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News Release June 2, 2003

FOR IMMEDIATE RELEASE

EUB Releases Reserves Report: Crude Bitumen Exceeds Conventional Oil Production by 25 Per Cent

Calgary, AB -The Alberta Energy and Utilities Board (EUB) today released its annual report Alberta's Reserves 2002 and Supply/Demand Outlook 2003-2012. This report is one of the most reliable sources of information on the state of reserves and the supply and demand for Alberta's diverse energy resources-crude bitumen, crude oil, natural gas, natural gas liquids, coal, and sulphur. It includes estimates of reserves and production volumes for 2002 and a 10-year supply/demand forecast for each resource.

The report notes that in 2002:

• Crude bitumen (oil sands) production surpassed provincial conventional oil production by 25 per cent. Bitumen production totaled 829 000 barrels (132 000 m³) per day, compared to conventional oil production of 660 400 (105 000 m³) per day.
• Alberta's total remaining bitumen and conventional oil reserves total 176 billion barrels (28.0 billion m³), consisting of bitumen at 174 billion barrels (27.7 billion m³) and conventional oil at 1.6 billion barrels (260 million m³).
• Remaining established marketable gas reserves stood at 42 trillion cubic feet (1171 billion m³).
• Despite short-term lower gas prices in 2002, gas prices have reached new and higher levels than historically. Lower prices precipitated a 3.8 per cent decline in natural gas production in 2002.
• Gas production is expected to rise by approximately 1.5 per cent over 2002.
• Remaining established coal reserves are 37 billion tons (34 billion tonnes).
• Extractable ethane reserves stood at over 1 billion barrels (165 million m³).

The EUB ensures that the discovery, development, and delivery of Alberta's resources take place in a manner that is fair, responsible, and in the public interest.

Please see backgrounder for more detailed information. Alberta's Reserves 2002 and Supply/Demand Outlook 2003 - 2012 is available on the EUB web site at www.ercb.ca or from EUB Information Services, Main Floor, 640 - 5 Avenue SW, Calgary, Alberta T2P 3G4.

For more information, please contact:
Darin Barter
EUB Communications
(403) 297-4116
Cell: 651-9487
darin.barter@gov.ab.ca

NR 2003-26

Backgrounder

Alberta's Reserves 2002 and Supply/Demand Outlook 2003 - 2012

Highlights

Crude Bitumen Reserves and Production

• Alberta's remaining established reserves of crude bitumen are estimated at 174 billion barrels (27.7 billion m³)
• In 2002, crude bitumen production reached 303 million barrels (48.1 million m³), exceeding conventional oil production by 25 per cent:
  • Crude bitumen, 829 000 barrels (132 000 m³) per day.
  • Conventional oil, 660 400 barrels (105 000 m³) per day
• Upgraded bitumen yielded 161 million barrels (25.6 million m³) of synthetic crude oil.
• The EUB estimates that by 2012 bitumen production could triple.

Conventional Oil Reserves and Production

• Alberta's remaining established reserves of conventional oil are estimated at 1.6 billion barrels (260 million m³).
• In 2002, 127 million barrels (20.2 million m³) of conventional oil were added to initial reserves.
• The EUB estimates the remaining ultimate potential of conventional oil at 5.0 billion barrels (787 million m³).
• In 2002, Alberta produced 241 million barrels (38.3 million m³) of conventional oil.
• In 2002, the number of successful wells drilled decreased by 24 per cent (1661 in 2002, down from 2220 in 2001).
• The EUB estimates that about 2000 successful oil wells will be drilled in 2003 and the number will increase to about 2200 wells per year over the remainder of the forecast period.

Total Oil Supply and Demand

• In 2002, Alberta produced 562 million barrels (89.6 million m³) of conventional oil, crude bitumen, and pentanes plus. This is slightly higher than in 2001.
• By 2012, EUB forecasts production of 2.7 million barrels (425 000 m³) per day. The ability to increase bitumen production will offset the continuing decline in conventional crude oil.

Natural Gas Reserves and Production

• In 2002, remaining established reserves (measured downstream of field plants) stood at 42 trillion cubic feet (1171 billion m³).
• Natural gas estimates do not include coalbed methane, which has the potential to add to Alberta's reserves in the future.
• Low gas prices in early 2002 led to a 17 per cent decline in gas well drilling and a 3.8 per cent decline in gas production. (2001 - production of 143 billion cubic metres or 5.1 trillion cubic feet, 2002 - production of 136 billion cubic metres or 4.8 trillion cubic feet.)
• Alberta produced 4.8 trillion cubic feet (136 billion m³) of marketable natural gas in 2002.
• The EUB projects that 9500 new gas wells will be connected in 2003, increasing to 10 500 in 2004 and 11 000 in 2005 and 2006. From 2007 to the end of the forecast period, the number of new gas wells will average 10 000 per year.

Natural Gas Supply and Demand

• The EUB expects gas production to increase by 1.5 per cent in 2003 but decline an average of 2 per cent each year over the remainder of the forecast period
• New pools are smaller and are showing lower initial production rates and steeper decline rates.
• As Alberta's natural gas requirements increase and production declines over time, the volumes available for potential removal will decline.
• The EUB's mandate requires that the natural gas requirements for Alberta's core market (residential, commercial, and institutional gas consumers) be met in the long term before any new gas removal permits are approved.

Ethane

• Remaining established reserves of extractable ethane is estimated at over 1 billion barrels (165 million m³).
• Production of specification ethane increased from 79.9 million barrels (12.7 million m³) in 2001 to 86.2 million barrels (13.7 million m³) in 2002.
• The ethane supply is expected to meet demand for the forecast period.

Coal Reserves and Production

• The current estimate for remaining established reserves for all types of coal is about 37 billion tons (34 billion tonnes). This is a massive resource and helps to meet the energy needs of Albertans. Coal supplies fuel for about 75 per cent of electricity generation in Alberta.
• Alberta's total 2002 marketable coal production was 34 million tons (31 million tonnes). Coal production is expected to increase over the forecast period to meet demand for additional electrical generation.

Reserves Definitions

Initial in-place: The volume of oil and gas calculated or interpreted to exist in a reservoir before any volume has been produced.

Established reserves: Reserves recoverable under current technology and present and anticipated economic conditions specifically proven by drilling, testing, or production, plus the portion of reserves interpreted to exist from geological, geophysical, or similar information with reasonable certainty.

Initial established reserves: Established reserves prior to all the deduction of any production.

Cumulative production: The sum of production volumes from all prior years.

Remaining established reserves: Initial established reserves minus cumulative production.

Ultimate potential: An estimate of initial established reserves that will have been developed in an area by the time all exploratory and development activity has ceased, having regard for the geological prospects of the area and anticipated technology and economic conditions.