News Release July 18, 2000

FOR IMMEDIATE RELEASE

EUB APPROVES PETRO-CANADA MACKAY RIVER SAGD PROJECT

Calgary, Alberta (July 18, 2000) The Alberta Energy and Utilities Board (EUB) today approved an application by Petro-Canada Oil and Gas (Petro-Canada) to construct and operate a $175 million steam-assisted gravity drainage (SAGD*) scheme for the production of crude bitumen from the Athabasca Oil Sands. The proposed project is located about 70 kilometres northwest of Fort McMurray, Alberta. Production is expected to be 3 500 cubic metres of bitumen per day, with a projected recovery of about 37 million cubic metres of bitumen over a 25 year project life span.

Petro-Canada's application was the subject of an EUB hearing held on May 17 and 18, 2000 in Fort McMurray, Alberta. Having considered the evidence, the Board concluded that the proposed project represents orderly development of energy resources in the area. The Board is satisfied that the SAGD technology can be successfully applied to the lease, and accepts that environmental impacts associated with the project development are manageable. Economic benefits of the proposed project would include contributions to provincial royalties and the local tax base, and the generation of economic activity in the area. The Board concluded that approval of this project is in the public interest, subject to the conditions noted in its Decision. These conditions include, among others:

• Petro-Canada shall situate the central plant and waste management facilities in locations mutually acceptable to the Board and to Alberta Environment (AENV).
• Petro-Canada shall monitor ground level ozone and volatile organic compounds for a six month interval or until such time as the Regional Sustainable Development Strategy (RSDS) establish a regional monitoring system for ozone, whichever is later.
• Petro-Canada shall monitor surface water quality within its project area, including appropriate tributaries of the MacKay River, at a frequency to be developed in consultation with the Board and AENV. Monitoring programs must be developed and implemented for each phase of the project.

The Board is satisfied that the public consultation program conducted by Petro-Canada was meaningful and effective in communicating with those most directly affected. The Board notes that the communities most directly impacted support the project. The Board believes that collaborative multi-stakeholder groups provide an effective mechanism in public/industry consultation, particularly in addressing environmental and socio-economic issues, including traditional land use, education, training and employment opportunities.

The Board recognizes the important role of industry operators in the region in supporting regional multi-stakeholder initiatives, such as RSDS, to resolve environmental issues and establish management systems. It expects Petro-Canada to be an active participant and comply with regulatory outcomes of those initiatives. The Board is encouraged by Petro-Canada's corporate position in the Voluntary Challenge Registry and the greenhouse gas reductions proposed for its MacKay River project. Petro-Canada is also commended for its commitment to annually increase energy efficiency of the MacKay River project by 1%. The Board recommends that applicants proposing energy developments of this duration and scale should adopt a management plan for greenhouse gas emissions within the first year of their operations.

* Steam-assisted gravity drainage (SAGD) is a process used to recover bitumen from oil sands. Typically, pairs of horizontal wells are drilled, one for steam injection and one for production. Under the ground, the horizontal wells run parallel to each other in the bitumen zone, with the production well located below the injection well. Steam is injected into the reservoir from the injection well and as the steam permeates the oil sands, the bitumen is heated, allowing it to flow, and the bitumen is then pumped to the surface via the production well. During the life of Petro-Canada's MacKay River Project, about 120 well pairs would be drilled from 24 pad locations.

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This news release and Decision Report 2000-50 are available on the EUB Web site at http://www.ercb.ca

For more information, please contact:

Dave Morris, Senior Advisor
EUB Communications
Tel. 403-297-7470
Fax 403-297-3757
E-mail:david.morris@eub.gov.ab.ca