Sunrise Energy Project

Sunrise marks the beginning of a new era for Husky in developing this increasingly important source of energy. This joint venture is an innovative, efficient North American energy solution that represents a responsible approach to resource stewardship.

Located 60 kilometres northeast of Fort McMurray, Sunrise is considered a world-class reservoir with 3.7 billion barrels of proved, probable and possible reserves (0.24 billion proved, 1.78 billion probable and 1.68 billion possible). Husky's working interest is 50 percent.

The first phase, representing an investment of $2.5 billion, is expected to produce about 60,000 barrels per day with first oil production expected in 2014. Regulatory approvals are in place for 200,000 barrels per day. Sunrise Phase 2 pre-engineering is underway.

Husky operates the oil sands facilities and its partner operates the jointly owned refinery near Toledo, Ohio, where bitumen will be processed into various transportation fuels.

Major construction contracts for the Sunrise Central Plant Facility and Field Facilities, along with transportation agreements, are in place.

Technology

Sunrise will use an in-situ recovery technology called steam-assisted gravity drainage (SAGD), which is similar to conventional drilling with minimal surface land disturbance. Steam injection heats and mobilizes the bitumen, allowing it to be pumped to the surface more easily.

Subsurface research and exploration gives Sunrise a comprehensive data set and information regarding reservoir description. Substantial subsurface field work included delineation wells, 3-D seismic, core analysis, log analysis, geological modeling, reservoir modeling, production forecasting, and comparisons to industry analogues from the neighbouring Firebag and Mackay River leases.

This information will provide for optimum well placement for recovery of the resource, while enabling the most efficient use of the land and maximum energy efficiency.

Environment

Environmental considerations are built into every aspect of design, construction and operation of the Sunrise Energy Project. Emerging technologies have resulted in improvements that have enabled the oil sands industry to reduce its emissions intensity (a measure of greenhouse gas emissions per barrel of oil produced) by more than 30 percent since 1990. SAGD technology eliminates the need for large tailings ponds.

Air

Husky is committed to addressing greenhouse gas emissions across all of its operations. The Company works with industry, regulators and governments, to lead the development and adoption of new technologies that will improve energy efficiency and reduce emissions.

At Sunrise, specific control technologies in both process and in equipment will help reduce greenhouse gas emissions and improve air quality, through:

• Energy efficient designs to reduce steam oil ratios;
• Ultra-low nitrogen oxide (NOx) boiler technologies with flue gas recirculation that significantly reduce NOx emissions;
• Technologies for sulphur recovery will be adopted to reduce sulphur dioxide (SO₂) emissions;
• Recovering gas vapours from tanks and process vessels so that they could be used as fuel and do not enter the atmosphere;
• Emissions scrubbing for air pollution control; and
• No venting of produced gases or flaring facilities at the well pads.

Throughout the life of the project, Husky will participate in comprehensive air monitoring programs, both at the Sunrise project and regionally, while its Environmental Performance Reporting System (EPRS) will facilitate and make available the provision of accurate and environmental data.

Water

The water required to process bitumen at Sunrise will not be sourced from surface lakes, rivers or streams. Water required for production will be sourced in part from the non-potable Basal McMurray aquifer below the McMurray bitumen formation and will be minimized by recycling more than 90 percent of the produced water.

Land

Sunrise will be developed sequentially and reclamation of disturbed land will be undertaken as drilling and production moves onto the next phase. Under the current plan, the development of Sunrise will affect less than five percent of the lease area, and only three percent will be under development at any given time. The wells will be drilled directionally from pads to minimize surface disturbance.

When work is completed at a site, the land will be restored to an equivalent pre-disturbed condition.

Community

First Nations and other key stakeholders are actively engaged in consultations around the development and operation of Sunrise to promote best practices in all aspects of resource recovery. Cooperation agreements outline how Husky and Aboriginal communities involved in the project work together.

Consultation is carried out through numerous forums including open houses, community events, newsletters and regular meetings with stakeholder groups and Aboriginal advisory committees. Project issues and information received from external stakeholders are recorded in detail and tracked. This results in continuous collaboration with stakeholders and industry participants on development, regional infrastructure and other emerging issues.

As the project proceeds, Husky will be working to facilitate business and economic benefits for local and Aboriginal groups.

Economic Benefits

With the third-largest reserves in the world, Canada's oil sands provide a significant and secure source of oil to enhance energy security. In addition to energy security benefits, the development of Canada's oil sands offers wide-reaching economic benefits.

Phase 1 development of the Sunrise Energy Project will create approximately 1,600 direct jobs in Alberta for construction and an additional 300 jobs for operations once all phases are complete. It will generate, in 2010 dollars, an estimated $40 billion in royalties, $6 billion in corporate income tax to Alberta and $8 billion in corporate income taxes to the federal government. Procurement of goods and services will be sourced from across Canada and numerous regions around the world.

Joint investment at Sunrise and the Toledo refinery is estimated at more than $10 billion for the total development – a significant boost to the economies of both regions.