Manufacturing Supply Chains Alberta's Oil

MANUFACTURING
SUPPLY CHAINS
IN ALBERTAS OIL SANDS
OCTOBER 2014
About CME
anadian Manufacturers & Exporters (CME),

established in 1872 by an Act of Parliament, is
Canadas largest trade and industry association and
is the voice of manufacturing and global business in
Canada. With offices in every province across Canada
and partnerships globally, CME directly represents more
than 10,000 leading companies in every sector and
every region of the country. Its membership network
accounts for an estimated 82 per cent of Canadian
manufacturing production and 90 per cent of goods
and services exports. Its membership is primarily small
and mid-sized companies, however it also includes
global multinationals involved in manufacturing,
supplying, and investing in Albertas oil sands.
For more than a decade, CME has been actively
helping its members do business in the oil sands. In
2000, CME founded the National Buyer-Seller Forum
(now National Supply Chain Forum) as a mechanism
to connect manufacturers from across Canada with oil
sands investors and owners. CME also provides direct
match-making services for our members to access
the oil sands and other natural resource projects
across Canada.
CME is also the Chair of the Canadian Manufacturing
Coalition, which represents over 50 sectoral
manufacturing associations which join together to
speak collectively about the critical importance of the
future of manufacturing in Canada.
More information is available at www.cme-mec.ca.
Foreword
anadian Manufacturers & Exporters is pleased to

present our second annual report on the impact of the
ongoing development of Albertas oil sands on Canadas
manufacturing sector.
The death of Canadas manufacturing sector has been
greatly exaggerated. So too has the negative impact of
the development of Albertas oil sands on the sector.
While Canadas manufacturing sector has gone through
significant challenges over the past decade, many of
which still continue, it will nevertheless produce record-breaking output in
2014. The sector was significantly and negatively impacted by the rapid rise
of the Canadian dollar, however much of that impact was due to too many
companies using the low dollar as a competitive crutch rather than using it
as a mechanism to create high value, innovative, world class products and
services to sell to the world.
Rather than the oil sands, or any major natural resource development
including mining, forestry and energy, being viewed as a negative force,
Canada must view these projects as generational opportunities for economic
growth. We must leverage and harness their development to maximize
economic opportunity today and for future generations.
As this report clearly indicates, manufacturers play a critical role in this
development. In 2010, manufacturers sold over $6 billion worth of high tech
products and services into the development and operation of Albertas oil
sands an increase of 27 per cent from 2009. While this $6 billion represents
only a fraction of the total economic output of the manufacturing sector, it is
a large and growing portion of sales for many sectors and many companies
especially those manufacturing machinery and equipment, steel and steel
products, and construction equipment. And these opportunities are not just
limited to Alberta manufacturers; they are being felt right across the country in
every province and region.
With hundreds of billions more expected to be invested into the development
and extraction of this natural resource, we must begin to focus our attention
on how Canadian manufacturers can continue to grow their sales into the oil
sands and capture more of these opportunities. In 2010, Canadian companies
captured 43.3% of the total manufacturing supply chain opportunities in the
oil sands, down from 46.1% the previous year. We need to reverse this trend.
Increasing domestic manufacturing content in the oil sands must be part of a
national strategy to maximize the value of natural resource development.
As a first step, Canadas manufacturers must understand the specific
opportunities that oil sands development offers them which this report aims
to support and they need to get more involved. Second, governments, oil
sands producers and manufacturers must work much more closely together
to improve domestic supply chains and to make them more efficient. This
step is critical to the long-run sustainability of oil sands development. Perhaps
most importantly, we must all work together to ensure that Canadians fully
understand and appreciate the economic importance of natural resource
development, and specifically Albertas oil sands, to ensure their development
continues responsibility and is not unnecessary restricted.
This is CMEs mission. We thank all of our partners who have supported our
efforts to date and we look forward to continuing to work with them and many
others towards these objectives.
Mathew Wilson
Vice President, National Policy
Canadian Manufacturers & Exporters
Table of contents
Executive Summary_________________________________________________________1
Production and Spending in the Oil Sands___________________________________1
Impacts of Oil Sands Expenditureson Manufacturing_______________________ 2
Recommendations___________________________________________________________ 3
Introduction___________________________________________________________________ 5
Albertas Oil Sands
and the Canadian Economy____________________________________________ 6
Current Oil Sands Production
and Expenditures in Alberta__________________________________________________ 6
Manufacturing Supply Chains
in the Oil Sands ____________________________________________________________10
National Overview____________________________________________________________11
Industry Breakdown Capital Investment____________________________12
Industry Breakdown MRO Expenditures____________________________13
Provincial Breakdown_______________________________________________________15
Overview_______________________________________________________________15
Newfoundland and Labrador__________________________________________16
Prince Edward Island___________________________________________________19
Nova Scotia___________________________________________________ 22
New Brunswick_____________________________________________ 25
Quebec___________________________________________________ 28
Ontario_________________________________________________________________31
Manitoba_________________________________________________ 34
Saskatchewan________________________________________________________ 37
Alberta___________________________________________________ 40
British Columbia_______________________________________________________ 43
Imports into Oil Sands Supply Chains_____________________________________ 46
Domestically-Sourced vs Foreign Goods__________________________________ 49
Looking Ahead: Oil Sands Production
and Expenditure Outlook______________________________________________ 50
Production Outlook________________________________________________________ 50
Market Access_________________________________________________________51
Oil Sands Expenditure Outlook____________________________________________ 52
Expenditure Scenarios________________________________________________ 52
Capital Investment Projections________________________________________ 52
Maintenance, Repair and Operations Expenditure Projections_______ 53
Potential Impact of Future Oil Sands Expenditures
on Canadian Manufacturers_______________________________________________ 53
Future Capital Investment_____________________________________________ 54
Future MRO Expenditures____________________________________________ 55
Benefits of Improving Supply Chain Penetration______________________ 56
Improved Supply Chain Penetration by Industry______________________ 56
Recommendations_______________________________________________________ 58
Conclusion____________________________________________________________________61
CONTENT
Executive Summary
lbertas energy sector is a major driver of economic activity across Canada. As global
demand for energy grows, investment in the provinces oil and gas sector is expected
to follow suit. Leading the way is the potential for billions of dollars of capital spending
in the oil sands in the coming decades.
Canadian manufacturers have long played a critical role in project development, operation and completion in the oil sands. They supply a wide range of technologies, goods and
services into project supply chains. As investment in the energy industry grows, manufacturers have significant potential to expand their business by accessing these supply chains.
In 2013, Canadian Manufacturers & Exporters (CME) conducted a detailed study of the
economic opportunities that oil sands development offers to Canadian manufacturers. That
study, entitled Oil Sands Manufacturing, was the first to pinpoint the specific nature of oil
sands supply chains and to quantify the present, and potential future, value of those supply
chains to Canadian manufacturers.
CME has since committed to producing three annual updates of that paper. The intent is to
provide new information on manufacturing supply chains in the oil sands while also tracking
changes in supply chain penetration over time. This paper is the first of these updates.
Production and Spending in the Oil Sands

It is difficult to overstate the size of the oil sands or the economic potential that resource
represents. At about 170 billion barrels, the oil sands contain the third largest crude oil
reserves in the world. More remarkable still, the actual volume of oil under northeastern
Alberta is actually ten times that amount; the remaining 90% is not considered to be
economically recoverable using currently-available technologies.
A tremendous amount of money has been spent unlocking the potential of the oil sands.
From 1997 to 2013, total annual expenditures in the oil sands have grown from $3.6 billion to just under $55 billion. In total, a staggering $348 billion has been spent over that
17-yearperiod.
As a result, oil sands output has soared and the industry itself has become one of the
primary engines of the Canadian economy. In 2013, total production hit a new record of 1.9
million barrels per day an 8.2% increase over the previous year. The oil sands account for
58% of all crude oil recovered in Canada, helping make Canada the fifth largest oil-producing
country in the world.
Oil sands expenditures, whether they be new capital project investments or ongoing
maintenance, repair and operations (MRO) spending, generate significant economic benefits
for Canada. They added $20.6 billion to the national economy through direct and indirect
impacts, as well as over creating 170,000 jobs and generating $1.0 billion in government
revenues, not including income taxes.
As significant as they are, these figures still reflect only a fraction of the overall impact of
the oil sands on the Canadian economy. They represent only the economic spinoffs from
oil sands expenditures and do not include the economic benefit (or government taxes and
royalties). Neither do they reflect the host of business services and downstream activities
that rely on the oil industry.
CONTENT
Oil Sands Supply Chains across Canada

The direct and indirect impacts of capital investment and MRO
expenditures in the oil sands generated the following economic
impacts across Canada in 2010:
$20.6 billion in GDP added to the Canadian economy
$6.0 billion in manufacturing output
More than 170,000 jobs
$1.0 billion in government revenues, not including income taxes
An estimated $7.2 billion in wages and salaries
Impacts of Oil Sands Expenditures on Manufacturing

To assess the impact of oil sands expenditures on manufacturing in Canada, CME
commissioned two economic simulations using Statistics Canadas input-output model. One
focused on the direct and indirect impact of oil sands capital investment on manufacturing, and
the other on the impacts of MRO expenditures. In total, capital and MRO spending in the oil
sands generated $6.0 billion in manufacturing output across Canada in 2010 (the most recent
year for which data are available). That total represents an increase of more than 27% over the
previous year.
While the majority of those impacts were in Alberta, all ten provinces saw an increase in
manufacturing output that can be attributed directly or indirectly to oil sands expenditures.
About $2.0 billion in manufacturing sales were generated outside Alberta in 2010, up from $1.6
billion the previous year. Ontario manufacturers captured 42% of that total.
Even though manufacturing sales grew significantly in 2010, the news was not all positive. The
27% increase in output was entirely because oil sands spending was higher that year, and not
because of better supply chain penetration. Canadian businesses captured 43.3% of the direct
and indirect manufacturing supply chain opportunities in 2010, down from 46.1% in 2009. This
decline in access to oil sands supply chains cost Canadian companies $634 million in lost sales
in 2010. Meanwhile, imports of manufactured goods into the oil sands rose by 51%, reaching
$8.3 billion that year.
As oil sands development continues to grow, the opportunities for Canadian manufacturers
will do likewise. To gain some sense of the potential impact on manufacturing across Canada,
CME constructed three scenarios for oil sands expenditures between 2012 and 2030, based
on historic spending levels and future expectations. Those scenarios suggest there could be
between $990 billion and $1.8 trillion spent on oil sands development over that period.
CONTENT
If Canadian manufacturers are able to at least maintain their present level of supply chain
access, oil sands expenditures could generate between $179 billion and $353 billion in total
business sales between 2012 and 2030. By 2030, annual sales could be as high as $33.3 billion
equivalent to the present-day value of the entire Canadian machinery-producing sector.
However, we cannot be content with those totals. Based on 2010 numbers, 57% of the
manufacturing opportunities from the oil sands are lost to imports. While it is unreasonable to
assume that Canadian companies could capture all the manufacturing spinoffs, it is critical that
we work to improve our supply chain penetration. If Canadian businesses were able to pick
up 25% of the manufacturing business currently held by foreign companies, it would create an
additional $59 billion to $117 billion in sales, on top of the figures above.
Recommendations
Achieving a 25% increase in supply chain penetration cannot happen overnight. However, given
the potential impact on Canadian manufacturers and the national economy generally, it is clearly
a worthwhile policy goal.
There are three general areas where action is needed to allow Canadian companies to sell
more manufactured goods into the oil sands: improving communication between manufacturers and project owners/developers; improving oil-sands-related manufacturing innovation in
Canada; and building the necessary infrastructure for Canadian oil to reach markets, and to
ensure the smooth operation and expansion of existing domestic supply chains.
1. Improving Communication between Project

Owners, EPCs and Manufacturers
A lack of timely and clear communication between project owners, engineering, procurement
and construction firms (EPCs) and manufacturers can create production delays and drive up
a range of manufacturing costs. Improving the accuracy of construction timelines, product
specifications and project scope would unlock innovation, create new efficiencies and
help build the relationships needed to create a vibrant and healthy domestic supply chain
into the oil sands. Specific measures that would help to improve communication between
manufacturers and project owners/developers include:
Establishing an oil sands supply chain working group with senior leaders to address major
bottlenecks in the supply chain, identify common threats to growth and propose solutions
for industry or government. Related work is being undertaken by GO Productivity (a
division of Productivity Alberta).
Having project owners and EPCs create detailed how-to guides to help manufacturers
better understand what they need to do to participate in oil sands supply chains.
CONTENT
Establishing an oil sands supply chain resource and procurement office to help
manufacturers lead about the specific procurement opportunities in the oil sands and to
efficiently engage and navigate supply chains.
Developing common supply chain pre-qualification standards for manufacturers and their
specific products in order to clarify and accelerate oil sands procurement.
2. Investing in Oil-Sands-Related Manufacturing Innovation

Technological innovation is pivotal to the success not only of oil sands development
generally, but of Canadian manufacturers in accessing the supply chains those investments
generate. For Canadian manufacturers to ensure a larger and growing role in the oil sands,
they need to be at the forefront of this innovation.
For this reason, CME recommends the creation of an Oil Sands Manufacturing Innovation
Centre, located in Ontario. A centre devoted to the development and testing of new products
and technologies in the oil sands would be tremendously beneficial to Canadian manufacturers looking to sell into that industry. Locating such a centre in Ontario would help eastern
Canadian companies improve their access to oil sands supply chains and reinforce the
message that the oil sands generate a truly national benefit.
3. Investing in Effective Supporting Infrastructure

Infrastructure is critical for two reasons. First, the transportation capacity to move crude oil
and bitumen to market is pivotal to future oil sands investment. Second, infrastructure is
needed to ensure that the upstream and downstream supply chains operate as smoothly
and efficiently as possible. Public infrastructure boosts productivity. The more productive
Canadian businesses are, the more competitive they will be in accessing oil sands supply
chains. In particular, work is needed to:
Improve the speed and perceived credibility of the pipeline approval process; and
Increase investment in critical infrastructure connecting oil sands sites to existing
transportation networks.
These issues are complex. They require governments, project owners, EPCs and
manufacturers to work together to overcome the barriers to growth and support domestic
supply chain growth and sustainability.
Canadians across the country have a stake in a strong and vibrant oil sands industry. The
challenge is to simultaneously secure the long-run competitiveness of that industry, while
also working to ensure that Canadian manufacturers are in the best possible position to
benefit from the value-added economic opportunities that oil sands investment generates.
Unlocking the full potential of the oil sands is critical to creating lasting economic benefit to
all regions of Canada.
CONTENT
Introduction
lbertas energy sector is a major driver of economic

activity across Canada. As global demand for energy
grows, expenditures in the provinces oil and gas
sector are expected to follow suit. Leading the way is the
potential for billions of dollars of capital spending in the oil
sands in the coming decades.
Canadian manufacturers have long played a critical role
in project development, operation and completion in the oil
sands. They supply a wide range of technologies, goods
and services into project supply chains. As investment in
the energy industry grows, manufacturers have significant
potential to expand their business by accessing these
supply chains. Canadian Manufacturers & Exporters (CME)
has long worked to connect Canadian manufacturers to
these opportunities.
In 2013, CME conducted a detailed study of the economic
opportunities that oil sands development offers to Canadian
manufacturers. That study, entitled Oil Sands Manufacturing,
was the first to pinpoint the specific nature of oil sands supply
chains and to quantify the present, and potential future, value
of those supply chains to Canadian manufacturers.
However, that study had two unavoidable drawbacks.
First, at the time, the necessary data was only available
for 2009 a function of the complexity of the economic
models that were used. Second, because it was the first of
its kind, that study was unable to provide any information
on the evolution of oil sands supply chains; it was limited to
offering a snapshot in time.
For this reason, CME has committed to publishing

three annual updates on our original 2013 publication.
The intent is to build on our initial work by updating
existing information on manufacturing supply chains
in the oil sands, and tracking how those supply chains
have changed. Specifically, these updates allow us to
track whether Canadian manufacturers have been able to
improve their position in those supply chains, or if more
of the value-added opportunities are leaking outside the
country. Developing a time series component to our supply
chain analysis will generate insight into the types of policy
solutions that may be required to increase Canadia supply
chain penetration.
Albertas oil sands have the potential to generate
billionsof dollars in new manufacturing output all
across Canada. However, this potential is far from
guaranteed. It requires better access to foreign markets
for Canadian crude oil, and improvements in supply chain
efficiency and the business environment generally. On
top of that, oilsands development is under siege from
multimilliondollar public relations campaigns and highprofile celebrity criticism. While there is always room to
improve the environmental performance of any industry,
CME believes that the positive economic story about
theoilsands also needs to be told. It is a story of job
creation, investment and growth in manufacturing across
Canada as a core element of energy development and
market access.
CONTENT
Albertas Oil Sands and the Canadian Economy

Current Oil Sands Production
and Expenditures in Alberta
1. Production
Oil sands expansion in Alberta is taking place at a rapid
rate. In spite of growing transportation challenges,
skilledlabour shortages, increased competition from
shaleoil production in the US and market access concerns,
oil sands production in 2013 rose by 8.2% compared
to theprevious year, hitting a new record of 1.9 million
barrelsper day.
Already, the oil sands are the dominant source of crude
oil production in Canada. In 2013, oil sands production
accounted for 58% of all crude oil recovered in Canada, up
from 47% five years earlier. That share is expected to rise
considerably in the years ahead as investment in the oil
sands continues to bring more production on line.
As a result, Canada has become a major source of
global crude oil production. As of 2012, Canada was the
worlds fifth-largest producer, behind Saudi Arabia, the
US, Russia and China. However, there is considerable
room to grow. The oil sands holds the worlds third
largest discovered reserves and crude oil production in
Canada is only about one third that of the United States.

Increasingly, oil sands production is taking place
through the development of in situ projects. In 2009,
the volume of recovered oil from mining activities was
slightly higher than from in situ production. Since then,
in situ production has grown by 69%, compared to 23%
for mining. Presently, in situ projects account for about
56% of all oil sands production in Alberta.
Oil Sands Are Driving Crude Oil Production Growth in Canada

(share of total production by province)
All others
16%
SK
17.2%
2008
Oil Sands
47.1%
All others
SK
14.7%
2013
9.4%
17.5%
19.7%
58.4%
Oil Sands
Other Alberta
crude
Other Alberta
crude
Source: CME calculations using data from CAPP
Mining and In Situ Production

Oil sands production comes in two forms. The first is traditional open-pit mining, used
to recover bitumen that lies relatively close to the land surface. All early oil sands
development in Alberta consisted of mining projects because bitumen close to the land
surface was easier to extract, and because the technology did not exist to economically
recover the deeper reserves.
The second form is called in situ production where bitumen that is too deep to be mined
is extracted by horizontal drilling and techniques such as steam-assisted gravity drainage
(SAGD). In such a process, companies drill two parallel horizontal wells. Steam is injected
into the top well, which heats the bitumen and causes it to drain into the bottom well
where it is recovered. It is estimated that only about 20% of the bitumen in Alberta is
recoverable through mining. The rest will be extracted though in situ means.
Although statistics can vary considerably from one project to the next, mining is generally
less energy intensive and is thus associated with lower per-barrel greenhouse gas
emissions compared to in situ projects. At the same time, while they require more
energyto produce a barrel of oil, in situ facilities have far less of an impact on the
surrounding landscape.
CONTENT
Top 10 Crude Oil Producers 2012
Proved Crude Oil Reserves by Country - 2012
(millions of barrels per day)
(billions of barrels)
Saudi Arabia
Venezuela
Canada
Iran
Iraq
Kuwait
UAE
Russia
Libya
Nigeria
Saudi Arabia
United States
Russia
China
Canada
Iran
UAE
Iraq
Mexico
Kuwait
0
10
12
Source: US Energy Information Administration
50
100
150
200
250
300
2. Expenditures
A tremendous amount of money has been spent on oil
sands development in recent years. According to the
Canadian Association of Petroleum Producers (CAPP), from
1997 to 2013, total annual expenditures have grown from
$3.6 billion to just under $55 billion. In total, a staggering
$348 billion has been spent over that 17-year period.
Oil sands expenditures can be divided into three broad
types of activities: in situ projects; mining projects; and oil
sands upgraders, which convert bitumen into synthetic
crude oil. Of the $348 billion in cumulative spending since
1997, just under half was on mining projects, about one
third on in situ development and operations, and the
remaining 17% on upgraders.
This ratio will change in the coming years. Early oil sands
development focused largely on mining activities. Beginning
in 2011, however, in situ investments took over the lead.
Given that 80% of the recoverable bitumen in the oil sands
is accessible only through in situ recovery methods, this
difference will only widen further in future.
For its part, spending on upgraders has been smaller
than either mining or in situ activity, reflecting the fact
that only a fraction of bitumen is upgraded or refined in
Alberta most is transported to other markets in Canada or
exported to the US. Moreover, because of the large up-front
construction costs, investments in upgraders tend to be
volatile from one year to the next, tracking the start-up and
completion of specific projects.
Oil Sands Expenditures
Cumulative Oil Sands Spending 1997 to 2013
($billions)
60
Upgraders
50
40
30
($billions)
57.3
Operating
124.4
Capital
164.4
20
10
0
In situ
Mining
199798 99 00 01 02 03 04 05 06 07 08 09 10 11 12 2013
Source: Canadian Association of Petroleum Producers (CAPP)
CONTENT
2.1 Capital Investment

Whether in upgraders, mining or in situ projects, there are
two broad types of oil sands expenditures new capital
investment, and spending on maintenance, repair and
operations (MRO). Capital investment refers to the spending
associated with developing a new mine, extraction site, or
upgrader. It can also include the expansion of an existing
operation, as well as the purchase of new machinery
and equipment for use on that site. Examples of new
capital investment include the purchase of trucks, mining
machinery, boiler tanks and other modular equipment.
It can also include the purchase of materials to link new
facilities to existing pipeline or rail transportation networks.
In 2013 alone, capital investment in the oil sands reached
a record $30.8 billion, up 13.3% over 2012 levels. Of that
total, $19.1 billion was in in situ projects and $8.6 in mining,
with the remainder invested in upgraders.
Oil Sands Capital Investment by Type
2.2 MRO Expenditures

Maintenance, repair and operations expenditures are
an often-overlooked component of oil sands spending.
Frequently, studies focus on initial capital investments but
pass over the significant levels of ongoing expenditure
required to keep oil sands operations running smoothly.
These expenditures cover everything from the cost of
scheduled or preventative maintenance to the purchase
and installation of replacement components for machinery
and equipment. Given the specialized nature of oil sands
extraction, products included in MRO expenses are often
raw steel or pre-fabricated components that are assembled
or even built on-site.
In general, MRO spending is less volatile than capital
investment as it is critical to maintaining existing production
activity and less susceptible to fluctuations in economic
conditions and the overall investment climate. Capital
investments can be deferred if the investment climate is not
attractive. MRO expenditures are less flexible.
($billions)
35
30
25
20
15
10
5
0
Oil Sands Operating Expenditures by Type

Upgraders
Mining
In Situ
($billions)
25
20
15
10
199798 99 00 01 02 03 04 05 06 07 08 09 10 11 12 2013
Investment growth in new oil sands capital has been

staggering. In situ capital investments in 2013 were 17
times higher than in 1997, while mining investment is nine
times higher. Annual upgrader investment rose from just
$5.7 million in 1997 to a peak of $6.6 billion in 2007 before
falling back to $3.1 billion.
Although the general growth trend is positive, capital
investment can be highly volatile from one year to the next.
The expected returns on new capital investments can
change considerably depending on prevailing economic
and policy conditions, the global sociopolitical environment,
and the outlook for crude oil prices. Projects that were
in the planning stages for years can be delayed or even
shelved if economic conditions are not suitable when it
comes time to break ground. This volatility is easily evident
in recent new capital spending patterns. From 2008 to
2009, new capital spending fell by 38% because of the
deterioration in global economic conditions at the time. It
took two years to recover the loss.
Upgraders
Mining
In Situ
5
0
199798 99 00 01 02 03 04 05 06 07 08 09 10 11 12 2013
This characteristic of MRO activity is reflected in recent

spending trends in the oil sands. Unlike capital investment,
which saw significant declines in 2003 and 2009, MRO
spending has grown far more consistently. From $1.7 billion
in 1997, MRO expenditures reached $24.1 billion in 2013.
Only twice in that period was there a year-over-year decline,
and in both cases the decrease was modest. There has not
been a drop in MRO spending in more than 10 years.
Unlike capital investment, upgraders are an important
component of oil sands MRO expenditures. Once upgrader
projects are completed, the ongoing costs of those facilities
can be considerable. As a result, even though there was
only $3.1 billion in new capital spending on upgraders
in 2013, MRO spending totalled a record $6.2 billion.
Meanwhile, MRO costs for in situ operations reached $8.7
billion in 2013, while mining operations were $9.1 billion.
CONTENT
3. Economic Contribution
The oil sands make a significant contribution to the
Canadian economy. However, the exact value of that
contribution is frequently underestimated for two reasons.
First, most available data are limited to the economic
contribution of the extraction process itself. Critics of the
oil sands have argued that the direct economic impact of
the industry is actually quite small about 2% of national
GDP. While accurate, this figure is also true in only the most
limited sense possible; the direct economic contribution
from taking the bitumen out of the ground. It does not
account for any of the impacts on refining, transportation,
business and engineering services, petrochemicals
production, research and development or any other
upstream or downstream activity that either serves the oil
sands or relies on the industry for business or feedstock.
In essence, to say that the oil sands accounts for 2%
ofthe Canadian economy is like saying that agriculture
accounts for just 1% of total economic output across
Canada. While technically true, no one would argue that
agricultures impact on Canadians lives is limited to one
cent out of every dollar our economy generates.
There is no doubt that Alberta captures the lions
share of the benefits, but the economic impact of the
oil sands extends well beyond provincial boundaries.
In particular, oilsands activity is one of the largest jobcreating industries in Canada. Every job in the oil sands
creates between 5.3 and 8.0 additional jobs elsewhere
in the country. That is the third highest jobs multiplier
in Canadaout of 235 industry categories. According
to estimates from the Government of Alberta, the oil
sands affect the jobs of 112,000 Canadians outside of
Albertaafigure expected to grow to over 500,000
overthe next 25 years. 1
On top of that, crude oil exports are critical to maintaining Canadas overall trade balance. Crude oil is Canadas
single most important export product, accounting for 17%
of all goods exports in 2013.2 Last year, Canada posted an
overall trade deficit of $3.1 billion dollars. Excluding our
crude oil trade surplus, that deficit is closer to $58.3 billion.
The oil sands, and Albertas energy sector in general, is
also a significant contributor to federal government coffers.
Although only the provincial government collects royalty
revenues, the federal government benefits from corporate
and personal income taxes, GST revenues, EI and CPP
premiums and a range of other taxes on the high incomes,
wealth and economic activity generated in the oil sands.
Albertas wealth also triggers billions of dollars in federal
equalization payments to other provinces, including $3.2
billion to Ontario in 2013-2014. Without the oil sands, it is
likely that the Ontario government would not receive any
money from that transfer program.
Moreover, many of these numbers are still limited to the
impact of extraction activity itself. They do not, for example,
account for the opportunities created in downstream industries like refining, transportation, petrochemicals and plastics
production. As shown in the figure below, these industries can
create as many or more jobs as oil sands extraction itself.
These figures also do not account for the economic
impact of the billions of dollars being spent on oil sands
development. Capital investment and MRO expenditures
are themselves tremendous drivers of economic activity
in Canada. As stated above, $348 billion has been spent
on oil sands development since 1997. Hundreds of billions
more will be spent over the next 1020 years. The potential
impact of these expenditures on the Canadian economy
and the manufacturing sector in particular is tremendous
and is the focus of the remainder of this paper.
Non-Conventional Oil Extraction is a Leading Creator of Jobs in Canada

(Total jobs created per job in a given industry) Source: Statistics Canada 2010 Input-Output Multiplier Tables
1
2
100
60
Trade Balance
Balance excluding crude oil
20
Direct and
Indirect Jobs
-20
Direct, Indirect
and Induced
-60
12
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Petroleum refineries
Grain and oilseed milling
Non-conventional oil extraction
Dairy product manufacturing
Non-ferrous metal production/processing
Conventional oil and gas extraction
Basic chemical manufacturing
Animal food manufacturing
Pay and specialty television
Lessors of real estate
Crude oil and other pipeline transportation
Diamond mining
Meat product manufacturing
Insurance carriers
Automobile and motor vehicle manufacturing
Crude Oil Dramatically Improves Canada's Trade Balance

(Trade surplus/deficit, in $billions)
15
Source: CME calculations using Statistics Canada data
Source: Alberta government: http://oilsands.alberta.ca/economicinvestment.html

Specific figures for oil sands crude are not available.
CONTENT
Manufacturing Supply Chains in the Oil Sands

The Canadian manufacturing sector has been a constant
fixture in supporting the growth and development of the
oil sands since the early 1950s supplying technologies,
machinery, and equipment in support of extraction and
upgrading operations. In 2013, CME began tracking
these relationships by analyzing the existing economic
linkages between domestic manufacturers and oil sands
development. This was a critical first step in improving
our understanding of how the impacts of the oil sands
reverberate across Canada, and in providing a sense of
what opportunities future oil sands investment hold for
Canadian manufacturers.
The second step is to track changes in these relationships over time to see how oil sands supply chains in
Canada are evolving. It is clearly in Canadas best economic interests to capture as much of the supply chain benefits
as possible. By tracking changes in supply chain relationships, we gain a better understanding of the challenges we
face in tapping into oil sands opportunities and what, if any,
policy intervention may be needed.
For this reason, CME once again commissioned two economic simulations from Statistics Canada using its inputoutput (I/O) model: a $1-billion shock to capital spending in
the oil sands; and an identical shock to operational spending. Our objective was twofold: to obtain more up-to-date
information on existing oil sands supply chain relationships
in Canada; and to learn how those relationships have
changes since our last report.
About Input-Output Modelling

Input-output models are an invaluable tool in assessing the economic impact of one particular
industry on the economy as a whole. These models use known information about inter-industry
relationships to track all the changes in the output of supplier industries that would be needed to
support an increase in output in any one industry.
As such, these models can be used either to explore in detail existing buyer-supplier relationships
in their entirety, or to estimate the impact of a change in activity in any one industry. A common
way to conduct input-output (I/O) analysis is to shock the existing model by supposing an
increase (or decrease) in output in a specific industry and then observing the direct and indirect
impacts in other sectors. This was the approach used in CMEs analysis.
Because I/O models use knowledge about existing economic relationships, they can provide an
accurate and highly detailed picture about the impacts that one industry can have throughout the
Canadian economy. However, they do have important limitations:
1. All relationships are linear. This means that if a $10 shock has an impact of $11 elsewhere
in the economy, then a $100 shock will have a $110 impact. This is unlikely to hold true
in the real economy because it does not account for economies of scale, changes in
production technologies and so on.
2. Demand shocks in the model are assumed to have no effect on prices.
3. The model is static it does not account for the time that might be required for the
economic impact of the shock to be fully realized.
4. There are no capacity constraints. The model assumes that the rest of the economy
always has the labour, goods and services immediately available to meet existing needs.
Finally, because of the complexity in tracking all the linkages across the economy, it takes several
years to finalize an I/O model. As such, the most recent year for which data are available is 2010.
10
CONTENT
National Overview
Because of their complexity, it takes about 36 months for
an I/O model of the Canadian economy to be developed
for any given year. As such, our updated simulation reflects
spending patterns in 2010. Based on total oil sands
spending of $30.5 billion that year, Canadian manufacturers
sold $6.0 billion of goods into the resulting supply chains,
up 27.3% from 2009 levels.
That $6.0 billion in manufacturing sales is divided in two
parts: sales generated by oil sands capital investment,
and those triggered by MRO expenditures. In general,
capital investment generates larger manufacturing spinoffs
because of a greater need for new machinery, equipment
and materials. For MRO spending, the manufacturing
requirements are lower. In 2010, manufacturing sales from
capital investment totalled $4.2 billion, compared to $1.7
billion for MRO activity.
Manufacturing sales on the capital side are also growing
faster than for MRO spending, although that difference
can largely be explained by higher expenditure levels.
Capital investment in the oil sands grew by 53.1% in 2010,
compared to 12.7% growth in MRO expenditures.
The increase in manufacturing activity from 2009 to 2010
can be broken up into three contributing factors. The first
is growth in oil sands expenditures themselves; if spending
increases from one year to the next, it is reasonable to expect
that the associated supply chain opportunities will grow as well.
The second factor is changing requirements in the oil
sands. As the industry evolves, its need for manufactured
products changes as well. Innovative practices, alternative
extraction methods, or the emergence of new technologies
can all impact the type of manufactured goods needed to
support investment.
The final growth driver is supply chain penetration. If
Canadian companies displace imports into the oil sands,
then they could drive their total sales higher, even if oil
sands investment were to remain constant.
Unfortunately for Canadian manufacturers, the growth in
sales in 2010 was because oil sands spending levels were
higher than the previous year. On the capital side, manufacturing sales grew by $1.1 billion in 2010. However, had
supply chain penetration remained unchanged from 2009
levels, Canadian manufacturing output would have grown
by $1.7 billion. Instead, a growing amount of the manufactured goods that went into oil sands capital projects
came from abroad. In 2009, Canadian companies captured
43.4% of the available supply chain opportunities on the
capital side. In 2010, that share fell to 39.4%. This decline
in supply chain penetration cost Canadian companies $634
million in lost sales.
The numbers are somewhat better for MRO spending
as oil sands companies tend to look more to domestic
firms to meet their repair and maintenance needs. MRO
supply chain penetration was 52.1% in 2010 essentially
unchanged from the previous year. Higher MRO spending
generated a $193-million increase in Canadian manufacturing sales, while changes in oil sands requirements added
another $24 million to manufacturers revenues.
Sales of Manufactured Goods into the Oil Sands

($billions)
5
2009
2010
4
3
2
1
0
Capital Investment
MRO Expenditures
Source: CME calculations based on Statistic Canadas input-output model
Oil Sands Supply Chains across Canada

The direct and indirect impacts of capital investment and MRO expenditures in the oil sands
generated the following economic impacts across Canada in 2010:
$20.6 billion in GDP added to the Canadian economy
More than 170,000 jobs
$1.0 billion in government revenues, not including income taxes
11
CONTENT
Growth Drivers in National Manufacturing Sales

($billions)
2.0
Capital Investment
MRO Expenditures
1.5
1.0
0.5
Supply Chain Penetration
0.0
Growth in
Change in
-0.5 Oil Sands Spending Oil Sands Requirements
-1.0
Canadian Share of Oil Sands Manufacturing Supply Chains

(%)
60
50
40
30
20
10
0
Industry Breakdown Capital Investment

By far the largest manufacturing beneficiaries of oil
sandscapital investment are producers of the machinery
and equipment needed to run mining and construction
operations. Capital investment is focused on putting in place
the equipment and facilities needed for long-term operations
toproceed. This machinery and equipment accounted for
half of the total impact on manufacturing from capital
spending in 2010 $2.1 billion out of $4.2billion in total
benefits to the sector. Other significant beneficiaries
included producers of steel tubes, pipes,
2009
2010
43.4%
52.1%
52.1%
39.4%
Capital
MRO
tanks and structures, as well as other products made from

basic metals.
While sales of mining and construction machinery and
equipment grew in 2010, producers also lost significant
market share. Total sales of those goods grew by $442
million in 2010, but had those companies been able to
maintain their 2009 market share, growth would have almost twice that amount. By contrast, many Canadian steel
producers managed to make gains into oil sands capital
investment opportunities. Producers of iron and steel pipes
and tubes in particular owed 31% of their increased sales in
2010 to improved supply chain penetration.
Canadian Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type
Value of the change attributable

to (in $000s):
Growth in
Change in Supply chain
oil sands
oil sands
investment requirements penetration
2009
2010
$000s
1,635.0
2,076.6
441.6
27.0
869.0
11.9
-439.3
Iron and steel pipes and tubes (except castings)
131.4
220.6
89.2
67.9
69.9
-8.1
27.5
Iron and steel basic shapes and ferro-alloy products
144.6
196.8
52.2
36.1
76.9
-7.8
-16.9
Diesel fuel
99.5
173.8
74.3
74.7
52.9
12.8
8.6
Boiler, tanks and heavy gauge metal containers
76.3
127.1
50.8
66.5
40.6
5.1
5.1
Fabricated steel plates and other fabricated structural metal
75.9
116.7
40.8
53.7
40.4
0.0
0.4
Concrete products
53.9
72.5
18.6
34.6
28.6
0.1
-10.1
Gasoline
45.4
68.8
23.4
51.4
24.2
1.6
-2.3
Other ornamental and architectural metal products
43.2
61.1
18.0
41.6
22.9
-2.0
-3.0
Logging, mining and construction machinery and equipment
Continue
12
CONTENT
Canadian Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
Other engine and power transmission equipment
39.3
59.7
20.5
52.2
20.9
-0.3
-0.1
Prefabricated metal building and components
31.7
49.0
17.3
54.4
16.9
-0.1
0.5
Metal valves and pipe fittings
33.2
48.3
15.1
45.4
17.6
3.4
-6.0
Plastic building and construction materials
27.9
47.4
19.4
69.6
14.8
3.2
1.4
Pumps and compressors
15.3
47.0
31.7
206.7
8.1
0.9
22.6
Custom work, other manufacturing production services
37.3
46.1
8.8
23.6
19.8
-7.5
-3.5
Ready-mixed concrete
39.5
42.9
3.4
8.7
21.0
-11.5
-6.1
Asphalt and asphalt products
22.2
40.4
18.2
82.1
11.8
3.7
2.8
Lubricants and other petroleum and coal products
16.2
40.0
23.7
145.9
8.6
11.3
3.8
Coating, engraving, heat treating and

similar metal processing services
32.7
38.5
5.8
17.6
17.4
-7.6
-4.0
Forged and stamped metal products
25.6
38.4
12.8
49.8
13.6
-0.6
-0.3
Rolled and drawn steel products including wire
22.6
37.2
14.6
64.8
12.0
-2.9
5.5
Cement
30.8
36.1
5.3
17.0
16.4
-5.7
-5.4
Measuring, medical and controlling devices
19.5
30.9
11.3
58.0
10.4
1.0
0.0
Ferrous metal castings
15.1
26.7
11.6
77.1
8.0
0.1
3.5
Chemical products not elsewhere classified
13.1
23.5
10.4
79.0
7.0
1.6
1.8
Industry Breakdown MRO Expenditures

On the MRO side, the impact on manufacturing is
moreevenly distributed across a range of products.
Iron and steel pipes and tubes top the list with $271
million in sales in 2010, followed by mining and
construction machinery and equipment, at $225
million. Otherimportantmanufactured goods that
feed intoMROspending include diesel, gasoline and
other petroleum products needed to keep oil sands

operationsrunning.
As on the capital investment side, supply chain penetration
decreased markedly for mining and construction machinery
and equipment producers in 2010. Subtracting out that one
industry, Canadian companies actually enjoyed an increase
in MRO supply chain penetration in 2010. The increase was
especially strong for steel pipe producers where 54% of output
growth came from displacing imported steel.
13
CONTENT
Canadian Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
expenditures requirements penetration
2009
2010
$000s
197.7
270.7
73.0
36.9
25.1
8.7
39.2
237.2
225.4
-11.8
-5.0
30.1
4.9
-46.8
Diesel fuel
188.3
218.8
30.4
16.2
23.9
3.7
2.9
Gasoline
103.5
108.2
4.7
4.5
13.1
-2.9
-5.5
76.1
91.1
15.0
19.7
9.7
10.2
-4.8
61.8
69.3
7.5
12.1
7.8
-0.4
0.0
38.1
43.9
5.9
15.5
4.8
-0.1
1.2
36.6
43.2
6.6
18.1
4.6
4.5
-2.6
Heavy fuel oils
39.7
43.2
3.5
8.7
5.0
0.7
-2.3
Printed products
44.0
35.6
-8.3
-19.0
5.6
-10.7
-3.3
30.6
33.5
2.9
9.6
3.9
-1.4
0.4
Other basic inorganic chemicals
24.5
28.4
3.9
15.9
3.1
-0.1
0.9
Petrochemicals
13.2
26.9
13.8
104.4
1.7
9.9
2.2
22.1
25.3
3.2
14.3
2.8
0.4
-0.1
Other basic organic chemicals
17.1
24.3
7.1
41.6
2.2
0.4
4.5
Industrial gases
16.9
21.1
4.2
25.1
2.1
1.7
0.4
Threaded metal fasteners and other turned metal products
17.1
19.7
2.7
15.7
2.2
1.3
-0.8
15.9
18.9
3.0
18.8
2.0
1.0
0.0
19.2
17.4
-1.8
-9.2
2.4
-1.3
-3.0
Jet fuel
15.3
17.0
1.6
10.7
1.9
0.8
-1.1
Transformers
16.1
16.0
-0.1
-0.6
2.0
-0.1
-2.0

16.0
15.7
-0.3
-1.7
2.0
-2.0
-0.3
13.1
13.4
0.3
2.6
1.7
-1.3
0.0
5.8
13.1
7.3
125.8
0.7
0.4
6.1
8.2
12.2
4.0
49.1
1.0
0.1
2.9
14
CONTENT
Provincial Breakdown
Overview
As might be expected, Alberta businesses supplied
the majority of made-in-Canada products that feed
into industrial demand in the oil sands. Over the years,
the province has built up a significant and growing
manufacturing presence built on meeting demand from
the fossil fuel sector. Of the $6.0 billion in Canadian
manufacturing sales into the oil sands in 2010, a full
two thirds came from Alberta. The provincial share was
especially high in capital investment where provincial
manufacturers captured 70% of the domestic supply
chain opportunities unchanged from 2009 levels.
Bycomparison, Alberta manufacturers accounted for just
under 59% for MRO-driven industrial demand in 2010 a
slight increase compared to the previous year.
Provincial Share of Manufactured Goods Sales

into New Capital Investments
AB 70.0%
BC 2.9%
Atlantic 1.0%
QC 4.1%
ON 12.3%
SK/MB 9.7%
Provincial Share of Manufactured Goods Sales

into MRO Expenditures
BC 3.6%
Atlantic 2.0%
Although Alberta businesses capture the lions share of

domestic oil sands spinoffs, the impacts are felt all across
the country. Oil sands-related investment triggered $2.0
billion in additional manufacturing output in other provinces
in 2010, up from $1.6 billion in 2009 an increase of nearly
25% in just one year.
Share of Capital Investment Impacts Outside Alberta

2009
2010
39.4% 41.0%
23.9% 24.3%
14.2%13.7%
11.3% 9.6%
7.7% 8.0%
3.5% 3.4%
Atlantic
QC
ON
MB
SK
BC
Excluding Alberta, Ontario benefits the most from oil

sands supply chains. Capital investment generated $519
million in manufacturing activity in Ontario 41% of the
total impact outside Alberta. At $307 million, Saskatchewan
manufacturers were next, with 24.3% of total sales from
outside Alberta. Quebec was third at 13.7% of 13.7% of
domestic, non-Alberta manufacturing output.
For MRO expenditures, the relative benefits to Ontario
are even higher. MRO spending generated $329 million in
sales for the provinces manufacturers in 2010. Thatrepresented nearly 19% of the total national impact and just
under 46% of the impact outside Alberta. Quebec was
next at $118 million, which represented 16.3% of the total
impact excluding Alberta.
Share of MRO Expenditures Impacts Outside Alberta

39.9% 45.5%
2009
2010
QC 6.8%
AB 58.5%
17.2%16.3%
ON 18.9%
10.2% 8.3%
9.1% 8.7%
4.6% 4.1%
4.3% 4.9%
SK/MB 10.2%
Atlantic
QC
ON
MB
SK
BC
15
CONTENT
Newfoundland and Labrador
Oil Sands Supply Chains in Newfoundland and Labrador

generated the following economic impacts in Newfoundland and Labrador in 2010:
$38.1 million in GDP to the provincial economy
$12.0 million in manufacturing output
242 direct and indirect jobs
$846,000 in provincial and municipal government revenues, not including income taxes
An estimated $10.3 million in wages and salaries
Oil sands expenditures directly and indirectly generated

$12.0 million in business for Newfoundland and Labrador
manufacturers in 2010, nearly a 30% increase over 2009
levels. Sales relating to new capital investment totalled
$8.9 million, while those relating to MRO expenditures were
valued at $3.1 million.
The industries in Newfoundland and Labrador most
affected by oil sands expenditures are largely the same,
whether they be on the capital or the MRO side. Mining and
construction machinery and equipment production dominates the list, with total sales reaching $7.6 million in 2010.
The vast majority of those sales were triggered by oil sands
capital investment. Comparatively speaking, the impact
of oil sands expenditures on other sectors was relatively
modest. Production of beverages, forged and stamped
metal products, and refined petroleum products such as
diesel fuel and industrial lubricants account for most of the

remaining impacts.
The 30% increase in manufacturing sales in 2010 is
entirely because of higher expenditures in the oil sands that
year. Supply chain penetration declined in 2010, primarily
on the capital investment side. Had provincial businesses
been able to maintain their 2009 share of manufacturing
supply chains, output would have increased by $3.8 million
(to $13.1 million) instead of by $2.7 million. This lower
degree of supply chain penetration was concentrated in
mining and construction machinery and equipment, as
well as diesel fuel and most types of basic and fabricated
steel products. Notable exceptions where supply chain
access improved include forged and stamped metal
products, plastic building and construction material, and
industriallubricants.
Growth Drivers in Manufacturing Sales
Newfoundland and Labrador Sales

of Manufactured Goods into the Oil Sands
(in $millions)
(in $millions)
4
10
2009
2010
Capital Investment
MRO Expenditure
Supply chain penetration

0
4
2
Growth in
oil sands spending
Change in
oil sands requirements
-2
0
Capital Investment
MRO Expenditure
16
CONTENT
Newfoundland and Labrador Manufacturing Sales Generated by Oil Sands Capital Investment
Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
4,782.0
6,877.0
2,095.0
43.8
2,541.6
34.9
-481.5
Diesel fuel
253.7
292.5
38.8
15.3
134.8
32.6
-128.7
150.7
243.7
93.0
61.8
80.1
-3.3
16.3
Beverages other than water and soft drinks
163.5
240.1
76.6
46.8
86.9
-11.3
1.0
53.4
191.7
138.2
258.6
28.4
37.1
72.7
Fabricated metal products, not elsewhere classified
133.8
139.7
5.9
4.4
71.1
-8.6
-56.6
6.8
116.6
109.8
1,621.8
3.6
0.8
105.5
38.1
108.4
70.3
184.8
20.2
-2.4
52.5
Heavy fuel oils
59.2
102.8
43.6
73.7
31.5
6.5
5.7
159.4
71.9
-87.5
-54.9
84.7
-8.6
-163.6
27.0
67.6
40.7
150.7
14.3
3.2
23.1
Jet fuel
37.9
65.6
27.7
73.3
20.1
7.7
-0.1
Gasoline
48.4
60.4
12.0
24.9
25.7
1.7
-15.3
92.8
57.5
-35.3
-38.0
49.3
0.0
-84.6
32.0
44.7
12.6
39.4
17.0
-6.5
2.1
Newsprint
45.2
39.4
-5.8
-12.9
24.0
0.4
-30.3
Printed products
20.5
34.7
14.2
69.2
10.9
-3.6
6.9
16.7
28.7
12.0
71.6
8.9
-0.8
3.9

14.2
23.7
9.4
66.1
7.6
-3.3
5.2
Light fuel oils
8.2
12.4
4.3
52.2
4.3
0.4
-0.5
Cement
33.9
11.4
-22.4
-66.2
18.0
-6.3
-34.2
Navigational and guidance instruments
0.7
11.0
10.3
1,447.1
0.4
0.2
9.7
Non-metallic mineral products, not elsewhere classified
0.0
9.9
9.9
n/a
0.0
0.0
9.9
Aircraft parts and equipment
3.9
9.7
5.7
144.6
2.1
1.3
2.3
Paperboard containers
4.9
8.2
3.3
66.3
2.6
-0.5
1.1
17
CONTENT
Newfoundland and Labrador Manufacturing Sales Generated by Oil Sands MRO Expenditures
Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
expentitures requirements penetration
2009
2010
$000s
734.0
771.9
37.9
5.2
93.0
15.1
-70.2
Beverages other than water or soft drinks
369.9
374.3
4.4
1.2
46.9
-37.6
-4.9
173.6
369.5
195.9
112.8
22.0
-1.0
174.9
Diesel fuel
441.2
344.7
-96.4
-21.9
55.9
8.6
-160.9
98.9
253.1
154.2
155.9
12.5
12.3
129.4
63.0
135.4
72.4
114.8
8.0
2.8
61.6
Jet fuel
102.0
124.9
22.9
22.4
12.9
5.1
4.8
51.9
90.9
38.9
75.0
6.6
-0.2
32.5
Heavy fuel oils
64.9
86.0
21.1
32.5
8.2
1.1
11.8
Gasoline
85.0
78.3
-6.7
-7.9
10.8
-2.4
-15.1
Printed products
50.6
61.5
10.9
21.5
6.4
-12.3
16.8
Newsprint
95.6
55.7
-39.9
-41.7
12.1
-5.0
-47.0
6.7
46.7
40.0
598.3
0.8
0.4
38.7
57.9
40.5
-17.5
-30.2
7.3
-6.8
-18.0
57.0
34.4
-22.5
-39.5
7.2
-9.9
-19.8
59.3
25.3
-33.9
-57.2
7.5
7.9
-49.4
8.7
17.3
8.6
98.9
1.1
3.1
4.4
Light fuel oils
14.6
16.1
1.5
10.1
1.8
-0.6
0.2
Cement
66.5
15.7
-50.8
-76.3
8.4
36.5
-95.7
Navigational and guidance instruments
1.4
14.0
12.7
939.4
0.2
0.2
12.3
11.5
13.8
2.3
20.1
1.5
-1.1
2.0
0.0
13.7
13.7
n/a
0.0
0.0
13.7
9.0
9.8
0.8
9.1
1.1
-0.4
0.0
Fluid milk and processed milk products (except frozen)
9.2
9.4
0.2
2.0
1.2
-0.6
-0.4
Prepared and packaged seafood products
43.0
9.3
-33.7
-78.3
5.5
-1.9
-37.3
18
CONTENT
Prince Edward Island
Oil Sands Supply Chains in Prince Edward Island

generated the following economic impacts in PEI in 2010:
$473,180 in manufacturing output
$127,000 in provincial and municipal government revenues, not including income taxes
The payment of just under $1.0 million in wages and salaries
Canadas smallest province was also the least impacted

by oil sands activity in 2010. In total, PEI manufacturers
sold $473,180 in goods to support oil sands growth and
operations in 2010, a 13.8% increase over 2009 levels.
Of that total, $183,632 was triggered by oil sands capital
investment while $289,547 came from MRO expenditures.
PEI is one of only two provinces (Nova Scotia being the
other) where the impact of MRO expenditures is greater
than for capital investments.
The direct and indirect impacts on the capital side
in PEIwere spread across a range of manufacturing
activities.The largest impacts were in the production
of paperboard containers, frozen foods and fabricated
metals.The ripple effects of oil sands development
werealso felt as far down the supply chain as animal
feedproduction.
In terms of MRO spending, the impacts were more

heavily concentrated in a single sector the production
of rail car parts. Other manufacturing businesses affected
by MRO spending include those producing food and
beverages, and ammonia and chemical fertilizer.
Growth in oil-sands-related manufacturing in PEI in 2010
was not the result of better supply chain penetration, but
rather of higher oil sands spending. Had PEI manufacturers
been able to maintain their 2009 share, their sales would
have been $528,366 in 2010 instead of $473,180. Changes
in oil sands requirements also had a slightly positive effect
on manufacturing spinoffs in PEI. On an industry-specific
level, food and rail parts producers improved their supply chain
access, while those manufacturing forged and stamped metal
products, as well as fabricated steel plates and structural
metals, saw their access to supply chains deteriorate.
PEI Sales of Manufactured Goods into the Oil Sands
(in $thousands)
(in $thousands)
2009
2010
300
MRO Expenditure
40
200
100
0
Capital Investment
80
Supply chain penetration

Growth in
oil sands spending
Change in
-40
Capital Investment
MRO Expenditure
19
CONTENT
PEI Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
15.5
22.1
6.5
42.0
8.3
-1.6
-0.2
Preserved fruit and vegetables and frozen foods
4.9
13.9
9.0
183.5
2.6
0.2
6.1
18.6
13.1
-5.5
-29.4
9.9
0.0
-15.4
Other animal feed
5.0
13.0
8.1
161.4
2.7
-0.6
6.0
Engineered wood members and trusses
0.5
12.9
12.4
2,440.0
0.3
0.4
11.7
4.8
12.5
7.7
159.1
2.6
0.3
4.8
Freight and utility trailers
12.7
11.4
-1.3
-10.5
6.8
1.2
-9.3
Bottled water, soft drinks and ice
6.4
11.3
4.9
75.7
3.4
0.8
0.6
Ammonia and chemical fertilizer
8.7
9.6
0.9
10.0
4.6
-1.2
-2.6

0.9
7.5
6.6
754.3
0.5
-0.2
6.4
Other miscellaneous general-purpose machinery
5.3
5.5
0.2
3.2
2.8
-0.2
-2.4
14.6
4.9
-9.6
-66.1
7.7
-0.3
-17.1
Pharmaceutical and medicinal products
2.9
4.1
1.1
38.4
1.6
0.0
-0.4
Parts for railroad rolling stocks
2.2
3.7
1.5
67.5
1.2
1.3
-1.0
Cheese and cheese products
3.3
3.6
0.2
7.5
1.8
0.0
-1.5
Motor vehicle bodies and special purpose motor vehicles
1.7
3.3
1.5
86.9
0.9
-0.3
0.9
Other dairy products
1.9
3.1
1.2
65.8
1.0
0.1
0.2
3.4
2.8
-0.6
-16.7
1.8
0.0
-2.4
Agricultural, lawn and garden machinery and equipment
2.1
2.5
0.3
15.5
1.1
-0.6
-0.2
Fresh and frozen beef and veal
1.5
2.4
0.9
56.8
0.8
0.2
-0.1
Printed products
1.1
2.2
1.1
104.9
0.6
-0.2
0.7
0.9
1.9
1.0
109.7
0.5
0.0
0.5
Signs
2.0
1.8
-0.3
-13.1
1.1
0.3
-1.6
0.2
1.7
1.5
866.6
0.1
0.0
1.5
0.9
1.5
0.7
79.3
0.5
0.3
-0.1
20
CONTENT
PEI Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
75.1
97.9
22.8
30.3
9.5
-3.0
16.3
29.2
24.0
-5.2
-17.9
3.7
-3.1
-5.8
19.8
23.0
3.3
16.5
2.5
-0.8
1.5
Preserved fruit and vegetables and frozen foods
10.6
21.3
10.7
100.8
1.3
-0.3
9.6
14.4
17.6
3.2
21.8
1.8
0.9
0.4
Other animal feed
9.3
17.5
8.2
88.3
1.2
-1.0
8.0
Pharmaceutical and medicinal products
8.9
8.5
-0.4
-4.4
1.1
-0.3
-1.3
35.5
8.2
-27.3
-76.8
4.5
-0.2
-31.6
7.8
7.9
0.1
1.0
1.0
-1.4
0.5
4.7
6.1
1.4
29.4
0.6
1.7
-0.9
2.8
5.7
2.9
105.3
0.4
-0.5
3.1

3.5
5.4
1.9
53.6
0.4
-0.4
1.9
Cheese and cheese products
6.3
5.2
-1.1
-17.2
0.8
-0.3
-1.6
Other dairy products
3.7
4.7
1.0
25.8
0.5
-0.1
0.6
7.6
4.4
-3.2
-42.0
1.0
-0.3
-3.8
2.6
4.1
1.5
56.9
0.3
-0.1
1.3
Fresh and frozen beef and veal
3.2
3.7
0.5
14.3
0.4
0.3
-0.2
Printed products
2.1
3.2
1.1
53.3
0.3
-0.5
1.4
1.8
2.9
1.1
58.5
0.2
-0.1
0.9
Signs
3.5
2.4
-1.1
-32.2
0.4
0.4
-1.9
Cookies, crackers and baked sweet goods
2.0
1.7
-0.3
-14.3
0.3
-0.1
-0.5
Engineered wood members and trusses
0.2
1.6
1.5
956.3
0.0
0.0
1.4
Other miscellaneous food products
1.9
1.2
-0.7
-36.5
0.2
0.0
-0.9
0.2
1.1
1.0
576.7
0.0
0.0
1.0
Fruit and vegetable juices (including frozen concentrated)
0.8
1.1
0.4
46.1
0.1
0.1
0.1
21
CONTENT
Nova Scotia
Oil Sands Supply Chains in Nova Scotia

generated the following economic impacts in Nova Scotia in 2010:
$1.8 million in provincial and municipal government revenues, not including income taxes
Nova Scotia manufacturers directly and indirectly sold

$19.5 million in goods into Albertas oil sands in 2010, an
increase of 43.0% over 2009 levels, and by far the fastest
rate of growth of any province. That $19.5-million total was
relatively evenly divided between capital- and MRO-induced
manufacturing activity. Capital investments generated $9.3
million in impacts, while MRO spending resulted in $10.1
million in manufacturing sales in Nova Scotia.
The impact of oil sands capital investment was
distributed across a range of industries but concentrated
most in diesel fuel production ($1.5 million) and other
petroleum products. The province also sold tires, iron
and steel pipes, measuring devices and a range of paper
and plastic products. The impacts on the MRO side are
somewhat more balanced, but are spread across essentially

the same set of industries.
Nova Scotia is the only province to have significantly
improved its access to oil sands supply chains in 2010.
While some specific sectors, like those producing iron and
steel pipes and tubes, saw their supply chain penetration
deteriorate, most others were able to make gains. Those gains
were strongest in refined petroleum products and tires.
The bad news for Nova Scotia is that the improved
supply chain penetration on the petroleum side will
be fleeting. The province shut down its only refinery
in Dartmouth in 2013, meaning that any supply chain
improvement from 2010-2013 will disappear once the
impact of that closure is reflected in the model.
Nova Scotia Sales of Manufactured

Goods into the Oil Sands
(in $millions)
(in $millions)
2009
2010
12
10
3.5
3.0
Capital Investment
2.5
MRO Expenditure
2.0
1.5
1.0
0.5
0.0
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
22
CONTENT
Nova Scotia Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
Diesel fuel
848.8
1,447.6
598.8
70.5
451.1
109.1
38.6
Tires
342.2
881.4
539.2
157.6
181.9
20.5
336.9
Gasoline
322.6
809.3
486.6
150.8
171.5
11.1
304.0
694.6
682.9
-11.7
-1.7
369.2
-43.0
-337.9
455.2
566.0
110.7
24.3
241.9
22.5
-153.7
Other converted paper products
283.9
474.5
190.6
67.1
150.9
-7.3
47.0
233.7
431.1
197.4
84.4
124.2
26.6
46.6
Paper (except newsprint)
226.1
388.0
161.9
71.6
120.2
18.1
23.5
Heavy fuel oils
92.0
387.3
295.3
321.2
48.9
10.0
236.4
184.6
333.9
149.3
80.9
98.1
-8.7
59.8
208.9
325.4
116.5
55.8
111.0
144.9
-139.5
131.9
223.0
91.2
69.1
70.1
-0.3
21.4
Jet fuel
94.5
207.4
113.0
119.6
50.2
19.3
43.5
Paperboard
94.7
192.7
97.9
103.4
50.3
10.3
37.3
79.0
166.2
87.2
110.4
42.0
-1.7
47.0
39.4
102.7
63.3
160.4
21.0
6.5
35.8
9.1
78.0
68.9
759.4
4.8
-0.1
64.2
Plastic products, not elsewhere classified
29.0
70.0
41.0
141.5
15.4
17.0
8.6
Plastic films and non-rigid sheets
82.5
64.4
-18.1
-22.0
43.9
12.3
-74.3
Wood pulp
22.6
60.1
37.5
165.5
12.0
-2.7
28.1
Wood chips
29.9
59.7
29.8
99.6
15.9
0.5
13.4
28.2
59.1
30.9
109.4
15.0
0.2
15.7
42.3
55.8
13.6
32.1
22.5
-2.9
-6.0
Light fuel oils
14.7
53.2
38.5
261.7
7.8
0.7
30.0
Cement
24.4
52.6
28.2
115.6
13.0
-4.5
19.7
23
CONTENT
Nova Scotia Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
1,668.0
1,870.0
202.0
12.1
211.4
32.4
-41.9
Tires
703.9
1,252.3
548.4
77.9
89.2
-16.9
476.1
Gasoline
673.0
1,178.0
505.0
75.0
85.3
-19.1
438.7
1,077.1
901.2
-176.0
-16.3
136.5
47.4
-359.9
448.0
503.3
55.3
12.4
56.8
-27.0
25.6
Heavy fuel oils
144.1
493.6
349.5
242.5
18.3
2.5
328.7
395.9
472.8
76.9
19.4
50.2
-21.0
47.7
Jet fuel
296.5
413.8
117.3
39.6
37.6
14.9
64.8
395.2
408.0
12.7
3.2
50.1
49.0
-86.4
137.4
270.9
133.5
97.1
17.4
-0.8
116.9
145.2
177.1
31.9
22.0
18.4
9.1
4.4
Paperboard
120.9
169.4
48.5
40.2
15.3
4.9
28.3
132.1
113.1
-18.9
-14.3
16.7
-2.2
-33.4
Other electronic components
3.0
109.3
106.3
3,519.5
0.4
0.2
105.8
Other beverages
93.2
86.6
-6.6
-7.1
11.8
-9.5
-9.0
73.4
79.9
6.4
8.8
9.3
25.9
-28.8
Light fuel oils
30.0
76.4
46.4
155.0
3.8
-1.2
43.8
Printed products
83.1
73.8
-9.3
-11.2
10.5
-20.1
0.3
Cement
46.2
70.9
24.7
53.3
5.9
25.4
-6.6
Other electrical equipment and components
67.8
69.9
2.1
3.1
8.6
0.9
-7.3
Wood chips
52.8
69.0
16.3
30.8
6.7
3.2
6.3
Wood pulp
37.0
66.7
29.7
80.3
4.7
-8.1
33.1
Aircraft and aircraft engines
61.7
65.6
3.9
6.3
7.8
2.5
-6.4
21.1
60.0
38.8
183.8
2.7
-3.3
39.5
45.6
54.8
9.2
20.3
5.8
1.1
2.3
Diesel fuel
24
CONTENT
New Brunswick
Oil Sands Supply Chains in New Brunswick

generated the following economic impacts in New Brunswick in 2010:
Thanks in large part to the presence of Canadas largest

oil refinery in Saint John, New Brunswick captured more
oil sands supply chain benefits than the other three
Atlantic Provinces combined. In 2010, $47.0 million in
manufacturing activity was the direct or indirect result
of oil sands investment an increase of just under
26% over2009 levels. Of that total, $25.2 million came
from capital investments and the remaining $21.8 from
MROspending.
On the capital investment side, by far the largest impact
was in diesel fuel production, which generated $10.5
million more in revenues than it would have in the absence
of oil sands capital investment. Other affected goods
included logging, mining and construction machinery and
equipment, specialized metal products, asphalt and paper.
In terms of MRO spending, the impact on diesel fuel
production in New Brunswick is even more pronounced,
reaching $13.3 million in 2010. Comparatively speaking,

most other industry impacts are small. The largest of these
include forged and stamped metal products, paper and a
range of other refined petroleum products.
For the most part, the increase in oil-sands-related
manufacturing in New Brunswick was the result of higher
oil sands expenditures and not greater supply chain
penetration. Supply chain access dropped markedly
on the capital side, while the provinces manufacturers
successfully made some inroads into MRO oil sands
opportunities. Had manufacturers maintained their 2009
levels of supply chain access, they would have generated
$60 million in sales instead of $47 million.
The overall decrease in supply chain access was
drivenby a steep drop in penetration for manufacturers
ofmachinery and equipment. Most other sectors actually
saw their supply chain penetration improve in 2010.
New Brunswick Sales of Manufactured

30
(in $millions)
2009
2010
25
(in $millions)
Capital Investment
15
MRO Expenditure
10
20
15
10
-5
-10
0
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
25
CONTENT
New Brunswick Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type
2009
2010
$000s

to (in $000s):
Growth in
oil sands
oil sands
Diesel fuel
5,262.4 10,475.2 5,212.8
99.1
2,796.9
676.2
1,739.7
8,665.7
3,252.4 -5,413.3
-62.5
4,605.8
63.2
-10,082.4
859.5
1,989.5
1,130.0
131.5
456.8
-40.5
713.6
475.6
1,146.2
670.5
141.0
252.8
78.7
339.1
307.4
906.9
599.5
195.0
163.4
24.7
411.5
246.9
878.7
631.8
255.9
131.2
1.4
499.1
501.9
684.0
182.1
36.3
266.8
-11.1
-73.6
Gasoline
342.1
567.3
225.2
65.8
181.8
11.8
31.6
141.6
362.5
220.9
156.0
75.3
-8.8
154.4
240.4
355.4
115.0
47.8
127.8
-13.0
0.2
Jet fuel
173.4
336.3
162.9
93.9
92.2
35.4
35.3
177.2
289.7
112.5
63.5
94.2
20.1
-1.8
Industrial and commercial fans and blowers,

and air purification equipment
154.8
270.1
115.2
74.4
82.3
-11.4
44.3
Heavy fuel oils
147.2
264.0
116.8
79.3
78.2
16.0
22.5
Prefabricated wood buildings and components
114.6
247.4
132.8
115.9
60.9
-8.7
80.6
6.9
220.6
213.7
3,094.6
3.7
-0.4
210.5
Refined precious metals, precious metals

alloys and gold as store of value
103.0
218.2
115.2
111.9
54.7
48.2
12.3
Light fuel oils
125.3
183.5
58.2
46.4
66.6
5.9
-14.3
Wood pulp
46.7
163.5
116.8
249.9
24.8
-5.5
97.4
Signs
38.3
161.1
122.8
320.6
20.4
5.2
97.2
Heating and cooling equipment (except

household refrigerators and freezers)
88.5
144.2
55.7
63.0
47.0
-2.8
11.5
Other transportation equipment and related parts
0.3
136.4
136.0
38,927.2
0.2
0.1
135.8
89.4
130.3
41.0
45.9
47.5
11.6
-18.1
56.1
110.3
54.1
96.4
29.8
-3.9
28.2
46.2
110.1
63.9
138.1
24.6
2.3
37.0
26
CONTENT
New Brunswick Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type
2009
2010
$000s

to (in $000s):
Growth in
oil sands
oil sands
Diesel fuel
9,909.2 13,312.2 3,403.0
34.3
1,256.2
192.6
1,954.2
1,186.7
1,267.8
81.1
6.8
150.4
-7.0
-62.3
600.1
1,115.0
514.9
85.8
76.1
-36.2
475.0
Gasoline
664.4
838.3
173.9
26.2
84.2
-18.8
108.5
Jet fuel
389.1
531.1
142.0
36.5
49.3
19.5
73.2
236.1
466.7
230.6
97.7
29.9
10.4
190.3
1,259.4
387.3
-872.1
-69.2
159.7
26.0
-1,057.7
Heavy fuel oils
267.1
382.4
115.3
43.1
33.9
4.6
76.8
Light fuel oils
272.8
278.8
6.0
2.2
34.6
-10.7
-17.9
Signs
68.2
216.7
148.5
217.7
8.6
7.2
132.7
213.3
209.8
-3.4
-1.6
27.0
13.6
-44.1
Wood pulp
85.6
200.3
114.6
133.9
10.9
-18.7
122.5
0.6
171.7
171.0
26,784.4
0.1
0.1
170.8
110.5
168.8
58.3
52.7
14.0
-11.2
55.5
116.5
132.9
16.4
14.1
14.8
7.3
-5.7
65.0
131.9
66.9
103.0
8.2
-6.0
64.7
Refined precious metals, precious metals

alloys and gold as store of value
64.0
129.8
65.8
102.7
8.1
21.4
36.3
90.3
119.1
28.9
32.0
11.4
12.1
5.4
Petrochemicals
68.6
104.3
35.7
52.0
8.7
51.5
-24.6
Wood chips
69.1
102.5
33.4
48.4
8.8
4.2
20.4
85.2
101.5
16.3
19.1
10.8
-14.1
19.6
117.2
80.8
-36.4
-31.0
14.9
14.5
-65.8
81.8
80.4
-1.4
-1.7
10.4
-24.6
12.9
60.0
66.2
6.2
10.3
7.6
-2.3
0.9
8.4
63.8
55.4
658.0
1.1
-1.0
55.3
27
CONTENT
Quebec
Oil Sands Supply Chains in Quebec

generated the following economic impacts in Quebec in 2010:
$291 million in manufacturing output
5,280 direct and indirect jobs
An estimated $200 million in wages and salaries
Quebec is the fourth-largest supplier of domestic

manufactured goods into Albertas oil sands. In 2010,
Quebec manufacturers sold a total of $291 million into the
oil sands, an increase of 18.5% over 2009 levels. Of that
total, $173.4 million came from capital investment effects,
while $117.8 came from MRO expenditures.
The impact of oil sands capital spending was spread
broadly across a wide range of Quebec industries related to
construction materials, metal products and fuels. Leading
the way was diesel fuel production at just under $18
million. Mining and construction machinery and equipment
followed closely behind at $15.7 million. For the most part,
however, the manufacturing impacts were concentrated in
areas related to construction activity basic iron and steel
products, concrete, prefabricated buildings, and plastic
building and construction materials.
The distribution of MRO impacts was somewhat
different.While diesel fuel continued to lead the way,
manufacturers of forged and stamped metal products,

transformers and printed products saw notable direct
andindirect benefits. Chemical producers, basic
steel product manufacturers, and petroleum refineries
alsogained.
Quebecs 18.5% growth in oil-sands-related
manufacturing was well below the growth in oil sands
expenditures in 2010, meaning that the province lost
ground in terms of supply chain penetration. Theloss
occurred in both capital and MRO spending, but
was particularly acute on the capital investment side.
Quebecmanufacturers would have realized an additional
$40 million in direct and indirect benefits had supply chains
access not deteriorated. In particular, manufacturers of
basic steel shapes and fabricated steel products lost
market share in 2010. Offsetting that to some degree were
improvements in supply chain access for concrete and
electronics manufacturers.
Quebec Sales of Manufactured

200
(in $millions)
(in $millions)
2009
2010
Capital Investment
60
MRO Expenditure
40
150
20
100
0
-20
50
0
80
-40
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
28
CONTENT
Quebec Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
Diesel fuel
11,656
17,957
6,302
54.1
6,195
1,498
-1,391
13,813
15,720
1,907
13.8
7,341
101
-5,535
22,115
11,980
-10,135
-45.8
11,754
-1,195
-20,694
Concrete products
1,454
9,709
8,255
567.9
773
7,480
7,628
9,642
2,014
26.4
4,054
-20
-2,020
5,112
7,728
2,615
51.2
2,717
581
-683
Refined non-ferrous metals and alloys (except

aluminum and precious metals)
3,056
6,392
3,336
109.2
1,624
470
1,242
3,863
6,352
2,489
64.4
2,053
-86
522
Communication and energy wire and cable
3,478
5,130
1,652
47.5
1,848
159
-356
2,136
4,959
2,823
132.2
1,135
-101
1,788
Aluminum and aluminum-alloy semi-finished products
2,309
4,147
1,838
79.6
1,227
59
552
Light fuel oils
2,381
3,319
938
39.4
1,265
112
-440
Transformers
2,109
3,311
1,201
56.9
1,121
24
56
839
3,066
2,227
265.5
446
86
1,696
1,064
2,385
1,321
124.2
565
749
Printed products
1,736
2,347
611
35.2
923
-309
-3
5,449
2,095
-3,354
-61.6
2,896
-6,252

1,515
2,086
571
37.7
805
-352
117
Bauxite, aluminum oxide and primary aluminum products
1,259
2,023
764
60.7
669
217
-122
909
1,999
1,090
120.0
483
108
499
1,410
1,955
545
38.7
749
-285
81
Gasoline
1,386
1,872
485
35.0
737
48
-299
Cement
438
1,732
1,295
295.7
233
-81
1,143

698
1,567
869
124.5
371
-51
549
1,297
1,488
192
14.8
689
-165
-332
29
CONTENT
Quebec Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
Diesel fuel
19,736
20,337
601
3.0
2,502
384
-2,285
8,066
11,003
2,937
36.4
1,023
-48
1,962
Transformers
6,526
7,333
807
12.4
827
-58
37
10,181
6,684
-3,497
-34.3
1,291
1,360
-6,147
Printed products
4,999
4,676
-323
-6.5
634
-1,211
255
Light fuel oils
4,619
4,297
-322
-7.0
586
-181
-727
2,281
3,462
1,181
51.8
289
-7
899
3,079
3,459
380
12.4
390
193
-203

1,695
3,027
1,332
78.6
215
514
603
Gasoline
2,575
2,555
-19
-0.7
326
-73
-273
3,368
2,517
-851
-25.3
427
-12
-1,266
2,221
2,008
-213
-9.6
282
46
-541
1,442
1,935
493
34.2
183
-2
312
102
1,761
1,660
1,631.5
13
1,641
1,071
1,540
469
43.8
136
192
141
1,139
1,339
201
17.6
144
85
-29
1,249
1,186
-64
-5.1
158
-75
-147
487
1,148
661
135.7
62
-32
631
1,293
1,100
-193
-15.0
164
32
-389
962
1,087
126
13.1
122
61
-58
Paperboard
661
1,002
341
51.6
84
27
230

758
992
235
31.0
96
-97
235
Paints, coatings and adhesive products
1,148
928
-221
-19.2
146
11
-377
Motor vehicle electrical and electronic equipment
1,570
867
-703
-44.8
199
122
-1,024
700
863
163
23.3
89
526
-452

Petrochemicals
30
CONTENT
Ontario
Oil Sands Supply Chains in Ontario

generated the following economic impacts in Ontario in 2010:
$1.92 billion in GDP to the provincial economy
Ontario is the largest source of manufactured goods

feeding into the oil sands outside of Alberta. In 2010,
Ontario manufacturers sold $848 million into oil sands
development and operations, up by 34% over 2009
levels. Of that total, $519 million was triggered by capital
investment while $329 came from ongoing MRO activities.
Oil sands capital investment generated $49 million in
output for producers of mining and construction machinery
and equipment in 2010, but the largest beneficiaries were
steel and other metals producers. Manufacturers of basic
steel shapes, pipes, rolled steel, boilers and other products
gained more than $250 million in additional business
through oil sands capital investment.
The same was largely true for MRO spending. About
$150 million in output for Ontario steel producers came
from ongoing oil sands expenditures. Chemical and

industrial lubricant producers were also among those to
benefit from oil sands MRO spending.
Ontarios 34% growth in manufacturing activity from
oil sands development was the result of higher oil sands
expenditures and not better supply chain penetration. The
good news for Ontario is that overall, supply chain access
remained roughly constant compared to 2009. A modest
deterioration in capital investment supply chains was nearly
offset by a corresponding increase in MRO linkages. More
specifically, Ontario steel producers made notable gains
into oil sands supply chains in 2010, while producers of
industrial lubricants, as well as mining and construction
machinery and equipment, saw their position in supply
chains weaken.
Ontario Sales of Manufactured

600
(in $millions)
(in $millions)
2009
2010
250
200
Capital Investment
500
150
MRO Expenditure
400
100
300
50
0
200
-50
100
0
-100
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
31
CONTENT
Ontario Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
53,358
81,739
28,381
53.2
28,359
-2,884
2,906
16,743
56,903
40,160
239.9
8,899
-1,037
32,298
90,846
49,110
-41,736
-45.9
48,284
663
-90,683
16,922
31,868
14,945
88.3
8,994
-2,159
8,111
3,969
29,750
25,781
649.6
2,110
264
23,408
6,384
16,674
10,290
161.2
3,393
-301
7,198
8,493
14,326
5,833
68.7
4,514
420
899
8,043
13,313
5,270
65.5
4,275
914
81
7,931
12,367
4,436
55.9
4,216
5,503
-5,283
5,840
9,041
3,201
54.8
3,104
696
-599

3,048
8,721
5,673
186.1
1,620
469
3,584
2,801
8,172
5,370
191.7
1,489
16
3,865
5,499
8,143
2,644
48.1
2,923
-122
-157
Diesel fuel
5,332
7,920
2,588
48.5
2,834
685
-931
4,741
7,413
2,673
56.4
2,520
-959
1,112
Rubber and plastic hoses and belts
5,158
7,334
2,176
42.2
2,741
445
-1,010
7,232
7,217
-15
-0.2
3,844
740
-4,599
3,529
6,617
3,088
87.5
1,876
161
1,051
5,614
6,307
693
12.3
2,984
-2,293
2,326
5,481
3,155
135.6
1,236
385
1,534
Printed products
3,939
5,234
1,295
32.9
2,094
-701
-98
3,736
4,948
1,213
32.5
1,986
-240
-533
2,955
4,683
1,728
58.5
1,570
-197
354
1,725
4,386
2,661
154.3
917
298
1,447
Gasoline
2,584
4,249
1,665
64.5
1,373
89
204
32
CONTENT
Ontario Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
24,844
69,272
44,428
178.8
3,149
1,092
40,187
28,291
39,936
11,646
41.2
3,586
3,778
4,281
16,366
16,285
-81
-0.5
2,075
-50
-2,106
12,415
13,846
1,431
11.5
1,574
-73
-70
16,444
12,637
-3,806
-23.1
2,085
2,040
-7,931
6,386
10,545
4,158
65.1
810
79
3,269
Printed products
10,159
9,184
-975
-9.6
1,288
-2,462
199
1,866
8,090
6,225
333.7
236
-84
6,072
6,064
6,382
318
5.2
769
453
-904
14,018
6,030
-7,989
-57.0
1,777
289
-10,055
4,921
5,752
831
16.9
624
309
-101
4,131
5,648
1,517
36.7
524
-15
1,009
Diesel fuel
5,895
5,526
-369
-6.3
747
115
-1,231
Transformers
5,050
5,135
85
1.7
640
-45
-510
Gasoline
4,126
5,103
977
23.7
523
-117
571
Motor vehicle metal stamping
2,897
4,898
2,001
69.1
367
106
1,528
Industrial gases
2,132
3,504
1,372
64.4
270
213
888

1,549
3,437
1,888
121.8
196
470
1,221
2,460
3,309
850
34.6
312
-245
783
Motor vehicle steering and suspension

components (except springs)
2,922
3,176
254
8.7
370
436
-552
2,584
3,123
538
20.8
328
25
186
1,247
3,051
1,803
144.6
158
72
1,574
2,532
3,017
485
19.1
321
-43
206
Petrochemicals
2,394
2,989
595
24.9
303
1,799
-1,507
4,221
2,771
-1,451
-34.4
535
-276
-1,710
33
CONTENT
Manitoba
Oil Sands Supply Chains in Manitoba

generated the following economic impacts in Manitoba in 2010:
$175 million in GDP to the provincial economy
Manitoba manufacturers sold $131 million into the oil sands

in 2010 an increase of 27.6% compared to the previous
year. Most of this total just under $102 million came
from activity generated by capital investment supply chains,
while MRO supply chains made up $29.4 million. The
gap between capital- and MRO-triggered manufacturing
in Manitoba widened considerably in 2010. Production
to support capital investment grew by 39.2%, while
production for MRO activities fell slightly.
Machinery and equipment producers in Manitoba are
the primary beneficiaries of oil sands capital investment.
Thosemanufacturers gained over $63 million in
additionalsales in 2010, led by mining and construction
machinery and equipment. Iron and steel producers also
benefited significantly.
On the MRO side, the story is largely the same.

Machinery and equipment producers accounted for close
to 40% of all direct and indirect effects from MRO spending
in 2010. Leading the way were manufacturers of mining
and construction machinery and equipment, along with
electrical and electronic components for motor vehicles.
Producers of large metal containers and chemicals also
gained from MRO spending in the oil sands.
While oil-sands-generated manufacturing in Manitoba
grew by 27.6% in 2010, this increase was entirely the result
of higher oil sands investment. Supply chain penetration
in the province fell for both capital- and MRO-induced
industrial demand. Not holding onto their 2009 market
share cost Manitoba manufacturers over $14 million in lost
sales in 2010.
Manitoba Sales of Manufactured Goods

into the Oil Sands
120
(in $millions)
2009
2010
100
40
Capital Investment
30
MRO Expenditure
20
80
10
60
40
-10
20
0
(in $millions)
-20
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
34
CONTENT
Manitoba Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type
2009
2010
$000s

to (in $000s):
Growth in
oil sands
oil sands
38,596.5 56,292.5 17,696.0
45.8
20,513.8
281.7
-3,099.6
4,485.5
9,779.8
5,294.3
118.0
2,384.0
298.4
2,611.9
5,668.4
6,808.2
1,139.7
20.1
3,012.7
-306.4
-1,566.6
3,678.2
5,088.6
1,410.5
38.3
1,954.9
-1,006.4
461.9
Concrete products
1,958.5
4,596.2
2,637.6
134.7
1,041.0
3.7
1,593.0
1,203.0
2,384.7
1,181.7
98.2
639.4
7.0
535.3
202.7
1,399.6
1,197.0
590.7
107.7
23.0
1,066.2
1,568.2
1,148.5
-419.7
-26.8
833.5
-4.1
-1,249.2
529.0
901.2
372.2
70.4
281.2
-35.3
126.4

760.2
664.6
-95.6
-12.6
404.0
-24.0
-475.6
302.9
577.8
274.9
90.8
161.0
-30.6
144.5
398.9
556.2
157.3
39.4
212.0
102.0
-156.7
315.2
539.0
223.7
71.0
167.5
86.8
-30.6
219.7
490.8
271.1
123.4
116.8
36.4
117.9
138.3
483.2
344.8
249.3
73.5
-3.6
274.9

393.3
443.4
50.1
12.7
209.0
-28.9
-130.1
Transformers
432.4
413.0
-19.5
-4.5
229.8
4.9
-254.2

99.3
364.0
264.7
266.7
52.8
15.3
196.7
311.3
328.3
16.9
5.4
165.5
0.1
-148.7
Motor vehicle plastic parts
200.6
314.4
113.8
56.8
106.6
12.4
-5.1
Printed products
544.6
304.0
-240.6
-44.2
289.4
-96.8
-433.1
Plastic films and non-rigid sheets
92.9
289.6
196.7
211.7
49.4
13.9
133.4
254.2
284.4
30.2
11.9
135.1
-51.4
-53.5
257.6
283.1
25.5
9.9
136.9
15.0
-126.4
148.7
266.0
117.3
78.9
79.1
5.1
33.2

35
CONTENT
Manitoba Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
5,620.0
6,051.4
431.4
7.7
712.4
115.8
-396.9
2,787.2
3,069.5
282.3
10.1
353.3
216.7
-287.7
1,823.7
2,565.0
741.4
40.7
231.2
-81.6
591.8
2,909.9
2,276.5
-633.4
-21.8
368.9
-10.8
-991.5
2,203.0
1,976.6
-226.4
-10.3
279.3
294.2
-799.9
1,662.9
1,719.6
56.7
3.4
210.8
43.3
-197.5
Transformers
1,299.0
838.3
-460.7
-35.5
164.7
-11.5
-613.9
664.2
670.5
6.3
0.9
84.2
-107.2
29.3
802.9
654.7
-148.2
-18.5
101.8
-32.5
-217.5
154.2
560.0
405.8
263.2
19.5
9.7
376.6
379.9
557.3
177.4
46.7
48.2
3.7
125.5
1,431.4
516.9
-914.5
-63.9
181.4
-346.9
-749.0
190.5
476.3
285.8
150.0
24.2
-10.1
271.7
Fresh and frozen pork
432.2
399.6
-32.7
-7.6
54.8
-8.6
-78.9
309.3
396.3
87.0
28.1
39.2
109.2
-61.5
324.7
392.5
67.9
20.9
41.2
20.7
6.0
321.4
361.4
40.0
12.4
40.7
-29.8
29.1
Motor vehicle plastic parts
330.1
348.9
18.8
5.7
41.8
5.3
-28.4
240.3
346.5
106.2
44.2
30.5
-9.4
85.1
269.9
305.5
35.6
13.2
34.2
-1.6
2.9
Other animal feed
281.5
245.0
-36.5
-13.0
35.7
-29.2
-42.9
Springs and wire products
331.6
224.7
-106.8
-32.2
42.0
5.1
-153.9

293.3
217.3
-76.0
-25.9
37.2
18.0
-131.1

85.5
162.6
77.1
90.1
10.8
25.9
40.3
Motor vehicle transmission and power train parts
13.3
161.7
148.4
1,117.9
1.7
1.4
145.3
Printed products
36
CONTENT
Saskatchewan
Oil Sands Supply Chains in Saskatchewan

generated the following economic impacts in Saskatchewan in 2010:
Saskatchewan is the third-largest source of manufactured

goods feeding into the oil sands. In 2010, the provinces
manufacturers sold $456 million in goods into oil sands
expansion and operations up 17.6% over 2009 levels.
The majority of that total $307 million was on the
capital spending side. The remaining $149 million came from
MRO spending. As in Manitoba, the gap between capitaland MRO-induced impacts widened considerably in 2010.
Direct and indirect demand from oil sands capital
spending had the greatest impact on machinery and
equipment manufacturers in Saskatchewan. Sales of those
goods accounted for nearly half the total industrial impact
stemming from capital projects. Much of the remainder
about $124million came from the manufacture of steel
products and other metalworking operations.
For MRO-triggered economic activity, the impact is even

stronger for manufacturers of steel products. Just over $91
million of the total $149 million in MRO impacts was captured
by steel producers and metalworking operations. Producers
of machinery and equipment, refined petroleum products and
chemicals also benefited from MRO spending in Alberta.
Saskatchewans ability to penetrate oil sands supply
chains fell markedly in 2010. Had the provinces manufacturers retained the same degree of supply chain penetration
as in 2009, sales would have been $529 million instead of $456
million a loss of $72 million in market opportunities. The bulk
of this lost supply chain activity was in steel and petroleum
products. By contrast, Saskatchewan was the only province
to see a significant improvement in accessing supply chains
for mining and construction machinery and equipment.
Saskatchewan Sales of Manufactured Goods

into the Oil Sands
350
(in $millions)
300
2009
2010
(in $millions)
150
Capital Investment
MRO Expenditure
100
250
50
200
150
100
50
0
-50
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
37
CONTENT
Saskatchewan Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
74,723
131,923
57,200
76.5
39,715
545
16,940
43,496
65,821
22,325
51.3
23,118
-2,351
1,558
45,018
42,756
-2,261
-5.0
23,927
-2,788
-23,400
Diesel fuel
11,201
12,369
1,168
10.4
5,953
1,439
-6,224
11,461
11,553
91
0.8
6,092
-3,136
-2,864
3,953
6,099
2,145
54.3
2,101
263
-219
Gasoline
4,018
4,482
463
11.5
2,136
138
-1,810

3,268
3,316
47
1.5
1,737
-759
-931
1,900
3,116
1,216
64.0
1,010
1,319
-1,113
1,380
2,979
1,599
115.9
733
228
638
481
2,607
2,126
442.2
256
1,870
1,870
2,506
636
34.0
994
-41
-316
2,068
1,519
-549
-26.6
1,099
-418
-1,230
74
1,403
1,329
1,790.7
39
20
1,269
1,497
1,284
-213
-14.2
796
-1,009
186
1,066
880
472.1
99
-9
790
636
695
60
9.4
338
60
-338
855
692
-163
-19.0
454
-2
-615
Light fuel oils
77
676
600
780.4
41
555
Turbines and turbine generator set units
171
652
481
281.1
91
49
341
2,109
638
-1,472
-69.8
1,121
-14
-2,579
577
577
n/a
577
360
495
136
37.7
191
43
-98
360
465
106
29.4
191
16
-102
Motor vehicle bodies and special purpose motor vehicles
117
391
274
233.5
62
-22
234
Concrete products


Waste and scrap of iron and steel
38
CONTENT
Saskatchewan Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
67,679
52,465
-15,214
-22.5
8,580
2,976
-26,769
27,541
32,350
4,810
17.5
3,491
3,678
-2,360
Diesel fuel
20,699
14,921
-5,778
-27.9
2,624
402
-8,804
10,884
14,339
3,455
31.7
1,380
224
1,851
Gasoline
9,056
6,940
-2,117
-23.4
1,148
-257
-3,008
4,069
4,302
233
5.7
516
-24
-259
404
4,010
3,606
893.1
51
11
3,545
4,747
3,442
-1,305
-27.5
602
589
-2,496
2,229
2,065
-164
-7.4
283
-360
-87

2,408
1,764
-645
-26.8
305
-307
-643
1,593
1,606
13
0.8
202
-71
-117
1,077
946
-131
-12.2
137
-3
-265
1,458
819
-639
-43.8
185
-146
-678
Light fuel oils
127
817
690
544.6
16
-5
679
858
719
-139
-16.2
109
-3
-245
Pesticide and other agricultural chemicals
623
656
34
5.5
79
-73
28
525
461
-65
-12.3
67
-56
-76
Wood pulp
869
454
-415
-47.8
110
-190
-336
Printed products
247
302
55
22.1
31
-60
83
284
284
n/a
284
267
278
11
4.3
34
-2
-20
1,188
272
-916
-77.1
151
23
-1,091
239
236
7,535.0
236
Grain and oilseed products, not elsewhere classified
208
215
3.6
26
-19
Processed meat products and animal by-products
130
205
75
58.2
16
54
Waste and scrap of iron and steel

Transformers
39
CONTENT
Alberta
Oil Sands Supply Chains in Alberta

generated the following economic impacts in Alberta in 2010:
$16.8 billion in GDP to the provincial economy
$696 million in provincial and municipal government revenues, not including income taxes
Not surprisingly, the impact of oil sands activity on

manufacturing is far higher in Alberta than anywhere else
in Canada. In 2010, the provinces manufacturers generated
output valued at just under $4.0 billion, up 28.6% compared
to 2009. Of that total, $3.0 billion came from capital spending
while $1.0 billion resulted from MRO activities.
Manufacturing activity was heavily concentrated in the
production of mining and construction machinery and
equipment. At $1.8 billion, that one product category
accounted for well over half of all direct and indirect
impacts. Diesel fuel and other petroleum products,
steel products and concrete accounted for much of
theremainder.
Petroleum products play a larger role in MRO spending,
largely because of the need for fuel to drive oil sands operations. Beyond petroleum and machinery and equipment,
the MRO impacts in Alberta are spread across a wide range

of industries.
As in nearly every other province, the growth in manufacturing activity from the oil sands in 2010 was entirely
the result of higher investment levels and not improved
penetration of oil sands supply chains. More specifically,
Alberta companies lost ground on the capital investment
side while penetration of MRO supply chains increased
very slightly that year. Manufacturing activity would have
been $405 million higher had supply chain penetration not
deteriorated in 2010. There were notable drops in market
penetration for producers of mining and construction machinery and equipment, as well as of concrete. While diesel
fuel and steel pipe/tube producers improved their supply
chain position, there was not a clear trend of winners and
losers in other industries.
Alberta Sales of Manufactured Goods

into the Oil Sands
(in $millions)
3000
(in $millions)
2009
2010
2500
Capital Investment
1500
MRO Expenditure
1000
2000
500
1500
1000
500
-500
0
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
40
CONTENT
Alberta Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type
2009
2010
$000s
Logging, mining and construction machinery and equipment 1,362,695 1,784,021 421,326

to (in $000s):
Growth in
oil sands
oil sands
30.9
724,265
9,946
-312,884
Diesel fuel
63,653
121,413
57,760
90.7
33,831
8,179
15,751
67,005
118,291
51,286
76.5
35,613
-4,150
19,823
62,044
102,766
40,722
65.6
32,976
22
7,724
62,999
76,219
13,220
21.0
33,484
4,191
-24,455
Gasoline
36,117
55,756
19,640
54.4
19,196
1,241
-797
32,134
53,295
21,161
65.9
17,079
-208
4,291
Concrete products
43,146
50,680
7,534
17.5
22,932
82
-15,479
39,195
42,303
3,108
7.9
20,832
-11,386
-6,339
11,779
41,343
29,564
251.0
6,260
686
22,618
24,911
37,120
12,209
49.0
13,240
2,550
-3,581
30,124
35,076
4,952
16.4
16,011
-1,419
-9,640
27,484
33,161
5,676
20.7
14,608
-5,560
-3,371
18,590
32,125
13,535
72.8
9,881
-49
3,703
Cement
28,165
29,308
1,143
4.1
14,969
-5,211
-8,615
17,701
29,093
11,392
64.4
9,408
-957
2,941

24,084
28,925
4,840
20.1
12,801
-5,589
-2,371
17,025
28,056
11,030
64.8
9,049
2,817
-836
5,828
23,492
17,665
303.1
3,097
4,043
10,524
11,692
19,896
8,203
70.2
6,214
1,329
660
10,697
14,857
4,160
38.9
5,685
-237
-1,289
9,676
13,658
3,982
41.2
5,143
478
-1,639
Petrochemicals
5,210
12,836
7,626
146.4
2,769
2,323
2,534
Material handling equipment
7,358
12,514
5,157
70.1
3,911
-436
1,682
8,839
11,172
2,334
26.4
4,698
51
-2,416
41
CONTENT
Alberta Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type
2009
2010
$000s

to (in $000s):
Growth in
oil sands
oil sands
196,346 192,208
-4,138
-2.1
24,890
4,046
-33,074
Diesel fuel
128,538 160,838
32,300
25.1
16,294
2,499
13,507
100,962 145,544
44,582
44.2
12,799
4,439
27,345
Gasoline
85,205
90,017
4,812
5.6
10,801
-2,415
-3,574
Heavy fuel oils
38,601
41,214
2,613
6.8
4,893
658
-2,938
28,895
28,298
-597
-2.1
3,663
-171
-4,090
14,287
25,936
11,649
81.5
1,811
1,773
8,065
Petrochemicals
10,000
22,955
12,955
129.5
1,268
7,513
4,174
18,094
22,508
4,414
24.4
2,294
356
1,764
17,465
21,802
4,336
24.8
2,214
-53
2,176
24,851
19,750
-5,101
-20.5
3,150
-1,113
-7,138
Printed products
24,472
17,982
-6,490
-26.5
3,102
-5,930
-3,662
Industrial gases
13,113
16,505
3,392
25.9
1,662
1,312
417
13,667
16,312
2,645
19.4
1,733
356
556
9,711
14,154
4,443
45.8
1,231
-36
3,248
Jet fuel
12,624
13,880
1,256
10.0
1,600
634
-978
14,379
13,194
-1,184
-8.2
1,823
-939
-2,068
9,730
11,892
2,162
22.2
1,233
727
202
4,390
11,390
7,000
159.4
557
307
6,136

10,653
10,782
129
1.2
1,350
-1,359
137
6,987
9,706
2,719
38.9
886
933
900
6,594
8,149
1,556
23.6
836
-1,034
1,754
7,696
7,628
-68
-0.9
976
-1,342
298
7,664
7,552
-112
-1.5
972
-765
-318
5,955
7,001
1,046
17.6
755
374
-83
42
CONTENT
British Columbia
Oil Sands Supply Chains in British Columbia

generated the following economic impacts in BC in 2010:
BC manufacturers sold $185 million in goods into the

oil sands in 2010 an increase of 11.4% over 2009
levels. About two thirds of this output just under
$122 million came from activity generated by capital
investment supply chains, while MRO supply chains made
up$63.2million.
As in Alberta and a number of other provinces, by far the
largest impacts were felt by producers of logging, mining
and construction machinery and equipment. At $29.3
million, that industry accounted for just over one quarter of
all direct and indirect manufacturing sales in 2010. Metal
products, concrete, and building and construction materials
were among the other BC industries most impacted by oil
sands capital investment.
Metal products and machinery and equipment also
figure prominently on the MRO side in BC. However, the
provinces manufacturers also delivered millions of dollars
in sales of paper and paper products, chemicals and fuels

to keep oil sands operations running.
Although BC saw 11.4% growth in manufacturing output
from oil sands expenditures in 2010, that increase was
entirely the result of higher oil sands investment levels and
not greater supply chain penetration. Supply chain penetration fell considerably for capital-triggered output, while the
decline was relatively small for MRO-generated manufacturing activity. Had BC manufacturers maintained their 2009
levels of supply chain access, they would have generated
$230 million in sales instead of $185 million. As in many
other provinces, the decline in supply chain access was
largely concentrated in mining and construction machinery
and equipment production. Nearly $37 million in revenues
was lost in that one sub-sector alone. Makers of metal
products helped to soften the blow as they saw a general
improvement in supply chain penetration in 2010.
British Columbia Sales of Manufactured Goods

into the Oil Sands
(in $millions)
150
2009
2010
(in $millions)
80
Capital Investment
60
120
40
90
20
MRO Expenditure
60
-20
30
-40
-60
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
43
CONTENT
British Columbia Manufacturing Sales Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type

to (in $000s):
Growth in
oil sands
oil sands
2009
2010
$000s
40,814
29,295
-11,519
-28.2
21,692
298
-33,509
2,631
5,211
2,580
98.0
1,399
-58
1,240
2,335
4,330
1,996
85.5
1,241
60
695
Concrete products
3,942
4,085
143
3.6
2,095
-1,960
347
3,965
3,617
1,041.0
185
23
3,410
2,299
3,836
1,537
66.9
1,222
261
54
826
3,764
2,938
355.7
439
2,499
Cement
1,110
3,695
2,585
232.8
590
-205
2,200
3,659
2,837
-822
-22.5
1,945
-24
-2,742
1,390
2,653
1,262
90.8
739
-4
527
3,965
2,608
-1,357
-34.2
2,108
-506
-2,959
2,125
2,601
476
22.4
1,129
367
-1,020
Softwood lumber
1,571
2,506
935
59.5
835
133
-33
898
2,477
1,578
175.7
478
-58
1,159
Diesel fuel
1,274
1,906
632
49.6
677
164
-208
1,164
1,740
576
49.5
619
-78
35
901
1,723
822
91.2
479
337
Printed products
1,045
1,566
521
49.9
555
-186
151
1,182
1,564
382
32.3
628
-239
-7
1,308
1,509
202
15.4
695
-132
-361
479
1,435
957
199.8
254
24
679
1,107
1,334
227
20.5
588
-101
-260
355
1,256
901
253.5
189
34
678
660
1,215
555
84.1
351
-39
243
970
1,157
187
19.3
516
78
-406


44
CONTENT
British Columbia Manufacturing Sales Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type
2009
2010
$000s

to (in $000s):
Growth in
oil sands
oil sands
196,346 192,208
-4,138
-2.1
24,890
4,046
-33,074
Diesel fuel
128,538 160,838
32,300
25.1
16,294
2,499
13,507
100,962 145,544
44,582
44.2
12,799
4,439
27,345
Gasoline
85,205
90,017
4,812
5.6
10,801
-2,415
-3,574
Heavy fuel oils
38,601
41,214
2,613
6.8
4,893
658
-2,938
28,895
28,298
-597
-2.1
3,663
-171
-4,090
14,287
25,936
11,649
81.5
1,811
1,773
8,065
Petrochemicals
10,000
22,955
12,955
129.5
1,268
7,513
4,174
18,094
22,508
4,414
24.4
2,294
356
1,764
17,465
21,802
4,336
24.8
2,214
-53
2,176
24,851
19,750
-5,101
-20.5
3,150
-1,113
-7,138
Printed products
24,472
17,982
-6,490
-26.5
3,102
-5,930
-3,662
Industrial gases
13,113
16,505
3,392
25.9
1,662
1,312
417
13,667
16,312
2,645
19.4
1,733
356
556
9,711
14,154
4,443
45.8
1,231
-36
3,248
Jet fuel
12,624
13,880
1,256
10.0
1,600
634
-978
14,379
13,194
-1,184
-8.2
1,823
-939
-2,068
9,730
11,892
2,162
22.2
1,233
727
202
4,390
11,390
7,000
159.4
557
307
6,136

10,653
10,782
129
1.2
1,350
-1,359
137
6,987
9,706
2,719
38.9
886
933
900
6,594
8,149
1,556
23.6
836
-1,034
1,754
7,696
7,628
-68
-0.9
976
-1,342
298
7,664
7,552
-112
-1.5
972
-765
-318
5,955
7,001
1,046
17.6
755
374
-83
45
CONTENT
Imports into Oil Sands Supply Chains
The supply chains that feed into Albertas oil sands are
not domestic but global. Doubtless, many Canadian
manufacturers are interested in capturing as much of
the spinoff impact as possible. However, imports are
a natural, and necessary, component of any industrial
operation. Access to attractively-priced imports and
materials is critical to preserving or enhancing our economic
competitiveness, as well as stimulating investment and growth.
For this reason, oil sands project owners and engineering,
procurement and construction companies (EPCs) import a
variety of manufactured and structural components when
they consider it advantageous to do so. This is no different
from manufacturers themselves importing a variety of subcomponents or intermediate goods in order to produce their
own final products at a competitive price. While project
owners might prefer to source their goods from Canadian
suppliers, imports are critical in cases where domestic firms
lack the capacity or expertise to produce certain types of
specialized products, or are unable to meet specific project
timelines or cost requirements.
As noted above, the majority of the direct and indirect
impact of oil sands expenditures on manufacturing leaks
out of the Canadian economy. In total, the value of imported manufactured goods that fed into those investments
reached $8.3 billion in 2010, compared to $6.0 billion for
domestically-produced goods. On top of that, imports
grew much faster than domestic manufacturing sales
by51.0% compared to 30.9%.
Of that $8.3 billion in manufactured imports, the

clear majority came from oil sands capital investment,
which triggered just under $6.6 billion in imports that
year. MRO spending required $1.8 billion in imported
manufacturedgoods.
Logging, mining and construction machinery and
equipment was by far the largest category of imported
manufactured goods in support of oil sands development,
accounting for $4.5 billion out of the total $8.3 billion
inmanufactured imports in 2010. The vast majority of
thoseimports ($4.1 billion) were in support of oil sands
capital investment. Measuring devices, iron and steel
products, and vehicle parts were among the other leading
imported goods. The types of goods imported were
largely the same on the capital and the MRO sides of oil
sandsexpenditures.
Since Canadian manufacturers lost ground in
accessingoil sands supply chains in 2010, it is hardly
surprising to note that market penetration improved
for foreign companies. In total, improved supply chain
penetration added $465 million in new sales for foreign
businesses that year. Almost all of that total came
from oilsands capital investment and was driven
by a tremendous increase in imported mining and
constructionmachinery and equipment. Subtracting out
the effect of thatone industry, foreign penetration of oil
sands supply chains was essentially unchanged from
2009levels.
Growth Drivers in Manufactured Imports
Imports of Manufactured Goods

into the Oil Sands
8000
(in $millions)
(in $millions)
2009
2010
6000
2500
MRO Expenditure
1500
4000
1000
2000
500
Capital Investment
2000
Capital Investment
MRO Expenditure
Growth in
oil sands spending
Change in
Supply chain
penetration
46
CONTENT
Imports of Manufactured Goods Generated by Oil Sands Capital Investment

Value of Sales
($000s)
Change:
20092010
Product type
2009
2010
$000s
Logging, mining and construction machinery and equipment 2,368,440 4,099,387 1,730,947

to (in $000s):
Growth in
oil sands
oil sands
73.1
1,258,812
17,286
454,848
280,673 451,628 170,955
60.9
149,176
13,870
7,909
138,791 213,778
74,988
54.0
73,767
-7,502
8,723
151,439 185,763
34,324
22.7
80,489
-9,380
-36,785
Medium and heavy-duty trucks and chassis
102,101 170,762
68,660
67.2
54,266
5,618
8,776
95,919
169,720
73,801
76.9
50,980
9,820
13,001
76,731
102,208
25,477
33.2
40,782
4,470
-19,776
66,168
100,673
34,505
52.1
35,168
-428
-235
66,278
81,510
15,232
23.0
35,226
-8,458
-11,537
47,186
74,667
27,481
58.2
25,079
-2,795
5,197
40,293
54,625
14,332
35.6
21,416
-1,880
-5,204

35,917
47,165
11,248
31.3
19,090
-2,637
-5,204
Concrete products
21,386
42,952
21,566
100.8
11,367
41
10,159
36,491
40,181
3,691
10.1
19,395
-9,984
-5,720
Turbines and turbine generator set units
16,730
34,045
17,315
103.5
8,892
4,783
3,641
Computers and computer peripheral equipment
22,040
33,835
11,795
53.5
11,714
270
-189
Other communications equipment
10,810
21,031
10,221
94.6
5,745
2,675
1,801
13,052
19,561
6,509
49.9
6,937
333
-761
Plastic resins
10,402
19,068
8,666
83.3
5,529
1,849
1,287
Gasoline
8,428
16,526
8,098
96.1
4,479
290
3,329
Switchgear, switchboard, relays and

industrial control apparatus
10,739
16,375
5,636
52.5
5,708
-104
33
8,918
15,881
6,963
78.1
4,740
2,456
-233
Tires
10,055
15,589
5,534
55.0
5,344
602
-412
10,889
15,375
4,485
41.2
5,788
724
-2,027
Light-duty trucks, vans and sport utility vehicles
9,398
15,245
5,848
62.2
4,995
192
660
47
CONTENT
Imports of Manufacturing Goods Generated by Oil Sands MRO Expenditures

Value of Sales
($000s)
Change:
20092010
Product type
2009
2010
$000s

to (in $000s):
Growth in
oil sands
oil sands
343,223 442,122
98,899
28.8
43,510
7,073
48,317
229,263 231,550
2,287
1.0
29,063
10,080
-36,856
82,078
90,938
8,860
10.8
10,405
-1,392
-153
63,695
87,464
23,769
37.3
8,074
8,507
7,188
56,104
61,884
5,781
10.3
7,112
-3,662
2,331
37,401
43,112
5,711
15.3
4,741
737
233
38,123
41,906
3,783
9.9
4,833
-141
-909
Motor vehicle gasoline engines and their parts
34,522
41,253
6,731
19.5
4,376
3,088
-733
37,357
38,740
1,383
3.7
4,736
973
-4,326
29,553
29,538
-15
-0.1
3,746
2,066
-5,827
25,183
28,340
3,157
12.5
3,192
328
-363
21,790
28,238
6,448
29.6
2,762
1,694
1,992
Gasoline
18,898
25,821
6,923
36.6
2,396
-536
5,063
23,940
25,697
1,757
7.3
3,035
-73
-1,205
Motor vehicle steering and suspension

components (except springs)
17,332
25,567
8,235
47.5
2,197
2,584
3,454
Tires
21,745
22,871
1,126
5.2
2,757
-522
-1,109
26,765
22,766
-3,999
-14.9
3,393
-4,912
-2,480
Transformers
16,880
20,834
3,954
23.4
2,140
-150
1,964
20,014
19,967
-47
-0.2
2,537
248
-2,831
15,293
19,796
4,503
29.4
1,939
1,631
933
13,487
17,249
3,762
27.9
1,710
1,008
1,045
Jet fuel
13,188
16,770
3,583
27.2
1,672
662
1,249
Heavy fuel oils
12,408
16,556
4,148
33.4
1,573
211
2,363
Ball and roller bearings
14,245
15,519
1,274
8.9
1,806
309
-841
8,724
14,181
5,456
62.5
1,106
1,083
3,268
48
CONTENT
Domestically-Sourced vs Foreign Goods
From the perspective of Canadian manufacturers, one

of the most useful components of an analysis of oil
sands supply chains is to look for areas where foreign
market share is high and where there are opportunities
for domestic producers to displace those imports. It
bears repeating that imports will always be a critical
component of oil sands supply chains simply because
domestic manufacturers may lack the capacity or degree
of specialization needed to meet project owners needs.
Nevertheless, knowing where those opportunities are is the
first step towards adapting the Canadian manufacturing
environment to meeting those needs and retaining a
greater share of the overall economic benefit of oil sands
development in Canada.
The figure below shows the top 25 manufactured goods
that are used in oil sands capital and MRO projects and
what share of those goods comes from domestic versus
foreign sources. Clear from the figure is that the degree of
foreign penetration depends heavily on the product in question. Some products like diesel fuel, gasoline and fabricated
steel plates are sourced almost exclusively from Canadian
companies, whether because of domestic expertise or
transportation-related challenges. Meanwhile, measuring
and controlling devices, pumps and compressors, and
heavy-duty truck parts are completely or largely imported.
The size of the market opportunity for Canadian
manufacturers also depends on how much those specific
products are needed by oil sands project owners.
Oilsandsexpenditures generate more demand for mining
and construction machinery and equipment than for any
other manufactured good by a considerable margin.
About 48% of the direct and indirect manufacturing
impacts of capital and MRO spending are in that one
product category offering a total market opportunity
of $4.5 billion. As such, those products offer Canadian
manufacturers the most room for gowth.
Supply Chain Opportunities for Canadian Manufacturers

Diesel fuel
Gasoline
Concrete products
Heavy fuel oils
$4,541.51
$417.31
$301.24
$542.57
$15.72
$231.60
$143.79
$42.35
$131.75
$19.73
$170.80
$101.48
$5.63
$43.21
$5.59
$26.89
$40.33
$82.79
$52.21
$54.62
$77.39
$15.31
$11.80
$48.33
$20.39
20
Imported
40
60
Domestic
80
Value of Imports (in $millions)
Market Share of Top Manufactured Goods Required in the Oil Sands 2010
100
(per cent)
49
CONTENT
Looking Ahead: Oil Sands Production

and Expenditure Outlook
Crude Oil Production Forecast
Production Outlook
5000
4000
3000
2000
1000
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Looking ahead, the recent strong growth in oil sands

production is expected to continue. According to its 2014
Crude Oil Production forecast, CAPP projects that oil sands
output could increase by close to 150% from 2014 to 2030
- from about 1.9 million barrels a day to 4.8 million barrels.
By then, the oil sands will account for more than three
quarters of all Canadian crude oil recovery.
Most of this growth is expected to come in in situ
operations. By the mid-2020s, production from oil sands
mining is projected to level off, while in situ recovery
continues to grow rapidly. By 2030, in situ production will
account for two thirds of all oil sands activity in Alberta.
It is worth noting, however, that growth expectations in
the oil sands have been dialed back somewhat compared
to previous years forecasts. Last year, for example,
CAPP expected production in 2030 to reach 5.2 million
barrels per day, compared to the most recent figure of 4.9
million barrels. The difference between the two forecasts
reflects uncertainty regarding project timing sparked
by growing concerns about cost competitiveness and
capital availability. It also bears mentioning that CAPPs
forecasts do not reflect the potential impact that market
access concerns and US supply expansion could have
on the economic case for pursuing additional oil sands
development projects in Alberta.
Nevertheless, as global demand for energy continues to
grow especially in emerging markets investment in the
oil sands is expected to expand well into the future, driving
additional growth in output capacity. According to the US
Energy Information Administrations International Energy
Outlook 2013, worldwide consumption of petroleum and
other liquid fuels is projected to rise from 90 million barrels
per day (bpd) in 2013 to 104 million barrels by 2030.
This demand growth is expected to come almost
exclusively in China and other developing countries in
Asia. Petroleum consumption in that part of the world is
projected to rise by 49% from 2013 to 2030, compared
to just 2% growth in the OECD. China alone is expected
to account for two fifths of all growth in global petroleum
demand over that period.
(000 bpd)
Alberta - Oil Sands
All other provinces
Alberta - Conventional
Source: CAPP 2014 Crude Oil Production Forecast
Slight Long-term Downgrade

in Projected Oil Sands Production
(Output forecast, in million bpd)
6
2013 Forecast
2014 Forecast
4
3
2
1
0
2015
2020
2025
2030
Source: CAPP 2013 and 2014 Crude Oil Production Forecasts
Asia is Driving Global Petroleum Demand

(% growth, actual and projected)
50
2020-2030
40
2010-2020
30
2005-2010
20
10
0
-10
World
China Other Asia
US
OECD
Europe
South/
Central
America
50
CONTENT
Market Access
A critical caveat to this production outlook is that it

supposes that all necessary transportation infrastructure
will be built to get bitumen and synthetic crude oil to
market. This is far from guaranteed.
The need for new pipelines and other infrastructure
comes not just from the potential constraints in existing
pipeline networks, but also from an analysis of future global
energy supply and demand trends. According to the US
Energy Information Administration (EIA), Asia and China in
particular is expected to drive global petroleum demand
growth in the years ahead. Meanwhile, the United States,
which accounts for 99% of Canadas crude oil exports,
is expected to see overall petroleum demand increase by
just 1.5% from 2013 to 2030. In fact, oil consumption in
the US is projected to plateau in 2019 and begin to decline
thereafter; from 2020 to 2030, the EIA forecasts US oil
consumption to fall by 3.7%. By 2030, the US will consume
as much oil as it will in 2014.
Even more concerning from a Canadian perspective
is the fact that oil production in the US has increased
dramatically in recent years a trend expected to continue
for at least the next seven years. From 2013 to 2020, US
oil production is forecast to rise by 13.9%, before tapering
off thereafter. As a result, net import requirements in the US
today are nearly half what they were in the mid-2000s and
are expected to drop further until leveling off around 2020.
As with our own analysis of future oil sands expenditures
(see below), it is important to note that projections like
these are always subject to change. New discoveries
or technologies, price changes, demand fluctuations,
economic growth, and development of alternative energy
sources are just a few of the factors that can dramatically

affect global energy supply and consumption patterns.
What we do know is that based on current information,
the US will not be a major long-term growth market for
Canadian crude oil.
The challenge for Canada is that the areas where demand
growth is robust are presently inaccessible. Asian demand
for oil is strong today, but while projects like the Northern
Gateway, Kinder Morgan, Keystone XL and Energy East
pipelines all hold promise to get Canadian oil to tidewater,
all are years away from completion, if they get built at all.
The biggest danger in this situation is complacency. It
would be a grave mistake to assume that countries like
China are content to wait for five or ten years for Canada
go through its approval and consultation processes not
to mention potential appeals to any final decision to
build a pipeline to tidewater. China may have large and
growing energy demand, but they are taking steps to fill
that demand from elsewhere. Already, China is securing
oil supplies through long-term contracts with Russia, and
is increasing its connections with central Asia and Africa as
well.
Failure to act in a timely manner will cost the Canadian
economy hundreds of billions of dollars in foregone income
and economic growth. Not only will future investment
opportunities and the resulting jobs and growth be lost, but
existing operations will be affected as well. For as long as
US oil production grows and Canadian heavy crude and
bitumen is effectively trapped on North American soil, it will
sell at a discount. Businesses, governments and, ultimately,
individual Canadians will end up paying the price.
US Import Demand for Crude Oil Will Be Half What It Was in the Mid-2000s
(million bpd)
Consumption
25
Production
20
15
10
Source: US EIA International Energy Outlook 2014
2040
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
Import Demand
51
CONTENT
Oil Sands Expenditure Outlook
Provided Canada can gain access to market outside the

US, oil sands expenditures should grow considerably into
the future. In its 2009 Oil Sands Manufacturing paper, CME
developed three scenarios for oil sands spending in mining
and in situ development through to 2030. These scenarios
were based on an understanding of past expenditure
growth while also factoring in a number of political,
economic and technological factors that could influence
future investment decisions.
Expenditure Scenarios
Low-growth scenario
The low-growth scenario assumes that economic growth
in the US and worldwide remains sluggish relative to prerecession levels. Politically, environmental policy comes
to dominate any discussion on oil sands development,
severely limiting increases in production or expansion of
vital pipeline capacity to connect the oil sands to export
markets. The resulting gridlock, combined with production
expansion in the US, drives a larger wedge between
bitumen and North American benchmark crude oil prices.
A reduction in government policies aimed at supporting oil
sands growth also add to the challenge. As the competitive
disadvantage grows, the potential return on oil sands
investments becomes much less attractive. As a result,
both new capital and MRO expenditures slow considerably.
High-growth scenario
By contrast, the high-growth scenario represents a bestcase environment for oil sands development. Strong
growth in North America is complemented by healthy
demand for commodities to fuel economic expansion in
Asia. New export pipelines to the east and west coasts,
as well as south to Texas refineries, open up new markets
for oil sands producers, providing them with the capacity
and market access needed to drive future expansion. The
resulting decrease in crude oil price differentials increases
the expected return on investment for new capital projects.
This scenario envisions both capital and MRO expenditures
continuing to grow at about the same rates as we have
seen in the recent past.
Baseline scenario
The baseline scenario is essentially a status-quo option
representing a middle ground between the high- and
lowgrowth scenarios. The global economy and world
energy demand grow moderately. In Canada, policy-makers
balance out environmental and economic considerations
when setting policies that affect oil sands investment.
Additional pipeline capacity gradually comes online,
butnew projects are delayed by lengthy government
reviews and regulatory processes. Rail transportation
continues to act as a pressure valve for getting oil sands
crude to market.
It is important to emphasise that these three scenarios
are not intended to predict where oil sands expenditures
will be heading in the years ahead. Such predictions
are seldom accurate as a host of unforeseeable factors
inevitably come into play, dramatically affecting final
outcomes. Rather, the low- and high-growth scenarios
should be interpreted as the upper and lower bounds of oil
sands expenditure growth based on what we know today
and expect for tomorrow. The baseline scenario represents
what in our view is the most likely outcome, based on
currently-available information.
Capital Investment Projections
In the low-growth scenario, new capital investment
essentially remains at or below current levels. In 2013,
actual capital spending in the oil sands (mining and in situ
only) was $30.1 billion. This figure is projected to remain
roughly constant through 2030 an amount well below the
expected rate of inflation over that period. Nevertheless,
even under this pessimistic scenario, there is still an
annual injection of between $27 billion and $30 billion into
oil sands capital projects over the next 17 years. In total,
the lower bound scenario anticipates cumulative capital
investment of $486 billion over the forecast period.
The baseline scenario envisions many of the anticipated
oil sands projects moving ahead as planned, and business
conditions remaining roughly the same as they have been
in recent years. In this case, capital investment would grow
moderately through the projection period, reaching about
52
CONTENT
$46 billion by 2030. This scenario would result in cumulative

new capital investment of $637 billion dollars through to
2030 equivalent to about $33 billion in new investments
every year over the next 17 years.
Projected New Capital Investment 2012 to 2030

(in $billions)
100
80
60
Upper Bound
Baseline
Lower Bound
total, that means cumulative MRO expenditures of $404

billion through to 2030.
In the baseline scenario, MRO expenditures increase
gradually over the time horizon, reaching about $46 billion
by 2030. Cumulative spending is $579 billion equivalent
to an average of $30 billion every year.
Finally, in the high-growth scenario, MRO costs follow the
same trajectory as new capital investment, rising to almost
$90 billion per year by 2030. In total, this scenario envisions
$890 billion in total expenditures over the projection period,
or an average of $47 billion in new MRO spending every year.
Projected MRO Expenditures 2012 to 2030
20
(in $billions)
As stated above, the high-growth scenario represents the

most optimistic outcome from the perspective of oil sands
development. In this case, investment continues to grow
in line with recent past trends, resulting in a total of $905
billion in new capital spending over the projection period.
Average new capital investment would be about $47 billion
per year, reaching a peak of over $80 billion by 2030.
Maintenance, Repair and Operations
Expenditure Projections
MRO expenditures in the oil sands have risen dramatically
since operations began in earnest in the mid-late 1990s.
That growth is expected to continue into the future,
regardless of scenario.
It is worth re-stating that MRO spending is potentially
more important in the long run to Canadian manufacturers
because it represents a more reliable and sustainable type
of expenditure. At the same time, however, new capital
investment is needed in order to create the need for
additional MRO spending requirements. Once that capital is
in place, MRO expenditures become almost a locked-in
spending item that manufacturers can count on well into
the future.
Because capital investment is essentially flat and
transportation infrastructure is largely not developed,
the lower-bound scenario presents a similarly modest
outlook for future MRO expenditures. Annual spending is
expected to remain essentially unchanged from 2012 levels,
averaging $21 billion a year over the projection period. In
100
80
60
Upper Bound
Baseline
Lower Bound
40
20
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
40
Potential Impact of Future

Oil Sands Expenditures on
Canadian Manufacturers
The three scenarios described above can be applied to
what we know about current oil sands supply chains to
project the potential economic opportunity for Canadian
manufacturers and the size of that opportunity for specific
industries. However, these projections should not be
treated as concrete expectations. As with any other
industry, supply chains in the oil sands are constantly
evolving as new technologies, extraction and construction
techniques, building practices and a host of other factors
will affect the type and amount of manufactured goods
required to meet project developers needs. As such, the
farther forward I/O models project, the less reliable the result.
This means that even though I/O models are the best
tool available for projecting future oil sands supply chain
benefits, the figures presented below should be considered
to be illustrative only. The actual impact on Canadian
manufacturers could be higher or lower, depending on how
supply chains evolve over time.
53
CONTENT
Another limitation of using I/O models to project forward

is that we lose the ability to track changes in provincial
shares over time. As such, while we can point to potential
impacts by industry, there is no way of assessing where
in Canada that economic activity would be taking place.
Changes in market share by province will be influenced by
such factors as local production capacity and workforce
availability, competitiveness, access to transportation
linkages and so on.
billion between 2012 and 2030. Assuming that oil sands

capital requirements remain unchanged over that period,
and that Canadian manufacturers maintain their existing
levels of supply chain penetration, the direct and indirect
spinoffs from these investments translate into cumulative
sales of between $120 billion and $224 billion between
2012 and 2030. The detailed breakdown of those business
opportunities for the top 25 manufactured goods made by
Canadian producers is shown in the table, below.
Potential Impact of Future Capital Investment

on Manufacturing Output in Canada (in $billions)
Future Capital Investment

In 2011, capital investment in the oil sands reached
$22.7 billion, up 32% from $17.2 billion in 2010. Based
on 2010 supply chains, we should expect that the total
impact on Canadian manufacturers will rise to $5.6 billion
that year. Any amount greater than that will represent an
improvement in supply chain penetration. A lesser amount
will demonstrate further deterioration.
Looking farther ahead, depending on the scenario,
CME projected that cumulative new capital investment
in the oil sands could range from $486 billion to $905
Canadian Manufacturing Sales Projections for

New Capital Investment ($000s)
Diesel fuel
Concrete products
Gasoline
Coating, engraving, heat treating and similar metal processing services
Cement
250
200
150
100
50
0
$120.4 b
Cumulative impact:
20122030 lower bound
$157.8 b
$224.4 b
Cumulative impact:
20122030 baseline
Cumulative impact:
20122030 upper bound
Note: Assumes 2010 supply chain penetration remains constant

Cumulative impact: 20122030

2010 Actual
2011
Lower bound
Baseline
Upper bound
2,076.6
220.6
196.8
173.8
127.1
116.7
72.5
68.8
61.1
59.7
49.0
48.3
47.4
47.0
46.1
42.9
40.4
40.0
38.5
38.4
37.2
36.1
30.9
26.7
23.5
2,739.9
291.1
259.6
229.3
167.7
154.0
95.7
90.8
80.7
78.8
64.6
63.7
62.5
62.0
60.8
56.6
53.4
52.7
50.7
50.6
49.1
47.6
40.7
35.3
31.0
57,581.6
6,117.8
5,456.5
4,818.8
3,524.0
3,236.7
2,010.6
1,908.3
1,695.4
1,656.5
1,358.5
1,338.7
1,313.6
1,302.5
1,277.3
1,188.9
1,121.5
1,108.2
1,066.3
1,063.9
1,032.3
1,000.7
856.3
741.1
651.6
76,928.5
8,173.3
7,289.8
6,437.9
4,708.0
4,324.3
2,686.2
2,549.4
2,265.1
2,213.0
1,815.0
1,788.5
1,754.9
1,740.1
1,706.4
1,588.4
1,498.3
1,480.5
1,424.6
1,421.4
1,379.1
1,337.0
1,144.0
990.1
870.5
109,354.4
11,618.4
10,362.5
9,151.5
6,692.4
6,147.0
3,818.4
3,624.0
3,219.8
3,145.8
2,580.0
2,542.3
2,494.7
2,473.6
2,425.7
2,257.9
2,129.9
2,104.5
2,025.1
2,020.5
1,960.4
1,900.5
1,626.2
1,407.4
1,237.4
54
CONTENT
Future MRO Expenditures

Similarly, MRO expenditures in the oil sands rose to
$18.2 billion in 2011, up nearly 37% from 2010 levels.
Based on 2010 supply chains, the total impact on Canadian
manufacturers should rise from $1.7 billion in 2010 to
$2.6 billion the following year. As with capital investment,
a total exceeding $2.6 billion in 2011 would represent an
improvement in supply chain penetration, while a lesser
amount would represent a decrease.
CMEs long-term projections suggest that cumulative
MRO oil sands expenditures could range from $404 billion
to $890 billion from 2012 through 2030. Subject to the
same caveats listed above for capital investment, the
direct and indirect spinoffs from those expenditures would
generate cumulative manufacturing output in Canada of at
Canadian Manufacturing Sales Projections for

MRO Expenditures ($000s)
Diesel fuel
Gasoline
Heavy fuel oils
Printed products
Petrochemicals
Industrial gases
Jet fuel
Transformers
Coating, engraving, heat treating and similar metal processing services
Potential Impact of Future MRO Expenditures on

Manufacturing Output in Canada (in $billions)
150.0
75.0
$58.5 b
$83.9 b
$129.0 b
Cumulative impact:
20122030 lower bound
Cumulative impact:
20122030 baseline
Cumulative impact:
20122030 upper bound
0.0
Note: Assumes 2010 supply chain penetration remains constant

least $58.5 billion and as much as $129 billion. The detailed

potential impact on Canadian manufacturers is shown in
the table below.

2010 Actual
2011
Lower bound
Baseline
Upper bound
270.7
225.4
218.8
108.2
91.1
69.3
43.9
43.2
43.2
35.6
33.5
28.4
26.9
25.3
24.3
21.1
19.7
18.9
17.4
17.0
16.0
15.7
13.4
13.1
12.2
370.9
308.7
299.7
148.2
124.8
94.9
60.2
59.2
59.1
48.8
45.9
38.9
36.9
34.6
33.2
28.9
27.0
25.9
23.9
23.3
22.0
21.6
18.4
17.9
16.7
8,239.7
6,859.5
6,657.8
3,292.2
2,773.5
2,108.5
1,337.2
1,316.1
1,313.4
1,084.7
1,019.6
864.4
819.3
769.4
738.3
642.3
600.5
574.8
530.9
517.2
488.2
479.3
409.1
397.6
371.2
11,808.9
9,830.8
9,541.7
4,718.3
3,974.9
3,021.9
1,916.5
1,886.3
1,882.4
1,554.6
1,461.3
1,238.8
1,174.1
1,102.7
1,058.2
920.6
860.6
823.8
760.8
741.2
699.7
686.9
586.3
569.9
531.9
18,600.6
15,484.8
15,029.4
7,431.9
6,261.0
4,759.8
3,018.7
2,971.1
2,965.0
2,448.7
2,301.8
1,951.3
1,849.4
1,736.9
1,666.8
1,450.0
1,355.5
1,297.5
1,198.4
1,167.6
1,102.1
1,081.9
923.5
897.6
837.9
55
CONTENT
Benefits of Improving Supply Chain Penetration

As outlined above, the projected growth in oil sands
expenditures (capital plus MRO) could generate between
$179 billion ($120 billion in capital investment impacts plus
$59 billion in MRO impacts) and $353 billion ($224 billion
plus $129 billion) in total manufacturing output in Canada
from 2012 to 2030. However, these economic impacts are
based on Canadian manufacturers maintaining the level
of access to oil sands supply chains they had in 2010. As
noted earlier, Canadian businesses captured just 43.3% of
the total direct and indirect manufacturing impacts from oil
sands investments that year, down from 46.1% in 2009.
The oil sands offer a significant growth opportunity for
Canadian manufacturers. Improving access to oil sands
supply chains could result in billions of dollars of additional
revenues and business opportunities, over and above the
amounts outlined in the tables above.
Additional Manufacturing Impact of

a 25% Increase in Supply Chain Penetration
(in $billions)
100
Capital
80
MRO
60
40
20
0
Lower bound
Baseline scenario
Upper bound
To illustrate the potential benefits of increasing supply

chain penetration, CME developed a scenario which
assumed that Canadian manufacturers were able to capture
an additional 25% of the supply chains currently held by
foreign companies. We then revisited our investment growth
scenarios to see how much additional economic activity

would be generated within Canada as a result.
The impact was considerable. Even using the
most conservative investment projections, improving
supplychain access by 25% would add nearly $59billion
inadditional manufacturing sales in Canada from
20122030, over and above the $179 billion mentioned
above. For the high-growth scenario, the impact could
be as muchas $117 billion in new manufacturing
output. To put that latter number in perspective,
itexceeds allmanufacturing sales from Alberta and BC
combinedin2013.
Improved Supply Chain Penetration by Industry
The same supply chain scenario can be used to show
which domestic industries might benefit most from
improved supply chain access. It should be stressed that
these results are only illustrative. In some cases, project
owners import specific products that cannot easily be
substituted with goods produced in Canada. There are
also capacity constraint issues to consider, as well as
price considerations. The goal, however, is to demonstrate
where the largest potential gains might be if Canadian
manufacturers were able to improve their overall access to
oil sands supply chains.
On the capital side, Canadian manufacturers of mining
and construction machinery and equipment would gain
the most from improved access to oil sands supply chains.
This is not a surprising result given the importance of that
one sub-sector to oil sands capital investment. However,
the impact would be considerable. In 2011 alone, a 25%
improvement in supply chain access would add $1.4 billion
in sales. Looking ahead to 2030, the cumulative impact
could range from $28.6 billion to $54.0 billion.
Other manufacturers that would benefit from
better supply chain access include those producing
measuringand controlling devices and other specialized
instruments, iron and steel products, and heavy-duty motor
vehicle parts.
The story is similar for MRO supply chains. Producers
ofmining and construction machinery and equipment
would add $151 million in output in 2011 if they could
capture 25% of the supply chain currently held abroad.
From 20122030, the cumulative benefit ranges from
$3.4billion to $7.6 billion. Producers of iron and steel pipes
and tubes could gain as much as $4.0 billion in additional
activity over that period, and those making specialized
instruments would gain up to $1.6 billion.
56
CONTENT
Impact of Improving Supply Chain Access by 25% Capital Investment (in $000s)
Industrial and commercial fans and blowers, and air purification equipment
Concrete products
Other communications equipment
Plastic resins
Gasoline
Switchgear, switchboard, relays and industrial control apparatus
Medical, dental and personal safety supplies, instruments and equipment
Impact of Improving Supply Chain Access by 25% MRO Expenditures (in $000s)
Motor vehicle gasoline engines and their parts
Gasoline
Motor vehicle steering and suspension components (except springs)
Tires
Transformers
Jet fuel
Heavy fuel oils
Ball and roller bearings

2011
1,352.2
149.0
70.5
61.3
56.3
56.0
33.7
33.2
26.9
24.6
18.0
15.6
14.2
13.3
6.9
6.5
6.3
5.5
5.4
5.2
5.1
4.9
4.8
4.8
4.6
Lower bound
28,609.2
3,151.9
1,491.9
1,296.4
1,191.7
1,184.5
713.3
702.6
568.9
521.1
381.2
329.2
299.8
280.4
146.8
136.5
133.1
115.3
114.3
110.8
107.3
103.2
102.1
100.8
98.2
Baseline
37,966.8
4,182.8
1,979.9
1,720.5
1,581.5
1,571.9
946.6
932.4
754.9
691.5
505.9
436.8
397.8
372.1
194.8
181.2
176.6
153.1
151.7
147.1
142.4
137.0
135.5
133.7
130.3
Upper bound
53,970.0
5,945.9
2,814.5
2,445.6
2,248.1
2,234.4
1,345.6
1,325.4
1,073.1
983.0
719.2
621.0
565.5
529.0
276.9
257.5
251.0
217.6
215.6
209.1
202.4
194.8
192.6
190.1
185.2

2011
151.4
79.3
31.1
30.0
21.2
14.8
14.4
14.1
13.3
10.1
9.7
9.7
8.8
8.8
8.8
7.8
7.8
7.1
6.8
6.8
5.9
5.7
5.7
5.3
4.9
Lower bound
3,363.8
1,761.7
691.9
665.5
470.8
328.0
318.8
313.9
294.7
224.7
215.6
214.8
196.5
195.5
194.5
174.0
173.2
158.5
151.9
150.6
131.2
127.6
126.0
118.1
107.9
Baseline
4,820.9
2,524.8
991.6
953.7
674.8
470.1
456.9
449.8
422.4
322.1
309.0
307.9
281.6
280.2
278.8
249.4
248.2
227.2
217.7
215.9
188.1
182.9
180.5
169.2
154.6
Upper bound
7,410.4
3,881.0
1,524.2
1,466.0
1,037.2
722.6
702.4
691.4
649.3
495.1
475.0
473.3
432.8
430.7
428.5
383.3
381.6
349.2
334.7
331.8
289.1
281.1
277.5
260.1
237.7
57
CONTENT
Recommendations:
Towards Enhancing and Developing Sustainable Oil Sands Supply Chains in Canada
Efficient and sustainable manufacturing supply chains are
critical to the success of Albertas oil sands. Project owners
face numerous challenges in developing oil sands ventures,
not least of which is that they operate in a high-cost
environment in Alberta and are facing growing competition
in North American energy markets from soaring US shale
oil production. On top of that, market access is a huge
concern as most of western Canadas oil is effectively
landlocked, meaning that Alberta heavy crude and bitumen
is selling at a discount compared to North American
benchmark prices. This discount lowers the expected
return on investment in oil sands projects and further
exacerbates development challenges.
In response, project developers and EPC contractors are
focusing their efforts on lowering costs and improving their
record when it comes to delivering projects on time and on
budget. This focus is driven not only by macro and infrastructure concerns, but also the fact that the industry itself
is relatively young. Many major industries navigate complex
supply chains, but in most cases, those have been developed over decades of expansion and growth. In the case of
the oil sands, investments have risen rapidly in a relatively
short time, leaving little time for the controlled and managed development of efficient supply chain relationships.
Indeed, the evidence from this study points to just how
volatile oil sands supply chains can be. In 2009, Canadian
manufacturers accounted for 41% of all sales of mining and
construction machinery and equipment into the oil sands.
One year later, that share had fallen to 34%. Supply chains
in the oil sands are still far from settled.
For their part, manufacturers in Canada who supply
goods into the oil sands face considerable challenges
as well. The most significant of these is to deliver goods
on time and on budget when product specifications and
expectations are constantly evolving as projects develop.
In our 2013 report on oil sands supply chains, CME
offered a series of recommendations for how to improve
the relationship between project owners, EPCs and
manufacturers, as well as what steps the federal and
provincial governments could take to improve the overall
business climate in which those companies operate. For
the most part, little has changed.
There has been some progress in a few areas, but last
years recommendations still largely stand as a template
for future action. While there are a number of policy issues
that would help manufacturing competitiveness generally
addressing skilled labour shortages, providing support

for investment in productivity-enhancing machinery and
equipment and so on there are also several that relate
specifically to oil sands supply chain development.
1. Improved Communication between Project

Owners, EPCs and Manufacturers
As identified in our 2013 report, the key issue in
the relationship between project owners, EPCs
and manufacturers is communication. Oil sands
development projects are complex, the industry is
relatively young and there are a host of problems that
help drive costs higher than necessary. These include
unrealistic construction timelines, project delays, unclear
project scope, and changing product specifications. A
lack of timely communication between suppliers and
procurers about these, and other, issues drives up
a range of manufacturing costs labour (including
overtime), materials and design and results in
production delaysas well.
CME research points to the need for effective communication to ensure that each party in the supply
chain understands the others business realities. Closer
cooperation will unlock innovation, create efficiency
and build the relationships and mutual trust needed to
create a vibrant and healthy domestic supply chain into
an efficient and well-run oil sands industry. To that end,
CME recommends:
Establishing an oil sands supply chain working

group. Senior leaders representing project owners,
EPCs and manufacturers need to meet on a regular
basis to address major bottlenecks in the supply
chain, identify common threats to growth and propose
solutions for industry or government. Each has a role
to play in improving cooperation and communication,
as well as building effective and efficient supply
chains. Related work is being undertaken by GO
Productivity (a division of Productivity Alberta)
for a Project Alignment & Delivery project to
discover, measure, and address critical execution
and productivity challenges in large energy and
construction projects in the Alberta market to improve
58
CONTENT
the long-term success and sustainability of the

industry. This is a positive step and could be applied
to the procurement process generally.
Creating detailed how-to guides for

manufacturers. Project owners and EPCs need to
create such guides to help manufacturers better
understand the expected steps and actions they need
to take to participate in oil sands supply chains.
Establishing an oil sands supply chain resource

and procurement office. Creating such an office
will help manufacturers lead about the specific
procurement opportunities in the oil sands and
to efficiently engageand navigate supply chains.
Considering the national scope of those supply chains
and the importance of business-to-business linkages
in their development and nurture, there is a natural
role for CME to play in this area, with assistance from
industryand government.
Developing common supply chain pre-qualification

standards. A standardized and centralized process
for pre-qualifying manufacturers and their specific
products and services would greatly clarify and
accelerate oil sands procurement.
2. Investing in Oil-Sands-Related
Manufacturing Innovation
Technological innovation is pivotal to the success
not only of oil sands development generally, but of
Canadianmanufacturers in accessing the supply
chainsthose investments generate. The oil sands
industry owes much of its present size to innovations
like steam-assisted gravity drainage (SAGD), which
opened up access to the 97% of bitumen too deep
to mine. Continued innovation is critical to reducing
development costs, lowering the environmental
footprintof the industry, and unlocking the potential
of the 90% of known reserves that are currently
uneconomic to extract.
For Canadian manufacturers to ensure a larger and

growing role in the oil sands, they need to be at the
forefront of this innovation. Governments in other
jurisdictions are playing an active role in promoting the
development of new products, ideas and practices
that improve domestic manufacturing productivity and
innovation. Canada needs to do the same to ensure that
our businesses are able to capture a greater share of the
57% of manufacturing spinoff benefits that currently go
to foreign businesses. As such, CME recommends:
The creation of an Oil Sands Manufacturing

Innovation Centre in Ontario. National innovation
centres in the United States are designed to solve
specific problems or develop new products for a
specific industry or purpose. They are instrumental
in spurring innovative commercialization. A similar
centre devoted to the development and testing of new
products and technologies in the oil sands would be
tremendously beneficial to Canadian manufacturers
looking to sell into that industry. Locating such
a centre in Ontario would help eastern Canadian
companies improve their access to oil sands
supplychains.
3. Investing in Effective Supporting Infrastructure

Investment in oil sands development requires the
transportation capacity to move crude oil or refined
petroleum to market. Without this capacity, there would
be little point in expanding production since there would
be no way for the oil to reach its destination.
In particular, there is an urgent need to expand our capacity to export crude oil to non-US markets. Canadas
export pipeline capacity is rapidly filling up, accelerated
by new US production which is competing for space on
existing lines. To alleviate this pressure, several pipelines
have been proposed that would deliver oil sands crude
to tidewater Keystone XL, Northern Gateway, Energy
East and the Kinder Morgan expansion. However, public
resistance has placed all four projects in doubt. Even
if they are approved, all are years away from operation. Moreover, it is not a case of choosing one or two
of these options; all four major pipelines are urgently
59
CONTENT
needed. In the meantime, the Canadian economy is losing billions of dollars in foregone oil revenues every year.
A number of smaller pipeline projects are helping to
ease the pressure in the short term, as is the rapidlygrowing use of rail to transport crude oil. However, these
are stopgap measures. Without continued investment
in new pipeline infrastructure, the oil sands will not be
developed to its full potential and, consequently, the full
economic opportunity for Canada will not be realized.
The need for infrastructure is not limited, however, to
pipeline capacity. Investment is needed to ensure that
upstream and downstream supply chains operate as
smoothly and efficiently as possible. This is especially
important given the cost and competitiveness pressures
facing both oil sands project developers and Canadian
manufacturers; public infrastructure investment has
been shown to have a direct and positive impact
on business productivity. The more productive are
Canadian businesses, the better able they will be to
thrive in a competitive global economy.
As such, CME recommends:
Improving the speed and perceived credibility

of the pipeline approval process. Pipelines are
urgently needed, but the consultation and approval
processes are growing more onerous and can take
years to complete before ground is ever broken. On
top of that, recent changes to the National Energy
Board approval process have created confusion and
undermined the credibility of NEB determinations. A
fast, transparent, impartial and, above all, respected
approval process is urgently needed.
Increasing investment in critical infrastructure

connecting oil sands sites to existing
transportation networks. Improving transportation
linkages will save Canadian businesses time and
money and lead to greater overall productivity. The
ongoing project to twin highway 63 is a significant
step in the right direction. Additional work is needed
to ensure that Canadas rail and road networks are
able to accommodate shipments of modularized
equipment and other large manufactured goods, and
to get those products to end users as quickly and
efficiently as possible.
It is worth noting that there have been some important
policy improvements in recent years that could assist
the development of stronger Canadian oil sands supply
chains. Infrastructure investments, the Canada Jobs
Grant, immigration reforms and efforts to implement a
one-project, one-process regulatory system are all steps
in the right direction. However, there have been backwards
steps as well. Notably, cuts to the Scientific Research &
Experimental Development Tax Credit (SR&ED) have had a
negative effect on business R&D spending the opposite of
what Canada needs to attract investment and growth.
These issues are complex and require governments,
project owners, EPCs and manufacturers to work together
to overcome barriers to growth and support the sustainable
development of domestic supply chains. Without collective
action, Canada will miss out on the economic opportunity
offered by oil sands development in Alberta. For this
reason, CME will be working with these groups to refine
our recommendations into specific action items. The end
goal is to increase supply chain penetration for Canadian
manufacturers in the oil sands while simultaneously making
oil sands investment more attractive and economically viable.
60
CONTENT
Conclusion
lbertas oil sands make a significant contribution to the Canadian economy. In 2010, the direct and
indirect impact of oil sands investment added nearly $21 billion to national GDP, created or supported
more than 170,000 jobs, and paid an estimated $7.2 billion in wages and salaries. These benefits were
spread across all provinces and territories. It is important to emphasize that these figures relate only to
investment; they do not reflect the impact from oil sands production, nor from downstream activities such
as petroleum refining, transportation or petrochemical production.
Canadian manufacturers also benefit significantly from oil sands expenditures. In 2010, Canadian
manufacturers sold $6.0 billion in value-added goods either directly or indirectly into oil sands projects
or their associated supply chains. While this total represented a healthy expansion over the $4.7 billion
in sales the previous year, the increase was due entirely to growth in oil sands expenditures and not to
improved supply chain penetration.
With oil sands spending expected to soar in the coming years, it is critical that Canadian manufacturers
improve their supply chain penetration in order to take advantage of the tremendous opportunities the
oil sands offer. We anticipate that cumulative expenditures in the oil sands (capital and MRO spending)
will range from $890 billion to $1.8 trillion from 2012 to 2030. A significant portion of that total range will
be spent on the purchase of machinery, equipment, steel pipes, valves and boilers, modular equipment
and a host of other manufactured goods. In total, there is a potential market opportunity of between $418
billion and $817 billion for Canadian manufacturers.
Because imports play an important role in any complex supply chain operation, Canadian businesses
will only see a fraction of that total. However, we owe it to ourselves to make that share as large as
possible. Increasing supply chain penetration by 25% could create as much as $117 billion in additional
manufacturing output in Canada.
The challenge is that Canadian manufacturers access to those supply chains is moving in the wrong
direction. In 2010, Canadian businesses produced 43.3% of the manufactured goods used in oil sands
investment or related spinoff activity, down from 46.1% in 2009. In that one year alone, Canadian
manufacturers missed out on $634 million in output growth because of lost supply chain opportunities.
This loss underscores the need for governments and businesses to work together to ensure that
Canadian manufacturers are well-positioned to capitalize on future supply chain opportunities.
CME believes that oil sands expenditures will be a major growth driver for Canadian manufacturers in the
years ahead. For this reason we are committed to publishing annual updates on oil sands supply chains
for at least two more years. Our intent is to better understand the nature and extent of those supply chain
opportunities, monitor how well Canadian companies are capitalizing on those opportunities, and to act
on our own recommendations for corrective policy action.
Even so, it bears repeating that future oil sands investment and expansion are far from certain. Nor, for
that matter, can manufacturers necessarily count on billions of dollars in supply chain opportunities.
Mounting public resistance, a lack of pipeline capacity, high production costs and lower oil prices are just
some of the factors that could greatly reduce oil sands production and investment down the road.
In short, there are no guarantees. Canadians across the country have a stake in a strong and vibrant oil
sands industry. The challenge is to simultaneously secure the long-run competitiveness of that industry,
while also working to ensure that Canadian manufacturers are in the best possible position to benefit from
the value-added economic opportunities that oil sands expenditures generate. Unlocking the full potential
of the oil sands is critical to creating lasting economic benefit to all regions of Canada.
61
CONTENT
Thank you to our partners:
Ministry of Economic Development, Employment and Infrastructure

Ministre du Dveloppement conomique, de lEmploi et de lInfrastructure
62
www.cme-mec.ca

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MANUFACTURING

anadian Manufacturers & Exporters (CME),

anadian Manufacturers & Exporters is pleased to

Production and Spending in the Oil Sands

Oil Sands Supply Chains across Canada

Impacts of Oil Sands Expenditures on Manufacturing

1. Improving Communication between Project

2. Investing in Oil-Sands-Related Manufacturing Innovation

3. Investing in Effective Supporting Infrastructure

lbertas energy sector is a major driver of economic

For this reason, CME has committed to publishing

Albertas Oil Sands and the Canadian Economy

Canada is only about one third that of the United States.

Oil Sands Are Driving Crude Oil Production Growth in Canada

Source: CME calculations using data from CAPP

Mining and In Situ Production

Top 10 Crude Oil Producers 2012

Proved Crude Oil Reserves by Country - 2012

(millions of barrels per day)

Source: US Energy Information Administration

Source: US Energy Information Administration

Oil Sands Expenditures

Cumulative Oil Sands Spending 1997 to 2013

Source: Canadian Association of Petroleum Producers (CAPP)

2.1 Capital Investment

Oil Sands Capital Investment by Type

2.2 MRO Expenditures

Oil Sands Operating Expenditures by Type

Investment growth in new oil sands capital has been

This characteristic of MRO activity is reflected in recent

Non-Conventional Oil Extraction is a Leading Creator of Jobs in Canada

Crude Oil Dramatically Improves Canada's Trade Balance

Source: CME calculations using Statistics Canada data

Source: Alberta government: http://oilsands.alberta.ca/economicinvestment.html

Manufacturing Supply Chains in the Oil Sands

About Input-Output Modelling

Sales of Manufactured Goods into the Oil Sands

Source: CME calculations based on Statistic Canadas input-output model

Oil Sands Supply Chains across Canada

Growth Drivers in National Manufacturing Sales

Supply Chain Penetration

Canadian Share of Oil Sands Manufacturing Supply Chains

Source: CME calculations based on Statistic Canadas input-output model

Industry Breakdown Capital Investment

Source: CME calculations based on Statistic Canadas input-output model

tanks and structures, as well as other products made from

Canadian Manufacturing Sales Generated by Oil Sands Capital Investment

Value of the change attributable

Iron and steel pipes and tubes (except castings)

Iron and steel basic shapes and ferro-alloy products

Boiler, tanks and heavy gauge metal containers

Fabricated steel plates and other fabricated structural metal

Other ornamental and architectural metal products

Logging, mining and construction machinery and equipment

Canadian Manufacturing Sales Generated by Oil Sands Capital Investment

Value of the change attributable

Other engine and power transmission equipment

Prefabricated metal building and components

Metal valves and pipe fittings

Plastic building and construction materials

Pumps and compressors

Custom work, other manufacturing production services

Asphalt and asphalt products

Manufacturing Supply Chains Alberta's Oil

Manufacturing Supply Chains Alberta's Oil