Western Canada

Production

Athabasca Oil Sands Project
The company holds a 20 percent nonoperated working interest in the Athabasca Oil Sands Project (AOSP) and the AOSP Expansion 1 Project near Fort McMurray, Alberta. The AOSP Expansion 1 Project, which achieved first production from the Jackpine Mine in third quarter 2010, is expected to increase daily production design capacity from oil sands by 100,000 barrels to more than 255,000 barrels in early 2011. In 2010, total daily production from oil sands averaged 126,000 barrels (24,000 net) of synthetic oil. Oil sands are mined from both the Muskeg River and Jackpine mines, and bitumen is extracted from the oil sands and upgraded into synthetic oil using hydroprocessing technology. Expansion of the Scotford Upgrader, also part of the project, was completed in second quarter 2011.

Exploration

Shale Gas
Through year-end 2010, the company increased its shale gas exploration leases in Alberta to approximately 200,000 acres (809 sq km), in the Duvernay formation near Fox Creek in west-central Alberta. Exploration planning activities on these 100 percent-owned and operated leases have begun, with plans to commence an appraisal drilling program in the second-half 2011. At the end of 2010, proved reserves had not been recognized for any of these areas.