Page 22 - AIF - English

NARRATIVE DESCRIPTION OF SUNCOR’S BUSINESSES

operator for an exploration well drilled in Block 30/11c, Operations BV (Harouge), shut in production as a result of

in which Suncor has a 57.857% interest. Drilling was political unrest that began in February 2011. In
completed early in 2013 and following evaluation, the March 2011, Suncor declared force majeure under its

well was determined to be non-commercial. No further EPSAs. Suncor exited development force majeure in
work on this discovery has been planned.
December 2011 and exploration force majeure in

• Scotney prospect (U.K.) – In 2013, Suncor, as operator, June 2012, and production resumed to previous rates.

drilled a well in Block 20/05b to comply with a work In July 2013, operations in Libya were again disrupted as
commitment for the licence, in which it has a 32.86% political unrest resulted in the closure of seaport terminals.

interest. This well was completed in late April 2013 Production has been shut in since July 2013 and Suncor
with no hydrocarbons encountered.
has not lifted production or recognized a sale since

• Lily prospect (U.K.) – During the fourth quarter of 2013, May 2013. Some seaports, largely on the country’s western
coast, were reopened in late December 2013, but eastern
the operator for the P928 20/1S licence, in which
Suncor has a 29.89% interest, drilled an exploration seaports, including the Ras Lanuf and Es Sider terminals
through which Suncor’s crude is exported, are still closed.
well but did not encounter hydrocarbons.
As a result of this extended loss of production and
• Blackjack prospect (U.K.) – During the second half of uncertainty on timing of return to operations in Libya,
2013, the operator of the P300 14/26a licence, in Suncor recorded an after-tax impairment charge of

which Suncor has a 26.69% interest, conducted a site $101 million against these assets in the fourth quarter
survey for a planned exploration well, which is of 2013.
scheduled to commence drilling during the first quarter
Despite the seaport closures, Suncor continued exploration
of 2014.
activities in 2013. During the year, two suspended wells
Suncor continues to pursue other opportunities in the and four additional exploration and appraisal wells were
North Sea, the Norwegian Sea and the Barents Sea. The
completed. Hydrocarbons were discovered in three of the
company holds interests in 30 exploration licences in the wells, while the other three wells were assessed as
U.K. and Norwegian sectors of these areas.
dry holes.

Libya
During 2013, exploration force majeure extension
agreements were signed by NOC and Suncor, relating to
In Libya, Suncor is signatory to seven EPSAs with the Libya
National Oil Corporation (NOC). Five of the seven EPSAs the 2011 force majeure situation, extending the exploration
period from December 31, 2012 until April 12, 2014. In
contain producing fields and exploration prospects; the
remaining two are exploration EPSAs that do not contain early 2014, an additional one-year extension to April 12,
2015, was approved by the NOC, with the formal
producing fields, one of which is being relinquished
because the exploration program was not successful. extension agreements to follow later in 2014. The terms of
the ESPAs allow for further extensions to be negotiated.
Together, Suncor and the NOC jointly design and
implement the development and redevelopment of existing The estimated cost of Suncor’s remaining exploration work
program commitment at December 31, 2013 is
fields in the Sirte Basin. Existing reserves are associated
with five separate agreements which contain five primary US$349 million.

producing fields. Under the EPSAs, the company pays At December 31, 2013, the company had an outstanding
100% of the exploration costs, 50% of the development obligation of US$74 million for a signature bonus relating

costs and 12% of the operating costs, and recovers these to Petro-Canada’s ratification of the Libyan EPSAs in 2008.
costs through a 12% share of a production cost recovery

mechanism. Any petroleum remaining after cost recovery is Syria
referred to as excess petroleum, and is shared between In December 2011, amid continuing unrest in Syria,

Suncor and the NOC based on several factors. Suncor’s sanctions were introduced and Suncor declared force
share of the excess petroleum can range from 4% to 85%. majeure under its contractual obligations and suspended its

The EPSAs expire on December 31, 2032, but include an operations in the country. Suncor withdrew its expatriate
initial five-year extension through the end of 2037. In staff and undertook measures to maintain support for its

2013, Suncor’s share of production in Libya averaged
Syrian employees. Consequently, the company has ceased
21 mbbls/d, (2012 – 42 mbbls/d). Libya is a member of the recording all production and revenue associated with its

Organization of Petroleum Exporting Countries (OPEC) and Syrian assets. Since 2011, Suncor has not been able to
is subject to quotas that can affect the company’s monitor the status of any of its assets in the country,

production in Libya.
including whether certain facilities have suffered damages.

For the period from March to September 2011, the Located in the Central Syrian Gas Basin, the Ebla project
operator for the joint operation, Harouge Oil
includes all hydrocarbons in the Ash Shaer and Cherrife

20 SUNCOR ENERGY INC. ANNUAL INFORMATION FORM 2014