2014 Oil Sands Report
Transcription
2014 Oil Sands Report
2014 Oil Sands Report Statoil Canada Who We Are In Canada Around the World Statoil Canada Ltd. (Statoil) is developing assets in the oil sands region of northeastern Alberta and offshore Newfoundland and Labrador. We have 100 per cent ownership of the Leismer and Corner oil sands lease areas, and are producing bitumen from Leismer. Offshore Newfoundland, Statoil is a partner in the Hibernia and Terra Nova fields as well as the Hebron and Hibernia South Extension developments. We also have made three discoveries in the Flemish Pass. Statoil employs about 500 people and is headquartered in Calgary, Alberta. Statoil ASA is an international energy company with operations in over 30 countries. Building on more than 40 years of experience from oil and gas production on the Norwegian continental shelf, we are committed to accommodating the world’s energy needs in a responsible manner, applying technology and creating innovative business solutions. We are headquartered in Stavanger, Norway, with approximately 23,000 employees worldwide, and are listed on the New York and Oslo stock exchanges. Cover: The Leismer Project’s Central Processing Facility. 2014 Oil Sands Report 2 This Report This is Statoil’s fifth Oil Sands Report. In it we provide information about our oil sands operations in northeastern Alberta that is relevant to our business objectives and the interests of our stakeholders and the communities in which we operate. We are aware of the need for open and transparent communication and work with various third party groups to achieve year-over-year improvement in the information provided. Boundaries This report is focused on the environmental, health and safety performance of the Leismer Demonstration Project’s (Leismer Project) production operations, from January 1 to December 31, 2014. We also provide relevant information about community programs and other activities related to Statoil’s oil sands activities, projects, the Calgary office, and exploration and drilling on our Leismer and Corner lease areas. Information about Statoil’s other Canadian operations can be found in the Statoil ASA 2014 Sustainability Report at www.statoil.com. All Key Performance Indicators (KPIs), with the exception of Health, Safety and Security, refer to production, consumption and emissions related to the production operations of the Leismer Project. This does not include exploration and drilling, and imported products and services (electricity, accommodation and transportation), and is aligned with regulatory reporting requirements. Natural gas consumption includes purchased pipeline gas as well as produced gas, which is combusted on-site. Under Health, Safety and Security (pg 13), the Total Canada Oil Sands KPIs refer to all oil sands–related activities, including drilling operations, projects, operations of the Leismer Project and the Calgary office. For an overview of scope and definition of terms, please visit www.statoil.com. It is important to note that since the Statoil Oil Sands Report has always covered 100 per cent of production and emissions related to the Kai Kos Dehseh (KKD) Oil Sands Partnership, the swap of KKD assets with PTT Exploration and Production (PTTEP) of Thailand in 2014 does not affect reporting in this document. A third party, KPMG, has independently assured selected KPIs appearing in this report. The KPMG Letter of Assurance can be found on pg 26. Financial information is beyond the scope of this document but can be found in the Statoil ASA 2014 Annual Report. For more information about how content was selected for this report please see pg 25. Water treatment operator completes process checks. 2014 Oil Sands Report 3 Contents From Our President.....................................................5 Sustainability.................................................................6 Summary of Our 2014 Performance.....................7 Our Oil Sands Operations.........................................8 Operations Update...................................................11 Health, Safety and Security...................................13 Innovation...................................................................14 Environmental Performance...................................16 Social Performance..................................................22 Report Content..........................................................25 Letter of Assurance .................................................26 Well Pad 5 piping structures at the Leismer Project. 2014 Oil Sands Report 4 From Our President Our oil sands business underwent a number of changes in 2014, beginning with an asset exchange that gave Statoil 100 per cent ownership of the Leismer and Corner lease areas in the Athabasca oil sands region. This allows us to continue developing the Leismer and Corner leases in a manner that is aligned with Statoil ASA’s sustainability strategy and business objectives. In keeping with our step-wise approach to oil sands development, in 2014 we focused our efforts on improving the economics of oil sands recovery and achieving lower carbon intensity while reducing our impacts on the environment. While undertaking this work, the Leismer Project reached record bitumen production levels, averaging more than 20,000 barrels per day in the last two months of 2014. These levels were achieved due to the optimization of existing wells and the addition of Well Pad 5 with seven well pairs, which went into production near the end of 2014. At the same time, Statoil achieved a significant reduction in our Total Recordable Injury Frequency rates in 2014 due to less drilling activity, greater accountability from leaders, increased co-ordination and rollout of safety programs. These activities were supported by an increase in communication through safety meetings and bulletins. Ståle Tungesvik President Statoil Canada Ltd. While progressing bitumen production and technology development at the Leismer Project, in September we made the decision to postpone our Corner development for at least three years. We made great strides in improving the business case for Corner, however, Statoil ASA has a highly competitive global portfolio of projects. This decision is in line with Statoil ASA’s company-wide priority to further balance returns and growth moving into 2015. Although our business has changed, our commitment to local communities and stakeholders remains strong. As part of our outreach, Statoil is sharing information about our 2014 performance and activities in this, our fifth annual Oil Sands Report. 2014 Oil Sands Report 5 Sustainability As the world’s population continues to grow, so will demand for the energy required to support fundamental human needs for clean water, heat and transportation. Canada will play a role in meeting increased global oil demand, which is expected to rise by 14 million barrels per day (mb/d) to reach 104 mb/d in 2040.* The challenge for oil sands operators like Statoil is to develop Canada’s oil sands reserves — the third largest proven crude oil reserves in the world — in a manner that is aligned with our sustainability objectives. This means focusing on carbon efficiency to address climate change, reducing our impact on air, land and water, creating value for local communities and being transparent and accountable in order to establish long-term relationships with communities, stakeholders and Aboriginal groups near our operations. These sustainability objectives work hand in hand with our business goals — to realize cost efficiencies, establish a long-term social licence to operate, and adopt new technologies to secure future business opportunities. Our sustainability approach is based on Statoil ASA’s values, policies and management system, which incorporate sustainability into all aspects of how we work. For general information about Statoil ASA and sustainability, please go to the Sustainability section of www.statoil.com. Detailed information can be found in the Statoil ASA 2014 Sustainability Report also at www.statoil.com. Growth in the Americas, led by U.S. tight oil, Canadian oil sands and Brazilian deepwater output, pushes non-OPEC production higher until the early-2020s. As U.S. tight oil output flattens and then starts to fall back, Canadian oil sands emerge as the engine of North American supply. (Source: World Energy Outlook 2014, pg 95.) (*Source: World Energy Outlook 2014, pg 95.) Main entrance to the Central Processing Facility. 2014 Oil Sands Report 6 Summary of Our 2014 Performance • In 2014, Statoil gained 100 per cent ownership of the Leismer and Corner lease areas and projects following a swap of its KKD oil sands leases with PTTEP. PTTEP now has 100 per cent ownership of the Thornbury, Hangingstone and South Leismer lease areas. • Development of Statoil’s Corner project was delayed for a minimum of three years, resulting in a staff reduction of about 60 employees. While the business case for Corner has improved significantly, Statoil ASA is prioritizing capital to the most economic projects in its global portfolio to increase profitability and reduce costs throughout the organization. • The Leismer Project reached record bitumen production levels of more than 20,000 barrels per day (bpd) at the end of 2014. This pushed our average daily bitumen production levels to more than 16,109 bpd in 2014, up from 14,847 bpd in the previous year. • The carbon dioxide (CO2) emissions per barrel (intensity) decreased to 67.0 in 2014 from 69.7 in 2013. Total CO2 emissions rose due to increased demand for steam used at the Leismer Project’s new wells. Steam is produced by generators fuelled by the combustion of natural gas, which releases CO2 emissions. • With the delay of our Corner development, we will be reviewing our Environmental Improvement Ambitions for CO2 intensity. As our initial ambitions were based on full field development, our short-term CO2 intensity is expected to remain mainly unchanged or reduced slightly due to the implementation of various technologies and development options designed to increase production while reducing steam requirements at the Leismer Project. Technologies being considered include infill wells, solvent co-injection and flow control devices. Longer-term, we aim to achieve significant reductions in CO2 intensity. • • Well Pad 5 with seven well pairs was added to the Leismer Project in 2014, with bitumen production beginning in the third quarter. The addition means the Leismer Project now has five well pads with 28 operating Steam Assisted Gravity Drainage (SAGD) well pairs, up from four well pads and 21 operating well pairs in 2013. • In 2014, we used less fresh water at our operations, due to negative reservoir retention as well as the addition of a saline water well to our water source wells. Negative reservoir retention means that more water is produced from the reservoir than is injected as steam. The decrease in our freshwater use, combined with an increase in bitumen production, reduced our 2014 freshwater intensity rate. This means that we were withdrawing less fresh water to produce a barrel of bitumen than in previous years. • The negative reservoir retention also had an impact on our produced water recycle rate, which decreased in 2014 from 2013. Since there is a limit as to how much produced water can be recycled by the facility, excess volumes must be removed from the system and disposed of to maintain the overall water balance. Produced water is treated before being recycled for use in bitumen recovery. • In 2014, we strengthened a Local Content Plan for the fabrication and construction of Well Pad 6. The project team identified contracting needs and local businesses that could potentially fill these needs. Where gaps in local capacity existed, plans were developed to help contractors become eligible to work on the project. Canadian production growth relies heavily on output from oil sands to achieve the anticipated increase from 4 mb/d in 2013 to 7.4 mb/d in 2040, the second largest rise among non-OPEC countries, after Brazil. (Source: World Energy Outlook 2014, pg 122.) Statoil achieved a significant reduction in our Total Recordable Injury Frequency rates in 2014. There were no serious health, safety and environment incidents and no lost-time injuries. 2014 Oil Sands Report 7 Our Oil Sands Operations Statoil has 100 per cent ownership of and operates the Leismer and Corner lease areas. In 2014, Statoil conducted a swap of its KKD oil sands leases with PTTEP. This gives Statoil 100 per cent ownership of the Leismer and Corner lease areas and projects while PTTEP has 100 per cent ownership of the Thornbury, Hangingstone and South Leismer lease areas. Prior to the change, Statoil had a 60 per cent interest while PTTEP had a 40 per cent interest in the KKD Oil Sands Partnership, which was operated by Statoil on behalf of both companies. The Leismer Project is the first oil sands development on the KKD leases. It is an active bitumen production operation that tests technologies and processes on a small scale before successful ones are moved to full-scale operation. Bitumen on Statoil’s Leismer and Corner lease areas is buried more than 400 metres beneath the earth’s surface and can only be developed in situ, meaning in place. To recover bitumen, the Leismer Project uses SAGD, the most common in situ recovery method used in the Athabasca oil sands region. SAGD relies on steam, which is generated by burning natural gas to heat water. That steam is injected into the reservoir and warms the bitumen until it flows and can be moved to the surface. SAGD Technology Bitumen/water emulsion and steam pipelines Well pad Production well Steam injection well Central Processing Facility 2014 Oil Sands Report 8 How SAGD Works • Wells are drilled parallel to each other in pairs, vertically to reach the reservoir and then horizontally across the reservoir. • The top well is an injector that carries steam to the reservoir, to heat the bitumen until it is warm enough to flow. • Warm bitumen flows into the lower producer well and is moved to the surface as an emulsion stream along with water, vapour and produced gas. • The streams are separated, cleaned and the water is treated so it can be reused to produce steam. • Bitumen is diluted with a light hydrocarbon so it can be transported to market by pipeline or rail. Leismer Project • Well Pads 1 to 5 have a total of 28 operating well pairs. • The Central Processing Facility (CPF) separates the bitumen, water, gas and other impurities, cleaning the bitumen and treating the water so it can be recycled to produce steam. • At the Cheecham Terminal, which consists of two storage tanks, a pipeline from the Leismer CPF delivers product to a larger oil transmission line or railcars for transport to market. The Leismer Project consists of five operating well pads, the Central Processing Facility and the Cheecham Terminal. 2014 Oil Sands Report 9 Kai Kos Dehseh Leases The Leismer and Corner lease areas are located within the KKD leases in the Athabasca region of Alberta. Leismer and Corner cover a 510-squarekilometre area and contain about 970 million barrels of estimated recoverable resources. ! ! ! ! Fort McMurray Anzac Cheecham Terminal 63 Statoil Lease Municipal District or County Limits 881 Water Bodies Watercourse Leismer to Cheecham Pipeline Waddell Road Leismer CPF Leism er Road Road Leismer Lodge Leismer Aerodrome Conklin 0 4.5 9 18 27 36 45 Kilometres 2014 Oil Sands Report 10 Operations Update Bitumen production increased at the Leismer Project during 2014 due to well optimization work and the addition of new wells. Key Performance Indicators 2014 2013 2012 5 879 692 5 419 156 5 977 817 16 109 14 847 16 333 bbl steam/bbl bitumen (steam-oil ratio or SOR) 3.1 3.2 2.5 cumulative SOR (CSOR) 2.9 2.9 2.7 198 006 192 716 168 653 66 63 56 162 198 37 Bitumen Production barrels (bbl) barrels per day (bpd) Energy Consumption Natural gas consumption 1,000 cubic metres (m3) Electricity consumption gigawatt hour (GWh) Flared gas 1,000 m3 Our Operations KPIs In the last two months of 2014, the Leismer Project achieved record bitumen production levels of more than 20,000 bpd. This increased our average daily bitumen production over 2013 levels. The production increase resulted from the optimization of existing wells and the addition of Well Pad 5 with seven new well pairs. As a SAGD well ages, the steam chamber enlarges and requires more steam to maintain the same production levels. More steam was also required in 2014 to start up Well Pad 5. Even though the steam demand increased, the volume of steam required to produce a barrel of bitumen, called the steam-oil ratio (SOR) was slightly reduced due to the increase in production. However, our cumulative steamoil ratio (CSOR) remained steady in 2014. As expected, the volume of gas flared in 2014 was less than in 2013 when a turnaround resulted in a major planned flaring event. However, there were two flaring events in 2014, one due to an electrical pump issue and the other due to an electrical outage caused by wildlife interference in our electricity supplier’s substation. 2014 Activities By the end of 2014, the Leismer Project had five well pads with 28 operating SAGD well pairs. Steam injection was also occurring at one new well pair and one infill producer well. This is up from four well pads and 21 operating well pairs in the previous year. Each well pair is made up of a steam injector and a bitumen producer. The increase in wells resulted from the addition of Well Pad 5 with seven well pairs, which began producing in third quarter 2014. Steam injection began at a previously drilled well pair in Well Pad 2 at the end of November 2014, which will be operational in 2015. Two infill wells were drilled at Well Pad 2 to produce bitumen from the heated section of the reservoir between existing well pairs. Steam injection began at one of the infill wells at the end of 2014, with production expected from both infill wells in 2015. In early January, there was an incident at Well Pad 3, which affected cables that had to be repaired, resulting in several weeks of production losses. Future Production Increases To maintain and increase production, the site for Well Pad 6 was also prepared in 2014 and five well pairs were drilled. The surface facility construction will begin in 2015, with production anticipated for second quarter 2016. We also received regulatory approval to drill another seven infill wells at Well Pad 1 in 2015. The Leismer Project is designed to produce 20,000 bpd but has regulatory approval to produce 40,000 bpd. The Leismer Project’s CPF can process increased volumes by optimizing equipment performance and debottlenecking. Statoil has also received approval from the Alberta Energy Regulator (AER) and Alberta Environment and Sustainable Resource Development (AESRD) for the construction, operation and environmental plans of Leismer Acceleration Phase 2 (LAP2). Natural gas consumption refers to the gas combusted on-site and includes both purchased pipeline gas and produced gas from the reservoir. More gas and electricity were consumed in 2014 as we added a fifth well pad and produced more steam overall, which required more fuel gas and electricity to power the equipment. 2014 Oil Sands Report 11 At the Well Pad 6 construction site, coconut matting is used for erosion control and to promote vegetation growth. Winter Activities Corner Due to the information collected from previous drilling activities, in 2014/2015 Statoil did not require further drilling of delineation wells at the Leismer and Corner lease areas. Our efforts in winter 2013/2014 were focused on seismic work to improve our understanding of steam flow and reservoir conditions in areas currently under production in Well Pads 3 and 4. Seismic involves the use of sound waves emitted from transmitters and receivers to gather information about underground formations that can be interpreted by geoscientists. Statoil’s Corner development was postponed in 2014 for a minimum of three years, which resulted in a staff reduction of about 60 employees. We also drilled five new wells, four of which were drilled in Corner to further delineate the area, and one well in Leismer as per a regulatory requirement. Wells Drilled 2014/2015 2013/2014 2012/2013 Leismer 0 1 43 Corner 0 4 21 While significant cost efficiencies have been achieved for Corner, the project was not as competitive as others in Statoil ASA’s global portfolio. Under the Statoil Technical Efficiency Program (STEP) rolled out in 2014, Statoil ASA is prioritizing capital to its most economic projects to increase profitability and reduce costs throughout the organization. Wells Drilled includes delineation and observation wells; SAGD wells are not included. Pipelines carry steam and bitumen at the Leismer Project. 2014 Oil Sands Report 12 Health, Safety and Security Worker Health and Safety Good health and safety practices begin with a comprehensive management approach to risk. Under this approach, Statoil works with our employees and contractors in the field to identify and develop solutions to health and safety risks. This collaboration allows Statoil to develop specific programs and procedures designed to eliminate and mitigate the consequences of incidents and accidents. The health, safety and security of our people are top priorities for Statoil. Key Performance Indicators 2014 2013 2012 0 0 1.5 1.19 8.3 8.7 SIF 0 0 0 TRIF 1.30 5.0 5.1 Total Canada Oil Sands Serious Incidents Frequency (SIF) Total Recordable Injury Frequency (TRIF) Risk assessment is also critical to the development of our emergency preparedness plans, which are regularly tested to determine their effectiveness. In 2014, Statoil conducted regular exercises to test our emergency preparedness plans. Field and head office personnel responded to a simulated scenario involving an individual who was seriously injured at the Leismer Project site. Healthy Living Environment Leismer Operations Total Canada Oil Sands includes: drilling operations, projects, Leismer Operations and the Calgary office. Rates are calculated based on one million work hours. SIF: Number of serious Health, Safety and Environment incidents (including conditions and near misses, but excluding all instances of ethical misconduct) categorized with a potential degree of seriousness of levels 1 and 2 based on one million work hours. TRIF: Number of fatal accidents, lost-time injuries, injuries involving substitute work and medical treatment injuries. Our Safety KPIs In 2014, Statoil achieved a significant reduction in our TRIF rates due to a reduction in drilling activity as well as a number of safety initiatives. These included greater accountability from leaders, increased co-ordination and rollout of safety programs in three key areas: drilling and wells, operations, and projects. Our efforts focused on identifying risks and taking action to mitigate those risks. Greater emphasis was placed on communication through safety meetings, bulletins and stand-downs. Statoil revised and updated the Site Emergency Response Plan, issuing new manuals and conducting exercises. We continued to implement leadership and training courses for project personnel and contractors working on field execution projects, as well as for Statoil supervisors on drilling and well projects. In addition, driving infractions on-site were significantly reduced in 2014 due to the emphasis on our safe driving program. For employees and contractors living at the Leismer Lodge accommodation camp, maintaining a healthy lifestyle is important when working 12-hour shifts. The lodge offers healthy eating options, fitness activities and relaxation areas. Alcohol and drug use are prohibited at the lodge and on all Statoil work sites. This policy is strictly enforced through training sessions, site access control and with-cause alcohol and drug tests. Road Safety The main highway to the Leismer Project is Highway 881, which runs from Lac La Biche to Fort McMurray. This highway is known for high traffic flow and serious vehicle accidents. To reduce the use of this corridor by Statoil personnel, many employees and contractors are bused in from major centres or flown into the Statoil-managed Leismer Aerodrome. The Aerodrome is a partnership between Statoil and other area companies. To reduce vehicle use on-site, Statoil uses shuttle buses and vans to transfer personnel from Leismer Lodge to their work sites. We conduct workshops to promote safe driving habits and use radar speed patrols to enforce speed limits on roads within our operating area. Process Safety Safety is a key consideration in the design and construction of all Statoil facilities. Preventive maintenance work is regularly conducted and operating procedures are welldefined to ensure our facilities are operated in a safe and efficient manner. Combined with regular inspections, this allows Statoil to identify potential mechanical issues before they occur. Following a third party audit, Statoil made improvements where appropriate. 2014 Oil Sands Report 13 Security Our oil sands operations place a high priority on security, which is preventive and proactive to manage risks. Plant protection efforts at the Leismer Project provide a secure work environment for our employees and community. Security evaluations are conducted at regular intervals on our operating facilities and new additions or projects to identify security risks at the earliest possible stages. Innovation We are testing and implementing technologies that will improve profitability and decrease our use of water, land and energy. As part of the Statoil Technical Efficiency Program, Statoil ASA reorganized technology development within its global operations to focus on reducing costs, increasing profitability and improving efficiency. This involved disassembling our Heavy Oil Technology Centre to better align our approach to technical innovation with our business objectives. At Statoil Canada, the Technology Excellence Team focuses on testing and implementing the best technologies the oil sands industry has available. We will be a fast follower of new and existing technologies that are aligned with our current ambitions and future growth in the oil sands. Since our five-year technology strategy was completed in 2014, we are developing a new strategy that will have a sharpened focus on technology integration at our operations. We believe testing and implementing these technologies over the next 10 years will improve water, land and energy efficiency, which will increase the profitability of our SAGD development. Reducing SAGD Warm-Up Time In 2014, Statoil tested a number of methods designed to reduce the time and steam used in the SAGD warmup phase. This phase — the time between when steam is initially injected to heat the reservoir and when the bitumen between the well pairs is warm enough to flow — is the most steam-intensive phase of SAGD operations; however, it results in low bitumen production rates. One method uses vacuum-insulated tubing to transport steam into the reservoir. This reduces the amount of heat lost from the well to the earth between the surface and the reservoir, and concentrates heat delivery into the reservoir. Vacuum-insulated tubing was installed on five injector wells in 2014 and results are being evaluated to determine if the benefits will offset the additional costs. Another method, called solvent-facilitated startup, is looking at the benefits of pumping solvent into the reservoir some time before starting steam injection. With time, the solvent could diffuse and increase the mobility of bitumen, potentially reducing warm-up time. This process was used on one well in 2014, with results currently being reviewed. Statoil has also implemented a development strategy that consists of placing the injector and producer wells closer together than the current industry standard of five metres, which would also contribute to reducing the warm-up time without adversely affecting the SAGD operation. Multi-Phase Flow Meters At Well Pad 3, Statoil tested the ability of multi-phase measurement technology to measure the emulsion stream produced from SAGD wells before it is sent to the CPF. Measuring this emulsion is challenging because it contains three different phases— bitumen, water and produced gas, which have varying flow rates and high temperatures. The multi-phase flow meters are able to measure each of the three phases before they are separated. This differs from the test separators currently being used that require large vessels to separate the emulsion into phases before each phase is measured. As a result, the multi-phase flow meters are much smaller than test separators. Statoil is seeking approval from the AER to use multi-phase flow meters, which would reduce the land footprint and capital costs associated with the installation of the larger test separators. Flow Control Devices Flow control devices are being tested at the Leismer Project’s Well Pad 5 to optimize the performance of horizontal wells used to inject steam and produce bitumen from the reservoir. The flow control devices are placed into horizontal wells and serve as the conduit for steam injection into, or emulsion production out of, the reservoir. The devices create a pressure drop that passively controls the flow rate of each fluid. For the production well, the tool will manage “hot spots” or imbalances in the volume of emulsion at different points in the well bore. This will result in a more uniform flow of bitumen along the horizontal well, which optimizes performance. 2014 Oil Sands Report 14 The Well Pad 5 test targeted different configurations and combinations of flow control devices, both in terms of the number of devices deployed and type of well targeted (injector and/or producer). This will provide Statoil with a matrix of configurations to quantify benefits. The flow control devices were deployed along with the well liner and installed at the time of drilling. Solvent Co-Injection Results from Statoil’s solvent co-injection pilot will be analyzed throughout 2015 to determine the project’s success. Solvent co-injection began in November 2013 and was completed at the end of 2014. The pilot involved co-injecting solvent with steam in three well pairs at Well Pad 3. Solvent is believed to penetrate the bitumen, reducing its in situ viscosity and allowing it to flow more readily. This means less steam is needed to mobilize the bitumen, which decreases the volume of water and natural gas required. Co-injecting solvent also has the potential to increase the amount of bitumen that can be “swept” or recovered from the reservoir. Industry Collaboration Collaboration is becoming the norm rather than the exception among oil sands companies due to the simple fact that we share many common challenges. Statoil recognizes that by working together we can leverage the experience and expertise of others without compromising our competitive position. In fact, working together often leads to more timely results and greater cost efficiencies. Statoil is a member of the Canadian Association of Petroleum Producers (CAPP) and one of the founding members of Canada’s Oil Sands Innovation Alliance (COSIA). COSIA, which represents 13 oil sands companies that are collectively responsible for almost 90 per cent of Canadian oil sands production, is focused on developing solutions to the environmental issues facing both in situ and mining oil sands developments. For information about initiatives undertaken by these two organizations, please see www.capp.ca and www.cosia.ca. Technologies are implemented at our operations to increase production and reduce Statoil’s environmental impact. 2014 Oil Sands Report 15 Environmental Performance CO2 Intensity Ambitions Statoil is working to manage our greenhouse gas emissions and environmental impacts. With the delay in our Corner development, we will be reviewing previously stated Environmental Improvement Ambitions for the CO2 intensity of our oil sands operations. As our initial ambitions were based on full field development, our short-term CO2 intensity is expected to remain mainly unchanged or reduced slightly due to the implementation of various technologies and development options designed to increase production while reducing steam requirements at the Leismer Project. GHG Emissions and Climate Change Key Performance Indicators 2014 2013 2012 393 729 377 612 332 163 67.0 69.7 55.6 CO2 Emissions tonnes kilograms per barrel (kg/bbl) bitumen Our Carbon Dioxide KPIs Greenhouse gas (GHG) emissions include CO2, methane (CH4) and nitrous oxide (N2O) and are often reported in common units known as CO2 equivalent. Since CH4 and N2O emissions from Statoil’s oil sands operations are insignificant, accounting for a fraction of a per cent of our total GHG emissions, we are reporting only CO2 emissions. The increase in CO2 emissions is mainly attributed to increased steam injection, particularly for the new well pairs, which required more fuel gas. Overall our CO2 intensity decreased due to increased bitumen production in 2014. Carbon Efficiency and Climate Change Statoil is testing and implementing the most promising technologies the oil sands industry has to offer to reduce our impact on the environment. This includes technologies that will improve fuel efficiency and reduce the volume of GHG emissions released to the atmosphere by our activities. Our carbon efficiency work is aligned with Statoil ASA’s corporate climate change ambition and sustainability strategy. This position acknowledges the scientific consensus on the link between higher levels of GHG emissions in the atmosphere from human activities and climate change, and endorses key advocacy positions on climate change. More information can be found at www.statoil.com/sustainability. Aerial view of the Leismer Project and surrounding Athabasca oil sands region. 2014 Oil Sands Report 16 Air Key Performance Indicators Air Monitoring 2014 2013 2012 tonnes 115 125 100 kg/bbl bitumen 0.02 0.02 0.02 tonnes 252 249 207 kg/bbl bitumen 0.04 0.05 0.03 SO2 Emissions NOx Emissions SO2 – sulphur dioxide NOx – nitrogen oxides Our Air KPIs The change in sulphur dioxide (SO2) emissions in 2014 is attributed to a decrease in the volume of produced gas from the reservoir, which is consumed on-site. Produced gas contains hydrogen sulphide (H2S), which produces SO2 emissions when combusted. The H2S content in the produced gas was also lower than 2013 levels. The slight increase in nitrogen oxides (NOx) emissions is largely attributed to an increase in overall natural gas consumption. In addition, there was a reduction in the onsite combustion of utility gas, propane, and diesel. The annual three-month continuous air monitoring program, required under our Environmental Protection and Enhancement Act (EPEA) approval, was conducted at the Leismer Project from July to September. The Wood Buffalo Environmental Association (WBEA) conducted the program on our behalf. One of WBEA’s continuous air monitoring stations was moved to the Leismer Project’s CPF at a location previously approved by Alberta Environment. The station monitors SO2, NOx, as well as wind direction and speed. SO2 and NOx are byproducts of the combustion of fossil fuels used on-site. Our passive air monitoring program involves five monitoring stations located around the perimeter fence of Leismer’s CPF. Each station has dedicated filters for collecting SO2 and H2S, which are changed monthly and sent to an accredited laboratory for analysis. H2S is present in the reservoir and comes to the surface in the gas produced along with bitumen. All data is submitted monthly and annually to the AER and Statoil has been consistently below the Alberta Ambient Air Quality Objectives (AAAQOs) for both the passive and continuous monitoring. To conduct source monitoring, one of the once-through steam generators (OTSGs) at the Leismer Project is fitted with a Continuous Emissions Monitoring System (CEMS) that continuously monitors NOx emissions from the stack. A manual stack survey is undertaken every year on one of the three OTSGs without CEMS on a rotating basis. All data is submitted monthly to the Alberta Energy Regulator and Statoil has been consistently below the NOx limit as outlined in our Environmental Protection and Enhancement Act approval, except for two one-hour exceedances, one during a malfunction of the air controller and one during maintenance. Four steam generators at the Central Processing Facility provide steam for the SAGD process. 2014 Oil Sands Report 17 Water Key Performance Indicators Water Definitions 2014 2013 2012 240 045 257 556 315 264 0.26 0.30 0.33 Freshwater Use m3 bbl fresh water/bbl bitumen 93.4 96.5 93.6 203 193 96 651 149 697 0.22 0.11 0.16 Disposal Water m3 bbl disposal water/bbl bitumen (Source: Water Conservation and Allocation Guidelines for the Oilfield Industry, Government of Alberta, 2006.) Fresh water, also called non-saline water, contains less than 4,000 mg/L TDS. Produced Water Recycle per cent Saline groundwater has more than 4,000 milligrams per litre (mg/L) total dissolved solids (TDS) and is often referred to as brackish water. Our Water KPIs Our freshwater use decreased in 2014 due to negative reservoir retention as well as the addition of a saline water well to our water source wells. Negative reservoir retention means that more water is produced from the reservoir than is injected as steam. In 2013, the reservoir retention was positive. The reduction in freshwater use coupled with an increase in bitumen production reduced our freshwater intensity in 2014. This means that we were withdrawing less fresh water to produce a barrel of bitumen than in previous years. The produced water recycle rate calculation has been updated based on regulatory requirements from the Alberta Energy Regulator and therefore we have restated previous years’ values to align with the updated formula. During times of negative reservoir retention, there is a limit to how much water can be recycled at the facility, which is why the produced water recycle rate decreased from 2013 to 2014. Produced water is treated before being recycled for use in bitumen recovery. Most noticeably, the volume of disposal water increased significantly in 2014, which can be attributed to the negative reservoir retention. This means that there was too much water in the facility and we had to dispose of the excess. Ideally, an even water balance is desired. However, there are many factors that affect the water balance including maintenance, the addition of new well pairs and any upsets such as power outages, which may affect steam injection or water production from any of the well pads. The most significant activity that affected the water balance in 2014 was the addition of Well Pad 5. The swing in the water balance from a positive reservoir retention in 2013 to a negative reservoir retention in 2014 has resulted in an overall increase in disposal water, which is also evident on a per barrel of bitumen basis. (Source: Glossary of Water Terms Related to Water and Watershed Management in Alberta, Alberta Environment, 2008.) Potable water that is suitable for human consumption is defined by Health Canada as containing less than 500 mg/L TDS. (Source: Health Canada Guidelines for Canadian Drinking Water Summary Table, August 2012.) Groundwater The SAGD process requires groundwater from deep underground formations to produce high-temperature steam. The steam is injected into the reservoir and reverts to water when it cools. This produced water is then pumped to the surface along with the bitumen and treated so it can be continuously recycled. At the Leismer Project, more than 93 per cent of the produced water was recycled in 2014. Of the produced water that is not recycled, some remains in the reservoir while the rest becomes concentrated with salt and minerals. It is disposed of in deep underground licensed disposal facilities. Statoil is licensed to draw groundwater from the Lower Grand Rapids Formation, which is considered a non-saline or freshwater aquifer. This deep underground formation contains water that has a high enough total dissolved solids concentration (1,250 – 1,550 mg/L) that it would require treatment to be fit for human consumption. To reduce our use of this fresh groundwater source, Statoil has received approval to draw brackish/saline groundwater from the Clearwater B aquifer. The first brackish water was used at the Leismer Project in June 2014. Our brackish water use will offset our fresh groundwater use. While the vast majority of water from the Lower Grand Rapids Formation is used to produce steam, historically smaller amounts have been used in surface applications such as dust control and building ice roads. In response to local concerns about the effects of using this water with high salinity for surface applications, Statoil drilled two wells into shallower Quaternary-aged formations to find fresher water with lower salinity and pH. We received approval to use 2014 Oil Sands Report 18 water from these wells for dust control and to build winter access roads. Currently Statoil is in the process of obtaining long-term licenses to use these wells. As part of the requirements of our groundwater licences, Statoil monitors the water levels, volumes and chemistry from each licensed diversion location. In addition, pressure information is collected from four Lower Grand Rapids monitoring wells and one Quaternary monitoring well. Water Intensity Ambition Our ambition to reduce water intensity by 45 per cent by 2020 was achieved in 2013 and 2014 based on our freshwater use per barrel of bitumen. In 2014 it took 0.26 barrels of fresh water to produce a barrel of bitumen (bbl/bbl) and in 2013 it took 0.30 bbl/bbl. This amounts to a reduction of more than 45 per cent compared to our first full year of operation in 2011 when our freshwater intensity was 0.61 bbl/bbl. Statoil will continue work to maintain this reduced water intensity in the years ahead. Groundwater Monitoring In 2014, Statoil hired a third party consultancy to update our groundwater monitoring program to include all of the KKD leases, in alignment with the Lower Athabasca Regional Groundwater Management Framework developed in 2013 by Alberta Environment and Sustainable Resource Development. Our existing Groundwater Monitoring Program meets the requirements of our EPEA approval, which includes semiannual monitoring of 16 shallow monitoring wells at the Leismer Project’s CPF, as well as semi-monthly monitoring of shallow groundwater, the Muriel Lake Formation, the Bonnyville Formation and the Empress Aquifer at Well Pad 1. In addition, we have four existing monitoring wells that address regional monitoring approval requirements. Our updated Groundwater Monitoring Program Proposal, submitted for regulatory approval in 2014, expands our groundwater testing to include phenols, naphthenic acids and polycyclic aromatic hydrocarbons. It also includes a groundwater response plan that outlines a series of escalating actions that we would undertake if monitoring results exceed specific levels. Potential actions include conducting confirmatory sampling, notifying the AER on confirmation of any impact, and investigating the source of the impact. Changes in groundwater temperature and geochemistry were observed in 2014, and Statoil is expanding our groundwater monitoring program at Well Pad 1 in accordance with our EPEA approval. Surface Water were no plans to use surface water in winter 2014/2015. For all sources of surface water, Statoil monitors diversion volumes and chemistry. The amount of surface water Statoil uses is so small we have never reached our licence limits for water volume. As part of our surface water licence, we conducted a three-year monitoring program on a series of chain lakes located in the Thornbury, Leismer and Corner areas. The data will determine if there were any cumulative effects from historical withdrawals from these surface sources. The field portion of the program was finished in October 2014, and a final report will be completed in 2015. Surface Water and Wetlands Monitoring Programs The Athabasca River basin provides a vital ecosystem for the plants, animals and people in the region. Statoil conducts wetland and surface water monitoring programs to measure the quality and quantity of water at select locations throughout the KKD leases. In May 2014, the Alberta Energy Regulator approved our Wetland Monitoring Program (WMP). The WMP now includes the majority of activities we voluntarily began in 2012 under our Surface Water Monitoring Program (SWMP) in response to stakeholder concerns about surface water bodies. In 2014, Statoil used only three per cent of the surface water allocated by AER/AESRD. There is no indication that development of the KKD leases is having an effect on the natural water cycle, based on the surface water quantity results (stream flows and lake levels) gathered to date. Water quality at the Leismer Project is similar to the baseline contained in our Environmental Impact Assessment, and is similar to natural conditions that existed before operations began in 2010. Snow quality results also indicate that since startup the Leismer Project has not released detectable amounts of hydrocarbons through air emissions. When water quality becomes poor, the number of different benthic invertebrates, diatoms and wetland vegetation species in an area decreases. Statoil’s WMP found that wetland vegetation species in bogs were more diverse in 2014 than in the previous three years. Industrial Runoff All rain and snowmelt within the Leismer Project’s process area is collected into a stormwater pond to control industrial runoff. In 2014, Statoil obtained water diversion licences to draw water from the stormwater ponds within the Leismer Project’s CPF, six well pads and one disposal well site. This water is used primarily for dust control during the summer and is only used once the water is tested and meets the discharge requirements of our EPEA approval. Historically, lake water was used for exploration drilling and winter freeze-down, largely to build ice roads. However, there 2014 Oil Sands Report 19 Land Key Performance Indicators Awards 2014 2013 2012 Total Land Disturbed (%) 4.7 4.7 4.7 Total Land Reclaimed (%) 16.3 12.2 12.2 Total Land Disturbed (%): The land disturbed for Leismer Operations as a percentage of the planned full build-out footprint for Leismer Operations. Land disturbed does not include previously disturbed land that has been successfully reclaimed, and is defined as areas where at a minimum, soil has been removed and soil may be required for land reclamation purposes. Total Land Reclaimed (%): The cumulative land reclaimed for Leismer Operations as a percentage of the cumulative land disturbed. Cumulative land disturbed includes all the land disturbed to date, including land that is now reclaimed. Our Land KPIs Since construction started at the Leismer Project, Statoil has had a slow pace of development, with no significant changes to land disturbance in 2014 over 2013 levels. This is due to the development of Well Pad 6 and the expansion of Well Pad 2, combined with progressive reclamation activities. In 2013, no new land was disturbed or reclaimed beyond the 2012 area. This slower pace of development has resulted in reduced effects on land, wildlife, and, ultimately, biodiversity, relative to the predictions of the Environmental Impact Assessment. Statoil is committed to progressive reclamation, reclaiming as disturbances become available. In 2014, total land reclaimed increased from previous years because we started reclamation activities on several borrow sites. Statoil’s Understanding Caribou Initiatives earned a 2014 Emerald Award in the Large Business category. The Emerald Awards celebrate and showcase environmental leadership in Alberta. The initiatives included studies on lichen propagation, winter snow track counts, and remote camera monitoring to estimate herd and predator numbers. Statoil’s most well-known program, the Scat Dog Study, used dogs to find wildlife scat (feces), which were studied to learn more about caribou and their predators. Our efforts are now focused on predator access control, where logs are spread over paths cut through the brush to deter wolves and other predators. Statoil was involved in a COSIA collaborative initiative to reclaim woodland caribou habitat in the Algar Region of northern Alberta. It also received a 2014 Emerald Award in the Shared Footprints category. Six oil sands companies, the Government of Alberta and the local forestry industry have worked together since 2009 to reclaim caribou habitat in the Algar Region southwest of Fort McMurray, along the Athabasca River. None of the companies involved in this effort has developed or has leases in the Algar area; however, the restoration work is part of a larger regional effort to restore caribou habitat to maintain the area’s biodiversity. After three years of funding, Statoil is now redirecting its resources to other land-based projects. Caribou Mitigation and Monitoring Program Statoil is implementing a Caribou Mitigation and Monitoring Program to reduce the effects of our activities on local woodland caribou habitat. The program sets objectives, metrics and performance targets for caribou habitat availability and connectivity as well as animal mortality. Approved in October 2014 by the AER, the program is an addition to historical activities we have undertaken to learn more about caribou behaviour and how we can reduce our impacts on habitat and herds. ©iStock.com/SoopySue Woodland caribou are under pressure in the northern boreal forest regions of all nine provinces where they make their home. Those in the oil sands region are designated as “at risk” under Alberta’s Wildlife Act and “threatened” under Canada’s Species at Risk Act. Statoil’s leases are within the East Side Athabasca Range, home to the Egg Pony herd. Statoil works to limit our impact on woodland caribou habitat. 2014 Oil Sands Report 20 Statoil seeks to protect biodiversity near our operations through research, environmental monitoring programs, and risk and impact management. Wildlife Monitoring Conservation and Reclamation Plan Statoil also has an approved (2012) Wildlife Mitigation Monitoring Program, designed to reduce the impacts of our activities on wildlife, including caribou and bears, birds and fish. Most Leismer site staff underwent bear awareness training in 2014 to improve individual knowledge of bear behaviour and bear safety. Wildife sighting cards are filled out when employees or contractors on the job site see wildlife. The cards are filed with Statoil environment staff and the information is provided to the provincial government. As part of our Conservation and Reclamation Plan and in accordance with provincial regulations, soil from construction sites is stored in segregated piles so the area can be reclaimed to its preconstruction state. Soil handling, placement, separation and stockpiling were supervised by third party environmental monitors for construction of Well Pad 6, as well as for other smaller clearing and reclamation activities. Soil Monitoring Statoil conducted its first soil monitoring program in 2014, which must be carried out every five years. A drill rig was used to take shallow well samples at 39 locations at the Leismer Project’s CPF and well pads where spills potentially could or did occur. Statoil will now submit a Soil Management Program Proposal, with sampling scheduled for summer 2015. Land Footprint Statoil is reviewing ways we can reduce the land footprint of our operations. While footprint size affects the environment and wildlife, a larger footprint also leads to higher maintenance, weed control, and ultimately, reclamation costs. We plan to continue to seek opportunities to carry out interim and progressive reclamation, such as reducing the width of corridors cleared through the brush for our activities. 2014 Oil Sands Report 21 Social Performance With the long life cycle of oil sands projects, Statoil recognizes the importance of establishing and maintaining sustainable relationships with Aboriginal communities and stakeholders near our operations. Consulting with Aboriginal Groups An estimated 23,000 Aboriginal people live in Alberta’s oil sands region, including 18 First Nations reserves and six Métis communities.* Thousands more live outside reserves and communities. First Nations Aboriginal and treaty rights are protected under the Canadian constitution. As a result, specific consultation requirements must be fulfilled before any potential impact on these rights, and the issuing of a permit by the regulator. Statoil meets, and often exceeds, regulations that require oil sands developers to consult with Aboriginal groups about projects that could impact their treaty and Aboriginal rights. We engage early in the development process and ensure Aboriginal groups and local communities have capacity to complete the work necessary to understand our projects and potential impacts. This engagement may include activities such as meetings, presentations and site visits. Statoil considers input received during these consultations in our project planning and implementation. In October 2014, we conducted a tour of the Leismer Project’s CPF for elders and industry relations representatives from Beaver Lake Cree Nation and Heart Lake First Nation. A Statoil presentation provided information about our Surface Water Monitoring Program, which was undertaken in response to community concerns about impacts on local lakes and streams. (*Source: http://www.oilsands.alberta.ca/FactSheets/Aboriginal_ Fact_Sheet.pdf.) Communicating Change In 2014, Statoil made a number of significant business decisions related to both our asset swap with PTTEP and postponement of our Corner development. Statoil recognized the need to be transparent and proactive in communicating these decisions to our local communities. We developed community outreach plans that were rolled out simultaneously with our public announcements to immediately provide information to Aboriginal groups and communities near our oil sands leases. Statoil then followed up with more detailed communication about these changes and potential impacts on communities, such as reduced contracting opportunities. Fort Chipewyan youth at the opening ceremony of an Experiential Learning Initiative gathering. 2014 Oil Sands Report 22 Local Content and Capacity Building Oil Sands Local Content Strategy In 2014, Statoil strengthened our Oil Sands Local Content Strategy to better align our local content ambitions with our business plans. The strategy assists us in identifying and addressing gaps between our business requirements and local capabilities. We used this process to develop our 2014 Local Content Plan for the fabrication and construction of Well Pad 6, intended to increase bitumen production at the Leismer Project. The Well Pad 6 project team identified contracting needs associated with building a well pad with five well pairs, and identified local businesses that could potentially fill these needs. Where gaps in local capacity existed, such as safety protocols, plans were developed to help contractors address these gaps so they were eligible to work on the project. In 2014, local contractors completed earthwork services, which involved clearing shrub and moving earth before wells were drilled. Local Lending Report As part of our ongoing efforts to support local economic development, Statoil funded a report that assessed the ability of Aboriginal entrepreneurs to access capital in order to start a business. The report, developed by an independent third party and entitled Assessing the Potential of Developmental Lending Along Alberta Highway 881, looks at ways to increase access to capital for those who live on reserves and therefore do not have private property for collateral. Statoil is currently reviewing a number of recommendations made in the report to increase local content. Local Hire Program As part of the Oil Sands Local Content Strategy, Statoil established the Local Hire Program to increase the hiring of individuals from local communities near our operations. Statoil worked with a number of internal and external stakeholders to establish a career path for up to eight individuals, ensuring they were supported through the steps required to achieve journeyman status in a variety of trades. Statoil has provided social investments to the Northeast Alberta Apprenticeship Initiative, which supports Albertans working toward their journeyman status. Connecting Local Contractors with the Oil Sands In 2014, local contractors and employment seekers continued to connect with oil sands developers at the Local Opportunity Centre (LOC), located near Conklin, Alberta. Statoil and government are partners in the LOC, which houses the federally and provincially funded Business Link. The 881 Business Incubation Centre, another partnership between Statoil, industry and government launched in 2011, was unable to fully meet its mandate and the partners mutually agreed to close it in June 2014. The partners are now considering alternative delivery methods to provide services where they are most needed. Statoil-sponsored Ski Fit North Alberta has integrated a Para Nordic component to accommodate all physical abilities. 2014 Oil Sands Report 23 Corporate Community Investment Statoil invests in a wide range of community programs that meet the needs identified by our stakeholders, while also aligning with our values and business objectives. Through consultation with community stakeholders, we have identified the following areas of priority, which are defined in our glossary on www.statoil.com. Contractual Obligations C$1.1 million Community Investment Chart Social Investment C$800,000 Donations C$153,000 Our Community Investment Data While Statoil experienced many changes in our oil sands business in 2014, we remain committed to local communities near our operations. Our investment dollars are focused on education, health and wellness, local culture and building local capacity. Investing in local communities provides mutual benefits. Members of local communities develop skills and work experience to participate in opportunities provided by the oil sands industry, while Statoil benefits from the development of a skilled labour pool. Training and hiring locally contributes to community sustainability and builds long-term success for individuals, communities and industry. Oil Sands Community Alliance Statoil is a member of the Oil Sands Community Alliance (OSCA), which is committed to working collaboratively with Aboriginal groups and local stakeholders to support thriving communities and responsible oil sands development. Through OSCA, which replaces the Oil Sands Developers Group, resource developers such as Statoil partner with local, provincial or federal government agencies, communities and other oil sands operators to address common issues. OSCA’s four core focus groups are: Aboriginal, Community Well-Being, Infrastructure and Workforce. Statoil sits on the Aboriginal Focus Group and co-chairs the Aboriginal Business Development Task Force. Sustainable Communities Initiative One of OSCA’s piority working areas is the Sustainable Communities Initiative (SCI), which is focused on the development of lasting relationships and collaboration between local communities and industry. SCI is made up of the communities of Janvier and Fort Chipewyan, sponsoring oil sands companies including Statoil, as well as partners such as the Royal Canadian Mounted Police and the Regional Municipality of Wood Buffalo. Under the auspices of SCI, the Sekweha youth group was formed in Janvier and the Lake Athabasca Youth Council in Fort Chipewyan to provide activities and resources to local youth. Experiential Learning Initiative In 2014, SCI focused on progressing the Experiential Learning Initiative (ELI), which integrates traditional Aboriginal culture, language, values and traditions with lessons taught in school. Approximately 100 people gathered on the north shore of Winefred Lake for two days in August to discuss how experiential learning can be incorporated into area schools. Participants came from surrounding communities, the Northlands School Division, the Yukon Territory, the neighbouring province of Saskatchewan and industry partners. SCI continues to work with the Northlands School Division to incorporate experiential learning into area schools. For more information on SCI, please go to www.sciconnect.ca. Ski Fit North Alberta Statoil entered its sixth year of sponsorship of the Ski Fit North Alberta (SFNA) program, with record participation levels by students and community members in the Athabasca oil sands region. During Statoil’s partnership with Cross Country Canada and Cross Country Alberta, SFNA has grown to include more than 4,250 participants, expanded the number of schools that have cross-country ski programs to 14, added Para Nordic equipment to accommodate all physical abilities, and trained and certified 17 new coaches. In 2014, Statoil donated 43 sets of ski equipment to participating communities. 2014 Oil Sands Report 24 Report Content Materiality In response to stakeholder input, we have included a section on Greenhouse Gas Emissions and Climate Change and developed new metrics to measure our Total Land Disturbed and Total Land Reclaimed. The preparation of this report is guided by Statoil Canada’s internal sustainability reporting guidelines, which can be found at www.statoil.com. These guidelines are aligned with the principles and framework of the Global Reporting Initiative (GRI) G3.1, an international body that has developed a framework for comprehensive sustainability reporting. An internal Content Board made up of Statoil managers who directly interact with our many stakeholders weighed all information. The Content Board then plotted the issues on the materiality map included below. As recommended by the GRI G3.1 reporting framework, content for this report was selected using a materiality analysis. This involves identifying issues that significantly affect our business performance and matter most to our key stakeholders and communities. To provide input into this process, Statoil considered: a stakeholder review we commissioned from the Pembina Institute; results of KPMG’s assurance activities over our 2013 report; peer reports; and a media scan of 2014 issues. High Materiality Map Increasing Importance to Stakeholders Aboriginal and community engagement GHG emissions and climate change Employee safety and security Water Land Air quality Innovation Low Energy efficiency Low Increasing Importance to Statoil High 2014 Oil Sands Report 25 Letter of Assurance Independent Limited Assurance Report to the Management of Statoil Canada Ltd. We have been engaged by the management of Statoil Canada Ltd. (Statoil) to undertake a limited assurance engagement, in respect of the year ended December 31, 2014, on certain quantitative performance information disclosed in the 2014 Oil Sands Report (the Report) as described below. Selected Indicators The scope of our limited assurance engagement, as agreed with management, comprises the following selected Key Performance Indicators (the Selected Indicators): Bitumen Production • Barrels (bbl) • Barrels per day (bpd) • Bbl steam/bbl bitumen (steam-oil ratio or SOR) • Cumulative SOR (CSOR) Energy Consumption • Natural gas consumption (1,000 m3) • Electricity consumption (GWh) • Flared gas (1,000 m3) Air Emissions • CO2 emissions (tonnes) • CO2 emissions (kg/bbl bitumen) • SO2 emissions (tonnes) • SO2 emissions (kg/bbl bitumen) • NOX emissions (tonnes) • NOX emissions (kg/bbl bitumen) Land • Total land disturbed (%) • Total land reclaimed (%) Water • Fresh water use (m3) • Freshwater use (bbl fresh water/bbl bitumen) • Produced water recycle (%) • Disposal water (m3) • Disposal water (bbl fresh water/bbl bitumen) Safety • Total Canada Oil Sands (Serious Incidents Frequency – SIF) • Total Canada Oil Sands (Total Recordable Injury Frequency – TRIF) • • Leismer Operations (Serious Incidents Frequency – SIF) Leismer Operations (Total Recordable Injury Frequency – TRIF) Community Investment • Social investment (C$) • Donations (C$) • Contractual obligations (C$) The Selected Indicators, contained within the Report, have been determined by management on the basis of Statoil’s assessment of the material issues that contribute to Statoil’s sustainability performance and that are most relevant to their stakeholders. There are no mandatory requirements for the preparation, publication or review of sustainability performance information. As such, Statoil applies its own internal reporting guidelines and definitions of sustainability reporting in preparing the Selected Indicators, which can be found in the Glossary of Terms on Statoil’s website. Management’s Responsibilities Management is responsible for the appropriateness of the internal reporting guidelines and definitions for sustainability reporting (the Reporting Guidelines) for the Selected Indicators as well as the preparation and presentation of the Report in accordance with the Reporting Guidelines, current as at the date of our report. Management is also responsible for the identification of stakeholders and material issues, for determining Statoil’s objectives in respect of sustainability performance and reporting, and for establishing and maintaining appropriate performance management and internal control systems from which the reported performance information is derived. 2014 Oil Sands Report 26 Our Responsibility Our responsibility in relation to the Selected Indicators is to perform a limited assurance engagement and to express a conclusion based on the work performed. We conducted our engagement in accordance with International Standard on Assurance Engagements 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information (ISAE 3000) and International Standard on Assurance Engagements 3410 Assurance Engagements on Greenhouse Gas Statements (ISAE 3410), issued by the International Auditing and Assurance Standards Board. ISAE 3000 and ISAE 3410 require that we comply with applicable ethical requirements, including independence requirements. We have not been engaged in respect to and our conclusion does not cover any periods prior to the year ended December 31, 2013. Assurance Approach We planned and performed our work to obtain all the evidence, information and explanations we considered necessary in order to form our conclusions as set out above. A limited assurance engagement consists of making inquiries, primarily of persons responsible for the preparation of the Selected Indicators, and applying analytical and other evidence gathering procedures to the Selected Indicators, as appropriate. Our procedures included: • Inquiries of management to gain an understanding of Statoil’s processes for determining the material issues for Statoil’s key stakeholder groups; • Inquiries with relevant staff at the corporate and business unit level to understand the data collection and reporting processes for the Selected Indicators; • here relevant, performing walkthroughs to test the W design of internal controls relating to data collection and reporting of the Selected Indicators; • Comparing the reported data for the Selected Indicators to underlying data sources; • Inquiries of management regarding key assumptions and where relevant, sample based re-performance of calculations; and, • Reviewing the Selected Indicators presented in the Report to determine whether they are consistent with our overall knowledge of, and experience with, the sustainability performance of Statoil. The extent of evidence gathering procedures performed in a limited assurance engagement is less than that for a reasonable assurance engagement, and therefore a lower level of assurance is obtained. Our assurance report is provided solely to Statoil in accordance with the terms of our engagement. Our work has been undertaken so that we might report to Statoil on those matters we have been engaged to report upon in this assurance report, and for no other purpose. We do not accept or assume responsibility to anyone other than Statoil for our work, for this assurance report, or for the conclusions we have reached. Inherent Limitations Non-financial information, such as that included in the Report, is subject to more inherent limitations than financial information given the characteristics of significant elements of the subject matter and the availability and relative precision of methods used for determining both qualitative and quantitative information. The absence of a significant body of established practice on which to draw, allows for the selection of different but acceptable measurement techniques that can result in materially different measurements and can impact comparability. The nature and methods used to determine such information, as described in the Glossary of Terms and management’s internally developed criteria may change over time, and the scope of our work did not include the appropriateness of such criteria. Independence and Competence In conducting our engagement we have complied with the independence and other ethical requirements of the IFAC Code of Ethics for Professional Accountants. The engagement was conducted by a multidisciplinary team that included professionals with suitable experience in both assurance and in the applicable subject matter including environmental, greenhouse gas, social, governance and financial aspects. Our Conclusion Based on the procedures performed, as described above, nothing has come to our attention that causes us to believe that the Selected Indicators for the year ended December 31, 2014 as identified above and disclosed in the 2014 Oil Sands Report have not been prepared and presented, in all material respects, in accordance with Statoil’s internal reporting guidelines and definitions for sustainability reporting, as at the date of our report. March 12, 2015 Vancouver, Canada 2014 Oil Sands Report 27 Your Comments Please We value your ideas and views on how we can improve our oil sands business and Oil Sands Report. Please send all comments to us by email at [email protected]. COM - 150038. Photos: Lawrence Sauter, Todd Korol, Lionel Giant, Helge Hansen, Tori D’Avella, Michael Neary. Statoil 3600, 308-4th Ave SW Calgary, AB Canada T2P 0H7 www.statoil.com