Environment We operate in an industry that affects the land, air, and water. Extracting fossil fuels requires the use of large machinery and the building of infrastructure in previously undeveloped areas, and often disturbs wildlife and vegetation. Our processes release emissions such as greenhouse gases and sulphur dioxide into the atmosphere. We use water and other resources during operations. Since ARC is made up of people who have a vested interest in keeping our environment safe and healthy for future generations, we strive to minimize environmental impacts during our operations to the extent reasonably and economically feasible. Once we are finished working in an area, we reduce our environmental footprint through reclamation activities. Our commitment to being a leader in our industry means proactively meeting or exceeding regulations to protect the environment and working with a cooperative spirit with public agencies in this regard. Through our participation in public reporting initiatives such as the Canadian Association of Petroleum Producer’s Stewardship Initiative, the Canadian GHG Challenge Registry, and the Carbon Disclosure Project, we gain access to information on best practices by others and can make continual improvements to our programs. A leading ethical fund company issued a report in 2007 where it ranked all energy companies on their environmental disclosure. ARC was the only trust that made it in the top ten rankings, amongst some of the leading energy companies in Canada. In 2007, ARC was included in the Jantzi Social Index in recognition for our commitment to the environment, community involvement, employee relations, human rights and corporate governance. Sustainable environmental practices are very much front and center in the news. Companies are encouraged by various advocacy and investor groups to take action. We are one of the few oil and gas operators who have a cash funded abandonment and reclamation fund. ARC actually has two reclamation funds – an unrestricted fund that is used for most of ARC’s reclamation projects and a restricted fund that is specifically targeted for reclamation activities in our Redwater field in Alberta. This field is important to us as it will form a basis for future greenhouse gas management projects, however, when ARC purchased Redwater, we assumed substantial reclamation obligations. Each quarter we withhold a portion of cash flow and fund ARC’s two reclamation funds. In 2007, we contributed $12 million into the funds. Our reclamation funds ensure that future stakeholders are not left carrying the entire financial burden of reclamation. An area of interest to ARC is carbon dioxide (CO2) injection into mature reservoirs. This process has been around for over 30 years and is used as a means to recover additional resources. As an added benefit, this process allows CO2 that would normally be emitted into the atmosphere to be safely sequestered below the ground. With Redwater, ARC has one of Canada’s largest fields that may be suitable for sequestering unwanted CO2 from large emitters such as upgraders and refineries. Additionally, this practice helps to extract incremental oil from mature fields, making more efficient use of already developed fields. It will be a few more years before we have commercially viable CO2 projects in Alberta. It will take legislation, and cooperation between emitters and end-users of CO2 before the required infrastructure is in place for larger scale projects. We are conducting a CO2 enhanced oil recovery pilot project at Redwater in 2008 to determine the commercial viability of a full scale CO2 injection project.
Health and Safety Protecting the health and safety of employees, contractors, and the public is paramount. ARC spends a significant amount of time on its health and safety programs. Whenever ARC purchases new properties, health and safety obligations are key considerations. Our health and safety programs are proactive and include educating our employees and contractors in safe working practices. Maintaining a strong health and safety record is challenging in today’s environment – especially on the contractor side – with increasing activity levels in the industry and much of the workforce less experienced than in the past. In spite of these challenges, ARC has consistently lowered our Lost Time Injury frequency to a level better than the industry average. We track and strive to improve our recordable injuries as a leading indicator of possible lost time accidents, and have initiated reporting near-misses so that we have a high level of awareness as to what activities could potentially result in injury. With no lost time accidents for employees in eleven of our twelve years of operations, we take pride in our performance, but every injury, no matter how minor, results in action.