Shelburne Basin Venture Exploration Drilling Project Environment Report for Monterey Jack E-43A

Project Shelburne Basin Venture Exploration Drilling Project

Document Title Environmental Report for Monterey Jack E-43A

Document Number EP201702246173

Document Revision 04A

Document Status Issued for Authority Approval (IFAA)

Owner / Author L. Smandych/L. Dalton

Issue Date April 18, 2017

Expiry Date None

Security Classification Restricted

Disclosure CNSOPB

Revision History REVISION STATUS APPROVAL Rev. Date Description Originator Reviewer Approver February 23, 01R Draft for Review Lexy Dalton Greg Krauss N/A 2017 March 27, 02R Draft for Review Lexy Dalton Lara Smandych N/A 2017 Tara 03R April 3, 2017 Final Draft for Review Lexy Dalton Barnett/Lindsay N/A Grice Ben Greg Krauss Final Draft for 04A April 18, 2017 Lexy Dalton Martell/Scott Approval Jardine  All signed originals will be retained by the P&T Document Control Center and an electronic copy will be stored in Livelink

Signatures for this revision Date Role Name Signature or electronic reference (email) Originator 4/3/2017 Lexy Dalton

Reviewer 4/13/2017 Ben Martell

Approver 4/18/2017 Greg Krauss

TABLE OF CONTENTS

ACRONYMS ...... 4 1. SCOPE AND PURPOSE ...... 6 2. PROJECT OVERVIEW ...... 6 3. GENERAL ENVIRONMENT CONDITIONS ...... 8 4. ENVIRONMENTAL PROTECTION AND PERFORMANCE ...... 8 4.1. Spills and Discharges ...... 10 4.1.1. Summary of Spills ...... 10 4.1.2. Summary of Authorized Discharges ...... 10 4.1.3. Summary of Unauthorized Discharges ...... 15 4.2. Material ...... 16 4.2.1. Summary of Waste Material Produced ...... 16 4.2.2. Waste Reduction Measures ...... 17 5. ENVIRONMENTAL CONTINGENCY PLAN EXERCISES ...... 19 REFERENCES ...... 20 APPENDIX A SUMMARY OF OPERATIONAL DISCHARGES ...... 22 APPENDIX B SUMMARY OF REPORTED DISCHARGES ...... 25 APPENDIX C SUMMARY OF WASTE DISPOSED DURING THE MONTEREY JACK WELL...... 26

LIST OF FIGURES

Figure 2-1: Monterey Jack E-43A Location ...... 7 Figure 4-1: Rig Discharges Quick Reference Card ...... 15 ACRONYMS

AFFF ...... Aqueous Film Forming Foam BOP ...... blowout preventer CCG ...... Canadian Coast Guard CNSOPB ...... -Nova Scotia Offshore Petroleum Board CO ...... Carbon Monoxide

CO2 ...... Carbon Dioxide

CO2e ...... Carbon Dioxide Equivalent ECCC ...... Environment and Climate Change Canada ECRC ...... Eastern Canada Response Corporation EL ...... Exploration Licences EPP ...... Environmental Protection Plan GHG ...... Greenhouse Gas HSSE & SP CF ...... Health, Safety, Security, Environment and Social Performance Control Framework JSA ...... Job Safety Analysis MARPOL ...... International Convention for the Prevention of Pollution from Ships

NOx ...... Nitrogen Oxides OA-D ...... Operations Authorisation – Drilling OCSG ...... Offshore Chemical Selection Guidelines for Drilling and Production Activities on Frontier Lands OEM ...... original equipment manufacturer OSPAR ...... Oslo and Paris Commissions OSR ...... Oil Spill Response OSRP ...... Oil Spill Response Plan OSV ...... Offshore Support Vessel OWS ...... oil water separator OWTG ...... Offshore Guidelines PLONOR...... poses little or no risk to the environment PM ...... Planned Maintenance PMR ...... Performance Monitoring and Reporting ROP ...... rate of penetration

Document # EP201611201173 - 4 - April 18, 2017 Revision 04A Restricted

ROV ...... remotely operated vehicle SBM ...... synthetic based mud SCCP ...... Source Control Contingency Plan SOC ...... synthetic-on-cuttings

SOx ...... Sulphur Oxides SWIM ……………………………………………..…Single Window Information Management TMS ...... Tether Management System WMP ...... Plan

Document # EP201611201173 - 5 - April 18, 2017 Revision 04A Restricted

1. SCOPE AND PURPOSE

Shell Canada Limited (Shell) has developed this Environmental Report for the Monterey Jack E-43A exploration well (the Monterey Jack well) in accordance with the requirements of Section 87(2) of the Nova Scotia Offshore Drilling and Production Regulations (SOR /2009- 317).

This report describes the environmental protection measures implemented and environmental performance observed during the drilling of the Monterey Jack well.

2. PROJECT OVERVIEW In 2015-2017, Shell conducted the first drilling campaign of an exploration drilling project within the area of its offshore Exploration Licences (EL) 2423, 2424, 2425, 2426, 2429 and 2430 in the Nova Scotia Offshore Area, under the jurisdiction of the Canada-Nova Scotia Offshore Petroleum Board (CNSOPB). The Shelburne Basin Venture Exploration Drilling Project (the Project) is divided into two separate drilling campaigns; Campaign one consisted of drilling two deepwater exploratory wells and a potential second Campaign consists of drilling up to five additional deepwater exploratory wells. As part of the Project, Shell has completed the drilling of the second exploration well of the first campaign, the Monterey Jack well. The well is located approximately 270 km offshore Nova Scotia in a water depth of approximately 2,118m (Figure 2-1). Drilling activity was completed by Shell’s contractor, Stena Drilling (Stena), using the Stena IceMAX drill ship (IceMAX) with support from up to four offshore support vessels (OSVs). Drilling commenced on September 26, 2016 and the well was abandoned in accordance with applicable regulations on January 21, 2017.

Document # EP201611201173 - 6 - April 18, 2017 Revision 04A Restricted

Figure 2-1: Monterey Jack E-43A Location

Document # EP201611201173 - 7 - April 18, 2017 Revision 04A Restricted

3. GENERAL ENVIRONMENTAL CONDITIONS In accordance with Section 87.1 of the CNSOPB Drilling and Production Guidelines (D&P Guidelines), the Physical Environmental Report required under Section 7 of the Offshore Physical Environmental Guidelines complies with the reporting requirements for describing the General Environmental Conditions, as outlined in section 87(2)(a) of the Nova Scotia Offshore Drilling and Production Regulations (D&P Regulations).

As part of the Monterey Jack end of well reporting requirements, Shell commissioned Amec Foster Wheeler (AMEC) to develop a Physical Environment Report. The report contains meteorological data; weather forecasts; oceanographic data, including current and wave data; and descriptions of the instrumentation installed, including calibration reports on each sensor. Please reference the Physical Environmental Report submitted for the Monterey Jack well for the General Environment Conditions required in accordance with Section 87.1 of the D&P Guidelines.

4. ENVIRONMENTAL PROTECTION AND PERFORMANCE Shell developed an Environmental Protection Plan (EPP) at the onset of the Project as part of the CNSOPB Operations Authorization – Drilling (OA-D) approval process, in accordance with Section 6 and 9 of the D&P Regulations and the Environmental Protection Plan Guidelines. The EPP describes the expected operational discharges and outlines the environmental management and environmental protection procedures to be executed, in order to comply with applicable environmental management commitments and requirements for Project operations. These procedures were developed from the Offshore Waste Treatment Guidelines (OWTG) as well as Shell’s Commitment and Policy on Health, Security, Safety, the Environment and Social Performance and Health, Safety, Security, Environment and Social Performance Control Framework (HSSE & SP CF). The EPP is managed as an evergreen document throughout operations and continuously updated to improve environmental compliance and accountability for operational activities.

Shell’s primary Health, Safety and Environment (HSE) objective is Goal Zero – no harm to people and no leaks to the environment. Shell’s HSSE & SP CF is a single set of best practice implementation guides to help achieve Goal Zero and comprises of 11 individual manuals written to guide Shell employees and contractors in appropriate health and safety management. These manuals cover key areas of HSSE & SP risk including environment (with subsections on biodiversity, emissions and waste among others), social performance and chemical management. The HSSE & SP CF also includes guidance for overall implementation

Document # EP201611201173 - 8 - April 18, 2017 Revision 04A Restricted

of these manuals including a chapter on Performance Monitoring and Reporting (PMR) of HSSE & SP data. The purpose of this chapter of the HSSE & SP CF is to report HSSE & SP performance data that are relevant, consistent, transparent, accurate and complete. Shell measures, monitors and internally reports performance of the following Project environmental parameters under PMR: • Energy Use • Greenhouse Gas (GHG) Emissions  Venting • Water Use • Oil Discharged to Surface Water • Waste • Volume of synthetic-on-cuttings (SOC) disposed at sea  Mass of water based mud and cuttings disposed  Mass of synthetic based mud and cuttings disposed • Biodiversity

Data is collected quarterly from each Operating Company within Shell (the Project is considered an Operating Company) and compared between Assets, Business Units, etc. across all of Shell. The data collected is used to quantify Shell’s HSSE & SP performance with the goal of continuous improvement (i.e. each year’s data improving on the year before).

The subsequent sections of this Report summarize the environmental protection matters during the drilling of the Monterey Jack well and the measures implemented to reduce environmental impact.

As part of Shell’s due diligence, Shell initiated an EPP Audit Program to verify compliance with the Project EPP. The objectives of the audits are to assess the adequacy of the Project environmental protection controls and whether they are effectively implemented towards achieving site, business and regulatory environmental objectives. Where weaknesses or deficiencies are identified, recommendation and guidance on what is expected and needed to demonstrate adherence to the EPP is provided and documented.

The following sections of the EPP were audited independently during the drilling of the Monterey Jack well: Section 11 – Monitoring and Reporting Section 13 – Additional Environmental Protection Considerations Section 14 – Chemical Selection and Management

Document # EP201611201173 - 9 - April 18, 2017 Revision 04A Restricted

Section 16 – Specialized Operations Section 17 – Environmental Incidents Section 18 – Additional Environmental Monitoring Section 19 – Public and Stakeholder Communication

The Section 11 audit was a desktop review of internal HSE monitoring and assurance processes. The Section 13 audit was an extensive field based audit of the OSVs to confirm adherence with the EPP as well as review of specific tasks on the IceMAX including helicopter refuelling and bulk transfers. For Section 14, a selection of proposed chemicals was reviewed to confirm whether or not they are still in use by the Project and to ensure the Material Safety Data Sheets were up to date onboard the IceMAX. The Section 16 audit was a desktop review of specialized operations, particularly relating to end of well activities. The Section 17 audit was a desktop review of environmental incidents and reporting. The Section 18 audit covered environmental monitoring of birds and marine mammal and the Section 19 Audit was a desktop review of the stakeholder engagement process and plans particularly with regard to fisheries and First Nations.

There were no significant findings resulting from the audits. Learnings from this assurance program include enhanced focus on key risk areas (e.g. chemical selection, waste management and reporting of environmental incidents) and improvements to the EPP to be more specific when describing requirements and discharges.

4.1. Spills and Discharges

4.1.1. Summary of Spills During the drilling of the Monterey Jack well there were no reportable spills (as defined in the CNSOPB Incident Reporting and Investigation Guidelines) from the IceMAX or the Project’s OSVs.

4.1.2. Summary of Authorized Discharges Shell’s environmental protection measures are based on best management practices to reduce and prevent the generation and/or discharge of waste into the marine environment. All offshore discharges associated with the Project are managed as described in the Project EPP and Waste Management Plan (WMP), in compliance with the Fisheries Act, the Migratory Birds Convention Act, the International Convention for the Prevention of Pollution from Ships (MARPOL) and the OWTG as applicable, prior to discharge.

Document # EP201611201173 - 10 - April 18, 2017 Revision 04A Restricted

Within the EPP, Shell identified normal operational discharges from the IceMAX and the associated compliance measurements, monitoring and/or reporting requirements as outlined in the OWTG. These discharges are listed in Appendix A.

In accordance with the OWTG and the EPP, Shell reported the discharges of bilge water, deck drainage, 48-hr mass averaged SOC, blowout preventer (BOP) control fluid and Monoethylene Glycol to the CNSOPB in a monthly EPP Compliance Monitoring Report (EPP Monthly Report). This report was submitted to the CNSOPB on the 15th day of each month from November 15, 2016 through to February 15, 2017. A summarized list of reported discharges and volumes from the drilling of the Monterey Jack well is provided in Appendix B except for SOC discharges. These are described in more detail in Section 4.1.2.3.

4.1.2.1. Bilge Water The IceMAX employs a MARPOL compliant oil-water separator (OWS) to treat bilge water from machinery spaces prior to discharge. The oil concentration limit for the separated water is set to 15 mg/L (15 ppm) and the unit is equipped with a high oil-in-water alarm that will sound if this limit is exceeded in the separated bilge water.

There were no exceedances of the bilge water oil concentration limit during the drilling of the Monterey Jack well.

4.1.2.2. Deck Drainage Drainage from exposed decks of the Stena IceMAX is collected in a drain line that flows through a monitoring system overboard. The oil-in-water detectors installed on the port and starboard side of the exposed decks use remotely operated valves to control the flow of deck drainage on the rig.  If the detected oil concentration in the drains exceeds 15mg/L the deck drainage is directed into a drain tank for collection and processing through an OWS prior to discharge.  If the oil concentration is below 15 mg/L, then the deck drainage is routed overboard.

Drainage from the drill floor is collected in drain/holding tanks. From these tanks the collected drain water is transferred through a dedicated MARPOL compliant OWS which

Document # EP201611201173 - 11 - April 18, 2017 Revision 04A Restricted

removes the oil from the drain water. Clean drainage water (oil concentration <15 mg/L) is discharged overboard and oily drainage (oil concentration >15 mg/L) drain water is returned to the recovered oil tank.

There were no exceedances of the deck drainage oil concentration limit during the drilling of the Monterey Jack well.

4.1.2.3. Synthetic Retained on Cuttings The riser system, installed after the completion of top hole drilling operations, creates a conduit to capture the associated drilling fluids and cuttings from the well, and transport them back to the IceMAX for further processing. Top hole drilling operations utilized water- based mud (WBM). After installing the riser, synthetic-based mud (SBM) was utilized.

Drill cuttings are separated from the drilling fluid utilizing the IceMAX’s solid control system. The separated cuttings are processed through the cuttings dryer prior to being discharged approximately 2 m below the sea surface. Only synthetic-based fluid adhering to cuttings (SOC) at a concentration of ≤6.9% (6.9g/100g) is discharged at sea in accordance with the OWTG.

As per the OWTG, the concentration of SBM retained on discharged drill cuttings is measured every 12 hours in accordance with the Procedure for Field Testing Oil Based Drilling Muds (API 1991). A mass-weighted rolling 48-hour average is calculated in grams of synthetic fluid per 100 grams wet solids. The average 48-hr mass-averaged SOC concentration for the well as a whole was 3.86g/100g.

There were no exceedances of the 6.9g/100g SOC limit during the drilling of the Monterey Jack well, which shows that the corrective actions implemented during the drilling of the Cheshire L-97A well were effective in managing this discharge.

4.1.2.4. Blowout Preventer Fluids In accordance with the OWTG, the Project EPP includes a description of the BOP fluid discharges associated with the Project. The original Project EPP described BOP control fluid discharges to sea related to low volume function testing of the choke and kill lines. The IceMAX is equipped with a unique return line system, whereby high volume functioning of the Ram/Annular preventers does not discharge BOP control fluid to the sea. The current

Document # EP201611201173 - 12 - April 18, 2017 Revision 04A Restricted

CNSOPB accepted version of the Project EPP describes all potential BOP control fluid discharges, including non-routine and emergency events. The inclusion of all BOP control fluid discharges, as well as estimates of the volumes to be discharged and the frequency of reporting, ensures full compliance with the OWTG. This additional detail regarding BOP control fluid discharges in the Project EPP is considered a positive improvement to environmental oversight of potential discharges to the Nova Scotia offshore marine environment. Further, the full inclusion ensured that these BOP control fluid discharges were treated as authorized discharges in accordance with the CNSOPB Incident and Investigation Reporting Guidelines.

During the drilling of the Monterey Jack well there were no exceedances of the BOP control fluid discharge estimates contemplated in the EPP. A summary of BOP fluid discharged during the drilling of the Monterey Jack well is included in Appendix B.

4.1.2.5. Monoethylene Glycol Hydrate build up around the wellhead connector has the potential to prevent the BOP from being disconnected from the wellhead. To prevent the buildup of hydrates, approximately 20-40 L of monoethylene glycol was pumped into this seal by the remotely operated vehicle (ROV) every 1-2 days. At times excessive hydrate buildup was observed by the ROV and the volume and frequency of glycol discharged was increased as reported in the EPP Monthly Reports. The glycol is typically discharged to sea through the wellhead connector, removing any hydrates that may be present; hydrates from around the BOP are also jetted directly using either sea water or glycol. The total volume of glycol injected by ROV during the drilling of the Monterey Jack well is included in Appendix B.

4.1.2.6. Fire Suppression Chemicals The IceMAX uses Aqueous Film Forming Foam (AFFF) in her fire suppression system. The fire monitors are tested monthly with seawater and the foam is sampled annually.

No foam was discharged to the marine environment during the drilling of the Monterey Jack well.

4.1.2.7. Air Emissions There are two sources of air emissions onboard the IceMAX, the ship engines and the onboard oil incinerator.

Document # EP201611201173 - 13 - April 18, 2017 Revision 04A Restricted

There are six 7.4 megawatt (MW) main diesel engines onboard the IceMAX. Through combustion of diesel the engines produce primarily CO2, NOX and CO along with other combustion products.

The incinerator is used to burn waste oil from the rig, including oil that has been separated from the bilge water and deck drainage streams prior to discharge overboard. Combustion of waste oil produces primarily CO2, SOX and CO along with other combustion products.

In accordance with the OWTG, greenhouse gases (GHGs) are reportable to Environment and Climate Change Canada (ECCC). GHG reporting to ECCC occurs annually and is only mandatory for facilities (including offshore installations) that produce more than 50 000 tonnes of GHG in a calendar year. Including the GHGs that resulted from the drilling of the Cheshire L-97A exploration well, the Project did exceed this 50 000 tonne threshold in 2016 and therefore Shell will report GHG emissions to ECCC for 2016. These will be reported in ECCC’s Single Window Information Management (SWIM) system prior to the deadline of June 1, 2017.

The Project did not exceed the 50 000 tonne threshold in 2017 and therefore is not required to report GHG emissions for 2017.

A summary of CO2 equivalent emissions (CO2e) produced during the drilling of the Monterey Jack well is included in Table 2 below.

Table 2: Summary of CO2e Emissions Produced in Drilling the Monterey Jack Well

2016 Engines (tonnes CO2e) Incinerator (tonnes CO2e) Oct 4872.09 0.00 Nov 5069.01 25.26 Dec 5504.02 19.94 TOTAL 15445.12 45.2

2017 Engines (tonnes CO2e) Incinerator (tonnes CO2e) Jan 5465.72 25.79 TOTAL 5465.72 25.79

Document # EP201611201173 - 14 - April 18, 2017 Revision 04A Restricted

4.1.3. Summary of Unauthorized Discharges As per the Project EPP, Shell lists and describes all known discharges expected as part of the drilling of the Monterey Jack well. Any product, event or volume exceedance not included within the EPP is considered unauthorized and is reportable to the CNSOPB and the Canadian Coast Guard (CCG).

There were no unauthorized discharges reported during the drilling of the Monterey Jack well which demonstrates the effectiveness of the training provided to the IceMAX crews and the emphasis placed on the differences between authorized versus unauthorized discharges.

To improve compliance and reporting performance of unauthorized discharges during the Project, Shell created Quick Reference Cards highlighting the approved rig discharges, (Figure 4-1). These cards were made available to all personnel onboard the IceMAX during the drilling of the Cheshire well to increase awareness and understanding of authorized versus unauthorized discharges.

Figure 4-1: Rig Discharges Quick Reference Card

Document # EP201611201173 - 15 - April 18, 2017 Revision 04A Restricted

4.2. Waste Material

4.2.1. Summary of Waste Material Produced destined for onshore treatment, and/or disposal are managed in accordance with the Nova Scotia Solid Waste-Resource Management Regulations and comply with applicable federal and provincial waste requirements as well as municipal bylaws.

Terrapure is the third-party waste management contractor for the Project. Terrapure managed all hazardous and non-hazardous wastes transported onshore from the IceMAX and ensure the waste is treated/disposed at Shell audited and approved facilities. As per the Shelburne WMP, all waste materials are to be properly classified, labeled and segregated to enable all personnel in the waste management chain to follow appropriate safety, handling and disposal practices.

Terrapure provided monthly summaries to Shell detailing the type and weight of waste received. A full listing of all wastes sent onshore during the drilling of the Monterey Jack well is provided in Appendix C. A summary of hazardous and non- masses that were recycled and disposed over the course of the Monterey Jack well is provided in Table 4 below.

Table 4: Summary of Wastes Disposed and Recycled during the drilling of the Monterey Jack well Waste Category Disposed (kg) Recycled (kg) Total (kg) Hazardous 6,387,250 75,748 6,462,998 Non-hazardous 28,045 43,280 71,325 Totals 6,415,295 119,028 6,534,323

The largest waste stream disposed (by mass) was interface fluids from riser displacements, which makes up 40.8% of all hazardous waste generated. This waste stream originates when displacing the riser from SBM to seawater in preparation for a well disconnect and consists mostly of seawater. The second largest waste stream produced was wash water from cleaning the interface fluid tanks (19.1% of all hazardous waste). The third largest waste

Document # EP201611201173 - 16 - April 18, 2017 Revision 04A Restricted

stream (18.6% of all hazardous waste disposed) was residual SBM, the drilling mud left over after completion of drilling.

The largest recycled stream (40.9% of recycled waste) was a mix of lube oil/water/glycol, waste lube oil is generated from the IceMAX engine oil changes and is recycled with waste water and waste glycol from the rig (glycol is used in radiators etc.). The second and third largest recycled waste streams were wood construction debris (19% of recycled waste) and metal (11.6%) which originate from various maintenance, repair and fabrication activities that occur daily on the rig.

4.2.2. Waste Reduction Measures

4.2.2.1. Project Waste Management onboard the Stena IceMAX Shell’s waste management philosophy, as outlined in the HSSE & SP CF, aims to prevent or reduce waste generation and requires project teams to incorporate controls into the design, procedures and working practices of all new activities in order to achieve this. Other Shell waste management strategies include reusing waste for the same or alternative applications, including in other industries, returning unused materials to suppliers and identifying recycling and recovery opportunities for waste. Shell has reviewed Stena’s waste management policies and has confirmed that they align with Shell’s philosophy.

Stena is committed to reducing, reusing and recycling the waste generated by its activities (e.g. drilling). In order to achieve this, a number of initiatives were implemented including:  Utilisation of environmentally friendly substances and products, wherever possible  Using stock prior to expiration to reduce quantities disposed  Reducing organic domestic waste

All crew on the IceMAX were responsible for minimising generation of waste. Both Stena and Shell recognise that improper disposal of waste (and the associated transport) is potentially harmful to the environment. The potential impacts of unnecessary transportation and improper disposal of waste can be reduced by minimising the quantity of waste generated and ensuring that all waste is correctly categorised, stored and disposed.

As outlined in Stena’s waste management procedure, waste products on the rig are to be separated at the source to encourage recycling. Shell developed a WMP for the project to detail the management processes and procedures for waste that is generated in association

Document # EP201611201173 - 17 - April 18, 2017 Revision 04A Restricted

with the Project. The WMP is based on Shell’s waste management philosophy of reduce, reuse and recycle wherever possible.

In addition to the principles outlined in the HSSE & SP CF, the following working practices were also implemented to reduce the amount of waste generated: • Complete use of materials and contents of containers • Adequate storage to avoid spoilage • Use of oldest supplies to avoid disposal due to expiry • Reduction of paper waste through use of electronic media • Reuse of waste material and products where possible in additional operational activities • Using non-hazardous alternatives, where possible • Return of unused materials to suppliers, where possible

4.2.2.2. Waste Management Assurance A Waste Management Audit was completed after termination of the Monterey Jack well. The purpose of this audit was to review waste management practices and confirm that wastes were being managed in accordance with the Project EPP and WMP. There were no significant (i.e. serious or high) findings from the audit. It was determined in the audit that overall waste management is well managed, however the audit did identify some areas that could be improved on for future projects. Unlike some of the other Project plans, the WMP was not regularly reviewed to identify any updates required, and there were some outdated references and processes still referenced in the document that had subsequently been replaced by more accurate and effective processes. Most of the findings were related to record keeping and roles and responsibilities. The recommendation for future projects is to regularly review the WMP to ensure all the specified tasks are being performed by the individuals assigned and as described in the plan.

To further demonstrate Shell’s commitment to implementing above-average environmental performance in waste handling and treatment, all facilities used to treat, store, dispose or recycle high-risk Project waste streams are reviewed and approved through the Shell Offsite Residuals Management audit process. Approved waste management facilities are reviewed every 5 years to evaluate continued compliance. Only those waste management facilities on the approved list are used in support of Project waste management. The following Shell approved facilities were utilised during the Project:  Terrapure – Sussex  Terrapure – Chatueaugay

Document # EP201611201173 - 18 - April 18, 2017 Revision 04A Restricted

 Stericycle  BD Rae Environmental  Aces Recycling  Miller Waste  John Ross & Sons  Halifax C&D Recycling  Otter Lake Waste Processing and Disposal Facility  Terrapure – Beechill  Clean Earth Technologies  Lafarge Canada  Conrads/SRT Soil Remediation Technologies  Edge Marine and Disposal Services Ltd.

5. ENVIRONMENTAL CONTINGENCY PLAN EXERCISES Shell takes all reasonable measures to prevent accidents and malfunctions that may result in adverse environmental effects and will implement emergency response procedures and contingency plans developed in relation to the Project. Examples of these Project contingency plans include the Oil Spill Response Plan (OSRP) and associated Wildlife Response Plan and Dispersant Preparedness and Operations Plan; as well as the Source Control Contingency Plan (SCCP) and associated Subsea Dispersant Plan and Contingency Plan for Cap and Contain.

Project response procedures and contingency plans were implemented prior to the commencement of operations, and assurance activities were undertaken to verify that plans were up-to-date, correct and appropriately implemented. Stena performed weekly safety drills onboard the IceMAX including environmental drills (local spill response).

Prior to the commencement of drilling operations, Shell conducted emergency response exercises to assure that the response capabilities outlined in the procedures and contingency plans were understood and could be mobilized and deployed, as required. These included an April 23, 2015 Shell Americas Response Team Tier III Oil Spill Response Exercise, as well as an October 2015 table top emergency response communications exercises.

Shell has a comprehensive oil spill response (OSR) training program to assure that the necessary competency and response capabilities outlined in Shell’s response procedures and contingency plans are ready to be implemented, as required. From September 2015 to December 2016, all crews on all OSVs completed multiple live on-water Offshore Oil Spill

Document # EP201611201173 - 19 - April 18, 2017 Revision 04A Restricted

Preparedness training sessions delivered by Eastern Canada Response Corporation (ECRC). The goal of each oil spill response training session is to safely develop OSV crew competency and expertise to understand and operate Tier I or Tier II Response Equipment, as per their vessel emergency response role and technical capability. The principal objective is to have each vessel crew able to safely and independently: set-up, deploy, operate and recover each piece of equipment assigned to their vessel in realistic offshore conditions, and to validate and operationalize the OSRP. Operational and procedural challenges and recommendations were also captured and incorporated into training materials, after action reviews, training summaries and Job Safety Analyses (JSAs) for wider distribution and sharing of best practices/lessons learned. In 2016, Aerial Observation of Marine Oil Spills training for flight crews was also added to the training program. This course included discussion on oil properties, fate and effects of oil, and oil spill assessment.

6. SUMMARY Shell achieved Goal Zero for the Project with no harm or leaks to the environment (defined as a process safety event with a release of >50 tonnes of material). By applying learnings from the Cheshire exploration well Shell achieved full compliance with the Project EPP and regulatory requirements during the drilling of the Monterey Jack well.

Overall environmental performance during the drilling of the Monterey Jack well demonstrates continuous improvement in accordance with Shell’s standards. Specifically, focused environmental training and communication to the IceMAX crew improved competence, and overall awareness of operational discharges and local regulatory requirements. Further, ongoing implementation of the environmental assurance program provided an opportunity for Shell to monitor daily operations onboard the IceMAX to ensure ongoing compliance and to identify any potential areas for improvement of environmental performance.

In summary, focused training and education, as well as continued proactive environmental compliance oversight ensured ongoing focus on continuous improvement of environmental performance and resulted in no environmental incidents or discharge exceedances during the drilling of Monterey Jack.

Document # EP201611201173 - 20 - April 18, 2017 Revision 04A Restricted

REFERENCES

National Energy Board, Canada-Nova Scotia Offshore Petroleum Board and Canada- Newfoundland and Labrador Offshore Petroleum Board. 2010. Offshore Waste Treatment Guidelines.

Shell Canada Limited. 2016. Environment Report for Cheshire L-97A. Revision 04A.

Shell Canada Limited. 2016. Environmental Protection Plan. Revision 09A.

Stantec Consulting Limited. 2014. Shelburne Basin Venture Exploration Drilling Project Environmental Impact Statement. Volume 1: EIS Document. Prepared for Shell Canada Limited.

Stena Drilling Limited. 2015. Stena IceMAX HSE Case Part 3 – Vessel Description.

Stena Drilling Limited. 2015. Stena IceMAX HSE Case Part 5 – Emergency Response.

Stena Drilling Limited. 2014. Management of Waste Offshore.

Document # EP201611201173 - 21 - April 18, 2017 Revision 04A Restricted

APPENDIX A SUMMARY OF OPERATIONAL DISCHARGES

Discharge OWTG Limit Management (per OWTG) Regulatory Stream Requirement

Air Emissions N/A Greenhouse gas (GHG) emissions are reported OWTG (sources: to Environment and Climate Change Canada engines and (ECCC) as required. Air emissions are reported onboard oil annually. In 2015 the Project did not reach the incinerator) threshold for GHG reporting. 2016 emissions will be submitted June 2017 per ECCC requirements.

Bilge Water 15 mg/L oil The IceMAX employs a MARPOL compliant oil- MARPOL in water water separator to treat bilge water from OWTG machinery spaces. This equipment is set to 15 mg/L and is equipped with a high oil-in-water alarm that will sound if this limit is exceeded.

Ballast Water N/A The IceMAX ballast water is contained in OWTG segregated tanks and therefore not contaminated with oil or chemicals. The IceMAX conducts all ballast water exchanges or saltwater tank flushing >200nm from shore.

Deck Drainage 15 mg/L oil Drainage from exposed decks: MARPOL in water - If the oil concentration of the deck drainage OWTG exceeds 15 mg/L, the drainage flows into a deck drain tank through remotely operated valves. - If the oil concentration of the deck drainage is below 15 mg/L, then the deck drainage is discharged overboard. Drainage from the drill floor: - Collected drainage is transferred through a dedicated MARPOL compliant oil water separator (OWS) which removes the oil from the drain water. - Clean drainage (oil concentration< 15 mg/L) is discharged overboard and oily drainage (>15 mg/L) is returned to the recovered oil tank.

Sewage and Macerated to All and food wastes are reduced MARPOL Grey Water a particle size through maceration to an average particle size OWTG of <6mm of 4 mm prior to discharge at sea.

Document # EP201611201173 - 22 - April 18, 2017 Revision 04A Restricted

Discharge OWTG Limit Management (per OWTG) Regulatory Stream Requirement The majority of the sewage and grey water produced on the IceMAX is passed through a non-chlorinated system. Sewage that is chlorinated is injected with a 15% solution on demand when the discharge pump is activated. The chlorine is substantially consumed during the disinfection process.

Cooling Water N/A There is no biocide added to the cooling water OWTG on board the IceMAX therefore it is considered an authorized discharge and not subject to discharge limit.

Drilling 6.9g/100g All substances that make up the drilling muds OCSG Discharges synthetic-on- (water based mud [WBM] and synthetic based OWTG (includes: cuttings mud [SBM]) are screened through Shell’s Drilling Muds (SOC) Chemical Selection and Review Process and Drilling developed in consideration of the OCSG. Cuttings) No whole SBM was discharged during the drilling of the Monterey Jack well. Drill cuttings are treated on board the IceMAX in order produce a 48-hour mass weighted average of retained synthetic-on-cutting (SOC) not exceeding 6.9g/100g. The 48-hr mass average SOC discharge SOC is reported monthly to the CNSOPB

Blowout N/A The BOP fluids used on the IceMAX are assessed OCSG Preventer (BOP) under the OCSG as having low aquatic toxicity OWTG Fluids and are accepted for use and discharge in (including accordance with those guidelines. hydrate seal All operational and batch discharges of BOP glycol) fluid and hydrate seal glycol are described in the EPP and are accepted for use and discharge as per the OCSG. The volumes of BOP fluid and glycol discharged are reported monthly to the CNSOPB.

Document # EP201611201173 - 23 - April 18, 2017 Revision 04A Restricted

Discharge OWTG Limit Management (per OWTG) Regulatory Stream Requirement

Fire N/A Fire monitors are tested monthly with seawater OWTG Suppression which is discharged without treatment. Chemicals The active fire extinguishing agent, Aqueous Film Forming Foam (AFFF) is sampled annually and contained on board. If AFFF is anticipated to be released to the marine environment during testing or sampling, prior notification will be provided to CNSOPB.

Document # EP201611201173 - 24 - April 18, 2017 Revision 04A Restricted

APPENDIX B SUMMARY OF REPORTED DISCHARGES FOR THE MONTEREY JACK WELL

Summary of Discharges for Monterey Jack E-43A September 26, 2016 - January 21, 2017

Date Parameter EPP Section Unit Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Volume of bilge water discharged 12.3.5 m3 0 69 35 10 30 Volume of deck drainage discharged 12.4.5 m3 591 435 855 643 419 Monoethylene Glycol 12.8.5 L 0 303 531 303 720 BOP control fluid 12.8.5 L 0 44202.8 2370 41583.6 41172

September 2016 Well spudded towards the end of the month (26th) therefore few discharges this month.

October 2016 - The BOP was landed on Oct 7, resulting in a flush of 1000L through the conduit lines. - The emergency system functions were tested on Oct 8. - There was a function test of the BOP failsafes and a SEM pod swap on Oct 9. - Additional function and pressure testing of the BOP occurred Oct 19, 26 and 29. - The LMRP was pulled on Oct 12 due to a weather disconnect requiring the conduit lines to be drained. - The LMRP was landed again on Oct 16 requiring another 1000L conduit flush.

November 2016 - Function tests performed Nov 6, 17 and 26. - There was a non-routine close and open function of the upper annular on Nov 9. - BOP pressure test Nov 12.

December 2016 LMRP unlatch failure near miss occurred Dec 15, LMRP was pulled to surface for testing and maintenance (Dec 20).

BOP fluid discharges: - BOP function tests were performed Dec 1 and 12 - Function and pressure tests performed Dec 7 and 28. - LMRP unlatch failure near miss required additional testing/discharge Dec 19. - LMRP was pulled Dec 20. January 2017 BOP fluid discharges: - BOP function tests were performed Jan 4 and 13 - All failsafe valves functioned Jan 18 and 19 - BOP was disconnected Jan 20, conduits drained

Glycol: BOP pulled Jan 19-21, therefore no discharges after Jan 19.

Bilge water and deck drainage: There were no discharges of bilge water or deck drainage following well temrination (Jan 21) and prior to exiting Canadian waters (Jan 28).

APPENDIX C SUMMARY OF WASTE DISPOSED DURING THE MONTEREY JACK WELL

SHELL CANADA - 2015/2016 WASTE DISPOSAL QUANTITIES 2017 Harzardous/ Non Well #2 Well #2 Well #2 Well #2/ clean up Recycle or Disposal Waste Description UOM Hazardous October November December January Total Hazardous Disposal Barite/ Drill Mud KG 0 Hazardous Disposal WDF (well displacement fluid) KG 359,070 117,710 767,190 1,371,270 2,615,240 Hazardous Disposal WDF/ wash water KG 649,270 230,860 347,380 1,227,510 Hazardous Disposal SBM KG 39,470 89,420 1,067,395 1,196,285 Hazardous Disposal SBM/ Water KG 500 643,450 643,950 Hazardous Disposal Cuttings/ Drill mud KG 210,850 182,890 68,900 180,080 642,720 Hazardous Disposal Water base cutting KG 0 Hazardous Disposal Cement powder KG 3,450 7,160 6,550 2,800 19,960 Hazardous Disposal Barite KG 200 1,990 2,190 Hazardous Disposal Barite/ Cement powder KG 0 Hazardous Disposal Barite/ Mud KG 0 Hazardous Disposal Empty pails KG 800 600 560 1,960 Hazardous Disposal Lime bags KG 1,000 1,700 700 800 4,200 Hazardous Disposal Oily Rags KG 6,800 7,600 6,600 6,600 27,600 Hazardous Disposal Hydraulic Hoses KG 0 Hazardous Recycled Hydraulic oil (Houghto Safe 273) KG 0 Hazardous Disposal Dye Containmented Garbage KG 600 600 Hazardous Disposal Creysilic Acid KG 410 410 Hazardous Recycled Empty Totes KG 200 2,200 3,500 1,700 7,600 Hazardous Disposal Shaker Screens KG 500 500 Hazardous Recycled Oily filters KG 400 400 Hazardous Disposal Oily Debris KG 200 800 1,000 Hazardous Disposal Dieseal KG 0 Hazardous Disposal mineral spirits KG 0 Hazardous Disposal Benzoic Acid KG 0 Hazardous Disposal cooking oil KG 0 Hazardous Disposal Grease pails KG 0 Hazardous Recycled Lube Oil/ Water/ Glycol KG 16,300 18,700 8,100 5,600 48,700 Hazardous Recycled Waste Oil KG 400 410 410 1,220 Hazardous Recycled Oily Water/ wash water KG 0 Hazardous Recycled Glycol KG 0 Hazardous Recycled Empty Drums KG 60 540 260 1,320 2,180 Hazardous Recycled Cal/ Aerosol Cans KG 400 1,000 400 1,800 Hazardous Disposal Floor Resin KG 0 Hazardous Recycled Aviation Fuel KG 1,410 1,698 1,555 760 5,423 Hazardous Disposal Van-sol KG 1,000 1,000 Hazardous Recycled Batteries KG 600 200 200 800 1,800 Hazardous Disposal Paint Cans KG 600 200 700 1,500 Hazardous Recycled Diesel/ Water KG 6,075 6,075 Hazardous Disposal Medical Waste KG 0 Hazardous Disposal Paint KG 0 Hazardous Recycled KG 0 Hazardous Recycled Flourscent Tubes KG 200 350 550 Hazardous Disposal Cement Retarder KG 275 275 Hazardous Disposal Polymer KG 250 250 Hazardous Disposal Deck Cleaner KG 100 100 Non Hazardous Disposal Domestic / Garbage KG 6,470 7,060 4,110 4,005 21,645 Non Hazardous Recycled Wood (construction debris) KG 2,910 9,040 7,060 3,670 22,680 Non Hazardous Recycled Cardboard/ Paper KG 1,000 1,300 2,500 750 5,550 Non Hazardous Recycled Recyclables/ Plastic KG 300 200 400 400 1,300 Non Hazardous Recycled Glass KG 0 Non Hazardous Recycled Scrap Metal KG 4,700 1,800 7,250 13,750 Non Hazardous Recycled Pipe End Caps KG 0 Non Hazardous Disposal Food Waste KG 800 1,800 2,000 1,800 6,400 Non Hazardous Disposal Grinding Disc KG 0 TOTALS (KGS) 1,308,270 693,553 1,236,415 3,296,085 6,534,323