Oil sands

Issue brieng
bp.com/sustainability
Oil sands
Issue brieng
How we operate
BP recognizes that we need to produce
energy responsibly minimizing impacts to
people, communities and the environment.
BPs systems of governance, management
and operation are designed to help us
conduct our business while respecting
safety, environmental, social and nancial
considerations.
Across all BP international operations,
established practices support the
management of potential environmental and
social impacts from projects and operations.
These practices cover projects from
pre-appraisal stage through to operations;
and reinforce BPs values, responsibilities
and local regulatory requirements.
BPs operating management system
integrates BP requirements on health, safety,
security, environmental and operational
reliability, as well as maintenance, contractor
relations, compliance and organizational
learning into a common system.
About BP in Canada
BP Canada is the Canadian subsidiary
of the BP p.l.c. group of companies.
Headquartered in Calgary, Alberta, we
are active in Alberta and the Northwest
Territories, while our marketing and trading
activities span the nation and expand into
the US.
BPs Canadian Arctic exploration
activities are operated through BP
Exploration Operating Company
Limited (BPEOC).
For more information
bp.com/aboutbp
bp.com/oms
For more information
bp.com/canada
Cover image
View of camp on BPs Terre de
Grace lease in Alberta, Canada.
Oil sands
Issue brieng 1
expertise with wells and improving large-
scale reservoir performance. Unlike mining,
in situ processes create a smaller physical
footprint and do not involve tailings ponds.
Our projects
BP is involved in three oil sands lease areas,
all of which are located in Alberta. None of
them are yet operational or producing. The
Sunrise Energy Project is expected to be
the rst on stream with production
beginning in 2014.
BP requires oil sands projects, like all of
its investments, to be commercially viable
over the life of the project. In gauging this,
we factor in carbon regulation and the
evolution of potential policy changes and
economic forecasts by using an estimated
carbon price. We expect the break-even
price for oil from Canadas oil sands to be
within the $60-$90 per barrel range we
require from other types of crude oil
investments.
1 BP Energy Outlook 2030
Canadas resources
Canadas oil sands have the third-largest
proven crude oil reserve in the world, after
Saudi Arabia and Venezuela.
Mainly located in the province of
Alberta, the oil sands are a natural mixture
of sand, water, clay and bitumen. They are
found at varying depths and in some cases
are directly exposed to the surface. There
are two methods of extracting this resource
in situ recovery and surface mining.
A key method of in situ recovery is
steam-assisted gravity drainage (SAGD),
which involves pumping steam into the
reservoir through a horizontal well to heat
and make the bitumen uid. The bitumen
and water mix then ows underground to a
second, lower horizontal well from which it
is then produced to the surface (see diagram
on page 4).
In all oil sands projects, whether operator
or not, BP plans to use in situ technology to
recover the resource. This production
technique reduces land disturbance and
aligns to our strengths, particularly to our
Industry has been
extracting oil from
Canadas oil sands
since 1967.
This combination of factors is expected to
increase the worlds primary energy
consumption by as much as 40%
1
over the
next 20 years, with a large portion of the
growth coming from developing economies.
The energy challenge
The energy challenge facing policymakers
and our industry is how to fuel the global
economy and address concerns about
energy security while reducing the amount
of carbon dioxide and other greenhouse
gases being emitted.
This challenge is global and complex,
involving many difcult energy decisions.
It links geopolitical concerns with
environmental trends and the energy needs
of people everywhere.
We believe the global energy challenge
can only be met through a diverse mix of
fuels and technologies. This is why BPs
portfolio includes oil sands, shale gas,
deepwater production and alternative
energies such as biofuels and wind power.
Beyond simply meeting growth in overall
demand, a diverse mix can help to provide
enhanced national and global energy security
while supporting the transition to a lower-
carbon economy.
Canadas oil sands play a key part in our
strategy to meet global energy demands and
tie in with our business strategy to invest in
exploration and production protably through
a portfolio of high-quality assets in the
worlds most prolic hydrocarbon basins.
The need for Canadas oil sands
The worlds population is projected to increase
by 1.4 billion over the next 20 years, while its
real income is likely to grow by 100% over the
same period.
Steam-assisted gravity
drainage diagram
See page 4

Lease area BPs interests Operator Status

Sunrise 50% owner Husky Energy Sunrise Energy Project
phase 1: Currently under
construction. Expected
production date is 2014
Pike 50% owner Devon
Terre de Grace 75% owner, in
partnership with Value
Creation Incorporated
BP
These lease areas are
currently under appraisal
for development.
Environmental baseline
studies are being
conducted in areas
including vegetation,
wetlands, wildlife, air
and water
Oil sands
Issue brieng 2
construction of Pike. These activities include
performing seismic and cap rock integrity
studies, and drilling delineation and water
wells. Devon will continue to perform
appraisal through to 2012 before developing
any project plans.
Terre de Grace
BP has a 75% operator interest in the
Terre de Grace oil sands leases, located
approximately 60 kilometres northwest
of Fort McMurray, Alberta in the western
part of the Athabasca region. Our partner
for Terre de Grace is Value Creation
Incorporated.
Since assuming operatorship of Terre
de Grace, BP has conducted both summer
and winter work programmes which consist
of environmental eld studies, ongoing
reclamation work and, in the winter, drilling
and seismic exploration activities which
require frozen ground conditions. Ongoing
appraisal activities include delineation drilling,
seismic acquisition and appraisal of water
sources. These assessments will help
determine the full production potential and
recoverable resources of the Terre de
Grace lease.
Sunrise Energy Project
The Sunrise Energy Project includes two
50/50 partnerships where Husky operates
its Sunrise leases in Alberta and BP
operates its Toledo renery in Ohio, US.
This project is estimated to cost around
$2.5 billion and is expected to produce
approximately 60,000 barrels per day (bpd)
of bitumen, beginning in 2014. Sunrise is
estimated to have more than three billion
barrels of bitumen resources.
In 2011, construction started on the
central plant facility and half of the 49 well
pairs were drilled.
Pike
BP has a 50% non-operated interest in the
Pike leases as part of BPs joint venture with
Devon. Pike is in the southern Athabasca
oil sands region and is approximately 25
kilometres southeast of Conklin, Alberta.
Pike is expected to produce 109,000 bpd
of bitumen. Pending regulatory approval, the
project will be constructed in phases over a
three to four-year period with initial production
for the rst phase projected for 2016.
Early engineering and appraisal activities
are currently underway to design and plan
Our investment in oil sands
BP is involved in three oil sands lease areas in
Alberta the Sunrise Energy Project, Pike and
Terre de Grace.
Environmental baseline
studies are being
conducted at Pike
in areas including
vegetation, wetlands,
wildlife, air and water.
Our focus, along with our partner BP,
is to do the right thing. This is evident
in how we manage important aspects
such as land and biodiversity, air, water
and stakeholders.
Doug Whiteside
Vice President,
Thermal Development,
Devon Canada Corporation
Oil sands
Issue brieng 3
For more information
environment.alberta.ca/apps/osip
The government of Alberta has
established an oil sands information
portal which provides environmental
indicators from Albertas oil sands
facilities on surface water, ground
water, air and biodiversity.
From the very beginning, Husky
seconded employees from BP into our
organization. These staff bring specic
technical expertise to assist on Sunrise
and a reciprocal arrangement is also in
place in the Toledo renery which is part
of our joint venture. This partnership
has proven to be benecial to
both companies.
John Myer
Vice President, Oil Sands,
Husky Energy
We carefully reviewed the decision to invest
in Canadas oil sands, as we do for all major
investments, taking into consideration
environmental, social and nancial concerns.
As with all of our projects, whether operator
or not, we monitor the delivery of these
projects and the mitigation of risk.
In addition to the day-to-day oversight
by operators, the projects are managed
through governance committees, with
representation from BP and our partners.
These committees meet quarterly to ensure
that the projects are proceeding in line with
the direction set by its members. Where
the operator is not BP itself, the operator
is required to provide timely reporting on
various nancial, operational, environmental
and safety metrics; all of which are
benchmarked against BP performance
expectations.
BP representatives on the governance
committees are also responsible for
conrming that project direction and activities
are consistent with BPs code of conduct.
The projects have technical sub-
committees that monitor areas such as:
Health, safety and environmental issues.
Project quality and execution.
Subsurface understanding and
uncertainty.
Facility design and project execution.
Product transportation.
Technology.
The regulatory environment in Alberta
Oil sands developments are subject to
comprehensive and rigorous requirements
as set out by regulatory agencies in the
province of Alberta and by the Canadian
federal government. These cover
environmental impact assessments,
stakeholder consultation and resource
management. The industry in Canada is
collaborative, the regulatory framework
is progressive, and we are working with
industry and regulators to set up a
framework to look at cumulative impacts and
to ensure the right regulations are in place.
Regulatory agencies engage a range
of stakeholders, including industry
organizations such as the Canadian
Association of Petroleum Producers,
during the development of new regulations
to ensure that they are credible, appropriate
and deliver the right outcomes. BP actively
monitors emerging regulatory issues to
ensure we are appropriately involved and
can develop our projects to meet all
regulatory requirements.
Responsible management and oversight
We recognize the need to be responsible in the
way that oil sands projects are managed.
Environmental performance alliance
BP is a member of Canadas Oil Sands
Innovation Alliance (COSIA), an initiative
made up of oil sands producers which
is focused on accelerating the pace of
improving environmental performance
in Canadas oil sands.
The founding charter of the alliance,
which was formed in 2012, is to enable
responsible and sustainable growth of
Canadas oil sands while delivering
accelerated improvement in environmental
performance through collaborative action
and innovation.
The creation of COSIA builds on
work done by the industry, and research and
development organizations over the past few
years. By taking a collaborative approach,
COSIA will focus on the most pressing oil
sands environmental challenges, specically
water, land and greenhouse gases; and aims
to accelerate the discovery and development
of environmental technologies.
www.cosia.ca
Site work being
conducted at BPs Terre
de Grace lease.
Oil sands
Issue brieng 4
Impact on the landscape
Projects are managed through governance committees,
with representation from BP and our partners.
Along with our partners, we are working at
a number of levels to enhance processes or
create new ones to reduce GHG emissions.
For example, one way that they can be
reduced is by processing the bitumen at
the renery, eliminating the potential for
a two-stage rening process.
The projects BP invests in intend
to use high-efciency steam generation
systems, including low nitrogen oxide burner
technology and equipment congurations
to optimize efciency. Carbon capture and
storage is also being evaluated as a long-
term mitigation opportunity.
Water
Oil sands development is water intensive.
Water supply and management are key
elements in planning a SAGD project.
We plan to draw the water used to make
steam primarily from underground aquifers
and, where possible, non-potable water
will be used.
BP is committed to maintaining a high
level of water conservation. Each of our oil
sands projects is being designed to meet
or exceed regulatory requirements.
Technology
BP is working to incorporate existing
technologies and research new
technologies and techniques to make
further improvements. We are doing
this in three ways:
1. Company-specic initiatives: By playing
to BPs strengths with initiatives
focusing on carbon management,
integrated subsurface reservoirs, SAGD
enhancement, and energy and water
efciency.
2. Joint venture collaboration: By working
with our partners on emissions reduction
and water treatment technologies.
3. Industry associations: By progressing oil
sands technology through collaborative
industry bodies such as the Petroleum
Technology Alliance of Canada, AACI
(a consortium including the Alberta
Energy Research Institute, Alberta
Research Council and industry
members) and the newly-formed
Canadas Oil Sands Innovation Alliance.
BPs priorities for technology development
reect a commitment to reducing the
intensity of our operations.
approving bodies, the Energy Resource
Conservation Board, originally formed in
1938, and Alberta Environment and Water,
which administers both the Alberta
Environmental Protection and Enhancement
Act and the Water Act.
Greenhouse gas emissions
A key concern around oil sands operations
using SAGD is the amount of greenhouse
gas (GHG) emissions produced from steam
generation and processing.
A well-to-wheels study conducted in
2009, which measured total GHG emissions
from production through to consumption,
found the lifecycle emissions for oil sands-
based products to be 5-15% higher than
those from average crude oil products
used in the US.
Options under consideration for
managing emissions include implementing
new technology and operating practices to
improve the efciency of our energy use
in both the upstream and downstream
processes. BP has a technology plan to
develop further improvements, including
reducing and avoiding emissions, through
additional heat integration, energy efciency
and improved recovery techniques.
In all oil sands projects, whether operator or
not, BP plans to use production techniques
which reduce land disturbance and create
a smaller physical footprint.
There are regulatory requirements
to complete environmental impact
assessments and to manage identied
issues. This will be accomplished throughout
the project lifecycle through project design,
use of constraints mapping, comprehensive
planning of activities, and ongoing
reclamation of disturbances.
At Terre de Grace, for example, one
of the rst activities we conducted was
the reclamation of well sites developed
during earlier stages of the project. BP will
continue reclamation activities throughout
the life of the project. We are planning
to assess the impacts of the project by
identifying environmental, social and
economic constraints and mapping them
in a geographic information system. The
results will guide the placement of facilities,
such as roads and pipelines, and will help
determine how we can minimize impacts
in the project area.
The province of Alberta has a well-
understood and proven regulatory process
for the submission and approvals of in situ
oil sands projects. There are two main
Steam-assisted gravity drainage
Surface
wellheads
Producing well
Steam injection well
Steam
800m
Bitumen
100-500m
Steam zone
of influence
Oil sands
Issue brieng 5
Stakeholder consultation at the Sunrise
Energy Project and Pike
Our partner in the Sunrise Energy Project,
Husky Energy, has consulted with Aboriginal
communities and other stakeholders since
the early planning stages and will continue
to do so throughout the life of the project.
Husky has a stakeholder management
strategy that outlines tools and
accountabilities to achieve transparent
and meaningful consultation. This plan
encompasses Aboriginal communities,
local government, provincial and federal
regulators, regional stakeholder groups,
employees, unions and others. The
framework provides a structure to identify
and engage stakeholders.
Husky also has an established
commitments register to capture concerns,
track responses, and implement mitigation
commitments to stakeholder issues.
Our partner in the Pike project, Devon
Energy, has a long history of operations in
the area and has well-established systems
and processes with Aboriginal stakeholders
that provide relevant and clear information
on the projects.
Devon also provides stakeholders with
the opportunity to participate throughout
the consultation process.
Health and safety
BP recognizes that some Aboriginal groups
living near Albertas oil sands region are
concerned about the potential health
impacts of oil sands development. BP is
supportive of the work the Alberta
government is doing in partnership with the
concerned Aboriginal groups. This includes
a community health assessment study to
determine the communitys health priorities.
Once the health assessment study has been
completed, the study committee will provide
recommendations for next steps if needed.
Building relationships with First Nation and
Mtis communities
BP began building relationships with First
Nation and Mtis communities in the oil
sands region in 2010, the year we
committed to being the operator of the
Terre de Grace project.
BP encourages First Nation and Mtis
communities to provide feedback on our
activities. For example, during consultation
with a First Nation group on the Terre de
Grace lease, a concern was raised about
bison. Bison are an important species to the
First Nation and they were concerned that
BPs activities on the lease might have a
negative impact on bison that might also
use the area.
In response to this concern, BP
consulted with an environmental advisory
rm and a biologist who specialized in
bison, and created a protocol that was
shared with the First Nation group. It was
subsequently put into practice on the
Terre de Grace lease. This protocol not
only ensured that any negative effects on
bison in the lease area would be minimized,
it also provided guidelines regarding the
safety of any eld staff on the site during
the wildlife encounters.
BP conducts site visits to the Terre
de Grace lease with First Nation and
Mtis members and supports local
community events, such as treaty days
and cultural retreats.
BP has established a stakeholder
commitments register to track stakeholders
interests, issues and concerns. The register
logs feedback on how issues are addressed
and resolved, as well as tracking any
commitments made. This register will
enable information to be shared and will
highlight key tasks and follow-ups for action.
Managing community impacts
Our oil sands projects, whether BP-operated
or not, are being developed in consultation with
affected local communities.
Promoting this kind of open dialogue
helps build strong, mutually benecial
working relationships with the local
communities and also supports
environmentally sound operations.
Melanie Ducharme
Stakeholder Relations,
BP Canada
Im impressed with the level of
engagement from the BP Canada team
towards environmental and social
issues. Through visits such as these,
one can truly appreciate the scale of the
projects and BPs commitment to them.
BP Chairman Carl-Henric Svanberg
(second from left) with some members
of the Sunrise Energy Project team.
Sustainability Review 2011
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Sustainability Review 2011
in print or read more online.
bp.com/sustainability
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sustainability performance, and our
nancial and operating performance.
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Photography
Courtesy of Husky Energy
Summary Review
Read a summary of our nancial
and operating performance in
BP Summary Review 2011 in
print or online.
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Annual Report and Form 20-F
Read details of our nancial
and operating performance in
BP Annual Report and Form 20-F
2011 in print or online.
bp.com/annualreport