Our Climate Change Action Plan

In 2009, ConocoPhillips Canada developed and began implementing a Climate Change Action Plan to govern business practices across our operations. In the face of a rapidly changing regulatory and policy environment, the Plan is designed to prioritize the mitigation of our own emissions, improve our management of climate change risks and investigate investment opportunities in new businesses like wind power and biomass. We work with federal and provincial governments to shape climate change policies and regulations that can meet environmental, social and economic performance standards. Our operations are subject to greenhouse gas or carbon management legislation or regulations in the provinces of British Columbia and Alberta.

Our plan is rooted in a carbon management strategy that optimizes greenhouse gas reductions from our own facilities and seeks external greenhouse gas reduction opportunities to help us meet our regulatory compliance obligations. Our strategy has three elements:

• Achieving real emission reductions at our facilities, which can be used to generate Emissions Performance Credits or offset credits for meeting our reduction targets.
• Achieving real and credible reductions of greenhouse gases by purchasing Emission Performance Credits or offset credits.
• Investing in technology for long-term emissions reductions from our facilities and supporting the continued availability of technology funds as a compliance option for emitters through payment into the Climate Change and Emissions Management Fund created under Alberta’s Specified Gas Emitters Regulation.

Achieving Real Reductions

Our carbon management strategy will drive real greenhouse gas emissions reductions at our facilities. These reductions can generate Emissions Performance Credits if those facilities are regulated under Alberta’s Specified Gas Emitters Regulation, or offset credits if the facilities are not regulated. We are working towards:

• Reducing the amount of natural gas we combust and vent.
• Reducing fugitive emissions from our facilities.
• Developing offset protocols for unregulated facilities that will allow us to generate greenhouse gas offsets.

We are also reducing our consumption of fossil fuel-generated electricity. Projects in 2009 included:

• Upgrades to compressor station lighting at our Elmworth gas plant near Grande Prairie, Alberta. The existing mercury vapour lights were replaced with more efficient LED lighting, significantly reducing electricity consumption.
• An automatic lighting installation at our Cessford, Alberta gas plant. Additional infrastructure allows the plant control system to shut down plant lighting automatically when not needed.
• Managing compressor stations in the Grande Prairie, Alberta area. Setting limits on electricity usage and staggering the start-up of compressor stations reduces the consumption of electricity and stress on the electrical infrastructure.
• Installing wind turbines on remote terminal units in the Edson, Alberta area. The energy generated by the turbines supplements solar power, which can fluctuate depending on the season.

Following testing and full implementation of these initiatives, we anticipate our electrical energy consumption will be reduced by one megawatt or a cost savings of $153,000.

Participating in the Carbon Market

The second element of our carbon management strategy calls for real and credible reductions through the actions of others. We participate in the Alberta Offsets Market, which allows for the generation, purchase and use of greenhouse gas emissions offsets from facilities and operations that do not fall under the Alberta government’s Specified Gas Emitters Regulation. We purchased verified offset credits to help meet our 2008 and 2009 compliance obligations for three facilities in our Western Canada Gas business. ConocoPhillips Canada is also active in the international carbon market.

Investing in Technology

The third element of our carbon management strategy involves investing in technology for long-term emission reductions from our facilities and supporting the continued availability of technology funds as a regulatory compliance option that spurs technological innovation.

Technological change and innovation will accelerate the pace of greenhouse gas emission reductions and help mitigate climate change impacts at an acceptable business and social cost. Our Climate Change Action Plan supports:

• Basic research and development.
• Technology-specific research, development and demonstration.
• Market demonstration of technologies.
• Commercialization of technologies.

These technologies will be focused on:

• Reducing the amount of steam used to produce bitumen in the steam-assisted gravity drainage process.
• Using alternative energy sources and technology for steam production and electricity.
• Reducing emissions associated with water processing and use.
• Reducing emissions associated with moving and treating waste.

Knowledge Management

Successfully addressing greenhouse gas emissions is supported through the development of new skills and competencies. Our Climate Change Action Plan positions us to address climate change challenges and create business value through:

• Recognizing climate change risks and opportunities.
• Building a long-term business perspective.
• Communicating with a broad set of stakeholders.
• Engaging with key thinkers and influencers.
• Creating new knowledge networks across functions within ConocoPhillips.
• Understanding the local and global business context.

Delivering on our climate change commitments requires innovation that will enhance our ability to execute and evolve our business. Learning from and sharing our successes and failures also plays a crucial role in our plan.