R e s p o n s i b l e C a n a d i a n e n e R g y

2 0 1 3 P r o g r e s s r e P o r t s u m m a r yView the full report online at www.capp.ca/rce

T a b l e o f c o n T e n T s

President's message ............................................3

Program, Vision, Principles .............................. 4-5

governance ...................................................... 6-7

advisory group statement ............................... 8-9

Performance overview ................................. 10-11

People .......................................................... 12-15

air ................................................................. 16-17

Canadian upstream oil and gas map ........ 18-19

air (continued) .............................................. 20-21

Water ............................................................ 22-25

Land ............................................................. 26-29

Hydraulic Fracturing ..................................... 30-31

transportation .............................................. 32-33

National Data table ...................................... 34-35

about CaPP ........................................back cover

Photo Credit: Sean F. Walsh, Connacher Oil and Gas LimitedCover Photo Credits L to R: 1 and 3 Cenovus Energy Inc.

online Links

22

P r e s i d e n T ’ s M e s s a g e

on behalf of the Canadian association of Petroleum Producers (CaPP) and all of our member companies, I am pleased to present the 2013 responsible Canadian energy (rCe) progress report.

the rCe report consists of two components:

•the print report, which provides highlights of our industry’s

performance from a national perspective in the areas

of people, air, water and land, and an overview of the

underlying data for 2012.

•the companion website, www.capp.ca/rce, which provides

greater in-depth data, analyses and commentary regarding

our performance by region and resource type, including

Western Canada, oil sands and atlantic Canada offshore.

responsible development of Canada’s oil and gas resources contributes to the

prosperity of all Canadians. Canada’s upstream oil and gas sector operates

in a diverse and rapidly changing external context influenced by: technology

breakthroughs such as hydraulic fracturing that have fundamentally recast North

american natural gas supply and demand, differing views as to the economic, social

and environmental performance of the industry, changing public expectations about

how the industry engages communities along the value chain, and, increasingly, a

global market for our products.

as Canada’s oil and gas industry seeks to diversify markets and grow production

of crude oil and natural gas, broader “social licence” for our activities becomes

increasingly important. the rCe Program, of which this report is a part, both reports

on industry performance in key areas and is intended to promote and enable industry

performance improvement over time.

the objective of CaPP’s responsible Canadian energy progress report is to ensure

our performance reporting is credible and transparent, with the view that this

will allow us collectively to assess how we are doing and to identify and act on

opportunities for improvement.

each year we gather and analyze data for this report, with the aim to quantify the

areas where we are improving our performance, and to identify areas where we

require more focus. the overall industry performance outlined in the report largely

speaks for itself. the report identifies areas where upstream oil and gas sector

performance continues to improve, as well as areas where our industry must focus

our efforts to deliver performance improvements.

this rCe report marks CaPP’s fourth year with the rCe Program, an unprecedented

industry-wide effort to assess and report performance. the rCe Program and this

report will continue to evolve, and the rCe advisory group has made a number of

suggestions in this regard. these will be reviewed and considered, along with other

potential enhancements, for future reports. as we move forward as an industry, our

task is to use the commitment of Canada’s industry to rCe to take steps that will

up our collective performance and at the same time consider better ways we can

articulate to Canadians the performance and value we deliver.

In a global context, Canada is pretty good at what we do in oil and gas development.

this report provides us an opportunity to demonstrate our progress, to be candid

about our challenges and to open the door for a collaborative approach to solutions.

We welcome your feedback.

Dave Collyer

3www.capp.ca/rce

r e s P o n s i b l e c a n a d i a n e n e r g y P r o g r a M

the responsible Canadian energy Program represents a collective commitment by CaPP’s member companies to measure and report on and continuously improve performance in the areas of people, air, water and land. the measurement, reporting and analysis of information enables industry to show both where it is making progress in improving performance and where more focus is needed to reduce industry’s environmental footprint, to ensure every worker returns home safely each day and to improve the ways in which it engages stakeholders.

Photo Credit: Shell Canada Ltd.Photo Credit: Husky Energy Inc.

4

V i s i o n a n d P r i n c i P l e s

CaPP’s Board of governors has endorsed the following Vision and Principles for the

responsible Canadian energy Program.

our Vision is:

• We will conduct our business activities in a safe and sustainable manner,

balancing social, economic and environmental considerations.

the Principles which we will hold each other accountable for and measure ourselves

against are:

• Provide a safe and healthy workplace for our employees, contractors and for

the communities in which we work, with a goal to do no harm;

• Conduct our activities in an environmentally responsible manner;

• engage our stakeholders in open and responsive communications;

• Create opportunities for economic and social benefits in the communities in

which we operate, at a local and national level; and,

• Conduct our business activities with integrity, ensuring all people are treated

with dignity, fairness and respect.

M e a s u r i n g P e r f o r M a n c e

the responsible Canadian energy Program focuses on four key performance

areas: people, air, water and land. objectives have been developed for each of the

focus areas and are stated at the beginning of each section of the report. CaPP

has standard metrics to assess industry’s performance in each of these areas and

to evaluate performance against the objectives. Based on performance, this report

outlines how the industry is progressing towards meeting its responsible Canadian

energy Vision and Principles.

Data on key metrics is gathered on an annual basis from CaPP members, as well as

from government and regulators, and reported to illustrate industry’s performance.

examples of leading practices and case studies are also presented in this report

to show the types of projects, technologies and innovation that are driving forward

performance of the industry.

this print report provides highlights of industry's performance; for detailed data and

regional analysis, view the full report online.

T h e R C e P R o g R e s s R e P o R T

the responsible Canadian energy progress report provides data,

information, trends and performance analysis, including descriptions

of the significance and relevance of the program’s key performance

areas. the goal of the publication is to put performance information

into context to support an understanding of what the data is

telling us, where progress is being made in achieving performance

objectives and where industry needs to improve its performance.

the 2013 report presents full year 2012 industry data and analysis.

Photo Credit: Shell Canada Ltd. 5

CAPP BOARD OF GOVERNORS

STAKEHOLDERS/SOCIAL LICENCE

P R O G R A M

G O V E R N A N C E

CAPP EXECUTIVE

CAPPMEMBERCOMMITTEES

RCEADVISORYGROUP

RCE PROGRAM MANAGEMENT

g o V e r n a n c e

the responsible Canadian energy progress report is an important annual

deliverable for CaPP and the upstream oil and gas industry. It is a key

element of the broader responsible Canadian energy Program. the

program is overseen by the manager, corporate responsibility, and is

supported by both CaPP staff and members.

the report provides a vehicle by which to communicate industry

performance, while the broader program also provides members with

guidelines and tools to support performance improvement. Progress

regarding enhancements to the responsible Canadian energy Program is

regularly communicated to member companies and to the CaPP Board of

governors.

to ensure consistent performance reporting on behalf of its members,

CaPP has developed a reporting and data submission guideline. CaPP’s

reporting guideline aligns in principle with company, national and

international reporting practices. the guideline outlines how data and

information for key metrics are to be submitted to CaPP on a regular

basis.

CaPP and member companies have also developed guidelines for

the management of specific and important areas of operations and

engagement. the purpose is to establish a point of reference for

companies when developing their internal systems. the guidelines

developed to date include:

• air and energy management;

• safety and well-being;

• stakeholder engagement;

• Water management;

• Land management;

• Community impacts and

benefits;

• aboriginal engagement; and,

• Hydraulic fracturing operating

practices.

CaPP’s Board of governors is composed of senior executives from 30 members representing small, medium and large companies. It sets strategic direction and priorities for CaPP and regularly reviews progress against strategies and plans.

Right Photo: Steam generators at an in situ steam assisted gravity drainage (SAGD) operation.6

Photo Credit: Cenovus Energy 7

greta Raymond Independent Consultant

Ken ogilvieEnvironmental Policy Consultant

RCEAG Chair

Anne McLellanLLP, Bennett Jones

Ruth Ramsden-Wood Community Member

Dr. Robert (Bob) PageDirector,

Enbridge Centre for Corporate Sustainability,

University of Calgary

stewart elgieDirector,

Institute of the Environment, University of Ottawa

gary RedmondExecutive Director,

Synergy Alberta

Robert Walker Vice President, ESG Services,

NEI Investments

JP gladuPresident and

Chief Executive Officer, Canadian Council for Aboriginal

Business

Chris smillieSenior Advisor,

Government Relations and Public Affairs,

Canadian Building Trades

John LoundsPresident and

Chief Executive Officer, The Nature Conservancy of

Canada

Dr. Dan Wicklum Chief Executive,

Canada's Oil Sands Innovation Alliance

Cameron MacgillivrayPresident and

Chief Executive Officer, Enform

the responsible Canadian energy advisory group (rCeag) is composed of leaders

representing the safety, environment, labour, aboriginal, academic, private, finance

and investment communities. the rCeag is an independent body whose role is

to advise and challenge industry to effectively manage its risks and continuously

improve its performance.

they review and provide feedback on the responsible Canadian energy progress

report process, the program and the progress industry is making as demonstrated in

the annual responsible Canadian energy progress report.

the rCeag has reviewed the 2013 responsible Canadian energy progress report

and their statement reflects the group’s perspective on the progress CaPP members

have made over the past year toward achieving the responsible Canadian energy

vision and principles.

For some key performance metrics, data provided by CaPP members has been

supplemented by publicly available data from federal and provincial governments

and regulators. CaPP will continue to take this approach to provide as complete a

picture of industry performance as possible.

r e s P o n s i b l e c a n a d i a n e n e r g y a d V i s o r y g r o u P

8

the rCe advisory group is pleased to provide the following comments on the 2013

progress report. as with previous statements, our goal is to help and challenge

CaPP members to improve reporting and performance in ways that are transparent,

credible and meaningful to the public. our comments should be read in the context

of previous years’ statements as we wish to avoid unnecessary repetition.

the three main comments we make for the 2013 and future reports are as follows:

• Future reports should be written using clear, non-technical language, so they

will be more easily understood by the public.

• CaPP members should pay greater attention to the transportation of their

products by various modes, such as rail, pipelines and marine tankers, and

within their sphere of influence work closely with carriers to assure the safe and

environmentally sustainable movement of these products.

• metrics included in the 2013 rCe report do not always line up well with the

program’s objectives, which make it difficult to understand whether all of the

objectives are being achieved. For example, further work is needed in areas

such as aboriginal and community engagement.

We call for CaPP member companies to be aggressive and specific about

performance ambitions, and to report progress towards those ambitions in a

credible manner to the public. rCe reports should be used by the public to

assess the Canadian oil and gas industry’s performance and significance at all

scales — regional, national and global. a broad perspective is required, recognizing

the industry’s contribution to Canada and the world, as well as the impacts of its

operations and products throughout their full supply chain and lifecycle.

CaPP members have responded well to a number of our past comments and

recommendations. We look forward to future rCe reports that include clearly

stated measures of performance ambition that drive continuous improvement,

and more comprehensive metrics at relevant sectoral levels to track performance

improvements. We respectfully submit these comments to CaPP.

to obtain our statement to the report issued in 2012, and the changes CaPP has made in response over the

past year, refer to www.capp.ca/rce.

a d V i s o r y g r o u P s T a T e M e n T

Photo Credit: Keyera Corporation

9www.capp.ca/rce

P e r f o r M a n c e o V e r V i e w

Performance trends for key focus areas are variable for 2012, with ongoing

performance improvement being demonstrated in some areas such as safety and the

reduction of Nox and so2, and performance challenges becoming more evident in

other areas such as greenhouse gases.

safety performance for both employees and the contractor workforce improved in

2012. overall safety performance as measured by total recordable Injury Frequency

(trIF) has shown moderate improvement, with a 29 per cent decline in trIF since

2008. the number of fatalities has continued to decline. Industry recognizes a safe

work environment means no one gets injured, and so will continue to drive toward

our goal of zero incidents. Industry will continue to focus on reducing hazards,

increasing emphasis on a safety culture and enhancing focus on process safety

management in operations.

Continuing a multi-year positive trend, CaPP member companies’ national Nox

and so2 emissions performance (both absolute emissions and emissions per barrel

of production) continued to improve in 2012, primarily due to shifts in production

mix and implementation of new technologies over the last five years. an absolute

reduction in these air contaminants helps to maintain air quality and reduce acid rain

and smog.

the total volume of fresh water consumed by our industry continues to increase, driven

largely by the growth of in situ oil sands production. the overall intensity (the amount

of fresh water withdrawn per barrel of production) of water use by the upstream oil

and gas industry has shown a slow and steady decline over the past decade. In situ oil

sands production is an important contributor to this trend, with fresh water withdrawal

falling from more than 0.6 barrels per barrel of bitumen production in 2003 to less than

0.4 barrels in 2012. most of this performance improvement has been achieved through

recycling and the use of saline groundwater sources.

total greenhouse gas (gHg) emissions from Canadian oil and gas continue to

increase as a result of increased oil sands production. gHg emissions intensity

P e o P l e a i r

10 Photo Credit: Husky Energy Inc.Photo Credit: Enform

has also increased (from 0.28 tonnes Co2e in 2008 to 0.34 tonnes Co2e in 2012),

reflecting the industry’s shift toward more energy intensive production processes.

While there are significant improvements in gHg emissions for some new projects

as compared to similar existing projects, the pace at which new technologies to

mitigate gHg emissions can be developed and implemented must accelerate in

order to achieve industry's longer term gHg emissions intensity reduction objective.

With the continued oil and gas industry growth, land disturbance is increasing.

Numerous reclamation initiatives are underway, but overall reclamation is not keeping

pace with disturbance.

Working collaboratively through organizations like Canada’s oil sands Innovation

alliance (CosIa) and with key stakeholders, innovation and technology are expected to

play a key role in meeting these key environmental performance challenges over time.

through CaPP's annual rCe data collection process, all member companies

indicating that they use hydraulic fracturing in their development programs were

surveyed in 2013 to assess adoption of the hydraulic fracturing operating practices

introduced in 2012. a high degree of implementation exists, demonstrating the

rapid application of voluntary practices by the Canadian industry and alignment with

regulatory requirements in some jurisdictions.

Finally, as described in the People section of this report, the upstream oil and gas

industry and the products we produce continue to have a very positive impact

on the Canadian economy, on jobs (both direct and indirect employment), and on

Canadians' quality of life.

Following is a summary of recent performance trends in each of CaPP’s key

performance areas — People, air, Water and Land. In this report, industry

performance is discussed from a national perspective, combining Western Canada,

oil sands and atlantic Canada offshore, and regionally in more detail in the full

version of the report, available on the web at www.capp.ca/rce .

w a T e r l a n d

11Photo Credit: Suncor Energy Incorporated

P e o P l e

s a f e T y w o r k f o r c e a n d r e s P e c T f u l e n g a g e M e n T

oBJeCTives: PeoPLe We will provide a safe environment for our employees, contractors and the

communities where we operate.

We will provide employment and business opportunities for regional

communities, including aboriginal peoples.

We will respectfully engage with directly affected stakeholders through all

stages of our operations.

The reduction in total recordable injury frequency (TRIF) from 2008 to 2012.

- 29%The reduction in number of recordable injuries from 2008 to 2012.

- 8%

safety is integral to Canada’s upstream oil and gas industry and the communities

in which we work. employee, contractor and community safety is industry’s first

priority.

Industry also recognizes the importance of investing in communities where it

operates, and in supporting employment and business opportunities for local

and aboriginal peoples. oil and gas companies engage directly with affected

stakeholders, ensuring they understand the positive and negative impacts (and

associated mitigation options) associated with oil and gas activity.

Photo Credit: Fisheries and Marine Institute of Memorial University

FACToiD: every year, almost 200,000 oil and gas workers are touched by enform’s leading health and safety training, programs and services.

12

P e o P l e

Left Photo: A study of dive masks used in the Helicopter Underwater Escape Trainer (HUET) will help improve safety outcomes in the offshore industry.

i M P r o V i n g s a f e T y

o u R P e R F o R M A n C e

National – total Fatalities

2008 2009 2010 2011 2012

30

25

20

15

10

5

0

Num

ber o

f Fat

aliti

es

National – Fatalities

the number of fatalities at operations continues to decline year over year. In 2012, there

were a total of four fatalities.

Industry’s safety performance goal is zero injuries and zero fatalities; any other number

is unacceptable. our safety record shows that the industry is making progress, but must

continue to be relentless in the pursuit of keeping people safe. Continued focus is needed on

industry’s safety practices and creating the safety culture to maintain a consistent disciplined

focus on risk management, particularly those risks associated with new activities.

*In 2009, there was a tragic helicopter incident offshore Newfoundland resulting in

17 fatalities. significant work on safety, specifically improving the safety of travel to

and from offshore facilities, has been undertaken in response to this incident. oil

sands producers experienced one fatality in each of 2011 and 2012. Fatalities at

conventional oil and gas operations in Western Canada have also decreased, from

seven fatalities in 2008 to three in 2012.

the national total recordable Injury Frequency (trIF) data shows the total worker

(employee and contractor) recordable injury rate has declined by 29 per cent since 2008.

the trIF has plateaued at around 0.80 worker injuries per 200,000 hours across all

operations (Western Canada, oil sands, atlantic Canada offshore).

National – total recordable Injury Frequency (trIF)

2.00

1.80

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.002008 2009 2010 2011 2012

Employee TRIF

Contractor TRIF

Combined Worker TRIF

Inju

ries/

200,

000h

rs

National – Total Recordable Injury Frequency

the data demonstrates the benefits of continued application of robust health and

safety management systems. However, the statistical plateau in performance

highlights a need to seek further innovative solutions to reduce injuries. Continual

focus on and improvement in systems enable organizations to manage health and

safety risks through a framework of processes and procedures that ensure, for

example, standardized safety training and equipment, and the application of leading

safety practices.

the data also suggests that health and safety management systems are helping the

industry maintain and improve safety performance in remote or harsh environments,

and among new workers. For example, trIF rates have historically increased in

years in which industry has taken in large numbers of new, inexperienced workers.

However, despite a 40 per cent increase in worker exposure hours from 2008 to

2012, trIF has not increased.

Working with enform, the oil and gas industry’s safety association, as well as with

the atlantic Canada offshore training and Qualifications Committee, industry follows

strong safety standards and guidelines, shares leading health and safety practices

and utilizes comprehensive integrated training resources.

*

13www.capp.ca/rce

P e o P l e

Photo Credit: Imperial Oil Limited

c r e a T i n g e c o n o M i c a n d

s o c i a l b e n e f i T s

o u R P e R F o R M A n C e

Canada’s oil and gas industry works with communities in all areas of operations. a

key benefit of oil and gas activity is royalties and taxes for governments, and jobs

and business opportunities in local communities.

upstream oil and gas payments to all levels of government in the form of

royalties, income taxes and lease sales average $18 billion per year.

In 2012, the industry employed more than 550,000 Canadians and provided

$67 billion in annual investment.

as Canada’s largest private sector investor, the economic contributions from

Canada’s oil and gas industry benefit Canadians coast to coast. employment

extends from rig hands in the oil field to technology experts developing new water

management tools. the industry also supports a variety of businesses across

Canada. one example is Vancouver-based glove manufacturer Watson gloves.

the company revived its failing business fortunes when it partnered with oil sands

companies to create specialty work gloves designed for oil sands workers.

safe, skilled and well-paying jobs are a primary benefit of upstream oil and gas

activity. In 2012, CaPP signed agreements with the Building trade unions and merit

Contractors association to advance initiatives to improve labour availability, including

workforce mobility, skilled trades training and apprenticeship opportunities, and

immigration.

the oil sands industry is the largest employer of skilled trades workers in Canada,

providing more than 200 million work hours annually for 14 unions with locals from

coast to coast.

according to the federal government’s Construction sector Council latest forecast,

by 2018 construction employment will rise by 180,000 jobs and about 200,000

w H aT ’ s n e X T: o P P o r T u n i T i e s a n d c H a l l e n g e s

given that the pace of industry safety performance improvement has

slowed, it is important that industry broadens the scope of its efforts. this

will include increased focus on process safety management in operations

(e.g., unplanned or hazardous release of hydrocarbons, such as a loss of

containment — well blowout, spill, fire, explosion, etc.). as well, continued

focus on leadership and safety culture will continue to strengthen industry’s

safety performance. evolution of performance measures to include process

safety and safety culture will enable industry to take safety to the next level.

For more information on what CaPP and industry are doing in these areas,

view our full report online.

Left Photo: The Aboriginal Awareness Training Program for Imperial Oil employees working at the Kearl Oil Sands project promotes greater awareness, understanding and respect for Aboriginal peoples and their culture.14

P e o P l e

skilled trades workers will retire. While about 170,000 new entrants are expected,

a 200,000-worker gap is forecast. these workforce challenges have inflationary

implications, including cost increases for construction projects and increased project

execution risk, and could impact the industry’s ability to attract investment. CaPP is

working with the federal and provincial governments to identify actions to address

this issue in both the near and medium term.

Canada’s oil and gas industry continues to be a major customer for aboriginal

companies and to invest in training and education for aboriginal people to ensure

they are well-positioned to benefit from the economic opportunities associated with

resource development.

With oil and gas production technology changing and exploration moving into

new areas such as New Brunswick, the focus on effective individual company

engagement and broader industry-stakeholder discussions about issues such as

market access and cumulative effects has increased. In 2012, CaPP held its Natural

gas Dialogues in Vancouver, Fort st. John, red Deer, ottawa, moncton, montreal,

toronto and Halifax, releasing in early 2013 the Natural gas Dialogues report

which summarizes the views expressed from customers, landowners, academics,

Ngos and other stakeholder groups, along with the industry’s response to these

views. the oil and gas industry also continued its landowner and community

engagement via independent third parties such as synergy alberta, and its individual

synergy groups. synergy groups provide the opportunity for communities to have

more meaningful, ongoing participation in decisions that directly affect them, and

embodies the principle of working together to resolve issues, lessen impacts,

and encourage the use of best practices in the areas of health, safety and the

environment. this initiative is based on collaboration and principles which CaPP and

its members strongly support.

w H aT ’ s n e X T: o P P o r T u n i T i e s a n d c H a l l e n g e s

Right Photo: Michelle Liebau, Workforce Supervisor at Suncor says: “I’ve been given opportunities that I would never have experienced anywhere else in Canada. I tell people that they have no idea just how amazing the potential is here.” View video online.

there is a current and continued projected shortage of skilled workers to

meet the oil and gas industry’s labour demands. through CaPP, industry is

facilitating the development of a workforce strategy for the upstream oil and

gas industry and working with other stakeholders to address training needs.

Canada’s oil and gas industry recognizes there are additional opportunities

for CaPP members to engage with aboriginal communities to develop

local skills and services through training, education, employment and other

capacity development initiatives.

For more information on these issues and initiatives,

view our full report online.

15

a i r

r e d u c i n g e M i s s i o n s i n T e n s i T y T H r o u g H T e c H n o l o g y a n d e n e r g y e f f i c i e n c y

oBJeCTives: A iR We will design and operate our facilities to be better than provincial air quality

objectives.

We will continue to reduce greenhouse gas emissions per barrel equivalent

of production by improving our energy efficiency and by developing new

technologies.

air quality matters to Canadians—both in terms of the potential for air contaminants

such as Nox and so2 to affect regional air quality, as well as the global impact of

greenhouse gas emissions. Canada’s oil and gas industry is working to continuously

improve air emissions performance for both contaminants and greenhouse gases.

air emissions data is typically presented in two distinct ways, volume and intensity.

Volume is important as it provides information regarding overall trends in total emis-

sions. It is impacted by many factors and does not provide a perspective on efficien-

cy of operations. Intensity measures are important in understanding how efficient an

operation is in terms of the emissions associated with delivering each unit of produc-

tion. Industry’s objective is to have continuous improvement in emissions intensity.

While both absolute and intensity measures provide important information to the oil

and gas industry, intensity is the more relevant measure of operational performance.

It normalizes, or accounts for, changes in product, production volumes and mix, and

it allows oil and gas companies to evaluate their own operations and against their

competitors — both domestic and international.

Photo Credit: ARC Resources LtdLeft Photo: ARC Resources Dawson gas plant incorporates a number of emissions practices that have reduced the plant’s overall carbon footprint by approximately 60,000 tonnes per year.

CO2

SO2

NOX

GHG

CO2

NOX

GHG

CO2

SO2

NOX

GHG

CO2

NOX

GHG

CO2

SO2

NOX

GHG

CO2

NOX

GHG

The reduction in SO2 intensity from 2008 to 2012 (an 18% reduction has been realized for NOx intensity).

The percentage of overall global GHG emissions represented by Canada’s oil sands industry. The industry accounts for 7.8% of Canada’s GHG emissions.

-19% 0.14% The increase in GHG intensity from 2008 to 2012 for the overall oil and gas industry.

+21%

16

a i r

g H g e M i s s i o n s

o u R P e R F o R M A n C e

National – gHg emissions

120

100

80

60

40

20

02008 2009 2010 2011 2012

Tota

l CO 2e

tonn

es/y

r

Western Canada Oil Sands Atlantic Canada Offshore

Mill

ions

National – Absolute GHG Emissions

as production, specifically oil sands production,

increases in Canada, the absolute amount of gHgs

emitted from oil and gas production is expected to

continue to increase in the near and medium term.

We anticipate that the progressive application of new

technologies will over time reduce gHg emissions

intensity and ultimately absolute gHg emissions.

In Western Canada, reductions in absolute gHg

emissions result from declining gas production. other

reductions in Western Canada gHg emissions result

from CaPP's reclassification of cold flow bitumen

from Western Canada conventional production to the

in situ oil sands category in an effort to better align

with government methodology. meanwhile, absolute

gHg emissions from oil sands continue to increase

as production increases in both mining and in situ

operations.

aging reservoirs and shifts in the mix of production.

For example, over the past five years, oil sands in

situ production volume, which has a more energy

intensive (and therefore gHg intensive) production

profile than mining, has increased almost 150 per cent.

additionally, as conventional oil and gas reservoirs

become depleted, more energy intensive technologies

are applied to maximize extraction of depleting

reservoirs, and to extract more difficult hydrocarbons,

largely those entrapped in deep deposits of sand or

shale. New technologies are being deployed which

have significantly lower gHg emissions intensity than

is the case for similar projects currently producing. the

challenge for the industry is to accelerate the pace of

development and implementation of new technologies

that reduce the intensity of gHg emissions from oil and

gas production despite the shift in production mix, and

over time diminish the upward trend in absolute gHg

emissions.

technology and innovation are critical tools for reducing

emissions intensity as production of oil sands resources

continues to grow. one example of an innovative

technology is solvent-cyclic steam-assisted gravity

drainage (sC-sagD). this technology reduces the

amount of steam required for in situ extraction, and

in the future is expected to decrease gHg emissions

intensity in mature in situ reservoirs. additional

technologies are being developed through Canada’s oil

sands Innovation alliance (CosIa).

National – gHg emissions Intensity

0.6

0.5

0.4

0.3

0.2

0.1

02008 2009 2010 2011 2012

Tonn

es C

O 2e /m

3 OE

Western Canada Oil Sands

Atlantic Canada Offshore

National

National – GHG Emissions Intensities

National gHg emissions intensity from oil and gas

production is trending up over time from 0.28 tonnes

Co2e/m3 in 2008 to 0.34 tonnes Co2e/m3 in 2012. this

is as a result of the increasing production coming from

more gHg-intensive extraction methods, including oil

sands.

the oil and gas industry's objective is to decrease the

overall intensity of gHg emissions per unit of energy

produced over time, largely through the development

and implementation of new technologies. there is

increasing focus, through CosIa and other initiatives,

on accelerating the pace of innovation to improve

environmental performance, including gHg emissions

intensity.

w H aT ’ s n e X T: o P P o r T u n i T i e s a n d c H a l l e n g e s

overall emissions intensity is increasing for a number

of reasons, primarily because more energy is needed to

extract and process oil and natural gas resources from

17www.capp.ca/rce

CRUDE OILPRODUCTION

POTENTIAL RESOURCES

NATURAL GASPRODUCTION

YUKONTERRITORY

NORTHWESTTERRITORIES

NUNAVUT

BRITISHCOLUMBIA

ALBERTA

SASKATCHEWAN

MANITOBA

ONTARIO

QUEBEC

PRINCEEDWARDISLAND

NEWBRUNSWICK

NOVA SCOTIA

NEWFOUNDLAND& LABRADOR

c a n a d i a n u P s T r e a M o i l a n d g a s M a P

on any given day, there are180 vessels of over 500 tonnes

gross tonnage that operate within Canadian jurisdiction9

oil sands production accounts for

7.8 per cent of Canada’s gHg emissions and just over

0.14 per cent of global gHg emissions4

upstream payments to government in the form of royalties, income taxes and lease sales average

$18 billion per year 2

Canada is the world’s 5th largest natural gas producer1

Fresh water withdrawal for 2012 was

244 million m3 as compared to

226 million m3 in 20097

In 2012, enform issued

240,000safety and training certificates (a record number)6

18

CRUDE OILPRODUCTION

POTENTIAL RESOURCES

NATURAL GASPRODUCTION

YUKONTERRITORY

NORTHWESTTERRITORIES

NUNAVUT

BRITISHCOLUMBIA

ALBERTA

SASKATCHEWAN

MANITOBA

ONTARIO

QUEBEC

PRINCEEDWARDISLAND

NEWBRUNSWICK

NOVA SCOTIA

NEWFOUNDLAND& LABRADOR

Canada has the

3rd largestoil reserves in the world2

annually 80 million tonnes of oil are safely shipped off Canada’s east and West coasts9

sources: 1 = BP statistical review 2013 2 = oil and gas Journal 2012 3 = CerI 2011 4 = environment Canada 2012, united Nations statistical Division and CaPP 5 = CerI 2011 6 = enform 2012 annual report 7 = government data 8 = CerI 2011 9 = transport Canada

the natural gas sector is expected to provide

317,000 jobs (indirect, direct and induced) across Canada by 20353

For every direct job created in Alberta’s oil sands industry, approximately

one indirect and

one induced job will be created in the rest of Canada8

New oil sands development is expected to contribute over

$2.1 trillion 2010 dollars to the Canadian economy over the next 25 years – about $84 billion per year 5

19www.capp.ca/rce

a i r

a i r e M i s s i o n s

o u R P e R F o R M A n C e

National – Nox emissions

350

300

250

200

150

100

50

02008 2009 2010 2011 2012

Kilo

tonn

es

Western Canada Oil Sands Atlantic Canada Offshore

National – Absolute NOx Emissions

the overall five year trend in Nox emissions shows a continuing decline as natural

gas production declines, oil production mix shifts to less Nox intensive sources,

and more efficient engines and boilers are put into use. Nox is a by-product of

combustion and is released from engines and boilers used in oil and gas production.

National – Nox emissions Intensity regional Comparison

1.2

1

0.8

0.6

0.4

0.2

02008 2009 2010 2011 2012

Tonn

es/1

03 m3 O

E

Western Canada Oil Sands

Atlantic Canada Offshore

National

National – NOx Emissions Intensity Regional Comparison

across all Canadian oil and gas production, Nox intensity continues to decrease

as a result of focus on the efficiency of engines and boilers. an exception to the

downward trend is in atlantic Canada where efficiency gains in offshore equipment

are offset by declining oil production and the increased need to power equipment

that pumps and treats increasing volumes of produced water.

In Western Canada (not including oil sands), the five-year trend shows a continuing

decline in Nox intensity — demonstrating the success of focusing on engine

efficiency, and because fewer engines and compressors are needed as natural gas

production declines.

oil sands Nox emissions continue to slowly increase with growing but less Nox

intense production, primarily from in situ. In situ production is less Nox intensive

than mining, so the production trend also means there continues to be a decrease in

overall Nox emissions per barrel of oil sands production.

National – so2 emissions

250

200

150

100

50

02008 2009 2010 2011 2012

Kilo

tonn

es

Western Canada Oil Sands

National – Absolute SO2 Emissions

atlantic Canada offshore contributions (not shown) are negligible at one tonne with respect to the national total.

the overall trend nationally in so2 emissions continues to improve, although the

mix of crude oils is becoming more sour (i.e., higher in sulphur content). this

improvement in so2 emissions is primarily the result of more efficient sulphur

recovery equipment at facilities that process sour crude oils.

20

a i r

w H aT ’ s n e X T: o P P o r T u n i T i e s a n d c H a l l e n g e s

Further improvements in the oil and gas industry’s air emissions intensity

are expected under the development of the federal air Quality management

system (aQms), which is a comprehensive approach for improving air

quality in Canada that is supported by CaPP. aQms is the product of

unprecedented collaboration by the federal, provincial and territorial

governments, industry and Ngos.

Implementation of aQms began in 2013. a key component of the system

will be emissions requirements that set a base level of performance on an

equipment-type basis, e.g., air emissions performance of engines.

the growing contribution of mine vehicle fleets to Nox emissions is driving

increased focus on Nox emissions reduction technologies. additionally the

aQms will include a Base Level Industry emissions regulation for natural

gas-fired reciprocating engines used at facilities and for gas compression.

While over the last five years there is an overall decline in so2 emissions in the

oil sands, variability year over year is the result of operational issues primarily

associated with upgraders. additionally, a one-time change in product classification

means some heavy crude production in alberta is now classified as in situ bitumen.

as such, there has been a slight increase in oil sands so2 emissions compared to

past years where the data has not been restated.

In Western Canada, an absolute reduction in so2 resulted from a decrease in sour

natural gas production volumes, the high efficiency of sulphur recovery equipment at

crude oil facilities, and because some sour crudes were reclassified as oil sands, as

noted above.

National – so2 emissions Intensity regional Comparison

1.8

1.6

1.4

1.2

1

0.8

0.6

0.4

0.2

02008 2009 2010 2011 2012

Tonn

es/1

03 m3 O

E

Western Canada Oil Sands

Atlantic Canada Offshore

National

National – SO2 Emissions Intensity

Nationally, in spite of the gradual shift to more sour crude and bitumen production,

so2 emissions intensities over the past years are improving. this is in part due to

reduced production of sour gas, improvements in sulphur recovery, and regulations

reducing the amount of flaring and venting in Canada.

In the oil sands, in situ production continues to grow, representing over half of oil

sands production though only a fraction of so2 emissions. In situ bitumen contains

far less sulphur than mined bitumen, so so2 emissions per barrel of oil sands

produced is down by 45 per cent since 2008.

Right Photo: Imperial Oil is working on an alternative to thermal recovery processes to reduce direct greenhouse gas emissions from production by more than 90 per cent. Photo Credit: Imperial Oil Limited 21

w a T e r

oBJeCTives: WATeR We will continue to reduce the amount of fresh water required per barrel

equivalent of production by improving water recycle rates, using low

quality (e.g. saline) water sources where feasible, and by developing new

technologies.

We will safeguard the quality of regional surface and groundwater resources.

r e d u c i n g f r e s H w a T e r w i T H d r a w a l P e r b a r r e l o f P r o d u c T i o n a n d s a f e g u a r d i n g w a T e r q u a l i T y .

CO2

SO2

NOX

GHG

CO2

NOX

GHG

CO2

SO2

NOX

GHG

CO2

NOX

GHG

the percentage of water used in oil sands mining production that is recycled. In situ rates are typically 90% to 95%.

the decrease in fresh water withdrawal per barrel of oil sands in situ production from 2003 to 2012.

80% - 46%the decrease in fresh water withdrawal per barrel of production for oil sands mining from 2003 to 2012.

- 28%

Canadians place high value on their fresh water resources. they want to know the oil

and gas industry is using water responsibly, without negative impact on water quality

or availability to communities.

Canada’s oil and gas industry is working to reduce the amount of fresh water

withdrawn per barrel equivalent of production. one approach is to improve water

recycling rates. using alternatives to fresh water, where feasible, and developing

and implementing new technologies for the efficient use of water are other ways

industry is working to manage water. Canada’s oil and gas industry is also working

with provincial and federal government agencies to increase data collection and

monitoring activities to improve knowledge and management of regional surface and

groundwater resources.

Photo Credit: Cenovus Energy Inc.22

w a T e r

r e d u c i n g o u r f r e s H w a T e r

i n T e n s i T y

o u R P e R F o R M A n C e

oil sands mining and In situ, and WCsB Crude oil – Fresh Water Withdrawal Per Barrel of Production

5.0

4.0

3.0

2.0

1.0

0.02003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Oil Sands Mining

Barr

els

per B

arre

l

WCSB Crude Oil

Oil Sands In Situ

National – Fresh Water Withdrawal per Barrel of Production

this graph shows fresh water withdrawal per barrel of production for oil sands

mining, oil sands in situ and Western Canada crude oil over the last decade.

In 2012, oil sands mining accounted for 68 per cent of industry's total fresh water

withdrawal, while crude oil and natural gas production (and associated usage types)

in the Western Canada sedimentary Basin accounted for 24 per cent. the remaining

eight per cent were used for in situ bitumen production in alberta.

Fresh water withdrawal per barrel of crude oil production in the Western Canada

sedimentary Basin has remained relatively constant over the last four years for which

we have quality government data. over that period, an average of 0.5 barrels of

fresh water was withdrawn per barrel of oil and gas production in Western Canada

(excluding oil sands).

oil sands mining operations' fresh water withdrawal varies significantly over time,

driven by new mine startups and the need to initially store large quantities of water.

Variability is also seen if facilities experience operational shutdowns for a period of

time. Fresh water withdrawal per barrel of oil sands bitumen production for in situ

and mining operations shows a slight decline over the last decade. most of this

performance improvement was achieved by increasing recycling rates and replacing

fresh water with saline groundwater sources. over time as mines reach steady state

operations, the need for make-up water declines and recycling rates increase. the

last mine start-up was in 2008 and in that year, oil sands mining operations withdrew

an average of 4.4 barrels of fresh water per barrel of bitumen. subsequently, there

were three years in a row of continual improvement. the 2012 withdrawal per barrel

of production shows an increase from the previous year, primarily due to one facility

returning to full production after incurring damage that had shut down production for

seven months in 2011.

2 0 1 2 : 3 . 1 B A R R e L s

oil sands mining – Barrels of Fresh Water Per Barrel of Bitumen Production

23www.capp.ca/rce

w a T e r

Photo Credit: Shell Canada Ltd.

w H aT ’ s n e X T: o P P o r T u n i T i e s a n d c H a l l e n g e s

the evolution and application of new technologies (e.g., the use of solvent injection

to enhance in situ production without the use of additional water) is expected to

contribute to further performance improvements. While saline groundwater use is

implemented where possible, availability of this alternative water source could be

limited in locations where such water is not found or cannot be feasibly retrieved.

Industry supports water conservation and continues to develop new methods for

recycling of water and to source alternatives to fresh water where appropriate.

However, it is important to consider all potential environmental impacts. For

example, the use of saline groundwater to conserve fresh water resources may

result in increased gHg emissions as a result of energy needed for water treatment,

increased surface footprint for treatment facilities, and the generation of a waste

stream (salt) that requires appropriate disposal. as such, industry supports the

principle that water management and allocation decisions made by government be

based on an assessment of environmental net effects, and with consideration for

land use objectives.

National – Fresh Water Withdrawal*

300

250

200

150

100

50

02009 2010 2011 2012

Mill

ions

m3

Western Canada Oil Sands In Situ Oil Sands Mining

National – Total Fresh Water Withdrawal

*Water data from last year’s report has been restated to include additonal water uses in the Western Canada volumes.

total fresh water withdrawn by industry in Western Canada, oil sands in situ and

oil sands mining, was 244 million cubic metres in 2012, an increase from 226

million cubic metres in 2009. the main reason for the overall increase in fresh water

withdrawal in 2012 was an increase in water requirements for oil sands mining

operations.

24

w a T e r

Left Photo: Shell has formed a dynamic relationship with the City of Dawson Creek by funding a water reclamation facility which supplies the majority of water Shell requires for its Groundbirch field completions.

Right Photo: The Subsea Well Response Project is a global initiative to develop advanced capabilities for handling underwater loss of containment of a well.

T h e o F F s h o R e e n v i R o n M e n T

spill prevention and response is always a key focus area for the

offshore industry. although the focus is on prevention first, offshore

operators also regularly assess their spill response capability. In

industry's view, Canada has a world-class spill response system

with global response equipment and personnel available on call

24/7/365. However, we recognize the need for ongoing improvement

and to learn from other jurisdictions. Industry is conducting

research on further enhancing its spill response capabilities through

participation in the subsea Well response Project (a joint global

initiative among oil and gas companies to develop advanced

capping and dispersant equipment to be used in case of an

underwater loss of containment of a well).

to find out more, read our full report online.

Photo Credit: Subsea Well Response Project

s a f e g u a r d i n g w a T e r r e s o u r c e s

o u R P e R F o R M A n C e

6 regulations in both British Columbia and alberta require disclosure of hydraulic

fracturing additives and chemicals.

the public and stakeholders are concerned about industry’s operating practices

affecting water quality, such as the potential effects of hydraulic fracturing on

groundwater and drinking water wells, and potential spills and disposal of waste

fluids. the oil and gas industry is highly regulated and takes strict measures to

protect both surface water and groundwater quality.

w H aT ’ s n e X T: o P P o r T u n i T i e s a n d c H a l l e n g e s

to help address public concerns about the potential health and environmental effects

of the chemicals used during hydraulic fracturing, CaPP sponsored the development

of a Fracturing Fluid additive screening tool in 2013. this tool categorizes

the additives in fracturing fluids according to their toxicity and environmental

persistence, enabling members to make appropriate decisions with regard to

chemical use. additional industry initiatives include a fracturing fluid reuse feasibility

study and decision tool, among others.

For more information, view our full report online.

In addition, water quality is being carefully monitored through industry and

government initiatives. In 2013, the governments of Canada and alberta jointly

announced access to federal and provincial environmental monitoring data on air,

water, land and biodiversity in the oil sands. this data is available through an online

data portal: www.jointoilsandsmonitoring.ca.

25

l a n d

M i n i M i z i n g l a n d i M P a c T, M a i n T a i n i n g b i o d i V e r s i T y

oBJeCTives: LAnD We will mitigate our impact on the land while maintaining regional ecosystems

and biodiversity.

We will progressively reclaim all lands affected by our operations, returning

them to self-sustaining landscapes.

Industry knows that the nature of oil and gas exploration and production has an

impact on the land and therefore continually assesses the impact of its activities, and

evaluates and addresses the effectiveness of its efforts to mitigate these impacts.

mitigation is achieved by ensuring that each phase of development, from site

preparation, through exploration and production, and finally reclamation, is designed

and implemented in a manner that minimizes land disturbance and industry’s surface

footprint. Industry works with numerous stakeholders including aboriginal peoples,

biologists and environmental scientists to achieve this goal.

once oil and gas development has occurred, industry knows that it is not always

possible to fully return an area back to its natural state. For example, lands which

are predominantly low-lying wetlands before oil sands mining development are

often reclaimed to upland (forested) areas, due to hydrological, hydrogeological and

geotechnical constraints. Industry is required to return the land to a productive self-

sustaining landscape prior to receiving a reclamation certificate and handing the land

back to the government.

Photo Credit: Nexen Energy ULCLeft Photo: As part of COSIA’s Algar Restoration Project, restoration of woodland caribou habitat is being achieved using best practices such as winter planting.

CO2

SO2

NOX

GHG

CO2

NOX

GHG

CO2

SO2

NOX

GHG

CO2

NOX

GHG

CO2

SO2

NOX

GHG

CO2

NOX

GHG

The proportion of Canada’s boreal forests that has been disturbed by oil sands mining operations in the past 46 years.

Increase in the number of inactive wells since 2008.

0.02% +32% The percentage of abandoned wells in active reclamation/remediation, being monitored to demonstrate successful reclamation, or awaiting reclamation certification/release.

77%

26

l a n d

P r o g r e s s i V e l y r e c l a i M i n g l a n d s

a f f e c T e d b y o P e r a T i o n s

W e L L s - W e s T e R n C A n A D A A n D o i L s A n D s i n s i T u

Wells Number of Wells Increase since 2008

active 228,006 10%

Inactive 108,283 32%

source: government data

active wells are wells that reported production at some point during the reporting

year, whereas inactive wells are capable of production but did not report production

in the reporting year. since 2008, the number of inactive wells is growing at a faster

rate than the number of active wells (32 per cent versus 10 per cent). regulations

require permanent abandonment (cut, cement and cap the well below the surface)

once a well reaches the end of its productive life. the number of inactive wells

depends primarily on the economic viability of the well. When, for instance, the price

received for gas is lower than what it costs to extract the gas, the operator may shut

in the well and manage it until such time as it again becomes economic.

regulators are required to strike a balance between conservation of oil and gas

resource potential and environmental liability. shutting in wells to conserve the

resource for the future can lead to an accumulation of inactive wells which is not

necessarily desirable in the near term. Industry is evaluating how to meet resource

conservation needs and the need to reduce the number of inactive wells.

status of abandoned Wells in 2012 – Western Canada and oil sands In situ

Oil Sands In Situ – Status of Abandoned Wells in 2012

Temporarily DeferredAbandoned Wells

Abandoned Wells in ActiveReclamation/Remediation

Abandoned Wells inMonitoring/Assessment or Application

29%

23%

48%

For the 43,136 wells that have been abandoned in Western Canada and oil sands

in situ developments as of 2012: 23 per cent are temporarily deferred; 48 per cent

are in active remediation or reclamation; and 29 per cent are in the monitoring,

assessment or application phase (the final phase before a reclamation certificate

is issued). the proportion of abandoned wells in each stage of life-cycle well

management is almost unchanged as compared to what was reported in 2011.

source: Canadian association of Petroleum Producers.

this graph captures how industry’s inventory of abandoned wells is progressing

through the stages of land reclamation, with the end goal of receiving a reclamation

certification/release, so that the land can be returned to the Crown or private

landowners. seventy-seven per cent of industry’s abandoned wells are in the

final two phases of reclamation: active reclamation/remediation and monitoring/

assessment or application. this demonstrates that industry is progressing

abandoned wells toward eventual certification. It is important to note the reclamation

process takes time to complete; typically, five to seven years.

27www.capp.ca/rce

¨

Disclaimer:

Geophysical, Geomatics, GIS Services 2013-06-12

This map is for illustrative purposes only and is not a legally recorded plan or survey and is notintended to be used for such purposes. Do not rely on this map as being a precise indicator ofroutes, land boundaries, locations of features nor as a guide for navigation. Encana Corporationmakes no warranty, cannot guarantee, and does not assume any liability or responsibilitywhatsoever for the quality and accuracy of the data and information contained herein. Users of thedata and information contained herein do so at their own risk. In no event shall EncanaCorporation be liable for injury, expenses, profits, loss or damage, direct, incidental orconsequential or any other pecuniary loss arising out of the use or inability to use the data andinformation contained herein. Usage, manipulation, or reproduction, in any form, of the data andinformation contained herein is prohibited without permission of Encana Corporation.

British ColumbiaTwo Island Lake

c-63-K\94-O-8

14 WellsTotal Disturbance = 5.4haReclaimed = 3.6haUnreclaimed = 1.8ha

l a n d

M i T i g a T i n g l a n d i M P a c T s a n d

M a i n T a i n i n g b i o d i V e r s i T y

the provincial and federal governments continue to clarify the definition of footprint

and biodiversity in the context of species-at-risk. For this reason, the selection of a

metric has been challenging. Instead, the oil and gas industry has proactively been

participating in on-the-ground initiatives throughout Canada.

an example is Canadian Natural resource Limited’s Bear management strategy—a

program that dramatically reduced the number of incidents with bears.

Visit our full report online for more information.

as well, through CaPP, industry has begun to turn its attention to its role and

responsibility in managing cumulative effects on a shared land base. CaPP has

been providing input to a number of key initiatives including the British Columbia

Cumulative effects management Framework, the alberta Lower athabasca regional

Plan, and the saskatchewan south of the Divide multi-species action Plan.

Photo Credit: Canadian Natural Resources Limited

Left Photo: Through strategies including fencing, garbage bin management, bear awareness training and banning of outdoor cooking, Canadian Natural Resources Limited has dramatically reduced incidents involving bears. In 2012, there were 215 bear sightings near Canadian Natural Resources Limited facilities and zero bear incidents.28

¨

Disclaimer:

Geophysical, Geomatics, GIS Services 2013-06-12

This map is for illustrative purposes only and is not a legally recorded plan or survey and is notintended to be used for such purposes. Do not rely on this map as being a precise indicator ofroutes, land boundaries, locations of features nor as a guide for navigation. Encana Corporationmakes no warranty, cannot guarantee, and does not assume any liability or responsibilitywhatsoever for the quality and accuracy of the data and information contained herein. Users of thedata and information contained herein do so at their own risk. In no event shall EncanaCorporation be liable for injury, expenses, profits, loss or damage, direct, incidental orconsequential or any other pecuniary loss arising out of the use or inability to use the data andinformation contained herein. Usage, manipulation, or reproduction, in any form, of the data andinformation contained herein is prohibited without permission of Encana Corporation.

British ColumbiaTwo Island Lake

c-63-K\94-O-8

14 WellsTotal Disturbance = 5.4haReclaimed = 3.6haUnreclaimed = 1.8ha

l a n d

o i L s A n D s M i n e s

since 2009, the total active footprint of oil sands mines increased by 17,064 hectares

to 84,394; and the area of land ready for reclamation or in some stage of reclamation

increased by 479 hectares to 8,088. In 2012, 90 per cent of the total active footprint

for oil sands mining operations was cleared or disturbed land while 10 per cent was

ready for reclamation or being reclaimed. this is a slight change from 89 per cent

and 11 per cent respectively in 2009. source: alberta environment and sustainable

resource Development. maintaining the percentage of land in the reclamation stage

while increasing the total active footprint demonstrates that industry is keeping up with

reclamation despite increasing development.

through progressive reclamation, mature oil sands mining companies have been able

to reclaim a more significant portion of land even as the mine continues to produce. For

example, 21 per cent of syncrude’s mildred Lake mining operation’s total active footprint

is ready for reclamation or is being reclaimed.

With new projects coming online, industry’s total active footprint growth will temporarily

outpace progressive reclamation progress. as these new projects mature, the

percentage of the total active footprint in some stage of reclamation will increase.

w H aT ’ s n e X T: o P P o r T u n i T i e s a n d c H a l l e n g e s

Industry and regulators want to ensure the abandonment and reclamation liabilities

are estimated appropriately to ensure that adequate funding is in place to manage

these liabilities. to address this, the energy resources Conservation Board (erCB),

now the alberta energy regulator (aer), implemented changes to the Licensee

Liability rating (LLr) Program in 2013. the LLr Program compares a producer

licensee’s assets with its liabilities, and requires companies to post security if

liabilities exceed assets. the changes to the program require a greater number

of licensees to post financial security deposits, significantly increasing the total

deposits held in guarantee of land reclamation.

Canada’s oil sands Innovation alliance (CosIa) is working to develop the Landscape

ecological assessment and Planning (LeaP) tool, which uses geospatial data and

forest industry modeling techniques to create a multi-layered digital map of land

use in the southern Lower athabasca region of alberta. LeaP will allow industry to

establish a baseline of land use in the region, as well as model how reclamation work

undertaken today will affect reforestation and caribou and other species habitat five,

ten, even fifty years into the future.

M u l T i - P a d w e l l s T o r e d u c e

l a n d f o o T P r i n T

Horizontal drilling allows multiple wells to be consolidated onto one

pad site. Not only does this reduce the average footprint per well, a

significant portion of the lease area can be reclaimed right after drilling

operations are completed to minimize surface disturbance. this is an

example of encana's 14-well pad in the Dawson Creek area. the initial

surface disturbance was 5.4 ha and 3.6 ha was progressively reclaimed

after the wells were drilled and tied in (i.e., only one-third of the surface

lease is ultimately taken up by wells and facilities).

Photo Credit: Encana

14 wells: Total disturbance = 5.4ha reclaimed = 3.6ha unreclaimed = 1.8ha 29

H y d r a u l i c f r a c T u r i n g

Photo Credit: Devon Canada30

H y d r a u l i c f r a c T u r i n g

2 0 1 3 H y d r a u l i c f r a c T u r i n g

P r a c T i c e s u P d a T e

In 2011, CaPP and its members developed a set of hydraulic fracturing principles

for tight gas that have since been adopted by members producing tight oil. In

2012, a series of seven leading operating Practices in support of the principles

were introduced, and implementation was initiated by members. as part of the

responsible Canadian energy Program, CaPP members who use hydraulic

fracturing in their shale and tight gas development programs made a commitment to

report to CaPP on the uptake of the operating Practices for Hydraulic Fracturing in

their first year of implementation.

the operating Practices set out clear expectations of members, including the

expectation that processes members use to manage critical aspects of their

hydraulic fracturing programs are disclosed to the public. In support of this,

CaPP added to its yearly performance survey of members a series of questions

regarding the state of implementation of the operating Practices.

recognizing that not all aspects of all of the practices can be fully implemented

in a single year, it is still important to report the implementation achieved with an

expectation that companies will continue to progress toward full implementation.

For this report, CaPP’s survey asked questions specifically regarding the

implementation of the first six practices relating to hydraulic fracturing. the results

are provided in the following graph.

National - Hydraulic Fracturing operating Practice Implementation

100

90

80

70

60

50

40

30

20

10

0OP #5 OP #6OP #4OP #3OP #2OP #1

HF Operating Practice Implementation

Perc

enta

ge Im

plem

ente

d

C A P P h y D R A u L i C F R A C T u R i n g o P e R AT i n g P R A C T i C e s

oP#1 Fracturing Fluid additive Disclosure

oP#2 Fracturing Fluid additive risk assessment and management

oP#3 Baseline groundwater testing

oP#4 Wellbore Construction and Quality assurance

oP#5 Water sourcing, measurement and reuse

oP#6 Fluid transport, Handling, storage and Disposal

Left Photo: Pressure pumping units in operation for hydraulic fracturing in the Horn River Basin. Illustration: Diagram showing an example of hydraulic fracturing.

Illustration Credit: Statoil

31www.capp.ca/rce

T r a n s P o r T a T i o n

Photo Credit: HDMC32

s a f e a n d r e s P o n s i b l e P r o d u c T

T r a n s P o r T T o M a r k e T

the upstream oil and gas industry has a longstanding commitment to working with

our transportation providers to ensure safe delivery of our products to markets. the

growth in oil and gas production and the need to access new markets are driving

new natural gas and oil pipeline proposals, potential for increased oil and LNg tanker

traffic along Canada’s West Coast and growth in the rail transport of crude oil.

With the oil and gas industry’s growth, Canada’s upstream producers continue to

support both industry initiatives directed at safe transportation of our products, and

efforts by governments to review safety standards and regulations. For example,

our industry supports the Canadian energy Pipeline association’s Integrity First®

Program, a program intended to improve performance throughout the pipeline

industry. We are also broadly supportive of the independent pipeline review

commissioned by the alberta energy regulator, which resulted in a number of

recommendations for regulatory enhancement, while affirming the pipeline industry’s

strong record and world-class safety systems. CaPP is currently assessing

opportunities to improve performance for those pipelines owned and operated by

member companies.

as producers, we are also working with rail operators to assure appropriate systems

and processes are in place to address the rapid growth in oil transport by rail, and

the impact on existing and new infrastructure. the tragic incident at Lac mégantic in

2013 reinforced the importance of working with the railways to address the safety of

rail transport of crude oil and other petroleum products.

In addition, we are working with the marine tanker industry to assure product

continues to move in a safe and environmentally responsible manner along Canada’s

coasts. Industry is providing input into the federal government’s panel on oil spill

prevention and response, and working with the marine industry, governments and

regulators to ensure that Canada has a world-class marine spill prevention and

response system in place.

T r a n s P o r T a T i o n

Left Photo: Deployment of the Norlense 1200R oil containment boom during Exercise Synergy on August 28, 2013. Synergy is an annual on-water spill response exercise organized by offshore operators in N.L. 33www.capp.ca/rce

n A T i o n A L

Key Metric Metric 2008 2009 2010 2011 2012global Reporting

initiative (gRi) Reference

gRi Performance

indicators

P e o P l e

Fatalities Worker fatalities (number/yr) 12 25 7 5 4 Social 2 LA7 3

Total recordable injury frequency (TRIF)

Employee total recordable injury frequency (TRIF) 0.63 0.60 0.58 0.56 0.51 Social 2 LA7 3

Contractor total recordable injury frequency TRIF) 1.24 0.94 0.99 1.00 0.84 Social 2 LA7 3

Combined total recordable injury frequency (TRIF) 1.08 0.85 0.88 0.89 0.77 Social 2 LA7 3

Community engagement Qualitative indicator discussed in report N/A N/A N/A

Spending on Aboriginal related projects Qualitative indicator discussed in report N/A N/A N/A

Taxes and royalties Investment spending Discussed in report Economic EC1 4

Payments to government Discussed in report Economic EC1 4

Employment (direct and indirect) Employment (direct and indirect) Discussed in report Social 2 EC1 4

w a T e r M a n a g e M e n T

Fresh water withdrawal

Fresh water withdrawal for Western Canada Sedimentary Basin operations (millions m3/yr.)1 First available in 2009 28.4 31.7 31.0 34.2 Environment EN8 5

Fresh water withdrawal for in situ operations (millions m3/yr)1 19.1 16.6 17.7 18.0 19.9 Environment EN8 5

Fresh water withdrawal for mining operations (millions m3/yr)1 184.3 162.4 152.4 143.5 167.0 Environment EN8 5

Fresh water as a percentage of total water withdrawal

Fresh water as a percentage of total water withdrawal for Western Canada Sedimentary Basin operations (%)1 First available in 2009 61% 66% 66% 68% Environment EN8 5

Fresh water as a percentage of total water withdrawal for oil sands in situ operations (%) 57% 50% 49% 52% 49% Environment EN8 5

Fresh water withdrawal per barrel of production

Fresh water withdrawal per barrel of production for Western Canada Sedimentary Basin operations (bbl/bbl)1 First available in 2009 0.5 0.6 0.5 0.5 Environment EN8 5

Fresh water withdrawal per barrel of production for oil sands in situ operations (bbl/bbl)1 0.6 0.4 0.4 0.4 0.4 Environment EN8 5

Fresh water withdrawal per barrel of production for oil sands mining operations (bbl/bbl)1 4.4 3.4 3.1 2.8 3.1 Environment EN8 5

Per cent water reuse

Per cent water reuse in hydraulic fracturing First reported in 2012 33% Environment EN10 6

Flow back generated (m3/yr) First reported in 2012 2,364,534* Environment EN8 5

Flow back reused (m3/yr) First reported in 2012 740,529 Environment EN10 6

Water quality Qualitative indicator discussed in report N/A N/A N/A

n a T i o n a l d a T a T a b l e

34

l a n d M a n a g e M e n T

Active wells and inactive wells

Active wells 207,595 204,198 213,991 215,220 228,143 Environment EN12 7

Inactive wells 82,081 90,045 94,748 102,304 108,327 Environment EN12 7

Annual well abandonments Annual well abandonments 1,791 1,914 3,126 2,682 2,915 Environment EN12 7

Status of abandoned wells in reclamation

Temporarily deferred abandoned wells First reported in 2011 9,788 10,155 Environment EN12 7

Abandoned wells in active reclamation/remediation 11,771 11,370 13,407 20,959 20,585 Environment EN12 7

Abandoned wells in monitoring/assessment or application 5,556 6,994 11,600 9,882 12,396 Environment EN12 7

Annual certifications or releases received Annual certifications or releases received 1,821 1,505 1,709 2,018 1,636 Environment EN13 8

Total active footprint (oil sands mining) Total active footprint (oil sands mining) (ha) First reported

in 2009 67,419 71,451 76,164 84,424 Environment EN12 7

Total area cleared or disturbed (oil sands mining) Total area cleared or disturbed (oil sands mining) (ha) First reported

in 2009 59,810 63,820 68,383 76,336 Environment EN12 7

Total area in reclamation or reclaimed and not certified (oil sands mining)

Total area in reclamation or reclaimed not certified (oil sands mining) (ha)

First reported in 2009 7,609 7,631 7,781 8,088 Environment EN13 8

N/A - Not available

"Combined" includes both employees and contractors in TRIF calculation1 Methodology updated in 2012 and applied to all five years of data as a restatement 2 Social = Labour Practices and Decent Work3 LA7 = Rates of injury, occupational diseases, lost days, and absenteeism, and total number of work

-related fatalities, by region and by gender4 EC1 = Direct economic value generated and distributed, including revenues, operating costs,

employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments

5 EN8 = Total water withdrawal by source6 EN10 = Percentage and total volume of water recycled and reused7 EN12 = Description of significant impacts of activities, products, and services on biodiversity in

protected areas and areas of high biodiversity value outside protected areas8 EN13 = Habitat protected or restored9 EN16 = Total direct and indirect greenhouse gas emissions by weight10 EN20 = NOx, SO2, and other significant air emissions by type and weight

n A T i o n A L

Key Metric Metric 2008 2009 2010 2011 2012global Reporting

initiative (gRi) Reference

gRi Performance

indicators

a i r a n d e n e r g y M a n a g e M e n T

Air emissions

SO2 emissions (tonnes/yr) 214,047 228,448 197,334 178,618 173,059 Environment EN20 10

SO2 intensity (tonnes per thousand m3 OE of production) 0.68 0.72 0.63 0.56 0.55 Environment EN20 10

NOx emissions (tonnes/yr) 286,555 299,852 283,407 265,948 255,144 Environment EN20 10

NOx intensity (tonnes per thousand m3 OE of production) 0.97 0.93 0.90 0.84 0.80 Environment EN20 10

Greenhouse gas (GHG) emissions

Total CO2 equivalent emissions (tonnes/yr) 90,607,676 98,826,706 102,399,512 102,442,702 109,815,779 Environment EN16 9

Tonnes GHG emitted per m3 OE of production 0.28 0.31 0.32 0.32 0.34 Environment EN16 9

35www.capp.ca/rce

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a b o u T T H e c a n a d i a n a s s o c i a T i o n o f

P e T r o l e u M P r o d u c e r s

the Canadian association of Petroleum Producers (CaPP) represents companies, large and small,

that explore for, develop and produce natural gas and crude oil throughout Canada. CaPP’s member

companies produce about 90 per cent of Canada’s natural gas and crude oil production. CaPP’s

associate members provide a wide range of services that support the upstream crude oil and natural

gas industry. together, CaPP's members and associate members are an important part of a national

industry with revenues of about $100 billion a year.

CaPP's mission is to enhance the economic sustainability of the Canadian upstream petroleum

industry in a safe and environmentally and socially responsible manner, through constructive

engagement and communication with governments, the public and stakeholders in the communities

in which we operate.

Place FSC logo hereENVIRONMENTAL BENEFITS STATEMENT

The savings below are achieved when post-consumer recycled fiber is used in place of virgin fiber. This report uses 910 kilograms of paper which has a post-consumer recycled content of 100 per cent. By using the environmentally friendly paper, in a print run of 4,000 copies, CAPP contributing to saving the following resources:

Trees Water-borne Waste Wastewater Solid Waste Greenhouse Gases Energy19 preserved 25 kilograms not created 30,975 litres flow saved 411 kilograms not generated 809 kilograms prevented 13,644,540 BTUs not consumed

Calculated based on data research by Environmental Defense Fund. Printed in Canada.