Leader's Letter

Whenever I have the opportunity to tour stakeholders around the Syncrude operation, I’m always proud to showcase its incredible complexity and our innovative mining and processing technologies. Yet, more importantly, I’m also proud to showcase how all these contribute toward responsible management of a valuable natural resource.

The oil sands help fuel the daily lives of Canadians and its development is justifiably of national interest. Therefore, we must ensure production of Syncrude’s high quality, light, low sulphur crude oil is managed effectively with our best knowledge, resources and expertise. We also need to be frank about where we’re seeking to improve on our performance, but also where we’ve made progress and what we’re doing well. The oil sands represent an incredible opportunity to demonstrate how resource extraction and reclamation can be responsibly achieved while meeting the expectations of many diverse stakeholders. And we are up to the challenge.

But before I discuss our progress in 2015, let me first mention the tremendous response of our workforce to the wildfire of 2016. This event, which will undoubtedly be remembered as one of the most significant in our company’s history, was a testament to their unwavering determination to ensure the continued viability of our company while at the same time caring for their families, homes and community.

Syncrude’s response involved supporting the sudden and complete evacuation of the Fort McMurray area for more than four weeks; the unplanned provision of accommodation and care for about 2,500 evacuees on the Syncrude site and then their evacuation; the complete and unprecedented shutdown of our entire operation; and, later, a safe and orderly return to full operations.

The wildfire resulted in many of our employees and neighbours suffering devastating losses of property, and I appreciate that it will take time and effort to rebuild and recover from the direct loss and emotional stress of that period.

We’ll examine the wildfire and its effects in detail next year. But now, let’s continue to review how Syncrude stewarded to our key issues in 2015.

We responded to the sustained low oil price environment that took hold in late 2014 by commencing a disciplined process to change the way we work. While taking non-value-added costs and activities out of the system is a priority (2015 expenditures were reduced by more than $1.3 billion), so is retaining the employees we need and, to date, Syncrude has experienced no layoffs among our permanent workforce. Equally important was supporting our key communities ($6 million in community investments were maintained) and stewarding to our regulatory requirements. As always, our efforts are being guided by our Vision, Values and Guiding Principles, and our commitment to safe, responsible and reliable operations.

Safety performance, in fact, was strong, with the lowest number of recordable injuries in five years and a lost-time injury rate (0.02) that was our best ever. However, we were disappointed when a fire occurred in our upgrader which suspended production from some of our units for nearly a month. Thankfully, no one was hurt.

The reclamation of 54 hectares of former mining land, while below target, reflected our ongoing work to return land we disturb to a healthy and productive state. In fact, Syncrude remains an industry leader in this effort; our reclaimed land represents 59 per cent of all oil sands reclamation, as compared to our 32 per cent share of the total oil sands land footprint.

Our ability to remediate mine tailings continued to improve with the successful start-up of the $1.9-billion-dollar centrifuge plant, which produced over 3.5 million cubic metres of soil material that is being used in reclamation of former mine areas. It’s important to note this Syncrude-developed technology adds no additional barrels to our production capacity – it is instead a prime example of our commitment to meeting stakeholder and regulatory expectations for improved environmental performance. It is also just one part of a growing suite of technologies now in use or being researched to effectively manage fluid fine tailings.

Biodiversity performance was mixed. We’re pleased that our reclaimed land is providing productive habitat for many species of wildlife, as demonstrated through the assessment of over 2,200 birds in our monitoring of reclaimed and natural areas on our leases. However, we’re saddened that 31 blue herons perished after they came into contact with residual bitumen in an inactive sump area on our site. Internal investigations have led to enhanced measures to help prevent a similar incident in the future. As well, the area has since been reclaimed and no longer presents a hazard.

Fresh water use per barrel of production was comparable with recent years. But, in recognizing we must be wise stewards of the Athabasca watershed, we are examining additional measures to conserve our water withdrawals and investigate how we can safely return water to the environment. Our aim is to reduce net river withdrawals by at least five million cubic metres annually over the next several years, and continue our research on effective water treatment processes.

Syncrude’s work with local Aboriginal communities, upon whose traditional lands we operate, continued to be guided by our goals to share in the opportunity we create and to mitigate concerns. In fact, Aboriginal business performance was strong, with $198.5 million in total contract value for the year. Robust hiring brought Aboriginal representation in our workforce to a 10-year high of 9.4 per cent. As well, we supported a new heavy equipment operator program that provides oil sands career training in the region’s Aboriginal communities; it graduated its first 21 students. Consultations on our proposed Mildred Lake Extension project led to four First Nations and three Métis locals filing statements of concern, and we are working to resolve the issues raised by the communities.

We recognize that environmental performance is the area of most concern to all our stakeholders. To enable better outcomes, Syncrude is consistently among the top spenders in Canada on research and development. In addition, we actively participate in collaborative technology development through Canada’s Oil Sands Innovation Alliance (COSIA), where we lead 40 Joint Industry Projects towards improving reclamation, tailings management and water use.

I’m confident that we are indeed up to meeting our challenges. The journey is ongoing, but the knowledge and hard work of our employees and partners will continue to deliver the progress that all of us—at Syncrude, in the Wood Buffalo region and beyond—want to see in our shared future.

Mark Ward, President and Chief Executive Officer