PRIMROSE FLOW TO SURFACE CAUSATION REPORT Report Prepared for: ALBERTA ENERGY REGULATOR AND ALBERTA ENVIRONMENT AND SUSTAINABLE RESOURCE DEVELOPMENT Prepared by: CANADIAN NATURAL RESOURCES LIMITED June 27, 2014 Calgary, Alberta Suite 2500, 855 – 2nd Street SW Calgary, Alberta, Canada T2P 4J8 Phone: 403.517.6700 Fax: 403.517.7350 www.cnrl.com TABLE OF CONTENTS 1 EXECUTIVE SUMMARY .................................................................................................................. 1-1 1.1 Purpose ............................................................................................................................ 1-1 1.2 Summary .......................................................................................................................... 1-1 1.2.1 Environmental Impacts ....................................................................................... 1-1 1.2.2 Causes ................................................................................................................. 1-2 2 INTRODUCTION ............................................................................................................................. 2-1 3 ACTIVITY SUMMARY ..................................................................................................................... 3-1 4 GEOLOGY OVERVIEW .................................................................................................................... 4-1 4.1 Definitions ........................................................................................................................ 4-1 4.2 Stratigraphy ..................................................................................................................... 4-2 4.2.1 Clearwater Reservoir .......................................................................................... 4-2 4.2.2 Grand Rapids Formation ..................................................................................... 4-2 4.2.3 Colorado Group .................................................................................................. 4-3 4.2.3.1 Joli Fou, Viking and Westgate Formations ........................................ 4-3 4.2.3.2 Fish Scales and Belle Fourche Formations ........................................ 4-5 4.2.3.3 Second White Speckled Shale and Niobrara Formations ................. 4-6 4.2.4 Lea Park Formation ............................................................................................. 4-6 4.2.5 Quaternary Sediments ........................................................................................ 4-7 4.3 Structure .......................................................................................................................... 4-8 5 HYDROGEOLOGY OVERVIEW ........................................................................................................ 5-1 6 GEOMECHANICS ........................................................................................................................... 6-1 6.1 Summary .......................................................................................................................... 6-1 6.2 Definitions ........................................................................................................................ 6-2 6.3 Nomenclature: ................................................................................................................. 6-2 6.4 Concepts .......................................................................................................................... 6-3 6.4.1 Caprock ............................................................................................................... 6-3 6.5 Geomechanical Characterization ..................................................................................... 6-4 6.5.1 Principal In-Situ Stresses ..................................................................................... 6-4 6.5.2 Hydraulically Induced Fractures ......................................................................... 6-6 6.5.2.1 Clearwater Capping Shale ................................................................. 6-7 6.5.2.2 Grand Rapids Formation ................................................................... 6-7 6.5.2.3 Joli Fou – Second White Speckled Shale Formations ....................... 6-7 6.5.2.4 Niobrara Formation .......................................................................... 6-8 6.5.2.5 Lea Park Formation ........................................................................... 6-8 6.5.2.6 Quaternary Sediments ...................................................................... 6-8 6.5.3 Natural Fractures, Faults, and Bedding Planes ................................................... 6-8 6.5.3.1 Permeability Enhancement due to Shear Movement ...................... 6-8 June 2014 Causation Report – Primrose FTS ii Canadian Natural Resources Limited 6.5.3.2 Permeability Enhancement by Hydraulically Induced Tensile Parting ............................................................................................. 6-11 6.6 Stress Modification of Shales ......................................................................................... 6-12 6.7 Geomechanical Interpretations ..................................................................................... 6-16 7 WELLBORES ................................................................................................................................... 7-1 7.1 Cased Operations Wells ................................................................................................... 7-1 7.2 Oil Sands Exploration Wellbores ...................................................................................... 7-2 7.3 FTS Wellbore Study .......................................................................................................... 7-5 8 CAUSES OF FTS .............................................................................................................................. 8-1 8.1 Excessive Release of Bitumen Emulsion from the Clearwater Reservoir into the Next Overlying Permeable Formation, the Grand Rapids Formation ...................................... 8-1 8.2 Vertical Hydraulically Induced Fracture that Propagates up to the top of the Grand Rapids Formation ............................................................................................................. 8-5 8.3 Vertical Pathways to Facilitate Fluid Transfer through Highly Impermeable Shales that have In-Situ Stress States that Favor Horizontal Fracturing ............................................ 8-6 8.4 An Uplift of the Overburden above the Clearwater Reservoir that Changes Stress in the Overlying Shale such that the Minimum Horizontal and Vertical Principal In-Situ Stresses Approach Each Other ......................................................................................... 8-7 8.5 Other Indications Related to the Cause ......................................................................... 8-13 9 FLOW PATH TO SURFACE .............................................................................................................. 9-1 9.1 Flow Path Overview ......................................................................................................... 9-3 9.2 Other Pathways ............................................................................................................... 9-7 10 FLOW PATH SITE SPECIFIC DETAILS ............................................................................................ 10-1 10.1 FTS Site 2-22 ................................................................................................................... 10-1 10.2 FTS Site 10-2 ................................................................................................................... 10-5 10.3 FTS Site 9-21 ................................................................................................................... 10-8 10.4 FTS Site Pad 74 ............................................................................................................. 10-11 10.5 FTS Site 10-1 ................................................................................................................. 10-14 10.6 Learnings since the 2009 FTS Event ............................................................................. 10-17 11 FUTURE REPORTING ................................................................................................................... 11-1 12 CONCLUSIONS ............................................................................................................................. 12-1 12.1 Environmental Impacts .................................................................................................. 12-1 12.2 Causes ............................................................................................................................ 12-1 13 REFERENCES ................................................................................................................................ 13-1 13.1 Government Regulations ............................................................................................... 13-2 June 2014 Causation Report – Primrose FTS iii Canadian Natural Resources Limited LIST OF FIGURES Figure 1-1 Conceptual Schematic of Possible Flow Paths ................................................................. 1-3 Figure 2-1 FTS Site Locations ...........................................................................................................