Energy Boom: Why Canada will be a Global Leader Derek Gates, CFA Founder SWM Oil Sands Sector Index TM SWM Canadian Energy Income Index TM

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Executive Summary Global Demand for all sources of energy are expected to increase by over 50% by 2030 from current levels (IEA, World Energy Report 2008) Canada is in a unique position to benefit from this trend with world class reserves in many of the key energy commodities such as crude oil, uranium, natural gas and coal You will learn how profitable investing in the energy sector will be over the next few decades and how you can profit from this mega trend by investing in the key growth sectors.

Global Demand for Energy Population growth and rapid industrialization of China, India and the Middle East is driving energy demand up Despite conservation and increased energy efficiency, demand will grow by 1.6% per year or by 45% from current levels by 2030 Fossil fuels are still expected to represent over 83% of our energy needs in 2030

World Energy Use by Fuel Type, 1980-2030 Future Share Of World Total Current Share Of World Total History Projections Oil 39.7% Oil 37.3% Coal 25.4% 23.3% Natural Gas Natural Gas 19.9% Coal 22.4% Nuclear 8.1% Nuclear 8.2% Renewable Renewable 6.8% 3.7% Hydro 2.6% Hydro 2.5% Source: EIA, IEA – WEO 2008

Failing to Plan and Invest Coal will become the dominant energy source in the world After the crude oil and natural gas production will peak, coal and oil sands will have to substitute at the expense of the environment Nuclear, renewable and hydroelectric power will be developed too slowly to avert economic and environmental disaster

World Energy Use by Fuel Type, 1980-2030 Failure to Plan Scenario Future Share Of World Total Current Share Of World Total History Projections Coal 37.9% Oil 39.7% Oil 24.9% Natural Gas 23.3% Natural Gas 19.9% Coal 22.4% Nuclear 8.1% Nuclear 8.2% Renewable 6.8% Renewable 3.7% Hydro 2.5% Hydro 2.6% Source: SWM Ltd. Projections ©

Sustainable Energy Future Renewable energy such as wind, solar and biomass must be developed faster Crude oil and natural gas production will peak soon, coal and oil sands will have to substitute while renewable energy is developed Nuclear power is an important addition to the energy mix and should be used in combination with energy extraction

Sustainable World Energy Use by Fuel Type, 1980-2030 Sustainable Development Plan Future Share Of World Total Current Share Of World Total History Projections Oil 24.9% Oil 39.7% Coal 24.2% Natural Gas 23.3% Renewable 20.4% Natural Gas 19.9% Coal 22.4% Nuclear 8.1% Nuclear 8.2% Renewable 3.7% Hydro 2.5% Hydro 2.6% Source: SWM Ltd. Projections ©

Global Crude Oil Production is at Peak Global supply for crude oil has been flat since 2004 Producing oil wells are depleting by at 5.1% per year globally (IEA – World Energy Outlook, 2008) Exploration and development costs for crude oil continue to climb as new sources of easy to find and extract oil becomes more scarce The quality of crude oil being extracted is declining, refineries need to focus on bitumen and heavy oil Source: Sustainable Wealth Management Ltd., IEA

Source: SWM Ltd. Projections © , IEA WEO 2008

Major Producers are at a Plateau Russia FSU Source: SWM Ltd. Projections © , IEA WEO 2008

Our Friends are Tapped Out Source: SWM Ltd. Projections © , IEA WEO 2008

OPEC is Not Increasing Production Source: SWM Ltd. Projections © , IEA WEO 2008

Source: Sustainable Wealth Management Ltd., Bloomberg

Existing Production is Flat Demand Grows, Existing Production is Flat Source: IEA WEO 2008, EIA Oil Market Report, SWM Ltd estimates

New Global Oil Requirements 2009 - 2018 Source: Sustainable Wealth Management Ltd. projections

Lack of Investment Opportunities Over $26 Trillion US$ of energy investment is needed between now and 2030. Half to be invested in power generation, half in energy production, mostly in fossil fuels At least 75% of proven global oil reserves are controlled by National Oil Companies (NOCs) Canada represents at least 55% of global reserves that can be invested in privately New discoveries are very scarce, most known oil and gas reserves are already being developed

Source: SWM Ltd. Projections © , IEA WEO 2008

Source: SWM Ltd. Projections © , IEA WEO 2008

Canada: The Future Oil King Canada will soon be recognized as having the largest oil reserves in the world and will become the largest oil exporter by 2030 Geopolitically stable and the largest crude exporter to the US (16% of all US imports) Oil companies are all independently owned Established industry which is open to foreign investment

Oil Export Leaders 2007 to 2015 Source: SWM Ltd. Projections © , IEA WEO 2008

Oil Export Leaders 2030 Source: SWM Ltd. Projections © , IEA WEO 2008

Production to continue for 100+ years Reserves Production Rate (boe/d) Years of Production at Estimated Production Rates Current Reserves under development 83.9 Billion boe 1,150,000 boe/day 200 Total Proven Reserves 174 Billion boe 3,600,000 boe/day (IEA Estimate for 2018) 132 Total Proven & Probable Reserves 305 Billion boe 5,900,000 boe/day (IEA Estimate for 2030) 142 Source: Sustainable Wealth Management Ltd. Estimates ©, IEA

Best Buying Opportunity in 4 Years! Production is up over 50% since 2004 and average oil prices have increased significantly. Source: Bloomberg, Sustainable Wealth Management, Ltd.

Canada’s Other Energy Resources – Nuclear Canada is the world’s largest producer of uranium, providing over 25% of world supply Canada is second only to Australia in terms of uranium reserves Canada has its own nuclear power plant design and producers 16% of its electricity needs from uranium Source: World Nuclear Association

Canada’s Other Energy Resources – Natural Gas Canada is the world’s third largest producer of natural gas and the largest supplier of natural gas to the United States Conventional reserves are 58 Tcf, and Natural Gas from Coal could add 200 Tcf to 550 Tcf Tight gas and shale gas will add another 500+ Tcf to Canada’s natural gas reserves Source: Canadian Society for Unconventional Gas, CAPP

Canada’s Other Energy Resources – Coal Canada has about 10 Billion Tonnes of Coal of which we produce about 100 Million Tonnes per year Canada is one of the world’s largest producers of coking coal for steel production We have a 100 year plus supply of coal at our present consumption rate Source: Coal Association of Canada

Canada’s Other Energy Resources – Hydroelectric Canada is the largest producer of hydroelectric power in the world, representing over 13% of world production The is another 182,832 MW of new potential power projects, 34,371 MW is practical in today’s economic and environmental situation Canada is the lowest cost producer of hydroelectric power in the world Source: International Journal on Hydropower and Dams, Government of Canada

Canada’s Other Energy Resources – Wind Current installed capacity provides electricity to over 563,000 homes, about 3% of world capacity Canada’s has the world’s longest coastline and some of the world’s largest plain land areas, giving it one of the largest potential wind resource We have a 100 year plus supply of coal at our present consumption rate Source: Canadian Wind Energy Association

Canada’s Other Energy Resources – Biomass Current installed capacity is 1,500 MW mostly using wood waste in the forestry industry Canada has 10% of the world’s forests and a large agricultural sector to provide feedstock 1,500,000 Canadian homes rely on wood for home heating Ethanol production from wheat, corn and other sources could triple in the near future from current production of 175 million L per year Source: Centre for Energy, Forestry Canada

Contact Information Derek Gates, CFA, CIM, CFP, FCSI President & CIO Sustainable Wealth Management Ltd. Suite 224, 222 – 16th Ave NE Calgary Alberta T2E 1J8 Phone 403 454-0881 Fax 403 454-0882