Pierre Alvarez, President Canadian Association of Petroleum Producers Industry and Communities Working Together to Build Better Communities Inuvik Petroleum Show June 2002 Pierre Alvarez, President Canadian Association of Petroleum Producers

CAPP Profile Represents 140 “upstream” companies that explore for, develop and produce petroleum Our industry is active in 12 of 13 jurisdictions across Canada CAPP members produce over 97 per cent of Canada’s natural gas and crude oil Our 125 associate members provide services that support the upstream industry Together, our members are part of a $52-billion-a-year national industry that affects the livelihoods of more than half a million Canadians

Industry Capital Spending $ BILLIONS Northern Canada ‘99 ‘00 ‘01E ‘02F $0.2 $0.3 $0.4 $0.5 International ‘99 ‘00 ‘01F ‘02F $1.7 $2.1 $3.5 $3.0 Oil Sands ‘99 ‘00 ‘01E ‘02F $2.4 $4.2 $5.0 $5.0 WCSB ‘99 ‘00 ‘01E ‘02F $11 $17 $20 $16 East Coast Offshore ‘99 ‘00 ‘01E ‘02F $2.7 $1.8 $1.5 $1.0

CAPP Members - North of 60º

What’s changing in industry? moving to oil sands, foothills, North, East Coast and coal-bed methane North American markets consolidating Technology deeper, further, faster - with smaller footprint Government Issues increasingly complex competing on a global stage Stakeholders more, different, higher expectations

What Have We Learned? Understanding the rules and limits comprehensive claims and federal roles make the North unique - not Alberta north! Accountability clarity and certainty help everyone Sensitivity to local circumstances industry can and is adjusting Communication is key two way street

Public Policy is Key to Competitiveness Key federal decisions in 2002 could have an enormous impact on Canadian investment federal corporate tax aboriginal consultation policy (requirements) market-based procedures (New Brunswick export hearing) regulatory change (CEAA, Species at Risk, Oceans Act, etc.) climate change

Factors Influencing the Future of Canada’s Oil and Natural Gas Industry Competitiveness resource base costs climate change taxation royalty regimes Access to the Resource environmental issues aboriginal relations Regulatory processes multiple jurisdictions complexity adds time Enablers technology and innovation cooperative approaches identifying regulatory overlap and duplication open and regular communication

Enablers - Technology and Innovation Seismic reduced foot-print enhanced data collection (3D) Drilling improved drill bit technology horizontal drilling; multi-well pads improved drilling muds Pipelines improved pipe material improved welding techniques improved integrity programs (“smart pigs”) directional drilling of stream crossings

Enablers - Cooperative Approaches Industry has been an active player in ongoing cooperative training, employment and environmental research activities in the North heritage and biophysical - $800,000 oil spill co-op - $150,000 SHaRE - $200,000 Environmental Studies Research Fund education and training in-kind costs Governments must also make multi-year commitments

Enablers - Cooperative Approaches Need for reliable, trained personnel and equipment rig training was a good first step long-term capacity is a serious issue Need to find ways to improve cost competitiveness for Northern operations remains very high cost Accountability cooperative approach to spending of education and training funds - government, communities and industry

Enablers - Cooperative Approaches Safety, Health and Respect for the Environment Group (SHaRE) recognition made of industry’s high safety standard continuous improvement Compliance and enforcement recognize zero tolerance for drug and alcohol need for local regulatory leadership, visibility and accountability with respect to safety Capturing/documenting safety statistics important safety management tool

Enablers - Identify Regulatory Overlap and Duplication Regulatory Regime look for ways to increase efficiency and effectiveness Regulatory Approvals Guides Entire NWT roadmaps complete (including offshore, Mackenzie Delta, Beaufort Sea) appreciate the community involvement in roadmap development Next step is reform, not watering down

Enablers - Open and Regular Communication Focus has been ISR but may now expand to the Gwich’in, Sahtu, and the possibility of Deh Cho and southern Yukon land sales CAPP Guide for Effective Public Involvement - expansion to include the North

Working Together We recognize there are many different interests and we value feedback from all groups We have an interest in working with stakeholder groups across Canada e.g. regional corporations; tribal councils; communities; AB Synergy Conference; East Coast Fisheries Liaison; etc. CAPP Stewardship initiative send out the challenge of continuous improvement Actions are louder than words hold us accountable

Working Together continue to look for ways... to make regulatory processes as efficient and effective as possible for industry, communities and regulators to work together more effectively as early as possible for industry and contractors to improve cost competitiveness in the North for CAPP operators to collaborate through a new phase of exploration and development in the North

Northern Canada Video