COMMERCIAL SCHEME Approval No

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2 COMMERCIAL SCHEME Approval No MADE at the City of Calgary, in the Province of Alberta, on ALBERTA ENERGY REGULATOR IN THE MATTER of a commercial scheme of Imperial Oil Resources Ventures Limited (hereinafter called the Operator ) for the recovery of crude bitumen from the Wabiskaw- McMurray Deposit in the Athabasca Oil Sands Area from wells located in the Aspen project area outlined in Appendix A to this approval. WHEREAS the Alberta Energy Regulator (AER) is prepared to approve an application by the Operator for a new scheme; WHEREAS the Lieutenant Governor in Council, by Order in Council O.C. # dated #, hereto attached as Appendix B, has authorized the granting of this approval; Pursuant to the Oil Sands Conservation Act, chapter O-7 of the Revised Statutes of Alberta, 2000, the AER orders as follows: 1) The Operator s scheme as described in a) Application No , is approved, subject to the Oil Sands Conservation Rules and the terms and conditions herein contained. 2) The recovery of crude bitumen from wells located in the development area outlined in Appendix A is approved. 3) Clause 1 does not preclude alterations in design and equipment, provided that the AER is satisfied that the alterations are compatible with the outline of the scheme, are made for the better operation of the scheme, and do not result in unacceptable adverse impacts. 4) The recovery process approved for the project is Solvent Assisted-Steam Assisted Gravity Drainage (SA-SAGD) utilizing only steam and solvent as the injection fluid unless otherwise stipulated by the AER. 5) Unless otherwise stipulated by the AER, the production of bitumen from the project area outlined in Appendix A shall not exceed cubic metres per day (m 3 /d) on an annual average basis. 6) Prior to drilling SA-SAGD wells, all wells that could be impacted by thermal operations of the new SA-SAGD wells must be completed or abandoned in a manner that is compatible with the thermal operations. The Operator must contact the AER for discussion of and obtain approval for the manner in which to complete or abandon wells not considered to be compatible with the thermal operations. Approval No Page 1 of 5

3 7) The bottomhole injection pressure for the approved drainage patterns within the development area outlined in Appendix A must not exceed 3400 kpa (gauge) during the start-up phase and 2500 kpa (gauge) during normal SAGD operations. 8) Unless otherwise stipulated by the AER, the Operator shall: a) provide the AER with gamma ray spontaneous potential resistivity and gamma ray neutron density logs from total depth to surface casing for all vertical wells, and b) take full diameter cores of the entire bitumen-bearing interval of the McMurray Formation from not less than four evenly spaced vertical wells per section, and at the AER s request i) analyze portions of such cores and ii) provide suitable photographs of the clean-cut surface of each core slabbed. 9) Where the Operator proposes to cease SAGD operations at a well pad that has produced less than 50 per cent of the in-place volume of crude bitumen and the AER s consent therefore is sought, the Operator shall advise the AER as to the following: a) the reason for proposing to cease SAGD operations, b) details of individual well workovers and recompletions attempted, c) detailed economics of continuing operations, d) the effect of ceasing SAGD operations on the bitumen recovery ultimately achievable from that part of the reservoir associated with the pad and immediately offsetting pads, and e) future plans for the well pad with reference to possible follow-up recovery techniques that could be applied and other zones that could be exploited. 10) The Operator shall ensure that sulphur recovery will be operational prior to the daily average sulphur inlet rate reaching one tone/day on a calendar quarter-year The calendar quarter-year sulphur recovery shall not be less than set out in AER Interim Directive , Sulphur Recovery Guidelines for the Province of Alberta, recovery requirements for the specified sulphur inlet rate. 11) Any plans for operations or development outside the approved development area shall be applied for to the AER for review. Such applications must: a) Include a complete geologic, reservoir and caprock integrity characterization to reduce uncertainty and improve understanding of subsurface properties for the McMurray. Information should include, but is not limited to i) McMurray delineation: (1) 16 wells per section; or (2) 8 wells per section plus 3D seismic; or (3) as authorized by the AER, Approval No Page 2 of 5

4 (4) minimum amount of wells to be cored per section is 4 wells ii) iii) iv) summary of core analysis and annotated representative core well photos of the reservoir and caprock, tabulation of reservoir properties, tabulation of reserve and resource estimates for drainage patterns, the development area and any expansion outside of the development area, v) tabulation of caprock properties, vi) discussion with supporting information of any geologic findings that have the potential to compromise caprock integrity, vii) submit the most current isopach maps of the gross, and net bitumen, gas saturation zone, lean zone, top water and bottom water, and viii) any other information required by the AER. b) Provide a detailed description of the proposed amendment, including the number and type of wells per drainage area, the lateral spacing between wells, the length and trajectory of each deviated and horizontal well, the horizontal well elevations, and the subsurface drainage area corresponding to each horizontal well. Provide an annotated log cross section for one representative well or well pair per drainage area to demonstrate that the well locations and drainage area designs have been optimized. c) Provide a discussion of the scheme performance to date, with specific emphasis on key factors affecting the success of the scheme, and how this experience will be incorporated into the design and operation of the scheme within the proposed additional area, including: i) the impact of top gas, ii) the impact of top water, iii) the impact of bottom water, and iv) state of steam chamber development and the effectiveness of the caprock. d) provide a discussion on bitumen recovery and pad production profiles for the well pads within the proposed additional development area. The information must include key performance predictions (e.g., injection and production rates, steam oil ratio), including the methodology utilized and supporting information. 12) (1) A well shall not be abandoned without prior written AER approval. (2) Where the Operator proposes to abandon a well and the AER s consent therefore is sought, the Operator shall advise the AER of the following: a) the reason for the proposed amendment, b) the effect of abandoning the well on the bitumen recovery ultimately achievable from the part of the reservoir associated with the well, c) plans for recovering any portion of the remaining bitumen in place, and Approval No Page 3 of 5

5 d) plans for recovering bitumen from other zones penetrated by the well. 13) The Operator shall comply with a minimum project boundary setback of 100 meters. 14) At minimum of one year prior to the drilling of Pads A01N and PadA09, the operator is required to submit, for AER approval, a caprock monitoring plan that includes but is not limited to the following: a) map showing well trajectories for Pads A01N and A09 in relation to the fault(s) identified, b) baseline hydrogeological data (pressures and chemistry) above and below the caprock to determine hydraulic isolation, c) a plan for monitoring the integrity of the caprock at Pads A01N and A09 including an operating strategy for both pads that includes potential mitigations for steaming in close proximity to caprock faults and methods for identifying potential out of zone excursions, and d) provide a response plan for managing potential out of zone excursions. 15) The Operator shall submit an updated noise impact assessment report once the equipment selection for the central processing facility is finalized. The updated noise impact assessment shall demonstrate that the project s noise impact on the surrounding area will be similar to the results presented in the project application document Volume 2 Environmental Impact Assessment, Section 5.0 Noise. 16) Notwithstanding any date by which any work, act, matter, or thing is by this approval required to be done, performed, or completed, the AER, if it considers it proper to do so, may by stipulation alter the dates specified. END OF DOCUMENT Approval No Page 4 of 5

6 ATHABASCA OIL SANDS AREA APPENDIX A TO APPROVAL NO Area(s) of Change Added Deleted Approval No Page 5 of 5