October 1, 2007

Suncor issued Alberta Environment, EUB orders for exceeding H2S emission limits

Alberta Environment has ordered Suncor Energy to immediately minimize hydrogen sulfide (H2S) emissions from the company's Firebag in situ enhanced oil sands recovery site near Fort McMurray. The environmental enforcement order was issued as a result of a joint inspection of the site in late August by Alberta Environment and the Alberta Energy and Utilities Board after Suncor notified the EUB that it was in non-compliance.

The inspection revealed numerous contraventions of Alberta Environment approval conditions, including unauthorized venting of H2S and a lack of pollution control equipment and proper emissions reporting.

Under the terms of the order, Suncor was to have drafted an interim action plan by September 28, outlining the immediate actions it will take to minimize H2S emissions until compliance is achieved. By October 22, 2007, Suncor must also submit a comprehensive plan detailing longer-term steps the company will take to restore and maintain compliance with Alberta Environment requirements. The long-term plan must specifically address the contraventions noted during the August inspection.

This includes updating and replacing equipment, the development and implementation of an H2S monitoring and reporting action plan, and a modeling study of current H2S emissions, complete with a worst-case consequence analysis for on- and off-site impacts.

Suncor is further required to submit monthly written progress reports summarizing the steps taken to comply with the order. The company must also commission a third-party audit of the environmental management system for the site.

The enforcement order was followed up by an order from the Alberta Energy and Utilities Board (EUB), which found Suncor to be in non-compliance with EUB requirements during the August inspection. The Board found that continuing venting and flaring of natural gas containing H2S exceeded allowable levels set out in Alberta's ambient air quality objectives for H2S.

The EUB views this as a serious matter of non-compliance and has ordered Suncor to implement measures immediately to correct the situation. Until Firebag is in compliance with EUB requirements, no operational enhancements to the project will be permitted.

In many cases, the Board will shut down a facility for this type of non-compliance. In the Firebag case, however, due to the nature of the resource and the means by which it is being recovered, shutting down the facility could damage the formation and potentially reduce the recoverability of the oil sands deposit.

Suncor subsequently reported that it is taking steps to comply with the Alberta Environment and EUB orders. The company said the long-term plan due by October 22 will include plans to construct vapour recovery units and/or emission abatement equipment. These future improvements to control emissions are aligned with work already underway at the site. Suncor is working on four separate projects to address venting issues and has introduced process control changes to mitigate emissions, in addition to undertaking comprehensive air monitoring. The work to control emissions at the Firebag site is expected to occur without affecting crude oil production.

"We take this situation very seriously and are committed to getting it resolved as quickly as possible. We're focused on generating safe, reliable production and that includes resolving issues that impact air quality," said Kirk Bailey, Suncor's executive vice-president, oil sands.

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