Part 1: Project Description

Transcription

1 Application for Approval of the AOSP Bitumen Blending Facility Project Part 1: Project Description Submitted to: Alberta Energy and Utilities Board and Alberta Environment Submitted by: Shell Canada Limited December 2007

2 PREFACE Section P.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION EXECUTIVE SUMMARY PURPOSE OF APPLICATION Shell Canada Limited (Shell) is applying to the Alberta Energy and Utilities Board (EUB) and Alberta Environment (AENV) to further amend the following existing approvals for the Scotford Upgrader Project: Construction and Operating Approval 8522, issued by the EUB under the Oil Sands Conservation Act (OSCA) Operating Approval , as amended, issued by AENV under the Environmental Protection and Enhancement Act (EPEA) Shell is also applying, under the Water Act, to withdraw water from the North Saskatchewan River. These applications are for approval to allow the addition, construction and operation of the Athabasca Oil Sands Project (AOSP) Bitumen Blending Facility Project (the project or bitumen blending facility) at the AOSP Scotford Upgrader. SCOPE OF AMENDMENT This integrated amendment application to the EUB and AENV is provided in two parts: Part 1: Project Description, which describes the proposed bitumen blending facility and the plans for executing and managing the project Part 2: Environmental Review, which reviews the project s potential environmental effects PURPOSE OF PROJECT The purpose of the Bitumen Blending Facility Project is to: recover paraffinic diluent from the diluted bitumen for reuse in the mine. The bitumen blending facility will be designed to recover paraffinic diluent from about 34 Mm 3 /a (215 million barrels per year) of incremental diluted bitumen production, equivalent to 2,650 m 3 /h (400,000 bbl/cd) of bitumen, from future AOSP mining developments in northern Alberta. December 2007 Shell Canada Limited P-i

3 PREFACE EXECUTIVE SUMMARY Section P.1 PURPOSE OF PROJECT (cont d) blend the resultant bitumen with other light hydrocarbon diluents, such as condensates or synthetic crudes, to produce bitumen or bitumen blend products for sale to markets or to other regional upgraders, or both. The capacity of the facility will be the equivalent of 2,650 m 3 /h (400,000 bbl/cd) of bitumen. The proposed project will be located within the Scotford Complex near Fort Saskatchewan, Alberta, and will be executed in four phases. Shell will operate the facility on behalf of the participating AOSP joint venture owners. Shell and the other joint venture participants require approval of this project to establish the flexibility to both upgrade bitumen locally in Alberta, and produce marketable bitumen blends for sale in other North American or world markets. Approval for all four phases and components of the project is being requested to allow flexibility in project development planning and execution. The staging of project phases could help to mitigate the potential construction impacts in the Scotford area. PROJECT SCOPE The proposed bitumen blending facility will be constructed in four phases, with each phase providing about 663 m 3 /h (100,000 bbl/cd) of additional equivalent bitumen capacity. When the project is complete, an additional 2,650 m 3 /h (400,000 bbl/cd) of bitumen capacity will have been installed at the AOSP Scotford Upgrader. Each phase of the bitumen blending facility will consist of similar processing facilities, utilities and offsites, including: a diluent recovery unit (DRU) a bitumen blending header supporting utilities and offsites FEEDSTOCK SOURCE The bitumen supply for the project will originate from future AOSP mining developments, and will be delivered as diluted bitumen to the Scotford Complex via the Corridor pipeline system. Condensates and synthetic crudes will be purchased from third parties for bitumen blending use. PROCESS OVERVIEW The basic process configuration is similar in each phase of the bitumen blending facility development. P-ii Shell Canada Limited December 2007

4 PREFACE EXECUTIVE SUMMARY Section P.1 The diluted bitumen will be processed in the diluent recovery unit (DRU) to recover the paraffinic diluent. The paraffinic diluent will be returned to the mine site for reuse in the mine s froth treatment process. The resultant bitumen will either be blended with suitable light hydrocarbons, such as condensate or synthetic crude, to produce marketable bitumen blend products for sale to Canadian and US refineries, or fed to other regional upgraders as feedstock. The bitumen blending facility will be operated as part of the expanded AOSP Scotford Upgrader. MARKETING Each participating joint venture owner will use or market its own share of production from each mine development. The bitumen blends are likely to be marketed to: other regional upgraders coker refiners in the North American market, predominantly those in the following Petroleum Administration for Defense Districts (PADD): PADD II area (US Midwest) PADD III area (US Gulf Coast) PADD V area (US West Coast) The PADD II market is already an established market for Western Canadian crudes. These PADD markets are robust and large enough to absorb the additional volume of bitumen blends produced from the project. PUBLIC CONSULTATION The proposed project was disclosed as part of the Public Disclosure for the Shell Scotford Upgrader 2 Project on January 24, This was followed by an open house on March 8, 2007, at which information on both the proposed Shell Scotford Upgrader 2 Project and the AOSP Bitumen Blending Facility Project was provided. A second open house was held on October 10, 2007, at which the AOSP bitumen blending facility was discussed and described separately from other Shell developments. However, this open house also provided the public with the opportunity to ask questions about the broader scope of all of Shell s proposed developments in the Scotford area. The development plans Shell has described in this amendment application reflect the potential for Shell s long-term, continuous development in the Scotford area. Disclosure of this nature is consistent with the desire expressed by stakeholders and regulators for industries to be transparent about their long-term plans in the region. December 2007 Shell Canada Limited P-iii

5 PREFACE EXECUTIVE SUMMARY Section P.1 PROJECT TIMING Subject to regulatory approval and participating joint venture owners project approval, construction of the first phase of the project could start as early as 2009, with start-up as early as ENVIRONMENTAL REVIEW A review of the project s possible environmental and socio-economic effects has been completed (see Part 2). The review concluded that the project would not have any unacceptable environmental or socio-economic effects, as long as the proposed mitigation measures and monitoring programs were implemented. The proposed project will create an estimated: 23,000 work years of employment during construction 115 operations jobs after all four phases are complete Developing the project will also contribute to revenues for all levels of government and provide contributions to regional economies. The phased approach to project development, as described in this amendment application, will ensure that benefits are more evenly distributed over the lifespan of the development. This approach also allows for reducing the potential impacts of intense construction peaks in the area and leads to a more long-term and stable basis for contributing to the local economy. P-iv Shell Canada Limited December 2007

6 PREFACE Section P.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION GUIDE TO THE APPLICATION SCOPE Shell s amendment applications for EUB and AENV approvals have been integrated to: reduce duplication, particularly for project descriptions make the application review as efficient as possible for regulators and the public The application is presented in two parts: Part 1: Project Description Part 2: Environmental Review PART 1: PROJECT DESCRIPTION Part 1 contains information required by the EUB to amend the approval under the OSCA and by AENV to amend the 10-year operating approval under the EPEA and to approve the application for water withdrawal under the Water Act. The Project Description: provides an overview of the proposed project outlines the existing operations describes the technical basis for the proposed project describes the public consultation program summarizes the results of the environmental and socio-economic reviews PART 2: ENVIRONMENTAL REVIEW Part 2 contains the environmental information required by AENV to amend the 10-year operating approval under the EPEA. December 2007 Shell Canada Limited P-v

7 PREFACE GUIDE TO THE APPLICATION Section P.2 PART 2: ENVIRONMENTAL REVIEW (cont d) The Environmental Review: describes the environmental setting provides qualitative and quantitative descriptions of the possible environmental effects of the project describes the possible socio-economic changes resulting from the project CROSS-REFERENCES TO REQUIRED INFORMATION The EUB information required to further amend EUB Approval 8522 for the Scotford Upgrader Project to include the bitumen blending facility, and the location of the information in the application, is provided in Table P-1. Section 10, AENV Approval Requirements, provides the information and crossreferences to information required for AENV to amend the EPEA 10-year operating approval for the Scotford Upgrader Project, to add the bitumen blending facility. Table P-1: Information to Amend EUB Approval 8522 EUB Directive 023 Information Required Location Part Project summary, objectives and approvals requested Section Act and section under which application is made Transmittal letter and Section Name and address of applicant Section Statement of need for and timing of the project Section 1.1 and Scheme description, including the location, size, scope, schedule, pre-construction, start-up, duration and reasons for proposed schedule Description of the regional setting with reference to existing and proposed land use Section 1 and Map of existing developments Section 1.2, Figure Aerial photo of proposed development area with locations of project components General description of storage and transportation facilities for dilbit, including pipeline size and ownership Proposed rate of production of hydrocarbon processed over project life Location Part 2 Section 1.1 Section 1 Section 2.2 and 3.3 Section 1.1 and Description of oil sands owned or leased Sections 1.1 and 10.2 Figure P-vi Shell Canada Limited December 2007

8 PREFACE GUIDE TO THE APPLICATION Section P.2 Table P-1: Information to Amend EUB Approval 8522 (cont d) EUB Directive 023 Information Required Description of proposed energy sources, alternative sources, rates of use and supply sources Results of public information programs Section 8 Location Part 1 Section 3.2 and Start and completion dates Section Name of person responsible for application Section Description of the bitumen blending utilities and offsites facilities Material and energy balances, including information regarding hydrocarbon and sulphur recoveries, water use and energy efficiency The quantity of products, by-products and discard generated and a general description of their disposition How surface drainage within the areas of the processing plant, product storage and discard disposal will be treated and disposed of Comparison of alternative processes based on recovery, energy efficiency, cost, commercial availability and environmental considerations, and reasons for selecting the proposed process Section 2 and 3 Section 4.1 and 5 Section 5 and 9.4 Section 4.2 and 4.3 Section 1.2 and Electrical generation facilities and external sources Section Source, quality and quantity of fuels, electricity or steam obtained from beyond project site Description of air and water pollution control and monitoring facilities, including a liquid spill contingency plan Description of the water management program, including: proposed water source and expected withdrawal source water quality control wastewater program water balance for the proposed scheme Section 3.2 Section 2.1, 3.3, 4.2, 4.3, 7.3, 8.4, 9.5, 9.6 and 10.2 Section 4 and Surface drainage collection, treatment and disposal Section 4.2 and Description of the air and water pollution control and monitoring facilities Section 2.1, 3.3, 4.3, 8.4 and Description of the emission control system Section 2.1 and Commercial viability Section Summary of public benefits and costs during construction and operation 3.3 Summary of economic and employment impacts of the project at regional, provincial and national levels Section 1.2 Section 12 Location Part 2 Section 12 December 2007 Shell Canada Limited P-vii

9 PREFACE GUIDE TO THE APPLICATION Section P.2 P-viii Shell Canada Limited December 2007

10 CONTENTS APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION TABLE OF CONTENTS Preface Executive Summary... i Guide to the Application... v Contents Table of Contents... ix List of Illustrations... xi 1. Overview 1. Background Proposed Development Current Operations Environmental Management Regulatory Approvals Processing Facilities 1. Process Technology Selection Feedstock New Processing Units Development Area Plot Plan Utilities and Offsites 1. Internal Utility Systems Third-Party-Supplied Utilities Storage and Metering Water Management 1. Water Supply and Distribution Water Collection Systems Water Treatment, Reuse and Release Water Intensity and Reduction Plan Material and Energy Balances 1. Material Balance Energy and Utility Balances Process Chemicals December 2007 Shell Canada Limited ix

11 CONTENTS TABLE OF CONTENTS 6. Marketing Plan 1. Market Positioning Pipeline Infrastructure Product Portfolio and Shipping Plan Project Execution Strategy 1. Introduction Contracting and Procurement Plan Construction Public Consultation 1. Approach Public Consultation Program Consultation Initiatives Regional Cooperation Environmental Management 1. Sustainable Development Health, Safety and Environment HSE Management System Waste Management Emergency Preparedness and Response Reporting Spills and Emissions Greenhouse Gas Management AENV Approval Requirements 1. Introduction Application for EPEA Amendment Summaries of Monitoring Results Attachments Glossary x Shell Canada Limited December 2007

12 CONTENTS APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION LIST OF ILLUSTRATIONS LIST OF FIGURES Figure 1-1 Location of the Bitumen Blending Facility Figure 1-2 Overview of Proposed Bitumen Blending Process Figure 1-3 Proposed Phase 1 Development Schedule Figure 1-4 Preliminary Site Plan Figure 1-5 Existing AOSP Scotford Upgrader Site Plan Figure 1-6 AOSP Scotford Upgrader Expansion Site Plan Figure 2-1 Bitumen Blending Facility Block Flow Diagram Figure 2-2 Diluent Recovery and Bitumen Blending Process Flow Figure 2-3 Bitumen Blending Facility Plot Plan Figure 4-1 Raw Water Supply and Distribution Figure 5-1 Bitumen Blending Facility Block Flow Diagram Figure 6-1 Current Crude Oil Market Areas Figure 6-2 Options to Increase Pipeline Capacity Figure 8-1 Shell s Principles of Consultation Figure 8-2 Shell s Good Neighbour Policy Figure 9-1 Shell s Commitment to Sustainable Development LIST OF TABLES Table P-1 Information to Amend EUB Approval P-vi Table 1-1 Amendments and Approvals Requested for the Bitumen Blending Facility Table 1-2 Ancillary Approvals for the Bitumen Blending Facility Table 2-1 Athabasca Bitumen Properties Table 2-2 Typical Paraffinic Diluent Quality Table 2-3 Process Unit Design Capacities for Each Phase Table 3-1 Estimated Hydrocarbon Flare Loads Table 3-2 Preliminary Hydrocarbon Flare Design Table 3-3 Preliminary Hydrocarbon Flare Exit Velocity Table 3-4 Preliminary Hydrocarbon Flare System Table 3-5 Estimated Bitumen Blending Facility Electrical Demand Table 3-6 Bitumen Blending Facility Process Tankage Table 3-7 Bitumen Blending Facility Utility Tankage Table 4-1 Effluent Release Volume Table 5-1 Bitumen Blending Facility Overall Material Balance Table 5-2 Bitumen Blending Facility Overall Energy and Utility Balances Table 5-3 Bitumen Blending Facility Overall Energy Efficiency Table 5-4 Bitumen Blending Facility Overall Water Balance (Summer) December 2007 Shell Canada Limited xi

13 CONTENTS LIST OF ILLUSTRATIONS Table 5-5 Estimated Process Chemical Requirements for the Facility Table 6-1 Proposed Crude Oil Pipelines Table 6-2 Proposed Condensate Pipelines Table 8-1 Public Consultation January to October 11, Table 9-1 Disposition of Proposed Bitumen Blending Facility Waste Table 10-1 Estimated Maximum Combustion Emissions for Stacks and Flares Table 10-2 Organic Emissions from Tanks Table 10-3 VOC Emissions Released from the Project Table 10-4 Ambient Air Analyzer Results (2002) Table 10-5 Stack Emission Limits (Before Expansion 1 Amendment) Table 10-6 Total Air Emissions (2003) Table 10-7 Hours of Exceeded Stack Licensed Limits (CEM) Table 10-8 Licence Stack Emissions Limit Contraventions (2003) Table 10-9 Flare and Incinerator SO 2 Air Emissions (2003) Table Monitored NO x Emissions (2003) Table Unlicensed or Uncontrolled Releases of H 2 S or SO 2 (2003) Table SRU Stack SO 2 Emissions (2003) Table Total Emissions (2004) Table Hours of Exceeded Stack Licensed Limits (CEM) Table Licence Stack Emissions Limit Contraventions (2004) Table Flare and Incinerator SO 2 Emissions (2004) Table Monitored NO x Emissions (2004) Table Unlicensed or Uncontrolled Releases of H 2 S or SO 2 (2004) Table AAQG Exceedances at Scotford and Lamont Air Stations (2004) Table Total Emissions (2005) Table Hours of Exceeded Stack Licensed Limits (CEM) Table Licence Stack Emissions Limit Contraventions (2005) Table Flare and Incinerator SO 2 Emissions (2005) Table Monitored NO x Emissions (2005) Table Unlicensed or Uncontrolled Releases of H 2 S or SO 2 (2005) Table AAQG Exceedances at Scotford and Lamont Air Stations (2005) Table Total Emissions (2006) Table Hours of Exceeded Stack Licensed Limits (CEM) Table Licence Stack Emissions Limit Contraventions (2006) Table Flare and Incinerator SO 2 Emissions (2006) Table Monitored NO x Emissions (2006) Table Unlicensed or Uncontrolled Releases of H 2 S or SO 2 (2006) Table AAQG Exceedances at Scotford and Lamont Air Stations (2006) Table Monthly Minimum and Maximum Potable Water Monitoring Results (2002) Table Potable Water Report Summary (2002) Table Weekly Potable Water ph, Turbidity and Total Chlorine Results from Potable Water Distribution System (2002) Table Monthly Minimum, Maximum and Average Chlorine (2003) Table Monthly Minimum, Maximum and Average of the Biological Testing (2003) Table Potable Water Incidents Reported to AENV (2003) Table Monthly Minimum, Maximum, and Average Chlorine (2004) Table Monthly Minimum, Maximum and Average of the Biological Testing (2004) Table Potable Water Incidents Reported to AENV (2004) Table Monthly Minimum, Maximum, and Average Chlorine (2005) Table Monthly Minimum, Maximum and Average of the Biological Testing (2005) xii Shell Canada Limited December 2007

14 CONTENTS LIST OF ILLUSTRATIONS Table Potable Water Incidents Reported to AENV (2005) Table Monthly Minimum, Maximum, and Average Chlorine (2006) Table Monthly Minimum, Maximum and Average of the Biological Testing (2006) Table Potable Water Incidents Reported to AENV (2006) Table Effluent Release Pond (2002) Table Effluent Release Pond Releases Compliance Summary (2003) Table Clean Stormwater Pond Discharge Quality (2003) Table Clean Stormwater Pond Releases Compliance Summary (2003) Table Effluent Release Pond Releases Compliance Summary (2004) Table Clean Stormwater Pond Transfer Water Quality (2004) Table Effluent Release Pond Releases - Compliance Summary (2005) Table Effluent Release Pond Discharge Quality Summary (2005) Table Effluent Release Pond Releases Compliance Summary (2006) Table Effluent Release Pond Discharge Quality Summary (2006) Table Effluent Release Pond Discharge Quality Summary (2006) Table Annual Waste Summary (2002) Table Annual Waste Summary (2003) Table Annual Waste Summary (2004) Table Annual Waste Summary (2005) Table Annual Waste Summary (2006) December 2007 Shell Canada Limited xiii

15 CONTENTS LIST OF ILLUSTRATIONS xiv Shell Canada Limited December 2007

16 OVERVIEW Section 1.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION BACKGROUND PURPOSE OF THIS APPLICATION Shell Canada Limited (Shell) is applying to the Alberta Energy and Utilities Board (EUB) and Alberta Environment (AENV) to further amend the following existing approvals for the Scotford Upgrader Project: Construction and Operating Approval 8522, issued by the EUB under the Oil Sands Conservation Act (OSCA) Operating Approval , as amended, issued by AENV under the Environmental Protection and Enhancement Act (EPEA) Shell is also applying, under the Water Act, to withdraw water from the North Saskatchewan River. These applications are for approval to allow the addition, construction and operation of the Athabasca Oil Sands Project (AOSP) Bitumen Blending Facility Project (the project or bitumen blending facility) at the AOSP Scotford Upgrader. PURPOSE OF THE PROJECT The purpose of the Bitumen Blending Facility Project is to: recover paraffinic diluent from the diluted bitumen for reuse in the mine. The bitumen blending facility will be designed to recover paraffinic diluent from about 34 Mm 3 /a (215 million barrels per year) of incremental diluted bitumen production, equivalent to 2,650 m 3 /h (400,000 bbl/cd) of bitumen, from future AOSP mining developments in northern Alberta. blend the resultant bitumen with other light hydrocarbon diluents, such as condensates or synthetic crudes, to produce bitumen or bitumen blend products for sale to markets or to other regional upgraders, or both. The capacity of the facility will be the equivalent of 2,650 m 3 /h (400,000 bbl/cd) of bitumen. PROJECT LOCATION The proposed project will be located within the Scotford Complex on the following new Shell lands to the north of the existing Scotford Complex: December 2007 Shell Canada Limited 1-1

17 OVERVIEW BACKGROUND Section 1.1 PROJECT LOCATION (cont d) NE W4M (portion) SE W4M SW W4M (portion) NE W4M NW W4M All lands are located within Strathcona County, about 5 km northeast of Fort Saskatchewan, Alberta (see Figure 1-1). The lands are situated within Alberta s Industrial Heartland and are zoned for heavy industrial development. 643 N North Saskatchewan River Edmonton City of Fort Saskatchewan 15 Calgary Approved Existing Scotford Complex Proposed Bitumen Blending Facility Area Shell Owned Land Figure 1-1: Location of the Bitumen Blending Facility SITE SELECTION Shell already has an established upgrader operation, the AOSP Scotford Upgrader, within the existing Scotford Complex. Therefore, the bitumen blending facility will be best situated adjacent to the existing AOSP Scotford Upgrader within the Scotford Complex. In addition to Shell s knowledge of the geotechnical aspects of the area, this site provides the proposed project with access to: 1-2 Shell Canada Limited December 2007

18 OVERVIEW BACKGROUND Section 1.1 existing regional infrastructure, such as roads, rail links and pipelines, which reduces the need to build new infrastructure and also reduces the impact on the surrounding areas a location already zoned for heavy industrial use a large skilled labour pool and supporting social infrastructure PROJECT NEED Shell and the participating AOSP joint venture owners require approval of this project to establish the flexibility to both upgrade bitumen locally in Alberta and produce marketable bitumen blends for sale in other North American or world markets. Approval is required for all four phases and components of the project, to allow flexibility in project development planning and execution. The staging of project phases could help to mitigate the potential construction impacts in the Scotford area. The oil sands resources in Alberta represent Canada s greatest potential source of future petroleum supply. Canada s oil sands resources are comparable in size to Saudi Arabia s conventional oil resources. Over the past 20 years, the contribution made by the oil sands to Canada s petroleum supply has increased substantially. The AOSP bitumen is well suited for use as local upgrader feed or for sale to a broad range of potential markets and customers. Bitumen from the mining development is treated at the mine using a froth treatment process. This process uses a paraffinic diluent that reduces the solids and water content of the bitumen to low levels. The resulting bitumen quality is suitable for either local upgraders or for transporting in pipelines to customers that have sufficient heavy oil conversion and desulphurization capacity to process significant quantities of bitumen in their total feedstock. However, before disposition, a bitumen blending facility is needed to recover the paraffinic diluent from the diluted bitumen and return it to the mine for reuse in froth treatment. The resulting bitumen from this facility will be blended with suitable light hydrocarbons, such as condensate or synthetic crude, into bitumen blend products for sale in the market, or as feed to regional upgrader facilities. RELATIONSHIP WITH OTHER DEVELOPMENTS The bitumen blending facility will be an integral part of the AOSP mining developments. It will be operated as part of the AOSP Scotford Upgrader. PROJECT PROPONENT The proponent for the project is Shell Canada Limited (Shell), which will apply for, and hold, all construction and operating regulatory approvals required for the December 2007 Shell Canada Limited 1-3

19 OVERVIEW BACKGROUND Section 1.1 PROJECT PROPONENT (cont d) project on behalf of Shell Canada Energy. Shell Canada Energy, a partnership of which Shell Canada Limited is the managing partner, will operate the new facility on behalf of the participating AOSP joint venture owners. Shell is one of Canada s largest integrated energy companies. Shell is a major producer of natural gas, natural gas liquids, sulphur, bitumen and synthetic crudes derived from bitumen upgrading. Shell manufactures, distributes and markets refined petroleum products across Canada. 1-4 Shell Canada Limited December 2007

20 OVERVIEW Section 1.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION PROPOSED DEVELOPMENT PROJECT SCOPE The proposed project will be constructed in four phases, with each phase providing about 663 m 3 /h (100,000 bbl/cd) of additional equivalent bitumen capacity. When the project is complete, an additional 2,650 m 3 /h (400,000 bbl/cd) of equivalent bitumen capacity will have been installed at the AOSP Scotford Upgrader. Each phase of the bitumen blending facility will consist of similar processing facilities, utilities and offsites, including: a diluent recovery unit (DRU) a bitumen blending header supporting utilities and offsites, including: tankage raw water storage and treatment wastewater treatment and effluent release clean and potentially oily surface water collection cooling and utility water a flare system electrical power FEEDSTOCK SOURCE The bitumen supply for the bitumen blending facility will originate from future AOSP mining developments, and will be delivered as diluted bitumen to the Scotford Complex via the Corridor pipeline system. Condensates and synthetic crudes will be purchased from third parties for bitumen blending use. DISTILLATION TECHNOLOGY Shell has already established a strong knowledge base of bitumen processing capability, including distillation technology, through the AOSP Scotford Upgrader, and through continued operational excellence and improvements to the existing operations. December 2007 Shell Canada Limited 1-5

21 OVERVIEW PROPOSED DEVELOPMENT Section 1.2 PROCESS OVERVIEW Figure 1-2 provides an overview of the proposed bitumen blending process. Each AOSP joint venture participant has the option of either selling its share of AOSP bitumen from the bitumen blending facility to market or sending it to neighbouring regional upgraders for further upgrading to synthetic crude oil products. Recycle to Mine AOSP Diluted Bitumen Paraffinic Diluent Bitumen Diluent Recovery Blender Product Distribution to Market or Regional Upgraders Figure 1-2: Overview of Proposed Bitumen Blending Process PUBLIC CONSULTATION Shell has an ongoing, high-engagement public consultation program for the existing AOSP Scotford Upgrader and has adopted a similar approach to consulting with stakeholders about the proposed bitumen blending facility. The proposed project was disclosed as part of the Public Disclosure for the Shell Scotford Upgrader 2 Project on January 24, This was followed by an open house on March 8, 2007, at which information on both the proposed Shell Scotford Upgrader 2 Project and the AOSP Bitumen Blending Facility Project was provided. A second open house was held on October 10, 2007, at which the bitumen blending facility was discussed and described separately from other Shell developments. This open house also provided the public with the opportunity to ask questions about the broader scope of all Shell-proposed developments in the Scotford area. Shell will continue consultation on the bitumen blending facility, in conjunction with other ongoing consultation at Scotford, to provide a comprehensive scope of Shell s operations and future development plans in the Alberta Industrial Heartland area. The development plans Shell has described in this amendment application reflect the potential for long-term, continuous development by Shell in the Scotford area. Disclosure of this nature is consistent with the desire expressed by stakeholders and regulators for industries to be transparent about their long-term plans in the region. 1-6 Shell Canada Limited December 2007

22 OVERVIEW PROPOSED DEVELOPMENT Section 1.2 PROJECT SCHEDULE Phased Development Project Timing The proposed project will be built in four phases, each consisting of 663 m 3 /h (100,000 bbl/cd) equivalent bitumen capacity. Using a similar design in each project phase will allow Shell to improve on design and construction efficiency over time, with the goal of reducing project costs and optimizing the pace of development. The pace and timing of development will depend on: the timing and outcome of the regulatory processes the ability to meet emerging regulatory requirements market conditions and economic viability the ability to access labour and capital resources Developing the project in phases helps to reduce and more evenly distribute the potential impacts of intense construction peaks in the area. If regulatory approval is granted and project approval is obtained for the investment, detailed engineering and construction of the initial phase could start as early as 2009 (see Figure 1-3). Commissioning and start-up for the first phase of the project could begin as early as Shell plans to operate each phase of the project for more than 30 years. Task Application and Environmental Reviews Preparation Regulatory Review Process Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Phase 1 Design and Construction Figure 1-3: Proposed Phase 1 Development Schedule MARKETING Each participating joint venture owner will use or market its own share of production from each mine development. These bitumen blends and other synthetic products from the AOSP Scotford Upgrader will provide a full spectrum of synthetic crude oils derived from bitumen. The bitumen or bitumen blends are likely to be marketed to either regional upgraders or coker refiners in the North American market, predominantly those in the following Petroleum Administration for Defense Districts (PADD): December 2007 Shell Canada Limited 1-7

23 OVERVIEW PROPOSED DEVELOPMENT Section 1.2 MARKETING (cont d) PADD II area (US Midwest) PADD III area (US Gulf Coast) PADD V area (US West Coast) These markets are robust and large enough to absorb the new bitumen blend volumes expected. As transportation infrastructure to the West Coast of Canada develops further, opportunities to supply offshore markets, including the Far East, might also become available. SITE PLAN A preliminary site plan is shown in Figure 1-4. The details of the overall plot will be developed during detailed engineering. 1-8 Shell Canada Limited December 2007

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25 OVERVIEW PROPOSED DEVELOPMENT Section Shell Canada Limited December 2007

26 OVERVIEW Section 1.3 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION CURRENT OPERATIONS AOSP JOINT VENTURE The Athabasca Oil Sands Project (AOSP) is a joint venture between Shell Canada Energy, Chevron Canada Limited and Marathon Oil Sands LP to develop world-class, integrated bitumen production and upgrading operations. Since its inception, the AOSP joint venture has developed and has been operating the AOSP Scotford Upgrader within the Scotford Complex near Fort Saskatchewan, to upgrade bitumen from its Athabasca oil sands mining developments. AOSP SCOTFORD UPGRADER The existing AOSP Scotford Upgrader was initially designed for 1,027 m 3 /h (155,000 bbl/cd) of bitumen processing capacity. On a stream-day basis, this capacity is equivalent to about 1,105 m 3 /h (167,000 bbl/sd) of bitumen feed, using a 93% on-stream factor. This on-stream factor accounts for both planned and unplanned outages. The existing AOSP Scotford Upgrader consists of: two trains of bitumen upgrading an integrated cogeneration unit, owned and operated by ATCO Power Canada Ltd. associated utilities and offsites The upgrader has been in full operation since The operations group has successfully achieved design capacity since start-up. Monthly and yearly environmental monitoring reports are filed with AENV in accordance with the AENV operating approval. These reports provide details on the upgrader s environmental performance, including incidents and follow-up actions, if required. These reports are available through AENV. Summary reports are included in Section 10.3, Summaries of Monitoring Reports. The upgrader also completed its first-cycle major turnaround in the summer of December 2007 Shell Canada Limited 1-11

27 OVERVIEW CURRENT OPERATIONS Section 1.3 AOSP SCOTFORD UPGRADER (cont d) Figure 1-5 provides an overview of the existing AOSP Scotford Upgrader site plan A North Saskatchewan River Expansion 1 Area Shell Chemicals Plant 1 x Flare Water and Discharge Ponds AOSP Scotford Upgrader Facilities 215a N Tank Farm A&V Unit RHC-IHT 3 4 Unit Sulphur Recovery 5 Hydrogen 6 Manufacturing Unit No Description Stormwater ponds Dilbit and diluent metering, and pumping Water treatment Cooling tower Central control building Utilities and cogeneration Scale (m) Scotford Refinery Figure 1-5: Existing AOSP Scotford Upgrader Site Plan AOSP SCOTFORD UPGRADER EXPANSION The previously approved Scotford Upgrader Expansion Project will add a third bitumen processing train of 596 m 3 /h (90,000 bbl/cd) of equivalent bitumen. In addition to this new train, the existing AOSP Scotford Upgrader will be optimized by selectively modifying existing process equipment to increase the overall reliability of the upgrader and to remove bottlenecks to increase capacity. In combination, this will bring the total capacity of the expanded AOSP Scotford Upgrader to 1,920 m 3 /h (290,000 bbl/cd) of equivalent bitumen. The third bitumen processing train to be added is similar in design to the existing upgrader s processing trains and is supported by associated utilities and offsites Shell Canada Limited December 2007

28 OVERVIEW CURRENT OPERATIONS Section 1.3 This processing train will be integrated into the operation of the existing AOSP Scotford Upgrader, and will use and build on existing utilities and infrastructure, where possible. The AOSP Scotford Upgrader expansion is currently under construction. Early work started in late 2006 with site clearance, fencing and topsoil management. During 2007, deep underground services, site grading, piling and the construction of temporary facilities to the north of Township 560A will be substantially completed. Site concrete work will be fully underway during the latter half of 2007, using a batching plant installed north of Township 560A. The major contracts for the site and module fabrication work have been awarded and the contractors mobilized. During peak construction, Shell expects to transport over 4,000 workers to the site each day in about 100 buses. The service will range from a transit style collection around the greater Edmonton region, to a shuttle service operating throughout the day to an off-site parking lot. Figure 1-6 provides an overview of the site plan of the AOSP Scotford Upgrader s third bitumen processing train. Clean Stormwater Pond Administration, Control and Maintenance 138 kv Substation N Borrow Pit A&V Flare Stack New Railway Sidings Potentially Oily Stormwater Pond Tank Farm Process Units RHC Third Train HMU Sulphur Recovery Unit Utilities New Cooling Tower Cells New 30 m 138 kv Power Line Right-of- Way AOSP Scotford Upgrader Facilities Waste Storage AOSP Scotford Upgrader Expansion 1 Facilities Boundary of AOSP Scotford Upgrader Facilities Not to scale Warehouse Figure 1-6: AOSP Scotford Upgrader Expansion Site Plan December 2007 Shell Canada Limited 1-13

29 OVERVIEW CURRENT OPERATIONS Section Shell Canada Limited December 2007

30 OVERVIEW Section 1.4 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION ENVIRONMENTAL MANAGEMENT PRINCIPLES The proposed Bitumen Blending Facility Project will be developed in a way that is consistent with Shell s long-standing commitment to sustainable development and its health, safety and environment policy. These commitments form the foundation for managing the project s environmental issues. Effective environmental management includes: a comprehensive understanding of baseline environmental conditions from a historical and current perspective a good understanding of relevant operating experience from the existing AOSP Scotford Upgrader Shell also participates in the following multi-stakeholder groups in the region to better understand the potential effects of future industrial developments on the surrounding areas: Northeast Capital Industry Association (NCIA) Fort Air Partnership (FAP) NCIA Upgrader Committee Shell is committed to measuring and actively managing its environmental performance. The AOSP Scotford Upgrader has achieved ISO certification. ENVIRONMENTAL REVIEW Based on direction from Alberta Environment (see Section 10.4), Shell has conducted an environmental review of the proposed bitumen blending facility. The review provided baseline environmental information on the biophysical systems and determined the potential impacts of project emissions on air and water (see Part 2: Environmental Review). The environmental review concluded that the proposed bitumen blending facility would not have any unacceptable environmental or socio-economic effects, as long as the proposed mitigation measures and monitoring programs were implemented. December 2007 Shell Canada Limited 1-15

31 OVERVIEW ENVIRONMENTAL MANAGEMENT Section 1.4 Key Environmental Issues The key environmental concerns identified in the environmental review are similar to those currently being managed by existing industry operators and communities in the region. Many of these concerns are regional issues arising from urban and industrial growth and include the effects on: air quality and consequential effects on the region s ecosystem water quality and aquatic resources in the North Saskatchewan River watershed the health of residents in the region Key Socio-Economic Impacts The key socio-economic issues identified through ongoing consultation with area stakeholders are the: land-use conflicts between industrial development and residential use effects of industrial development on the quality of life of local residents, such as noise, air quality, emissions, traffic congestion and visual effects access to training, employment and business opportunities for local residents effects on infrastructure and community services in Fort Saskatchewan 1-16 Shell Canada Limited December 2007

32 OVERVIEW Section 1.5 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION REGULATORY APPROVALS SCOPE Shell holds the necessary approvals for operating the Scotford Upgrader and for constructing and operating the approved expansion of the Scotford Upgrader. To enable the expected growth in bitumen production from AOSP mining developments, Shell is requesting further amendments to approvals from the province and ancillary approvals from municipal and provincial authorities for the proposed bitumen blending facility. APPROVALS REQUESTED Table 1-1 summarizes the approvals requested to add the bitumen blending facility at the AOSP Scotford Upgrader. Table 1-1: Amendments and Approvals Requested for the Bitumen Blending Facility Approval Scheme to construct and operate an oil sands bitumen upgrader. EPEA 10-year operating approval. Diversion, control and use of water Legislation Oil Sands Conservation Act Type of Approval Existing Approval Number Amendment 8522 EUB EPEA Amendment (as amended) Approval Authority AENV Water Act New New AENV Requested Amendment to Approval Under the Oil Sands Conservation Act Shell is requesting a further amendment to EUB Approval 8522, under the Oil Sands Conservation Act, to cover: the addition of the bitumen blending facility, consisting of four phases of diluent recovery units and bitumen blending headers, with supporting utilities and offsites modifications to the Scotford Complex infrastructure to allow increased capacity December 2007 Shell Canada Limited 1-17

33 OVERVIEW REGULATORY APPROVALS Section 1.5 Requested Amendment to Approvals Under EPEA Shell is requesting an amendment to AENV s 10-year Operating Approval (as amended) under the Environmental Protection and Enhancement Act (EPEA), to cover: operation of the proposed bitumen blending facility at the AOSP Scotford Upgrader the construction, operation and reclamation of the bitumen blending facility, which includes modifications and additions to AOSP bulk petroleum facilities, site utilities and infrastructure New Licence Under the Water Act Approval for a new licence under the Water Act will be requested from AENV for water withdrawal volumes required to meet the needs of the bitumen blending facility. Water requirements will be delivered by a Shell-owned river water pump house and intake facility. ANCILLARY APPROVALS Shell will require other municipal and provincial approvals for the proposed bitumen blending facility, some of which are listed in Table 1-2. These approvals will be independently applied for by Shell. Table 1-2: Ancillary Approvals for the Bitumen Blending Facility Approval Legislation Approval Authority Development permit Municipal Government Act, Part 17 Strathcona County Product and natural gas pipelines Pipeline Act EUB Electrical power transmission facilities Electrical Utilities Act EUB Construction dewatering Water Act AENV Historical resources clearance Historical Resources Act Alberta Tourism, Parks, Recreation and Culture COMPLIANCE WITH GOVERNMENT POLICIES AND PLANS The bitumen blending facility, if approved, will be constructed and operated in accordance with applicable acts, regulations and approvals granted. The project supports the Government of Alberta s policy to encourage development of the oil sands resources of northeastern Alberta in a sustainable and environmentally responsible manner. It conforms to the land use bylaw for Strathcona County, which allows the construction of an oil sands processing plant within the designated heavy industrial district in which the proposed bitumen blending facility is to be located Shell Canada Limited December 2007

34 OVERVIEW REGULATORY APPROVALS Section 1.5 COMMUNICATION WITH THE APPLICANT All communication with Shell Canada Limited on these regulatory applications should be directed to both: Mr. Donald Crowe Manager, Regulatory Approvals Shell Canada Limited Oil Sands Division 400 4th Avenue S.W. P.O. Box 100, Station M Calgary, Alberta T2P 2H5 Tel: (403) Fax: (403) donald.crowe@shell.com Mr. Shawn Denstedt Osler, Hoskin & Harcourt LLP Barristers and Solicitors Suite 2500, TransCanada Tower 450 1st Street S.W. Calgary, Alberta T2P 5H1 Tel: (403) Fax: (403) sdenstedt@osler.com December 2007 Shell Canada Limited 1-19

35 OVERVIEW REGULATORY APPROVALS Section Shell Canada Limited December 2007

36 PROCESSING FACILITIES Section 2.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION PROCESS TECHNOLOGY SELECTION DILUENT RECOVERY TECHNOLOGY SELECTION Purpose of Diluent Recovery The diluent recovery unit (DRU) will recover the paraffinic diluent used in transporting the diluted bitumen from the mine to the AOSP Scotford Upgrader so that it can be returned to the mine plant for reuse in the bitumen froth treatment process. Shell has accumulated extensive knowledge about bitumen processing, including distillation, through the AOSP Scotford Upgrader and its expansion projects, and through continued operational excellence and improvements to existing AOSP operations. Therefore, Shell intends to leverage the knowledge, engineering and design information, and lessons learned in distillation technology from the AOSP Scotford Upgrader. Technology Selection Criteria Technology Selected The selection of the diluent recovery technology was based on the need to: recover and return on-specification paraffinic diluent from the diluted bitumen feed for the mine operations ensure that the diluent recovery efficiency was not less than 99% in order to minimize the amount of paraffinic diluent that needs to be manufactured to make up for the inefficiency keep the design as simple as possible to minimize costs and to simplify operations Conceptual configuration scouting was undertaken by the distillation group within Shell Global Solutions International (Shell GSI), and covered designs ranging from a simple preflash drum arrangement to a full atmospheric fractionator design. Shell GSI concluded that: a trayed preflash column was required to achieve recovery above 96% an optimized preflash and rectifying column design could achieve 99% recovery of on-specification paraffinic diluent December 2007 Shell Canada Limited 2-1

37 PROCESSING FACILITIES Section 2.1 PROCESS TECHNOLOGY SELECTION Technology Selected (cont d) a mild vacuum column design could achieve slightly better than a 99% recovery performance. However, this option was eliminated because of the potential risk of operational issues being caused by free water mixing with feed. The selected diluent recovery unit (DRU) design meets all the criteria. It is the simplest non-vacuum design that will achieve 99% diluent recovery and onspecification paraffinic diluent. EMISSION CONTROL TECHNOLOGY SELECTION The following design features will be used to control emissions: low NO x burners that meet the relevant Canadian Council of Ministers of the Environment (CCME) emission targets storage tanks will be designed to achieve low emissions to the atmosphere natural gas and fuel gas will be used as fuel for the utility boilers the flare system network will include flow meters to detect, identify and minimize chronic flare loads a leak detection and repair (LDAR) program will be implemented to identify and repair any leaking equipment on an ongoing basis to reduce fugitive emission losses 2-2 Shell Canada Limited December 2007

38 PROCESSING FACILITIES Section 2.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION FEEDSTOCK BITUMEN FROM THE MINE The primary feedstock to the bitumen blending facility will be diluted bitumen produced at the AOSP mine developments. This feedstock will be delivered to the Scotford Complex via the Corridor pipeline system. Extracted bitumen from the oil sands (froth) is further processed at the mine site using a paraffinic diluent. This froth treatment results in a portion of the heavy asphaltenes being rejected from the froth, producing a product that is low in water, soluble salts and mineral fines. Processing conditions will be continuously optimized to produce cleaned bitumen that achieves the quality required for upgrading process unit feedstock or a marketable bitumen. Table 2-1 compares the key properties of raw Athabasca bitumen with those of cleaned AOSP mine bitumen. Table 2-1: Athabasca Bitumen Properties Undiluted Bitumen Properties Raw Athabasca Bitumen Cleaned AOSP Mine Bitumen Density (kg/m 3 ) 1,006 1,000 Sulphur (wt%) Boiling Fractions ( C) vol% vol% Naphtha, C Kerosene, Light gas-oil, Extra heavy gas-oil, Vacuum gas-oil, Residue, Residue Properties Density (kg/m 3 ) 1,058 1,048 Nitrogen (wt%) Sulphur (wt%) Oxygen (wt%) Nickel (ppm) Vanadium (ppm) December 2007 Shell Canada Limited 2-3

39 PROCESSING FACILITIES FEEDSTOCK Section 2.2 BITUMEN FROM THE MINE (cont d) Removing some of the bitumen asphaltenes has the added benefit of lowering the sulphur and organic metal compounds in the treated bitumen. PARAFFINIC DILUENT FROM THE MINE The paraffinic diluent used in the mine froth treatment process will also be used to dilute the bitumen production to meet pipeline viscosity and density specifications for transporting the diluted bitumen from the mine site to Scotford. The design basis for the incoming feed to this project is 35 vol% paraffinic diluent and 65 vol% cleaned bitumen. The paraffinic diluent content ranges from 25 to 35 vol%, depending on the pipeline seasonal delivery temperature. The recovered paraffinic diluent from the DRU will be pumped back to the mine site via the diluent return pipeline of the Corridor pipeline system. Table 2-2 shows the typical average paraffinic diluent quality in diluted bitumen. The paraffinic diluent is a proprietary mix of paraffins, composed mainly of pentanes and hexanes. Table 2-2: Typical Paraffinic Diluent Quality Attribute Amount Basic sediment and water <0.5 vol% H 2 S <1 ppmw True vapour pressure at 35 C <76 kpa(a) C 4- <1 wt% Specific gravity DILUENT FOR PRODUCT BITUMEN BLENDING Bitumen will be blended with other light hydrocarbons (diluents) to produce marketable bitumen blend products. Condensates, synthetic crudes or other internal AOSP Scotford Upgrader light hydrocarbon streams can also be used for this purpose. Commercial condensates and synthetic crudes will be purchased from third parties for bitumen blending, as required. If condensate is used for blending, the resultant bitumen blend product will be conbit. If synthetic crude is used, the resultant bitumen blend product will be synbit. 2-4 Shell Canada Limited December 2007

40 PROCESSING FACILITIES Section 2.3 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION NEW PROCESSING UNITS CAPACITY The project will be executed in four phases, each of which will consist of similar process units. A DRU and bitumen blending header will be installed in each phase. The nominal capacity of the processing units for each phase of the bitumen blending facility is shown in Table 2-3. An overall block flow diagram after the final phase is shown in Figure 2-1 Table 2-3: Process Unit Design Capacities for Each Phase Process Unit for Each Phase Capacity on stream day basis (m 3 /h) Capacity on stream day basis (bbl/sd) Diluent Recovery Unit (DRU) 944 (diluted bitumen) 142,500 (diluted bitumen) Bitumen blending header, assuming synbit 1,282 (synbit) 193,520 (synbit) Note: The design of the bitumen blending header assumes that all the mine bitumen to the facility is blended with synthetic crude to make a synthetic bitumen blend product (synbit) for sale to the market. Each phase will be capable of increasing its design capacity, without significant modifications, to process the equivalent of 663 m 3 /h (100,000 bbl/cd) of bitumen. This will result in a total of 2,650 m 3 /h (400,000 bbl/cd) of bitumen capacity being added to the AOSP Scotford Upgrader by the end of the fourth phase. DILUENT RECOVERY UNIT The diluent recovery and bitumen blending process configuration for each phase of the bitumen blending facility is shown in Figure 2-2. The DRU configuration includes a fractionation column with a bottom atmospheric stripping section and a top diluent rectification section, as well as a stabilization column. Stripping steam will be used in the stripping section of the main column to maintain a low temperature to avoid cracking the bitumen. Stabilizer overhead gas production will be minimal, and will be routed directly to boiler fuel gas blending. Solids and liquids de-entrainment will be managed in the top of the stripping section. December 2007 Shell Canada Limited 2-5

41 PROCESSING FACILITIES NEW PROCESSING UNITS Section 2.3 Diluent Imported Diluent Diluent DRU DilBit DilBit Export Product Blends DilBit DilBit DilBit Recombination and Blending Header DRU Recombination and Blending Header DRU Recombination and Blending Header DRU Recombination and Blending Header Figure 2-1: Bitumen Blending Facility Block Flow Diagram 2-6 Shell Canada Limited December 2007

42 PROCESSING FACILITIES NEW PROCESSING UNITS Section 2.3 Fuel Gas Fuel Gas AOSP Diluted Bitumen from Mine Reflux Wash Sour Water Sour Water Reflux Stabilizer Steam Steam Sour Water Fractionator Steam nnf Heavy Naphtha to Blend DRU Bottoms to Crude Blend Imported Diluent Cooling Water Export Product Recombination and Blending Header nnf nnf Recombined Feed to Feed Tankage nnf = normal no flow Diluent Recycled To Mine Diluent Figure 2-2: Diluent Recovery and Bitumen Blending Process Flow The fractionator feed will be heated with steam exchangers. The process facility area will be self-heat integrated, exchanging overheads and bottoms heat with the diluted bitumen feed. The rectifier section and stripping section will be combined in a single column to reduce the capital cost. The rectifier will ensure that the paraffinic diluent specification is met. The separate stabilizer column will remove any C 4 - material to meet the final diluent true vapour pressure (TVP) specification. Steam will be used as the heat source. The vessel internals will be a Shell proprietary design, similar to those used in the AOSP Scotford Upgrader atmospheric distillation unit to control foaming and de-entrainment. BITUMEN BLENDING HEADER The equipment used to make bitumen blend products for sale in the market will be an integral part of the DRU. The DRU will be equipped with a recombination header for low turndown situations. During normal operations, this header will be used to blend the export bitumen blend product, conbit or synbit. December 2007 Shell Canada Limited 2-7

43 PROCESSING FACILITIES NEW PROCESSING UNITS Section 2.3 BITUMEN BLENDING HEADER (cont d) Imported diluents, such as condensates and synthetic crudes, will be used as blending materials to dilute the bitumen to meet pipeline density and viscosity requirements. Alternatively, the blending materials could be sourced from the AOSP Scotford Upgrader. 2-8 Shell Canada Limited December 2007

44 PROCESSING FACILITIES Section 2.4 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION DEVELOPMENT AREA PLOT PLAN PLOT PLAN The currently proposed plot plan for all four phases of the project is shown in Figure 2-3. This plot plan will be refined during detailed design and engineering for improved operability and layout. December 2007 Shell Canada Limited 2-9

45 PROCESSING FACILITIES DEVELOPMENT AREA PLOT PLAN Section 2.4 Figure 2-3: Bitumen Blending Facility Plot Plan December 2007 Shell Canada Limited 2-10

46 UTILITIES AND OFFSITES Section 3.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION INTERNAL UTILITY SYSTEMS SCOPE The utilities required for the bitumen blending facility include: plant air utility water fire water steam cooling water fuel gas instrumentation and control systems a flare system PLANT AIR Air compressors and air dryers will be pre-built during the first phase of the project to supply instrument and utility air systems for all four phases. UTILITY WATER Utility water will be supplied from raw water ponds that receive raw water from a river water pumphouse located on the North Saskatchewan River. FIRE WATER The bitumen blending facility s fire water supply system will be integrated with the existing AOSP Scotford Upgrader site-wide fire water system. Firefighting facilities will be installed to protect the facility. STEAM The current project premise is that steam will be generated using multiple package boilers and waste heat recovery. There will also be some interconnection with existing AOSP Scotford Upgrader steam systems for start-up and emergency back-up steam supply. December 2007 Shell Canada Limited 3-1

47 UTILITIES AND OFFSITES INTERNAL UTILITY SYSTEMS Section 3.1 COOLING WATER The bitumen blending facility design is based on using a combination of air and water cooling. During detailed design, the optimum split between air and water cooling will be reviewed. Current plans are to build one two-cell cooling tower in Phase 1 and to add a second two-cell cooling tower in Phase 3. Design considerations for the cooling water system will include: capital and operating costs water reuse summer operability cooling tower fan noise cooling tower mist and fog generation optimum heat integration additional electrical power requirements additional indirect carbon dioxide emissions FUEL GAS The bitumen blending facility will use a fuel gas system, with natural gas as makeup to supply the boilers. INSTRUMENTATION AND CONTROL Integrated information management systems for the bitumen blending facility will be installed in each phase to provide full instrumentation, control and information network capabilities. These facilities will be used to monitor and optimize plant performance. FLARE SYSTEM Scope The proposed project will include hydrocarbon flare systems similar to those used in the AOSP Scotford Upgrader. The design basis developed to date has considered a combined flare system for the four phases of the bitumen blending facility. The hydrocarbon flare events from the bitumen blending facility are expected to be of short duration. As there is no material cracking of the bitumen occurring in the diluent recovery process, an acid gas flare system is not required for the bitumen blending facility. The current hydrocarbon flare system s design is preliminary, based on available information. Each flare system will include: liquid knockout facilities flame ignition burner management 3-2 Shell Canada Limited December 2007

48 UTILITIES AND OFFSITES INTERNAL UTILITY SYSTEMS Section 3.1 The final flare stack heights will be based on a maximum ground-level heat radiation of 4.73 kw/m 2, or according to EUB Directive 060. Estimated Flare Loads A flare management plan will be developed during detailed engineering. Table 3-1 shows the estimated hydrocarbon flare loads for the bitumen blending facility. Table 3-1: Estimated Hydrocarbon Flare Loads Peak Load Design Flow Project Phase * Flare Case Scenario (t/h) Phase 1 Hydrocarbon Case 1 Reflux failure 454 Hydrocarbon Case 2 Site-wide power failure Phase 2 Hydrocarbon Case 1 Reflux failure 454 Hydrocarbon Case 2 Site-wide power failure 61 * 123 * Phase 3 Hydrocarbon Case 1 Reflux failure 454 Hydrocarbon Case 2 Site-wide power failure 184 * Phase 4 Hydrocarbon Case 1 Reflux failure 454 Hydrocarbon Case 2 Site-wide power failure 246 * Note *: = with site-wide power failure cases, numbers are cumulative for all phases. Hydrocarbon Flare Flare Design Table 3-2 shows the preliminary hydrocarbon flare design. Table 3-2: Preliminary Hydrocarbon Flare Design Component Hydrocarbon Flare Number of pilots 3 Type of igniter primary Electronic spark Type of igniter secondary Flame-front generator Exit Velocities Table 3-3 shows the estimated hydrocarbon flare exit velocity. Table 3-3: Preliminary Hydrocarbon Flare Exit Velocity Operation Emergency (reflux failure case) Exit Velocity (m/s) 80 Normal 0.02 December 2007 Shell Canada Limited 3-3

49 UTILITIES AND OFFSITES INTERNAL UTILITY SYSTEMS Section 3.1 Flare Stack Sizes Table 3-4 shows the preliminary hydrocarbon flare stack size. Table 3-4: Preliminary Hydrocarbon Flare System Flare for Project Total No. Stack Diameter (m) Stack Height (m) Bitumen blending facility 2 * Note *: one stack in operation and stack as a spare on a common derrick. Stack Combustion Method The proposed combustion method for the flare stack will include steam assist to ensure smokeless combustion. 3-4 Shell Canada Limited December 2007

50 UTILITIES AND OFFSITES Section 3.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION THIRD-PARTY-SUPPLIED UTILITIES SCOPE The following utilities for the project will be purchased from third-party suppliers: electrical power natural gas nitrogen ELECTRICAL POWER Each phase of the bitumen blending facility will have a slightly different electrical power demand, depending on the extent of utilities and offsites infrastructure constructed or pre-built in the previous phase. The total electrical demand will be 25 MW after the fourth phase has been completed. The current project premise is that all 25 MW of electrical power will be imported from the Alberta grid. Table 3-5 shows the estimated electrical demand for each phase of the bitumen blending facility. Table 3-5: Estimated Bitumen Blending Facility Electrical Demand Phase Phase 1 (MW) Phase 2 (MW) Phase 3 (MW) Phase 4 (MW) Power Demand Cumulative Total NATURAL GAS The bitumen blending facility will require a new third-party natural gas supply pipeline to the facility, with a design capacity of between 50,000 and 60,000 m 3 /h. The volume of natural gas required will depend mainly on the fuel gas makeup requirement. This volume will be determined during detailed engineering. A custody transfer meter and pressure reduction station will supply the highpressure unodorized natural gas based on the fuel gas makeup requirement. December 2007 Shell Canada Limited 3-5

51 UTILITIES AND OFFSITES THIRD-PARTY-SUPPLIED UTILITIES Section 3.2 NATURAL GAS (cont d) A second stage of pressure letdown will supply a lower-pressure natural gas distribution system for smaller users, such as: building heating furnace pilots flare pilots blanket gas systems A system for adding an odorant, such as mercaptan, will be provided for the 1,100 kpa(g) natural gas system used for building heating. NITROGEN A third-party supply of nitrogen will be required for use in purging and nitrogen blanketing in the: tank farm process units flares utility stations 3-6 Shell Canada Limited December 2007

52 UTILITIES AND OFFSITES Section 3.3 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION STORAGE AND METERING PROCESS STORAGE TANKS New process storage tanks will be required for the proposed bitumen blending facility, as shown in Table 3-6. Table 3-6: Bitumen Blending Facility Process Tankage Tank Capacity Tank Service Quantity * m 3 bbl Roof Type Diluted bitumen 5 49, ,500 Internal floating Paraffinic diluent 2 49, ,500 Internal floating Imported diluent (condensate, synthetic crude) 4 49, ,500 Internal floating Blended bitumen products (conbit, synbit) 5 49, ,500 Internal floating Light gas oil storage 1 4,000 25,160 Fixed roof Light gas oil flush receiving 1 4,000 25,160 Internal floating Slop oil 1 2,000 12,580 Internal floating Note *: Quantities shown are for four phases of the bitumen blending facility. Table 3-7 provides utility tankage requirements for the bitumen blending facility. Some of these tanks can be shared with other adjacent facilities for similar service. Table 3-7: Bitumen Blending Facility Utility Tankage Quantities by Phase Volume per Tank Roof Tank Service (m 3 ) Type Contents Alum Cone Chemical Bio sludge Cone Process water Caustic Cone Chemical Concentric treatment Open Process water DAF effluent Cone Process water Demineralized water ,000 Cone Water Dissolved air flotation Cone Process water Equalization ,000 Cone Process water Flocculation Cone Process water December 2007 Shell Canada Limited 3-7

53 UTILITIES AND OFFSITES STORAGE AND METERING Section 3.3 Table 3-7: Bitumen Blending Facility Utility Tankage (cont d) Quantities by Phase Volume per Tank Roof Tank Service (m 3 ) Type Contents Fractionation Cone Process water Neutralization Cone Process water Potable water Cone Water Recovered condensate ,754 Cone Process water Regeneration waste Cone Process water Slop oil treatment Cone Hydrocarbon Sodium hypochlorite Cone Chemical Sulphuric acid Cone Chemical METERING In-Plant Metering In-plant meters will be installed for all significant process unit internal streams and inter-unit transfers. Metering information will be used to monitor, control and optimize the process units for product quality, yield and energy efficiency. In-plant meters will be installed for: process streams natural gas steam condensate electrical power streams to the flare system raw water effluent Custody Transfer Stations Custody transfer stations will be installed for: diluted bitumen feed paraffinic diluent return imported diluent natural gas import electrical power nitrogen import blended bitumen products export any transferred utilities 3-8 Shell Canada Limited December 2007

54 UTILITIES AND OFFSITES STORAGE AND METERING Section 3.3 Any other hydrocarbon streams being sent to or received from other facilities, including the Scotford Refinery and other regional upgrader facilities, will also pass through custody transfer stations. WEIGH STATIONS Weigh stations will be installed to monitor truck movements of materials to and from the proposed project site, including the transportation of: chemicals solid or liquid waste for off-site disposal December 2007 Shell Canada Limited 3-9

55 UTILITIES AND OFFSITES STORAGE AND METERING Section Shell Canada Limited December 2007

56 WATER MANAGEMENT Section 4.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION WATER SUPPLY AND DISTRIBUTION WATER SUPPLY Shell is applying to AENV under the Water Act for approval to withdraw water from the North Saskatchewan River to supply the proposed bitumen blending facility. Raw water will be drawn from the North Saskatchewan River via a Shell-owned river water pumphouse. WATER DEMAND Service Requirements Demand Raw water is required for: cooling water makeup, to replace evaporation losses and blowdown boiler feedwater makeup, to replace blowdown from steam generators and losses from the steam system process water makeup makeup for raw water treatment, including filter backwash and regeneration processes utility water fire water The bitumen blending facility will require the following raw water demand: about 400 m 3 /h of water diversion from the North Saskatchewan River to meet normal summer requirements a peak water diversion rate of 600 m 3 /h to manage start-up and abnormal operational requirements Figure 4-1 shows the raw water supply and distribution for peak flows. December 2007 Shell Canada Limited 4-1

57 WATER MANAGEMENT Section 4.1 WATER SUPPLY AND DISTRIBUTION Raw water intake from the North Saskatchewan River Other Shell Users Peak 600 m 3 /h Normal Summer 400 m 3 /h Raw Water Treatment Facility Distribution Raw Water Holding Ponds Cooling Tower Makeup and Utility Water Figure 4-1: Raw Water Supply and Distribution RAW WATER TREATMENT Raw Water Ponds The raw water ponds will be used to supply clarified water to the: cooling towers utility water systems fire water systems Alum and polymer will be added to one of the ponds to aid clarification. The volume of water required will vary seasonally, with more water required in the summer to provide additional cooling for the process. The amount of chemicals needed will also vary seasonally. Typically, chemical use will increase in the spring in response to high solids loading in the incoming raw water. In addition: clean stormwater ponds will intermittently supply the raw water ponds when storm or snowmelt water is available microfilter reject water from the raw water treatment plants will be sent to the raw water ponds for recycle back to the facility The raw water ponds will also supply water to the raw water treatment facility. Sodium hypochlorite will be added for algae control. 4-2 Shell Canada Limited December 2007

58 WATER MANAGEMENT Section 4.1 WATER SUPPLY AND DISTRIBUTION Raw Water Treatment Plant The raw water treatment plant will supply treated water to the bitumen blending facility. Raw water treatment to produce high quality (demineralized) boiler feedwater includes the following processing steps: filtration (ultra or microfiltration), to remove fine solids reverse osmosis, to reject a large portion of the dissolved solids ion exchange, to polish the water and remove almost all of the remaining dissolved solids deaeration, just before the water is routed to the boilers The following chemicals will be used in the raw water treatment process: sodium hypochlorite, which might be added to prevent the growth of algae in the filters chemical scavengers, to protect the reverse osmosis system ph control, upstream of the reverse osmosis unit oxygen scavengers and corrosion-scale inhibitors, which will be added to protect the equipment sodium hydroxide and sulphuric acid, which will be used in the regeneration of ion exchange equipment The demineralized water will be combined with steam condensate before it is deaerated. The deaerated boiler feedwater will then be used to produce steam for the facility. Boiler feedwater will also be used for process wash water. POTABLE WATER The project facility will be connected to the municipally supplied potable water line that is being installed along Highway 214. This supply line will have sufficient capacity to supply all new facilities. Individual development areas might need to provide intermediate storage, chlorination and distribution of portable water to various points of use. December 2007 Shell Canada Limited 4-3

59 WATER MANAGEMENT Section 4.1 WATER SUPPLY AND DISTRIBUTION 4-4 Shell Canada Limited December 2007

60 WATER MANAGEMENT Section 4.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION WATER COLLECTION SYSTEMS SCOPE All process or potentially contacted water on site will be controlled and routed to the appropriate unit for treatment or reuse. The following water collections systems are planned for the facility areas: clean stormwater collection potentially oily water collection oily water collection CLEAN STORMWATER COLLECTION The clean stormwater collection system will collect and route surface water to a clean stormwater pond. The system will consist of a network of: open ditches channels culverts underground carbon steel and reinforced-concrete pipes catch basins manholes The clean stormwater pond will be built to hold: storm runoff and snowmelt from the process pads and tank farms storm runoff from inside developed perimeter roads raw water or clarified water used from the fire water or utility water systems water from steam condensate that is not suitable for immediate recycle construction-related water and hydrotesting water The high-density polyethylene (HDPE) lined clean stormwater pond will be sized to accommodate stormwater from the clean stormwater system during a one-in- 10-year storm. It will also accommodate the surface water collected by the potentially oily stormwater system, excluding the first flush (first 25 mm of precipitation to the process areas) to the potentially oily stormwater pond. Water in the clean stormwater pond will be sent to the raw water ponds or tested and released if it meets the regulatory effluent release quality requirements. If the December 2007 Shell Canada Limited 4-5

61 WATER MANAGEMENT WATER COLLECTION SYSTEMS Section 4.2 CLEAN STORMWATER COLLECTION (cont d) water does not meet regulatory or process specifications, it will be treated in the wastewater treatment plant. POTENTIALLY OILY STORMWATER COLLECTION The potentially oily stormwater collection system will consist of a network of underground carbon steel and reinforced concrete pipes, catch basins and manholes. The system will collect and route surface water that might contain solvents, hydrocarbons or other contaminants to a potentially oily stormwater pond. The collection system will be sized to handle the first flush of stormwater collected from the process areas. The remainder of the stormwater will be diverted to the clean stormwater pond. The potentially oily stormwater pond will be constructed with earth or gravel dykes, and lined with two layers of an HDPE liner, or an HDPE liner overlaying a clay liner. The new potentially oily stormwater pond will be built to hold: water from process unit pads contaminated water from the tank farm containment systems The potentially oily stormwater will be treated in the wastewater treatment plant, if required. OILY WASTEWATER COLLECTION An oily wastewater sewer system will be installed to handle oily wastewater drainage from process systems, equipment and storage facilities. The sewer system will be a piped gravity-flow system that collects drainage in open funnels or cups and discharges it into collection sumps located below grade. The material in the collection sumps will be pumped to a recovered oil tank or the wastewater treatment plant. 4-6 Shell Canada Limited December 2007

62 WATER MANAGEMENT Section 4.3 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION WATER TREATMENT, REUSE AND RELEASE SCOPE The following major process water streams will be recycled for reuse where practical, or routed to the wastewater treatment plant or, if the stream is suitable for release, routed to the effluent holding ponds: microfiltration reject from the raw water treatment plant, which will be sent to the raw water ponds for clarification and reuse reverse osmosis reject and neutralized regeneration water from the raw water treatment plant, which will be released to the effluent holding ponds blowdown from the cooling towers, which will be released to the effluent holding ponds boiler blowdown from the steam generators, which will be released to the effluent holding ponds potentially oily water and oily stormwater, which will be sent to the wastewater treatment plant During detailed design, consideration will be given to recycling, reusing and treating water streams from the bitumen blending facility elsewhere in the Scotford Complex. WASTEWATER TREATMENT Shell is not planning to incorporate any additional deep well disposal facilities, but instead will treat wastewater to meet regulatory requirements. Shell plans to use the best available technology economically achievable (BATEA) for wastewater treatment facilities. These facilities will be similar to the existing AOSP Scotford Upgrader wastewater treatment plant that has proven performance, while reliably meeting requirements for treated water quality. The planned biological wastewater treatment plant will treat the following streams: potentially oily water oily stormwater December 2007 Shell Canada Limited 4-7

63 WATER MANAGEMENT Section 4.3 WATER TREATMENT, REUSE AND RELEASE WASTEWATER TREATMENT (cont d) sanitary waste turnaround and maintenance wastes oily sump collection materials The waste treatment plant for the bitumen blending facility will include: feed equalization with solids and gross hydrocarbon removal additional suspended hydrocarbon removal ph adjustment, as required biological treatment, including nutrient removal for ammonia and phosphate control tertiary filtration and disinfection solids handling equipment for dewatering sludge Treated water from the wastewater treatment plant might be routed to the cooling towers or sent to the effluent holding ponds. Sediment from the wastewater treatment facility will be sent to a secure landfill for disposal. SANITARY WASTE SYSTEM Sanitary waste discharge will be directed to the wastewater treatment plant for treatment. EFFLUENT RELEASE Release Volume Table 4-1 lists the release volumes from the existing AOSP Scotford Upgrader, and the proposed bitumen blending facility. Table 4-1: Effluent Release Volume Release Rate from AOSP Scotford Upgrader Release Rate from Bitumen Blending Facility Effluent release rate 1,600 m 3 /h 2,400 m 3 /h Approximate number of 9 h 2 h hours of release daily 4-8 Shell Canada Limited December 2007

64 WATER MANAGEMENT Section 4.3 WATER TREATMENT, REUSE AND RELEASE Effluent Release and Quality Release Timing Streams from various sources will be commingled in one of two effluent holding ponds. The holding ponds will be filled continuously. In a batch process, effluent will be transferred from the effluent holding ponds to the effluent release pond where the effluent will be tested according to AENV approval requirements. Effluent that meets the testing requirements will be released to the common Scotford Complex effluent release line and routed to the North Saskatchewan River. All effluent will meet the effluent quality requirements of the operating approvals. For the results of the assessment of the effects of effluent on the receiving environment, see the Environmental Review in Part 2. Because of the increasing number of facilities releasing effluent to the common line, Shell will develop an effluent release plan to manage releases from the different facilities in the Scotford Complex under normal operating conditions. December 2007 Shell Canada Limited 4-9

65 WATER MANAGEMENT Section 4.3 WATER TREATMENT, REUSE AND RELEASE 4-10 Shell Canada Limited December 2007

66 WATER MANAGEMENT Section 4.4 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION WATER INTENSITY AND REDUCTION PLAN ALTERNATIVE SUPPLY OPTIONS Shell recognizes the need for proper management of water resources in Alberta and the goals set out in the Alberta Water for Life Strategy. Shell will continue to work with industry peers through the Northeast Capital Industrial Association to evaluate viable options for a regional water supply, including investigating the use of treated municipal effluent water. REDUCTION AND REUSE ALTERNATIVES In conjunction with securing water supply, Shell continues to investigate ways to reduce water use intensity. This must be balanced with reduced effluent qualities, disposal of salt to landfill (as a solid) or deep wells (as brine), and the additional energy input required to remove salts from the circulating water. Alternatives that are being considered for the bitumen blending facility include: internal reuse opportunities advanced nutrient removal technologies salt removal technologies and salt disposal options regional industrial effluent treatment plant opportunities with return of treated water Directly associated with internal reuse, alternative means of removing various non-organic compounds being investigated include: technologies to remove specific effluent constituents opportunities to use low-quality water internally and to sequester salts December 2007 Shell Canada Limited 4-11

67 WATER MANAGEMENT Section 4.4 WATER INTENSITY AND REDUCTION PLAN 4-12 Shell Canada Limited December 2007

68 Section 5.1 MATERIAL AND ENERGY BALANCES APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION MATERIAL BALANCE CALCULATION METHOD A Shell proprietary simulation tool was used to develop the overall material and energy balances for the proposed bitumen blending facility. The calculations for the balances are based on all four phases of the new facility. Figure 5-1 is a simplified block flow diagram for the proposed facility. Make-Up Diluent 201 t/sd 307 m 3 /sd Total Diluent Return 19,893 t/sd 30,403 m 3 /sd Diluted Bitumen 84,140 t/sd 95,040 m 3 /sd Diluent Recovery Units (DRU) DRU Off-Gas to Fuel Gas Drum 7 t/sd Imported Synthetic Crude for Blending 56,118 t/sd 64,944 m 3 /sd Bitumen and Residual Diluent Bitumen Blenders Bitumen Blend Product Synbit 120,559 t/sd 129,871 m 3 /sd Figure 5-1: Bitumen Blending Facility Block Flow Diagram BASIS OF MATERIAL BALANCE The material balance for the bitumen blending facility is based on: an on-stream factor of 98.4%, which represents a multi-year annual average, including both planned and unplanned outages December 2007 Shell Canada Limited 5-1

69 MATERIAL AND ENERGY BALANCES MATERIAL BALANCE Section 5.1 BASIS OF MATERIAL BALANCE (cont d) 2,693 m 3 /h (406,504 bbl/sd) or 2,650 m 3 /h (400,000 bbl/cd) of bitumen feed, which is the total of the four phases an annual average of 1,267 m 3 /h (191,245 bbl/sd) or 1,247 m 3 /h (188,185 bbl/cd) paraffinic diluent, which is assumed to be, on average, 32% of the diluted bitumen blend. Paraffinic diluent recovered from the DRUs will be returned, via pipeline, to the mine for reuse in the bitumen froth treatment process. The percentage of diluent in the diluted bitumen for dilbit pipeline blend will be adjusted between winter and summer to meet the pipeline viscosity requirement. 2,706 m 3 /h (408,416 bbl/sd) or 2,662 m 3 /h (401,881 bbl/cd) of synthetic crude oils used as blending material. Condensate can also be used as blending material, in which case the volume of the condensate is substantially less than the synthetic crude oil required. Alternatively, some of the blending materials could be obtained from the AOSP Scotford Upgrader. PRODUCTS The following marketable bitumen blend products will be produced from the facility: a synthetic bitumen blend (synbit), consisting of an imported synthetic crude and bitumen a condensate bitumen blend (conbit), consisting of an imported condensate and bitumen a mix of synbit and conbit, including using some of the products from the AOSP Scotford Upgrader MATERIAL BALANCE SUMMARY Table 5-1 summarizes the overall material balance for the bitumen blending facility using synthetic crude as blending material for synbit production. 5-2 Shell Canada Limited December 2007

70 MATERIAL AND ENERGY BALANCES MATERIAL BALANCE Section 5.1 Table 5-1: Bitumen Blending Facility Overall Material Balance Overall Material and Volume Balance t/sd m 3 /sd Intake Diluted bitumen 84,140 95,040 Imported synthetic crude as diluent (for blending) 56,118 64,944 Makeup paraffinic diluent Natural gas (imported) 805 Total intake 141, ,291 Production Total paraffinic diluent return to mine 19,893 30,403 Total bitumen blend product 120, ,871 Total fuel gas 812 Total production 141, ,274 Note: 1. Only hydrocarbon liquid streams are expressed in volumetric terms in this table. 2. To obtain corresponding calendar day values, multiply the stream-day numbers by December 2007 Shell Canada Limited 5-3

71 MATERIAL AND ENERGY BALANCES MATERIAL BALANCE Section Shell Canada Limited December 2007

72 Section 5.2 MATERIAL AND ENERGY BALANCES APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION ENERGY AND UTILITY BALANCES CALCULATION METHOD The results from the material balance were used to develop the overall total energy and utility balances for the proposed facility (see Table 5-2). Table 5-2: Bitumen Blending Facility Overall Energy and Utility Balances Energy Balance Primary Source of Energy Electricity (MW) Electricity 25 Mass (t/sd) Fuel Gas (GJ/h) Fuel gas produced in process units 14 Equivalent energy from natural gas purchased for burning as fuel gas 1,595 Primary Consuming Source Total Supply 25 1,609 Fuel gas required for steam production 14 Natural gas required for steam production 1,595 Total electrical power requirement 25 Summary of Steam Produced and Consumed Total Demand 25 1,609 Equivalent energy for 4,500 kpa(g) steam produced 12,917 1,609 Total 12,917 1,609 BASIS OF ENERGY AND UTILITY BALANCES The energy and utility balances for the proposed facility are based on: the available fuel gases being used for internal consumption the estimated energy and utilities requirements for each main process unit ENERGY EFFICIENCY The results from the material balance and energy and utilities balances were used to develop an overall energy efficiency for the proposed facility (see Table 5-3). December 2007 Shell Canada Limited 5-5

73 MATERIAL AND ENERGY BALANCES ENERGY AND UTILITY BALANCES Section 5.2 Table 5-3: Bitumen Blending Facility Overall Energy Efficiency Mass Flow Rate Energy (LHV) Streams Calendar (t/cd) Stream (t/sd) (MW) Calendar (GJ/h) Stream (GJ/h) Input and Intake Paraffinic Diluent 19,575 19,893 36,598 37,193 Makeup paraffinic diluent Bitumen 63,219 64, , ,846 Imported synthetic crude as diluent (for blending) 55,220 56,118 92,743 94,251 Natural gas (imported) ,569 1,595 Net electricity (imported from grid) Total 139, , , ,352 Output in Products Total paraffinic diluent return 19,574 19,893 36,598 37,193 Total bitumen blend product synbit 118, , , ,474 Used Total 138, , , ,667 On-site fuel gases (C 2-, C 3, C 4, hydrogen) ,583 1,609 Total ,583 1,609 Subtotal of output plus used 139, , , ,276 Overall efficiency = output/input 99% WATER BALANCE An overall water balance for the four-phases of the bitumen blending facility is provided in Table 5-4. The water balance reflects normal summer operational requirements. The monthly variability of the water balance is within seasonal change expectations. SULPHUR BALANCE Because the paraffinic diluent at the bitumen blending facility will be recovered at a relatively low temperature, the bitumen will undergo negligible thermal cracking in the diluent recovery process. Most of the organic sulphur originally contained in the bitumen will remain with the bitumen as part of the synbit s or conbit s organic sulphur. The combined trace levels of hydrogen sulphide (H 2 S) in the feed and trace levels generated by cracking will be routed to the overhead gas and sour water streams. The sour water will be routed to the AOSP Scotford 5-6 Shell Canada Limited December 2007

74 MATERIAL AND ENERGY BALANCES ENERGY AND UTILITY BALANCES Section 5.2 Upgrader s sour water stripper. The overhead gas will be routed to the fuel gas system feeding the steam boilers. Table 5-4: Bitumen Blending Facility Overall Water Balance (Summer) Major Uses Overall Water Balance Raw water to clarifier ponds (cooling tower makeup and utility) Normal (m 3 /h) * Raw water to demineralization plant Total demand from the North Saskatchewan River 400 Other Water Sources Oily water sewer 40 Potable water (via truck) 4 Water in feed 16 Water Disposition Total water to site 460 Clarifier 1 Utility water 40 Vapour to atmosphere (cooling tower evaporation, steam system losses) Treated water returned to the North Saskatchewan River Total water from site 460 Note *: A peak flow of 600 m 3 /h is required as a design margin to handle upset conditions and transition during start-up and shutdown. December 2007 Shell Canada Limited 5-7

75 MATERIAL AND ENERGY BALANCES ENERGY AND UTILITY BALANCES Section Shell Canada Limited December 2007

76 Section 5.3 MATERIAL AND ENERGY BALANCES APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION PROCESS CHEMICALS CHEMICAL REQUIREMENTS Table 5-5 summarizes a preliminary list of the operating chemicals required for the utilities used in the bitumen blending facility. These chemicals, which are mainly used for water treatment, will be similar to those already in use at the existing AOSP Scotford Upgrader. The approximate consumption quantity shown in the table is the amount required for all four phases of the bitumen blending facility. Chemical quantities and supplies will be further developed during detailed engineering. Table 5-5: Estimated Process Chemical Requirements for the Facility Chemical Consumption (t/a) Use Alum 50 Raw water treatments clarification Anionic liquid polymer 2 Raw water treatments clarification Antiscalant 40 Scale and corrosion control, cooling water BFW corrosion inhibitor 3 Corrosion control on boiler feedwater BFW oxygen scavenger 3 Oxygen scavenger, boiler feedwater Biocide 10 Microbiological control, cooling water Biosurfactant 10 Cooling water Caustic soda 200 Raw water treatments ph control Citric acid 3 Cleaning reverse osmosis Coagulant 5 Clarification Corrosion inhibitor 25 Cooling water Demulsifier 5 Wastewater treatment Dispersant 8 Cooling water Flocculant 50 Raw water treatments clarification Sodium bisulphite 10 Raw water treatments Sodium hypochlorite 70 Raw water treatments Sodium hypochlorite 150 Clarification, cooling water Sulphuric acid 98% 250 Cooling water ph adjustment Sulphuric acid 98% 100 Raw water treatments ph control Sulphuric acid 98% 3 Wastewater treatment ph adjustment December 2007 Shell Canada Limited 5-9

77 MATERIAL AND ENERGY BALANCES PROCESS CHEMICALS Section 5.3 CATALYSTS No catalysts are required for the bitumen blending facility. CHEMICAL STORAGE AND HANDLING All on-site chemical and waste chemical storage will be designed according to industry standards and applicable health and safety guidelines. Generally, these areas will include appropriate containment and spill mitigation measures. Chemicals will be stored in a secured location, close to the relevant process units Shell Canada Limited December 2007

78 MARKETING PLAN Section 6.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION MARKET POSITIONING WORLD CRUDE OIL MARKET The world supply of crude oil continues to be dominated by suppliers in the Middle East, South America, the North Sea, West Africa and North America. Global petroleum demand is expected to increase moderately over the next five years. The growth in crude supply is lagging behind the demand, which leads to a tight market. The world market influences North American market dynamics primarily in imported alternatives to US major refining centres from the North Sea, Mexico, Ecuador, the Middle East, Venezuela, Brazil and West Africa. The Far East, including China and Korea, could offer a potential new market for Canadian crude oils derived from oil sands. However, currently no established cost-effective transportation infrastructure is available for shipping exports. However, two pipeline projects, the Enbridge Gateway Project and the Trans Mountain expansion project, if supported by the industry and approved by the regulators, could open the way for exports to the Far East. MARKETS FOR WESTERN CANADIAN CRUDE OIL Figure 6-1 shows the current crude oil markets, including the: US Petroleum Administration for Defense Districts (PADD) Western Canadian core and extended crude oil market areas The core market areas are predominately landlocked in the PADD II and PADD IV areas, extending from western Pennsylvania, south to Chicago, and west to Montana. The extended market includes areas of PADD III (Oklahoma and Texas) and PADD V (Puget Sound and California). Substantial volumes of light crude oil can be processed in all these core and extended market areas. Currently, Canadian heavy crude oil is mainly processed in the core market area. A limited volume of heavy crude oil can be processed in the core market area because of the number of refineries with sufficient heavy oil conversion and desulphurization capabilities, either existing or planned. A broader potential market for Canadian heavy crude oil is in the extended market areas, once the transportation issue is resolved. The extended PADD market areas are large December 2007 Shell Canada Limited 6-1

79 MARKETING PLAN MARKET POSITIONING Section 6.1 MARKETS FOR WESTERN CANADIAN CRUDE OIL (cont d) enough to provide a robust market platform for Canadian heavy crude oil production. Shell Canada Petro-Canada Imperial Edmonton Hardisty Husky-Lloydminster Vitol ChevronTexaco-Burnaby BP-Cherry Point ConocoPhillips-Ferndale Coop-Regina Tesoro-Anacortes Shell-Anacortes Montana Ref-Great Falls Ultramar Shell PetroCanada Irving Imperial ConocoPhillips Billings ExxonMobil Cenex Tesoro-Mandan Murphy-Superior Texaco Tesoro Valero Shell Sinclair-Casper Salt Lake City Sinclair-Rawlins Tesoro ChevronTexaco Frontier-Cheyenne Flying J Holly Valero Suncor MAP-St.Paul Flint Hills-Pine Bend PetroCanada-Oakville Imperial Sarnia Shell Imperial-Nanticoke Suncor MAP-Detroit United-Warren Citgo-Lemont ConocoPhillips BP-Toledo Sunoco ExxonMobil-Joliet BP-Whiting Sunoco -Toledo Valero MAP-Canton ConocoPhillips Motiva Sunoco Premcor-Lima Sunoco Sunoco MAP-Robinson Shell NCRA-McPherson ConocoPhillips-Wood River Frontier-El Dorado MAP-Catlettsburg Giant Farmland-Coffeyville ChevronTexaco BP Paramount Valero ExxonMobil Shell ConocoPhillips Valero ConocoPhillips-Ponca ConocoPhillips - Borger City Sinclair-Tulsa Gary WIlliams Valero Premcor Refinery Configurations PADD V PADD IV PADD III PADD II PADD I Western Navajo Lion Hunt Crown Alon Placid Shell Valero ChevronTexaco ExxonMobil ExxonMobil Motiva Fina Shell Premcor ConocoPhillips MAP Murphy LCR Motiva ConocoPhillips Valero Valero ExxonMobil Motiva CITGO Chalmette Crown ConocoPhillips MAP Shell Coastal BP Valero CITGO Valero Heavy Sour Medium Sour Light Sweet Core Market Extended Market Source: Market study by Muse Stancil, February 2007 Flint Hills Valero Figure 6-1: Current Crude Oil Market Areas WESTERN CANADIAN SYNTHETIC CRUDE PRODUCTION Future increases in synthetic crude production in Canada are expected to result mainly from: expansions by: Canadian Natural Resources Limited (CNRL) OPTI-Nexen Suncor Energy Inc. (Suncor) Syncrude Canada Limited (Syncrude) potential new upgrader projects by: BA Energy Inc. (BA Energy) Petro-Canada Ltd. (Petro-Canada) 6-2 Shell Canada Limited December 2007

80 MARKETING PLAN MARKET POSITIONING Section 6.1 North West Upgrading Inc. Husky Energy Inc. (Husky) additional OPTI-Nexen phases Imperial Oil Limited Synenco Energy Inc. Shell Canada Limited (Shell) IN SITU BITUMEN PRODUCTION In situ bitumen production in Canada is expected to increase substantially, mostly because of a higher production outlook from such companies as: EnCana CNRL Petro-Canada Devon Energy Corporation (Devon) Husky (Sunrise Oil Sands Project) MEG Shell DISPOSITION FOR ALL WESTERN CANADIAN SYNTHETIC CRUDE OIL The lower Midwest, Mid-Continent and the Puget Sound areas could be the expected growth markets for synthetic crude in the medium to long term. DISPOSITION FOR WESTERN CANADIAN HEAVY CRUDE OIL The traditional destination for Canadian heavy crude oil blends has been the US Upper Midwest (PADD II area). In the future, pipeline expansions and new pipeline projects will provide increasing opportunities to reach extended markets, including the US Gulf Coast (PADD III area), the US West Coast (PADD V area) and, eventually, even the Far East. These US Gulf Coast and US West Coast markets are robust markets that are large enough to absorb the new bitumen blend volumes (synbit and conbit) expected from the proposed project. December 2007 Shell Canada Limited 6-3

81 MARKETING PLAN MARKET POSITIONING Section Shell Canada Limited December 2007

82 MARKETING PLAN Section 6.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION PIPELINE INFRASTRUCTURE COMMON CARRIER PIPELINE CAPABILITY Currently, crude exports from the Western Canadian Sedimentary Basin (WCSB) are mostly facilitated via three major pipeline systems: Enbridge Express/Platte Trans Mountain These pipelines have enough capacity to handle the current WCSB crude oil production. However, as oil sands production expands faster than conventional oil production declines, additional pipeline capacity will be required. PIPELINE INDUSTRY EXPANSION PLANS Crude Oil Pipelines Figure 6-2 illustrates the current pipeline infrastructure and the pipeline expansion projects either being constructed or future projects disclosed by their project proponents. As oil sands production from Western Canada increases over the next decade, some of these proposed pipelines are expected to be implemented. Table 6-1 lists several of the large pipeline projects that have been proposed to create additional capacity for transporting Western Canadian crude oil to the various markets. Table 6-1: Proposed Crude Oil Pipelines Pipeline Owner Project Approximate Capacity (bbl/d) Market Potential Enbridge Gateway 400,000 West Coast and Far Kinder Morgan Trans Mountain 400,000 East Enbridge Alberta Clipper 400,000 Upper Midwest Enbridge Southern Access 400,000 TransCanada Keystone 500,000 Mid-Continent Altex Energy Ltd. Altex Pipeline 250,000 Enbridge and ExxonMobil Clydesdale 400,000 TEPPCO and ConocoPhillips Seaway 350,000 US Gulf Coast December 2007 Shell Canada Limited 6-5

83 MARKETING PLAN PIPELINE INFRASTRUCTURE Section 6.2 Ft. McMurray Kitimat Burnaby Edmonton Hardisty Anacortes Clearbrook Superior St. Paul Sarnia Salt Lake City Chicago Los Angeles Cushing Wood River Patoka Proposed Expansion or New Pipeline Gateway Enbridge (Clipper) TMX Altex Keystone MinnCan Southern Access Seaway Clydesdale St. James Houston Existing Pipelines Several Pipelines Frontier Kinder Morgan Platte Kinder Morgan (Express) Spearhead Enbridge Mustang/Chicap Pipelines Koch Corsicana Figure 6-2: Options to Increase Pipeline Capacity Condensate Pipelines In addition to the crude oil pipeline projects, several proposed condensate pipelines could provide Canadian oil sands producers with access to condensate supply (see Table 6-2). Table 6-2: Proposed Condensate Pipelines Pipeline Owner Project Approximate Capacity (bb/d) Enbridge Southern Lights 180,000 to 220,000 Enbridge Gateway 150,000 Pembina Spirit 100,000 BP BP Pipeline Reversal System ~ 150,000 Chicap Pipeline Company Capline Chicap System > 400, Shell Canada Limited December 2007

84 MARKETING PLAN Section 6.3 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION PRODUCT PORTFOLIO AND SHIPPING PLAN PRODUCTS Production from the proposed bitumen blending facility will be a mix of synbit and conbit bitumen blends. Depending on which phase of the project and the availability of condensates and synthetic crudes, the proportion could vary. SHIPPING PIPELINES Connection to the pipeline terminals in the Edmonton area via pipeline will provide further access to the West Coast, Eastern Canada and US markets. PRODUCT MARKETS Each participating joint venture owner will use or market its own share of bitumen or bitumen blends from the proposed bitumen blending facility to: regional upgraders in the Scotford area coker refiners in the North American market, including: the US Midwest (PADD II area) the US Gulf Coast (PADD III area) the West Coast (PADD V area) These PADD markets are robust and large enough to absorb the new bitumen blend volumes expected from the project. December 2007 Shell Canada Limited 6-7

85 MARKETING PLAN Section 6.3 PRODUCT PORTFOLIO AND SHIPPING PLAN 6-8 Shell Canada Limited December 2007

86 PROJECT EXECUTION STRATEGY Section 7.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION INTRODUCTION PROJECT OBJECTIVE The development of the proposed bitumen blending facility might occur over a period of about 13 years, beginning as early as To reduce execution and market risks, the project will be broken down into manageable phases, each led by engineering, procurement and construction (EPC) contractors. The timing of each phase will depend on the outcome of this regulatory process and the required owners investment decisions. The integration and interfaces between project phases will be managed by Shell and will be optimized to minimize the impact on the operating facilities and surrounding communities. Specific execution strategies and plans will be developed for each phase to ensure the successful design, engineering, construction and start-up of the bitumen blending facility. For each phase, the strategies and plans will be consistent with Shell s project management system and will support the overall objective of delivering a bitumen blending facility, which will: comply with all regulatory requirements and commitments achieve a world-class safety record throughout construction and into operations have an efficient start-up and ramp-up to full production for each phase of the project PROJECT GOVERNANCE All Shell-operated projects follow a project governance model, the integrated Project Management System (ipms), which provides the framework by which project work is conducted, including: a gate review process for the front-end development (FED) stages best practice guides, standards and procedures project value improvement processes (PVP) for the various stages of the project The ipms is centred on an ongoing critical review of the scope development and key decisions related to the project s front-end development. The system uses a December 2007 Shell Canada Limited 7-1

87 PROJECT EXECUTION STRATEGY INTRODUCTION Section 7.1 PROJECT GOVERNANCE (cont d) rigorous step-by-step approval process to ensure quality assurance from stage to stage. It also identifies clearly defined deliverables and mandatory project practices that validate completion of each stage before the project can progress to the next stage. Assurance and peer reviews throughout the project will provide assurance of the quality of project work and, in particular, risk management. Proper use of the integrated project management system will help develop multifunctional teams that: focus on key initiatives and value drivers focus on decisions, not activities drive effective alignment of all project stakeholders PROJECT STAGES The project will be executed in six stages: scouting front-end development project implementation (engineering, procurement and construction) commissioning and start-up operations decommissioning and reclamation Scouting In the scouting stage, which has been completed, various technology options were investigated and the optimum technology was chosen to meet the project objectives. A preliminary cost estimate was generated, as well as a preliminary set of economics, to confirm that the project would be viable. Front-End Development Implementation During the FED stage, concepts generated in the scouting stage will be progressed through design and engineering. This will enable a project cost estimate to be prepared in sufficient detail to allow an investment decision to be made. The implementation stage starts with detailed engineering and progresses through procurement and construction to mechanical completion and handover to operations. This stage will include: finalizing construction execution plans finalizing commissioning and start-up execution plans establishing operating organizations 7-2 Shell Canada Limited December 2007

88 PROJECT EXECUTION STRATEGY INTRODUCTION Section 7.1 developing and testing systems and procedures recruiting and training operating staff Commissioning and Start-Up Operations During the commissioning and start-up stages, the project implementation team will provide training, start-up planning and support to the operating staff to: ensure continuity of knowledge ensure a smooth transition from construction to operations During the first years of operations, the facility will be optimized to ensure reliable and stable operations. During this period, capacity debottlenecking opportunities will be evaluated and pursued. Decommissioning and Reclamation At the end of operations, the facility will be decommissioned and the site returned to the appropriate land use. KEY INITIATIVES AND PROJECT STRATEGIES To manage risks, the proposed project will be designed and constructed in four phases. An integrated project team will manage the design and execution of each of the project phases with a focus on the integration and interface issues. For each phase, project execution plans will be developed, which incorporate the following initiatives and strategies: leveraging the technical, execution and operations knowledge gained from previous Shell projects at the Scotford site adopting best practices and lessons learned from other organizations that have executed recent projects in the oil sands industry developing labour strategies to determine how to best execute the project in a highly competitive and active market. Construction and operations workers will be recruited from the Greater Edmonton area first, then Alberta and the rest of Canada. limiting the effect on, and interference with, existing operations maximizing off-site construction through modularization using an integrated and cross-functional project organization December 2007 Shell Canada Limited 7-3

89 PROJECT EXECUTION STRATEGY INTRODUCTION Section 7.1 KEY INITIATIVES AND PROJECT STRATEGIES (cont d) involving operations and construction personnel early in the project to obtain their input into the detailed design. This will benefit the transition from engineering to construction to operations. 7-4 Shell Canada Limited December 2007

90 PROJECT EXECUTION STRATEGY Section 7.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION CONTRACTING AND PROCUREMENT PLAN CONTRACTING During the FED stage, engineering contractors will work with the Shell team to develop the project scope, cost estimate and execution plans. Also, Shell will decide on the contracting approach for engineering, procurement and construction. Detailed contracting plans, consisting of a breakdown of the work scope, cost estimate, contracting approach and potential contractors, will be developed for each component of the proposed project. The contracting plans will be reassessed following each phase of the project, as lessons learned become available. Key factors that will influence the contracting strategy include: the general industry direction towards breaking large projects into smaller, more manageable work scopes the general direction of industry in Alberta towards multiple contractors, with the owner retaining overall management responsibility the performance of major contractors on other Shell and third-party projects PROCUREMENT Goods and services will be procured according to Shell s business policies and supply chain management policies and procedures. This includes providing meaningful opportunities for local, Albertan and Canadian participants within a global project procurement strategy. The intent is to develop a supply chain management program that will capture the maximum value throughout all phases of the project. Key procurement initiatives for the project include: optimizing life-cycle costs of ownership in all procurement decisions identifying long-lead delivery items early in the FED phases ensuring that quality and performance standards are being maintained, given the changing global market, by pre-qualifying supplier and contractor quality assurance and control practices, and building technical integrity management plans into the procurement plans December 2007 Shell Canada Limited 7-5

91 PROJECT EXECUTION STRATEGY Section 7.2 CONTRACTING AND PROCUREMENT PLAN PROCUREMENT (cont d) incorporating strategies to manage risks in project procurement requirements, such as: evaluating early the manufacturing and fabricating capacity and capability visiting potential suppliers early in the planning process using and leveraging Shell s global procurement expertise and relationships using lessons learned from each phase of the project to set the procurement plans for the subsequent project phases 7-6 Shell Canada Limited December 2007

92 PROJECT EXECUTION STRATEGY Section 7.3 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION CONSTRUCTION CONSTRUCTION STRATEGY Construction will be managed by contractors under Shell s supervision. All site activities will comply with Shell s health, safety and environment (HSE) policies and management systems. The proposed project will be constructed on a site in the northern part of the Scotford Complex, north of Highway 560A. For each phase, the construction areas will be kept separate from operational areas as much as possible, by using: fencing dedicated entrance gates access roads a security system The proposed project will be constructed in phases, starting as early as Phases will possibly overlap as they move into construction. The following initiatives will be explored to address the impacts of the long construction duration and the potential overlaps: stagger, wherever possible, construction phases to reduce the overall workforce at the site and to avoid congestion of material deliveries investigate and, where practical, implement opportunities to reduce the number of vehicles travelling to and from the site plan carefully the logistics of the construction support activities, including an emphasis on just-in-time delivery of equipment and materials maximize the use of off-site modular construction, pre-fabrication and preassembly to reduce the number of workers employed directly on the construction sites monitor regional air quality during construction using the existing, extensive monitoring programs that are ongoing in the area, including the static monitoring network and the Fort Air Partnership (FAP) air monitoring network December 2007 Shell Canada Limited 7-7

93 PROJECT EXECUTION STRATEGY CONSTRUCTION Section 7.3 CONSTRUCTABILITY CONSIDERATIONS During the FED phases, constructability workshops will be held to allow construction considerations to be incorporated into the project design. During the early part of implementation, these constructability considerations will be incorporated into the construction execution plans. For the proposed project, the constructability considerations include: splitting the project work scope into manageable pieces developing strategies to manage brownfield construction for later project phases developing transportation, such as rail and truck, and site logistics to support construction and address the impact on the existing infrastructure in the Scotford area developing strategies to address the effects of construction noise, increased traffic and stress on existing infrastructure identifying early laydown areas required for construction, module staging areas and fabrication areas defining early requirements for construction, utilities and infrastructure support, such as electrical power, information technology and site trailers, as well as relocating the utilities corridor and pipelines TRAFFIC PLAN CONSIDERATIONS Construction of the proposed project will result in increased traffic volumes in the area. To address the impact on the existing highway infrastructure and local access roads to the Scotford Complex, a detailed construction traffic plan will be developed as part of the Construction Execution Plan for each phase of the project. The traffic plan will be developed in consultation with local municipalities and other stakeholders. The plan will be based on experience from previous projects in the Scotford area as well as the results of the County of Strathcona Traffic Study, completed in Shell Canada Limited December 2007

94 PUBLIC CONSULTATION Section 8.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION APPROACH COMMITMENT Shell is committed to working with stakeholders regarding the proposed AOSP Bitumen Blending Facility Project. Shell will continue to engage stakeholders, to understand their interests and issues, and to listen and respond. CONSULTATION PRINCIPLES Shell s Principles of Consultation (see Figure 8-1) provide the framework for designing and implementing the public consultation program for the proposed project. These consultation principles are based on accepted industry practice. Shell's Principles of Consultation Shared Process Design consultation programs based on public input, taking into consideration their knowledge, in areas where Shell operates or plans to operate. Respect Respect individual values. Consultation recognizes the legitimacy of peoples concerns and the valuable input they can provide. Timeliness Start consultation early. Provide social and environmental information and resources to ensure that the public and regulators are informed when participating in the consultation process. Disclose all non-proprietary relevant information. Use appropriate methods of communication to proactively provide frequent updates to all stakeholders and to respond to questions and requests for information in a timely way. Relationships Establish and maintain long-term relationships with key stakeholders through interaction, working teams and general involvement in the project. Meet and work with stakeholders face-to-face, whenever possible. Communication Consult closely with communities and interested parties affected by the project and regulatory process. Gather and listen to feedback, and work with people to resolve any concerns that might be identified. Responsiveness Adapt plans based on stakeholder input and provide feedback on how input has affected plans and decisions. Establish feedback mechanisms to ensure that input is being captured and concerns addressed on an ongoing basis. Accountability Trust that representatives of interest groups are accountable to the organizations they represent. Figure 8-1: Shell s Principles of Consultation December 2007 Shell Canada Limited 8-1

95 PUBLIC CONSULTATION APPROACH Section 8.1 GOOD NEIGHBOUR POLICY Based on Shell s consultation principles, the Good Neighbour Policy (see Figure 8-2) is the foundation for a mutually prosperous, long-term relationship with the people living near the proposed project. Shell s Good Neighbour Policy Shell s objective is to develop a mutually prosperous, long-term relationship with our neighbours living in close proximity to our oil sands operations. We will use the following principles as a guide in developing such a relationship: We will earn trust and respect at an early stage through honest, open and proactive communication. We will, on an ongoing basis, involve our neighbours in decisions that impact them with the objective of finding solutions that both parties view as positive over the long term. We will construct and operate the mine and upgrader in an environm entally responsible and economically robust manner. We will use and encourage local businesses where they are com petitive and can meet Shell s requirem ents. We will ensure that the jobs created by the mine and upgrader are filled by its neighbours whenever possible but always on a strictly merit basis. To help make this happen, we will as necessary work with our neighbours, contractors, educational institutions and other producers to develop the skills required. Figure 8-2: Shell s Good Neighbour Policy 8-2 Shell Canada Limited December 2007

96 PUBLIC CONSULTATION Section 8.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION PUBLIC CONSULTATION PROGRAM CONSULTATION OBJECTIVE The objective of the consultation program for the proposed bitumen blending facility is to ensure that the public and stakeholders are familiar with the proposed project, that their concerns and interests are understood, and that steps to mitigate their concerns are implemented, where appropriate. CONSULTATION PROCESS Stakeholder Identification Stakeholder Input Shell s public consultation program is built on the process of identifying individuals and groups that might be affected by adding the proposed project. Relationships with many of the neighbouring stakeholders for the project have already been established as a result of the active stakeholder engagement process used during the planning, construction and operation of the AOSP Scotford Upgrader, the recently approved expansion of the AOSP Scotford Upgrader, and the recently filed application for the Shell Scotford Upgrader 2 Project. In addition, staff in the Scotford Refinery, which is located immediately south of the proposed AOSP bitumen blending facility, have a 20-year history of working with local stakeholders. The ongoing Scotford public consultation program includes stakeholder meetings, information sessions and communications, such as: regular update meetings informal drop-in coffee sessions open houses face-to-face visits mail-outs telephone calls and These interactions with the public allow Shell to identify and better understand the ongoing interests and concerns of stakeholders, well in advance of any planned projects. An advance understanding of stakeholder concerns allows the project development team to implement mitigation strategies, where appropriate. December 2007 Shell Canada Limited 8-3

97 PUBLIC CONSULTATION PUBLIC CONSULTATION PROGRAM Section 8.2 Stakeholder Input (cont d) Stakeholder Issues Issues Management The public consultation process also provides procedures for documenting and tracking concerns raised by stakeholders. The ongoing public consultation program for the AOSP Scotford Upgrader identified the following key issues related to future industrial development in the region: emergency preparedness and the ability to respond a better understanding of regulatory requirements and processes potential health effects related to industrial activity, including the effects of increasing cumulative air emissions effects of noise on area residents effects of increased rail and road traffic, such as volume, delays, noise and safety the increased number of industrial developments requiring review and input Issues related to regional industrial activity will continue to be addressed through ongoing participation by Shell representatives in stakeholder meetings, local and regional working groups and committees. Project-specific consultation will focus on stakeholder concerns specific to the proposed project. Shell will continue to mitigate stakeholder issues and concerns by: taking responsibility for areas that are directly under its control facilitating and advocating in areas that are not under its control providing resources for identifying and managing impacts, where appropriate Feedback Mechanisms In addition to meetings, open houses and workshops, several other feedback mechanisms will continue to be used for the proposed project to provide the public with opportunities to ask questions, voice concerns or provide input. These feedback mechanisms include: access to Shell representatives an information phone line comment cards at Shell-sponsored public events the website: Shell Canada Limited December 2007

98 PUBLIC CONSULTATION PUBLIC CONSULTATION PROGRAM Section 8.2 Access to Shell Representatives Because Shell has existing relationships with its Scotford Complex neighbours, Shell representatives are well known in the stakeholder community. Local residents tend to call Shell representatives directly if they have questions or concerns about Shell s project plans. Shell encourages this kind of informal communication by providing local contact information in printed materials, such as: information handouts business cards mailed letters and notifications the Shell website Information Phone Line A telephone number will be provided in printed material and on the Shell website. As is the current practice, questions and requests for information will be responded to, and feedback will be forwarded to the appropriate project staff, and documented. Comment Cards Shell is interested in feedback from public events and makes comment or feedback cards available to event attendees. The cards also give those who prefer to write down their questions, rather than voice them publicly, an opportunity to provide input. Shell Website For stakeholders with on-line access, Shell will post project updates throughout the regulatory process on its website at December 2007 Shell Canada Limited 8-5

99 PUBLIC CONSULTATION PUBLIC CONSULTATION PROGRAM Section Shell Canada Limited December 2007

100 PUBLIC CONSULTATION Section 8.3 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION CONSULTATION INITIATIVES PUBLIC DISCLOSURE The Public Disclosure on January 24, 2007, provided the public and stakeholders with initial information on the proposed AOSP Bitumen Blending Facility Project, as well as on the Shell Scotford Upgrader 2 Project. The Public Disclosure was released through: a press release the mail, to over 100 neighbouring stakeholders A project-related telephone number was provided in these communications to enable recipients to request information and to provide feedback. MEETINGS AND WORKING GROUPS Meetings will be held with interested stakeholders to provide updates on the proposed Bitumen Blending Facility Project, discuss concerns and plan future activities. Mail-outs, comment cards, phone calls, personal visits and correspondence will be used, as required and appropriate. Shell continues to play a leadership role in bringing together a working group made up of industry and other players to collectively identify sustainable options for addressing regional land use concerns. These concerns are largely based on the resulting impacts of the local area s designation as heavy industrial. Residents who live within this heavy industrial area continue to express concerns regarding effects on their residential property and land values. The Voluntary Property Purchase Program, which is administered by the Land Trust Society, provides local residents with an opportunity to relocate if they wish to leave the area. The program was developed in conjunction with input from stakeholders, including residents, Strathcona and Sturgeon counties, and industry. Shell has been actively involved in developing the program and funding it along with area industry and Strathcona and Sturgeon counties. The Land Trust Society provides guidance for the program and includes Shell representatives on the board of directors. Shell actively supported the IHCARI committee and the Residents Synergy Conference of October 2006, which provided a forum for residents to suggest steps for mitigating issues of concern. The Implementation Action Team (IAT), December 2007 Shell Canada Limited 8-7

101 PUBLIC CONSULTATION CONSULTATION INITIATIVES Section 8.3 MEETINGS AND WORKING GROUPS (cont d) including a Shell representative, is currently preparing approaches, work programs and communication plans for the recommendations brought forward at that conference. A separate industry-based group, through the NCIA, in which Shell participates, works together to address regional environmental issues related to, or potentially compounded by, future developments. CONSULTATION ACTIVITIES Open Houses and Project Presentation Ongoing Plans On March 8, 2007, Shell held an open house in Fort Saskatchewan, at which the development plans for the Shell Scotford Upgrader 2 Project and the AOSP Bitumen Blending Facility Project were presented. Information on these projects was displayed and handout materials were made available to clarify the plans for these projects. The AOSP Scotford Upgrader general manager presented information on the plans for the proposed upgrader and discussed the bitumen blending facility as part of the broader development plan. Shell personnel were available to answer questions and discuss concerns. Comment cards were available for stakeholders to complete. A second open house was held on October 10, 2007, at which the proposed AOSP bitumen blending facility was described separately from the broader Shell development plans in the Scotford area. Shell is committed to ongoing consultations with stakeholders on activities related to the proposed project, and to addressing related issues. Table 8-1 lists Shell s recent consultations with stakeholders, including activities related to: the project s ongoing consultation program Shell and AOSP expansion and growth plans concerns regarding industrial development 8-8 Shell Canada Limited December 2007

102 PUBLIC CONSULTATION CONSULTATION INITIATIVES Section 8.3 Table 8-1: Public Consultation January to October 11, 2007 Date Activity Stakeholder January Sent letter to neighbours regarding new call-out providers and scheduled test call-out for January Issued press release updating plans for AOSP and Shell upgraders. 24 Made advance calls to key stakeholders to inform them of the press release and Notice of Public Disclosure for expansion plans. 25 Distributed Public Disclosure describing plans and options for AOSP and Shell upgraders. February Sent letter to neighbours regarding results of the January 17, 2007 CN Rail crossing mock exercise Neighbour visits by Gecko Consultants to update contact information for emergency call-outs and provide neighbours with an updated information package, including the Shelter-in-Place video. Shell s community affairs representative participated in nine home visits and also distributed the Public Disclosure for the proposed project. 19 Investigated three sites, including Provident Energy, after a neighbour complained of an odour of rotten eggs. The investigation indicated that nothing was happening at the site to cause the odour. Responded to neighbour, who was also concerned about the long wait at CN train crossings. Gave neighbour CN contact information. March Held an open house and delivered two presentations to provide information and identify issues and concerns regarding the Shell Scotford Upgrader 2 Project and AOSP Bitumen Blending Facility Project. 10 Sent information letter to neighbours informing them of new callout communication system with Comm-Alert Inc. Planned a test call. 11 Sent information letter to neighbours informing them of the planned test of the new evacuation siren on March 23 and 30, Sent follow-up letter to neighbours regarding the March 8, 2007 open house, with a copy of the PowerPoint presentation. 19 Sent letter to neighbours regarding the January 22, 2007 call-out test results and advised them of the next test call-out for April 4 and 5, All All Stakeholders on the phone list dated January 24, 2007 All All Neighbours R-05, R-03, R-44, R-46, R-12, R-13, R-10 and others Neighbour SE of Shell Scotford Neighbours and general public All Neighbours 21 Made telephone calls to confirm test call-out date. Neighbour R-11 Neighbour R Received a telephone call regarding concerns about trucks driving through Bruderheim. Enquired about Shell trucks. Investigation confirmed that: no Shell trucks were in Bruderheim on March 15, 2007 the project has ceased activities of the contract for imported fill material transportation All All Chief Administration Officer of Bruderheim December 2007 Shell Canada Limited 8-9

103 PUBLIC CONSULTATION CONSULTATION INITIATIVES Section 8.3 Table 8-1: Public Consultation January to October 11, 2007 (cont d) Date Activity Stakeholder March 2007 (cont d) 21 (cont d) Shell trucking might resume in June 2007 material is being hauled for an Enbridge project The information was conveyed to the concerned caller. April Responded by letter to the City of Fort Saskatchewan s March 23, 2007 letter regarding concerns about truck travel through the City of Fort Saskatchewan during peak travel times. 19 Sent an to confirm cancellation of the noise survey because of bad weather. 20 Received a phone call from a Fort Saskatchewan resident who said he held mineral rights on 7.5 acres north of the Scotford Complex where the AOSP Scotford Upgrader expansion construction was currently taking place. Shell community affairs followed up with a message to Shell s land department for further follow up. 26 Conducted set up again for a noise survey on neighbour s property. Neighbour mentioned several concerns: did not get April 4, 2007 test call-out received no follow up from a meeting in November 2006 with a consultant who met with neighbour R-11 and neighbour R-14 (consultant advised he was not representing Shell) was looking for report on April 4, 2007 refinery flaring event 30 Conducted telephone conversation with neighbour regarding the query raised at the Joint Industry Community Meeting about the availability of BTEX data on the Fort Air Partnership (FAP) website. Explained the interruptions in data polling experienced by AGAT Labs, and that FAP is working with AGAT to resolve issues. Requested that FAP follow up with neighbour. BTEX monitoring at the Scotford II Station complies with AENV requirements. May Received response to request for discussion and to propose meeting in May A neighbour was unable to attend March 8, 2007 open house, but received the follow-up information package. She was interested in knowing where the building was going to take place. Shell offered to provide a copy of the Public Disclosure document, which was mailed to her home on May 11, Shell set a date for a followup meeting with this neighbour on June 14, Ian Gray (Nichols Applied Management) and Margit Phillips (Shell) met with the director of Family and Community Support Services. Ian presented Big Picture Upgrader Activities in the Heartland and related Social Considerations and Margit briefed the board on the current and upcoming projects using the March 8, 2007 open house presentation and April 26, 2007 community meeting presentation. Copies of the Public Disclosure document, both presentations and the proposed Terms of Reference were given to all attendees. City of Fort Saskatchewan Neighbour R-11 Fort Saskatchewan Resident Neighbour R-11 Fort Air Partnership Neighbour R-11 Alexander IRC Neighbour R-7 Family and Community Support Services 8-10 Shell Canada Limited December 2007

104 PUBLIC CONSULTATION CONSULTATION INITIATIVES Section 8.3 Table 8-1: Public Consultation January to October 11, 2007 (cont d) Date Activity Stakeholder May 2007 (cont d) 10 Visited neighbour s property to re-set up noise survey equipment for six days. Followed up with voice message and to advise neighbour of visit. 14 Sent letter to neighbours regarding implementation of new on-site alarm system. 21 Sent follow-up to May 14, and voice message regarding setting up a meeting to discuss gaining an understanding of Alexander IRC s role or function and their interest or concern regarding the environment and the impact of the proposed Shell Scotford Upgrader 2 Project and AOSP Bitumen Blending Facility Project. 22 Received a phone call from a resident west of the AOSP Scotford Upgrader whose land is just within Shell s Emergency Planning Zone, but whose residence is not. He had attended the North West Upgrading hearing and had questions about emergency response and risk in relation to his residence. Shell followed up with him and, because of the proximity of his residence, we provided him with the contact information of the North Strathcona County liaison officer. 31 Spoke with an Alexander First Nation representative and set up a meeting date for June 22, 2007 in Edmonton to gain a greater understanding of the Alexander IRC role and functions, discuss environmental matters and concerns and the impact of resource development. 31 Made telephone call to neighbour to set up meeting on June 14 regarding rail and environmental concerns. June Attended Alexander First Nation and Alberta Government Guidelines Information Workshop in Alexander. 14 Met with neighbour to discuss concerns about rail transport and noise. 14 Met with neighbour to discuss the proposed Shell Scotford Upgrader 2 Project and AOSP Bitumen Blending Facility Project, and to discuss any concerns the neighbour had, such as concerns about rail transport and noise. 14 Met with neighbour to follow up on questions the neighbour raised after the September 2006 AOSP Scotford Upgrader incidents, i.e., air monitoring data, health and a general update. Meeting was attended by Shell community affairs representative and AOSP Scotford Upgrader environment manager. 22 Met with Alexander First Nation regulatory coordinator, at the request of Alexander First Nation, to better understand their concerns about industrial development. 26 Attended a forum hosted by Fort Saskatchewan Family and Community Support Services on large-scale construction workforces and community engagement in the Alberta Industrial Heartland. Neighbour R-11 All Alexander IRC Neighbour west across the North Saskatchewan River from AOSP Scotford Upgrader Alexander First Nation Neighbour R-6 Neighbour R-7 Alexander First Nation and Government of Alberta Neighbour R-6 Neighbour R-7 Neighbour R-14 Alexander First Nation City of Fort Saskatchewan December 2007 Shell Canada Limited 8-11

105 PUBLIC CONSULTATION CONSULTATION INITIATIVES Section 8.3 July 2007 Table 8-1: Public Consultation January to October 11, 2007 (cont d) Date Activity Stakeholder 9 Met with city manager and growth manager. Provided update on Shell projects, including AOSP Scotford Upgrader expansion, Shell Scotford Upgrader 2 Project and the AOSP Bitumen Blending Facility Project. Left copies of Public Disclosure and final Terms of Reference. Will send them a copy of applications for the Shell Scotford Upgrader 2 Project and the AOSP Bitumen Blending Facility Project. 11 Made telephone call to a stakeholder to request a meeting to discuss safety procedures. 16 Made a telephone call to DFO to discuss the modelling of the river intake for sediment transport and fish return system. Incorporate modelling of fish return system into plans. 26 Made telephone call to owner of Elk Island Retreat to request information and a site tour. This recreation property is located within 15 minutes of the AOSP Scotford Upgrader, and the purpose was to see if there were concerns about the project. August Met with Strathcona County liaison officer to discuss stakeholder concerns, including increased hydrogen sulphide (H 2 S) levels at FAP Scotford R2 station near Scotford and issues with NRCAER posting. 14 Met with City of Edmonton project manager regarding an update on the AOSP Scotford Upgrader expansion and the AOSP Bitumen Blending Facility Project. Clarified the differences between the current Shell Scotford Upgrader 2 Project and the AOSP Scotford Upgrader expansion. City of Edmonton Neighbour R10 Fisheries and Oceans Canada (DFO) Elk Island Retreat (RV and Campground) Neighbour R11 City of Edmonton 15 Distributed a copy of the IHCARI response to resident issues. Neighbours 15 Discussed format of joint industry open house with BA, NW Upgrading, Petro-Canada, Total, Synenco, Auxsable, NA Oil Sands. 15 Discussed the idea of a collective industry open house and presentation with the Alexander First Nation, to be held in their community. 16 Discussed land sale and purchase options with neighbour and proposed activities in the area requiring access to stakeholder land. 16 Phoned to enquire if there were residents living on the property, to note this information for emergency response purposes. 16 Set up noise survey equipment. Discussed with neighbour the Voluntary Property Purchase Program (VPPP) concern regarding homes sitting empty and vandalism. The Scotford 2 application mail-out was sent to the incorrect address. September Called neighbour to find out if he was moving away, to record this information for emergency response purposes. He had sold property to Total E&P. Alexander First Nation Alexander First Nation Neighbour R-3 Neighbour R-64 Neighbour R-11 Neighbour R Shell Canada Limited December 2007

106 PUBLIC CONSULTATION CONSULTATION INITIATIVES Section 8.3 Table 8-1: Public Consultation January to October 11, 2007 (cont d) Date Activity Stakeholder September 2007 (cont d) 7 Sought advice on application of government consultation guidelines regarding First Nations. Advised that because the project is on private land, government guidelines do not apply. Sought advice regarding the proposed open house with the Alexander First Nation. 7 Made a follow-up telephone call to the Alexander First Nation regarding proposed open house dates. Indicated there is a $12,000 cost to industry to hold the open house. The Alexander First Nation provided an open house cost breakdown of $16,000. Industry provided a counter-proposal for costs. Waiting to hear back with a decision on the date. 10 Informed neighbour that an on-site noise survey had been completed. The report is pending. Enquired about the VPPP status. It was in the works and the appraiser had come out. 10 Called to obtain an update on who the new owner of this property would be, as the previous owner had passed away. This information was required to update the project s emergency response contact information. 11 Toured Elk Island Retreat with the owner. Provided an update on proposed Shell projects and left the Public Disclosure. Enquired about possible issues with projects. There were none. They wanted to be re-zoned to C6 in order to expand their facility. 11 Delivered inside-outside thermometer that Shell had made for resident. Discussed current living situation, i.e., renting or moving. Resident expressed satisfaction with Shell s emergency response plan and efforts at making changes and communicating with residents. 12 Neighbour called to express concerns about high traffic at intersections and during peak traffic hours. Forwarded concerns to Strathcona County, and the Scotford general manager and construction manager. 18 Sent follow-up to the Alexander First Nation regarding the proposed budget and a date for the October 2007 open house. 21 Sent follow-up to the new City of Edmonton project manager to set time to discuss proposed Shell projects, i.e., the Shell Scotford Upgrader 2 Project and the AOSP Bitumen Blending Facility Project. 21 Sent request to the Alexander First Nation for a decision on proposed joint-industry open house date and budget. 25 Made a follow-up telephone call to the Alexander First Nation regarding the joint industry open house decision. The Elders are still discussing the open house. They will write a letter to Shell and copy the government, providing consultation policy and further documentation. Shell reiterated its position to work with them on business development. 26 Followed up on a neighbour s phone call concerning waits at traffic lights. Advised Strathcona County of the concern and called the neighbour to notify them that the problem had been brought forward and changes would be forthcoming. Alexander First Nation Alexander First Nation Neighbour R-11 Neighbour R-12 Elk Island Retreat Neighbour R14 Neighbour R-61 Alexander First Nation City of Edmonton Alexander First Nation Alexander First Nation Resident outside of Shell s primary communications area December 2007 Shell Canada Limited 8-13

107 PUBLIC CONSULTATION CONSULTATION INITIATIVES Section 8.3 Table 8-1: Public Consultation January to October 11, 2007 (cont d) Date Activity Stakeholder September 2007 (cont d) 26 Conducted a follow-up visit to determine if the neighbour is interested in selling land. Confirmed that the neighbour had received a copy of the Shell Scotford Upgrader 2 Project application. October Sent an notification of Shell s upcoming October 10, 2007 open house to County representatives. 2 Sent a follow-up to the City of Edmonton project team lead to set up a meeting and advise him of the upcoming October 10, 2007 open house. 2 Made a personal visit to a neighbour to provide them with a copy of the advertisement for the October 10, 2007 open house. Asked the resident if he had any health problems with their cattle. They had over 600 head of cattle and did not have any health problems with them. 3 Dropped off personal advertisements for the October 10, 2007 open house. 8 Telephoned the neighbour to advise them of the October 10, 2007 open house. 9 Telephoned the City of Edmonton project team lead to ask if a representative would be coming to the October 10, 2007 open house and to discuss their issues and concerns about Shell s project. 10 Held an open house and delivered presentations to provide information and to provide stakeholders with a forum to ask questions and identify issues and concerns regarding the AOSP Bitumen Blending Facility Project and Shell s Scotford Upgrader 2 Project. Neighbour R-3 Canart and Fenske City of Edmonton Neighbour R-10 I-1, R-3, R-5, R-11, R-12, R- 13, R-14, R-16, R-17, R-22, R-44, R-47, R-35, Heartland Hall and the Public Library Neighbour R-7 City of Edmonton Neighbours and general public 8-14 Shell Canada Limited December 2007

108 PUBLIC CONSULTATION Section 8.4 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION REGIONAL COOPERATION INDUSTRY APPROACH Shell is committed to working with regulatory agencies and regional stakeholders as part of its ongoing commitment to sustainable development, which incorporates social, economic and environmental protection. Shell will continue to support existing and new regional cooperative initiatives through funding and staff time, as appropriate. MEMBERSHIP IN LOCAL ORGANIZATIONS Shell is a member of several local organizations in the region, including: the Fort Air Partnership (FAP), a voluntary group that consists of representatives from: the public a non-governmental organization industry Alberta s Industrial Heartland Association Capital Health Alberta Environment FAP generates and provides comprehensive and credible air quality information to the public, industries and government. the Northeast Capital Industry Association (NCIA), a group that provides a mechanism for industry members to work cooperatively on regional issues to support sustainable industrial growth. The Scotford Complex holds two seats on the board of directors, with other personnel on several working committees. the upgrader proponents committee, a subgroup of NCIA that focuses on resolving regional issues related to proposed upgrader facilities PARTICIPATION IN OTHER INITIATIVES Shell s other regional cooperative initiatives will include: December 2007 Shell Canada Limited 8-15

109 PUBLIC CONSULTATION REGIONAL COOPERATION Section 8.4 PARTICIPATION IN OTHER INITIATIVES (cont d) participating in designing and implementing the Fort Saskatchewan health exposure study participating in a cooperative regional industry initiative that will monitor the effects of emissions on soil quality over time. This study is the result of the presence of sensitive soils in the region and the cumulative industrial emissions to the air and potential deposition of acidifying materials to those soils. working with other industry members to: develop a collaborative approach to resolving the region s land use conflicts in a way that all stakeholders will view as mutually beneficial conduct traffic studies and evaluate potential mitigation opportunities, particularly for construction cycles working with other industry and government groups to understand regional groundwater quality and flow working with other industry groups to: develop a noise management program develop a regional airshed model 8-16 Shell Canada Limited December 2007

110 ENVIRONMENTAL MANAGEMENT Section 9.1 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION SUSTAINABLE DEVELOPMENT COMMITMENT TO SUSTAINABLE DEVELOPMENT Shell is committed to sustainable development, as set out in its sustainable development commitment statement (see Figure 9-1). Shell s commitment to sustainable development is an overarching corporate goal, alongside growth and profitability. Each of these goals is essential for delivering long-term value to Shell s shareholders, and provides the foundation for the company s development projects and business activities. Economic, environmental and social considerations are integrated in decisionmaking in all of Shell s business activities. Shell will continue to comply with legislation and exercise environmental due diligence, consistent with the requirements of the International Organization for Standardization (ISO) standard. Shell will also continuously improve the overall environmental performance of its operations and products, while ensuring short- and long-term commercial success. This includes setting goals and reporting progress regularly. December 2007 Shell Canada Limited 9-1

111 ENVIRONMENTAL MANAGEMENT SUSTAINABLE DEVELOPMENT Section 9.1 Figure 9-1: Shell s Commitment to Sustainable Development 9-2 Shell Canada Limited December 2007

112 ENVIRONMENTAL MANAGEMENT Section 9.2 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION HEALTH, SAFETY AND ENVIRONMENT MANAGEMENT COMMITMENT Shell believes that the management of health, safety and the environment (HSE) is integral to its project development organization. This requires commitment and leadership to communicate the importance of HSE performance and to ensure that plans and resources are provided to achieve the HSE objectives. All Shell employees and contractors must understand the HSE objectives and their individual responsibility to help achieve them. HSE POLICY The Scotford HSE management system is based on Shell s HSE policy. This policy is part of Shell s Commitment to Sustainable Development (see Figure 9-1 in Section 9-1). HSE IMPLEMENTATION Shell will apply its HSE policy to the proposed project by: including HSE planning and assessment components in each stage of project development developing and implementing plans to ensure that work is done in an orderly way that meets Shell s minimum expectations, regulatory requirements, stakeholder and permit commitments and values providing the required resources, including the organization, capital equipment and systems to ensure that HSE plans are carried out providing leadership, stewardship and accountability at all levels for achieving HSE goals managing all hazards and effects, including systematically identifying significant risks and developing plans to minimize and manage them implementing procedures and practices to control potentially hazardous tasks conducting training and competency assessments to ensure that workers are capable of performing their work safely and efficiently December 2007 Shell Canada Limited 9-3

113 ENVIRONMENTAL MANAGEMENT Section 9.2 HEALTH, SAFETY AND ENVIRONMENT HSE IMPLEMENTATION (cont d) monitoring and measuring performance to provide feedback and to measure success against HSE targets and performance standards taking preventive and corrective action to apply lessons learned and seek continuous improvement communicating with stakeholders to identify and understand their concerns, and to foster their involvement and participation HSE CONTINUOUS IMPROVEMENT INITIATIVES Shell is also committed to adaptive management and continuous improvement in HSE performance, which is demonstrated by: implementing a health, safety and environmental management system (HSE MS) that includes continuous improvement implementing an environmental management system that meets the requirements of the ISO standard applying self-imposed standards and guidelines communicating with stakeholders, including governments and communities, to understand and respond to evolving expectations conducting ongoing research to improve the project s efficiency and HSE performance continuing to integrate HSE management and sustainable development principles into business decision-making processes CONSIDERATIONS FOR EXTREME WEATHER Shell s facilities are designed to operate continuously through historical weather extremes recorded in the Alberta Industrial Heartland. If extreme weather that is beyond the plant design is forecast, Shell will implement plans to reduce the risks for employees, the public and its facilities. These plans might include shutting down the plant and securing it against the extreme weather. 9-4 Shell Canada Limited December 2007

114 ENVIRONMENTAL MANAGEMENT Section 9.3 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION HSE MANAGEMENT SYSTEM HSE MANAGEMENT SYSTEM FOR PROPOSED PROJECT The new bitumen blending facility will be integrated into the existing AOSP Scotford Upgrader HSE management system, which is compliant with ISO Ongoing monitoring and continuous improvement of this system will provide an effective basis for adaptive management and self-regulation. CORE COMPONENTS OF THE HSE MANAGEMENT SYSTEM Planning Core components of the HSE management system include: planning implementing and operating checking and taking corrective action Planning includes developing: procedures to identify existing and emerging HSE risks and aspects that must be controlled and influenced procedures to identify and access legal and other requirements that apply to HSE procedures to establish and maintain documented HSE objectives and targets management programs that designate responsibility for achieving HSE management system objectives and targets management plans that are endorsed and actively supported by senior management Implementing and Operating Implementing and operating the system includes: defining and documenting roles, responsibilities and authorities that are communicated to facilitate effective HSE management December 2007 Shell Canada Limited 9-5

115 ENVIRONMENTAL MANAGEMENT HSE MANAGEMENT SYSTEM Section 9.3 Implementing and Operating (cont d) providing appropriate awareness and competency training for personnel whose work has the potential to create an HSE impact on project personnel and those affected by project activities developing procedures: for internal and external communications to identify the potential for, and the response to, incidents and emergencies, and to prevent and reduce the impacts that might be associated with them documenting the core elements of the management system developing document control procedures to ensure that HSE management system-related documents: can be located are periodically reviewed, revised as necessary and approved developing documented operating procedures for the operations and activities that have significant HSE aspects, as determined by hazard and risk assessments including HSE targets in employee annual evaluation processes Checking and Corrective Action Checking and taking corrective action includes: developing procedures for: regularly monitoring, measuring and recording key characteristics of operations and activities that can have a significant impact defining responsibilities and authorities for handling and investigating incidents and carrying out corrective and preventive actions handling and maintaining records, such as those related to training and the results of audits and reviews developing a program and procedures for conducting periodic audits of the HSE management system MANAGEMENT REVIEW The HSE management system will be reviewed at least annually to ensure its continuing suitability, adequacy and effectiveness. 9-6 Shell Canada Limited December 2007

116 ENVIRONMENTAL MANAGEMENT HSE MANAGEMENT SYSTEM Section 9.3 INDIVIDUAL COMPETENCY Program Objectives Program Scope The ability to implement and maintain management systems depends on employee competency. Defining HSE critical competency requirements for each work position and identifying training needs are key components of HSE management. The following describes the competency and training program that is currently in place at the existing AOSP Scotford Upgrader, and which will be applied to the proposed project. The objectives of the individual competency program are to: ensure that all employees and contractors at the project site are capable of applying the knowledge they receive through training to do their jobs in a way that is consistent with the HSE policy and with the commitment to sustainable development develop competency profiles for each position on the project, with the priority being those positions that are considered HSE critical support training requirements by continuously assessing competency track training and competency levels for workers Competency will be maintained by: assessing the skills required for each work position selecting candidates who meet, or exceed, the minimum skill set for the work positions orienting new or transferred personnel into the program evaluating HSE critical skills and competencies continuously, and providing refresher courses or advanced training, where required Team leaders will be responsible for identifying, monitoring and supporting staff training. FIELD CONSTRUCTION AND OPERATING TEAM HSE TRAINING Team members will receive training relevant to their work positions for implementing the HSE plans. This will include training for: using and interpreting the hazards and effects management process, including hazard and risk assessments December 2007 Shell Canada Limited 9-7

117 ENVIRONMENTAL MANAGEMENT HSE MANAGEMENT SYSTEM Section 9.3 FIELD CONSTRUCTION AND OPERATING TEAM HSE TRAINING (cont d) using incident management procedures and processes for responding to specific incidents and to reduce the probability of future incidents conducting regular emergency response drills using identified hazards as potential scenarios, followed by an evaluation of the response drill applying the incident command system following a proactive management process to identify new potential risks and ensuring that they are managed 9-8 Shell Canada Limited December 2007

118 ENVIRONMENTAL MANAGEMENT Section 9.4 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION WASTE MANAGEMENT STRATEGY The new facility will be integrated into the existing AOSP Scotford Upgrader waste management system. Waste management practices will be updated, as required, so that: the most representative information is available on each waste stream procedures and guidelines are current with legislation and corporate policy The waste generated by the proposed project will be managed to minimize environmental impacts by: selecting and using materials effectively using, where practical, the principle of reduce, reuse and recycle for nonhazardous and hazardous materials informing employees, contractors and customers of the HSE risks associated with waste, and holding them accountable for implementing HSE standards and procedures identifying third-party business opportunities, such as recycling, to increase the effectiveness of reusing materials and resource waste DISPOSITION OF WASTE Waste generated by the proposed project will be similar to the waste generated by the AOSP Scotford Upgrader. Table 9-1 shows the planned disposition of typical waste generated at the proposed project. Further effort will be made to identify waste reduction, reuse and recycling initiatives. December 2007 Shell Canada Limited 9-9

119 ENVIRONMENTAL MANAGEMENT WASTE MANAGEMENT Section 9.4 Table 9-1: Disposition of Proposed Bitumen Blending Facility Waste Chemical tote tanks General refuse Waste Group Grey water and sanitary waste Hydrocarbon-contaminated materials and liquids Maintenance fluids, such as bundle cleaning, passivation and acid cleaning fluids Oily sludge Pallets Pop cans, bottles, plastic, paper and cardboard Scrap metal Sludge from tanks and the wastewater treatment plant Used drums Used oil, filters and plastic oil containers Used pipe insulation Disposition Return to supplier for cleaning and reuse Send to an approved landfill through a contractor, if non-hazardous Treat in wastewater treatment plant Send to an approved hazardous waste disposal or destruction site, if unable to reclaim hydrocarbons Send to an approved disposal facility Send to an approved hazardous waste disposal or destruction site, if unable to reclaim hydrocarbons Send to contractor for reuse Recycle Send to contractor for reuse Send to an approved disposal facility Return to contractor for recycling Send to re-refining with an approved contractor Send to insulation contractor for reuse, where practical, or send to an approved land fill for disposal 9-10 Shell Canada Limited December 2007

120 ENVIRONMENTAL MANAGEMENT Section 9.5 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION EMERGENCY PREPAREDNESS AND RESPONSE SCOPE The current AOSP Scotford Upgrader Emergency Response Plan will be revised to include the requirements of the bitumen blending facility. The project will have dedicated resources and trained personnel in place for construction and operations, to execute responses appropriate to potential emergency scenarios. The emergency preparedness and response plan will provide structure and guidance for responding to such incidents as: spills fires loss of containment injuries Lessons learned from experience at other facilities as well as those gained from practical drills will be incorporated into the plan. INCIDENT COMMAND SYSTEM The emergency response program will be modelled after the incident command system (ICS) that is part of the existing AOSP Scotford Upgrader Emergency Response Plan. The ICS is an organizational system for achieving an effective and orderly response to an incident. If an incident occurs on the site, a preassigned incident commander will immediately assume overall responsibility for coordinating the response. The ICS is designed to work for all incidents regardless of size. ICS can be scaled to manage incidents where a single individual can oversee the entire incident response, or for larger, more complex incidents, where several discipline-specific individuals are required to form an incident command team. The value of this approach is that it incorporates all aspects of emergency response, including critical roles, responsibilities and a management process. ICS is an internationally recognized best practice and is constantly upgraded with lessons learned from similar situations. December 2007 Shell Canada Limited 9-11

121 ENVIRONMENTAL MANAGEMENT Section 9.5 EMERGENCY PREPAREDNESS AND RESPONSE HAZARD AND RISK ASSESSMENTS Shell applies the hazards and effects management process (HEMP) to all hazards, both construction and operations related. As part of this process, an HSE case will be developed to demonstrate that all hazards and their associated risks are properly identified, assessed and managed, including: controls to prevent the release of a hazard recovery preparedness measures to reduce the impact of a hazard EMERGENCY RESPONSE PLAN Separate Emergency Response Plans will be developed specifically for construction and operations. These Emergency Response Plans will focus on activity-specific emergency response scenarios. However, the content of the plan for both construction and operations phases of the proposed project will include, as a minimum, plans for: protecting the safety of workers and the public attending to the injured assessing the incident and resources required to contain or control an emergency restoring containment and control investigating an incident to identify the root cause to help prevent a similar incident from occurring providing notices and reports according to corporate and regulatory requirements The Emergency Response Plans will also include: emergency response policies and procedures an emergency contact list containment and control strategies maps equipment lists information on specialized training needs general response scenarios EMERGENCY RESPONSE RESOURCES Resources for responding to incidents will include: 9-12 Shell Canada Limited December 2007

122 ENVIRONMENTAL MANAGEMENT Section 9.5 EMERGENCY PREPAREDNESS AND RESPONSE an on-site incident command team an on-site field emergency response team an integrated construction and operations emergency response team on-site emergency medical and firefighting facilities and equipment mutual aid agreements with the Northeast Region Community Awareness and Emergency Response (NRCAER) a Standard Operating Agreement with Strathcona County Emergency Medical Services On-Site Emergency Response Team To facilitate an immediate response to an emergency, on-site emergency response teams will be established. As a minimum, team members will be trained in: basic firefighting spill control and cleanup medical response and rescue first aid Responsibilities will be defined to ensure that appropriate personnel will be involved in the response to any incident. If the incident creates a threat to the environment or a variance from environmental permits or regulations, environmental personnel will be involved in determining the: potential effects from the incident control measures to be used required remediation specific reporting requirements On-Site Emergency Facilities Additional emergency response facilities will be provided for the proposed project construction sites. These facilities will include: an emergency clinic, including nurses and an on-call doctor access to the Scotford fire truck access to the local and municipal ambulance storage for firefighting apparel firefighting equipment for local construction sites spill cleanup equipment for construction sites December 2007 Shell Canada Limited 9-13

123 ENVIRONMENTAL MANAGEMENT Section 9.5 EMERGENCY PREPAREDNESS AND RESPONSE Off-Site Emergency Resources Site-specific emergency response resources will be backed up by Shell s corporate emergency response system and resources. Shell also participates in coordinated emergency response services through mutual aid agreements in place with NRCAER and a standard operating agreement and procedure with Strathcona County. LEVELS OF EMERGENCY The decision to request off-site resources will depend on the actual and potential severity of an incident. Shell classifies emergencies into three tiers according to the response required and the need for off-site resources: Tier 1 emergency a local, isolated emergency that is confined within the facility fence line and can be managed by on-site personnel and equipment available at the time of the incident Tier 2 emergency a local emergency with the potential for off-site impacts, requiring notification of the oil sands crisis management team and activation of the Scotford Complex and construction joint incident command team Tier 3 emergency an emergency that results in off-site impacts that might require external mutual aid support. The oil sands crisis management team and the crisis command centre would be activated to provide strategic support and resource allocation. The standard operating agreement and procedure might be activated with Strathcona County. An assessment of the potential and actual HSE effects of an incident will be an integral part of the initial response. Within the limits of safe operations, the first responders will implement immediate steps to limit the scale of the emergency and to identify the resources required for containment and recovery. Individual competency training and clear accountabilities, coupled with Emergency Response Plans, will provide the framework for a quick and appropriate response to prevent, contain and limit adverse effects Shell Canada Limited December 2007

124 ENVIRONMENTAL MANAGEMENT Section 9.6 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION REPORTING SPILLS AND EMISSIONS PURPOSE Shell will design, construct, operate and maintain the proposed project to prevent or reduce, to a level as low as reasonably practicable, the potential for releasing substances that might adversely affect health, safety or the environment. If spills or emissions occur, they will be reported according to applicable regulatory requirements and corporate standards. OFF-SITE CONTACTS For incidents that have, or are likely to have, an off-site impact, appropriate notification will be given to key community, government and industrial contacts. Notification decisions will be based on potential effects and available information. Key contacts include: local residents AENV the EUB Strathcona County the RCMP Shell s crisis management team third-party facility owners, such as: Inter Pipeline Fund, which owns the Corridor pipeline system ATCO Power ATCO Pipelines ATCO Electric CONTENT OF NOTIFICATION Notifications regarding potential spills and emissions will: describe the incident, based on the facts available identify potential impacts provide the status of containment and cleanup, as applicable December 2007 Shell Canada Limited 9-15

125 ENVIRONMENTAL MANAGEMENT Section 9.6 REPORTING SPILLS AND EMISSIONS CONTENT OF NOTIFICATION (cont d) identify the incident command team member responsible for providing further updates 9-16 Shell Canada Limited December 2007

126 ENVIRONMENTAL MANAGEMENT Section 9.7 APPLICATION FOR APPROVAL OF THE AOSP BITUMEN BLENDING FACILITY PROJECT PART 1: PROJECT DESCRIPTION GREENHOUSE GAS MANAGEMENT CLIMATE CHANGE POLICY Shell shares the global concern about climate change. Although climate change is a long-term issue requiring long-term solutions, Shell is taking action now to reduce greenhouse gas emissions and is committed to voluntarily reporting its progress in reducing these emissions. Specifically, Shell: participates proactively in addressing the climate change issue analyzes the greenhouse gas-related impacts of new businesses and growth activities addresses direct and indirect emissions in its greenhouse gas management plans reviews the goals for greenhouse gas reductions regularly, considering stakeholder input and an improved understanding of technology, policies and other factors includes the cost of carbon in evaluating projects maintains open and transparent communication with key stakeholders encourages employees to develop an understanding of, and take action to address, climate change Shell intends to continue to use these approaches for the planning, construction and operation of the proposed project and related facilities. MANAGEMENT PLAN BASIS The greenhouse gas management plan for the proposed project will be based on: recently announced provincial and federal greenhouse gas emission regulations. Shell will, at a minimum, meet these new regulatory requirements. December 2007 Shell Canada Limited 9-17