Page 19 - AIF - English

With respect to the bitumen quality adjustments, Suncor MacKay River (2012 – 6% of R) and royalties averaging 7%

filed a Notice of Commencement of Arbitration with the of R for Firebag (2012 – 6%), which continues in the
Alberta government on January 29, 2011 pursuant to the pre-payout phase.

dispute resolution provisions of the Suncor RAA. In
December 2013, Suncor reached an agreement with the Exploration and Production

Alberta government to settle all unresolved royalty issues For a discussion of the environmental and other regulatory
under the Suncor RAA.
conditions, competitive conditions, foreign operations and

The co-owners of Syncrude also filed a non-compliance seasonal impacts affecting our Exploration and Production
segment, refer to the Industry Conditions and Risk Factors
notice with the Alberta government, citing that reasonable
adjustments in the determination of the bitumen value sections of this AIF.

were not considered by the government. In
December 2013, the Syncrude co-owners reached an East Coast Canada – Assets and Operations
Based in St. John’s, Newfoundland and Labrador, this
agreement with the Alberta government to settle
unresolved royalty issues under the Syncrude RAA.
business includes interests in three producing fields and
future developments and extensions. Suncor is also
Under these modified settlement agreements, certain
involved in exploration drilling for new opportunities.
provisions of the BVM Regulation, including the floor price Suncor is the only company in this region with interests in
limitations, will apply for the term. A floor price is applied
when prices for Canadian heavy oil are discounted relative every field currently in production.

to heavy oil prices at the U.S. Gulf Coast.
Terra Nova
In 2013, Oil Sands royalties (excluding Syncrude) were The Terra Nova oilfield is approximately 350 km southeast
approximately 7% (2012 – 6%) of Oil Sands operating
of St. John’s. Terra Nova was discovered in 1984, and was
revenues (excluding Syncrude). In 2013, Suncor incurred the second oilfield to be developed offshore Newfoundland
royalties on Syncrude operations averaging approximately
and Labrador. Operated by Suncor, the production system
5% of Syncrude operating revenues before royalties uses an FPSO vessel that is moored on location, and has
(2012 – 6%).
gross production capacity of 180 mbbls/d (net 68 mbbls/d
Beginning on January 1, 2016, Suncor’s Oil Sands Base and to Suncor) and oil storage capacity of 960 mbbls. Terra

Syncrude operations will be subject to the generic royalty Nova was the first harsh environment development in
regime that is currently in place for all other oil sands North America to use a FPSO vessel. Actual annual
production levels are lower than production capacity,
royalty projects in Alberta, including Suncor’s In Situ
operations, as described below.
reflecting current reservoir capability, including natural
declines, gas and water injection and production limits, and

In Situ
asset and facility reliability. Production from Terra Nova
began in January 2002. At December 31, 2013, there were
Under the New Royalty Framework, royalties on Suncor’s
Firebag and MacKay River projects are based on a sliding- 29 wells: 17 oil production wells, nine water injection wells
and three gas injection wells. In 2013, Suncor’s share of
scale rate of 25% to 40% of R – C, subject to a minimum
royalty within a range of 1% to 9% of R. Revenues used Terra Nova production averaged 14 mbbls/d compared to
9 mbbls/d in 2012. The company commenced off-station
in royalty formulas are driven primarily by benchmark prices
for WCS, while sliding-scale percentages in royalty formulas maintenance of the Terra Nova facility in late September
2013 for ten weeks to repair a mooring chain and perform
depend on prices for WTI from Cdn$55/bbl to the
maximum rate at a WTI price of Cdn$120/bbl. A project preventive maintenance on the remaining eight chains.
Production was reinstated in early December 2013. In
remains subject to the minimum royalty (the pre-payout
phase) until the project’s cumulative gross revenues exceed comparison, the facility was off-line for approximately
27 weeks in 2012 as part of a dockside planned
its cumulative costs, including an annual investment
allowance (the post-payout phase). In 2013, Suncor maintenance program.

incurred minimum royalties at a rate of 7% of R for

SUNCOR ENERGY INC. ANNUAL INFORMATION FORM 2014 17