2. Oil Sands Round Table Calgary September 26 th, 2006 Will Roach President & Chief Executive Officer UTS Energy Corporation

3. Agenda n Oil Sands Introduction n Oil Sands Scale n Oil Sands Production Technologies n Oil Sands Challenges

4. Oil Sands Introduction

5. 1875 Canada Geological Survey registers oil sands 1915 shipments to Edmonton for paving 1938 Abasand commercial production - 2,500 barrels destroyed by fire in 1941 - not rebuilt 1950’s separation technology centrifugal force Strong interest results in dozens of exploration leases sold by the government 1964 Esso starts Cold Lake; GCOS construction 1967 first GCOS (Suncor) production - 32,000 b/d 1978 first Syncrude production - 109,000 b/d 1993 truck and shovel technology adopted key to revitalizing the development outlook 2004 oil sands production reaches 1 million barrels per day Canadian Oil Sands History

6. Alberta’s Oil Sands What are Oil Sands? A mixture of sand and other rock material containing deposits of bitumen (a heavy viscous crude oil; API gravity typically <10). At room temperature, near solid state and must be converted to upgraded crude (typically API gravity of between 30 to 40). Where are the Oil Sands Deposits? Athabasca in NE Alberta; Cold Lake in E-Central Alberta; and Peace River in NW Alberta.

7. Alberta’s Oil Sands Deposits

8. Bitumen In-Place Volumes and Reserves 35 Mineable 143 In Situ Initial Volume In-Place 1,629 Billion Barrels Established Reserves 178 Billion Barrels MineableIn Situ 1,516 In Situ 113 Mineable

9. McMurray Formation Outcrop

10. Lateral Accretion Beds

11. Oil Sands Scale

12. Global Crude Oil Reserves by Country Source: Oil & Gas Journal Dec. 2005 Includes 175 billion barrels of oil sands reserves Canada, with 175 billion barrels in oil sands reserves, ranks 2 nd only to Saudi Arabia in global oil reserves

13. Top 10 World Crude Oil Producers in 2005 Source: EIA & CAPP Oil sands growth will move Canada from #8 to #4 in the world by 2015

14. Canadian Oil Production Conventional, Oil Sands and Offshore Western Canadian Conventional Oil Oil Sands Offshore Source: CAPP ActualForecast Oil Sands Production: 2005 = 1.0 million b/d 2015 = 3.5 million b/d 2020 = 4.0 million b/d Constrained Case

15. Oil Sands Production Technologies

16. Mining & Upgrading In-situ Recoverable resource = 65 billion barrels Recoverable resource = 250 billion barrels Cyclic Steam Process Source: Syncrude Source: Imperial Oil Source: Shell Canada Oil Production Steam Assisted Gravity Drainage Steam Injection Reservoir Oil Production Steam Chamber Steam Injection Source: Petro-Canada

17. Oil Sands “Economics” (drivers really)

18. Attractive Economic Fundamentals Factors making oil sands investments appealing: n Mining projects are characterized by: n massive resources (measured in Billions of bbls rather than Millions of bbls); n essentially “no” exploration risk; n non-declining production profiles; and n extremely long reserve life (typically 40 to 50 years). n In-Situ projects are characterized by: n massive resources (measured in Billions of bbls rather than Millions of bbls); n low exploration risk (increased production risk relative to mining); and n extremely long reserve life (typically 40 to 50 years). n Both Mining and In-Situ have an attractive royalty regime.

19. Crude Oil Prices 1975 – 2006 US $ per barrel (WTI)

20. U.S. Oil Production/Demand n U.S. oil production reached a peak of just under 10 million b/d in 1970. n U.S. demand for oil is increasing in the country at approximately 1-2% per year.

21. Full Cycle Costs: Oil Sands versus Conventional * FHP Development Cost assumes: CAPEX $15B / Resource of 3.5B bbls. Source FirstEnergy Capital Corp: **Average 2005 Western Canadian Opex per bbl; ***Average 2005 Western Canadian FD&A per barrel (Proved plus Risked Probable); including Future Capital Costs, **** Average 2005 Western Canadian Reserve Life Index Finding Development Mining Extraction Upgrading Energy: Natural Gas Sustaining Capex Site Restoration $0.10 $4.25* $4.00 $8.00 $1.00 $0.50 Total Notional C$25.85/bbl $18.70*** $8.30** $1.00 $?? FD&A Sustaining Capex Abandonment Oil Sands (Fort Hills) Conventional Total C$28.00+/boe OPEX F&D RLI 50 years RLI 10.5years****

22. Capital Investment in Alberta $ billions Close to $60 Billion i Close to $60 Billion investment in oil sands projected for 2006-2010

23. Oil Sands Capital Costs Increases Global Cost Increases Not Just Local Production Start Date 200120032006200720082010

24. Fort Hills Project and Technology Selection Fort Hills Project will use naphthenic froth treating and delayed coking upgrading technology Mine Ore Prep. Upgrader Extraction & Tailings Froth Treatment Pipeline Bitumen Production Naphthenic Paraffinic Hydro- Cracker Delayed Coker Common Dedicated

25. Upgrader Technology: Costs 101 kbpd SCO Hydro- Cracker (paraffinic) ( + H ) 86 kbpd SCO Bitumen 100 kbpd Hydro- cracker SCO volume is 17% HIGHER oror Hydro-cracker uses 45-55% MORE natural gas, thus Opex is HIGHER Coker (naphthenic) ( - C ) Operating Costs SCO Yields from Upgrader Hydro-cracker on-stream time ~ 5% LOWER than Coker Capital Intensity per flowing barrel of SCO for Hydro-cracker is 20-30% HIGHER Capital Costs

26. Upgrader Technology: Capital Intensity The following comparison is based on a notional 100 kbpd bitumen to the upgrader: MineBit. Prod.Upgrader FHP: Coker 100 kbpd 86 kbpd MineBit. Prod.Upgrader Hydro- Cracke r 105 kbpd 100 kbpd101 kbpd Difference in Capital Intensity for Hydro-cracker +20 to 30% per flowing barrel of SCO Total Incremental Capital Intensity for Hydro-Cracker vs. Coker per flowing barrel of SCO 0% +20 to 30% +25 to 35% +20 to 30%

27. Oil Sands Challenges

28. Challenges: n Use of land n Use of water n Use of natural gas n Infrastructure requirements n Workforce availability n Access to markets n Costs Research and development is aimed at: n Sustainable resource development in an environmentally responsible manner n Reducing costs

29. Oil Sands Production Technologies Alternatives to Natural Gas THAI TM (Toe-to-Heel Air Injection) Petrobank Whitesands Project OrCrude Process - Nexen/OPTI Longlake Multiphase Superfine Atomized Residue - DeerCreekSuncor 3 rd Upgrader - Coke Gasification OXYGEN WASTE WATER PETROLEUM COKE SYNTHETIC GAS (CO, H 2, CO 2 ) GASIFIER CO 2 CAPTURE & SEQUESTER HYDROGEN HYDROTREATORS BOILERS STEAM & ELECTRICITY FUEL

30. Industrial Construction Projects >100 MM Cdn (2004 Q1 – 2010 Q4)

31. Calgary Edmonton ALBERTA Mining Area Oil Sands Areas Fort M c Murray VCI VCI VCI VCI Mineable Area, AEUB Currently Operating/ Under Construction Mining Projects Planned Mining Projects Currently Operating/ Under Construction In-situ Projects Planned In-situ Projects Other Oil Sands Leases Leases 5, 8 & 52: 30% WI (46,170 acres) Lease 437/438: 30% WI (12,968 acres) Lease 311: 50% WI (11,520 acres) Lease 14: 100% WI (7,067 acres) Lease 634: 100% WI (1,280 acres) Athabasca region