kearl oil sands project description update - may 2006 · given the project's remote location...
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Project Description Update – Kearl Mine Development May 2006
Kearl
This document contains forward-looking information on future production, project start-ups and future capital spending.Actual results could differ materially due to changes in project schedules, operating performance, demand for oil andgas, commercial negotiations or other technical and economic factors.
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exploring for and producing oil and natural gas,refining and marketing petroleum products, andmanufacturing and selling petrochemicals. It hasabout 5,100 employees in two operating divisions -the Resources Division and the Products andChemicals Division.
Resources DivisionImperial's Resources Division manages thecompany's natural resource operations and is basedin Calgary, Alberta. It is one of Canada's largestproducers of crude oil and natural gas. It is aleading developer of Canada's vast oil sandsresources through its 25 percent ownership of theSyncrude project and its operations at Cold Lake,Alberta. Imperial is the only original owner ofSyncrude still involved in the project and, as aresult, has a long history of contributing to the FortMcMurray community and Wood Buffalo Region.Imperial is also the leader of a Canadian groupadvancing the development of natural-gasresources in the Mackenzie Delta region ofCanada's Far North. The company also operates 18pipelines and has ownership interests in severalothers.
Products and Chemicals DivisionThe Products and Chemicals Division manages thecompany's petroleum products and chemicalsbusinesses, under the Esso and Mobil brands. Theproducts group operates four refineries, and anextensive network of retail and wholesale outlets. Itis one of the largest suppliers of refined products inCanada. Of the company's four refineries, threehave some capability to process bitumen and arepipeline-connected to the proposed Kearldevelopment region.
The chemicals group operates four manufacturingplants and a number of strategically locateddistribution centres across the country. It's one ofthe largest chemical companies in Canada.Chemical products include primary petrochemicals,plastic resins, solvents and additives for lubricatingoils.
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PROPOSED DEVELOPMENTThe Kearl Oil Sands Project is a potential oil-sandsmining, pipeline and upgrading project in Alberta,proposed by Imperial Oil Resources VenturesLimited (Imperial Oil) and ExxonMobil CanadaProperties (ExxonMobil Canada). Imperial OilResources, as designated operator, submitted themine application (leases included in Kearlapplication are shown in figure) and relatedenvironmental impact assessment to the AlbertaEnergy and Utilities Board and Alberta Environmentin July 2005. The company responded to theregulators' information requests in March 2006 andexpects to hold public hearings in the second half of2006.
WHO ARE WE?Imperial Oil Limited Imperial Oil Limited is Canada's largest integrated(production, refining and product delivery)petroleum company. It's a leading producer of crudeoil and natural gas and a major company byinternational standards. The company's focus is on
Fort McMurray
Athabasca River
Syncrude Syncrude
Petro- Canada
Sync
rude
Suncor
Fort McKay
Shell
ExxonMobil
Imperial Oil
CNRL
Deer Creek
Suncor
6
87
3631A
88
A
Syncrude
Shell
ExxonMobil CanadaExxonMobil Canada (formerly Mobil Oil Canada) is a wholly owned subsidiary of Exxon Mobil Corporationand a major petroleum producer in Canada. The company holds a leadership position in key petroleumexploration and production areas, with large working interests in the Hibernia, Terra Nova and Sableoffshore energy projects off Canada's East Coast.
The company has about 1,100 employees who support its operations across Canada. In western Canada,ExxonMobil operates nine oil and gas facilities and has ownership interests in 13 other facilities. It's alsopart of the Imperial-led, Canadian group advancing the development of Mackenzie Delta natural-gasresources in Canada's Far North.
ExxonMobil's western Canadian holdings include interests in more than three million acres of explorationlands. This includes portions of Leases 36, 31A and 88 in the Athabasca region.
PROJECT DETAILSEstimated ProductionThe proposed development will be an open-pit mining operation. Expected eventual production, based ona phased development scenario, could average about 300,000 barrels of bitumen a day, with variationsabove and below this volume. This will likely involve an initial mine development as early as 2010 withdesign capacity of about 100,000 barrels-a-day, with two additional phases in 2012 and 2018. Maximumproduction could be up to 345,000 barrels-a-day.
Estimated ResourcesBased on evaluation drilling carried out to date, total recoverable bitumen before royalties is estimated tobe 4.6 billion barrels using current government guidelines.
Estimated CostThe initial cost estimate for the mine development was estimated to fall in the $5-8 billion range in 2005dollars. Work is being done to refine this preliminary cost estimate and fully understand the impact of highindustry activity on this estimate.
Estimated ScheduleFollowing is a preliminary schedule for the project.
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Environmental Baseline Studies
Public Consultation and Info. Sharing
Release Project Update and Draft EIA Terms
EIA Terms of Reference Finalized
Environmental Impact Assessment
Prepare/File Regulatory Application
Regulatory Process/Approvals
Engineering, Procurement and Construction
First Oil
Construction of Second Train
Second Train Start-up
Task
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Third Train (2018)
PROPOSED FACILITIES AND OPERATIONOil-Sands MineThe mine's design concept is similar to existing oil-sands mines in the Fort McMurray region. Plans are touse state-of-the-art, large scale shovels, trucks, crushers and an oil-sands hydrotransport system.
The base mine will be developed in a staged approach. The initial mine development (the first train) willinvolve clearing and draining the surface area, removing the muskeg overburden before mining the oilsands can begin, and stockpiling the muskeg for use in future reclamation. The current planning basisincludes an initial mine train with production capacity of about 100,000 barrels-a-day. A second train willfollow. These developments would take place on Leases 6 and 87.
Bitumen ExtractionThe mined ore will be crushed, mixed with water for slurrying, transported and conditioned in a pipeline,and fed to a bitumen-extraction facility. The bitumen will be separated as froth – a mixture of bitumen,water and solids. The froth will be further treated in a froth treatment plant to produce bitumen for sale.
Bitumen UpgradingCurrent plans do not include any on-site upgradingfacilities for the first phase of development. Toreduce the bitumen's viscocity such that it can beshipped by pipeline, a number of blending optionsare being considered. The product will betransported to market through a pipeline system.Imperial and ExxonMobil own extensive refineryinfrastructure in Canada and the U.S. that couldreceive bitumen or upgraded feedstock to make avariety of refined products. Production may also besold to third parties. Any future Kearl upgradingcapacity or related pipelines to support future mine phases would be the subject of a separate application.
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Mining
Extraction
Hydrotransport/ Conditioning
Froth Treatment
Oil Sands Slurry
Water
Slurry PlantConveyorCrusherTrucksShovel
Froth
Diluent
Tailings
To Market
Sand/Water
Recycle Water
Proposed Mining Sequence
Preliminary Development Concept
InfrastructureThe project includes development of related infrastructure, including a water intake and water pipeline (toallow water to be withdrawn from the Athabasca River), water storage, an operations camp, and roads.
Given the project's remote location and estimated commuting time of at least 90 minutes each way,Imperial is planning to have a camp-based operation with a workforce on a rotating schedule. This willallow Imperial Oil to have a safe, healthy, productive and efficient work environment with minimal impacton the Fort McMurray infrastructure. Imperial is planning to fly operators to the site, likely from Edmonton.For this reason Imperial is currently working with other operators on a joint industry airstrip just south ofthe Kearl leases.
Fresh Water SourceThe current design basis for the project has the Athabasca River as the water source for this developmentand includes 30 days of on-site contingency water storage which would allow Imperial to reducewithdrawals during low-flow periods that occur in the winter.
Streams, small water bodies and the upper reaches of the Muskeg River will be diverted from time to timeduring the mine operations. These diversions will affect fish and fish habitat in the area. The lost fishhabitat will be more than offset with created fish habitat by extending the northern part of Kearl Lake. Theextension will have a water depth greater than Kearl Lake providing better over-wintering habitat andimproving the fish resource in the lake.
Energy EfficiencyEnergy efficiency is a key component of Imperial's design basis and, as such, our application includes thelow energy extraction process and electrical cogeneration. Advanced energy management processes willalso be applied to continuously improve the energy efficiency of the operation.
Tailings ManagementTailings (a mixture of fine clay,sand and water) are a by-productof the bitumen-extraction process.The application includes anexternal tailings area in thenortheast portion of Lease 6.Conventional tailings-treatmenttechnology is planned for use untiltailings can be stored in adepleted mine pit, at which timeconsolidated tailings technologywill be implemented. This willallow Imperial to minimize surfacedisturbance, reduce the ultimatefine tailings volume andaccelerate the reclamation of the external tailings area.
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NProposed Raw W
ater Pipeline
Plant Site
ProposedPowerline
Hot Bitumen ProductPipeline
NaturalGas
Pipeline
Administrationand Operations Camp
MaintenanceShop
ProposedIndustryAirstrip
ProposedCompensation Lake
PotentialWater Storage
ExternalTailings Area
NorthPit
EastPit
SouthPitWest
Pit
Proposed Powerline
Proposed River WaterIntake
Musk
egRive
r
Can
terra
Roa
d
Steepbank Gas Pipeline
Kinde
r Morgan
Corridor P
ipeline
KearlLake
McClellend Lake
Winter Road
Athabasc
aRiv
er
FirebagRiver
FortMcKay
Proposed ProjectRoads
Bitumount
FortMcKay
I.R.
T94
T95
T96
T97
T98
T99
R6 W4R7R8R9R10R11
ENVIRONMENTAL MANAGEMENTCompany CommitmentImperial and ExxonMobil are committed toenvironmental management as an integral part oftheir business. This includes integratingenvironmental considerations in business planning,facilities and product design, operating processesand training programs.
The companies' current operations incorporateextensive environmental design and protectionmeasures to mitigate effects on water, land and airquality. In addition, a variety of ongoingconsultation forums provide the public withopportunities to review and provide input to thecompanies' environmental performance and futuredevelopments.
ReclamationMining operations will change the landscape andtraditional land use will be affected. The miningoperations only use a portion of the project lands atany time and much of the lands will not be affectedfor 20-25 years. When project lands are used laterin the life of the project, the lands used earlier willbe reclaimed. The intent is to engage stakeholdersin reclamation planning so that, to the extentpractical, lands reclaimed will have traditional landuse capability and available access. Progressivereclamation will continue throughout the life of theproject. The graphics show the planned status ofthe site at four different time periods throughoutthe operational life of the mine.
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Lease
88B
Lease6
Lease 87
Lease88A
Lease 36KearlLake
Mus
keg
River
Lease
31A
Proposed
Compensation
Lake
Wapasu C
reek
R7R8 R6 W4
T97
T96
T95
IOR Map No.: 074-0050-365-120
2 20
Kilometres
Potential
Water
Storage
2021
Lease
88B
Lease 6
Lease 87
Lease88A
Lease 36
Lease
31A
Proposed
Compensation
Lake
Mus
keg
River
Wapasu C
reek
KearlLake
IOR Map No.: 074-0050-365-121
2 20
Kilometres
Potential
Water
Storage
R7R8 R6 W4
T97
T96
T95
2041
Lease
88B
Lease 6
Lease 87
Lease88A
Lease 36KearlLake
Mus
keg
River
Lease
31A
Proposed
Compensation
Lake
Wapasu C
reek
2 20
Kilometres
IOR Map No.: 074-0050-365-122
R7R8 R6 W4
T97
T96
T95
Potential
Water
Storage
2051
Lease
88B
Lease 6
Lease 87
Lease88A
Lease 36KearlLake
Mus
keg
River
Lease
31A
Proposed
Compensation
Lake
Wapasu C
reek
R7R8 R6 W4
T97
T96
T95
IOR Map No.: 074-0050-365-110
2 20
Kilometres
Closure
Surface Water Diversions
Legend
Kearl Leases
Active or Non-Reclaimed Mine Areas
Proposed Water Management Areas
Reclaimed Areas
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SOCIOECONOMIC BENEFITSImperial will continue to utilize and build uponsocio-economic information gathered from otheroperators and industry associations, such as theAthabasca Regional Issues Working Group (RIWG),along with input from our own public consultationprocess to assess the socio-economic impacts andbenefits of this project. We expect benefits toinclude:
• Investment of an estimated $5 to 8 billion (2005 $CDN) to develop the Kearl Oil SandsProject, which will be largely spent in theprovince of Alberta and across Canada.
• The peak construction work-force is expected tobe 1,700 people.
• The Project is committed to supporting local andregional business development by preferring touse, on a competitive basis, qualified local andregional materials and services suppliers withhigh safety and environmental performancestandards. We intend to use the RegionalEconomic Development Link (RED Link) tofacilitate communication with the local businesscommunity for local contracting opportunities.
• Approximately 1,100 to1,300 permanent jobs,when all three mine trains are in operation.Imperial will adopt a camp-based operation witha workforce on a rotating schedule.
• Provincial and federal revenues from corporatetaxes and royalties are expected to be $24 billion(2005 $CDN) over the life of the project.
• A preliminary estimate of property taxes to theRegional Municipality of Wood Buffalo is $14.5million per year during peak operations.
• Personal income taxes and induced revenuebenefits will provide additional benefits to theprovincial and federal government.
Roy Steinhauer Aboriginal Affairs ManagerTel. 403-237-3710 [email protected]
Kim FoxPublic Affairs Advisor Tel. 403-237-3889 [email protected]
Inquiries related to procurement, contracting andservices should be directed to:Kearl Project Information LineTel. 1-888-666-7617
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WE’VE MOVEDAll proposed development activities have now beenmoved to Imperial's offices in downtown Calgary, Alberta. The company address is:Imperial Oil Resources237 Fourth Avenue S.W.P.O. Box 2480, Station ‘M’Calgary, Alberta, Canada T2P 3M9
Inquiries related to the proposed project arewelcome, and should be directed to:
Mark Little Kearl Oil-Sands Development ManagerTel. [email protected]
Stuart Nadeau Environmental and Regulatory ManagerTel. [email protected]
Peter Clarke Procurement ManagerTel. [email protected]
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Kearl