introduction table of contents page 1.0 ...page 1-1 1.0 introduction 1.1 project description 1.1.1...

Imperial Oil Resources Limited Cold Lake Expansion Project Volume 1 – Project Description March 2016

Table of Contents – Page i

SECTION 1.0 – INTRODUCTION TABLE OF CONTENTS

PAGE

1.0 INTRODUCTION ............................................................................................................ 1-1 1.1 Project Description ............................................................................................. 1-1

1.1.1 Purpose ............................................................................................... 1-1 1.1.2 Project Location ................................................................................... 1-1 1.1.3 Proposed Development Plan ............................................................... 1-1 1.1.4 Proposed Development Plan Boundaries ............................................ 1-5

1.2 Applicant and Operator .................................................................................... 1-10 1.2.1 Applicant ............................................................................................ 1-10 1.2.2 Operator ............................................................................................ 1-10 1.2.3 Company Background ....................................................................... 1-10 1.2.4 Company Strengths ........................................................................... 1-10

1.3 Project Overview .............................................................................................. 1-11 1.3.1 Central Processing Facility ................................................................ 1-12 1.3.2 Field Facilities .................................................................................... 1-12 1.3.3 Infrastructure ..................................................................................... 1-13 1.3.4 Development Schedule ..................................................................... 1-13

1.4 Project Need ..................................................................................................... 1-15 1.4.1 Project Benefits ................................................................................. 1-15 1.4.2 Implications of Project Delay ............................................................. 1-16 1.4.3 Product Markets ................................................................................ 1-17 1.4.4 Project Alternatives ............................................................................ 1-17

1.5 Regulatory Approvals ....................................................................................... 1-18 1.5.1 Existing Approvals ............................................................................. 1-18 1.5.2 Requested Approval Amendments .................................................... 1-18 1.5.3 Associated Approvals ........................................................................ 1-19 1.5.4 Land and Mineral Rights .................................................................... 1-20 1.5.5 Communication with Applicant .......................................................... 1-20


Table of Contents – Page ii

TABLE OF CONTENTS (cont’d)

PAGE

LIST OF TABLES

Table 1.1-1: Project Footprint Summary ................................................................................. 1-7 Table 1.3-1: Proposed Project Schedule .............................................................................. 1-14 Table 1.5-1: Cold Lake Approvals ........................................................................................ 1-18 Table 1.5-2: Other Authorizations or Notifications Related to the Project ............................ 1-19

LIST OF FIGURES

Figure 1.1-1: Regional Setting and Project Location Map ....................................................... 1-2 Figure 1.1-2: Project Area and Development Area Map .......................................................... 1-3 Figure 1.1-3: Topography of the Project Area Overview Map .................................................. 1-6 Figure 1.1-4: Project Footprint Overview Map ......................................................................... 1-8 Figure 1.5-1: Oil Sands Lease Holders in and Adjacent to the Project Area Map ................. 1-21 Figure 1.5-2: Petroleum and Natural Gas Rights Holders in and Adjacent to the Project

Area Map .......................................................................................................... 1-22


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1.0 INTRODUCTION

1.1 Project Description

1.1.1 Purpose

Imperial Oil Resources Limited (Imperial) is applying to the Alberta Energy Regulator (AER) to continue phased development of its in situ Cold Lake Operations (CLO). The proposed Cold Lake Expansion Project (the project) will have a bitumen production capacity up to 8,740 m3/cd (55,000 bbl/cd) from the Grand Rapids Formation. This application seeks amendments to existing CLO approvals to include the project. Specifically, amendments are requested for:

Commercial Scheme Approval 8558; and

Environmental Protection and Enhancement Act (EPEA) Approval 73534-01-00 to construct, operate and reclaim a proposed in situ oil sands commercial scheme development.

1.1.2 Project Location

The project is located on Crown land approximately 23 km northwest of the City of Cold Lake, Alberta, in the Municipal District of Bonnyville No. 87 (Figure 1.1-1). The project area covers parts of Townships 65 and 66 in Ranges 2, 3 and 4, West of the Fourth Meridian.

The project is wholly on Imperial’s Cold Lake oil sands leases (Figure 1.1-2) including:

lease 7289120040 (40);

lease 7289120041 (41); and

lease 7289120042 (42).

1.1.3 Proposed Development Plan

The Cold Lake oil sand leases were acquired by Imperial between 1958 and 1962. Delineation drilling and research focused on developing a commercially feasible heavy oil extraction process beginning in the early 1960s. Several pilot projects were initiated between 1964 and 1975 to develop and refine the cyclic steam stimulation (CSS) recovery process. In 1983, the Energy Resources Conservation Board (now the AER) approved the phased commercial development of the Cold Lake leases, and successive phases were approved in 1984, 1985, 1986 and 1999. In 2000, separate Cold Lake facilities were consolidated into a single scheme (Approval 8558) and environmental approval (Approval 73534-01-00), and in 2004, approvals were amended to include the Nabiye plant.

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7289120041Lease 41

7289120042Lease 42

7289120040Lease 40

7289120049Lease 49

Oil Sands Lease


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Existing CLO facilities support CSS crude bitumen extraction from the Clearwater Formation and include the following developments:

Maskwa;

Mahihkan;

Leming;

Mahkeses; and

Nabiye.

Existing operations share common infrastructure including water supply, water disposal, power supply, diluent supply and shipping pipelines. Water is managed at a district level and coordinated between facilities.

The project is an expansion of existing operations that will target bitumen resources in the Grand Rapids Formation using a solvent-assisted steam-assisted gravity drainage (SA-SAGD) recovery process. Although there is some spatial overlap between the project and existing operations, high-pressure CSS and SA-SAGD recovery will not simultaneously occur in overlapping areas.

Imperial plans to develop 52 pads in the project area to recover approximately 87.5 million m3 (550 million bbl) of bitumen from the Grand Rapids Formation. Over the 30-year life of the project, continued delineation and improvements in recovery efficiency are expected to increase the potential recoverable resource. Up to 37 potential well pads could further extend the life of the project and have been included in the project footprint for the environmental assessment.

Construction will start as early as 2019 with site clearing. The project will include a central processing facility (CPF), well pads, associated field facilities and related infrastructure including interconnections with existing Imperial facilities in the Cold Lake area.

The project will use a SA-SAGD thermal recovery process, where horizontal wellpairs are spaced 100 m apart laterally and about 5 m apart vertically. Steam mixed with solvent will be sent into an upper injection well to heat bitumen and allow it to flow by gravity into a lower production well located near the reservoir base.

Well pad construction will be ongoing over the life of the project and includes:

11 initial well pads (seven to 11 wellpairs per pad);

41 productivity maintenance pads (four to 11 wellpairs per pad); and

up to 37 potential pads (five to 11 wellpairs per pad).

The resource associated with potential well pads is excluded from the current resource estimate as development would be subject to further delineation, reservoir performance and future economic conditions.


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The development of the potential pads is subject to additional regulatory approvals requiring public notification.

The project application is supported by an environmental impact assessment (EIA). The conclusion of the EIA is that the potential effects of the project are expected to be acceptable and can be managed with appropriate mitigation measures.

1.1.4 Proposed Development Plan Boundaries

The project and development areas for this project are the same (Figure 1.1-2). These areas will be referred to as the project area in this application. This area includes all lands:

subject to direct disturbance by the project and associated infrastructure (e.g., roads and pipelines);

where project bitumen recovery and processing will occur; and

that contain the total bitumen resource that will support the life of the project.

Imperial does not have the oil sands rights to an area under Marie Lake between leases 40 and 41 (Figure 1.1-2). Therefore, this area is excluded from the project development plan. Figure 1.1-3 shows the topography of the project area.

Imperial owns a 100% working interest in the oil sands leases in the project area and retains the right to develop the resources in the Grand Rapids Formation.

The following major project components will be built in the project area:

CPF;

field facilities, comprising up to 89 SA-SAGD well pads and related facilities;

associated utilities, pipelines and roads; and

other infrastructure including interconnections with existing CLO.

1.1.4.1 Project Footprint

The total project footprint is 1,715 ha. Table 1.1-1 summarizes the footprint by project component and Figure 1.1-4 shows the footprint layout. The project footprint and well pad siting will continue to be refined considering resource delineation, consultation feedback, traditional land use information, and project design criteria. For the proposed footprint, Imperial evaluated the following criteria in determining the location and size of the project facilities:

Resource recovery, including:

o ensuring that surface locations allow for economic resource recovery; and

o accounting for well drilling equipment limitations, such as reach.

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Table 1.1-1: Project Footprint Summary

Project Component Number Total Area

(ha) Footprint

(%)

CPF plant site 1 84 3

SA-SAGD well pads:

initial pads 11 41 2

productivity maintenance pads 41 147 5

potential pads 37 125 5

Observation wells 311 175 6

Access roads and utility corridors1 n/a 572 21

Potential borrow sources:

initial borrow sources 10 260 9

future borrow sources 10 260 9

project inventory borrow sources unlikely to be developed2

38 1,001 37

Mahihkan North (MAHNO) substation 1 1 <1

Power line n/a 15 1

Fibre optic cable n/a 3 <1

Underground pipeline n/a 32 1

Total Disturbance3 1,7152 100

Notes: 1 Utility corridors include aboveground pipelines. 2 Project inventory borrow sources that are unlikely to be developed are not included in the

calculation of the total disturbance area. 3 Total disturbance includes 11 ha associated with potential well pad 86. n/a = Not applicable.

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Cold Lake

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Project Footprint


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Environmental sensitivities, including:

o selecting sites to minimize overlap with environmental receptors, such as high value wetlands, wildlife habitat (including the Cold Lake Caribou Range) and reducing the number of waterbody crossings;

o Cold Lake commitments such as setbacks from Marie Creek, Marie Lake, May Lake, Bourque Lake, and Medley River; and

o avoiding areas with higher potential for archeological sites.

Surface disturbance area, including:

o reusing existing surface disturbances; and

o minimizing new surface disturbances while meeting drilling, operating and maintenance requirements.

Consultation incorporating feedback from First Nations, cabin owners and recreational users regarding:

o facility setbacks from waterbodies and access roads;

o the use of access roads; and

o continued access to recreational trails.

Traditional land use.

Cost.

The project footprint and well pad siting will continue to be refined considering resource delineation, consultation feedback, traditional land use information, and project design criteria. For example, in late 2015, the project footprint was adjusted based on consultation with project stakeholders resulting in a decision to not develop potential well pad 86 near Marie Lake and to relocate potential well pads 80 and 81 near the Shelter Bay Resort (Figure 1.1-4).

The project footprint will also become better defined as site-specific information is collected. To address the project’s borrow requirements, Imperial has conducted a preliminary inventory and has identified 58 potential borrow sources (1,521 ha). Although a large number of potential borrow sources have been mapped and assessed in the EIA, Imperial expects that only a smaller subset will be required for project construction. This includes about 10 sources (260 ha) required for initial project construction and about 10 sources (260 ha) required for future project construction. Geotechnical programs will confirm which 20 borrow sources in the project inventory will be eventually developed.

The total project disturbance area (1,715 ha), shown in Table 1.1-1, includes potential well pad 86 that Imperial has removed from the development plan, but it excludes 38 potential borrow sources (1,001 ha) in the project inventory that have yet to be confirmed and are unlikely to be developed.


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For the purposes of the EIA and the conceptual Conservation and Reclamation Plan, a total disturbance area (2,716 ha) is used and includes all (58) potential borrow sources in the project inventory.

1.2 Applicant and Operator

1.2.1 Applicant Imperial Oil Resources Limited is the applicant and will be the holder of the licences and approvals. Imperial Oil Resources Limited is a wholly owned subsidiary of Imperial Oil Limited, having its head office in Calgary, Alberta. Imperial Oil Limited is listed on the Toronto Stock Exchange as IMO.

1.2.2 Operator Imperial Oil Resources (an Alberta limited partnership between wholly owned subsidiaries of Imperial Oil Limited) will be the operator of this project. Imperial Oil Resources’ success as an operator is based on the ability to conduct an open dialogue with local communities and stakeholders, and maintain their ongoing support. Maintaining public confidence and continuing responsible growth as a company means balancing the supply of petroleum products to meet global energy demands with the need for appropriate environmental protection. Imperial Oil Resources continues to reduce the environmental effects of its oil sands developments through research and the application of innovative technologies. Imperial’s near- and long-term success depends on delivering the highest standards of integrity in all aspects of its business. Integrity is a commitment to do the right things, every time – in safety, environmental performance, business ethics and community engagement.

1.2.3 Company Background Imperial Oil Limited is:

one of the largest producers of crude oil in Canada;

a major producer of natural gas;

the largest refiner and marketer of petroleum products in Canada; and

a significant member of the Canadian petrochemical industry.

Imperial pioneered the development of large-scale, in situ bitumen recovery at Cold Lake.

1.2.4 Company Strengths Imperial will use its extensive experience to develop the project resource in a safe and environmentally responsible manner. Company strengths include:

experience in:

o heavy oil developments and operations, such as the Cold Lake in situ operation, the Kearl Oil Sands Project (Kearl) mining operation and through a 25% ownership in Syncrude;


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o existing bitumen markets – specifically through its world-class Cold Lake and Kearl operations;

o large projects – specifically through development of operations, such as Cold Lake and Kearl;

o refining – as a significant refiner in Canada, with several facilities that convert bitumen into useable energy products (e.g., gasoline, jet fuel, diesel, and asphalt); and

o research and development, both through research at company facilities and as a member of Canada’s Oil Sands Innovation Alliance (COSIA).

strong safety and environmental performance;

a strong financial position, including the ability to finance the project;

involvement in pipeline operations across North America;

extensive chemicals and refining expertise;

project execution systems, standards and procedures, in conjunction with Exxon Mobil Corporation, that have been used in over 100 major projects, in more than 20 countries; and

ownership of heavy oil conversion technologies that are currently used in the industry.

In addition to these strengths, Imperial can draw on the expertise of its major shareholder, Exxon Mobil Corporation. Exxon Mobil Corporation is the majority shareholder of Imperial Oil Limited, holding 69.6% of the shares. For further information, see Imperial’s website at http://www.imperial.ca.

1.3 Project Overview

The project will consist of:

a CPF, including:

o oil treating facilities;

o steam generation;

o water treatment facilities;

o solvent recovery;

o sulphur removal;

o auxiliary systems;

field facilities, including:

o SA-SAGD pads and observation well pads;

o roads, pipelines and power lines to connect wells to the CPF;


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infrastructure, including:

o access road from the Nabiye road;

o utility corridor including power lines from the Mahihkan North substation;

o utilities corridor extending from Maskwa to the CPF that includes natural gas, water, disposal, diluent and diluted bitumen (dilbit) pipelines;

o utilities corridor extending from Mahihkan to Maskwa that includes natural gas; and

o borrow source areas.

1.3.1 Central Processing Facility

A CPF will be developed with a bitumen capacity of 8,740 m3/cd (55,000 bbl/cd).

The CPF will separate produced water and gas from bitumen and solvent liquids. The CPF will also distribute steam and solvent to the field for subsequent injection into the reservoir. Produced gas will be cooled to recover the produced solvent. The remaining produced gas will be used to supplement purchased natural gas as fuel in the steam generators. Recovered solvent will be reused to reduce the amount of makeup solvent. Produced water will be deoiled, combined with makeup water, treated to remove impurities, and used to generate high-pressure, high-quality steam. Bitumen will be dewatered, blended with diluent, and pumped to market as dilbit.

A steam separator will be used to provide 100% quality steam for distribution to the field.

Onsite tankage will be provided at the CPF for dilbit and diluent storage, and other process requirements.

1.3.2 Field Facilities

Field facilities for the project include production well pads and associated facilities that support and connect the well pads to the CPF.

The full field development in the project area will include up to 89 SA-SAGD well pads over the 30-year operating life of the project. Each production well pad will typically include seven to 11 wellpairs (i.e., one steam injection well and one production well).

Facilities connecting the SA-SAGD well pads to the CPF will include:

production, steam, solvent injection and natural gas pipelines;

electrical power distribution and communication lines; and

access roads.

Observation wells will also be required to support monitoring of production well pads.


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1.3.3 Infrastructure

An access road and a common utilities corridor will connect the project to other CLO located approximately 6 km away. The common utilities corridor will contain:

natural gas pipeline;

diluent supply pipeline to the CPF;

dilbit export pipeline from the CPF; and

water pipelines to and from the CPF.

A transmission power line will be constructed in a separate corridor from the Mahihkan North substation to the project.

Operations support buildings will be located adjacent to the CPF. Fill and aggregate material required to develop project facilities will be supplied from borrow pits in the project area or transported by truck from offsite sources, as required.

1.3.4 Development Schedule

1.3.4.1 Development Plan

The CPF is centrally located to SA-SAGD well pads and existing Cold Lake infrastructure. The SA-SAGD wells are expected to have a life span of about seven to 12 years, depending on reservoir thickness. As the wells reach the end of their production, new wells will be developed in the project area over the 30-year operating life of the project. Wellpairs will be drilled and produced as needed to maintain the maximum CPF throughput.

Imperial plans to drill 477 wellpairs on 52 pads in the project area to recover approximately 87.5 million m3 (550 million bbl) of bitumen. Over the life of the project, continued delineation and improvements in recovery efficiency are expected to increase the potential recoverable resource. Up to 37 potential well pads have also been included in the project footprint for the environmental assessment. The resource associated with potential well pads is excluded from the current resource estimate as development would be subject to further delineation, reservoir performance and future economic conditions. Potential pads have been included in the project footprint estimate to conservatively reflect a maximum development case. Observation wells associated with each SA-SAGD pad will be distributed throughout the project area to aid in assessing reservoir performance and improve recovery.

Saline makeup water for steam generation will be obtained from existing CLO. The steady-state daily average rate is expected to be approximately 4,500 m3/d. Utility and domestic water will also be sourced from CLO and the demand during steady-state operation is estimated to be about 50 m3/d.

The access road and the common utility corridor for the project will generally parallel existing Cold Lake development from Maskwa to an access point on the existing Nabiye road. Natural gas, diluent and dilbit pipelines will tie into Cold Lake infrastructure at the Maskwa plant.


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Potential borrow source locations have been identified in the project area to support construction of the CPF, field facilities and infrastructure. Additional work will be undertaken to determine the most suitable borrow sources.

Project planning considered environmental constraints to guide the placement of surface development within the project area. The purpose of constraints planning is to reduce or minimize environmental effects in areas of higher sensitivity. A project constraints map was developed to support stakeholder consultation. Constraints planning, including the consideration of environmental, social and economic factors and feedback from consultation will be used to locate surface development so that the potential for effects on the environment are mitigated. Where practical, planned development will be located on, or adjacent to, areas of existing disturbance to reduce the amount of new footprint required.

1.3.4.2 Development Schedule

The project schedule depends on regulatory approvals, internal funding decisions, and market conditions. Construction is expected to last up to three years followed by an operational life of 30 years.

Table 1.3-1 shows the earliest proposed project schedule.

Table 1.3-1: Proposed Project Schedule

Activity Timing Aboriginal and public engagement Ongoing Regulatory application submission 2016 Anticipated regulatory approval 2018 Start site clearing for construction 2019 Commissioning and startup (first steam) 2022 Progressive reclamation (start) 2032 CPF decommissioning (start) 2057 Reclamation complete 2067

Early construction activities, such as clearing trees and brush, grubbing and stripping to rough grade for the CPF, initial SA-SAGD pads and access roads will typically be scheduled during the winter to take advantage of frozen conditions for access. Early works will also include ditching and developing the CPF stormwater pond to provide adequate drainage and water control on the work sites throughout the construction period.

After areas are rough graded, the next phase of construction will:

install, cut and cap piles;

lay concrete foundations, weather permitting; and

set modules.


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Module piping interconnections and installation of electrical and instrumentation tray, cable and devices will be ongoing, concurrent with onsite assembly of the hot lime softener. Systems will be brought to mechanical completion and hydrotested. Continuity and loop checks will be performed on the electrical and control systems. Mechanical completion will be done on a system-by-system basis and will be followed by turnover, commissioning and startup.

The construction workforce is expected to come from the local area (60%), from Alberta (20%) and from the rest of Canada (20%). Workforce transport is expected to be a mix of commercial and charter aircraft using existing airports and ground transportation.

Construction will be completed on a shift schedule. It is expected that workers will be lodged in camps near the project and will be transported by bus to and from the site. The bus transportation strategy will limit project-related traffic on local roadways. The project plans to use existing camps and is also assessing a new camp located on the CPF worksite to improve construction efficiency.

The overall project execution plan is based on maximizing the use of modules. Modules will be fabricated and assembled primarily in the Edmonton area and will be transported by truck to the site. Imperial will develop a detailed module transportation logistics plan to minimize the effect of module movement on highway and local road traffic.

1.4 Project Need

Imperial’s Cold Lake asset is one of the largest in situ oil sands recovery operations in Canada and among the country’s largest source of crude oil production. Since startup of the commercial production project in 1985, the Cold Lake asset has produced about 214 million m3 (at year-end 2015) with average production gradually increasing to about 25,000 m3 of bitumen per day.

1.4.1 Project Benefits

Imperial is applying for regulatory approval of the project based on an evaluation of the technical feasibility, productivity and profitability of the project. As the supply of conventional oil resources declines, the supply of oil by the project will contribute to meeting global energy demand. The project will support the Alberta and local economy through taxes and royalties, as well as through continued employment of Imperial’s employees and contractors. The costs presented in this application are preliminary and subject to change. As market conditions evolve, future uncertainty is reduced and engineering definition progresses, the cost estimate will be refined. Based on preliminary project planning, current taxation and royalty structures, and economic forecasts, the benefits of the project on the Alberta and Canadian economies are expected to include:

30 years of onsite operations activity in the Cold Lake area related to the development of the project;

an initial capital expenditure of about $2 billion (in 2015 dollars) and future capital expenditure estimated at about $4 billion (2015 dollars);


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estimated expenditures of about $5 billion (in 2015 dollars) for operating costs. Operating costs cover natural gas for fuel, other consumables, labour and direct services;

estimated employment of an average construction workforce of about 550 workers per year for constructing the CPF, initial well pads and facilities;

estimated employment of an operations workforce of about 100 workers per year;

estimated direct federal and provincial tax revenues of about $2 billion (in 2015 dollars) over the life of the project;

estimated royalty revenues to the Government of Alberta of about $4 billion (in 2015 dollars) over the life of the project; and

estimated annual property taxes to the Municipality of Bonnyville of about $25 million (in 2015 dollars).

Furthermore, these benefits are based on economics that assume the regulatory approvals for the project will be received in 2018, construction starting in 2019 and first oil production commencing in 2022.

To encourage benefits for the local community and region, Imperial will continue to:

support local and Aboriginal business development by giving preference to competitive and qualified local and regional service suppliers that have high safety and environmental performance standards;

provide opportunities for local and Aboriginal businesses to participate in bids for services required during the life cycle of the project; and

offer training and capacity building opportunities to support local employment and long-term workforce development.

1.4.2 Implications of Project Delay

Current business conditions and the general slowdown in industry activity are conducive to cost-effective project execution. Delaying or deferring the project could result in eventual development taking place in a higher cost environment, placing additional pressure on project cost, schedule and execution.

Negative impacts of project delay include:

reduced economic benefits;

loss of potential employment for local area and provincial residents; and

reduced bitumen supply to offset declining conventional oil supplies.


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Positive impacts of project delay include:

increased economic benefits due to higher commodity prices and greater price stability;

increased revenues to governments via higher royalties and taxes;

potential for advances in recovery and environmental technologies to be incorporated in the project implementation; and

greater clarity and certainty regarding the impact of potential climate change regulation on project economics.

The implications of not proceeding with the project are:

the previously described project benefits will not be achieved;

potential contribution of the project to meeting the world energy demand would not be realized; and

Alberta’s oil sand resource in the project area would not be recovered.

1.4.3 Product Markets

Imperial will evaluate alternatives to:

process bitumen from the project at its affiliated refineries or at third-party facilities; and

transport blended bitumen and diluent through existing or new regional pipeline systems.

Imperial Oil Limited’s products and chemicals division manages the petroleum products and chemicals businesses under the well-known Esso and Mobil brand names. The products group operates three refineries and an extensive network of retail and wholesale outlets. Imperial Oil Limited is one of the largest suppliers of refined products in Canada. Imperial and its affiliate ExxonMobil have refineries with the capability to process oil sands bitumen. These refineries are connected by pipelines to the oil sands development regions, including the current and proposed CLO.

Imperial expects blended bitumen from the project and diluent required by the project will be transported by pipelines that service the existing CLO. However, Imperial will evaluate other transportation alternatives as required to maximize value for the project and province.

1.4.4 Project Alternatives

Advances in technology not only have the potential to enhance production but may also reduce environmental impacts. In 2014, Imperial invested $175 million in research and technology to enhance environmental performance, improve efficiency and augment bitumen recovery. Through the development and application of new technology, Imperial brings innovative solutions to improving environmental performance. Technology and innovation initiatives at Imperial focus on the refinement of in situ bitumen recovery technologies for SAGD and CSS that have the potential to significantly reduce water use and greenhouse gas emission intensity through use of solvents in addition to, or in place of, steam.


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Imperial has selected SA-SAGD as the recovery technology for the project. Alternatives considered included CSS and SAGD. The Grand Rapids reservoir characteristics are more suitable to a SAGD process than to a CSS process. SA-SAGD was selected over SAGD because production rates are enhanced by the solvent. The addition of solvent to the injected steam further reduces the in situ oil viscosity thereby increasing bitumen rates and reducing the steam-oil ratio. On a per barrel of bitumen production basis, SA-SAGD will reduce steam and water requirements, fuel gas consumption and greenhouse gas emissions.

Imperial’s active participation in COSIA focuses on accelerating the pace of improvement in environmental performance in Canadian oil sands through collaborative action and developing innovative technology. COSIA is focused on four environmental priority areas; tailings, water, land and greenhouse gases. Imperial will continue to explore emerging technologies and opportunities that will enhance the project, where practical.

1.5 Regulatory Approvals

1.5.1 Existing Approvals

Existing approvals for Imperial’s CLO are outlined in Table 1.5-1.

Table 1.5-1: Cold Lake Approvals

Approval Legislation Approval (as amended) Scheme for recovery of in situ oil sands Oil Sands Conservation Act Approval No. 8558

Environmental operating approval Environmental Protection Enhancement Act Approval 73534-01-00

Diversion of surface and groundwater Water Act1 License No. 00079923-01-00

Note: 1 Amendments to the Water Act licence are not required as the project will operate within existing CLO approved

volumes.

1.5.2 Requested Approval Amendments

Imperial is applying for regulatory approval to construct, operate and reclaim the proposed project on its lease located in Townships 65 and 66 and Ranges 2 to 4, West of the Fourth Meridian. The application and supporting EIA are submitted to meet the requirements under the following Alberta statutes:

Oil Sands Conservation Act (OSCA); and

Environmental Protection and Enhancement Act (EPEA).

Imperial is seeking amendments to existing approvals from AER under:

Sections 10 and 11 of the OSCA to construct and operate a 8,740 m3/cd (55,000 bbl/cd) in situ bitumen commercial scheme from an oil deposit in the Grand Rapids Formation;


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Part 4 of the Oil Sands Conservation Rules to construct and operate an in situ oil sands operation;

Section 50 of the EPEA for the submitted EIA report and a decision by the Director that the EIA is complete pursuant to Section 53 of the EPEA;

Division 2 of Part 2, Section 68 of the EPEA to construct, operate and reclaim the processing facilities associated with the project, including facilities to recover and treat bitumen and produced water. Facilities include field production facilities, central processing facilities, buildings, structures, process and pollution abatement equipment, vessels, storage facilities, material handling facilities, roadways, pipelines and other installations; and

Division 2 of Part 2 for a conceptual Conservation and Reclamation Plan and Part 6 of the EPEA to reclaim the components of the project previously listed.

In addition, the project is subject to Schedule 1 of the Activities Designation Regulation as an activity for which an approval is required and to Schedule 1 of the Environmental Assessment (Mandatory and Exempted Activities) Regulation requiring the preparation of an EIA.

Imperial is not requesting an increase in its licensed volumes for surface water withdrawals from Cold Lake or for contingency fresh groundwater use as part of this project. Imperial plans to use process water from CLO facilities as the primary makeup water source for the project.

1.5.3 Associated Approvals

Imperial will also file separate applications or notifications for the project-related activities listed in Table 1.5-2 and as required by the following AER directives:

Directive 042: Measurement, Accounting and Reporting Plan (MARP) Requirements for Thermal Bitumen Schemes;

Directive 051: Injection and Disposal Wells – Well Classifications, Completions, Logging, and Testing Requirements; and

Directive 056: Energy Development Applications and Schedules.

Table 1.5-2: Other Authorizations or Notifications Related to the Project

Authorizations or Notifications Legislation Approval Authority Development permits Municipal Government Act Municipal District of Bonnyville Surface dispositions Public Lands Act AER Wells and facilities Oil and Gas Conservation Act AER Construct and operate pipelines Pipeline Act AER Historical resource clearance Historical Resources Act Alberta Culture Electrical power interconnect Hydro and Electric Energy Act Alberta Utilities Commission


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1.5.4 Land and Mineral Rights

Imperial owns a 100% working interest in the oil sands leases for the Grand Rapids, McMurray and Clearwater formations within the Cold Lake Leases. The project area is located within these leases and comprises approximately 135 sections.

Figure 1.5-1 shows oil sands leases owned by Imperial and by other companies on lands adjacent to the project. Figure 1.5-2 shows petroleum and natural gas (P&NG) rights owned by Imperial and other companies for the project area and land adjacent to the project area.

Imperial currently holds surface land leases and other rights of access with the Crown for the project lands required to conduct existing operations in the area, including short-term oil sands exploration permits to conduct exploration programs for the project area.

1.5.5 Communication with Applicant

All communication with Imperial (the applicant) on this regulatory application should be directed to:

Ms. Sandy Campbell Manager, SAGD Environment & Regulatory Imperial Oil Resources Limited 505 Quarry Park Blvd SE Calgary, AB, Canada T2C 5N1 Telephone: (587) 476-4393 Email: [email protected]

mailto:[email protected]

ColdLake

ProvincialPark


Area

Marie Lake

Marie

Cre

ek

LemingLake

Jack

fish C reek

BourqueLake

MayLake

Med

ley

Rive

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Recreation Area

Cold Lake

Crane Lake

Tucker Lake

Marguerite Lake

Ethel Lake

Saskatchewan

Alberta

Oil Sands Lease

ColdLake

ProvincialPark


Area

Marie Lake

Marie

Cre

ek

LemingLake

Jack

fish C reek

BourqueLake

MayLake

Med

ley

Rive

r




Recreation Area

Cold Lake

Crane Lake

Tucker Lake

Marguerite Lake

Ethel Lake

Saskatchewan

Alberta

Petroleum and Natural Gas Lease

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