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OutlookforEastCoastOil

PresentationtotheNationalEnergyBoards

2010Energy

Futures

Conference

WadeLocke

epar men

o

conom csMemorialUniversity

March

12,

2010

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PresentationOutline Basins

Investment

LandSa es

Exploration

OffshoreProduction

Hibernia&

Hibernia

South

Extension

WhiteRoseExpansion

Hebron

rp an

as n

EyestotheFuture

Conclusion

8/8/2019 Wade Locke

3/17

NLBasins

SaglekBasin

HopedaleBasin

AnticostiBasinOrphan Basin

JeannedArc

FlemishPass

Basin

ar mes as n

SydneyBasin

LaurentianSubbasinBasin

Source:CNLOPB

8/8/2019 Wade Locke

4/17

OffshoreExpendituresNL

AlreadylargeinvestmentinNLsoffshore($24.6Bto2008),withmore

tofollowshortlyfromWhiteRoseExtension,Hebron&HiberniaSouth.

$8.2B

$5.0B11.4B

Source:CNLOPB

8/8/2019 Wade Locke

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BidsforNLOffshoreParcels:19882009

$2,500Inexcess of $2BinworkbidinNLoffshore,nearly$700M

$1,500

,

Dollars

total).Second

well

being

drilled

in

Spring

2010

in

Orphan.

$1,000

illi

onsof

Orphan

Basin

$500

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

CumulativeBids AnnualBids

DataSource:CNLOPBwebsite

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ExplorationWellsDrilledOffshoreNL

1720

Forthelast20years,anaverageof1.3

15

Drilles

wellsper

year

have

been

drilled.

9

7

1010

rofWell

34

5 5

34 45

Numbe

1 1 1

0

1966

1968

1970

1972

197

1976

1978

1980

1982

198

1986

1988

1990

1992

199

1996

1998

2000

2002

200

2006

2008

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RecoverableOilReserves/Resources

1200

1600

rels

s ore

ro ec

Doesnotinclude170Mbbls(oilinplace)forWhite

1,244

574800nsofBa

Itdoes

not

include

479

MM

bbls

of

NGLs.

could

add

60MbblstoWhiteRose749

670

289 139

749 130234 36 23 14

13 10 8 7 6 40

400Milli

ibernia

enNevis

raNova

&North

yst

nneBay

Mara

ringdale

Nautilus

g'sCove

empest

Rankin

Fortune

thMara

ebron/B Te

iteRose

Amet

WestB Sp Kin

South Ea

sSo

W Production Remaining

CNLOPBwebsite ProductionasofJan31,2010

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ProductionProfileNLOffshore

150

ActualandExpected

11198 94

100perye

ar

1.1Bbblsproduced &1.8Bbblsleft,peak135Mbblsin2008

53

69

47ofBarrel

580M

420M

370M

2111

Millions

1.2B

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

Hibernia TerraNova WhiteRose Hebron CombinedDataSource:Actualproduction CNLOPB,estimatedprodcution Locke

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HiberniaProduction

80

r

IncludingHiberniaSouthExtensionNGLs

60

lsperye

HiberniaAA

Block

50Mbbls

45Mbbls

40

sofBarr HiberniaSouthUnit

170Mbbls

20

Million

1,000Mbbls

0

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

HiberniaField HiberniaAABlock HiberniaSouthUnit NGLs

DerivedfromCNLOPBStaffAnalysis20090807,TableA.2.2HDPAmendment Application

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Hebron

GBSdevelopment

46Binvestment

. .

approx600Mbbls

firstoil2017

heavyoil BenNevispool(80%ofproduction)has20o API

90metres waterdepth

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White

Rose

Extension TiebacktoFPSO(mainfield) $3.5Binvestment

Doubleproduction(200Mbbls

Source:PetroleumDevelopment,2008AnnualReport,GovNL

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OrphanBasin

Source:ChevronCanada

evron ana a m e an s rp an as ncoven urers xxon o

CanadaLtd.,ImperialOilResourcesVenturesLimitedandShellCanada

Energy)todrillanexplorationwell(LonaO55)intheSpringof2010.

Thewater

depth,

at

2,600

metres,

will

set

anew

record

for

offshore

wells

drilledinCanada.

ChevronplanstousetheStenaCarrondrillship.TheOrphanBasin

explorationwell

will

take

several

months

to

drill

and

evaluate.

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EyestotheFuture

Mizzen(SDL1047)

FollowonfromMizzenL11in2003

e , g ven s a us a o us y

1,100m

water

depth

Outsideof200milelimit butoncontinentalshelf

Standalonedevelopmentneeded

Ballicatters SinglewelldrilledtoevaluatetargetswithtwoadjacentELsunderrig

sharingagreement

EL1113validatedbutEL1092cons icuousl absentPeriodIIextension

Rumorsthatbaritesenttorigisconsistentwithapressureeventbeingencountered

2wells

drilled

in

2008

and

3onshore

wells

to

be

drilled

in

2010

by

NALCOR

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R&D TheKeytotheArctic Given NLsproximitytotheArctic;

GivenhowNLhasmetthechallengesforice,icebergsandars oceanenv ronmentsont e ran an s;

GiventheharshclimatechallengesthatNLwillfacein

GiventheresearchexpertisecurrentlyresidentatCCOREand

GivenR&DandE&TcommitmentsexpectedwithinNLasaresultofitsoilresources($0.5to$1Bfromexiting&planned

projects)

NListhenaturalgatewayfortheexploitationofresourcesine rc c. cana soac asacon u or e nee e o

overcome

the

Arctic

challenges

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R&DRequirementsfromExistingandPlannedOil

$1,000

50

$60

ar

Theannualaveragetodatehasbeen$30$35M

$600$40

fDollar

sPer

Y

$400

$20

30

illionso

fDolla

$200

$10 M

illions Cumulative R&DExpenditures

willbebetween $0.7Band$1.0

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

CumR&D

Requirements Annual

R&D

Requirements

Source:LockePresentationtoNOIA2009

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Conclusion Activityfirststartedinmid1960s,withfirstoilin1997and1Bthbarrelproducedin2009

$25Binvestedinoffshoretodate

Threeoperatingprojects

Hebronabouttostartdevelopmentwithproductionexpect2017

WhiteRose

Extension

and

Hibernia

South

Extension

commenced

Orphanbasinhashugh potential

Naturalgaspotentialhigh(10.8TCF)

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Thankyou

for

letting

me

share

my

ideas