Air

Sulphur Emissions Syncrude operated within its 90 day rolling average SO2 license limits (245 tonnes per day for Main Stack emissions and 250 tonnes per day for All Sources emissions) and even limited crude oil production to ensure this occurred. However, Syncrude was required to provide additional information to regulators as our 2004 SO2 annual average for All Sources exceeded 230 tonnes per day.

Regulators Approve Emission Reduction Project

In November, Syncrude received regulatory approval for a proposed $400 million project to reduce sulphur dioxide emissions. The project, which will commence operation in 2009, involves the retrofit of a flue gas scrubbing system into the operation of Syncrude’s two existing cokers. In combination with sulphur dioxide emission reduction technology also being incorporated into a third coker now under construction, the project will reduce stack emissions of sulphur compounds by 60 per cent from current approved levels of 245 tonnes per day. The reduction will be gradually achieved over the course of a two-year period after start-up in 2009. A 50 per cent reduction in emissions of particulate matter also will be achieved. The project engineering design specification will be complete in 2005; with procurement and construction activities to follow in 2006 and beyond.

Also see discussion on key stakeholder concerns, page 32.

Greenhouse Gas Emissions Reporting System Best Practice

In 2004, Syncrude continued its work with government and other industry members to develop a comprehensive, auditable method for the reporting of greenhouse gas emissions from the oil sands and heavy oil upgrading industry. This effort establishes a best reporting practice for the oil sands and heavy oil upgrading industry and will support the mandatory reporting of GHG emissions to regulators, which commenced in 2004. A draft estimation method that will accurately capture all sources of greenhouse gas emissions has now been developed and is being reviewed through a multi-stakeholder consultation process.

Key Air Indicators

	2005 Target	2004 Actual	2004 Target	2003	2002	2001	2000
Main Stack SO2
Hours greater than 16.4 tonnes per hour	0	2	0	3	1	1	3
Daily average greater than 292 tonnes per day (# of occurances)	0	0	0	0	0	0	1
Main Stack Opacity (# hrs > 40%)	<5	11	<5	6	3	12	8
Main Stack NOx Emissions
(#hrs > 1.5 tonnes per hr)	0	0	0	0	0	0	0
Ambient Air Exceedences
H2S Hourly (#)	0	20	0	5	7	4	49
H2S 24-hr Period (#)	0	3	0	5	7	4	49
SO2 Hourly (#)	0	2	0	2	2	0	3
SO2 24-hr Period (#)	0	0	0	0	1	0	0
Odour Complaints Received (#)	0	1	0	0	1	0	0
Environmental Fines (#)	0	0	0	0	0	0	0
Environmental Administrative Penalties (#)	0	0	0	0	0	3	1
Total Penalties by Year ($000)	0	0	0	0	0	28	7
Cumulative Total Penalties ($000)	37	37	37	37	37	37	9
Alberta Environment conducts regular on-site audits of our stack sampling procedures to ensure compliance with requirements to maintain high quality data within tightly specified tolerances. Information relating to offsite air quality is measured, collected and validated by an independent third party, the Wood Buffalo Environmental Association.

Energy Efficiency and Climate Change

Syncrude did not meet its target for energy efficiency in 2004. Performance was 1.35 million BTUs per barrel of oil produced versus the target of 1.26. Contributing factors included higher than expected natural gas consumption at the Aurora mine due to the start-up of Aurora’s second production train, lower than planned bitumen recovery and high energy consumption caused by unplanned outages of major production equipment.

Syncrude has committed to achieving energy intensity improvements of at least one per cent per year. Between 1988 and 2004, we reduced the energy needed to produce a barrel of crude oil by 8.3 per cent. We continue to pursue progress through energy conservation efforts and improved bitumen recovery and upgrading yields which help to further reduce the amount of energy consumed to produce a barrel of crude oil.

These improvements have and will continue to lower our greenhouse gas emissions intensity. In fact, for the period 1988-2010, we are projecting a 23 per cent reduction in emissions of CO2 per barrel of crude oil produced. Because we are significantly increasing our production and quality of crude oil, total emissions will increase. Syncrude continues to be challenged by societal demand for highly upgraded clean burning crude oil, a process that consumes energy, as well as demand for greater energy efficiency in our processes.

Also see discussion on Stakeholder Benefits of Capital Program, page 22.

Toward meeting our energy efficiency objectives, Syncrude employs dedicated energy efficiency specialists who assist operating staff in the technical development of energy conservation opportunities and projects, the planning of production configurations and daily energy and emissions optimization. Syncrude also requires energy conservation assessments of all processes and equipment proposed for its expansion projects.

Syncrude has developed a set of energy and emissions performance factors to assist operating areas in achieving annual and monthly targets for heat recovery and energy use. Each month, operating teams review and steward toward their individual targets.

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Actions taken by Syncrude in response to stakeholder concerns raised during our stakeholder engagement processes are noted throughout this report; these actions are indicated by the symbol.