Horizon Oil Sands Project, Alberta, Canada

The Horizon Oil Sands Project is being developed by Canadian Natural Resources Ltd. The CA$10.8 billion project will provide the phased development of one of the most significant energy resources in North America (the oil sands of Alberta contain an estimated 300 billion barrels worth of oil reserves). At full production (using in situ and open cast techniques for extraction), the Horizon Project will supply 232,000bpd of sweet synthetic crude oil, eight percent of current Canada's daily production.

The Horizon Oil Sands Project is located approximately 70km north of Fort McMurray in the Regional Municipality of Wood Buffalo, Alberta (a 115,000-acre site leased from the Province of Alberta). Construction and development will take place in three phases from project start in 2004 to full production in 2012. The peak workforce of 4,500 will be achieved at the height of the construction work during 2006-07.

The first production of synthetic crude oil will begin in third quarter of 2008 (110,000bpd) - first phase start up - with full production on-stream in 2012, which will amount to 232,000bpd of synthetic crude oil. Future expansion to a production level of 500,000 bpd is planned. There will be 2,400 permanent positions at the project and the production life is anticipated to be more than 40 years, throughout which CA$24 billion will be generated in direct government revenue. The annual operating budget for the project will be CA$740 million.

CONTRACTORS

Canadian Natural Resources Ltd and its contractors have made a commitment to hire qualified local people first, Albertans second and Canadians third. About 2,400 people will be required to operate the Horizon plant site by 2012, when Phase 3 of the project is completed. About 400 people will be hired during 2005, and by 2008, between 1,300 and 1,500 people will be hired. These positions will include business services, maintenance crafts, technical and professional support as well as operations and supervisory staff.

About 1,250 people are already working on the Horizon Project, including Canadian Natural employees, contractors and construction workers. The specialisations of the contractors cover engineering, communications, construction, construction of the camp to house the employees, airstrip construction, equipment design and construction, upgrading and treatment, laboratory services, geotechnical surveying and engineering and a whole range of different activities. Lead contractors include Fluor Canada Ltd, SNC Lavalin, Black & Veatch, Technip, AMEC, and Noramac. A full list of contractors is supplied in the specifications.

PROGRESS

Deep underground facilities, including electrical, natural gas, water and sewage, are progressing on schedule. Temporary water and sewage treatment plants were completed by mid-2005. The Horizon airstrip was completed on schedule in 2005, ready for an influx of new workers. The airstrip is the same size as the Fort McMurray runway and is able to accommodate 737-size planes (the company offers a daily commuting service to and from the camp). The three camps, capable of accommodating 2,000 people per camp, were completed in 2006. By September 2006, 4,000 workers were living in camps one, two and three (the number is now approaching 7,000).

Following the foundation preparations, the coker area was turned over to the contractor in early 2006. The hydro treater reactors were assembled in June 2005 and the coker drums were fabricated abd delivered by mid-2006. Overburden removal was completed by early 2007, exposing the area to be mined.

During the final quarter of 2007, the raw water pond was completed and pre-commissioning work was started in the areas of utilities, offsites and bitumen production with significant hydro-testing targeted for completion before the winter of 2007-2008. In the fourth quarter of 2007, detailed risk assessment of commissioning and start-up were carried out to highlight areas needing attention. In the fourth quarter of 2007, several plants reached mechanical completion and are now ready for commissioning. Training programs have also been set in place.

TEST DRILLING

At the plant site in early 2005, the test drilling was completed and the results further confirm the ore body definition to begin the mining operation (16 billion barrels of bitumen as the whole reserve with 6 billion recoverable with current technology).Further test drilling was carried out during the winter of 2006-2007 to determine more information about the deposit and this was completed by March 2007.

The 22km access road off Highway 63 leading to the Horizon site was also completed to Alberta government standards, and was paved in late 2005. About 5,000ha of land was cleared by mid-2005. Since that time, Canadian Natural has been working on several reforestation projects.

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