Section 1 - Project Introduction - Pengrowth Energy Corp Files/03 Section 1...Pengrowth Lindbergh SAGD Project Section 1 – Project Introduction December 2011 Page 1-i ... the bitumen

Section 1 Project Introduction

Pengrowth Lindbergh SAGD Project Section 1 – Project Introduction

December 2011 Page 1-i

TABLE OF CONTENTS

Page

1 PROJECT INTRODUCTION ............................................................................................. 1

1.1 PROJECT BACKGROUND .................................................................................................. 2

1.2 PROJECT PROPONENT ..................................................................................................... 3

1.3 PROJECT OVERVIEW ....................................................................................................... 4

1.4 PROJECT REGULATORY APPROVAL PROCESS ................................................................ 4

1.4.1 Existing Approvals ................................................................................................ 4

1.4.2 Application Approvals .......................................................................................... 5

1.4.3 Additional Approvals Associated with the Application .................................... 5

1.5 APPLICATION GUIDE AND DESCRIPTION ........................................................................ 6

1.6 REGIONAL SETTING ......................................................................................................... 6

1.7 DEVELOPMENT PLAN....................................................................................................... 7

1.7.1 Development Schedule .......................................................................................... 7

1.7.2 Project Development Area ................................................................................... 7

1.8 PUBLIC CONSULTATION PROGRAM ................................................................................ 7

1.9 ENVIRONMENT HEALTH AND SAFETY PROGRAM .......................................................... 8

List of Tables

Page Table 1.0-1 Summary of Project Components ........................................................................... 1 Table 1.7-1 Project Development Schedule ............................................................................... 7

List of Figures

Figure 1.1-1 Project Location

Figure 1.1-2 Pengrowth Oil Sands Leases and Regional Development

Figure 1.1-3 Resource Development Area and Disturbance Footprint

Figure 1.1-4 Initial Project Development

Figure 1.7-1 Topography in the Resource Development Area


December 2011 Page 1-1

1 PROJECT INTRODUCTION Pengrowth Energy Corporation (Pengrowth) received approval for the Lindbergh SAGD Pilot Project (Pilot Project) in July 2011 (Approval #6410H). The Pilot Project is currently under construction and is expected to commence operations in Q1 2012. Pengrowth is filing this application as an amendment of Scheme Approval #6410H to expand the capacity of the Project. The proposed Lindbergh SAGD Project (the Project) is designed for an annual average production rate of 1,987 m3/d.

The Project includes installation/modifications of the following:

three multi-well well pad locations with a total of 23 new horizontal well pairs;

construction of a new Central Processing Facility (CPF) including water recycling technology and cogeneration facilities;

connection of the well pads to the CPF with above ground pipelines, roads, and power distribution lines;

fuel gas line tied into a third party gas distribution system;

overhead power line tied into a nearby ATCO power sub-station;

connection of the pilot wells to the CPF and suspension of Pilot Plant operations;

source water pipeline from the Pilot source water pond to the CPF; and

expansion of both the Project Area and the Resource Development Area.

The various components of the Project are listed in Table 1.0-1.

Table 1.0-1 Summary of Project Components

Project Component Area (ha)

Central Processing Facility 24.1

Well Pad D02 4.0

Well Pad D03 3.8

Well Pad D04 4.7

Well Pad D05 4.3

Construction Camp 10.1

Operations Camp 3.2

Supervisor’s Camp 0.8

Camp Access 0.2

Remote Sump 1 4.7

Remote Sump 2 4.9

Borrow Pit 1 1.3



Table 1.0-1 Summary of Project Components

Project Component Area (ha)

Borrow Pit 2 5.9

Borrow Pit 3 17.0

Borrow Pit 4 6.8

Soil Storage 20.8

Access/Pipe Corridor 29.9

Source Water 2.3

Pipeline Re-routing 1.1

Total 149.8

Pengrowth has actively engaged stakeholders to explain the Project and to understand their concerns. An updated summary of Stakeholder Consultation conducted to date is included as part of this application.

1.1 PROJECT BACKGROUND

In 2004, Pengrowth Corporation (Pengrowth) acquired the Lindbergh leases from Murphy Oil Company Limited (Murphy). The Pengrowth Lindbergh Field lands are located within the following mineral leases: 0727288080033, 072728808A033, 0757596090625, and 0757598120181. These mineral leases comprise approximately 8,320 hectares (ha) and are situated approximately 22 km southeast of Bonnyville, Alberta (Figures 1.1-1 and 1.1-2).

Murphy operated the field as an Enhanced Oil Recovery (EOR) project using the cyclic steam stimulation (CSS) process throughout most of the 1980’s and the early 1990’s. Pengrowth is currently upgrading the existing facilities and drilling two horizontal SAGD well pairs for a pilot-scale Steam Assisted Gravity Drainage (SAGD) performance test in the Lloydminster Formation.

Pengrowth has identified a Project Area and a Resource Development Area (RDA) for the Lindbergh SAGD Project (Figure 1.1-3). The Project Area is the larger resource area that will support all stages of development for the entire 25 year life of the project and encompasses nine sections of land. The RDA contains the bitumen resources required for the initial stages of SAGD development and includes five sections of land. The Project Area and RDA are shown on Figure 1.1-3 and are as follows:

Project Area:

Sections 30 and 31, Township 58, Range 4, W4M; and Sections 12, 13, E ½ 14, 23, 24, 25, E ½ 26 and 36, Township 58, Range 5, W4M.



Resource Development Area:

Sections 13, E ½ 14, 23, 24, 25 and E ½ 26, Township 58, Range 5, W4M.

Pengrowth has identified the location and trajectories of the first four well pads with up to 31 horizontal well pairs (Figure 1.1-4). The initial development will utilize three of these pad locations with the fourth pad as a contingent. Data from the ongoing delineation drilling program will be used to verify the initial three well pad selections and to locate future pads within the RDA.

1.2 PROJECT PROPONENT

Pengrowth is a publically traded Canadian oil and gas exploration and production company based in Calgary, Alberta. Pengrowth operates numerous oil and gas properties that span the Western Canadian Sedimentary Basin in Alberta, British Columbia, and Saskatchewan, with production exceeding 70,000 barrels of oil equivalent per day (boed).

Pengrowth's property portfolio contains some of the highest quality assets in Canada's energy sector with an average reserve life index of approximately ten years on a proved plus probable basis. Pengrowth's strong suite of conventional assets (approximately 50% natural gas and 50% crude liquids) is balanced by an expanding inventory of unconventional resources including coalbed methane and oilsands interests.

Pengrowth owns a 100% working interest in the 8,320 ha of oilsands mineral leases in the Lindbergh field.

The name and address of the applicant for the Project is:

Pengrowth Energy Corporation

2100, 222 3rd Avenue SW

Calgary, Alberta T2P 0B2

Correspondence concerning this application should be directed to the above address to the attention of:

Steve De Maio, Vice President, In Situ Oil Development and Operations

Phone: (403) 233-0224

Fax: (403) 265-6251

Email: [email protected]



1.3 PROJECT OVERVIEW

The planned facilities Pengrowth is proposing for the Lindbergh SAGD Project include a number of wells pads and associated infrastructure such as well pairs, roads, above ground gathering and distribution systems, power lines, and a Central Processing Facility (CPF). In addition, existing infrastructure such as the North Saskatchewan River intake, pump station, source water pond at the pilot plant, and pipeline will utilized for the SAGD Project. A raw water pipeline from the source water pond to the CPF will be installed and buried. Dual buried water disposal pipelines from the CPF to the existing water disposal well infrastructure will also be installed. A gas pipeline will be tied into a third party gas distribution system and an overhead power line will be installed from the nearest sub-station to the CPF. A cogeneration unit will be constructed as part of the CPF to provide power for local use in the plant and wells.

Raw water and produced water are treated at the CPF and re-used to generate steam which is sent to each of the well pads via above ground pipelines for injection into the individual well pairs. Produced fluids (bitumen, water, gas) are transported from the well pads to the CPF via above ground pipelines. The bitumen, water and gas are separated at the CPF. The produced gas is burned in the steam generators, the bitumen is blended and trucked to a marketing point, and the water is recycled.

The Lindbergh SAGD Project will produce a maximum annualized bitumen rate of 1,987 m3/d (12,500 bpd) over an expected project life of 25 years. During the life of the Project there will be 60 to 65 well pairs drilled from approximately eight to nine well pads. This Project is expected to produce approximately 17.0 MMm3 (107 MMbbls) of bitumen. The cumulative steam to oil ratio (CSOR) for the Project is expected to be 3.62.

1.4 PROJECT REGULATORY APPROVAL PROCESS

1.4.1 EXISTING APPROVALS

The Lindbergh SAGD Pilot Project is currently operating under:

ERCB Approval No. 6410H;

EPEA Approval No. 1581-02-00;

Water Act Approval No. 29768-00-00, as amended; and

ERCB Water Disposal No. 4312 and 5565.

Copies of these approvals are provided in Appendix 1.



1.4.2 APPLICATION APPROVALS

The approval application package submitted hereby is for the amendment of ERCB Approval No. 6410H in accordance with ERCB Directive 023 requirements. Pengrowth is also applying for an amendment of EPEA Approval No. 1581-02-00.

ERCB Approval

approval to construct and operate the Project pursuant to Sections 10 and 11 of the Oil Sands Conservation Act and Sections 3 and 33 of the Oil Sands Conservation Regulation; and

approval to construct and operate a distribution and gathering pipeline system within the Project development area pursuant to Part 4 of the Pipeline Act.

AENV Approval

approval, pursuant to Part 2, Division 2 and Section 66 of the Alberta Environmental Protection and Enhancement Act, to construct and operate the Project including facilities to recover and treat bitumen and processed water;

approval, pursuant to Part 2, Division 2 and Section 66 of the Alberta Environmental Protection and Enhancement Act, to construct and operate the cogeneration facility; and

conservation and reclamation approval, as required under the Conservation and Reclamation Regulations, to develop, operate and reclaim the central processing facility of the Project.

1.4.3 ADDITIONAL APPROVALS ASSOCIATED WITH THE APPLICATION

Pengrowth will file separate applications for those parts of the Project that are legislated under various other statutes. Provincial application and approval requirements applicable to the Project which will be submitted under separate cover are:

surface rights requirements pursuant to the Public Lands Act (i.e., access road, natural gas pipeline, water pipeline);

site surface disturbance clearance pursuant to the Historical Resources Act;

production and injection well drilling licenses issued pursuant to the Oil and Gas Conservation Act;

installation of a natural gas pipeline from third party facility to the CPF, pursuant to the Pipeline Act;

Development Permits pursuant to the Municipal Government Act, from the County of St. Paul for construction and operation of the Project and related infrastructure;



cogeneration facility approval as per Part 2 Section 11 of the Hydro and Electric Energy Act to be filed with the Alberta Utilities Commission; and

electrical power interconnections issued pursuant to the Electrical Utilities Act.

1.5 APPLICATION GUIDE AND DESCRIPTION

This application for the Project is found in one volume consisting of the following components:

Section 1 – Project Introduction

Section 2 – Project Description

Section 3 – Stakeholder Consultation

Section 4 – Environmental Setting

Section 5 – Conceptual Conservation and Reclamation Plan

Appendix 1 – Existing Approvals

Appendix 2 – Caprock Analysis

Appendix 3 – Consultation

Appendix 4 – Air Quality Assessment

Appendix 5 – Noise Assessment

Appendix 6 – References

Appendix 7 – Project Team

Appendix 8 – Acronyms and Glossary

1.6 REGIONAL SETTING

The Project is located approximately 22 km southeast of Bonnyville, Alberta, approximately 18 km north of Lindbergh, and approximately 19 km east of the town of Elk Point in the County of St. Paul in the eastern-central region of Alberta.

The Project is situated within the Alberta Plains region and the North Saskatchewan River drainage basin. This area is characterized by relatively high relief, ridged to hummocky and rolling terrain. An aerial photograph and topography of the Project Area is presented in Figure 1.7-1. The Project is located on Crown land with both anthropogenic and natural cover. Land surrounding the Project Area is used primarily for cattle grazing, although some hay cropping is also practiced. There are several oilfield producers and industrial service providers in the immediate vicinity of the site. The Project is located in a sparsely populated rural area southwest of Muriel Lake and northwest of Garnier Lake.



1.7 DEVELOPMENT PLAN

1.7.1 DEVELOPMENT SCHEDULE

Table 1.7-1 shows a development schedule for the Project.

Table 1.7-1 Project Development Schedule

Activity 2011 2012 2013 2014

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Project Viability Assessment

Baseline Environmental Assessment

Engineering Support

Regulatory Submission

Regulatory Review

Regulatory Approval

Construction and Drilling

Commissioning and Initial Circulation

Conversion to Production

1.7.2 PROJECT DEVELOPMENT AREA

The Project development area is presented in Figure 1.1-3.

1.8 PUBLIC CONSULTATION PROGRAM

Pengrowth has had an ongoing dialogue with local stakeholders since 2010 regarding the environmental and social aspects of SAGD development in the Lindbergh Area. Specific discussion on the Project began in January of 2011.

Stakeholder groups consulted to date for the Project have included regulatory review agencies, persons or companies having interests in the land on or near the Project, Aboriginal communities and First Nations, regional and municipal governments, regional service providers, and special interest groups. During the Project’s planning stages, opportunities are provided for questions and concerns to be raised by stakeholders so that they can be addressed in a constructive manner. Resolution of issues has been incorporated, where possible, into the Project’s development plans. Following project approval, Pengrowth will continue to work in an open and inclusive manner with all communities and stakeholders impacted by its operations.



Details of Pengrowth’s public consultation activities for the Project are provided in Section 3.0.

1.9 ENVIRONMENT HEALTH AND SAFETY PROGRAM

Pengrowth will provide responsible management for the Project by ensuring that health, safety, and environmental policies and procedures are established and implemented. Pengrowth has a formal documented corporate EH&S Program, which will be enhanced to incorporate a site specific program for the Project. All Pengrowth employees are trained and familiar with all company policies and procedures. Pengrowth employees, contractors and consultants will receive proper instructions on Pengrowth standards and procedures through on-site training programs in accordance with OH&S guidelines and requirements. By following this approach, the Project will be developed and operated in a safe, professional and responsible manner.

Details of Pengrowth’s environment, health and safety program are provided in Section 2.9.


December 2011

FIGURES

LindberghProject Area

Cold LakeI.R. 149B

Cold LakeI.R. 149

Moose LakeProv. Park

River IntakeStation

10-23-056-05 W4M

Beaver R iver

Muriel Creek

Sand River

Nor

th

Saskatchewan Ri ver

FrogLake

ColdLake

MurielLake

MooseLake

SinkingLake

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55

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41

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28

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41

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28

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55

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28

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��897

��

��659

��882

��892

��660

��897

Holyoke

Ardmore

Glendon

La Corey

Elk Point

Cold Lake

Beaverdam

Fort Kent

Bonnyville

Grand Centre

Happy Hollow

Northern Valley

St. Paul

Therian

St. Vincent

Lindbergh

R 2 W4M

T62

T61

T59

T60

T58

T57

T56

T63

R 4R 5 R 3R 6R 7

T64

R8

Whitney LakesProv. Park

KehewinI.R. 123

UnipouheosI.R. 121

PuskiakiweninI.R. 122

I

REF: Geobase, 2010.

0 8 164

Kilometres

Legend

Project Area

Water Pipeline

1.1-1

PS/SL

KK

Oct 20/11

11-032

Project Location

Lindbergh SAGD Project

PROJECT:

DATE:

CHECKED:

DRAWN: FIGURE:

PROJECT:

TITLE:

MapArea

Fort McMurray

Calgary

Edmonton

GarnierLake

BulletLake

R 5 R 4 W4M

R 5 R 4 W4M

MichelLake

T 59

T 58

T 58

T 57

Muriel Lake

CPF

BorrowPit 3

Borrow Pit 4

ConstructionCamp

Borrow Pit 2

Well Pad D04

Well Pad D05

Well Pad D02

Well Pad D03

Remote Sump 2

Remote Sump 1

Operations Camp

Borrow Pit 1

Supervisor's Camp

63

5

8 8

4

4 41

3

9

64

5

9

2

9

5 2 1

87

97

29

24

34

16

30

32

28 28

20 19

15

17

22

18

13

25

32

2121 23

14

14

27

13

10

17

20

1210

31363533

26

15

1211

16

11

18 16

33

29

17 16

1.1-2

PS

KK

Dec 15/11

11-032

Pengrowth Oil Sands Leasesand Regional Development


PROJECT:

DATE:

CHECKED:

DRAWN: FIGURE:

PROJECT:

TITLE:

REF: EPEA -Footprint-REV 5.dwg, Oct. 27, 2011; NHC (hydrology), 2011;Global Oilfield Surveys Inc., 10-0500M01.dwg.

I

0 1 2 km

Legend

Pengrowth Leases

Project Area

Resource Development Area

Surface Dispositions

GarnierLake

R 5 R 4 W4M

T 58

D01D01

CPF

BorrowPit 3

Well Pad D03

Well Pad D02

Well Pad D04

BorrowPit 4

RemoteSump 2

Remote Sump 1

ConstructionCamp

OperationsCamp

Well Pad D05

BorrowPit 2

Borrow Pit 1Supervisor's

Camp

7

24

34

30

1922

18

25

23

14

27

13

10

313635

26

15

1211

1.1-3

SL

KK

Nov 28/11

11-032

Resource Development Area andDisturbance Footprint


PROJECT:

DATE:

CHECKED:

DRAWN: FIGURE:

PROJECT:

TITLE:

Legend

Project Area


Pilot Footprint

Streams with Defined Channels

Drainages without Defined Channels

Waterbody

Proposed Footprint

CPF

Well Pad

Construction Camp

Operations Camp

Supervisor's Camp & Access

Remote Sump

Borrow Pit

Soil Storage

Access/Pipe Corridor

Source Water

Pipeline Re-routing

REF: EPEA -Footprint-REV 5.dwg, Oct. 27, 2011; NHC (hydrology), 2011.

I

0 0.7 1.4 km

1:35,000Scale

Facility Count Hectares

CPF 1 24.1

Well Pad 1 1 4.0

Well Pad 2 1 3.8

Well Pad 3 1 4.7

Well Pad 4 1 4.3

Construction Camp 1 10.1

Operations Camp 1 3.2

Supervisor's Camp 1 0.8

Camp Access 1 0.2

Remote Sump 1 1 4.7

Remote Sump 2 1 4.9

Borrow Pit 1 1 1.3

Borrow Pit 2 1 5.9

Borrow Pit 3 1 17.0

Borrow Pit 4 1 6.8

Soil Storage 9 20.8

Access/Pipe Corridor 1 29.9

Source Water 3 2.3

Pipeline Re-routing 2 1.1

Total: 30 149.8

D02

D03

D04

D05

GarnierLake

R 5 R 4 W4M

T 58

CPF

BorrowPit 3

Well Pad D03

Well Pad D02

Well Pad D04

BorrowPit 4

RemoteSump 2

Remote Sump 1

ConstructionCamp

OperationsCamp

Well Pad D05

BorrowPit 2

Borrow Pit 1Supervisor's

Camp

7

24

34

30

1922

18

25

23

14

27

13

10

313635

26

15

1211

1.1-4

SL

KK

Dec 15/11

11-032

Initial Project Development


PROJECT:

DATE:

CHECKED:

DRAWN: FIGURE:

PROJECT:

TITLE:

Legend

Project Area


Pilot Footprint



Waterbody

Proposed Footprint

CPF

Well Pad

Construction Camp

Operations Camp


Remote Sump

Borrow Pit

Soil Storage


Source Water

Pipeline Re-routing

Trajectory


I

0 0.7 1.4 km

1:35,000Scale

Facility Count Hectares

CPF 1 24.1

Well Pad 1 1 4.0

Well Pad 2 1 3.8

Well Pad 3 1 4.7

Well Pad 4 1 4.3

Construction Camp 1 10.1

Operations Camp 1 3.2

Supervisor's Camp 1 0.8

Camp Access 1 0.2

Remote Sump 1 1 4.7

Remote Sump 2 1 4.9

Borrow Pit 1 1 1.3

Borrow Pit 2 1 5.9

Borrow Pit 3 1 17.0

Borrow Pit 4 1 6.8

Soil Storage 9 20.8

Access/Pipe Corridor 1 29.9

Source Water 3 2.3

Pipeline Re-routing 2 1.1

Total: 30 149.8

D02

D03

D04

D05

65

5

66

0

650

665

645

635

62

0

640

630

625

61

56

05

61

0

670

675

680

685

69

0

695

60

0

700

59

5

590

705

710

655

600

645

680

665

670

665

605

670

665

60

5

670

645

655

675

600

660

650

705

65

5

675

670

610

695

665

655

65

5

690

605

660

680

605

61

0

600

600

605

660

690

670

695

650

650

610

700

66

0

660

670

655

665

680

66

5

60

5705

670

660

655

670

64

5

6856

50

665

67

0

65

5

610

645

655

645

660

660

690

665

67

0

645

655

665

660

660

665

66

0

660

655

675

66

5

60

5

660

685

65

0

610

685

675

645

66

0

690

660

660

665

665

660

665

665

600

645

650

695

695

640

670

600

610

645

600

595

645

665

660

655

680

660

660

24

25

23

14 13

26

1.7-1

SL

KK

Nov 28/11

11-032

Topography in ResourceDevelopment Area


PROJECT:

DATE:

CHECKED:

DRAWN: FIGURE:

PROJECT:

TITLE:

Legend

Project Area


Pilot Footprint

Contour (5m interval)



Waterbody

Proposed Footprint

CPF

Well Pad

Construction Camp

Operations Camp


Remote Sump

Borrow Pit

Soil Storage


Source Water

Pipeline Re-routing


I

0 0.5 1 km

1:22,000Scale

Documents

Section 1 - Project Introduction - Pengrowth Energy Corp Files/03 Section 1...Pengrowth Lindbergh SAGD Project Section 1 – Project Introduction December 2011 Page 1-i ... the bitumen