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Suncor recognized the climate change challenge nearly two decades ago. We became one of the first major energy companie to adopt an action plan and technologies to reduce greenhouse gas emission intensity across our operations.
 
Climate Change

Air EquipmentSuncor was one of the first major energy companies to adopt a climate change action plan to better manage our greenhouse gas (GHG) emissions. We continue to adapt and refine that plan to make continuous improvement in reducing the carbon intensity of our operations.

Suncor has voluntarily reported its progress in managing GHG emissions since 1995—and progress has been made. We have invested in technology, improved energy efficiency and reduced GHG emissions intensity at our oil sands plant by 53.6% compared to 1990 levels. But we know that much more can—and must—be done as both production volumes and the corresponding level of absolute emissions continue to grow.

Suncor believes our single biggest near-term opportunity to reduce GHG emissions is through improved reliability and energy efficiency across our operations. We had some success in this area in 2009 and we are currently implementing corporate-wide operational reliability and energy management programs aimed at making continuous improvements in the coming years. The investment in energy management, in particular, is not a single point project or set of activities, but is the development of a more comprehensive approach to our own energy use from design, construction, and ongoing operations to ensure we are as efficient as we can be given the physical and economic constraints of our facilities.

Suncor continues to invest in high-efficiency co-generation facilities and renewable energy sources, to collaboratively advance new emissions-reducing technologies, including carbon capture and storage. As a responsible energy developer, we also continue to work with governments and other stakeholders on emerging public policy solutions aimed at finding the most effective ways to reduce global GHG emissions.

Following the 2009 merger with Petro-Canada, Suncor’s total production levels increased significantly, impacting both our absolute GHG emissions and our per-barrel emissions intensity. On these pages, we provide an overview of Suncor’s performance in 2009 as well as our major challenges and priorities going forward.

Our Performance

Total upstream production averaged 456,000 barrels of oil equivalent (boe) through the course of 2009, compared to 264,700 boe in 2008. This 2009 volume only includes production from Petro-Canada assets after merger close on August 1, but the GHG volumes that follow are for the combined company’s full year emissions. Intensity calculations use full-year production and carbon dioxide equivalent (CO2e) volumes from both predecessor companies. All numbers included here are for operated facilities and properties only, and represent 100% of the direct and indirect emissions at these facilities. (Data is not broken down by working interest and does not include non-operated facilities.)

Absolute full-year CO2 emissions in 2009 totaled 19.5 million tonnes, compared to 11.5 million tonnes for legacy Suncor assets in 2008—a one-time 70% increase, mainly due to the much larger combined total production levels. For the assets operated by the combined company, we recorded an 11% absolute increase from 17.5 million tonnes in 2008 (before the merger) to 19.5 million tonnes in 2009 (after the merger). Some overall absolute GHG reductions were experienced, such as a 1.2% decline in Natural Gas (mostly due to lower production volumes) and 8% decline at Terra Nova, due to a reduction in flare volume which can be attributed to higher gas injection availability than predicted, improved asset availability and good management of the flaring strategy.

Using globally accepted GRI protocols, Suncor’s reported corporate GHG emissions intensity experienced a significant one-time decrease year-over-year of 13%. That drop is partly due to the averaging in of legacy Petro-Canada upstream natural gas and offshore oil production that exhibits lower carbon intensity (at least in the production phase) than oil sands extraction. But there were also independent decreases in GHG emissions intensities in 2009 at our oil sands facilities. For example, the emissions intensity at Suncor’s legacy mineable Oil Sands operations in 2009 was 6% less than in 2008, while Suncor’s legacy in-situ Firebag operations recorded a 2.4% decline. The emissions intensity at Petro-Canada’s legacy MacKay River in-situ plant also dropped by 8.6% in 2009, for similar reasons. The intensity decreases were mainly due to improved reliability and productivity (if a plant runs well below its capacity, it continues to use significant levels of energy without producing as much finished product, thus boosting per-barrel emissions rates). Overall the In-Situ business unit (combined Firebag and MacKay) posted a 4% drop in emissions intensity.

Suncor operates four refineries—in Edmonton, Alberta; Montreal, Quebec; Sarnia, Ontario; and Commerce City, Colorado, as well as a Lubricants plant in Mississauga, Ontario. Overall, the refining sector increased its GHG emissions intensity by 3% in 2009 on a combined asset basis, and 12% on a pre-merger Suncor-only basis. The biggest performance gain was at the Commerce City refinery; although absolute GHG emissions increased, emissions intensity dropped by 4.6%. The Edmonton, Sarnia and Commerce City refineries have all recently completed major upgrade projects and are now looking to optimize operations using energy management and operational excellence initiatives.

Please note: the sum of the Suncor facilities production will not equal the reported net corporate production. Inter- and intra-business unit product transfers (hydrocarbon streams that pass through more than one Suncor facility) are removed from the corporate total to give the net production. This is done to prevent double-counting of hydrocarbon streams sent for further processing within the company. Individual facility intensities are calculated based on gross facility production; business unit intensities are calculated based on gross production minus intra-business unit material transfers, and the corporate GHG intensity is calculated based on gross production minus all inter- and intra-business unit transfers.

Energy IntensityEnergy Use

Looking Ahead

Suncor is resuming a growth strategy in its oil sands business. That means, in the immediate term at least, absolute GHG emissions will increase. We believe we can make continued progress on reducing emissions intensity, while working towards long-term solutions to deal with absolute GHG emissions.

While these intensity improvements often do not involve absolute reductions, they are still very real as they displace production emissions from other sources.

In terms of emissions intensity, there are reasons for optimism.

  • There is significant room to improve the reliability and productivity of existing oil sands facilities—further reducing energy use and GHG emissions.
  • Suncor is targeting a corporate-wide 10% improvement in energy efficiency by 2015 through a significant new energy management system. While we believe energy savings can be achieved in all our operations, the biggest potential volume gains remain in Oil Sands.

Suncor continues to be guided by the seven-point climate change action plan we first adopted in 1997, which calls on us to:

  • Manage our own GHG emissions
  • Develop renewable sources of energy
  • Invest in environmental and economic research
  • Use domestic and international offsets
  • Collaborate on policy development
  • Educate employees and the public
  • Measure and report our progress.

Suncor is on track to spend an additional $500 million over five years developing wind energy and biofuels. In 2009, Suncor approved a $120 million expansion of its ethanol production plant near Sarnia, Ontario, that will double its capacity to 400 million litres per year. Our renewable energy projects create partial offsets for GHG emissions in our operations, while opening up new business opportunities and helping Canada to begin the necessary shift to a greener energy system.

Similarly, Suncor is moving on several fronts to advance potential carbon-reducing technologies, including carbon capture and storage (CCS). We continue to work with both ICO2N and the Carbon Capture Project. These groups include some of the world’s leading energy companies working with both domestic and international governments—on research and development aimed at making CCS more affordable and on studies to guide future policy and regulations that will enable CCS to proceed.

Suncor is also a founding member of two new organizations that will bring expertise—and investment capital—to bear on the climate change challenge.

Carbon Management Canada (CMC) is a national centre of excellence funded by federal and provincial governments and industry. Through work at over 20 universities across Canada, its key mandate is to investigate cost-effective, carbon-efficient techniques for extracting fossil fuels. The Oil Sands Leadership Initiative (OSLI), comprised of Suncor and four other progressive-minded oil sands companies, is focused on real solutions that lead to improved environmental performance, including carbon-reduction initiatives.

As Canada’s largest energy company—and the fifth largest in North America—Suncor is increasingly active in public policy discussions on energy and the environment.

We believe the December, 2009 Copenhagen Climate Change Accord, while not binding, could encourage countries to innovate within their own borders to help reduce global GHG emissions—whether it’s by boosting the profile for renewable energy, expanding nuclear, investing in technologies to reduce the carbon footprint of conventional energy sources, or some combination of the above.

When it comes to climate change regulations, Suncor continues to press for:

  • clarity and certainty as our investors want to know what the rules are up front.
  • fairness and competitiveness so no one industry or region should be unfairly targeted or punished, and
  • harmonization across jurisdictions to avoid overlap and inefficiencies.

Suncor sees GHG emissions trading and other carbon pricing mechanisms as useful tools. But we also believe that, to be effective, climate change policy must encourage the development and deployment of new technologies that will transform how we produce and use energy. Cap and trade policies alone will not accomplish this.

Suncor continues to monitor initiatives by California and others to establish low carbon fuel standards (LCFS). We believe these initiatives may not have the desired impact of reducing overall GHG emissions. In particular, approximately 75-80 % of the life cycle emissions of petroleum-sourced fuel occur when the fuel is combusted in vehicles and so these emissions are highly dependent on engine fuel efficiency and total miles driven—factors a California-style LCFS doesn’t influence. For that reason, Suncor is starting to discuss with stakeholders proposals for a “low carbon transportation framework” that would deal with reducing GHG emissions released in both the production and consumption of energy products.

Finally, recent crude oil life cycle assessment studies indicate that, on a “wells-to-wheels” basis, the carbon intensity of oil sands crude is not significantly different from conventional crudes, including offshore imports. Displacing GHG emissions to other jurisdictions will not create a net benefit for the atmosphere and could compound energy security and social concerns linked with reliance on foreign imports, as well as increasing the overall carbon footprint associated with bringing crude oil from its source to consumers.

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