Opportunities and Challenges of Heavy Oil Development in Canada

Colombian Oil and Gas Investment Conference Cartegena, Colombia, December 5, 2006

K.C. Yeung, Suncor Energy Inc. President 2005/2006, Canadian Heavy Oil Association Outline

1. Overview of Canadian Oil Sands Resources 2. Recovery Processes 3. Challenges and mitigation 4. Emerging Technologies 5. Summary

Alberta Oil Sands Deposits

ALBERTA ATHABASCA PEACE Project Investment RIVER • $45 billion built from 1996-2005

WABASCA • $95 billion expected in 2006-2010 Edmonton COLD LAKE

LLOYDMINSTER

Calgary 100 mile 125 km Canada U.S.A. Source: CAPP, NEB Area: Lloydminster Process: CHOPS (Cold Heavy Oil Production with Sands) Companies: Husky, Nexen

ALBERTA Typical Cold Production History ATHABASCA

PEACE 25 RIVER

20 with sand

15 /day) WABASCA 3

Edmonton 10

Oil Rate (m without COLD LAKE sand

LLOYDMINSTER 5

Calgary 0 100 mile 0 360 720 1,080 1,440 125 km Production Time (days) Canada U.S.A. Area: Cold Lake Process: Cyclic Steam Stimulation, SAGD Companies: Imperial Oil, CNRL, Husky

ALBERTA Imperial Oil Cold Lake Project Production ATHABASCA PEACE RIVER

WABASCA Edmonton COLD LAKE

LLOYDMINSTER

Calgary 100 mile 125 km Canada U.S.A. Area: Peace River Process: Cyclic Steam Stimulation Company: Shell

ALBERTA ATHABASCA PEACE RIVER

WABASCA Edmonton COLD LAKE

LLOYDMINSTER

Calgary 100 mile 125 km Canada U.S.A. Area: Athabasca Process: Mining & Extraction, SAGD

ALBERTA ATHABASCA PEACE RIVER

WABASCA Edmonton COLD LAKE

LLOYDMINSTER

Calgary 100 mile 125 km Canada U.S.A. McMurray Oil Sand Outcrop

Athabasca River Horse River Oil Sands Mine Face

Estuarine Channel Shale plug

Channel Margin Shale Clast Breccia Estuarine/Fluvial contact Tar Island Outcrop - Tar Island Outcrop - Athabasca River Athabasca River

What is Brad Pitt doing here? Truck & Shovel Mining Oil Sands Truck & Operator ALBERTA OIL SANDS MINING PROJECTS

Company Project Size (mbopd) On Production

Albian/Shell Muskeg/Jackpine 150 now Suncor Base Plant 280 now Syncrude Base Plant 300 now CNRL Horizon 110 2008 Imperial Kearl Like 100 2010 Synenco Northern Lights 50 2010 PetroCan Fort Hills 50 2011 SAGD (Steam Assisted Gravity Drainage) Process ALBERTA SAGD COMMERCIAL PROJECTS

Company Project Size (mbopd) On Production

ConocoPhillips Surmont 100 2006-2012 Total Joslyn 45 2010 Devon Jackfish 35 2008 Encana Christina Lake 18 2008 Encana Foster Creek 40 - 60 now Husky Sunrise 50 - 200 2008 - Husky Tucker Lake 30 2006 JACOS Hangingstone 10 now MEG Energy Christina Lake 25 2008 North American Kai Kos Dehseh 10 2008 Petro Canada MacKay River 30 - 74 now - 2010 OPTI/Nexen Long Lake 72 2007 Shell Orion 10-20 2007 Suncor Firebag I &270 now ALBERTA OIL SANDS LAND SALES

$/Ha Bonus $ Million 1800 1800 1600 1600 1400 1400 1200 1200 1000 1000 800 800 600 600 400 400 200 200 0 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006*

$/Ha Total Bonus

* January to October 2006 Challenges and Mitigation High capital costs and Manpower shortage • Good front end scoping and engineering • Modular design and fabrication • Phased development approach • Skilled worker from overseas Challenges and Mitigation High fuel costs • Reduce SOR for Steam Based Processes • Lower operation pressure • Addition of solvent (ES-SAGD or SAP) • Alternative Fuel • Bitumen • Gasification of coke, coal • Diesel • Nuclear reactor Challenges and Mitigation Boiler Feedwater and Water Disposal Constraint

• Brackish Water • Recycle of Produced Water • Crystallization process Challenges and Mitigation Transportation and Marketing Constraint

• New and expanded pipelines • Expansion of Markets • Purchasing refineries or alliance with refiners Challenges and Mitigation Environmental Issues

• CO2 emission • Lower Steam Oil Ratio • Land Disturbance and Wildlife • Long horizontal wells drilled from pads • Narrower zig-zag seismic lines • Elevated pipelines or Bridges over pipelines so that wildlife can pass underneath or over top Woodland Caribou & Predator

Emerging Recovery Technologies

• VAPEX (Vapor Extraction) • THAI (Toe to Heel Air Injection) • ET-DSP (Electro-Thermal Dynamic Stripping Process) THE VAPEX CONCEPT

Solvent Vapor Chamber

Injector Draining Edge of diluted, diluted DAO deasphalted Oil (DAO)

Producer THAI (Toe-to-Heel Air Injection)

Courtesy of Petrobank ET-DSPTM Technology 210 Days30 Days

Combination of 6 Elements 123

All the oil is produced 4 5 6 In less than One Year !!

Courtesy of ET Energy Summary

• Canada holds vast amount of heavy oil resources which can provide a significant role in the energy of the future • Significant commercial development of heavy oil in Alberta in the past few years and in the upcoming years using mining & extraction, CSS and SAGD • There are challenges and opportunities: capex and opex optimization, manpower, midstream and downstream, environmental impacts, etc. • Research and Field Test ongoing to improve current technologies and to develop Emerging Recovery technologies GRACIAS THANK YOU OBRIGADO MERCI