November 20, 2006

EUB attaches environment-related conditions to approval of Suncor's Steepbank, Voyageur projects

Suncor Energy's application to build a third bitumen upgrading facility (the Voyageur upgrader) has been given conditional approval by the Alberta Energy and Utilities Board (EUB), along with the company's application for the Steepbank mine extension. The EUB decision includes seven conditions to be met by Suncor relating to environmental and technical aspects of the project. The conditions include increasing tailings efficiency by 2009, providing the EUB with detailed information related to reclamation of tailings ponds, and submitting plans to incorporate additional tailings techniques beginning in 2007.

The Voyageur upgrader is the centerpiece in Suncor's plans to expand oil sands production to more than half a million barrels per day (bpd) between 2010 and 2012, while the Steepbank mine extension will be a key element in supplying bitumen to future upgrading operations.

The two applications constituted "the most complex regulatory filing in Suncor's history, involving thousands of hours of consultation with local, regional and provincial stakeholders during project planning," said Steve Williams, Suncor's executive vice-president, oil sands. "We worked very closely with stakeholders on this application and the conditional approval received today reflects those efforts. We believe we will be able to meet the conditions," he added.

The EUB decision addresses matters relating to the Suncor project including; project need, social and economic effects, public consultation, resource recovery, tailings management, air, groundwater, surface water, health effects, traditional land use, regional environmental initiatives, technology, and liability management. The Board has also concluded that Alberta Environment is the appropriate regulatory authority for managing greenhouse gas (GHG) emissions from the Voyageur project.

Three conditions of the approval deal specifically with managing tailings, the mixture of water, clay, sand and residual bitumen produced during the extraction process. The EUB has directed Suncor not to mined oil sands from the North Steepbank mine extension until: (a) the company can achieve a consolidated tailings (CT) efficiency of 76% on a quarterly basis, no later than the first quarter of 2009; (b) Pond 8 tailings storage is available for the deposition of CT; and(c) commercial CT production from the Millenium extraction plant has begun.

The company will also be required to provide detailed information to the Board about the ability of the CT stored in its tailings pond to provide a reclamation surface capable of supporting traffic. Beginning in 2007, Suncor must also include in its annual tailings management plan detailed plans for incorporating supplementary tailings techniques to reduce its inventory of mature fine tailings (MFT).

Other terms of the approval require Suncor to:

*meet a lower diluent loss limit of 4.0 volumes of diluent per thousand volumes of bitumen, effective November 1, 2008; and

*submit for EUB approval detailed geotechnical designs for the in-pit and the external overburden disposal structures along the Steepbank River at least six months before field preparation begins in these areas.

Where appropriate, Suncor's implementation of the conditions will be integrated into detailed engineering and site preparation work for both projects, which is expected to begin in early 2007.

In its approval, the EUB also notes the Suncor project will not require additional water beyond its existing allocation. It has, however, expressed concern about the added stress of burgeoning oil sands development on the existing public infrastructure in the Wood Buffalo region. Additional infrastructure investment will be needed to meet the continued growth in service requirements, and there is only a short window of opportunity to make these investments in parallel with continued oil sands development, says the Board.

Consequently, the EUB has made two recommendations to the Alberta government in its decision: first, that co-ordinated action be taken at all levels of government to ensure that the Regional Municipality of Wood Buffalo has the ability to service the anticipated level of sustained growth in the region; and second, that the provincial government continue to work with the Northern Lights Health Region (NLHR) to address the lack of land, infrastructure, and resources currently facing the NLHR in Fort McMurray.

The EUB decision follows a public hearing held in Fort McMurray from July 5 to 20, 2006. The decision document may be viewed on the EUB Web site,

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