Page 97 - Suncor AR English

The costs to construct, install and commission, or acquire, oil and gas production equipment, including oil sands

upgraders, extraction plants, mine equipment, processing and power generation facilities, utility plants, and all renewable
energy, refining, and marketing assets, are capitalized as plant and equipment within Property, Plant and Equipment.

Stripping activity required to access oil sands mining resources incurred in the initial development phase is capitalized as

part of the construction cost of the mine. Stripping costs incurred in the production phase are charged to expense as they
normally relate to production for the current period.

The costs of planned major inspection, overhaul and turnaround activities that maintain Property, Plant and Equipment

and benefit future years of operations are capitalized. Recurring planned maintenance activities performed on shorter
intervals are expensed as operating costs. Replacements outside of a major inspection, overhaul or turnaround are

capitalized when it is probable that future economic benefits will flow to the company and the associated carrying
amount of the replaced asset (or part of a replaced asset) is derecognized.

Leases that transfer substantially all the benefits and risks of ownership to the company are recorded as finance lease

assets within Property, Plant and Equipment. Costs for all other leases are recorded as operating expense as incurred.

Borrowing costs relating to assets that take a substantial period of time to construct are capitalized as part of the asset.
Capitalization of borrowing costs ceases when the asset is in the location and condition necessary for its intended use,

and is suspended when construction of an asset is ceased for extended periods.

(h) Depreciation, Depletion and Amortization
Exploration and Evaluation assets are not subject to depreciation, depletion and amortization. Once transferred to oil and

gas properties within Property, Plant and Equipment and commercial production commences, these costs are depleted on
a unit-of-production basis over proved developed reserves, with the exception of exploration and evaluation costs

associated with oil sand mines which are depreciated on a straight-line basis over the life of the mine and property
acquisition costs which are depleted over proved reserves.

Capital expenditures are not depleted until assets are substantially complete and ready for their intended use.

Costs to develop oil and gas properties other than oil sands properties, including costs of dedicated infrastructure, such as

well pads and wellhead equipment, are depleted on a unit-of-production basis over proved developed reserves. A portion
of these costs may not be depleted if they relate to undeveloped reserves. Costs to develop and construct oil sands mines
are depreciated on a straight-line basis over the life of the mine.

Major components of Property, Plant and Equipment are depreciated on a straight-line basis over their expected

useful lives.

Natural gas processing plants 15 years
.......................................................................................................................................................................................................................................................
Oil sands upgraders, extraction plants and mine facilities 20 to 40 years
.......................................................................................................................................................................................................................................................
Oil sands mine equipment 5 to 15 years
.......................................................................................................................................................................................................................................................
Oil sands in situ processing facilities 30 years
.......................................................................................................................................................................................................................................................
Power generation and utility plants 30 to 40 years
.......................................................................................................................................................................................................................................................
Refineries, ethanol and lubricants plants 20 to 40 years
.......................................................................................................................................................................................................................................................
Marketing and other distribution assets 20 to 40 years

The costs of major inspection, overhaul and turnaround activities that are capitalized are depreciated on a straight-line
basis over the period to the next scheduled activity, which varies from two to five years.

Depreciation, depletion and amortization rates are reviewed annually, or when events or conditions occur that impact

capitalized costs, reserves or estimated service lives.

SUNCOR ENERGY INC. ANNUAL REPORT 2013 93