canadian oil sands

8/11/2019 Canadian Oil Sands

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Oil sandsIssue briefingbp.com/sustainability


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Oil sands

Issue briefing

How we operateBP recognizes that we need to produceenergy responsibly minimizing impacts topeople, communities and the environment.

BPs systems of governance, management

and operation are designed to help us

conduct our business while respecting

safety, environmental, social and financial

considerations.

Across all BP international operations,

established practices support the

management of potential environmental and

social impacts from projects and operations.

These practices cover projects from

pre-appraisal stage through to operations;

and reinforce BPs values, responsibilitiesand local regulatory requirements.

BPs operating management system

integrates BP requirements on health, safety,

security, environmental and operational

reliability, as well as maintenance, contractor

relations, compliance and organizational

learning into a common system.

About BP in Canada

BP Canada is the Canadian subsidiary

of the BP p.l.c. group of companies.

Headquartered in Calgary, Alberta, we

are active in Alberta and the Northwest

Territories, while our marketing and trading

activities span the nation and expand into

the US.

BPs Canadian Arctic exploration

activities are operated through BP

Exploration Operating Company

Limited (BPEOC).

For more informationbp.com/aboutbp

bp.com/oms

For more informationbp.com/canada

Cover imageView of camp on BPs Terre deGrace lease in Alberta, Canada.


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Oil sands

Issue briefing 1

expertise with wells and improving large-

scale reservoir performance. Unlike mining,

in situ processes create a smaller physical

footprint and do not involve tailings ponds.

Our projects

BP is involved in three oil sands lease areas,

all of which are located in Alberta. None of

them are yet operational or producing. The

Sunrise Energy Project is expected to be

the first on stream with production

beginning in 2014.BP requires oil sands projects, like all of

its investments, to be commercially viable

over the life of the project. In gauging this,

we factor in carbon regulation and the

evolution of potential policy changes and

economic forecasts by using an estimated

carbon price. We expect the break-even

price for oil from Canadas oil sands to be

within the $60-$90 per barrel range we

require from other types of crude oil

investments.

1BP Energy Outlook 2030

Canadas resources

Canadas oil sands have the third-largestproven crude oil reserve in the world, after

Saudi Arabia and Venezuela.

Mainly located in the province of

Alberta, the oil sands are a natural mixture

of sand, water, clay and bitumen. They are

found at varying depths and in some cases

are directly exposed to the surface. There

are two methods of extracting this resource

in situ recovery and surface mining.

A key method of in situ recovery is

steam-assisted gravity drainage (SAGD),

which involves pumping steam into the

reservoir through a horizontal well to heat

and make the bitumen fluid. The bitumenand water mix then flows underground to a

second, lower horizontal well from which it

is then produced to the surface (see diagram

on page 4).

In all oil sands projects, whether operator

or not, BP plans to use in situ technology to

recover the resource. This production

technique reduces land disturbance and

aligns to our strengths, particularly to our

Industry has beenextracting oil fromCanadas oil sandssince 1967.

This combination of factors is expected to

increase the worlds primary energy

consumption by as much as 40%1over the

next 20 years, with a large portion of the

growth coming from developing economies.

The energy challenge

The energy challenge facing policymakers

and our industry is how to fuel the global

economy and address concerns about

energy security while reducing the amount

of carbon dioxide and other greenhousegases being emitted.

This challenge is global and complex,

involving many difficult energy decisions.

It links geopolitical concerns with

environmental trends and the energy needs

of people everywhere.

We believe the global energy challenge

can only be met through a diverse mix of

fuels and technologies. This is why BPs

portfolio includes oil sands, shale gas,

deepwater production and alternative

energies such as biofuels and wind power.

Beyond simply meeting growth in overall

demand, a diverse mix can help to provideenhanced national and global energy security

while supporting the transition to a lower-

carbon economy.

Canadas oil sands play a key part in our

strategy to meet global energy demands and

tie in with our business strategy to invest in

exploration and production profitably through

a portfolio of high-quality assets in the

worlds most prolific hydrocarbon basins.

The need for Canadas oil sandsThe worlds population is projected to increaseby 1.4 billion over the next 20 years, while itsreal income is likely to grow by 100% over thesame period.

Steam-assisted gravitydrainage diagramSee page 4

Lease area BPs interests Operator Status

Sunrise 50% owner Husky Energy Sunrise Energy Project

phase 1: Currently under

construction. Expected

production date is 2014

Pike 50% owner Devon

Terre de Grace 75% owner, in

partnership with Value

Creation Incorporated

BP

These lease areas are

currently under appraisal

for development.

Environmental baseline

studies are being

conducted in areas

including vegetation,

wetlands, wildlife, airand water


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Oil sands

Issue briefing 2

construction of Pike. These activities include

performing seismic and cap rock integrity

studies, and drilling delineation and water

wells. Devon will continue to perform

appraisal through to 2012 before developing

any project plans.

Terre de Grace

BP has a 75% operator interest in theTerre de Grace oil sands leases, located

approximately 60 kilometres northwest

of Fort McMurray, Alberta in the western

part of the Athabasca region. Our partner

for Terre de Grace is Value Creation

Incorporated.

Since assuming operatorship of Terre

de Grace, BP has conducted both summer

and winter work programmes which consist

of environmental field studies, ongoing

reclamation work and, in the winter, drilling

and seismic exploration activities which

require frozen ground conditions. Ongoing

appraisal activities include delineation drilling,seismic acquisition and appraisal of water

sources. These assessments will help

determine the full production potential and

recoverable resources of the Terre de

Grace lease.

Sunrise Energy Project

The Sunrise Energy Project includes two

50/50 partnerships where Husky operates

its Sunrise leases in Alberta and BP

operates its Toledo refinery in Ohio, US.

This project is estimated to cost around

$2.5 billion and is expected to produce

approximately 60,000 barrels per day (bpd)

of bitumen, beginning in 2014. Sunrise isestimated to have more than three billion

barrels of bitumen resources.

In 2011, construction started on the

central plant facility and half of the 49 well

pairs were drilled.

Pike

BP has a 50% non-operated interest in the

Pike leases as part of BPs joint venture with

Devon. Pike is in the southern Athabasca

oil sands region and is approximately 25

kilometres southeast of Conklin, Alberta.

Pike is expected to produce 109,000 bpd

of bitumen. Pending regulatory approval, theproject will be constructed in phases over a

three to four-year period with initial production

for the first phase projected for 2016.

Early engineering and appraisal activities

are currently underway to design and plan

Our investment in oil sandsBP is involved in three oil sands lease areas inAlberta the Sunrise Energy Project, Pike andTerre de Grace.

Environmental baseline

studies are being

conducted at Pike

in areas including

vegetation, wetlands,

wildlife, air and water.

Our focus, along with our partner BP,

is to do the right thing. This is evident

in how we manage important aspects

such as land and biodiversity, air, water

and stakeholders.

Doug Whiteside

Vice President,Thermal Development,Devon Canada Corporation


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Issue briefing 3

For more informationenvironment.alberta.ca/apps/osip

The government of Alberta has

established an oil sands information

portal which provides environmental

indicators from Albertas oil sands

facilities on surface water, ground

water, air and biodiversity.

From the very beginning, Husky

seconded employees from BP into our

organization. These staff bring specific

technical expertise to assist on Sunrise

and a reciprocal arrangement is also in

place in the Toledo refinery which is part

of our joint venture. This partnership

has proven to be beneficial to

both companies.

John MyerVice President, Oil Sands,Husky Energy

We carefully reviewed the decision to invest

in Canadas oil sands, as we do for all major

investments, taking into consideration

environmental, social and financial concerns.

As with all of our projects, whether operator

or not, we monitor the delivery of these

projects and the mitigation of risk.

In addition to the day-to-day oversight

by operators, the projects are managed

through governance committees, with

representation from BP and our partners.

These committees meet quarterly to ensurethat the projects are proceeding in line with

the direction set by its members. Where

the operator is not BP itself, the operator

is required to provide timely reporting on

various financial, operational, environmental

and safety metrics; all of which are

benchmarked against BP performance

expectations.

BP representatives on the governance

committees are also responsible for

confirming that project direction and activities

are consistent with BPs code of conduct.

The projects have technical sub-

committees that monitor areas such as: Health, safety and environmental issues.

Project quality and execution.

Subsurface understanding and

uncertainty.

Facility design and project execution.

Product transportation.

Technology.

The regulatory environment in Alberta

Oil sands developments are subject to

comprehensive and rigorous requirements

as set out by regulatory agencies in the

province of Alberta and by the Canadian

federal government. These coverenvironmental impact assessments,

stakeholder consultation and resource

management. The industry in Canada is

collaborative, the regulatory framework

is progressive, and we are working with

industry and regulators to set up a

framework to look at cumulative impacts and

to ensure the right regulations are in place.

Regulatory agencies engage a range

of stakeholders, including industry

organizations such as the Canadian

Association of Petroleum Producers,

during the development of new regulations

to ensure that they are credible, appropriateand deliver the right outcomes. BP actively

monitors emerging regulatory issues to

ensure we are appropriately involved and

can develop our projects to meet all

regulatory requirements.

Responsible management and oversightWe recognize the need to be responsible in theway that oil sands projects are managed.

Environmental performance alliance

BP is a member of Canadas Oil Sands

Innovation Alliance (COSIA), an initiative

made up of oil sands producers which

is focused on accelerating the pace of

improving environmental performance

in Canadas oil sands.

The founding charter of the alliance,

which was formed in 2012, is to enable

responsible and sustainable growth ofCanadas oil sands while delivering

accelerated improvement in environmental

performance through collaborative action

and innovation.

The creation of COSIA builds on

work done by the industry, and research and

development organizations over the past few

years. By taking a collaborative approach,

COSIA will focus on the most pressing oil

sands environmental challenges, specifically

water, land and greenhouse gases; and aims

to accelerate the discovery and development

of environmental technologies.

www.cosia.ca

Site work being

conducted at BPs Terre

de Grace lease.


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Issue briefing 4

Impact on the landscapeProjects are managed through governance committees,with representation from BP and our partners.

Along with our partners, we are working at

a number of levels to enhance processes or

create new ones to reduce GHG emissions.

For example, one way that they can be

reduced is by processing the bitumen at

the refinery, eliminating the potential for

a two-stage refining process.

The projects BP invests in intend

to use high-efficiency steam generation

systems, including low nitrogen oxide burner

technology and equipment configurations

to optimize efficiency. Carbon capture andstorage is also being evaluated as a long-

term mitigation opportunity.

Water

Oil sands development is water intensive.

Water supply and management are key

elements in planning a SAGD project.

We plan to draw the water used to make

steam primarily from underground aquifers

and, where possible, non-potable water

will be used.

BP is committed to maintaining a high

level of water conservation. Each of our oil

sands projects is being designed to meetor exceed regulatory requirements.

Technology

BP is working to incorporate existing

technologies and research new

technologies and techniques to make

further improvements. We are doing

this in three ways:

1. Company-specific initiatives: By playing

to BPs strengths with initiatives

focusing on carbon management,

integrated subsurface reservoirs, SAGD

enhancement, and energy and waterefficiency.

2. Joint venture collaboration: By working

with our partners on emissions reduction

and water treatment technologies.

3. Industry associations: By progressing oil

sands technology through collaborative

industry bodies such as the Petroleum

Technology Alliance of Canada, AACI

(a consortium including the Alberta

Energy Research Institute, Alberta

Research Council and industry

members) and the newly-formed

Canadas Oil Sands Innovation Alliance.

BPs priorities for technology development

reflect a commitment to reducing the

intensity of our operations.

approving bodies, the Energy Resource

Conservation Board, originally formed in

1938, and Alberta Environment and Water,

which administers both the Alberta

Environmental Protection and Enhancement

Act and the Water Act.

Greenhouse gas emissions

A key concern around oil sands operations

using SAGD is the amount of greenhouse

gas (GHG) emissions produced from steamgeneration and processing.

A well-to-wheels study conducted in

2009, which measured total GHG emissions

from production through to consumption,

found the lifecycle emissions for oil sands-

based products to be 5 -15% higher than

those from average crude oil products

used in the US.

Options under consideration for

managing emissions include implementing

new technology and operating practices to

improve the efficiency of our energy use

in both the upstream and downstream

processes. BP has a technology plan todevelop further improvements, including

reducing and avoiding emissions, through

additional heat integration, energy efficiency

and improved recovery techniques.

In all oil sands projects, whether operator or

not, BP plans to use production techniques

which reduce land disturbance and create

a smaller physical footprint.

There are regulatory requirements

to complete environmental impact

assessments and to manage identified

issues. This will be accomplished throughout

the project lifecycle through project design,

use of constraints mapping, comprehensive

planning of activities, and ongoingreclamation of disturbances.

At Terre de Grace, for example, one

of the first activities we conducted was

the reclamation of well sites developed

during earlier stages of the project. BP will

continue reclamation activities throughout

the life of the project. We are planning

to assess the impacts of the project by

identifying environmental, social and

economic constraints and mapping them

in a geographic information system. The

results will guide the placement of facilities,

such as roads and pipelines, and will help

determine how we can minimize impactsin the project area.

The province of Alberta has a well-

understood and proven regulatory process

for the submission and approvals of in situ

oil sands projects. There are two main

Steam-assisted gravity drainage

Surface

wellheads

Producing well

Steam injection well

Steam

800m

Bitumen100-500m

Steam zone

of influence


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Oil sands

Issue briefing 5

Stakeholder consultation at the Sunrise

Energy Project and Pike

Our partner in the Sunrise Energy Project,

Husky Energy, has consulted with Aboriginal

communities and other stakeholders since

the early planning stages and will continue

to do so throughout the life of the project.

Husky has a stakeholder management

strategy that outlines tools and

accountabilities to achieve transparentand meaningful consultation. This plan

encompasses Aboriginal communities,

local government, provincial and federal

regulators, regional stakeholder groups,

employees, unions and others. The

framework provides a structure to identify

and engage stakeholders.

Husky also has an established

commitments register to capture concerns,

track responses, and implement mitigation

commitments to stakeholder issues.

Our partner in the Pike project, Devon

Energy, has a long history of operations in

the area and has well-established systemsand processes with Aboriginal stakeholders

that provide relevant and clear information

on the projects.

Devon also provides stakeholders with

the opportunity to participate throughout

the consultation process.

Health and safety

BP recognizes that some Aboriginal groups

living near Albertas oil sands region are

concerned about the potential health

impacts of oil sands development. BP is

supportive of the work the Alberta

government is doing in partnership with the

concerned Aboriginal groups. This includes

a community health assessment study to

determine the communitys health priorities.

Once the health assessment study has been

completed, the study committee will providerecommendations for next steps if needed.

Building relationships with First Nation and

Mtis communities

BP began building relationships with First

Nation and Mtis communities in the oil

sands region in 2010, the year we

committed to being the operator of the

Terre de Grace project.

BP encourages First Nation and Mtis

communities to provide feedback on our

activities. For example, during consultation

with a First Nation group on the Terre de

Grace lease, a concern was raised aboutbison. Bison are an important species to the

First Nation and they were concerned that

BPs activities on the lease might have a

negative impact on bison that might also

use the area.

In response to this concern, BP

consulted with an environmental advisory

firm and a biologist who specialized in

bison, and created a protocol that was

shared with the First Nation group. It was

subsequently put into practice on the

Terre de Grace lease. This protocol not

only ensured that any negative effects on

bison in the lease area would be minimized,it also provided guidelines regarding the

safety of any field staff on the site during

the wildlife encounters.

BP conducts site visits to the Terre

de Grace lease with First Nation and

Mtis members and supports local

community events, such as treaty days

and cultural retreats.

BP has established a stakeholder

commitments register to track stakeholders

interests, issues and concerns. The register

logs feedback on how issues are addressed

and resolved, as well as tracking any

commitments made. This register willenable information to be shared and will

highlight key tasks and follow-ups for action.

Managing community impactsOur oil sands projects, whether BP-operatedor not, are being developed in consultation withaffected local communities.

Promoting this kind of open dialogue

helps build strong, mutually beneficial

working relationships with the local

communities and also supports

environmentally sound operations.

Melanie DucharmeStakeholder Relations,

BP Canada

Im impressed with the level of

engagement from the BP Canada team

towards environmental and social

issues. Through visits such as these,

one can truly appreciate the scale of the

projects and BPs commitment to them.

BP Chairman Carl-Henric Svanberg

(second from left) with some members

of the Sunrise Energy Project team.


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Sustainability Review 2011

Read the summary

Sustainability Review 2011

in print or read more online.

bp.com/sustainability

Reports and publicationsThis report is part of BPs corporatereporting suite. We also report on oursustainability performance, and ourfinancial and operating performance.

Contact details

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You can email the Sustainability

Reporting team at

[email protected]

or send us your feedback online at

www.bp.com/sustainabilityfeedback

You can also telephone

+44 (0)20 7496 4000

or write to:

Sustainability Report

BP p.l.c.

1 St Jamess Square,

London SW1Y 4PD, UK.

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Photography

Courtesy of Husky Energy

Summary Review

Read a summary of our financial

and operating performance in

BP Summary Review 2011in

print or online.

bp.com/summaryreview

Annual Report and Form 20-F

Read details of our financial

and operating performance in

BP Annual Report and Form 20-F

2011in print or online.

bp.com/annualreport

canadian oil sands

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