Kearl Oil Sands Project Description Update

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Kearl Oil Sands Project Description Update Kearl Project Description Update – Kearl Mine Development May 2006 This document contains forward-looking information on future production, project start-ups and future capital spending. Actual results could differ materially due to changes in project schedules, operating performance, demand for oil and gas, commercial negotiations or other technical and economic factors. WB00200 06 05 PROPOSED DEVELOPMENT exploring for and producing oil and natural gas, The Kearl Oil Sands Project is a potential oil-sands refining and marketing petroleum products, and mining, pipeline and upgrading project in Alberta, manufacturing and selling petrochemicals. It has proposed by Imperial Oil Resources Ventures about 5,100 employees in two operating divisions - Limited (Imperial Oil) and ExxonMobil Canada the Resources Division and the Products and Properties (ExxonMobil Canada). Imperial Oil Chemicals Division. Resources, as designated operator, submitted the Resources Division mine application (leases included in Kearl Imperial's Resources Division manages the application are shown in figure) and related company's natural resource operations and is based environmental impact assessment to the Alberta in Calgary, Alberta. It is one of Canada's largest Energy and Utilities Board and Alberta Environment producers of crude oil and natural gas. It is a in July 2005. The company responded to the leading developer of Canada's vast oil sands regulators' information requests in March 2006 and resources through its 25 percent ownership of the expects to hold public hearings in the second half of Syncrude project and its operations at Cold Lake, 2006. Alberta. Imperial is the only original owner of Syncrude still involved in the project and, as a Athabasca River result, has a long history of contributing to the Fort McMurray community and Wood Buffalo Region. Imperial is also the leader of a Canadian group Imperial Oil advancing the development of natural-gas Fort McKay 6 resources in the Mackenzie Delta region of 88A Petro- Shell Canada Canada's Far North. The company also operates 18 CNRL 87 36 Syncrude 31A pipelines and has ownership interests in several Deer Creek Shell ExxonMobil others. Syncrude Products and Chemicals Division The Products and Chemicals Division manages the Syncrude Syncrude company's petroleum products and chemicals businesses, under the Esso and Mobil brands. The Suncor Suncor products group operates four refineries, and an extensive network of retail and wholesale outlets. It is one of the largest suppliers of refined products in Canada. Of the company's four refineries, three have some capability to process bitumen and are pipeline-connected to the proposed Kearl Fort McMurray development region. The chemicals group operates four manufacturing WHO ARE WE? plants and a number of strategically located Imperial Oil Limited distribution centres across the country. It's one of Imperial Oil Limited is Canada's largest integrated the largest chemical companies in Canada. (production, refining and product delivery) Chemical products include primary petrochemicals, petroleum company. It's a leading producer of crude plastic resins, solvents and additives for lubricating oils. oil and natural gas and a major company by international standards. The company's focus is on 2 ExxonMobil Canada ExxonMobil Canada (formerly Mobil Oil Canada) is a wholly owned subsidiary of Exxon Mobil Corporation and a major petroleum producer in Canada. The company holds a leadership position in key petroleum exploration and production areas, with large working interests in the Hibernia, Terra Nova and Sable offshore energy projects off Canada's East Coast. The company has about 1,100 employees who support its operations across Canada. In western Canada, ExxonMobil operates nine oil and gas facilities and has ownership interests in 13 other facilities. It's also part of the Imperial-led, Canadian group advancing the development of Mackenzie Delta natural-gas resources in Canada's Far North. ExxonMobil's western Canadian holdings include interests in more than three million acres of exploration lands. This includes portions of Leases 36, 31A and 88 in the Athabasca region. PROJECT DETAILS Estimated Production The proposed development will be an open-pit mining operation. Expected eventual production, based on a phased development scenario, could average about 300,000 barrels of bitumen a day, with variations above and below this volume. This will likely involve an initial mine development as early as 2010 with design capacity of about 100,000 barrels-a-day, with two additional phases in 2012 and 2018. Maximum production could be up to 345,000 barrels-a-day. Estimated Resources Based on evaluation drilling carried out to date, total recoverable bitumen before royalties is estimated to be 4.6 billion barrels using current government guidelines. Estimated Cost The initial cost estimate for the mine development was estimated to fall in the $5-8 billion range in 2005 dollars. Work is being done to refine this preliminary cost estimate and fully understand the impact of high industry activity on this estimate. Estimated Schedule Following is a preliminary schedule for the project. 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Task Environmental Baseline Studies Public Consultation and Info. Sharing Release Project Update and Draft EIA Terms EIA Terms of Reference Finalized Environmental Impact Assessment Prepare/File Regulatory Application Regulatory Process/Approvals Engineering, Procurement and Construction First Oil Construction of Second Train Second Train Start-up Third Train (2018) 3 Preliminary Development Concept Shovel Trucks Crusher Conveyor Slurry Plant Oil Sands Slurry Water Mining Hydrotransport/ Conditioning Froth Treatment Diluent Extraction Froth Sand/Water To Market Recycle Water Tailings PROPOSED FACILITIES AND OPERATION Oil-Sands Mine The mine's design concept is similar to existing oil-sands mines in the Fort McMurray region. Plans are to use state-of-the-art, large scale shovels, trucks, crushers and an oil-sands hydrotransport system. The base mine will be developed in a staged approach. The initial mine development (the first train) will involve clearing and draining the surface area, removing the muskeg overburden before mining the oil sands can begin, and stockpiling the muskeg for use in future reclamation. The current planning basis includes an initial mine train with production capacity of about 100,000 barrels-a-day. A second train will follow. These developments would take place on Leases 6 and 87. Bitumen Extraction The mined ore will be crushed, mixed with water for slurrying, transported and conditioned in a pipeline, and fed to a bitumen-extraction facility. The bitumen will be separated as froth – a mixture of bitumen, water and solids. The froth will be further treated in a froth treatment plant to produce bitumen for sale. Bitumen Upgrading Current plans do not include any on-site upgrading facilities for the first phase of development. To reduce the bitumen's viscocity such that it can be shipped by pipeline, a number of blending options are being considered. The product will be transported to market through a pipeline system. Imperial and ExxonMobil own extensive refinery infrastructure in Canada and the U.S. that could receive bitumen or upgraded feedstock to make a variety of refined products. Production may also be sold to third parties. Any future Kearl upgrading capacity or related pipelines to support future mine phases would be the subject of a separate application. Proposed Mining Sequence 4 Tailings Management R11 R10 R9 R8 R7 R6 W4 Proposed T99 Tailings (a mixture of fine clay, River Water Intake sand and water) are a by-product Winter Road Proposed Raw Water Pipe of the bitumen-extraction process. Proposed T98 Powerline N r e v The application includes an i line R a c McClellend Lake Fi s rebagR er a iv b a t h external tailings area in the A Potential northeast portion of Lease 6. External Water Tailings Area Storage T97 Conventional tailings-treatment Plant Site Administration Maintenance and Operations technology is planned for use until Bitumount Shop Camp North Pit r East e iv Pit tailings can be stored in a R Proposed g e k s Powerline T96 u M South depleted mine pit, at which time Pit West Pit consolidated tailings technology Kearl Proposed Lake Project Roads Proposed will be implemented. This will Compensation nterra Road Proposed a Lake C Industry Hot T95 Airstrip Bitumen allow Imperial to minimize surface Natural Product Gas Pipeline Pipeline disturbance, reduce the ultimate Steepbank Gas Pipeline Kinder Mor Fort fine tailings volume and McKay ga n Corridor P T94 Fort accelerate the reclamation of McKay I.R. ipeline the external tailings area. Infrastructure The project includes development of related infrastructure, including a water intake and water pipeline (to allow water to be withdrawn from the Athabasca River), water storage, an operations camp, and roads. Given the project's remote location and estimated commuting time of at least 90 minutes each way, Imperial is planning to have a camp-based operation with a workforce on a rotating schedule. This will allow Imperial Oil to have a safe, healthy, productive and efficient work environment with minimal impact on the Fort McMurray infrastructure. Imperial is planning to fly operators to the site, likely from Edmonton. For this reason Imperial is currently working with other operators on a joint industry airstrip just south of the Kearl leases. Fresh Water Source The current design basis for the project has the Athabasca River as the water source for this development and includes 30 days of on-site contingency water storage which would allow Imperial to reduce withdrawals during low-flow periods that occur in the winter. Streams, small water bodies and the upper reaches of the Muskeg River will be diverted from time to time during the mine operations. These diversions will affect fish and fish habitat in the area. The lost fish habitat will be more than offset with created fish habitat by extending the northern part of Kearl Lake.
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