Page 25 - AIF - English

2009. Royalties for natural gas and oil production are set distributed primarily across Quebec and Ontario. The

by a sliding-scale formula ranging from 5% to 36% for Montreal refinery also produces feedstock for Suncor’s
natural gas, and 0% to 40% for conventional crude oil. lubricants plant. Refined products are delivered to

Rates are dependent on well depth, production rates, price, distribution terminals in Ontario via the Trans-Northern
and quality of the natural gas and crude oil. New wells Pipeline and delivered to customers directly by truck, rail

receive an initial maximum rate of 5%, subject to volume and marine vessel.
and credit caps. In Alberta, costs for gathering,
The Sarnia refinery has a crude oil capacity of 85 mbbls/d,
compressing, and processing the provincial government processing both SCO from the company’s Oil Sands
share of gas and NGLs are allowable deductions from gross
operations and conventional crude oil purchased from third
royalties payable. Royalties for NGLs are determined based parties on a spot basis or under contracts that can be
on the prescribed reference prices multiplied by flat rates of
terminated on short notice. Crude oil is supplied to the
30% for propane and butane, and 40% for pentanes.
Sarnia refinery primarily via the Enbridge Mainline and

Royalties for Suncor’s North America Onshore production in Lakehead pipeline systems. Suncor procures conventional
B.C. are regulated primarily by the Petroleum and Natural crude oil feedstock primarily from Western Canada and has

Gas Royalty and Freehold Production Tax Regulation. the ability to supplement supply with purchases from
Royalty formulas (rates) for natural gas production are the U.S.
different based on the date the well was drilled. Gas rates
Production yield from the Sarnia refinery includes gasoline,
start as low as 9%, and are subject to a sliding scale with distillate and petrochemicals, which are primarily distributed
a maximum royalty rate of 27% as prices increase. B.C.
in Ontario. Refined products are delivered to distribution
provides royalty adjustments for deep drilling, lower terminals in Ontario via the Sun-Canadian Pipeline, or
production rates, and unique production methods. In B.C.,
delivered to customers directly via marine vessel and rail.
field expenses (gathering, compression and processing) are The Sarnia refinery also has limited access to pipelines
allowed as cost of services deductions from gross royalties.
delivering refined products into the U.S.
Plant processing costs are included as adjustments to the
provincial government valuation price. Royalties on NGLs To meet the demands of Suncor’s marketing network in
Eastern North America, the company also purchases
are assessed at a flat rate of 20% of revenues.
gasoline and distillate from other refiners. Suncor enters
During 2013, royalties for North America Onshore into reciprocal exchange arrangements with other refiners
production averaged 10% of gross revenue (2012 – 7%).
in Eastern North America, primarily for gasoline and
distillate, as a means of minimizing transportation costs
Refining and Marketing
and balancing product availability. Specialty products, such
For a discussion of the environmental and other regulatory as asphalt and petrochemicals, are also exported to
conditions, and competitive conditions and seasonal
customers in the U.S.
impacts affecting our Refining and Marketing segment,
refer to the Industry Conditions and Risk Factors sections of Suncor holds a 51% interest in ParaChem Chemicals L.P.
(ParaChem), which owns and operates a petrochemicals
this AIF.
plant located adjacent to the Montreal refinery. Feedstock
for the plant includes xylene and toluene produced by the
Operations – Refining and Product Supply
Montreal and Sarnia refineries. The plant primarily produces
Eastern North America
paraxylene, which is used by customers to manufacture
The Montreal refinery has a crude oil capacity of
polyester textiles and plastic bottles. Paraxylene production
137 mbbls/d, processing primarily foreign conventional was approximately 355,000 metric tonnes in 2013 (2012 –
crude oil, with a flexible configuration that allows
362,000 metric tonnes). ParaChem also produces benzene,
processing of light, sour and heavy grades of crude oil, as hydrogen and heavy aromatics. Benzene production is
well as intermediate feedstock. Crude oil is procured from
delivered back to the Montreal refinery to be marketed
the market on a spot basis or under contracts that can be with production from that facility.
terminated on short notice. Crude oil for the refinery is
Suncor’s lubricants plant produces specialty lubricants and
largely supplied via the Portland-Montreal Pipeline and to a
lesser extent, by rail and marine transportation. With the waxes that are marketed in Canada and internationally. The
facility is the largest producer of lubricant base stocks in
commissioning of the rail offloading facility in the fourth
quarter of 2013, the Montreal refinery has also started to Canada. In 2013, the plant produced approximately
804 million litres of lubricant base stocks. Feedstock for the
receive inland crudes. Rail volumes are expected to increase
to 35 mbbls/d by the end of the first quarter of 2014.
lubricants facility comes from Suncor’s Montreal refinery
and other purchase contracts.
Production yield from the Montreal refinery includes

gasoline, distillate, asphalt and petrochemicals, which are

SUNCOR ENERGY INC. ANNUAL INFORMATION FORM 2014 23