Copyright 2004, Society of Petroleum Engineers Inc. This paper was prepared for presentation at The Seventh SPE International Conference on Health, Safety, and Environment in Oil and Gas Exploration and Production held in Calgary, Alberta, Canada, 2931 March 2004. This paper was selected for presentation by an SPE Program Committee following review of information contained in a proposal submitted by the author(s). Contents of the paper, as presented, have not been reviewed by the Society of Petroleum Engineers and are subject to correction by the author(s). The material, as presented, does not necessarily reflect any position of the Society of Petroleum Engineers, its officers, or members. Papers presented at SPE meetings are subject to publication review by Editorial Committees of the Society of Petroleum Engineers. Electronic reproduction, distribution, or storage of any part of this paper for commercial purposes without the written consent of the Society of Petroleum Engineers is prohibited. Permission to reproduce in print is restricted to a proposal of not more than 300 words; illustrations may not be copied. The proposal must contain conspicuous acknowledgment of where and by whom the paper was presented. Write Librarian, SPE, P.O. Box 833836, Richardson, TX 75083-3836, U.S.A., fax 01-972-952-9435.

ABSTRACT The paper provides an overview of the strategic planning process for effective environmental management within a comprehensive HS&E managing system utilizing the corporate planning process. The focus of the presentation will be a guide to effective process and tools for integration of Environmental Business Plans with other corporate managing systems. Through the implementation of the Environmental Business Planning process, ExxonMobil's goals are to apply continuous efforts to improve environmental performance, efficiently obtain development approvals, minimize environmental liability and foster development of public policy based on sound science. In Canada, both Imperial Oil Resources and ExxonMobil Canada utilize this strategic planning tool. This process leads to increased stakeholder confidence and lowest total cost operations. The key to success lies in a sustained stewardship process that is owned by operating and project departments supported by HS&E staff. The key components of the system are:

Situation analysis Long term strategy Objectives, Goals and Targets Environmental Management Plans Environmental Aspects Environmental Improvement Plans Routine environmental expenditures Clear roles and accountabilities Stewardship of plan implementation and performance

results Performance overview

INTRODUCTION In 1992, Exxon developed a comprehensive, structured Framework to help manage Health, Safety and Environment risks. The Framework, known as the Operations Integrity Management System, or OIMS, has now reached a high level of maturity with substantial results. The OIMS Framework consists of 11 Elements, each of which includes an underlying principle and set of expectations to be met in the design, construction and operation of facilities. The managing systems put in place to meet the expectations of OIMS have these common criteria:

their scope is clear and the objectives measurable responsible and accountable resources are identified procedures are documented activities and results are measured and verified, and continuous improvement and feedback mechanisms are

in place.

OIMS provides a disciplined approach to managing Health, Safety and Environment risk, and its deployment has led to performance improvements in all business areas. In May 2001, the ExxonMobil Management Committee gave strong support to longer-range environmental management recognizing that environmental planning will help the business address continually rising environmental requirements and expectations, while delivering both sound environmental and economic performance.

SPE 86615

Environmental Business Plans: Strategy Through to Implementation Andrew Teal/Exxon-Mobil Canada West and Helga Shield/Imperial Oil Resources

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In 2002, a corporate reference guide formally outlining the requirements for Environmental Business Planning was developed and rolled-out world-wide to all ExxonMobil affiliates. The identification and assessment of environmental risks and the setting of goals, objectives and targets are key to the program. The initial focus has been on organizational awareness, understanding current performance, and defining improvement opportunities. The process allows improvement opportunities to be developed by local business based on local drivers and needs. Environmental Performance Indicators (EPIs) which were already in use prior to the roll-out, continue to be refined and expanded. In response, Imperial Oil Resources and ExxonMobil Canada West have developed formal written Environmental Business Plans and Environmental Management Plans documenting how their respective companies evaluated environmental risks and established plans to address gaps between actual and desired performance. Vision and Strategy Imperial Oil Resources and ExxonMobil Canada West share a vision to sustain improved environmental performance in all key environmental aspects, and build stakeholder confidence as a high quality operator. This will result in:

full regulatory compliance, reduced environmental impacts, ready access to resources, and timely approvals and reasonable regulatory

interpretations such that they achieve the best-in-class operating and development cost. The two companies in western Canada share four key strategic focus areas:

Continuous Efforts to Improve Environmental Performance

Minimize Environmental Liability (lifecycle) Efficient Development Approvals Influence Industry and Government Policies and

Regulations Drivers Corporate environmental strategy is governed by the Environmental Policy Statement, and ExxonMobil's four corporate priorities to achieve flawless execution, grow profitable sales volumes, have the best-in-class cost structure and improve the productivity of their asset mix. The environmental principles of sound science, risk managed solutions, benefits justifying the cost, and Net Environmental Benefit including cost benefit analysis, provide the foundation for our strategic direction. Environmental expectations are often driven by the public, employees, neighbors and regulators. They provide a barometer of societal expectations. Their insights and values,

combined with our understanding of the technical complexities and scientific knowledge of our environmental aspects must result in stakeholder supported solutions that are practical, timely and cost effective. The importance of effectively managing external influences cannot be underestimated. The issues must be adequately addressed with practical solutions. The perceived issues must also be understood, addressed and effectively communicated. A need to better understand our emissions and their implications for the environment and human health is growing. Emission inventories and speciation of our effluent streams to better quantify them, and then understanding the science of the causes and effects of these releases, is being demanded by a more knowledgeable public. Air emissions, including toxics from flaring and venting and VOC emissions, in particular, will continue to be a key focus in western Canada in the near term. Nuisance emissions, such as odours and noise, will continue to gain focus as urban sprawl and acreage proliferation infringe on our current operations and restrict future development. One of the key implications for our business, with the greatest associated cost, remains environmental liability management. The expectation of landowners and the general public that land should be left as it was found, and that "pristine" criteria should be applied post-closure, is a significant challenge for all industries in our region. The abandonment and reclamation requirements for our existing facilities and leases, coupled with the contingent liability for previously owned facilities, are significantly affected by public demands and the drive by elected officials to appease their demands. Surface water and groundwater are emerging as a key environmental topic area of public concern in western Canada. Specific concerns are being expressed by the public and regulators related to both the volumes of surface waters used by industry, and the potential and perceived degradation of groundwater quality by impacts from industry-related activities. Restricted land access for future development is another growing issue with public demands for the exclusion of industrial activity and for the preservation of wildlands and habitat protection. Environmental Impact Assessments (EIA), including cumulative assessments, are now standard requirements for new developments. Science continues to be the foundation, but effective consultation and communication are becoming more and more important. Collaborative approaches founded on trust will be crucial for future successful development and operation. Imperial Oil Resources and ExxonMobil Canada West continue to work with industry associations such as the Canadian Association of Petroleum Producers (CAPP), municipal, provincial and federal regulators, multi-stakeholder synergy groups, and local health authorities to ensure the application of sound science and practical, "no regrets" solutions to environmental challenges. We also continue to support and fund environmental research through the

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Petroleum Technology Alliance Canada (PTAC) and our own research activities. METHODOLOGY Each ExxonMobil company and affiliate is required to develop a corporate Environmental Business Plan by the Operations Integrity Management System. The Plans are updated annually by corporate ExxonMobil Canada West and Imperial Oil Resources Health, Safety and Environment Staff, endorsed by their respective senior management, and communicated to all operating staff. At minimum, the Plans must include: 1. Environmental issues assessment over the planning term. An assessment overall environmental issues and a description of specific environmental performance or flawless environmental operations targets. 2. Progress versus prior year plan/initiatives. Stewardship on deliverables identified, and progress toward environmental performance targets. 3. Description of existing situation. Site environmental aspects; regulations driving mandatory compliance projects; current emissions/effluents/waste volumes/trends; current compliance performance/trends; and other items such as local public/community issues. 4. Environmental drivers affecting unit operations. Opportunities for reduced cost, increased performance, or reduced risk; compliance issues requiring attention/improvement; known/anticipated regulatory changes; areas requiring improved environmental performance; new project/potential project implications/opportunities; areas of particular public scrutiny; Regional or Global Business Line environmental strategies; benchmarking results with regional competitors and ExxonMobil sites. 5. Long-term strategy (e.g. 5-Year Plan). Key areas meriting attention plus a desired future state for these items including the plan for meeting regulatory requirements. 6. Multi-year environmental improvement initiatives. Near and long-term tactics, such as programs/projects/etc. planned to close gaps, progress the long-term strategy objectives, and meet regulatory requirements in the long term strategy. 7. Current-year action plans for environmental improvement initiatives. Detailed descriptions of current budget year actions to accomplish the multi-year environmental improvement initiatives. 8. Environmental Business Plan input to Corporate Business Plan. A summary of current year Environmental Improvement Initiatives for input into the Corporate Business Plan.

To facilitate the effective development and implementation of Environmental Business Plans (EBP), corporate expectations for environmental performance have been made very clear. The ExxonMobil corporate Environmental Policy is the principle source of guidance. Where there are compelling scientific, competitive, local community and governmental, or economic drivers, corporate Environmental Business Plans also consider setting appropriate and continuing improvement goals for environmental performance. In western Canada, recent focus has been placed on: eliminating continuous flaring, reducing emissions, noise, odors and waste regardless of regulatory status, eliminating spills, reducing the number/frequency of reportable incidents, complying with new regulations in advance of their effective date and taking actions in anticipation of probable or potential legislation, liability management and reduction, reductions in fresh water use, energy efficiency improvements, greenhouse gas reductions and waste minimization. Each operating Business Unit in the two companies then develops an area-specific Environmental Management Plan that is aligned with the corporate Business Plan and also includes a Unit-specific situation analyses, environmental aspects, objectives and targets, and stewardship.

Initiatives and work activities are divided into two categories: regulatory non-optional and risk reduction continuous improvement. The regulatory non-optional activities are automatically included in the Corporate Planning and budgeting process. The risk reduction continuous improvement items are ranked on a seriatim for funding purposes based on:

risk/waste/emission prevention and reduction issue containment - avoiding / mitigating further risk /

preventing plume growth practicality opportunities for cost-sharing with other partners and

business units ability to pilot and share lessons learned with others advance preparation and cost savings for upcoming

regulatory changes

Feb - May Oct-DecJuly/SeptOct - Dec

Corp SHEStewardship

Community/Environmental

Climate

EnvironmentalBusiness Plan

EnvironmentalAspects

Cycle 1 Cycle 2

EnvironmentalStrategy

EnvironmentalPerformance

Strategic IssuesInput to Nextyears EBP

Assess CurrentPerformance

BenchmarkPerformance

Corporate Plan

Stewardship

Initiate NewEnvironmental

Business PlanningCycle

RegulatoryRequirements

OIMSAssessment

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public and regulatory expectations and perceptions future developments and approval renewals in the area an operating areas individual assessment of priority

The higher value opportunities are then forwarded for inclusion in the corporate plan and budget, and the lower ones for re-consideration in following years.

Clear assignment of responsibility is made for all approved work activities using individual written accountability agreements. A number of supporting environmental procedures and work aids (e.g., spill response flowcharts and checklists, documented vegetation management plans, water testing and release procedures and documentation) have been developed as part of an Environmental Toolbox for operating staff to ensure consistent quality in routine and repetitive work. Stewardship by the individual Business Units, and corporately by Imperial Oil Resources and ExxonMobil Canada West, occurs annually to ExxonMobil. Additionally, environmental performance indicators for things such as: number and volume of spills, number of compliance incidents, volumes of gas flared, amount of wastes disposed and recycled, greenhouse gases and other air emissions by each individual business unit in Imperial Oil Resources and ExxonMobil Canada West are stewarded to their senior management, and, ultimately, to senior management at ExxonMobil.

CONCLUSIONS Disciplined development of Environmental Business Plans and Environmental Management Plans at Imperial Oil Resources and ExxonMobil Canada West has resulted in better incorporation of the environmentally driven aspects of the business into the world-wide ExxonMobil planning process and helped to ensure operating units meet obligations and expectations for managing the environmental aspects of their business. All levels in both companies, from operations staff to senior management, are engaged and accountable. As

a result, ownership for the environmental aspects of our business has increased, and, ultimately, improved our respective performance. At Imperial Oil Resources, for example, 99.7 percent of solution gas was captured in 2001, the most recent year of reporting, the best among the 50 largest oil producers in Alberta. Further reductions in flaring and venting were undertaken in 2002 and 2003. In November 2002, the company began operation of a newly built 170MW cogeneration plant at Cold Lake improving energy efficiency - an initiative that was not only good for the environment, but made good business sense too.

Similarly, between 1999 and 2002, ExxonMobil Canada West reduced their flaring by 48% and the number of spills by 50%.

Lloyd's Register Quality Assurance provided an independent evaluation of OIMS against the requirements of the International Standard for Environmental Management Systems, ISO 14001 most recently in July 2001. They confirmed that the environmental management components of OIMS are consistent with the intent and meet the requirements of ISO 14001. Additionally, they stated that "We further believe ExxonMobil to be among the industry leaders in the extent to which environmental management considerations have been integrated into its ongoing business processes."

OIMS

Tools / OperatingStandards

Env. Aspects andImprovement Plan

Corp EnvironmentalBusiness Plan

OIMS

company-wideEnvironmental Business Plan

aspects, objectivestargets, EPIs

Area Business PlanArea SpecificTactical Plan

Environmental Tool Box

WasteManagement

System

CheckLists

SpillReduction

Plan

RegulatoryReferences

Bulletins

IOR's and EMCW's Environmental Management Plan Model

-identifies influencing factors,goals, outlook, evaluates

aspects

-environmental aspects-regulatory compliance-action plan to improve

environmental performanceand achieve goals and targets

-tools designed to manageaspects

-ensuring that environmentalconsiderations be

incorporated into thecorporate planning process.

-manages SHE risks through acomprehensive, structured frameworkreferred to as the Operations Integrity

Management System, or OIMS

targets, EPIsaspects, objectives,

targets, EPIs

Area Business Plan

aspects, objectivestargets, EPIs

Area Business Plan