Canada’s Shale Gas

February 5, 2010

The Resource Triangle

Resource Triangle
Increased operating challenges

Conventional
resources
Improved technology

Small volumes that Conventional

Increased cost

are easy to develop

Unconventional Tight gas

resources sands
Large volumes
that are difficult Coal bed methane
to develop

Shale Gas

Gas hydrates

1
 Canadian Natural Gas Resources
Conventional and New Sources

Eastcoast Offshore , 90 Tcf WCSB Conventional Gas -

PRODUCED to date, 165
Tcf

Additional Non-Conventional
Natural Gas Resources
Northern Canada, 116 Tcf
British Columbia (in place):
CBM ~ 100 tcf
Tight >300 tcf
Shale >250 tcf
W C S B C o n v e n t io n a l Gas
Resources REMAINING, Alberta (in place):
146 Tcf
CBM ~ 500 tcf

Source: National Energy Board

British Columbia Ministry of Energy, Mines & Petroleum Resources
Alberta Geological Survey

Types of Rock Oil and Gas is produced from

2
 Unconventional Natural Gas Basins

• Technology has
unlocked vast
supplies of shale
gas across North
America
• Robust supply
outlook for
unconventional gas
• Game changing for
the natural gas
industry
• Reserves
• Economics
• Location
• Technology
• US shale gas is
close to market

Western Canada – Resource Plays

Source: TransCanada

3
 Key Characteristics of Canadian/US Shales

Source: TransCanada

Footprint Reduction – Pad Drilling

4
 Horizontal Well with Multi-stage Fracturing

Source: Encana

Multi-stage Fracturing

5
 Shale Gas Production Outlook – Canada & US

Source: TransCanada

Canadian Natural Gas Production Forecast

25

20

15
Billion cubic feet/day

Mackenzie/Beaufort Sea

10 BC Tight & Shale Gas

Coalbed Methane

5 Nova Scotia Offshore

Conventional Gas

0
2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2011 2 0 1 2 2013 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 2020

Sources: CAPP

6
 North American Natural Gas Pipelines and
2009 Exports to the US (bcf/day)

Alaska
Alaska Natural
Natural
Gas
Gas Pipeline
Pipeline Mackenzie
Mackenzie Valley
Valley
Pipeline
Pipeline

TransCanada
Alberta
Westcoast (NGTL)
A NG/
Pacific NW TransCanada Transmission
Foothills
1.5 bcf/d Alliance Mainline
Northwest Northeast
2.6 bcf/d M&NE
Foothills
PGT Great TQ&M
Northwest Northern
Lakes
Border
Central IroquoisPNGTS
PG&E Kern 3.7 bcf/d t or CNG
River Trailblazer V ec Algonquin
California A NR
1.1 bcf/d NGPL Panhandle
Transwestern Texas
SoCal A NR
El Paso NGPL Eastern

Transcontinental
El Paso

Canadian Natural Gas

Canadian Demand and Exports to U.S.

18
Natural gas prices
deregulated in 1985
15

12 Canadian Demand
billion cubic feet per day

6
Exports to U.S.
3

0
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009

Source: CAPP Statistical Handbook

7
Canadian and US Natural Gas Prices

16

14

12

10
US$/MMBtu

4 September 2009
was the lowest price
2 since August 2002
AECO NYMEX
0
Jul'05

Jul'06

Jul'07

Jul'08
Jan'06

Jan'07

Jan'08

Jan'09

Jul '09
Jan'05

Jan '10
Source: CAPP Natural Gas Report