community matters nexenâ€™s report to the community october 2013
About This Report Welcome to Community Matters, Nexen’s Report to the Community. Through many forms of communication – ads, events, community support, a cup of coffee in the Anzac office – we work hard to make sure the lines of communication are open. The last time Nexen produced a comprehensive report to the community it was 2006 and we were embarking on a bold new adventure: launching our Long Lake facility and associated assets. Since that time, our operations have grown – and so has our presence in northeastern Alberta. We have become part of the local fabric. We support a variety of community events, programs and initiatives. We promote local business development. Our employees live and volunteer in local communities. We produced this, our 2013 Report to the Community, to give you an update on our activities and achievements since we started our operations at Long Lake. It’s a story we’re proud of and we’re happy to share it with you. In particular, we’ll focus on our environmental commitments and how we’re taking action on them, as well as our community investment commitments and some of the milestones we’ve achieved. Even though it’s been a while since our last formal report, we are always in reach. This report will also introduce you to some of our team members and there’s a handy list of key contact names too. Finally, we’ll give you an overview of our recent expansion projects in the Kinosis area and our resource development and exploration plans in the oil sands region. Nexen is developing a bountiful resource with a long lifespan and tremendous growth potential. To be successful in this development, we have always believed it’s essential to build and maintain mutually beneficial relationships within the communities where we do business. Nowhere is that more true than the region around our oil sands development. We are touching many lives in ways we believe are positive.
Long Lake operations milestones
April 2007 first steam injected at commercial-scale plant
september 2007 first bitumen from SAGD wells received at Long Lake’s central processing facility
first bitumen from Long Lake delivered to Market
first production of premium synthetic crude (PSC™) from upgrader; Nexen gains sole operatorship of Long Lake facility
regulators approved first phase of Kinosis SAGD development
five million hours worked with no lost-time incident (Long Lake Operations)
first full turnaround (Planned maintenance) on plant & SAGD facilities
november 2008 official grand opening of Long Lake facility
regulators approved Pads 14 & 15 construction
Late summer 2012
october 2013 first steam injection at pads 14 & 15
Throughout the life of our operations, we are committed to: • Understanding and addressing stakeholder concerns • Enhancing local employment and business development • Investing in community initiatives to build capacity and self-sufficiency • Developing our projects in a safe and environmentally responsible manner
This is Nexen today
Nexen and the community
Nexen and the environment
on the horizon
This is Nexen Today
3,200 * From all corporate sources
2012 production before royalties*
2012 Proved + probable reserves*
THOUSAND BARRELS OF OIL EQUIVALENT PER DAY (BOE/D)
overview: A global company Nexen Energy ULC is responsibly developing energy resources in some of the world’s most significant basins. A wholly–owned subsidiary of CNOOC Limited, Nexen’s approximately 3,200 employees operate under value-based principles of excellence, personal accountability, integrity and social and environmental responsibility. It’s about getting the job done, the right way. Nexen has three principal businesses: conventional oil and gas, oil sands, and shale gas.
Conventional oil and gas: safe, reliable offshore operations We have major positions in some of the world’s most significant conventional offshore basins – the UK North Sea, West Africa and the Gulf of Mexico. From Europe to Africa to North America, our conventional business forms the heart of our current production and cash flow.
Shale gas: vast resources The advancement of drilling technology has enabled the cost-effective recovery of shale gas – a game-changing resource for the world’s energy supply. Shale gas, which is found in abundance throughout many continents, is an affordable, clean–burning fuel.
Nexen is responsibly developing energy resources in some of the world’s most significant basins.
We recognized the potential of shale gas early and in 2006 began acquiring large blocks of high-quality acreage in the Horn River Basin located in northeast British Columbia — one of the most prospective gas fields in North America. In addition, Nexen is bringing the operational and technical expertise we have acquired developing Canadian shale gas lands to new shale gas prospects in Colombia, South America.
Oil sands: responsibly developing Canada’s bounty Canada is home to the world’s third–largest hydrocarbon basin – the oil sands. This abundant, secure and long-term resource offers significant energy potential for Canadians and the world market. As much as 1.7 trillion barrels of oil is estimated to be contained in the oil sands, of which approximately 169 billion barrels can be recovered using today’s technology. The energy industry is focused on responsibly developing the oil sands. Today, growing production is supported by technological advances that are improving energy efficiency and reducing our impact on air, water and land. The oil sands are vast and represent a vital energy source that a growing economy and consumers demand. Oil sands development currently generates about 112,000 jobs across Canada, a number that’s expected to increase.
A Nexen employee stands on platform where bitumen flowlines lead back to the Long Lake integrated oil sands facility.
Our Oil Sands Business A major oil sands player As an early entrant in Canada’s oil sands, Nexen recognizes the long-term value of this abundant, secure and reliable energy source. More than a decade ago we began to build a significant land position in northeastern Alberta.
Long Lake Our Long Lake facility, which began producing bitumen in 2007, is an integrated steam-assisted gravity drainage (SAGD) and upgrading operation that uses proprietary OrCrude™ technology as well as hydrocracking and gasification, to produce premium synthetic crude (PSC™) oil.
Today, Nexen has an interest in more than 300,000 acres in the Athabasca region, with an estimated three to six billion barrels of contingent recoverable oil sands resource.
In 2012, Long Lake production averaged 31,100 barrels of bitumen per day (bbl/d) from 108 well pairs on 13 pads; additional pads are planned to start production in 2013. Total production capacity of the facility is 72,000 barrels of bitumen per day. Work is underway at Long Lake and Kinosis (located about 12 km south of Long Lake) to increase bitumen production and enable operation of the upgrader at full capacity. For more information about development at Long Lake and Kinosis, see the “On the Horizon” section of this report.
Syncrude Nexen has a 7.23% interest in Syncrude Canada’s oil sands mining and upgrading facility, located about 40 kilometres north of Fort McMurray. The facility’s current production capacity is 350,000 bbls/d (25,000 bbls/d net to Nexen).
Hangingstone Nexen has a non-operating 25% working interest in this SAGD project, which is being developed by Japan Canada Oil Sands (JACOS). Hangingstone is located about 50 kilometres southwest of Fort McMurray. Initial production at Hangingstone is expected to average about 20,000 bbls/d of bitumen (about 5,000 bbls/d net to Nexen). Production start-up is expected to begin in the first half of 2016. For more information, go to www.nexeninc.com
A gasifier unit at Nexen’s Long Lake facility.
Nexen process operators do their inspection rounds at Long Lake’s SAGD well Pad 13.
Getting Oil from Sand The oil sands are located in three basins in Alberta – Athabasca, Cold Lake and Peace River. To date, the Athabasca basin is where the majority of oil sands projects have been developed. Oil sands are a naturally occurring mixture of sand, clay, minerals, water and bitumen. To process the heavy, extremely viscous bitumen into oil, it must first be separated from the water and sand. It is then upgraded before being used to produce fuels such as gasoline and diesel. There are two primary recovery methods for the oil sands: surface mining and in-situ.
In-situ recovery Steam-assisted gravity drainage (SAGD) is the most common in-situ recovery process. In-situ means “in place” – this approach allows access to oil sands deposits that are too deep to be reached through surface mining. In-situ development disturbs less land than oil sands mining, and does not require tailings ponds. Nexen’s Long Lake and Kinosis developments use in-situ recovery to produce bitumen.
UNDERSTANDING OIL SANDS TECHNOLOGY
Steam-assisted Gravity Drainage (SAGD)
Bitumen from Canada’s oil sands is recovered using two main methods: About 20% of the resource is close enough to the surface to be mined using large trucks and shovels.
The remaining 80% can only be accessed through in-situ operations, most commonly using steam-assisted gravity drainage (SAGD) technology, which injects steam into the reservoir to thin the bitumen before pumping it to the surface. A relatively new innovation, in-situ offers an important environmental benefit: in-situ projects typically disturb about 85% less land than mining.
oil sands leases
Fort McMurray 69
FORT MCMURRAY FIRST NATION
LITTLE HORSE Gregoire Lake (Willow Lake)
FORT MCMURRAY FIRST NATION
Athabasca Northern Railway
STONY COTTONWOOD 881
CHIPEWYAN PRAIRIE DENE FIRST NATION
Operated properties Non-operated properties
(Nexen has working interest in these areas, which may be developed in the future by other companies.)
Nexen’s Way: Our Corporate Values At Nexen, it’s not just what we do that matters – it’s how we get the job done. And the foundation of our growth strategy is the energy and expertise of our employees, who are committed to working with integrity and engaging our stakeholders. We’re proud of our record of safe, reliable and environmentally responsible energy development. That’s Nexen’s Way.
About CNOOC limited In February 2013, Nexen became a wholly–owned subsidiary of CNOOC Limited (China National Offshore Oil Corporation) – one of the world’s largest oil and natural gas exploration and production companies. CNOOC Limited is a state-owned enterprise of the Chinese government; however, approximately 35% of the company is held by private investors. CNOOC Limited lists on the Hong Kong, New York, and Toronto Stock Exchanges. With its acquisition of Nexen, the largest such acquisition to date between Chinese and Canadian companies, CNOOC Limited made a number of commitments relating to maintaining and enhancing Nexen’s existing environmental, community and social responsibility initiatives.
our values • Protecting people and the environment – We each play a role in protecting the safety and well-being of ourselves, our co-workers and the communities and environment in which we work. • Commitment to excellence – We drive for, and reward, high performance. We are passionate about delivering results and innovative in overcoming obstacles. • Accountability – We each know our responsibilities and are accountable for our decisions, behaviours and actions. We measure our results to validate our individual and shared ownership of Nexen’s successes and shortcomings. • Integrity – We conduct business in an ethical manner and build relationships based on collaboration, honesty and respect. • Courage – We’re not afraid to break from the pack. We have the confidence to speak up and make difficult decisions. We take informed risks based on facts to create value responsibly.
The control room at Nexen’s Long Lake facility is staffed by several operators at all times.
NEXEN AND THE COMMUNITY
Engaging with integrity is the cornerstone of our culture and a guiding value for our stakeholder engagement
meet our team At Nexen, how we work is as important as the results we deliver. We’re committed to partnering with community members and other stakeholders in the areas where we operate. We build long-term trust by sharing information, consulting with stakeholders about our business decisions and working collaboratively to understand their needs and expectations. To foster healthy, productive relationships with our stakeholders, in 2000 Nexen Oil Sands established a dedicated Community Consultation and Regulatory Affairs (CCRA) team. The team employs a variety of means to engage and communicate with our neighbours and stakeholders. We welcome visitors to our Anzac Community Office, host and participate in open houses, and provide information about our activities through ads and articles in community newsletters. Nexen is also proud to support and participate in cultural and community events and celebrations. “It’s important to have a team of people who not only work here but also live in the community, so they understand community concerns,” says Kris Geekie, Vice President CCRA. ”Our staff are accessible and knowledgeable. I’m really proud of them.” In addition, Nexen demonstrates respect for our stakeholders and Aboriginal communities through early, ongoing engagement and open dialogue. We strive to align the interests of our stakeholders with our values and business principles. We believe that all stakeholders have a legitimate right to know about Nexen’s planned and ongoing activities, and to be consulted on issues that affect you. We welcome – and actively encourage – your input. We seek to identify issues of concern to you, and work toward resolution. We’re here to help – we live here too, we are part of the community. Call us, we’ll listen.
Some of the friendly faces you’ll see in our Community Affairs Office in Anzac.
Profile: Stella Kreutzer Born and raised in Anzac, Stella Kreutzer is truly part of the community Stella Kreutzer is a master organizer. As Senior Administrator in Nexen’s Anzac office, she handles all of our annual giving in Wood Buffalo, organizes events, and helps out with consultation and local hiring. “The best thing about this job is working with the people in our community,” says Stella, who was born and raised in Anzac and is a member of the Willow Lake Métis. “There are so many groups doing so many things that really make a difference in the lives of the people who reside here. It’s great to be part of that and see our community grow and prosper.” Stella often helps individuals and groups with their applications for funding. While applications can be submitted online, many remote communities don’t have high speed internet so it’s easier for their representatives to just drop in and meet with Stella. “Sometimes I have to explain what funding we can – and can’t – provide to local groups,” she adds. “We have eligibility rules that guide our decisions.” When Nexen is a major sponsor of events, Stella will often sit on the event organizing committees. “I’m happy to do whatever is needed,” she says. “Pitching in is part of small town life and it’s part of Nexen’s philosophy.” Stella has been working in community relations at the Anzac office for 13 years. In September 2013, Stella Kreutzer received the McMurray Girl Empower Award. She has seen first-hand how oil sands development has changed her town. “Before 2005, there was no industrial development south of Fort McMurray,” she says. “The activity has been a boon to small communities like Anzac. We now have a recreation centre, grocery store, even a pizzeria. Schooling has also improved tremendously. When I grew up, the Anzac School only went as far as Grade 6. Now with the Bill Woodward School, which Nexen has supported from the beginning, my younger children have the opportunity to stay in Anzac for high school.” She adds, “We’re not the only company working here, it’s just that we are the visible one because we chose to have an office in Anzac. Honestly though, I wouldn’t have it any other way. We are part of the community.”
Wood buffalo leader takes on new role Cindy Amerongen joins Nexen’s stakeholder relations team In May 2013, Nexen welcomed Cindy Amerongen as our new Manager, Community Relations & Consultation. While she’s new to Nexen, Cindy is well known in Wood Buffalo from her distinguished 23-year career at Keyano College. For the past five years, she served as Vice President, Community Relations. “Cindy has had a storied career at Keyano and we’re proud to have her on our stakeholder relations team,” says Kris Geekie, Vice President, Community
Consultation and Regulatory Affairs. “Her experience working with communities in the region is unparalleled, her expertise in community affairs is top-notch, and she brings great enthusiasm and passion to everything she does. Cindy is taking on a vital role that demonstrates Nexen’s commitment to earning our social license in the areas that we work.” Cindy works out of the Anzac office as well as the Long Lake admin building and leads the stakeholder relations team. While working for an energy company is new to her, Cindy notes that she actually knows Nexen fairly well because the company has been a long-time supporter of Keyano College. “I’m excited by this opportunity,” she says, “because Nexen
takes such a proactive approach to building strong relationships with community members and other stakeholders, and giving back to communities in meaningful ways.”
Working with our Aboriginal neighbours Long-term engagement with indigenous peoples is an essential component of Nexen’s commitment to responsible energy development. While we’ve always focused on consultation and engagement, our new Indigenous Peoples Policy (approved in February 2013) formalizes how Nexen approaches our relationships with First Nations communities. We’re now in the process of developing Aboriginal Relations Guidelines, which focus on how we implement the policy. Together, the policy and guidelines define a clear and consistent standard for Aboriginal relations across our operations. “In the oil sands, we operate on or in close proximity to the legally recognized lands and traditional territories of indigenous peoples,” explains Neil Rutley, Senior Advisor, Community Relations. “We are committed to minimizing negative impacts of our existing and future development on these lands. We also emphasize the importance of building enduring and trusting relationships and bringing benefits back to the communities. The Aboriginal Relations Guidelines will provide guidance on how we do that.” For the oil sands region, one of the most challenging areas is capacity building. While Nexen wants to increase Aboriginal employment and employ more Aboriginal contractors, this can be difficult to do if they don’t have the required skills and qualifications. The conventional thinking has been to train people for specific jobs. However Nexen is looking at the bigger picture. “We need to start very early in schools and support programs that reinforce the benefits of education,” says Neil. “Capacity building is bigger than just filling jobs for our projects. The sustainability of Aboriginal communities depends on having a broad spectrum of jobs.” Nexen is also working diligently in Aboriginal business development. Our Canadian Local Contracting Policy embodies a “local first” approach to sharing the economic benefits of development with the people closest to our operations, which includes Aboriginal communities. “Aboriginal businesses can provide an array of services and that’s a resource pool we pull from when possible,” says Ron Sturgess, Economic Development Specialist. “If Aboriginal businesses meet the criteria, using local contractors is a win-win for our company and our neighbouring communities.” Ron works closely with the Northeastern Alberta Aboriginal Business Association (NAABA), a non-profit organization that promotes Aboriginal businesses. NAABA certifies that all full members have at least 51% Aboriginal ownership and are local to the Wood Buffalo region. Going forward, engagement will be more important than ever. “By engaging, not just consulting, we build stronger relationships with Aboriginal communities,” explains Kris Geekie, VP, Community Consultation and Regulatory Affairs, Calgary. “We recognize that our operations have impacts. With strong relationships and ongoing communication, we know where concerns over our impacts are and we can design mitigation strategies to minimize those impacts.”
Ron Sturgess and Neil Rutley.
Community Investment Giving back to the communities where we operate is a deeply rooted value at Nexen. We seek to improve the quality of life in communities where we live and work through investments that help build local capacity and self-sufficiency. Nexen’s ReachOut program helps support charitable organizations and employee volunteering. We believe local residents should have an opportunity to share in the economic benefits created by our developments in northeastern Alberta. We seek to provide employment, training and business opportunities on a competitive basis, to individuals and businesses in proximity to our development. Our giving priorities for the Oil Sands region are: • Education Excellence & Innovation – we support educational programs and projects that contribute to the development and growth of people within the community. • Celebrating Arts & Culture – we support events and organizations that contribute to the artistic and cultural strength of our communities. • Supporting Communities – we support programs and projects that promote the well-being of our communities. • Environmental Care – we support programs and projects that develop and enhance environmental stewardship, habitat protection and conservation, and related educational initiatives. To apply for funding or other support, go to: www.nexeninc.com/en/ Community/Giving/HowToApply.aspx
Each year, Nexen employees volunteer hundreds of hours in the community – including the annual Wood Buffalo Food Bank drive.
A gathering place: Nexen’s Anzac Community Office Fort McMurray is the largest community in the oil sands region of northern Alberta. Most of the oil sands industry’s business meetings and stakeholder consultation takes place in this city. But Nexen took a different approach in the early 2000s when we began developing the Long Lake oil sands facility. We made a deliberate decision to locate our community office in the hamlet of Anzac, 45 km southeast of Fort McMurray. Why? Because Anzac is the closest community to our Long Lake operations. It’s also central to the growing number of SAGD oil sands facilities that are operating or being built in the region. The office coordinates consultation, local business development and community investment for Nexen’s oil sands operations. Its location promotes more interaction in a convenient and accessible manner. Over the past decade, the role of Nexen’s community office has grown alongside the relationships it has helped cultivate. “We’re the only energy company with a local office in Anzac, which demonstrates our commitment to the community and our willingness to listen and engage our neighbours,” says Neil Rutley, an Anzac resident and a Senior Community Relations Advisor with Nexen. The Anzac office is central to Nexen’s business development and employment efforts in the area and is staffed with a full-time business development advisor in addition to community relations personnel. It also serves as a drop-off point for resumes and a resource for local contractors and businesses. Neil explains, “Having a local presence enables Nexen to ensure stakeholder and Aboriginal community views are heard and well considered before decisions are made that impact Anzac and the surrounding communities. The beauty of the office is that we are part of the local conversation and we can answer questions, clarify and address situations.”
Nexen Community Investment Milestones march 2007
2009 award recipients (L to R); Sage Mitchell, Tyrone Brass (standing in for his daughter Jordan) and Lisa Wipf.
Long Lake running track.
Stella Kreutzer presents the first Long Lake Innovation Award to Science Fair participant Mauricio Lopez.
Nexen announces the creation of four annual Education Awards in the amount of $1,000 each for students pursuing studies at the post-secondary level.
Nexen pledges $1.5 million to the Bill Woodward School in Anzac, along with $1 million in scholarships.
The Long Lake Running Track opens at Keyano College’s Sport & Wellness Centre, thanks to Nexen’s $150,000 donation.
Edmonton’s Northern Alberta Institute of Technology (NAIT) now has a unique high-tech conference facility, thanks to a $1 million donation from Nexen.
Nexen begins annual support for Wood Buffalo Regional Science Fair.
Thanks to a $250,000 donation, the Nexen Fieldhouse opens at MacDonald Island in Fort McMurray, a space that now rocks with concerts and special events.
Nexen President & CEO Charlie Fischer (right) presents a cheque to Steve Noskey (centre).
NAIT students celebrate with Nexen’s Cecilia Mutch (L) and Kris Geekie (R).
Nexen employees in MacDonald Island Team orange jackets.
Nexen donates $1 million to Fort McMurray’s Father Mercredi High School Science & Technology Centre.
Groundbreaking for the new Oilsands Power & Process Lab at Keyano College, assisted by a major contribution of $750,000 from Nexen.
Nexen provides $10,000 in aid to Fort McMurray Heritage Park after devastating flood.
Engineering classroom in the new Science & Technology Centre.
Nexen’s SVP, Oil Sands Jim Arnold and Keyano College Foundation Board Chair Dale Unruh.
Flood in June 2013.
Doing Business with Nexen At Nexen, we drive economic growth, particularly in the areas where we operate, creating opportunities for the businesses that support us. We benefit from the proximity of local suppliers — working with people who know the local culture, community and environment the best. Communities, in turn, benefit from direct and indirect employment and the diversification of the local economy that our company generates. We use local labour and services first, as long as contractors and suppliers meet our standards in terms of safety, expertise, technical qualifications and price. In order to facilitate this, we partner with local contractors and our suppliers to increase their ability to compete for work and meet our requirements. As contractors and suppliers are partners in our business success, it’s important they have the same commitment to ethics, integrity and sustainable business practices as we do. In order to ensure alignment, we’re committed to providing our current and prospective contractors and suppliers with the appropriate resources and tools, enabling them to work ethically, responsibly and safely.
Up to PAR In 2012, Nexen received silver-level Progressive Aboriginal Relations (PAR) certification from the Canadian Council for Aboriginal Relations (CCAB), which is the premier corporate social responsibility program that emphasizes Aboriginal relations. PAR certification is independent verification that we are delivering on our commitments and gives Aboriginal communities confidence in our commitment to them.
For more information, call Ron Sturgess, Economic Development Specialist, at 780-334-2850 or go to www.nexeninc.com/en/DoingBusinessWithUs
Nexen and Keyano College: A longstanding partnership Keyano College is not only an outstanding education and training facility in the Wood Buffalo region, the College also does extensive community outreach and capacity building. Nexen supports many of these outreach activities. And now we have a closer tie to the College: Tony Mankowski, Vice President-Operations, Oil Sands recently accepted a position on the Keyano College Foundation Board of Directors. Tony joins Kris Geekie, Vice President-CCRA, who has been on the board for several years. The Foundation’s mandate is to raise funds to support the College through capital fundraising campaigns, endowments and awards, and partnering with industry to support programs and services at Keyano. For example, Nexen contributed $750,000 toward the construction of the Oilsands Power & Process Engineering Lab at the College. Construction is nearing completion. Tony and the Foundation board are looking
Keyano lab construction.
forward to hosting a grand opening celebration this winter. Another program Nexen is proud to support is the College’s Passport to Success, an annual bursary available to unemployed or underemployed single parents of dependent children who are enrolled in a certificate or
diploma program at Keyano College. The award is intended to assist applicants with tuition and living costs. Nexen has funded Passport to Success since 2010. We made an initial three-year commitment of $120,000, and we’ve just renewed the partnership for another three years at $150,000, effective until 2015.
Helping to build sport, recreational and cultural spaces Canada’s largest community recreation, leisure, and social centre is growing – and CNOOC Limited and Nexen are playing a big part in the new development. MacDonald Island Park has become the heart of Fort McMurray with indoor and outdoor recreational facilities second to none. “Mac Island” has evolved as the foremost venue for major events and concerts, conferences, festivals, exhibitions and recreation in
northern Alberta. The evolution continues with planned expansions that include an outdoor football stadium and performance stage, a professional-level baseball diamond, a new badminton centre and more – adding to an already vibrant and energetic recreational experience. And Nexen is part of that growth. In October 2013, we announced major funding support to the MacDonald Island Park Society and the Regional Recreation Corporation, which included renewed support for the existing Nexen Field House, naming of the Nexen Activity Field House, and targeted funding
for the new and unique performance stage at the outdoor stadium venue. Total value of this commitment is $460,000. And Nexen will have a further funding announcement by the end of 2013. CNOOC Limited is proud to make this donation through its wholly-owned subsidiary, Nexen Energy ULC, as it offers sustainable support to these important recreational and leisure operations. We are committed to promoting healthy lifestyles for our employees, their families and the Wood Buffalo community.
A concept drawing of the new outdoor performance stage.
Nexen and the Environment
Our groundwater monitoring shows that:
Integrated land management means:
• Water quality is generally comparable to baseline (before development)
• Nexen cooperatively manages industrial land with other users
• Changes in groundwater levels resulting from withdrawals are consistent with our predictions
• Reduced land disturbance means fewer roads, pipelines and utility corridors on our oil sands leases
• Local wetlands and surface water bodies are not being influenced by project activities
As global demand for hydrocarbons continues to increase, our commitment is to responsibly develop the energy needed by consumers and a growing economy. To do this, we focus on strengthening our operational performance – increasing oil and natural gas production while also working to reduce our impacts to air, water and land. At Nexen, we are committed to stewarding our oil sands developments in a safe, sustainable and socially responsible way. We seek to continuously improve our environmental performance through application of innovative technology and best practices including the incorporation of First Nations’ traditional knowledge and land use, and collaboration with other oil sands developers, regulators and stakeholders. We apply technology and innovation to improve efficiencies and minimize our footprint. We also work cooperatively and constructively with industry peers, governments, Aboriginal and local community leaders and many diverse stakeholder groups to bring about outcomes that reduce environmental impacts.
As a responsible oil sands producer Nexen participates in many collaborative regional environmental organizations focused on identifying and addressing environmental concerns within the Lower Athabasca region. These organizations include: • COSIA (Canada’s Oil Sands Innovation Alliance) - Nexen is a charter member of COSIA, a group of 14 oil sands producers focused on improvement of environmental performance through collaborative action and innovation. (www.cosia.ca) • WBEA (Wood Buffalo Environmental Association) – This group monitors the air in the Regional Municipality of Wood Buffalo, 24 hours a day, 365 days a year, through a variety of monitoring programs. The information collected is openly shared with stakeholders and the public. (www.wbea.org) • RAMP (Regional Aquatics Monitoring Program) – An industry-funded, multistakeholder environmental monitoring program initiated in 1997, RAMP integrates aquatic monitoring activities in the oil sands region to identify long-term trends, regional issues and potential cumulative effects related to industrial development. (www.ramp-alberta.org)
OSLI SCWG (Oil Sands Leadership Initiative Sustainable Communities Working Group) is researching and developing ways of building deep, long-lasting relationships between local communities and industry.
• CEMA (Cumulative Effects Management Association) – A multi-stakeholder group and key advisor to the provincial and federal governments, committed to respectful, inclusive dialogue to make recommendations for managing cumulative effects of development in the Wood Buffalo region. (www.cemaonline.ca) • LARP (Lower Athabasca Regional Plan) – The plan came into effect September 1, 2012. This regional plan considers the cumulative effects of all activities on air, water and biodiversity. It establishes new environmental frameworks with limits to protect air and surface water quality and increases the total conserved land within the region to more than 2 million hectares. (www.landuse.alberta.ca/ RegionalPlans/LowerAthabascaRegion) • EMCLA (Ecological Monitoring Committee of the Lower Athabasca) – A joint government and industry program working to ensure that regional wildlife and biodiversity monitoring required by the provincial Environmental Protection and Enhancement Act approvals is carried out by oil sands operators in a coordinated and efficient way, providing valuable knowledge for resource managers. (www.emcla.ca)
• OSLI SCWG (Oil Sands Leadership Initiative Sustainable Communities Working Group) – A group researching and developing ways of building deep, long-lasting relationships between local communities and industry. With an emphasis on a shared future, the OSLI SCWG is exploring how sustainable communities learn, grow and thrive over the long term. (www.osc.ca) • iFROG (Industrial Footprint Reduction Options Group) – A cooperative group focused on conducting and sharing lessons learned from facility reclamation efforts including wetland ecosystem reclamation.
Air quality monitoring near Long Lake.
Environmental Management Our operations at Long Lake are regulated by Alberta Environment and Sustainable Resource Development (AESRD) via approvals under the Alberta Environmental Protection and Enhancement Act. The approvals set requirements for air, water, wastewater management, wildlife management, land disturbance and reclamation parameters. To ensure we meet these requirements – and exceed them when possible – we have established monitoring systems and management processes. Environmental management at our Kinosis in-situ development, currently under construction, is also regulated by the AESRD. For more information on Kinosis, see “On the Horizon” in this report.
Air quality All air emissions resulting from Long Lake facility operations are strictly regulated by the AESRD. Regulatory limits are set to protect the environment and people living near our operations. We have an extensive network of air monitoring stations within the project lease and surrounding area, including an air quality monitoring trailer, continuous emissions monitoring systems and passive air monitors. Air monitoring equipment includes: • Six continuous emissions monitoring system (CEMS) units mounted on plant stacks. Each unit continuously monitors and records nitrogen oxides (NOx), total effluent flow rate and temperature to ensure the stack emissions are within specified pre-set limits. The CEMS alerts plant operations personnel if these specified emission limits are exceeded. • Twelve passive monitors that measure the ambient air for sulphur dioxide (SO2) and hydrogen sulphide (H2S) concentrations on a monthly basis. These monitors are located around the Long Lake site away from the central plant, to give an indication of the plant’s impacts on surrounding air quality. • Nexen is a part of the Wood Buffalo Environmental Association (WBEA) ambient monitoring network. An ambient air monitoring station is located in the nearby community of Anzac and maintained by WBEA to continuously monitor for NO2, SO2, ozone, particulates, total reduced sulphur (TRS), total hydrocarbon (THC) and volatile organic compounds (VOCs). Our air monitoring activities are focused on early detection and prevention of potential changes to local air quality. Nexen has an emergency response plan. In the event of upset conditions that may have air quality impacts, Nexen alerts nearby residents as part of that plan. Long Lake is equipped with technology to recover and remove 99.9% of the SO2 from the bitumen upgrading process.
Responding to odours at Long Lake Although it is not feasible to eliminate off-site odours completely, Nexen is committed to minimizing odours as much as possible. You can help, by calling the Anzac Community Office or the Operations Hotline when you notice an odour you believe is from Nexen’s Long Lake facility.
Please let us know when and where you noticed the odour, and if possible provide information on the strength and type of smell. • You can rate odour strength on a scale of 1 to 10, with 1 being faint and 10 being very strong. • Odour type could be sewer (ammonia), rotten egg (sulphur), oil/gas (hydrocarbon), smoke.
Your participation in this program will help us to track and better understand when and why odours are occurring. This in turn will help us to make educated operation decisions on how to minimize odours: • Operations hotline 780-334-2121 • Community Office 780-334-2850
A Nexen environmental technician holds up a vial containing a ground water sample he collected from the moat near SAGD well Pad 7.
Water management Nexen monitors both surface water and groundwater quality and quantity through two different monitoring programs: • The groundwater monitoring program is composed of an extensive network of groundwater monitoring wells designed to monitor shallow, intermediate and deep deposits. Most of the wells are equipped with pressure transducers that continuously record water levels. Each well is visited and inspected four times per year to retrieve the recorded water level data and collect a water quality sample. The collected data is analyzed annually to determine whether Nexen’s operations are affecting groundwater levels or quality. • The wetland monitoring program is designed to assess the potential effects Nexen may have on wetland vegetation communities, and water quality and quantity in the Gregoire River and in small shallow lakes in the area. The program measures surface water quantity and chemistry, and wetland vegetation variations to assess potential changes to aquatic resources that may result from Nexen’s activities. Results are reported annually to the provincial government.
Soil management Nexen monitors and controls our impacts on soil in numerous ways: • Implementing erosion control measures in susceptible areas, and repairing areas where erosion has occurred on an as-needed basis. • Managing soil stockpiles to ensure soil that can be reused for reclamation of disturbed areas is recorded and stored for later use. • In the event of a spill or other event that could affect soil quality, the soil is cleaned up immediately and properly disposed to avoid further contamination or impacts. • Conducting a yearly soil monitoring program to screen for the release of substances to soil from the facility’s operation and activities. This program is intended to identify the most likely locations for release of substances. Soil samples are collected and analyzed, and appropriate action is taken if impacts are detected.
Wildlife, land use and reclamation Regional biodiversity and wildlife monitoring Nexen contributes to biodiversity monitoring within the Lower Athabasca region, including financial support for the Alberta Biodiversity Monitoring Institute (ABMI). We work with the ABMI by providing a biodiversity monitoring location near our Long Lake facility. Monitoring at the Long Lake location in 2013 found approximately 82 species, from microscopic bugs to plants and birds. The information collected from the site will contribute to understanding how different species and habitats are changing over time within the region and throughout the province. Nexen also conducts an ongoing wildlife monitoring program in collaboration with the University of Alberta, the Ecological Monitoring Committee of the Lower Athabasca (EMCLA) and the ABMI to determine which wildlife species are within our lease area, and species abundance over time. Winter tracking surveys and wildlife cameras provide information about ungulates (such as moose and caribou) and fur-bearing animals. Wildlife recording units have been positioned throughout the Nexen lease area to monitor for bird and amphibian species and track population changes. Nexen records all reported wildlife sightings and encounters. This information is included in a province-wide database managed by Alberta Environment and Sustainable Resource Development, Fish and Wildlife Division. These reports allow Nexen to continually improve our wildlife management initiatives by helping us understand what wildlife species may become habituated to the site and could be negatively impacted by operational activities. Reclamation Nexen plants native boreal forest tree and shrub species every year to minimize the duration and impact of disturbance from our exploration programs. We currently plan to plant as many sites as we disturb every year. For example, in 2013 we planted 233,000 seedlings on some 200 sites, 30,000 of which were planted by local First Nations planters. Nexen is also working to increase the number of different species planted every year, to kick-start the natural biodiversity of our reclaimed sites.
Moose are common in the Long Lake area.
Reforestation In northern Alberta, we’re part of the Faster Forests initiative, which has resulted in approximately 1.6 million trees and shrubs being planted in the oil sands region between 2009 and 2012. Along with our partners, we’re planting more diverse species to more accurately mimic the natural biodiversity of the boreal forest and speed reforestation.
Planters cut willow branches to re-plant in disturbed areas.
Caribou habitat restoration In partnership with other members of Canada’s Oil Sands Innovation Alliance (COSIA), Nexen is currently leading Alberta’s largest woodland caribou habitat restoration program located within the Algar caribou range south of Fort McMurray. Nexen is in the third year of this five-year program. The objective is to restore caribou habitat by reforesting old industrial and disturbed areas. These lands were reclaimed to a previous standard but that standard is now unsuitable as caribou habitat because cutlines remain, which fragment the forest. To date 115 km of these cutlines have been reforested and monitoring is ongoing to measure the effectiveness of the reforestation work. Invasive plants Nexen is committed to eradicating noxious weed species. We control weeds on our lease by: • Seeding our soil stockpiles and other disturbed areas, where appropriate, with native grasses to slow or prevent the growth of weeds. • Monitoring the site on a yearly basis to locate and control weed infestations. • Implementing appropriate control measures based on the weed species and area, including herbicide application and/or mechanical weed control. Research and development initiatives Nexen is undertaking research and development initiatives aimed at reducing our environmental impact, including: • Studying winter planting of black spruce to increase seedling survival and improve successful restoration of treed wetland habitat. • Upland area restoration trials including soil rehabilitation techniques and native boreal seed collection and germination studies. • Wildlife monitoring technology development including new ways to count animals, from remote sensing using airplanes to improving the use of audio recorders.
COSIA members share $700 million in oil sands innovation A unique organization is improving environmental performance in Canada’s oil sands through collaboration and innovation. To date, the 14 major oil sands producers that make up Canada’s Oil Sands Innovation Alliance (COSIA) have shared about 440 technologies and innovations that cost more than $700 million to develop.
The Long Lake facility and recycle ponds.
Bird-watching, Long Lake style Each spring, as migratory birds return to the Wood Buffalo region, the environmental team at Long Lake focuses on keeping waterfowl away from our recycle ponds. Because Nexen uses SAGD to recover bitumen, there are no tailings ponds at Long Lake. However, water chemistry in Long Lake’s recycle ponds is not considered safe for waterfowl. The ponds hold recycled process water, excess boiler water, effluent from the hot lime softeners and storm water drainage. Because the water is warm, the ponds are often the only ice-free water in the spring and that makes them attractive landing spots for waterfowl. Long Lake’s environmental group works around the clock to make our recycle ponds unattractive to birds. Animals are incredibly adaptable, so what worked last year to deter the waterfowl may not work this year. For 2013, we introduced new and more reliable electric/propane combination cannons and increased the human presence at the pond. Environmental team members spent at least five hours a day deterring waterfowl away from the recycle ponds.
COSIA provides an opportunity for oil sands producers to share information and work collaboratively to solve environmental performance issues facing the industry. The importance of this sharing is that all member companies have access to new research, new technology and new information that they can use to accelerate environmental performance within their own companies.
• Four to eight propane scare cannons.
In addition to technology sharing, COSIA is developing performance initiatives – approximately 185 projects are underway – in four Environmental Priority Areas (EPAs): tailings, water, land and greenhouse gases. Nexen is currently leading one of largest projects in the Land EPA, which involves restoring land disturbed by industrial activity decades ago.
• Booms set out at the inlet where process boiler water, runoff water and water from other sources enters Pond A. The booms stop hydrocarbon from entering the large area of the pond. A boom is also deployed on Pond B to trap hydrocarbons from vacuum trucks, which discharge into the pond.
“This habitat restoration work is not only important for rehabilitation of species at risk such as the woodland caribou, but it provides Nexen with a testing ground for technologies and techniques that will allow us to improve eventual reclamation of our oil sands facilities,” says Jeremy Reid, Specialist-Environment, Nexen Oil Sands.
Long Lake staff monitor the system often to gather information on the effectiveness of the bird deterrents and recommend improvements as needed. Monitoring includes:
COSIA was established in 2012. In its first year, COSIA consolidated the environmental efforts of three industry-supported research organizations: the Oil Sands Leadership Initiative, Oil Sands Tailings Consortium, and the Canadian Oil Sands Network for Research and Development.
Our waterfowl deterrent system includes: • Eight bird of prey effigies (scarecrows) fastened to the safety railing surrounding Recycle Water Ponds A and B. • Flashing tape tied onto the railing surrounding Recycle Water Ponds A and B.
• Checking the cannons regularly to ensure they are working properly. •
Recording sightings of migratory birds that land on the pond to evaluate the deterrent system’s effectiveness and assist with future mitigation plans.
A local trapper also assists us to maintain the bird deterrent system and to monitor remote well access roads along with the Kinosis area.
Our ears in the woods You could call it high-tech bird watching. Environmental specialists in Nexen’s Community Consultation and Regulatory Affairs team are piloting an automated way to conduct wildlife surveys. Instead of having several biologists in the field listen for calls, Nexen is testing automated recording units to capture the calls of owls, waterfowl and amphibians. “Using automated equipment is a more efficient and more effective method of conducting wildlife monitoring for these species. It saves money and provides more accurate results,” says Jeremy Reid, Specialist-Environment. “It’s also safer, because we don’t have to send biologists into remote areas as often, which is especially a concern on nocturnal surveys.” Each automated unit is equipped with microphones, a digital recording device (similar to the image card in your digital camera) and a battery. The units, which look like boxes with microphones protruding from them, are strapped to trees, programmed to record at selected intervals, and left alone to be our ears in the woods.
Researchers return periodically to replace the card or battery. Nexen has about 50 units deployed at strategic locations. Data is analyzed by researchers at the University of Alberta. Results will be shared with the university as well as the Alberta Biodiversity Monitoring Institute. We’ll compare results from our program to other areas in the region, which will further help us to identify which bird and amphibian species could be affected by our development activities. If automated monitoring proves effective, Nexen plans to promote use of this technology among members of the Canadian Oil Sands Innovation Alliance to improve overall environmental impact mitigation. “This bird and amphibian survey is part of our continued monitoring at Kinosis, which in turn helps us design effective methods to mitigate impacts on plants and animals resulting from oil sands development activities,” explains Will Hughesman, Manager, Regulatory Affairs at Nexen. “What we learn from ongoing wildlife monitoring at Kinosis can be used elsewhere on Nexen’s future development areas.”
Researchers installing automated monitoring units.
Boreal forest in the Long Lake area.
On the Horizon Our Plan for Long Lake • Ramp up Pads 11, 12, 13 (2012 to 2014) • Construct and ramp up operation at Pads 14 and 15 (2012 to 2015) • Construct and start operations at Kinosis 1A (2012 to 2015) • Improve efficiency of existing wells, SAGD and upgrader (ongoing) • Future pads (2015 and beyond)
Early evening shots of Nexen’s Long Lake Phase I integrated oil sands facility.
Current and Future Developments Nexen is strategically positioned for future in-situ oil sands development, with land holdings in a number of Athabasca prospect areas including Leismer, Cottonwood, Meadow Creek, Corner and Chard. We continue to explore for future bitumen recovery opportunities on our leased lands. Future developments will build on the knowledge and experience gained from successful developments to date.
More wells at Long Lake More development is underway at Long Lake. We began production from 18 new well pairs on Pads 12 and 13 in 2012 and these wells are now ramping up to full production. We are currently completing the development of new wells at Pads 14 and 15. The first of these wells began injecting steam in the third quarter of 2013. The plan is to drill additional well pairs from the same pads with first steam scheduled for mid-2016. The Pads 14 and 15 project began in 2011 and it has been a team effort involving multiple disciplines and responsibilities including regulatory approvals, subsurface appraisals and well placement considerations, geotechnical assessment, facility design, drilling and completions, lease preparation, module assembly, site construction and commissioning/start-up. “Because all these activities are related, communications and interface management is critical,” notes Greg Davin, Area Project Manager, Pads 14 and 15. “We’re always innovating in Oil Sands, looking for quality, striving for predictable schedules and keeping costs down so in the end we have a cost-effective facility that meets our corporate goals.”
Greg Davin, Area Project Manager, Pads 14 and 15.
Oil Sands Exploration Drilling Each winter, Nexen drills exploration wells in undeveloped areas in order to define the extent of underground bitumen deposits and learn more about reservoir characteristics. Nexen strives to improve the efficiency of our drilling programs and to decrease our environmental footprint.
For example: • The 2011-2012 drilling season set a new benchmark for Nexen regarding water volumes and efficiency • On the 2012-2013 drilling program, water diversion volumes were within 3% of the benchmark 2011-2012 season, and within 12% for waste volumes
• Also in 2012-2013, Nexen used an air rig for drilling water wells, resulting in a fluid-free drilling operation • The 2012-2013 drilling program did not incorporate sumps, thus minimizing direct impact on surrounding lands and reducing our environmental footprint (Nexen used tanks instead)
• A 30% decrease in water diversion was achieved during the drilling phase of 33 observation wells in 2012-2013
Kinosis: a phased development Nexen Oil Sands is poised to become “more than Long Lake” with the upcoming launch of our approved Kinosis project. Kinosis, formerly called Long Lake South, is located about 12 km south of our Long Lake facility. This area represents a new development strategy for Nexen. The plan is to develop stand-alone SAGD projects of approximately 15,000 – 25,000 bpd each. Drilling and equipment construction for the first phase – Kinosis phase 1 A (K1A) – is now well underway. Steam for the K1A wells will be provided by four generators installed at Kinosis, using water supplied by the Long Lake facility. Bitumen from K1A will be processed at the Long Lake upgrader. Nexen is continuing to make progress on plans for future development at Kinosis.
Kinosis project in July 2013.
Nexen is proud to be a part of your community
awards and Recognition We’re pleased to be recognized for the way we work. These awards reflect our values: good governance practices, transparent disclosure, effective stakeholder relations and a dynamic workplace that attracts and engages talented people.
Global 100 Most Sustainable Corporations from Corporate Knights Magazine, 2013
Top 50 Most Socially Responsible Corporations 2012, Maclean’s Sustainalytics
Community Engagement Award, 2012 World Shale Oil & Gas Summit
Canada’s Top 100 Employers 2012, Mediacorp Canada Inc.
Aon Hewitt 2012 Green 30 List, Maclean’s Magazine.
2012 Corporate Reporting Award for Oil and Gas, Canadian Institute of Chartered Accountants
Alberta’s Top 60 Employers 2013, Mediacorp Canada Inc.
Carbon Disclosure Leadership Index (Canada), 2012
2012 Dow Jones Sustainability Index tracks financial performance of leading sustainable companies
Progressive Aboriginal Relations Certification - Silver Level, Canadian Council for Aboriginal Business
Annual Report Award for Financial Statements and Analysis for Senior Oil and Gas Companies, Oilweek Magazine, 2012
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2012 sustainability report
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