 11.1% -28.7% 13.5% -36.5% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Yr-on-Yr Chg % 70.3% 28.5% -24.4% 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.

21 Page 21 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. -0.3% 4.2% -4.9% 32.1% -4.3% -1.9% 17.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 5.0% 0.2% 8.1% 90.1% -8.4% 1.7% 13.8% % of Total % 100.0% 6.7% 56.0% 93.3% 44.0% 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 Gasoline Distil. Resid. Total Q Q Q Q Q Yr-on-Yr Chg. 5.1% 0.2% 28.3% 3.1% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 1.9% -5.1% -96.3% -3.6% 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. 0.0% 2.5% 38.1% 3.3% -28.9% -19.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 7.2% 6.7% -8.3% 3.7% -30.0% -20.1% 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. Relevant Independent Objective

22 Page 22 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. 0.9% -13.9% 11.8% 17.1% 47.8% 0.5% -4.9% -1.1% -11.3% 5.3% 23.0% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 5.7% -13.7% 0.5% -8.9% 149.2% 5.9% 3.4% 27.1% -10.6% 0.9% 2.1% 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 0.0% -4.4% 10757% % 12.0% 32.2% % 0.0% 0.0% -15.4% 0.0% 6.5% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Yr-on-Yr Chg. 0.0% -28.6% 0.0% 0.0% 11.7% % 0.0% 0.0% 0.0% % 0.0% -3.9% % of Total 3 0.0% 54.7% 0.0% 9.0% 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.

23 Page 23 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 , , , , , , ,592 4Q , ,033 1Q ,729 2Q ,412 3Q ,538 4Q ,690 Yr-on-Yr Chg % -13.0% -58.7% -19.0% -5.2% -26.8% -18.6% -6.8% -17.8% -10.2% -16.9% Feb ,748 Mar ,550 Apr ,424 May ,404 Jun ,407 Jul ,482 Aug ,547 Sep ,584 Oct ,620 Nov ,678 Dec ,772 Jan-17 1, , ,918 Feb-17 1, , ,994 Yr-on-Yr Chg. 39.0% -2.2% 55.6% 34.9% 5.2% -15.2% -7.0% -2.9% -12.9% -6.0% 14.1% % of Total % 4.4% 0.7% 58.7% 9.1% 10.9% 20.0% 15.1% 6.1% 21.3% 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 , ,861 1, , , , Q Q Q Q Q Yr-on-Yr Chg % -31.5% -20.1% -20.3% -17.8% -22.3% -22.3% -23.3% 3.1% -12.4% -37.9% -17.6% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb ,053 Yr-on-Yr Chg. 82.9% 19.5% 0.0% 59.8% 16.3% 43.4% 46.8% -22.1% 46.3% 43.7% 47.1% 44.2% % of Total 3 6.1% 14.0% 2.8% 40.4% 10.8% 70.7% 68.8% 1.9% 29.3% 85.8% 14.2% 100.0% Notes: 1. Excluding Mexico. 2. Includes drilling on inland waterways. 3. As of latest month. Source: Baker Hughes, Inc. Relevant Independent Objective

24 Page 24 Geographical Specifications 1. The World: OECD is comprised of countries from three regions: North America (Canada, Mexico, US); Europe (Austria, Belgium, Czech Republic, 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