Alberta Environment Reporting

ConocoPhillips Canada has eight facilities that process sulphur that require Alberta Environment approvals. These facilities must submit an annual air emissions report, summarizing the facility’s compliance with the air conditions to Alberta Environment.

In 2008 and 2009, three facilities in our Western Canada Gas operations and one facility in Oil Sands did not meet all of the conditions of their approval. Deficiencies included:

• Ambient air monitoring samples were not collected as required. This was reported and we made adjustments to our process to ensure the required samples are collected.
• The amount of sulphur processed by a plant was exceeded. To reduce flaring at this location and reduce the amount of sulphur processed, another reinjection compressor was brought into service.
• The hourly Alberta Ambient Air Quality Objective for hydrogen sulphide was exceeded, detecting an hourly average reading of 11 parts per billion, over the objective of 10 parts per billion. Our investigation determined the most likely cause to be hydrogen sulphide released from a large livestock carrier or an improperly sealed tank truck carrying sour oilfield fluids driving near the monitoring trailer. To help prevent future problems with the monitoring, an additional monitoring station has now been added at the plant, for a total of nine stations.
• The Surmont Phase 1 facility exceeded the oxides of nitrogen limit in their approval in 2008 due to an administrative error made by ConocoPhillips Canada when we applied for the approval. An application for amendment was subsequently submitted and the limit was amended. In 2009, our emissions were within the limits defined in the approval.

Inspections

The Alberta Energy Resources and Conservation Board, the British Columbia Oil and Gas Commission and the Saskatchewan Ministry of Energy and Resources conduct inspections, without notice, of oil and gas operations. Inspectors tour wellsites, facilities and pipelines, inspecting equipment and operations to ensure they meet regulations.

These agencies conducted a total of 592 inspections of our operations in 2008 and 784 in 2009. Each time we experience a high-risk or serious enforcement action on any issue, a corrective action plan is created with any relevant learnings communicated to all staff to prevent similar incidents in the future.

Serious or high-risk findings included:

• While conducting pipeline construction operations, an existing pipeline was hit by excavation machinery and enforcement was issued. We investigated the incident and found that documented procedures were not followed by workers. We repaired the damaged line and reviewed construction procedures with all workers to ensure awareness of the policies.
• We could not verify that a required underground tank integrity test had been conducted. We immediately performed the test, which showed the tank integrity was satisfactory and no leaking was occurring. We then conducted a review of all tanks to ensure they met the testing requirements.
• Hydrogen sulphide odours were confirmed coming off our lease due to a frozen piece of equipment, which allowed gas to vent. To address the issue and prevent a recurrence, we insulated the equipment and replaced the damaged portion with an updated model.
• We failed to report a known surface casing vent flow. We reported this to the Alberta Energy Resources and Conservation Board and reviewed our internal surface casing vent flow processes, improving them to ensure we promptly and correctly submit regulatory reports.

We were also issued $11,660 in non-compliance fees from the Alberta Energy Resources and Conservation Board for failing to submit 11 pressure and deliverability tests and $7,035 in fees for incorrect reporting of production. We are examining these non-compliances to determine the best way to address them and prevent recurrences.

Inspections by Regulators in Alberta, Saskatchewan and British Columbia