Suncor Energy – Annual Information Form 2009
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17FEB201022072349 ANNUAL INFORMATION FORM DATED MARCH 5, 2010 FORM DATED ANNUAL INFORMATION ANNUAL INFORMATION FORM TABLE OF CONTENTS TABLE OF CONTENTS ................... i Corporate, Energy Trading and Eliminations ...... 26 GLOSSARY OF TERMS .................. 1 RESERVES ESTIMATES ................... 27 CONVERSION TABLE .................... 3 General ............................. 27 PRESENTATION OF INFORMATION .......... 3 Reserves Evaluation Process and Controls ........ 27 FORWARD-LOOKING STATEMENTS .......... 3 Definitions and Notes to Reserves Data Tables ..... 28 NON-GAAP FINANCIAL MEASURES .......... 5 Reserves Categories (SEC definitions) .......... 28 ACCOUNTING MATTERS ................. 5 Discussion on Changes to Reserve Estimates ...... 30 CORPORATE STRUCTURE ................. 5 Changes related to revised SEC reserves disclosure Name and Incorporation .................. 5 requirements ...................... 30 Intercorporate Relationships ................ 6 Merger of Suncor and Petro-Canada ......... 30 GENERAL DEVELOPMENT OF THE BUSINESS .... 7 Production ......................... 30 Overview ............................ 7 Bitumen Reserves ..................... 30 Three-Year History ...................... 8 In-Situ ............................ 30 Oil Sands .......................... 8 Mining ............................ 30 Natural Gas ......................... 9 International ........................ 30 East Coast Canada .................... 10 Required U.S. Oil and Gas Disclosure .......... 31 International ........................ 10 Voluntary Additional Disclosure .............. 34 Refining and Marketing ................. 11 Remaining Recoverable Resources ............ 36 Other ............................ 12 Standardized Measure of Discounted Future Net Significant Acquisition in 2009 .............. 12 Cash Flows and Changes Therein Relating to NARRATIVE DESCRIPTION OF THE BUSINESS . 13 Proved Oil and Gas Reserves .............. 37 Oil Sands ............................ 13 INDUSTRY CONDITIONS ................. 48 Operations ......................... 13 Pricing and Marketing – Oil and Natural Gas ...... 48 Principal Products ..................... 14 Pipeline Capacity ..................... 48 Principal Markets ..................... 14 Royalties and Incentives ................... 48 Transportation ....................... 14 Canada – General ..................... 48 Competitive Conditions ................. 15 Alberta ........................... 49 Seasonal Impacts ..................... 15 East Coast Canada .................... 51 Sales of SCO and Diesel ................. 15 United States ........................ 51 Environmental Compliance ............... 15 Other International .................... 51 Natural Gas .......................... 16 Land Tenure .......................... 51 Marketing, Pipeline and Other Operations ...... 16 Environmental Regulation ................. 52 Principal Products ..................... 17 RISK FACTORS ........................ 54 Competitive Conditions ................. 17 DIVIDENDS .......................... 63 Seasonal Impacts ..................... 17 DESCRIPTION OF CAPITAL STRUCTURE ....... 63 Environmental Compliance ............... 17 General Description of Capital Structure ........ 63 East Coast Canada ...................... 17 Constraints .......................... 63 Marketing, Pipeline and Other Operations ...... 18 Ratings ............................. 63 Sales of Conventional Crude Oil ............ 19 MARKET FOR OUR SECURITIES ............. 65 Principal Products ..................... 19 Price Range and Trading Volume of Common Shares 65 Competitive Conditions ................. 19 Toronto Stock Exchange ................. 65 Seasonal Impacts ..................... 19 New York Stock Exchange ................ 65 Environmental Compliance ............... 19 Prior Sales .......................... 65 International .......................... 20 DIRECTORS AND EXECUTIVE OFFICERS ....... 66 Marketing, Pipeline and Other Operations ...... 20 Directors ............................ 66 Principal Products ..................... 21 Corporate Officers ...................... 68 Competitive Conditions ................. 22 Cease Trade Orders, Bankruptcies, Penalties or Environmental Compliance ............... 22 Sanctions .......................... 69 Refining and Marketing ................... 22 Conflicts of Interest ..................... 69 Average Daily Sales of Petroleum Products ..... 24 SUNCOR EMPLOYEES ................... 70 Procurement of Feedstocks ............... 25 RELIANCE ON EXEMPTIVE RELIEF ........... 70 Transportation and Distribution ............. 25 AUDIT COMMITTEE INFORMATION .......... 71 Competitive Conditions ................. 26 LEGAL PROCEEDINGS AND REGULATORY Environmental Compliance ............... 26 ACTIONS .......................... 73 SUNCOR ENERGY INC. 2010 ANNUAL INFORMATION FORM i INTEREST OF MANAGEMENT AND OTHERS IN SCHEDULE ‘‘C’’ – MODIFIED FORM 51-101F3 MATERIAL TRANSACTIONS .............. 73 REPORT OF MANAGEMENT AND DIRECTORS ON TRANSFER AGENT AND REGISTRAR ......... 73 RESERVES DATA AND OTHER INFORMATION .... C-1 MATERIAL CONTRACTS .................. 73 SCHEDULE ‘‘D’’ – MODIFIED FORM 51-101F2 INTERESTS OF EXPERTS ................. 74 REPORT ON RESERVES DATA BY INDEPENDENT DISCLOSURE PURSUANT TO THE REQUIREMENTS QUALIFIED RESERVES EVALUATORS .......... D-1 OF THE NEW YORK STOCK EXCHANGE ..... 74 SCHEDULE ‘‘E’’ – REPORT OF GLJ PETROLEUM ADDITIONAL INFORMATION .............. 74 CONSULTANTS LTD. ................... E-1 SCHEDULE ‘‘A’’ – SUNCOR ENERGY INC. POLICY AND PROCEDURES FOR PRE-APPROVAL OF SCHEDULE ‘‘F’’ – REPORT OF SPROULE AUDIT AND NON-AUDIT SERVICES ......... A-1 ASSOCIATES LTD. .................... F-1 SCHEDULE ‘‘B’’ – AUDIT COMMITTEE MANDATE . B-1 SCHEDULE ‘‘G’’ – REPORT OF RPS ENERGY PLC. ..G-1 ii SUNCOR ENERGY INC. 2010 ANNUAL INFORMATION FORM GLOSSARY OF TERMS In this Annual Information Form (AIF), references to ‘‘we’’, ‘‘our’’, ‘‘us’’, ‘‘Suncor’’ or ‘‘the company’’ mean Suncor Energy Inc., its subsidiaries, partnerships and joint venture investments unless the context otherwise requires. References to ‘‘legacy Suncor’’ and ‘‘legacy Petro-Canada’’ refer to the applicable entity prior to the August 1, 2009 effective date of the merger. Barrel of oil equivalent (boe) Suncor converts natural gas to barrels of oil equivalent (boe) at a 6 thousand cubic feet:1 barrel ratio. BOEs may be misleading, particularly if used in isolation. The boe conversion ratio of 6 thousand cubic feet:1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Bcf Billions of cubic feet. Bitumen/heavy crude oil A naturally occurring viscous mixture, consisting mainly of pentanes and heavier hydrocarbons, which is not recoverable at a commercial rate in its naturally occurring viscous state through a well without using enhanced recovery methods. When extracted, bitumen/heavy crude oil may be upgraded into crude oil and other petroleum products. Bpd Barrels per day. Capacity Maximum annual average output that may be achieved from a facility in ideal operating conditions in accordance with current design specifications. Conventional crude oil Crude oil produced through wells by standard industry recovery methods. Conventional natural gas Natural gas produced from all geological strata, excluding coal bed methane and shale gas. Crude oil Unrefined liquid hydrocarbons, excluding natural gas liquids. Development costs Includes all costs associated with moving reserves from other classes such as ‘‘proved undeveloped’’ and ‘‘probable’’ to the ‘‘proved developed’’ class. Dry hole An exploration or development well determined, on an economic basis, to be incapable of producing hydrocarbons, and that will be plugged, abandoned and reclaimed. Feedstock In the oil sands business, feedstock generally refers to raw bitumen required in the production of SCO. In the downstream business, feedstock refers to crude oil and/or other components required in the production of refined products. Finding costs Includes the cost of and investment in undeveloped land, geological and geophysical activities, exploratory drilling and direct administrative costs necessary to discover crude oil and natural gas reserves. SUNCOR ENERGY INC. 2010 ANNUAL INFORMATION FORM 1 Gross wells/Land holdings Total number of wells or acres, as the case may be, in which Suncor has an interest. Heavy fuel oil Residue from refining of conventional crude oil that remains after lighter products such as gasoline, petrochemicals and heating oils have been extracted. This product traditionally sells at less than the cost of crude oil. In-situ In-situ or ‘‘in place’’ refers to methods of extracting heavy crude oil from deep deposits of oil sands by drilling with minimal disturbance of the ground cover. Lifting costs Includes all expenses related to the operation and maintenance of producing or producible wells and related facilities, natural gas plants and gathering systems. MD&A Suncor’s Management’s Discussion and Analysis dated February 26, 2010, accompanying its audited consolidated financial statements, notes and auditors’ report, as at and for the three years in the period ended December 31, 2009. MMbbls Millions of barrels. MMbtu Millions of British Thermal Units. MMcf Millions of cubic feet. Natural gas Hydrocarbons that at atmospheric conditions of temperature and pressure are in a gaseous state. Natural gas liquids