GROWING TOGETHER: Ontario’s role in ’s oil and gas supply chain

VICKI BALLANCE DAVID MCHATTIE Vice President, Operations Vice-President Institutional Relations Explorers and Producers Tenaris Association of Canada

MIKE GLADSTONE DAVID SWORD Director, External Affairs, Canada Energy Consultant Canadian Association of Producers (CAPP) GARY G. MAR Q.C. President and CEO Petroleum Services Association of Canada (PSAC)

#OnChamberNetwork | #StrongerTogether GROWING TOGETHER: Ontario’s role in Canada’s oil and gas supply chain

DAVID SWORD Energy Consultant Canadian Association of Petroleum Producers (CAPP)

#OnChamberNetwork | #StrongerTogether QUESTION

THE WORLD’S BIGGEST OIL PRODUCER IS: 1. Iraq 2. Qatar 3. Russia 4. Saudi Arabia 5. United States –ANSWER

#OnChamberNetwork | #StrongerTogether Growing together: Ontario’s role in Canada’s oil and natural gas supply chain

4 Made in Ontario

In 2016-17 the oil sands companies alone spent $1.9 billion on supplies and services from 1,162 companies in Ontario.

This is down 45 % since 2014-15.

Source: CAPP member data aggregated by CAPP, 2019

5 Growth in the Global Energy Mix from 2017-2040

Source: IEA, World Energy Outlook 2018, New Policies Scenario 6 Economic growth and products driving demand

7 Top 10 World Natural Gas Producers in 2017

Trillion Cubic Feet per Year 0 5 10 15 20 25 30

US

Russian Federation

Iran

Qatar

Canada Canada, is the 5th largest producer of China natural gas in the world.

Norway

Australia

Saudi Arabia

Algeria

Source: BP Statistical Review 2018 and CAPP Top 10 World Crude Oil Producers in 2017

Canada has the 3rd largest reserves in the world.

Source: BP Statistical Review 2018 & CAPP) Crude oil including lease condensate. THE GLOBAL ENERGY PULSE

10 Economic Impacts of the Oil and Natural Gas Industry in Canada

Source: Statistics Canada, Prism Economics and CAPP, 2018

11 Environmental Protection Spending by Industry - 2016

Source: Statistics Canada, 2019 12 GROWING TOGETHER: Ontario’s role in Canada’s oil and gas supply chain

DAVID MCHATTIE Vice-President Institutional Relations Tenaris

#OnChamberNetwork | #StrongerTogether QUESTION

WHAT PERCENTAGE OF STEEL CONSUMED IN CANADA IS DEDICATED TO AUTO AND AUTO PARTS? 1. 10% 2. 20% 3. 35% –ANSWER 4. 50% 5. 60%

#OnChamberNetwork | #StrongerTogether QUESTION

WHAT PERCENTAGE OF STEEL CONSUMED IN CANADA IS DEDICATED TO THE ENERGY SECTOR? 1. 10% 2. 20% 3. 35% –ANSWER 4. 50% 5. 60%

#OnChamberNetwork | #StrongerTogether Manufacturing Committed to Canada’s Energy Industry Agenda

. Tenaris

. Canada’s Energy Sector is Large on Global Scale

. Opportunity to Connect Manufacturing and Energy Sectors Better

17 Global Leader in Pipes for the Oil & Gas Industry

Serving the world's energy industry – In Canada, $1B Revenues employing 1,000 in 3 manufacturing locations and 5 service centres 7.7 18 5 US$ billion Countries R&D Centers Annual net sales Manufacturing Worldwide (2018) facilities

Sales by Region Asia Pacific Middle East & 4% 23,472 30 Africa North America 20% 47% Employees Countries (2018) Services and distribution network Europe 9% South America 19%

18 TenarisAlgomaTubes supply chain: adding value to Canada’s resource sector

. Iron Ore to Steel Bar, transformed into a steel pipe, threaded and installed in a well

Grande Prairie

Fort McMurray

Rio Tinto Fer et Titane (RFT) Havre Ste. Piere

Nisku

RTFT Steel Mill Sorel-Tracy

Sault Ste. Marie

19 TenarisPrudential supply chain: secure source of supply

. Iron Ore to Hot Rolled Coil, transformed into a steel pipe, threaded and installed in a well

ArcelorMittal Mines Mont-Wright

WESTERN SEDIMENTARY ArcelorMittal Pelletizing Plant Calgary BASIN Sept-Iles

ArcelorMittal Dofasco Hamilton

20 Canada’s Energy Sector is Large on Global Scale

Global OCTG Market (Th tonnes, source Metal Bulletin Report) Rank Apparent Consumption 2014 2016 2018 1 USA 6,490 2,080 4,960 • We should all be aware that 2 China 3,300 2,616 3,634 Canada is one of the largest 3 Russia 1,699 1,984 2,391 4 Canada 1,112 459 745 producers of oil & natural gas 5 Saudi Arabia 595 424 487 6 Brazil 350 148 272 • But to produce oil & natural 7 India 254 246 228 gas, manufactured goods are 8 Mexico 253 70 217 9 Oman 237 275 234 critical. This means that 10 Kazakhstan 220 118 155 Canada is one of the world’s 11 UAE 201 320 236 largest markets for these 12 Thailand 197 129 116 13 Iran 158 100 150 manufactured goods. 14 Indonesia 157 48 56 15 Colombia 153 45 88 16 Iraq 153 39 94 17 Argentina 148 52 217 18 Egypt 146 92 107 19 Algeria 143 161 169 20 Venezuala 116 164 108 21 Australia 96 53 59 22 Kuwait 85 282 240 23 Malasia 81 29 25 24 Azerbaijan 79 47 64 25 Angola 75 22 38 26 Vietnam 72 51 52 27 Nigeria 59 37 32 28 Uzbekistan 57 26 40 29 UK 50 25 61 30 Norway 47 97 75 21 Steel Is everywhere in energy development, here are the energy tubulars examples:

• Drilling, completion and production of oil and gas

• Transportation of oil and gas

• Process and power plants

Oil Country Tubular Line Pipe for Hydrocarbon Power Goods Onshore and Processing Generation Offshore applications

22 35% of Canada’s steel consumption is in the energy sector, equal to that of auto and auto parts

Steel Consumption by Sector – Canada (Avg 2010-14)

5% • Cdn steel production/consumption $14B • About $5B to the auto sector while an equal amount went to the energy sector 25% 35% • The energy sector consumed over $500 Million in Canadian goods manufactured in Northern Ontario alone • About $4B is steel pipes while the rest is: plate, coil, rebar, beams, etc used 35% Energy either directly or in further fabrication/construction for the energy Automotive sector Construction • Fabricated and manufactured products Other Machinery & Equipment include buildings, water treatment facilities, boilers, wellheads, valves, processors, pressurizers, etc

23 Ontario Manufacturers for Canada’s Energy Sector are big and small

24 Canadian Drilling Activity in 2019 is now 30% lower than 2018 and much lower than 2014 Drilling Rig Activity – Canada

25 Since 2013, TS employment in Northern Ontario has been cut in half

Employee Count – TenarisAlgomaTubes

800

600 -50% 400

200

0

2013 peak 2019

. Other negative impacts include an import surge from Non- NAFTA sources and the US Section 232 Tariffs vs. Canada

26 Chinese Steel Means Increased GHG Emissions

GHG Emissions per Tonne of Steel – China vs. Canada

3.5 Tonnes 4 CO2 / Tonne Steel 3 2.4 Tonnes additional tonnes of GHG 2 1.1 Tonnes per tonne of imported CO2 / Tonne Steel Chinese steel 1 0

China Canada *Calculations based on World Steel data

. South Korea emits double (+1.3 tonnes)

. India emits double (+1.2 tonnes)

27 Canada’s Energy & Manufacturing Sectors are Connected – there are more Opportunities Possible

Here is what you now know:

• Canada is one of the largest producers of oil & natural gas (the 3rd largest) • But to produce oil and natural gas, an important volume of manufactured goods are critical – this means that Canada is one of the world’s largest markets for these manufactured goods • Between 2010-2014 as much steel was used in Energy as Autos • Northern Ontario generated over $500 Million in energy sector manufactured goods sales; for all of Ontario, it must be much more • We all care about the environment and this concern should be a competitive advantage. Using Canadian manufactured goods that are produced using low carbon electricity it good for Canada. This connects Ontario/Quebec as manufacturing cores with our Western energy core.

28 Thank you!

29 GROWING TOGETHER: Ontario’s role in Canada’s oil and gas supply chain

MIKE GLADSTONE Director, External Affairs, Canada Enbridge

#OnChamberNetwork | #StrongerTogether QUESTION

ON AVERAGE, HOW MANY DAYS DOES IT TAKE FOR A LARGE PIPELINE TO BE APPROVED, IN CANADA AND THE US?

1. Canada – 681 days, US – 336 days – ANSWER 2. Canada – 435 days, US – 378 days 3. Canada – 550 days, US – 578 days

#OnChamberNetwork | #StrongerTogether QUESTION

IN 2017, HOW MUCH DID CEPA’S MEMBERS SPEND IN ONTARIO TO OBTAIN PERSONNEL, SERVICES, SUPPLIES AND EQUIPMENT FROM LOCAL SOURCES?

1. $1.5 billion 2. $4.1 billion – ANSWER 3. $3.2 billion

#OnChamberNetwork | #StrongerTogether CEPA MEMBERS

CANADIAN ENERGY PIPELINE ASSOCIATION ENBRIDGE

• Enbridge operates the world’s longest and most complex crude oil and liquids transportation system

• Enbridge’s three liquids pipelines deliver 96% of the province’s crude imports • Enbridge’s natural gas transmission and midstream pipelines assets cover about 41,850 km in 31 American states, 5 Canadian provinces and offshore in the Gulf of Mexico • Enbridge Gas is Canada’s largest natural gas distribution provider by volume and third largest by customer connections

CANADIAN ENERGY PIPELINE ASSOCIATION ENBRIDGE – IN ONTARIO

• Enbridge’s three liquid pipelines deliver 96% of Ontario’s crude imports • Enbridge’s Dawson Hub is one of North America’s most liquid natural gas trading hubs • In 2018, over $2 billion invested in capital expenditures and operations • More than $127 million paid in property and other taxes annually • This helps to fund schools, hospitals and other priority investments.

CANADIAN ENERGY PIPELINE ASSOCIATION THE ENERGY LANDSCAPE IN ONTARIO

Natural gas provides low cost, critical and reliable energy

Critical Resilient Ontario Energy by Fuel Type

Peak Natural 84,261 17% Gas Demand Avg Natural 3% 40% 34,193 1% Gas Demand Peak 24,706 Electrcity… Avg Electrcity 15,959 39% Demand MW

Petroleum Products Notes: 1. Ontario Peak natural gas demand is 6.9 Natural Gas bcf/day 2. Avg. natural gas demand includes refill of storage 3. Peak electricity demand recorded in Summer 2006 (IESO)

Ontario’s energy system reality: Natural gas provides more than twice the energy at less than half the cost of electricity

* Enbridge’s 2017 Ontario LTEP Submission.

CANADIAN ENERGY PIPELINE ASSOCIATION CEPA MEMBER PIPELINE NETWORK

O Gas pipeline O Oil pipeline

CANADIAN ENERGY PIPELINE ASSOCIATION TRANSMISSION PIPELINES IN ONTARIO

More than 8,000 jobs in Ontario in 2015

Added $1.8B to Ontario’s GDP in 2015

$4.1 billion Spent in Canadian communities in 2017

CANADIAN ENERGY PIPELINE ASSOCIATION CANADA IS A TRUSTED TRADING PARTNER

• Canada is an exporting nation and trusted trading partner • Opportunity: The world needs our oil and natural gas

CANADIAN ENERGY PIPELINE ASSOCIATION GROWING TOGETHER

• Ontario remains a partner in enabling the growth of Canada’s energy industry through manufacturing, construction, finance, and technology.

CANADIAN ENERGY PIPELINE ASSOCIATION GROWING TOGETHER: Ontario’s role in Canada’s oil and gas supply chain

GARY G. MAR Q.C. President and CEO Petroleum Services Association of Canada (PSAC)

#OnChamberNetwork | #StrongerTogether QUESTION

THE AUTO SECTOR’S CONTRIBUTION TO CANADA’S GDP IS:

1. 6x larger than the Oil & Gas sector’s contribution 2. 3x larger than the Oil & Gas sector’s contribution 3. Equal to the Oil & Gas sector’s contribution 4. 3x smaller than the Oil & Gas sector’s contribution 5. 6x smaller than the Oil & Gas sector’s contribution – ANSWER

#OnChamberNetwork | #StrongerTogether QUESTION

BILL C-48, THE OIL TANKER MORATORIUM ACT, WILL BLOCK WHICH VESSELS CARRYING PETROLEUM PRODUCTS:

1. Foreign tankers from waters anywhere off the coast of Canada; 2. Foreign and Canadian tankers anywhere off the coast of Canada; 3. Canadian tankers anywhere off the coast of Canada; 4. Foreign tankers from waters off the coast of northern ; 5. Foreign and Canadian tankers from waters off the coast of northern British Columbia; or 6. Canadian tankers off the coast of northern British Columbia. – ANSWER

#OnChamberNetwork | #StrongerTogether Barriers to Opportunity

Gary G. Mar, President and CEO Petroleum Services Association of Canada

May 4, 2019 About PSAC

• National trade association

• Representing service, supply and manufacturing sectors

• 18 business subsectors, over 250 products and services

• Over 450,000 workers across Canada

45 Canadian Exports by Industry Resource Works Resource - Infographic by Stewart Muir by Infographic Stewart Muir Source: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1210013401

46 Oil and Gas contributes more to Canada’s GDP and exports more than other sectors

GDP (x1,000,000) Exports (x1,000,000)

200,000 200,000 $161 B $134 B

$73 B 100,000 100,000

$26 B

0 0 O&G Auto/Parts O&G Auto/Parts

Source: Tenaris, 2019 47 Capital is fleeing Canada

The Fraser Institute reports: “Canadians have increasingly looked to other countries to invest, with the amount Canadians invest abroad rising 74 per cent from 2013 to 2017. At the same time, foreign direct investment— investment from other countries into Canada— dropped a staggering 55.1 per cent from 2013 to 2017.”

48 Pipelines cancelled

• Northern Gateway, Energy East

Source: BOE Report https://boereport.com/2016/01/13/b-c-supreme-court- hands-another-setback-to-northern-gateway-pipeline Source: CBC https://www.cbc.ca/news/canada/new-brunswick/energy-east- pipeline-completion-date-pushed-back-to-2020-1.3019311

49 Pipelines delayed

• Line 3, TMX, Keystone XL

Source: CAPP, 2017 50 Competitive issues include U.S. tax changes sound - - s - u - firms - gas - and - competitive - more - to - flees - canada - for - destined - once - capital - as - Source: Post Source: Financial https://business.financialpost.com/commodities/energy/oil alarm

51 Canada is losing $ billions Loss to Canada: $80 Million per day $92 Billion (2008–2020e)

Source: Canada Action, 92 Billion https://www.canadaaction.ca/oil_discount

52 Why are we losing billions? - vivian Canada - - across reason - news/corbella - - name - realizing - - good - are - no - for - household - a economy - become - energy - should - our Source: Calgary Herald Calgary Source: https://calgaryherald.com/news/local krause - sabotaged - - groups Source: Post Source: Financial https://business.financialpost.com/opinion/canadians foreign -

53 Contrary to what you might see…

Source: Financial Post https://business.financialpost.com/opinion/we-are-first-nations- that-support-pipelines-when-pipelines-support-first-nations 2/ - - pipeline - of - favour - in - out - speak - Source: CKPG Today CKPG Source: https://ckpgtoday.ca/2019/01/23/first nations

Source: JWN Energy https://www.jwnenergy.com/article/2016/12/all-first-nations-crossed- 54 trans-mountain-pipeline-route-support-project-kinder-morgan/ Opportunity to Lift Developing Nations out of Energy Poverty

Source: India Climate Dialogue https://indiaclimatedialogue.net/2014/07/17/millions-die-indians-still-cook-wood-dung/

Image Caption: The burning of dung in cities is increasingly criticised as contributing to air pollution - Times Newspapers Limited (UK), 2015

55 If We Care About Global Emissions, Canada should supply the world with energy

Source: BP Report: Energy demand by region 56 https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-region.html U.S. Oil and Natural Gas Production at Record Levels

INCREASING: Consumption, Production and Exports - hit - DECREASING: Imports exports - production - oil - crude s - -

Source: U.S. EIA – April 2019 Monthly Energy Review, Fig 1.1 https://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf levels/#494a6a785a78 - Source: Forbes: U.S. Crude Oil Production, Export Levels Export Hit Record Crude Oil Production, U.S. Forbes: Source: https://www.forbes.com/sites/judeclemente/2019/03/01/u record

57 Bill C-69 Impacts Major Projects in All Industries - Darlington Darlington –

58 Source: CANDU Plant Nuclear https://cna.ca/technology/energy/candu technology/ Bill C-48: Oil Tanker Moratorium Act

Canada’s West Coast Canada’s East Coast

Source: Resource Works 59 https://www.resourceworks.com/c48hearing Bill C-48: Support pipeline - - pro - 1.4941165 - 48 - c - nations - Source: CBC News https://www.cbc.ca/news/politics/tasker first

60 Some questions you may want to ask federal candidates that come knocking at your door

 Where do you stand on  Would you prefer oil by rail or Bill C-69? by pipeline?

 Where do you stand on Bill  Are you in favour of these C-48, the tanker ban? pipelines?

 Are you in favour of Canadian  Trans Mountain oil over foreign-sourced oil in Expansion (TMX) eastern Canada?  LNG Canada/Coastal GasLink  Do you support Canadian oil  A potential Energy East and natural gas development?

61 Petroleum Services Association of Canada

Thank you For more information, please visit psac.ca ANSWERS

VICKI BALLANCE Vice President, Operations Explorers and Producers Association of Canada

#OnChamberNetwork | #StrongerTogether CLOSING

GARY G. MAR Q.C. President and CEO Petroleum Services Association of Canada (PSAC)

#OnChamberNetwork | #StrongerTogether CONTACT US

FOR FURTHER INFORMATION

Please contact David Sword

#OnChamberNetwork | #StrongerTogether