see the possibilities in a changing world

Transcription

1 see the possibilities in a changing world 2009 summary report on sustainability

2 Oil Sands and In Situ Fort McMurray Natural Gas Edmonton Calgary CANADA UNITED STATES Cheyenne Sarnia Refining and Marketing Denver/Commerce City Toronto what s inside introduction about Suncor Energy performance at a glance for a message from Rick George environmental performance water air land tailings climate change our performance social performance safety community investment community infrastructure aboriginal relations downstream health concerns our employees economic performance corporate performance shared economic benefits priorities, operational excellence environmental performance social performance economic performance Above: Reclamation students fertilizing south tailings dyke wall at Suncor s oil sands facility. Cover: Reclaimed overburden storage area at Suncor s oil sands facility near Fort McMurray, Alberta.

3 facing challenges. seeing possibilities. In a world that s constantly changing, the key to success is learning to adapt and innovate. What doesn t change are core values. At Suncor Energy, pursuing a vision of responsible energy development has long been a core value. When faced with challenges, we look for new possibilities to realize that vision. Suncor s seventh biennial report on sustainability documents our progress on a wide range of environmental and social issues. It also explains how we are responding to changing economic times. Through a renewed focus on achieving excellence across our operations, we are striving to make Suncor a more sustainable energy company today and for the long run. About Suncor s 2009 Report on Sustainability The following report on sustainability was created by using the Global Reporting Initiative (GRI) G3 Guidelines. Independent third party, Deloitte & Touche LLP, reviewed selected performance indicators for the years 2007 and 2008 using the Global Reporting Initiative G3 guidelines for those indicators. The results of their review can be found on our website under the Third Party Assurance section. Stakeholder feedback is also an integral part of developing this report. As in previous years, Suncor enlisted the guidance of Ceres, a network of investors, labour, environmentalists and other public interest groups to help ensure our report is relevant and meaningful. We thank Ceres and the participating stakeholders for their assistance in creating the 2009 report on sustainability. As part of Suncor s sustainable development efforts, we have significantly reduced the size of the printed report, which was created as a summary of the full report. Once you have read through this summary, we invite you to go to our web site at to find our full report on our performance. For those interested in Suncor s performance data, all of our reviewed information can be found on the web in an easy to access and customize format. Suncor Energy Inc. is an integrated energy company strategically focused on developing one of the world s largest petroleum basins Canada s Athabasca oil sands. Headquartered in Calgary, Alberta, Suncor has approximately 6,800 employees. Our core oil sands business is supported by natural gas production in Western Canada and downstream refining, marketing and retail operations in Ontario and Colorado. Suncor is also an industry leader in renewable energy development with four wind farms and an ethanol production facility summary report on sustainability

4 Suncor pursues a triple bottom line vision of sustainable development we maintain that energy development should occur in a way that provides economic prosperity, promotes social well-being and preserves a healthy environment. performance at a glance As a responsible energy developer, Suncor strives for excellence in economic, social and environmental performance. Below is a snapshot of our priorities in 2007 and 2008 and how we performed against those priorities: Pursue Zero Injuries Employee lost-time injury and recordable injury frequency continued to decline as employees and contractors embraced our Journey to Zero safety culture. Suncor also launched a major initiative to enhance process safety management. But the death of Finning Canada employee Kevin Grocutt at the Millennium Mine in July 2008 was a tragic reminder of why we must constantly seek safety improvements. Reduce Our Environmental Footprint We continued to make advances in reusing and recycling water resources. As a result, Suncor s absolute water use has declined by 22 percent over the last six years. We made advances in progressive land reclamation and piloted research into new technologies to accelerate the pace of tailings pond reclamation. Suncor is on track to achieve an industry first in 2010 by completing surface reclamation of Pond 1, our original tailings pond. Address the Climate Change Challenge Suncor established a team of senior leaders to identify the best opportunities for improving energy efficiency and for reducing greenhouse gas emissions across our operations. We continued to investigate and advance potential emissions-reducing technologies, including carbon capture and storage. We also opened our fourth (and largest) wind power project near Kincardine, Ontario. Invest in Healthy Communities Suncor invested a total of $24.9 million in hundreds of charitable and non-profit organizations in communities where we operate. We worked with stakeholders to address housing needs and other infrastructure challenges in the Wood Buffalo region and we funded the construction of a new $55 million interchange on Highway 63, north of Fort McMurray. We also entered a partnership with the Fort McKay First Nation to establish a business incubator to promote economic development and entrepreneurship. Generate Prosperity and Opportunity In 2007 and 2008, Suncor paid approximately $2.6 billion in royalties to the Alberta government and another $2 billion in property and excise taxes to all three levels of government. Suncor spent a total of $16.5 billion on goods and services, including $367 million on direct purchases from Aboriginal businesses in the Wood Buffalo region. Promote Sustainable Development Suncor continued to work closely with a range of multistakeholder groups including the Boreal Leadership Council, the Regional Aquatics Monitoring Program and the Cumulative Environmental Management Association to encourage responsible energy development. We entered into partnerships with the Alberta Conservation Association and Ducks Unlimited to establish specific conservation projects. We also co-founded the Oil Sands Leadership Initiative, a group of six oil sands producing companies dedicated to making tangible improvements to environmental, social and economic performance of the oil sands industry. Suncor Energy Inc. 2

5 The Global Reporting Initiative (GRI) recommends assessing performance to understand contributions to, and impacts on, society. We use the most recent Canadian data and statistics available to provide systemic indicators that reflect the regional and national impacts of our operations. Reclamation area 8 at Suncor s oil sands facility. environment social Air Emissions (thousand tonnes/year)* Lost-time Injury Frequency (Injuries per 200,000 hours worked) Oil Sands Natural Gas R&M Canada R&M U.S.A. Suncor Energy Suncor employees Suncor contractors *Air emissions include SO 2, NOx and VOC emissions. economic Net Production (thousands of boe/day) * Water Withdrawal and Use (million m 3 ) Oil Sands Natural Gas Water withdrawn Water used * 2005 oil sands production was affected by a January fire that damaged one of two upgraders. Land Use at Oil Sands (cumulative hectares) Installed Wind Capacity (megawatts) * Land disturbed Land reclaimed Per cent reclaimed * Production capacity at wind farms in which Suncor is a partner summary report on sustainability

6 There s a famous saying, May you live in interesting times. Scholars continue to debate whether it s meant to be a blessing or a curse and the confusion is understandable. Interesting times, like the ones we are currently experiencing, are filled with both challenges and opportunities. ceo s message Starting in fall 2008, the global credit crisis and resulting market turmoil affected every sector of the economy, and every industry and company. It forced all of us to take a long, hard look at how we conduct our businesses and what changes are needed to chart a successful course in the years and decades ahead. For the energy industry, the challenge was compounded. Even before the global financial crisis struck, our industry faced a significant dilemma how to produce the energy required to fuel our economy in a way that is socially beneficial and preserves a healthy environment. At Suncor, we ve been thinking about this dilemma for a long time. That s why, in the early 1990s, we were one of the first energy companies to adopt a vision of sustainable development as a key part of our business strategy. It s also why, more than a decade ago, we implemented a comprehensive climate change action plan. And we continue to challenge ourselves to do more. With this Report on Sustainability, Suncor is setting out specific performance goals for improving energy efficiency and reducing our environmental footprint. We intend to monitor and report our progress in meeting these goals. A Changing World Interesting times inevitably means changing times and that s very true for Suncor. In response to the recent market turmoil, we have put major growth projects on hold. While it was a difficult decision, the opportunity we see is breathing room to further refine our core business strategy across a triple bottom line of environmental, social and economic performance. We are seizing that opportunity. An intense focus on operational excellence targets improvements in every aspect of our business including safety, reliability and environmental responsibility. The efficiencies we build into our operations are intended to strengthen our performance today and put us on a more sustainable footing when the time comes to resume our growth projects. And we know improvements are needed. As recently as 2008, we experienced setbacks at our oil sands plant and in situ operations due to environmental performance problems. Going forward, we are determined to do better. There are other ways in which these are interesting times. The proposed merger of Suncor and Petro-Canada announced in March 2009 would create a premier Canadian energy company with the integrated assets and financial strength to compete globally. But it s also important to note these are two companies with a longstanding commitment to environmental stewardship and social responsibility. By joining forces, we see an opportunity to strengthen and build on those shared values. So the central theme of this report seeing the possibilities in a changing world is timely. Suncor has always been about seeing possibilities where others saw only problems and obstacles. That s how we pioneered development of Canada s oil sands at a time when many thought it couldn t be done on an economic basis. This report documents our successes and outstanding challenges on a wide range of social and environmental issues. For the first time, Suncor s annual climate change report documenting our progress in managing greenhouse gas (GHG) emissions is included as part of this broader Report on Sustainability. We know our industry is in the public eye as never before. We are also keenly aware that many believe the oil sands industry is not doing enough to reduce environmental impacts. We have heard this message loud and clear and we are responding. Consultation with our own stakeholders reveals two other expectations frankness and transparency. They want us to be candid about our sustainability challenges and forthright about potential solutions. This report attempts to do just that. One of the biggest challenges we face is reducing the carbon intensity of our business. Suncor continues to act on several fronts investing in new technologies, developing renewable energy sources and getting involved in the public policy discussion. Suncor Energy Inc. 4

7 Suncor is proud of its sustainability efforts to date, but we also recognize there is still much work ahead of us. In response to our stakeholders requests, we have set environmental performance goals to measure our sustainability progress. Consolidated tailings ponds at Suncor s oil sands facility. We are encouraged by recent moves in Canada and the United States to develop coherent and comprehensive plans to manage GHG emissions. As climate change regulations are introduced, we will continue to press for clarity, fairness and as much harmonization as possible. We recognize there are many areas where we can target improvement on past performance; several are highlighted in this report. But I d like to conclude by citing a couple of emerging success stories. In 2010, Suncor expects to become the first oil sands company to have a tailings pond with a trafficable surface that has progressive reclamation underway. This milestone is a source of pride for us, but it s also just one step on a longer journey. That s why we re investing in research and development of new technologies to significantly accelerate the pace of tailings pond reclamation. Suncor has also reduced its absolute water use over the past six years. Our objective now is to become the lowest intensity water user in the oil sands industry and we are committing nearly $600 million over the next decade to manage our water plan. Water use and tailings management represent huge costs for our business. Our focus on improved performance in both areas is a good example of how we see and intend to realize the possibilities for creating a more sustainable energy industry. None of this will come easily and it will require collective action. In that context, I ask you to read this report carefully and give us your feedback. Together, we have the opportunity to take this changing world of ours and make it a better one. Rick George president and chief executive officer Suncor s performance goals Suncor is taking a proactive approach to further reducing its environmental footprint by adopting a series of strategic environmental performance goals. All of the proposed reductions are absolute, except for energy efficiency which is intensity-based. We are planning to achieve these goals even as our production rates grow.* Indicator Water Use Land Disturbance Energy Efficiency Air Emissions Environmental Performance Goal Reduce water intake by 12 percent by 2015 Increase land area reclaimed by 100 percent by 2015 Improve energy efficiency by 10 percent by 2015 Reduce current air emissions by 10 percent by 2015 We will also work to align our current GHG strategy to address emerging climate change policies by This, in turn, will help us clarify our long term goals. * The base year for the planned improvements is The goals were established in 2009 and our business units will be addressing them in the 2010 business planning cycle, with capital allocations to follow. Suncor is looking at a five-year timeframe for implementation as these performance goals will require significant resources (capital investments and people) and focus. Our focus will be to assign the right resources at the right time. On the web: Details on how Suncor plans to achieve each of these performance goals can be found in the What Guides Us section, under CEO s Message/Performance Goals summary report on sustainability

8 Responsible energy development means minimizing our impact on precious water, air and land resources. environmental performance Wherever lands are disturbed by development, Suncor pursues progressive reclamation efforts, including reclaiming tailings ponds. To date, Suncor has reclaimed 1,000 hectares of land. We begin the reclamation process as soon as operations are completed. Reclaimed overburden storage area at Suncor s oil sands facility. We are conducting large-scale tests of new technologies to further accelerate reclamation efforts. Water Suncor reduced its absolute water use by 22 percent over the past six years. Many of the gains were made at our oil sands facility. In 2008, we used 3.1 cubic metres of water to produce one cubic metre of oil a 37 percent reduction in water use intensity since Suncor realized these savings through increased reuse and recycling in particular, improved mine tailings operations, which enabled increased recycling and reduced water makeup for tailings. Approximately 90 percent of the water used to make steam at our in situ operation is recycled through a continuous loop system, eliminating the need for fresh surface or ground water. All of the make-up water is taken from oil sands wastewater systems. Suncor s licensed withdrawal from the Athabasca River accounts for approximately 0.3 percent of the average river flow and about one percent during low-flow (i.e. in winter). In 2008, Suncor signed an interim agreement with three other operating oil sands companies to ensure we met new government restrictions on water withdrawal during winter months. Suncor releases water back to the Athabasca River on a regular basis. Our plan is to manage wastewater discharges to meet or exceed regulatory water quality standards. No tailings waters are discharged. Suncor recently adopted a 10-year water management plan designed to recycle and reuse larger amounts of wastewater and tailings water, reducing our need to Suncor Energy Inc. 6 environmental performance

9 Environmental stewardship and responsible development make good business sense. We are working hard to reduce the amount of water and natural gas we use, limit the level of greenhouse gas emissions and air contaminants, and reduce the length of time it takes to reclaim disturbed lands. Suncor s Commerce City refinery in Colorado. withdraw river water. This plan identifies costs greater than $500 million to execute, and with focus we hope to improve this plan by looking for more innovation and sustainable technology solutions. Our aim is to be the lowest water intensity user in the oil sands mining business. In 2007, Suncor learned about discrepancies in how wastewater discharges were being reported by a subcontractor who operated sewage treatment facilities at two of Suncor s residential camps. After cooperating fully with the subsequent investigation, Suncor pled guilty in April 2009 to one count of exceeding approved discharge limits and received a $175,000 fine. The subcontractor pled guilty to intentionally providing false information and allowing discharges that at times exceeded approved limits. The subcontractor who operated the treatment facilities was dismissed. Although Suncor was not directly involved in the operation of the treatment or camp facilities, we were the owner of the camp. We deeply regret this incident and have strengthened our project controls to prevent it from happening again. Air Corporate-wide sulphur dioxide (SO 2 ) emissions intensity remained relatively steady, though performance at oil sands was hampered by reliability issues related to the sulphur recovery units in our upgrader. Those issues were addressed and, by the first quarter of 2009, SO 2 emissions were below our internal targets and well below regulatory limits. Nitrogen oxide emissions intensity at our natural gas and refining operations continued to decline. But corporatewide emissions intensity increased slightly due to weaker performance at oil sands. Extensive mitigation efforts were undertaken to address ground level concentration (GLC) exceedances for sulphurous compound emissions at our oil sands base plant and to bring ambient hydrogen sulphide emissions near our Firebag in situ operations back into regulatory compliance. In April 2009, Suncor pled guilty to two counts under the Alberta Environment Protection and Enhancement Act related to the Firebag emissions and received a $675,000 fine. Suncor has spent approximately $175 million in equipment to bring the facility into compliance. This episode represented a failure in management oversight, for which we take full responsibility. Land Since 1967, Suncor s operations have disturbed approximately 17,749 hectares of land. As of the end of 2008, we had reclaimed approximately 1,019 hectares, or about six percent of the total. Suncor expects the rate of reclamation to accelerate significantly as new reclamation techniques are implemented. In 2007 and 2008, Suncor pioneered new land restoration techniques and made strides in progressive reclamation reclaiming a major overburden mine storage area as it was created. Suncor continued to work as a signatory to the Boreal Forest Conservation Framework, which commits participants to protecting at least 50 percent of the boreal forest region from development, and minimizing the impact of resource production by following and sharing best land management practices. We also renewed an agreement with the Alberta Conservation Association to help preserve boreal forest habitat, and signed a new five-year partnership agreement with Ducks Unlimited to fund and support wetland protection and watershed health. On the web: More on Suncor s new water plan; details on reclamation progress and conservation initiatives; and a full report on Suncor s response to recent environmental control and protection orders can be found in the What Guides Us section, under Performance in / Operational Issues environmental performance summary report on sustainability

10 Suncor expects to mark an industry milestone in 2010 by becoming the first oil sands company to complete surface reclamation of a tailings pond. Pond 1 at Suncor s oil sands facility. seeing the possibilities tailings pond reclamation Suncor expects to mark an industry milestone in 2010 by becoming the first oil sands company to have a tailings pond with a trafficable surface that has progressive reclamation underway. The plan is to ultimately transform Suncor s 136-hectare Pond 1, established in the 1960s, into mixed wood forest and a small wetland capable of supporting a variety of plants and wildlife. While a significant development, this milestone is also a reminder of the challenges that remain. Like any mining process, oil sands mines produce tailings. The tailings are a mixture of water, clay, sand and residual bitumen produced during the extraction process. After the tailings are pumped into large settling ponds, the sand drops out and is used to build holding dykes. The fine clay mixture left over forms a stable suspension that, over time, settles into a fluid-like deposit called fine tailings. Left alone, fine tailings would take centuries to consolidate into a soil-like deposit. Suncor is highly motivated to accelerate the pace of tailings reclamation. Our nine tailings ponds cover a total of 31.8 square kilometers (km) and contain approximately 230 million cubic metres of mature fine tailings (MFT). Active tailings ponds account for nearly 30 percent of the 17,749 hectares of disturbed land Suncor is currently working to reclaim. Suncor pioneered Consolidated Tailings (CT) technology in the 1990s. By adding gypsum, we were able to accelerate the release of water from the tailings and achieve a solid surface in years rather than decades. The released water is recycled in Suncor s operations. CT technology is working, and we continue to work on increasing production efficiency. Suncor researched and developed new de-watering technologies that we are now working to implement on a commercial scale. Our goal is to reduce the backlog of tailings and ultimately eliminate the need for new tailings ponds at our mines (in situ production does not produce tailings). These emerging technologies are critical for Suncor. The Alberta government recently introduced regulations that set annual targets for reducing MFT and require surface reclamation of tailings ponds to be completed within five years of the ponds becoming inactive. The criteria established through this new directive are going to be difficult to achieve, but we re confident that by implementing improved tailings practices we will be able to meet the regulator s requirements. As we work to eliminate the need for future tailings ponds, we strive to ensure our existing facilities are as secure as possible. While concerns have been raised about tailings seepage, the fact is seepage is an important part of dyke construction that contributes to the dyke s integrity and stability. But all of Suncor s tailings ponds are designed with seepage control mechanisms that collect seepage and return it to the pond to prevent it from entering groundwater systems or waterways. Water quality monitoring in the Athabasca River shows no change in water quality either upstream or downstream of oil sands developments. On the web: A question and answer with Suncor s Chris Fordham on meeting the tailings challenge, and more details on dry tailings technologies can be found in the Minimizing Our Environmental Footprint section under Tailings/ The Tailings Challenge. Suncor Energy Inc. 8 environmental performance

11 Suncor was an early mover in addressing the climate change challenge. In 1997, we were one of the first major energy companies to adopt a climate change action plan to manage greenhouse gas (GHG) emissions across our operations. We have also voluntarily reported on our progress annually since climate change Investment in wind power is a key component of Suncor s climate change action plan. We use revenues from oil sands development to invest in wind power, providing significant business opportunities where we build. Ripley Wind Power Project near Kincardine, Ontario. Suncor operates one of Canada s largest ethanol facilities the St. Clair Ethanol Plant in the Sarnia-Lambton region of Ontario. And progress has been made. We ve invested in technology, improved energy efficiency and reduced GHG emissions intensity at our oil sands plant by 45 percent compared to 1990 levels. But we know much more can and must be done as our absolute emissions continue to grow. Suncor believes that our first lever to reduce GHG emissions is to improve reliability and energy efficiency across our operations. Our operational excellence focus launched in 2008 is aimed at revitalizing Suncor s vision to do just that. Suncor continues to invest in renewable energy sources and to collaboratively advance new emissions-reducing technologies, including carbon capture and storage. As a responsible energy developer, we also continue to work with governments and other stakeholders on emerging public policy solutions aimed at finding the most effective ways to reduce global GHG emissions. In 2009, we are reviewing our GHG strategy in light of stakeholder concerns and emerging government policies. The revised strategy will help Suncor identify and implement future levers and actions to address stakeholder concerns and policy requirements. For the first time, we are making our annual Climate Change Report part of our broader Report on Sustainability. In these pages, we provide an overview of our performance in 2008 as well as our major challenges and priorities going forward. More information on all these aspects including details on the performance of each of Suncor s business units can be found in the online edition of this report at climate change summary report on sustainability

12 We know that oil sands mining disturbs the land but not forever. Good land management practices are key to Suncor s overall vision of responsible development. Our goal is to do this work better and faster. our performance Reclaimed overburden storage area at Suncor s oil sands facility. Both absolute GHG emissions and emissions intensity decreased in 2008 as compared to previous years. These decreases, however, did not contribute to improved performance. They are the result of extended outages of one of our oil sands hydrotreating units, which resulted in a larger amount of sour crude oil product being produced and thus fewer GHGs emitted. As the result of unexpected shutdowns in 2008, average production rates were also well below Suncor s existing capacity. The closer our plant runs to capacity, the more efficient it becomes as economies of scale take effect. Even at lower production rates, much of the plant infrastructure must keep running, drawing energy without producing as much finished product so per-barrel GHG emission rates go up. By the first quarter of 2009, Suncor s renewed focus on operational excellence resulted in improved reliability and productivity. We plan to sustain this momentum, which should allow us to resume making emission intensity improvements. Suncor s decision in January 2009 to delay our major growth projects until economic conditions improve means our absolute GHG emissions will not grow as quickly as previously expected. Suncor Energy GHG Emissions Actual and Estimates ( ) (1)(2)(3)(4)(5) thousand tonnes CO 2 equivalents (CO 2 e) Business as usual (BAU) CO 2 e emissions (thousand tonnes CO 2 e) Actual and estimated CO 2 e emissions (thousand tonnes CO 2 e) Suncor Energy GHG Emission Intensity Actual and Estimates ( ) (1)(2)(3)(4)(5) tonnes CO 2 e/cubic metres of oil equivalent (m 3 OE) Actual and estimated CO 2 e emission intensity (tonnes CO 2 e/m 3 OE) BAU CO 2 e emission intensity (tonnes CO 2 e/m 3 OE) (1) Estimates are based on current production forecasts and methodologies. The tables contain forward-looking estimates and users of this information are cautioned that the actual GHG emissions and emission intensity may vary from the estimates contained in the table. (2) Data from 1990 to 2000 does not include Suncor s U.S. operations. (3) Data includes direct and indirect CO 2 e emissions. (4) Data and estimates for 2006 onward include the St Clair Ethanol Plant. (5) Data and estimates have changed from last year's report due to Oil Sands methodology changes that reflect the inclusion of biomass, a methodology change in the calculation of fugitive emissions using LDAR data, and revisions to emission factors based upon AENV's request. These changes are also consistent with the methodology used for SGER Bill 3 reporting. Definitions: Direct GHG emissions: Emissions from sources that are owned or controlled by the reporting company. Indirect GHG emissions: Emissions that are a consequence of the operations of the reporting company, but occur at sources owned or controlled by another company (e.g. purchased electricity). Absolute (total) emissions: The total GHG emissions (direct and indirect emissions) of a facility or reporting company. Emission intensity: Ratios that express GHG impact per unit of physical activity or unit of economic value (e.g. tonnes of CO 2 e emissions per unit of gross production). Suncor Energy Inc. 10 climate change

13 Suncor is taking the lead in progressive water management. We are minimizing the amount of water required for our operations, recycling it where possible and ensuring the quality of discharged water meets regulatory requirements. Natural wetlands monitoring at Suncor s oil sands facility. Looking Ahead We remain committed to our seven-point climate change action plan. This plan calls on Suncor to manage our own emissions, develop renewable sources of energy, invest in environmental and economic research, use domestic and international offsets, collaborate on policy development, educate employees and the public, and measure and report our progress. We are proceeding on all those fronts. At the same time, the global economic crisis that emerged in the fall of 2008, concurrent with a significant drop in commodity prices, forced Suncor to review and reassess its spending priorities. Some difficult decisions had to be made. For example, we decided to delay construction of a proposed $120 million expansion of our ethanol production plant near Sarnia, Ontario. We also opted not to proceed at this time with a proposed joint venture with Lignol Innovations to construct an $80 million USD cellulosic ethanol plant in Colorado. All the same, Suncor remains committed to pursuing a parallel path for energy development building today s oil sands industry while also helping to bring along new sources of energy for tomorrow at a pace and scale that reflects our financial capacity. Similarly, Suncor is moving on several fronts to advance new technologies to reduce GHG emissions. We continue to work with the Integrated CO 2 Network (ICO 2 N) on industry efforts to improve the commercial viability of carbon capture and storage (CCS) technology. We are also a long-term partner in the Carbon Capture Project, where some of the world s leading energy companies and various governments collaborate on research to help make CCS a reality. Suncor continues to invest in other technologies aimed at conserving energy and reducing GHG emissions. These include proposals to use gasification technology to turn petroleum coke into synthetic gas and investigate the potential for harnessing deep geothermal energy. Suncor welcomes emerging efforts in Canada and the United States to develop more comprehensive energy and climate change policies. When it comes to climate change regulations, we continue to press for clarity and certainty (i.e. our investors want to know what the rules are up front), fairness and competitiveness (i.e. no one industry or region should be unfairly targeted or punished), and harmonization across jurisdictions to avoid overlap and inefficiencies. Suncor sees emissions trading and other carbon-pricing mechanisms as useful tools for achieving low cost GHG emission reductions. But we also believe that, for climate change policy to be effective, it must accelerate the pace of development and deployment of new technologies that will transform how we produce and use energy. Cap and trade policies will not accomplish this. We need complementary policies and measures that will attract additional capital over the near to long term. Suncor is closely monitoring initiatives by California and others to establish low carbon fuel standards, noting there have been challenges with lifecycle assessment methodology and potential overlaps with other climate change policies such as renewable fuel standards. We will continue to monitor policy in this area and participate in studies aimed at determining the lifecycle GHG emissions from oil sands and other fuel sources. The fact that 75 to 80 percent of lifecycle GHG emissions come from combustion of gasoline or diesel, underscores the need for energy consumers as well as energy producers to be represented in policy making. On the web: A question and answer with Suncor s Gord Lambert, vice president of sustainable development, on public policy challenges, renewable energy and the dirty oil campaign; and features on Suncor s response to California s low carbon fuel standard and carbon capture and storage initiatives can be found in the Climate Change section. climate change summary report on sustainability

14 Suncor is committed to being a good corporate citizen. That includes protecting the safety of our employees, building strong and healthy communities and working respectfully and constructively with our Aboriginal neighbours. social performance At the heart of Suncor s Stakeholder Relations Policy is a commitment to collaboration, transparency and respect for all views. The policy guides us as we aim to develop long-term relationships with those affected by our business. We don t just work here, we live here, too. That s why Suncor is committed to enhancing the quality of life through investments. Safety Suncor considers safety our top priority. In 2002, we launched Journey to Zero, which aims to eliminate workplace injuries. As of the end of 2008, the frequency of lost-time injuries for Suncor employees and contractors had been reduced by nearly two-thirds, while the frequency of recordable injuries dropped by half. In 2008, we began implementing a new process safety management (PSM) regime that is about setting clear performance standards in all our business units, identifying potential safety gaps and developing action plans for filling those gaps. Rigorous audits (including third-party audits) are expected to result in continuous performance improvements. In July 2008, Suncor had a tragic reminder of why we must constantly renew our commitment to workplace safety. Kevin Grocutt, a 40 year-old Finning Canada employee, was fatally injured in an incident at the Millennium mine. The findings of an oil sands fatality investigation team, along with any changes Suncor may make to its operations will be shared with our employees. Our approach to investigating this tragic incident is founded on one of the key Journey to Zero principles: all incidents are preventable, says Kirk Bailey, executive vice president, oil sands. We are determined to learn from this incident and ensure nothing like this ever happens again. Suncor Energy Inc. 12 social performance

15 Community Investment Suncor believes in giving back to the communities where we operate. In 2007 and 2008, Suncor and the Suncor Energy Foundation invested a total of $24.9 million in hundreds of charitable organizations and non-profit groups. Some highlights of community investments initiated over the past two years include: $2 million over five years to improve health programs in the Wood Buffalo region. $2.5 million for a new performing arts centre in Fort McMurray. $2 million over five years to build a gallery dedicated to teens at the new Telus World of Science centre in Calgary. $1.05 million over three years to establish a Sustainability Centre at Lambton College in Sarnia, Ontario. Community Infrastructure Suncor recognizes the infrastructure pressures oil sands development places on communities in northern Alberta. Through our participation with the Oil Sands Developers Group (OSDG), we have played a key role in making the Alberta government aware of local infrastructure needs and encouraging long-term planning and funding initiatives. Suncor is particularly active on the critical issue of developing more housing, including low-cost housing. Brenda Erskine, Suncor s director of stakeholder and community relations, oil sands, also serves as chair of the Wood Buffalo Housing and Development Corporation and chair of the OSDG s housing committee. Aboriginal Relations Many of Suncor s operations are located on or near the traditional lands of Aboriginal peoples. Suncor recognizes Aboriginal peoples as the original and continuing inhabitants of the land and accepts we have mutual responsibilities and obligations toward the land. We consult closely with our Aboriginal neighbours and, where possible, we incorporate traditional environmental knowledge into our plans. Suncor is currently working on good neighbour agreements with the First Nations and Métis in the Wood Buffalo area to look at long-term issues of concern in their communities and how we can work together on solutions. Suncor also works with Aboriginal communities to identify business opportunities that let us tap into their skills and expertise. Since 1992, Suncor has spent more than $1 billion on goods and services from Aboriginal companies in the Wood Buffalo region including $367 million in 2007 and But it s not simply about cash infusions. In 2008, we entered a partnership with the Fort McKay First Nation and contributed start-up funding for a business incubator to promote economic development and entrepreneurship in Fort McKay. The incubator will provide small business guidance in marketing, human resources and finance. Downstream Health Concerns For years, residents of Fort Chipewyan, Alberta, have raised concerns about cancer rates in their community. Many residents attribute the cancers to contamination from a range of upstream industrial development, including oil sands operations, uranium mining and pulp mills. In February 2009, the Alberta Cancer Board released a study of a rare cancer called cholangiocarcinoma in Fort Chipewyan. The study made three key points: The incidence of rare cancers in Fort Chipewyan is within the expected range. The cancer rate overall was higher than expected. The findings are based on a small number of cases and could be due to chance, increased detection or increased risk in the community. While the study of the cancer incidence in Fort Chipewyan found levels of the rare cancer were not higher than expected, it did point to the need for a detailed, long-term analysis to understand the reasons for the higher rates. Suncor takes the issue of downstream health concerns very seriously. We are making a renewed effort to ensure the residents and other stakeholders understand what Suncor is doing to protect regional water, land and air quality and to quickly inform them of any regulatory exceedances. Suncor works on several fronts to ensure our operations have minimal impact on the quality of water in the Athabasca River. The Regional Acquatics Monitoring Program (RAMP), which began extensive monitoring of the river in 1997, has found no discernable water quality changes either upstream or downstream of oil sands operations. Our Employees Suncor strives to be an employer of choice by providing competitive compensation and benefits, opportunities for professional advancement and the chance to be part of a socially responsible and ethical company. We recognize the proposed merger of Suncor and Petro- Canada will result in areas of overlap and some job losses. We are committed to dealing with all affected employees with fairness and respect. We believe that in the longer term, the proposed merger will create new and broader career opportunities within a stronger company. On the web: A question and answer with Suncor s Brenda Erskine on meeting the infrastructure challenge; a feature on new process safety initiatives; and more details on Aboriginal and employee relations can be found in the Supporting Social Well-Being section. social performance summary report on sustainability

16 A vibrant oil sands industry acts as an engine for the larger economy, creating well paying jobs, promoting economic growth and providing governments and suppliers with valuable revenues. But we are not immune to external forces and, when the economy falters, we are forced to reconsider our plans and priorities. economic performance Suncor was the first company to develop the oil sands, creating an industry that is now a key contributor to Canada s prosperity. What makes Suncor unique is that we combine our long-term growth strategy with a broad vision of responsible development. Consider it a study in contrasts. For 2007 and most of 2008, commodity prices remained strong, the oil sands industry approved record levels of capital spending and the economy thrived. But the global credit crisis that emerged in the fall of 2008, combined with significantly reduced world oil prices, changed everything. The market volatility is perhaps best summed up in the following statistic: crude oil prices ranged from a high of $147 USD per barrel in July 2008, to a low of $31 USD per barrel in December of that year. Like everyone else, Suncor had to act swiftly and decisively. We suspended construction on our major growth projects and reduced our capital spending plans for 2009, originally projected at approximately $6 billion, to $3 billion. These were difficult, but necessary, decisions to protect the long-term value of our assets. We remain committed to strategically and responsibly growing our business only the timetable has changed. A snapshot of Suncor s corporate performance as well as the shared economic benefits generated by our operations in 2007 and 2008: Corporate Performance Oil sands production averaged 228,000 barrels per day (bpd) in 2008, compared to 235,600 bpd in 2007 and Suncor Energy Inc. 14 economic performance

17 Suncor Energy s refining and marketing operations provide a vital link between our large Canadian resource base and the growing North American energy market. We process oil sands crude into the high-quality refined products that consumers demand. 260,000 bpd in Production declines were due primarily to planned and unplanned maintenance activities at our oil sands facilities. Suncor reported net earnings of $2.983 billion in 2007 and $2.137 billion in However, Suncor recorded a net loss of $215 million in the fourth quarter of The earnings loss was primarily due to significant decreases in benchmark commodity prices. Suncor s common shares closed at $23.72 on the Toronto Stock Exchange on December 31, 2008, a decrease of approximately 56 percent on a splitadjusted basis over the year before. The decline reflected the general downward trend in global equity markets and, more specifically, the decline in benchmark commodity prices for Suncor s core products. Our focus remains on building long-term shareholder value. From 2003 to 2008, Suncor s share price increased by nearly 46 percent. Shared Economic Benefits Between 2006 and 2008, Suncor paid $2.6 billion in royalties to the Alberta government, including $2.2 billion in oil sands royalties. Suncor paid an additional $2 billion in property and excise taxes to all three levels of government. Capital spending in 2007 and 2008 totaled more than $13 billion. Suncor spent a combined $16.5 billion on goods and services in 2007 and A look at our supply chain spending for 2008 shows we had 6,300 Canadian vendors spanning all 10 provinces as well as the Northwest Territories. The United States was our next biggest supplier (1,719 vendors), although we also purchased goods and services from 19 other countries. Whenever possible, Suncor prefers to use local vendors. In 2007 and 2008, we spent a combined $367 million on direct purchases from Aboriginal businesses in the Wood Buffalo region helping us surpass a $1 billion spending milestone since we began keeping this data in looking ahead Suncor s renewed focus on operational excellence is aimed at improving safety, reliability, productivity and environmental performance. We are starting to realize some of the benefits. Oil sands production averaged 278,000 bpd in the first quarter of 2009, compared to 248,000 bpd in the first quarter of We are targeting average production of 300,000 bpd for the full year (+5%/ -10%). The efficiencies we build into our operations today will serve us well tomorrow as we assess when, and how, to resume our growth projects. We intend to examine each growth project on its merits and proceed only when the economics are right. Pending regulatory approval, the proposed merger of Suncor and Petro-Canada creates a new company better positioned to responsibly pursue major projects and growth opportunities. On The web: More details on Suncor s economic performance, including efforts to reduce operating costs, improved support systems for suppliers, and the construction of the Highway 63 interchange north of Fort McMurray, Alberta can be found in the Creating Prosperity section. economic performance summary report on sustainability

18 Suncor is a pioneer of technological innovation building a new industry from the oil sands that many said could not be developed economically. And we re proud of our track record of innovation. Our ability to meet past challenges gives us the confidence to meet the challenges we face today. priorities, Steepbank extraction plant construction site at Suncor s oil sands facility. Building a sustainable energy company is work that s constantly in progress. Here are some of Suncor s priorities over the next two years: Operational Excellence Suncor will be focused on providing safe, reliable and cost-effective operations that respect the communities where we work and protect our shared environment. We expect improved performance across our business units, putting us on a more sustainable footing both today and when the time comes to resume our growth projects. Environmental Performance Achieve an industry first by creating a trafficable surface that has progressive reclamation well underway on Suncor s original tailings pond in Advance dry tailings technology to accelerate future tailings pond reclamation efforts in keeping with new timetables set by government regulators. Implement Suncor s new water management plan with the aim of becoming the industry s lowest intensity water user. Continue working with the Integrated CO 2 Network (ICO 2 N), a group of 19 companies, on developing cost-effective options for carbon capture and storage (CCS) technology. Launch third phase ( ) of the CO 2 Capture Project (CCP), a decade-long partnership of energy companies and government organizations, to advance CCS. This phase is expected to include pilot plants and demonstration projects. Continue to invest in renewable energy and to investigate emerging technologies such as geothermal and petroleum coke gasification that are aimed at improving energy efficiency and reducing greenhouse gas emissions. Implement a strategy to significantly accelerate the pace of land reclamation. Support multi-stakeholder efforts to secure conservation areas to offset lands disturbed by development. Develop and implement an environmental excellence strategy that clarifies and drives environmental performance improvement throughout the organization. Social Performance Continue the Journey to Zero safety program, applying lessons learned to further improve personal and process safety. Work closely with community leaders, Aboriginal groups and multi-stakeholder organizations on environmental, health and infrastructure concerns in regions where we operate. Recruit and retain top talent in the Wood Buffalo region and continue to forge partnerships with Aboriginal businesses. Economic Performance Achieve safe, reliable levels of production that maximize our operational capacity and generate employment opportunities, government revenues and economic growth. Assess potential growth projects on their merits, and proceed only when the economics are right. Strengthen relationships with suppliers through improved Systems, Applications and Process (SAP) services. Suncor Energy Inc summary report on sustainability

19 Legal notice Forward-looking statements This report contains forward-looking statements, including statements about future plans for production growth, that are based on our assumptions and that involve risks and uncertainties. Actual results may differ materially. All statements that address expectations or projections about the future, including statements about Suncor s strategy for growth, expected and future expenditures, operating performance (which includes environmental, health, safety and regulatory compliance) and expected impact of future commitments, are forward-looking statements. Some of the forward-looking statements may be identified by words like expected, believe, plans, milestone, targets, intended, pursue, looking, objective, could, would, investigate, estimates, goals, aims, focus, on track, opportunity, work to, priorities, and strategies. The forward-looking statements speak only of the date hereof and Suncor undertakes no duty to update these statements to reflect subsequent changes in assumptions (or the trends or factors underlying them) or actual events or experience. These statements are not guarantees of future performance and Suncor s actual results may differ materially from those expressed or implied by its forward-looking statements. Readers are cautioned not to place undue reliance on them. The risks, uncertainties and other factors that could influence actual results include but are not limited to: changes in the general economic, market and business conditions; fluctuations in supply and demand for Suncor s products, commodity prices and currency exchange rates; Suncor s ability to respond to changing markets and to receive timely regulatory approvals; the successful and timely implementation of capital projects including growth projects and regulatory projects ;the accuracy of cost estimates, some of which are provided at the conceptual or other preliminary stage of projects and prior to commencement or conception of the detailed engineering needed to reduce the margin of error; the cumulative impact of other resource development; the integrity and reliability of Suncor s capital assets; Suncor s ability to comply with current and future environmental laws; the future potential for lawsuits against greenhouse gas emitters, based on links drawn between greenhouse gas emissions and climate change; the accuracy of Suncor s reserve, resource and future production estimates and its success at exploration and development drilling and related activities; the maintenance of satisfactory relationships with unions, employee associations, joint venture partners, suppliers and customers; competitive actions of other companies, including increased competition from other oil and gas companies or from companies that provide alternative sources of energy; the uncertainties resulting from potential delays or changes in plans with respect to projects or capital expenditures; actions by governmental authorities including increasing taxes, changes in environmental and other regulations; the ability and willingness of parties with whom Suncor has material relationships to perform their obligations to Suncor; and the occurrence of unexpected events such fire, blowouts, freeze-ups, equipment failures and other similar events affecting Suncor or other parties whose operations or assets directly or indirectly affect Suncor. The foregoing important factors are not exhaustive. Many of these risks and other factors are discussed in Suncor s current Annual Report, Annual Information Form/Form 40-F and other documents Suncor files with securities regulatory authorities.