Imperial Oil Limited's Submission to the Climate Change Voluntary Challenge and Registry Program 1997 Update October 1998 Index 1. Message from the Chairman 2. Executive Summary 3. Introduction 4. Greenhouse Gas Emission Inventories - 1990 to 1997 Estimating methodology and assumptions Industry Performance Indicators Recent initiatives / progress 5. Greenhouse Gas Emissions Forecasts for the Year 2000 Assumptions Future initiatives / actions 6. Maintaining Competitiveness Leadership Communication Appendices A) B) C) Projects completed - some examples Projects being implemented or evaluated Data for figures Information For correspondence and details concerning this report, please contact: Mr. D.E. Smith - Director Corporate Planning, Environment & Safety Imperial Oil Limited 111 St. Clair Avenue West Toronto, Ontario M5W 1K3 Phone: 416-968-4747 Fax: 416-968-8348 2 MESSAGE FROM THE CHAIRMAN Climate change is a complex, long-term issue. There are many uncertainties and unanswered questions. Reducing greenhouse gas emissions means improving the efficiency of energy use in the economy and/or limiting economic growth. Prudent risk management suggests that voluntary and other cost-effective no-regrets measures to control greenhouse gas emissions make sense, while these uncertainties are being addressed. Accordingly, Imperial continues to support the government's Climate Change Voluntary Challenge and Registry Program initiative (VCR), as the most appropriate public policy response to the climate change issue. Energy costs are critical to our competitiveness and have been a key factor for many years in facility design and operation. There are strong economic incentives to identify and implement viable energy efficiency opportunities, consistent with our business strategies. And while we continue to make steady progress in the efficient use of energy, the gains we have achieved are relatively small--1% per year in our refineries for example. Total greenhouse gas emissions from company operations in 1997 remained about the same as in 1990. We expect total emissions in 2000 will be about 5% higher than 1990 reflecting increased demand for our products as the Canadian economy continues to grow. R.B. Peterson October 1998 3 2. EXECUTIVE SUMMARY Imperial continues to support the efficient use of energy and the Voluntary Challenge and Registry (VCR) Program as the most appropriate public policy response to manage greenhouse gas (GHG) emissions. This, Imperial's fourth submission to the VCR, updates earlier reports and provides an inventory of direct and indirect GHG emissions for 1997, on an absolute and unit-of-production basis, as well as an updated forecast for the year 2000. It also provides a review of initiatives and progress in 1997 and future plans and assumptions supporting the year 2000 forecast. The scope of Imperial-operated facilities included in the report are essentially the same as last year. Emission estimation methodologies also remain the same and closely follow industry practice. Figure #1 below shows carbon dioxide equivalent (CO2E) emissions on an absolute basis and Table #1 provides the data on a unit-of-production basis. Figure #1 - CO2 Equivalent Emissions (Kt) Including Emissions from Purchased Electricity Chemicals Petroleum Products** Upstream* 14000 12000 10000 8000 6000 4000 2000 0 1990 4 1996 1997 2000 * Includes Conventional Oil, Natural Gas/NGL's and Bitumen production ** Includes Refining, Distribution and Marketing Table #1 - CO2 Equivalent (CO2E) Emissions per Unit-of-Production Including Emissions from Purchased Electricity Business Segment Conventional Oil* Natural Gas/NGL's* Bitumen* Petroleum Products** Chemicals** 1990 22 38 69 235 679 1996 17 38 113 247 520 1997 19 43 78 240 499 2000 20 45 93 237 481 1997 vs. 1990 (13.6%) 13.2% 13.0% 2.1% (26.5%) 2000 vs. 1990 (9.1%) 18.4% 34.8% 0.9% (29.2%) * Tonnes per thousand barrels of oil equivalent (T/KBOE). ** Tonnes per thousand tonnes of production (T/Kt). Total GHG emissions from company operated facilities in 1997 decreased from the previous year and are slightly lower than in 1990. Upstream emissions decreased about 4% from 1996 levels due mainly to less steam injection at Cold Lake bitumen operations. This reduction was only partially offset by slight increases in other parts of the company. Based on current expectations for our business, we forecast that overall emissions in 2000 will be about 5% higher than they were in 1990. On a unit-of-production basis, emissions decreased at Cold Lake in 1997 compared to the previous year, due mainly to increased production following higher steam injection levels in the previous year. The year 2000 forecast is based on our anticipated production plans. Emissions from other upstream production were about the same overall in 1997 versus the previous year. In the downstream, emissions on a unit-of-production basis decreased in 1997 from the previous year and are expected to decrease further in the year 2000, as further increases in energy efficiency offset the more energy-intensive manufacture of reformulated fuels. Focus on energy efficiency improvements is being maintained through management processes. We anticipate continuing our participation in various fora concerning the efficient use of energy and communicating on these and related issues. 5 3. INTRODUCTION Imperial continues to support the efficient use of energy and the Voluntary Challenge and Registry program (VCR) as the most appropriate approach to help manage greenhouse gas (GHG) emissions. This is Imperial's fourth submission to the VCR. It provides an update to our prior submissions and also includes the results of our efforts to continually improve energy efficiency as well as our emissions estimation and forecasting methodology. Our report includes direct emissions from facilities that we operate and indirect emissions from the electricity that Imperial purchases and consumes. This is consistent with the VCR guidelines. Emissions from purchased electricity were estimated using factors provided by regional electrical utilities and represent the overall mix of generation capacity rather than emissions from marginal generation capacity. This report includes carbon dioxide equivalent (CO2E) emissions using Global Warming Potential (GWP) factors indicated in the table below. Carbon dioxide (CO2) Methane (CH4) Nitrous Oxide (N2O) 6 GWP 1 21.0 310 4. GREENHOUSE GAS EMISSION INVENTORIES - 1990 to 1997 Upstream Operations The scope of operations covered by this report remains largely the same as in the previous year. Facilities continue to be rationalized and oil and gas producing assets sold. Emissions and production from these assets are included for the period that they were owned and operated during the year. Principal sources of direct GHG emissions from upstream operations include fuel (mainly natural gas) combustion to raise heat, pressure and drive machinery, as well as flaring, venting, and fugitive losses from pipelines and equipment. Indirect emissions are derived from the electricity that Imperial purchases to the extent that fossil fuels (mainly coal) are consumed to generate the purchased power. Energy use is influenced by the nature of operations. More energy is required in conventional oil production from mature fields as more water is produced with the oil. Declining natural pressure in mature gas wells ultimately leads to increased compression to meet processing and pipeline needs. Energy requirements in bitumen production are influenced by the degree of steam injection and are cyclical in nature due to the cyclic steam stimulation process that is employed. Older wells require more steam and thus energy per barrel of oil production. Methodology used in the development of emissions from upstream operations, as shown in Figure #2 below, is based on the Canadian Association of Petroleum Producer's (CAPP) "short form" approach, modified to reflect our own experience. Figure #2 - CO2 Equivalent Emissions (Kt) from Upstream Operations Including Emissions from Purchased Electricity 8000 Bitumen 6000 Natural Gas/NGL's Conventional Oil 4000 2000 0 1990 7 1996 1997 Two corrections have been made to previously reported data. While absolute emissions from gas and NGL operations were stated correctly and remained about the same, emissions on a unit-of-production basis have been restated to recognize all third party volumes processed at company operated facilities. Last year's report was the first in which emissions from purchased electricity were included. In developing this data, electricity used (and therefore emissions) to drive pump jacks in conventional oil production was over-estimated. Previous year's data has been restated. The effect of this change was to decrease 1996 overall upstream emissions by about 7%. Table #2 provides (GHG) emissions data on a unit-of-production basis, including indirect emissions from purchased electricity. The various types of oil and natural gas production have been converted to a standard oil equivalent basis, as developed by CAPP, to normalize for the different types of production and energy use. Table #2 - CO2 Equivalent Emissions per Unit-of-Production from Upstream Operations (Tonnes per Thousand Barrels of Oil Equivalent-T/KBOE) Including Emissions from Purchased Electricity Business Segment Conventional Oil Natural Gas / NGL's Bitumen TOTAL 8 1990 22 38 69 44 1996 17 38 113 51 1997 19 43 78 49 1997 vs. 1990 (13.6%) 13.2% 13.0% 11.4% 1997 vs. 1996 11.8% 13.2% (31.0%) (3.9%) Discussion of (GHG) Emission Trends On an overall basis, GHG emissions from upstream operations last year were about 4% below the previous year and slightly lower than 1990 levels. Last year absolute emissions increased slightly over the previous year for conventional oil and decreased slightly for natural gas/NGL business segments. At the same time production dropped about 10% overall due to asset divestments and natural productivity declines. However, the associated emission reductions were offset by increased energy requirements to handle and process increasing amounts of water being produced with oil in mature oil and gas fields. Flare volumes were also slightly higher. To some extent these increases were mitigated by various actions, including efforts to make more efficient use of equipment through rationalizing facilities and other initiatives. Emissions from bitumen production at Cold Lake decreased by over 6% due to decreased steam injection last year following a higher level in 1996. This variability is consistent with the cyclic nature of production at this facility. On a unit-of-production basis, emissions from conventional oil and gas production increased over the previous year, as shown in Table #2. Efforts to rationalize facilities and other efficiency measures were insufficient to offset the higher energy requirements associated with the decreasing productivity of mature fields. Emissions on a unit-of-production basis from Cold Lake bitumen production decreased. This is a refection of the higher rates of steam injection in 1996 as Phases 9 and 10 were brought on-stream and the resultant higher production rates in 1997. The steam injection rate also declined slightly last year, which combined with increased bitumen production, resulted in a decline in the unit-ofproduction emissions of about a third, versus 1996. 9 Industry Performance Indicators As noted earlier we have used methodology developed by CAPP to develop emission estimates. We have also referenced below, performance indicators developed by CAPP (VCR Guide published in April 1997) related to the use of energy in oil and gas production. Production Energy Intensity (PEI) is a measure of the energy required to produce one cubic metre of oil equivalent. Imperial's PEI's for 1996 and 1997 are shown in Table #3 together with industry averages provided by CAPP. Both the conventional oil and natural gas / NGL data have been restated for 1996 based on the revisions mentioned earlier. Table #3 - Production Energy Intensity - PEI (GJ / M3OE Produced) IMPERIAL Business Segment 1996 1997 Conventional Oil Natural Gas / NGL's Crude Bitumen TOTAL 1.1 2.8 10.8 4.4 1.1 3.0 7.2 3.9 Industry Average (Source - April 1997 CAPP VCR Guide) 2.12 Weighted Average = 1.95 14.6 - Imperial's PEI in the natural gas/NGL segment includes emissions associated with the deep-cut recovery and fractionation of NGL's at some operations, which doesn't exist to the same extent on an industry-wide basis. This processing increases the amount of energy used and therefore the PEI, which increased slightly from the previous year, reflecting in part the impact of some asset divestments. The PEI for bitumen production at Cold Lake decreased and maintained a lower level than the industry average for similar production. This is consistent with other studies that indicate Cold Lake production to be less energy intensive that other similar oil sands production. Production Carbon Intensity (PCI) is the amount of CO2E emitted per unit-ofproduction and is the same as the unit-of-production data for Imperial's operations shown in Table #2. Neither the PEI nor PCI lend themselves to benchmarking between companies, given the variability of production mixes, for which it is difficult to accurately compensate. They are more useful as indicators to track performance within a company. 10 Recent Initiatives / Progress As a result of energy surveys and on-going efforts to optimize operations, a variety of initiatives have been evaluated and implemented since our last report, some of which are described in Appendix A. Many are relatively small and illustrative of the type and scale of opportunities for improvements in energy use and emission reductions. During 1997 an energy management advisor position was also established in the upstream. This will enhance our efforts to identify energy efficiency opportunities, implement attractive projects and maintain an energy management plan, all of which should contribute to reduced GHG emissions. Energy is a significant part of bitumen production costs at Cold Lake and consequently there is continual focus on the efficient use of energy. A number of initiatives have been implemented and others are under review as noted in Appendices A & B. Progress has been made to reduce flaring and therefore GHG emissions, with other initiatives being implemented or under evaluation. Downstream Operations The principal sources of direct GHG emissions from downstream operations include fuel combustion to raise heat, pressure and drive machinery in refining and chemicals operations. Indirect emissions are derived from the electricity that Imperial purchases to the extent that fossil fuels (mainly coal) are consumed to generate the purchased power. Energy use is influenced mainly by production rates, utilization, product mix (e.g. gasoline versus fuel oil) and processing intensity. As regulations change to mandate the reformulation of fuels, more intense processing is employed, requiring increased energy consumption. Emissions from downstream operations are provided in Figure #3 and include emissions from purchased electricity. Estimation methodologies remained essentially the same as in earlier reports and are generally consistent with industry practices. Table #4 provides emissions data on a unit-of-production basis for the same periods. 11 Figure #3 - CO2 Equivalent Emissions from Downstream Operations (Kt) Including Em issions from Purchased Electricity 6000 5000 Chemicals 4000 Petroleum Products* 3000 * Includes refining, distribution and marketing 2000 1000 0 1990 1996 1997 Table #4 - CO2 Equivalent Emissions per Unit-of-production from Downstream Operations (Tonnes per Thousands of Tonnes of Production-T/Kt) Including Emissions from Purchased Electricity Business Segment Petroleum Products* Chemicals Total Downstream 1990 235 679 253 1996 247 520 258 *Includes refining, distribution and marketing 12 1997 240 499 251 1997 vs. 1990 0.4% (26.5%) (0.8%) 1997 vs. 1996 (2.8%) (4.0%) (2.7%) Discussion of Emission Trends On an absolute basis, 1997 emissions from petroleum products operations were about the same as the previous year in spite of increased refinery production to meet market demand for our products. Emissions on a unit-of-production basis decreased about 3% consistent with further gains in energy efficiency reflected in the Solomon Energy Intensity Index (EII). Emissions from chemicals operations increased by about 6% on an absolute basis, versus the previous year, while on a unit-of-production basis they decreased by about 4%, reflecting processing changes, increased efficiencies and production increases. On an overall basis, emissions from downstream operations last year were about the same as 1996 levels in spite of increased manufacturing activity. Recent Initiatives / Progress Progress in the more efficient use of energy was achieved. Refinery energy efficiency as measured by the EII improved further in 1997 and has now improved by about 9% over the 1994 to 1997 period. This exceeds the commitment made through the Canadian Petroleum Products Institute (CPPI) to the Canadian Industry Program of Energy Conservation (CIPEC), to improve energy efficiency as measured by EII, by an average of 1% per year during the period 1995 to 2000. Improvements have been achieved through improved facilities utilization, equipment upgrades and implementation of operational and maintenance improvements. Energy costs in the petroleum refining industry remain the largest component of production cost, and are, therefore, a key to competitiveness. Focus on energy management was maintained through a management system approach being implemented at all refineries. Also a network of energy specialists from our refineries, led by the Manager of Energy Improvement, provides an on-going forum to interchange learnings from energy improvement opportunity assessments and to share best practices. Appendix A includes examples of some projects that were recently completed and contributed to improved energy efficiency in 1997. 13 Industry Performance Indicators The Solomon Energy Intensity Index (EII) is used in the North American petroleum refining industry as a benchmark to measure the energy efficiency of refineries. The index is the ratio of actual energy consumption in a given refinery to standard energy consumption factors developed by Solomon Associates. The lower the index, the greater the efficiency. The overall EII for Imperial's refineries is shown in Figure #4 below. Also shown is the average for Canadian and US refineries that participate in Solomon Associate reporting. Imperial's energy intensity index has improved over several years, however, we continue to strive for further improvements. Figure #4 - Energy Intensity Index (EII) 110 IOL Average US Average Canadian Average 100 90 1992 1994 1996 1997 The average EII for Imperial's refineries in 1997, as shown above in figure #4 was calculated internally and has not been verified by Solomon Associates, who calculate the index every other year. The 1997 value is therefore subject to adjustment when Solomon calculates the value for 1998. 14 5. GREENHOUSE GAS EMISSIONS FORECAST FOR THE YEAR 2000 Forecasts of emissions for 2000 are based on our current view of how Imperial's business may evolve, recognizing that this could change with future business development. Forecast assumptions are provided below for each business segment. Figure #5 shows emissions estimates on an absolute basis by business segment and Table #5 provides emission data on a unit-of-production basis. Figure #5 - CO2 Equivalent Emissions (Kt) Including Emissions from Purchased Electricity 14000 12000 Chemicals 10000 Petroleum Products 8000 Bitumen 6000 Natural Gas/NGL's Conventional Oil 4000 2000 0 1990 1997 2000 Table #5 - CO2 Equivalent Emissions per Unit-of-Production Including Emissions from Purchased Electricity Business Segment Conventional Oil* Natural Gas/NGL's* Bitumen* Petroleum Products** Chemicals** 1990 22 38 69 235 679 1997 19 43 78 240 499 2000 20 45 93 237 481 * Tonnes per thousand barrels of oil equivalent production (T/KBOE) ** Tonnes per thousand tonnes of production (T/Kt) 15 2000 vs. 1990 (9.1%) 18.4% 34.8% 0.9% (29.2%) Upstream Operations The fundamental factors driving emissions from conventional oil and natural gas/NGL production have not changed from earlier reports. We expect declining production from mature fields to require increased energy to produce the same barrel of oil or equivalent. Our strategies to mitigate increased energy consumption in these sectors is to continue to focus on energy efficiency opportunities, rationalize equipment in step with declining production and capitalize on economic flare-reduction opportunities. Our forecasts take these opportunities into account. Also, our forecasts exclude asset divestments completed in 1997 and prior years. Bitumen production is expected to decline slightly over the forecast period. Given the proportionately large amount of energy used in bitumen production, energy efficiency has been and continues to be a key focus. Our plans include further evaluating and implementing potential opportunities to improve energy efficiency and reduce flaring. Some of these potential projects are identified in Appendix B. Emissions on a unit-production basis are expected to be higher in 2000 than last year, consistent with anticipated steaming rates and production plans. Annual emission data for bitumen production is subject to some variation, driven by alternating steam injection and oil production cycles, the phasing in and out of new and older wells and production strategy to meet business objectives. In an attempt to normalize for these variables, Table #6 provides a three-year rolling average of emissions on a unit-of-production basis from 1995 to the year 2000. On a rolling average basis, unit emissions are forecast to decline slightly between 1995 and 2000. Table #6 - CO2 Equivalent Emissions per Unit-of-Production Bitumen Production - 3 Year Rolling Average (T/KBOE) PERIOD '95-'97 '96-'98 '97-'99 '98-'00 T/KBOE 91 85 77 82 Examples of some projects currently being implemented or being evaluated are provided in Appendix B. 16 Downstream Operations The emissions forecast for the year 2000 reflects similar planning assumptions to those adopted last year, for example, the slate of crude oils processed in 2000 is assumed to be similar to that processed in recent years, as is the proportionate range of products manufactured. However, for this year's report we have assumed that total petroleum product demand will be higher than that employed in earlier forecasts. Previous forecasts for 2000 were based upon product demand increasing at a rate equivalent to Natural Resources Canada (NRCan) predictions for petroleum product end-use demand. In view of demand growth in recent years, this earlier prediction appears unrealistically low. Our emissions forecast this year is, therefore, based on demand in 2000 being an aggregate 7.2% higher than it was in 1994. This reflects the actual 1.2 % annual growth rate experienced during the past 10 years. The higher product demand assumption results in refining emissions in 2000 being about the same as they were in 1990. If the same NRCan demand predictions had been used as in previous reports, refinery forecasted emissions would have been about 5% lower than 1990. Our forecast assumes an improvement in refining energy efficiency, as measured by the EII, of 1% per year, on average, over the 1995 to 2000 period. As noted earlier, we are taking steps through an energy performance managing system to be more competitive in energy efficiency and expect to meet or exceed our 1% per year improvement goal. Emissions from chemicals manufacturing are projected to decrease on a unit of production basis, due to process improvements and increased production of less energy-intensive products. Emissions from distribution and marketing facilities represent a small part of Imperial's overall emissions. However, we expect further declines in energy consumption as facilities are rationalized in the pursuit of increased marketplace efficiencies. Nevertheless these emissions impacts are small compared with those from manufacturing operations. 17 6. Maintaining Competitiveness Leadership The cost of energy represents a significant cash operating cost in most parts of our business. To maintain and improve our competitiveness we have devoted resources to achieve improvements in this area, and plan to continue to do so. Our focus is to achieve further economic energy efficiency improvements as we strive for greater competitiveness through lower costs. As noted earlier we have established an energy management advisor position to focus efforts in the upstream and plan to continue our involvement with the CAPP initiatives to improve emissions estimation methodologies and contribute Imperial's data to the CAPP database for upstream performance indicators. In the downstream, our efforts continue to be focussed on the goal of improving energy efficiency in our refineries by at least 1% per year over the period 19952000 (total 6%) as measured by the EII. As noted, we are making steady progress. A key part of this is the continued resourcing of the energy improvement organization initiated in 1996. As noted in last year's report, processes are already in place in which energy use is periodically reviewed by senior management. In 1997 reviews were held to specifically address those parts of our business that consume significant amounts of energy, thereby bringing focus to opportunities for further efficiencies. We plan to continue our support for the VCR by providing reports such as this and to continue to provide input to VCR development, based on our own experience. Communication As noted in previous reports, Imperial has contributed to the development of public policy on GHG emissions and climate change for several years, including working with industry and business associations, providing input directly to government and publishing discussion papers on the issue. Given the importance of this issue to all Canadians, we plan to continue efforts of this nature and communicate with policy makers and other stakeholders. 18 Recognizing the significance of the climate change issue we communicated widely with our employees last year on several aspects of the subject, including the company's GHG emission levels. In last year's report we indicated our intention to evaluate an effective means to raise awareness with our customers about the efficient use of energy and associated economic benefits. While a ready opportunity did not present itself in 1997, advertising pamphlets for our summer gasolines this year included several references to factors that could affect fuel consumption. 19 APPENDIX A PROJECTS COMPLETED SINCE THE LAST VCR REPORT, THAT CONTRIBUTE TO REDUCTIONS OF GREENHOUSE GAS EMISSIONS 20 _______________________________________________________________________________ Business Segment/ Facility: Conventional Oil / Sunset Battery Description of project: Installation of vapour recovery unit to reduce direct CH4 venting Impact on GHG Emissions: CO2E reduction of 32.9 Kt/yr. _______________________________________________________________________________ Business Segment/Facility: Natural Gas / Everdell Gas Plant (Uphole Gas Plant) Description of project: Electronic ignition system installed to improve combustion efficiency. Service factor also improved and flaring reduced. Impact on GHG Emissions: CO2E reduction of 7.1 Kt/yr. _______________________________________________________________________________ Business Segment/Facility: Conventional Oil / Belly River Description of project: Vapour recovery unit installed to reduce flaring. Impact on GHG Emissions: CO2E reduction of 4.3 Kt/yr. _______________________________________________________________________________ Business Segment/Facility: Bitumen / Cold Lake Description of project: Leming boiler controls upgraded. Fuel gas consumption reduced. GHG Emissions Impact: CO2E reduction of 1.6 Kt/Yr. _______________________________________________________________________________ Business Segment/Facility: Bitumen / Cold Lake Description of project: Mahikan plant heat exchanger reconfigured to capture heat from glycol system to preheat boiler feed water. Impact on GHG Emissions: CO2E reduction of 8.8 Kt/yr. _______________________________________________________________________________ Business Segment/Facility: Natural Gas / Medicine Hat Shallow Gas Description of project: Installation of equipment to prevent free gas venting. Impact on GHG Emissions CO2E reduction of 0.3 Kt/yr. _______________________________________________________________________________ 21 _______________________________________________________________________________ Business Segment: Conventional Oil / Norman Wells Description of Project: Improved efficiency of operating well artificial lift. Impact on GHG Emissions: CO2E reduction of 0.5 Kt/yr. _______________________________________________________________________________ Business Segment: Natural Gas / Cynthia Description of Project: Installation of vapour recovery unit to reduce flaring. Impact on GHG Emissions: CO2E reduction of 4.3 Kt/yr. _______________________________________________________________________________ Business Segment: Natural Gas / Sunset Battery Description of Project: Improvements to increase flare efficiency. Impact on GHG Emissions: CO2E reduction of 1.0 Kt/yr. _______________________________________________________________________________ Business Segment: Conventional Oil / Norman Wells Description of Project: Improved efficiency of operating well artificial lift. Impact on GHG Emissions: CO2E reduction of 0.5 Kt/yr. _______________________________________________________________________________ Business Segment: Natural Gas / Medicine Hat-Roseglen Description of Project: Rationalization of equipment facilitated shutdown of 1100 HP compressor Impact on GHG Emissions: CO2E reduction of 7.4 Kt/yr. _______________________________________________________________________________ 22 _______________________________________________________________________________ Business Segment: Refining & Chemicals / Sarnia Description of Projects: Waste heat boiler on catalytic cracking unit cleaned to improve efficiency Optimization of hydrogen purge at hydrogen plant to reduce consumption / energy required Reduced number of pumps used in gasoline blending thereby reducing energy consumed Monitoring of heat exchanger efficiency at distillation units to reduce fuel consumption Replacement of air pre-heaters and economizers at utility plant to improve heat recovery Impact on GHG Emissions: CO2E reduction of 9.8 Kt/yr. _______________________________________________________________________________ Business Segment: Refining & Chemicals / Strathcona Description of Projects: Equipment installed to recover butane at the butamer unit resulting in reduced flaring Optimization of processing at butamer unit resulting in reduced energy requirements Impact on GHG Emissions: CO2E reduction of 11.5 Kt/yr. _______________________________________________________________________________ Business Segment: Refining & Chemicals / Nanticoke Description of Projects: Refurbishment of air pre-heaters at crude distillation units resulting in improved heat recovery. Heat exchanger modifications at the crude distillation unit to improve efficiency Impact on GHG Emissions: CO2E reduction of 15.9 Kt/yr. _______________________________________________________________________________ 23 24 APPENDIX PROJECTS BEING IMPLEMENTED OR EVALUATED IN 1998 _____________________________________________________________________________________ Business Segment/Facility: Natural Gas / Medicine Hat Shallow Gas Description of project: Installation of equipment to prevent free gas venting. Impact on GHG Emissions: CO2E reduction of 0.3 Kt/yr. _____________________________________________________________________________________ Business Segment/Facility: Natural Gas / Boundary Lake Description of project: Rationalization of equipment Impact on GHG Emissions: CO2E reduction of 0.5 Kt/yr. _____________________________________________________________________________________ Business Segment/Facility: Natural Gas / Rainbow Lake Description of project: Procedural changes to reduce flaring. Impact on GHG Emissions: CO2E reduction of 5.7 Kt/yr. _____________________________________________________________________________________ Business Segment/Facility: Natural Gas / Quirk Creek Description of Project: Rationalizing compressor capacity. Impact on GHG Emissions: CO2E reduction of 0.7 Kt/yr. _____________________________________________________________________________________ Business Segment/Facility: Natural Gas / Quirk Creek Description of Project: Minimizing temperature of field line heaters. Impact on GHG Emissions: CO2E reduction of 0.7 Kt/yr. _____________________________________________________________________________________ Business Segment/Facility: Natural Gas / Devon Gas Plant Description of Project: Switch to selective amine to strip CO2 and reduce releases Impact on GHG Emissions: CO2E reduction of 6.8 Kt/yr. ____________________________________________________________________________________ 25 _____________________________________________________________________________________ Business Segment/Facility: Conventional Oil / Redwater Description of Project: Inject acid gas to reduce flaring. Impact on GHG Emissions: CO2E reduction of 4.3 Kt/yr. _____________________________________________________________________________________ Business Segment/Facility: Conventional Oil / Norman Wells Turbo Generator Fuel Enrichment Description of Project: Replace diesel fuel with propane enriched gas as fuel. Impact on GHG Emissions: A multi-year project with potential CO2E reductions of 5.4. Kt/yr if fully implemented _____________________________________________________________________________________ Business Segment/Facility: Bitumen Production/Cold Lake Description of Project: -Installation of higher efficiency burners in steam generators. -Steam generator conversion to produced gas (reduced flaring) -Equipment changes to stabilize and streamline gas flows in plant. -Reprogramming of inlet controls to improve stability and improve efficiency. -Modifying and upgrading process controls to help minimize flaring. Impact on GHG Emissions: Potential for 47.2 Kt/yr CO2E reduction. _____________________________________________________________________________________ Business Segment/Facility: Bitumen Production/Cold Lake-Leming Plant Description of Project: Operate production pads to reduce release of produced gas Impact on GHG Emissions: CO2E reduction of 165 Kt/yr. _____________________________________________________________________________________ Business Segment/Facility: Bitumen Production/Cold Lake-May Plant. Description of Project: Operate production pads to reduce flaring. Impact on GHG Emissions: CO2E reduction of 9.5Kt/yr. _____________________________________________________________________________________ 26 _____________________________________________________________________________________ Business Segment/Facility: Bitumen Production/Cold Lake Description of Project: Upgrade vapour recovery system to allow higher heat exchanger efficiency and add heat exchanger capacity. Impact on GHG Emissions: CO2E reduction of 20 Kt/yr. _____________________________________________________________________________________ Business Segment: Refining & Chemicals / Sarnia Description of Projects: Installation of process controls to reduce heat loss to cooling water at the crude distillation unit Control of steam in flare system to reduce energy requirements Increased heat recovery at heat exchangers on hydrocracking unit Installation of variable speed drives on light ends unit reduce energy consumption Installation of increased heat exchanger capacity on hydrocracker to improve heat recovery Impact on GHG Emissions: CO2E reduction of 2.6 Kt/yr. _____________________________________________________________________________________ Business Segment: Refining & Chemicals / Strathcona Description of Projects: Vacuum pump replacement on atmospheric and vacuum unit resulting in reduced power consumption Recovery of potentially oily condensate to reduce energy required to generate steam Impact on GHG Emissions: CO2E reduction of 11.1 Kt/yr. _____________________________________________________________________________________ Business Segment: Refining & Chemicals / Nanticoke Description of Projects: Rationalization of on-line drivers for dual drive pumps throughout plant Lower volume of cold water addition to effluent treating system to reduce additional heat needs Impact on GHG Emissions: CO2E reduction of 10.6 Kt/yr. _____________________________________________________________________________________ 27 28 APPENDIX DATA FOR FIGURES Figure #1 - CO2 Equivalent Emissions (Thousands of Tonnes - Kt) Including Emissions from Purchased Electricity Business Segment Upstream* Petroleum Products** Chemicals Total Imperial Oil 1990 6462 5248 463 12173 1996 6588 5204 457 12249 1997 6325 5215 485 12025 2000 7090 5240 490 12820 1997 vs. 1990 (2.1%) (0.6%) 4.8% (1.2%) 2000 vs. 1990 9.7% (0.2%) 5.8% 5.3% * Includes Conventional Oil, Natural Gas/NGL's and Bitumen production ** Includes Refining, Distribution and Marketing Figure #2 - CO2 Equivalent Emissions from Upstream Operations (Thousands of Tonnes - Kt) Including Emissions from Purchased Electricity Business Segment Conventional Oil Natural Gas/NGL's Bitumen Total Upstream 1990 1320 2680 2462 6462 1996 685 2046 3856 6587 1997 1997 vs. 1990 710 (46.2%) 2000 (25.4%) 3615 46.8% 6325 (2.1%) 1997 vs. 1996 3.6% (2.2%) (6.3%) (4.0%) Figure #3 - CO2 Equivalent Emissions from Downstream Operations (Thousands of Tonnes - Kt) Including Emissions from Purchased Electricity Business Segment Petroleum Products* Chemicals Total Downstream 1990 5248 463 5711 1996 5204 457 5661 * Includes Refining, Distribution and Marketing 29 1997 5215 485 5700 1997 vs. 1990 (0.6%) 4.8% (0.2%) 1997 vs. 1996 0.2% 6.1% 0.7% Figure #4 - Energy Intensity Index (EII) IOL Average US Average Canadian Average *IOL Estimate 1992 104 94 105 1994 104 91 99 1996 96 90 95 1997 95* U/K U/K Figure #5 - CO2 Equivalent Emissions (Thousands of Tonnes - Kt) Including Emissions from Purchased Electricity Business Segment Conventional Oil Natural Gas/NGL's Bitumen Petroleum Products Chemicals Total Imperial Oil 30 1990 1320 2680 2462 5248 463 12173 1997 710 2000 3615 5215 485 12025 2000 575 2220 4295 5240 490 12820 2000 vs. 1990 (56.4%) (17.2%) 74.5% (0.2%) 5.8% 5.3%