Our Water Performance

Over the past several years we’ve been slowly reducing the volume of non-saline water used for waterfloods. The major use of non-saline water in our Western Canada Gas operations will soon be for the drilling and completing of wells. As a result, the total volume of water we use will vary primarily with our level of drilling activity. As we begin to explore for and produce more gas from unconventional sources like shale gas, we will experience an increase in our total volume of non-saline water used over the short term.

We are working on a strategy to minimize the volume of non-saline water used in our operations. Technology is a key part of this strategy and we are working on ways to use deeper sources of saline water and to reuse water that is brought to surface.

Variations in water use in our Western Canada Gas operations over the past three years are a result of:

• Decreased volumes of produced water injected or disposed of in 2008 due to land sales and changing operational needs.
• Less water used to drill and complete wells in 2009, as fewer wells were drilled.
• Decreased use of saline groundwater in waterfloods in 2009 due to changing operational needs.

Assessing Our Water Use

Over the past two years we completed water use assessments in all areas of our Western Canada Gas operations. These assessments identified:

• Ways to improve the tracking and reporting of water use in business functions (e.g. operations, drilling and completions, seismic operations)
• Gaps in water management
• Opportunities for water reuse and recycling

As a result of these assessments, we are putting in place practices to ensure our total water footprint will be measured in all phases of our Western Canada Gas business, from construction to transportation. We are also assessing the practicality of using alternatives to non-saline water in our operations.

Minimizing Our Water Use

We are working to minimize our non-saline water use in all areas of our operations. In 2008, we committed to eliminating our remaining use of non-saline water, where practical, in all existing waterflood projects.

To meet this commitment, we reviewed all existing water licenses and assessed all of our remaining waterfloods using Alberta Environment’s Oilfield Injection Policy Guidance Document. This guidance document helps to identify alternatives to using non-saline water and defines a process to examine the economics of implementing these alternatives.

From our license review project we identified several water licenses that were not currently being used. We are investigating alternatives to managing these unused sources of water and have submitted an application to Alberta Environment to transfer one of the water licenses to The Water Conservation Trust of Canada. If successful, this transfer would keep the water in the river and not allow it to be reallocated. During our waterflood assessment project we evaluated seven waterfloods and determined the following:

• Four locations were not currently using non-saline water and at these locations we have committed to not reactivate the non-saline sources of water.
• One location in our Rimbey, Alberta operations is still using approximately 70 m³ per day of non-saline water. It is likely that this volume will not be required in five years’ time. This current use of water was determined to be sustainable and does not impact the watershed or nearby users.
• One location in our O’Chiese operations in west-central Alberta is using approx 60 m³ per day of groundwater. The assessment determined this water use is sustainable and will not have a significant impact on the watershed or nearby users.
• Two locations in our Mantario and Marengo operations in southwest Saskatchewan use a combination of saline and non-saline groundwater as make-up water. We have determined that the current and future use of non-saline groundwater is sustainable and will not impact the local watershed or nearby users.