Full Description

Petro-Canada is an integrated oil and gas company with a portfolio of businesses spanning both the upstream and downstream sectors of the industry. In the upstream businesses, the Company explores for, develops, produces and markets crude oil, natural gas liquids (NGLs) and natural gas in Canada and internationally. The downstream business unit refines crude oil and other feedstock, and markets and distributes petroleum products and related goods and services, primarily in Canada. On August 1, 2009, Suncor Energy Inc. completed its merger with Petro-Canada.

Upstream

As of December 31, 2008, Petro-Canada's upstream operations consisted of three business units: North American Natural Gas, with production in Western Canada and the United States Rockies; Oil Sands, with operations in northeast Alberta, and International & Offshore. International & Offshore has two segments: East Coast Canada, with three developments offshore Newfoundland and Labrador, and International, where the Company operates in two core areas: North Sea and Other International (Libya, Syria and Trinidad and Tobago).

North American Natural Gas explores for and produces natural gas, crude oil and NGL in Western Canada and the United States Rockies. This business also markets natural gas in North America and has resources in Alaska, the Northwest Territories and the Arctic Islands. Annual production before royalties totaled 214 billion cubic feet (Bcf) of natural gas and 4.8 million barrels (MMbbls) of conventional crude oil and NGL during the year ended December 31, 2008. Exploration and development drilling activity in North American Natural Gas resulted in 590 gross (415 net) wells, including 431 gross (280 net) natural gas wells and 148 gross (124 net) oil wells, for an overall success rate of 98% in 2008. Western Canada natural gas production averaged 562 million cubic feet of gas equivalent/day (MMcfe/d) in 2008. Exploration and development drilling activity in Western Canada resulted in 292 wells (gross), for an overall success rate of 97% in 2008. The United States Rockies natural gas production averaged 103 MMcfe/d in 2008. During 2008, exploration and development drilling activity in the United States Rockies resulted in 287 gross wells. In Western Canada, Petro-Canada operates 10 natural gas field processing plants, with total licensed capacity of approximately one billion cubic feet/day (Bcf/d), of which the Company's share is approximately 622 million cubic feet/day (MMcf/d).

Petro-Canada estimates that it has 1.21 billion barrels (bbls) of total Oil Sands proved plus probable reserves and 9.52 billion bbls of total Oil Sands contingent and prospective resources. The Company's major oil sands interests include a 12% ownership in the Syncrude joint venture (an oil sands mining operation and upgrading facility), 100% ownership of the MacKay River in situ bitumen development (a steam-assisted gravity drainage (SAGD) operation), a 60% ownership in and operatorship of the proposed Fort Hills oil sands mining project, and oil sands acreage considered prospective for in-situ development of bitumen resources. Syncrude is an oil sands mining operation located approximately 40 kilometers north of Fort McMurray, Alberta. Syncrude is a joint venture formed to mine shallow deposits of oil sands from the McMurray formation in the Athabasca Oil Sands and to extract and upgrade bitumen to produce synthetic crude oil. Syncrude holds eight oil sands leases (numbered T10, T12, T17, T22, T29, T30, T31 and T34) issued by the Province of Alberta, covering a total of approximately 255,000 acres. Syncrude's production averaged 289,000 barrels/day (b/d) gross (34,700 b/d net) in 2008.

Petro-Canada is project operator of the Fort Hills project with a 60% interest, and UTS Energy Corporation (UTS) and Teck Cominco Ltd. (Teck) each hold a 20% interest. The Fort Hills mining project has estimated contingent resources of approximately four billion bbls of bitumen or 3.6 billion bbls of synthetic crude oil after accounting for upgrading yields (approximately 2.4 billion bbls of bitumen or 2.2 billion bbls of synthetic crude oil based on Petro-Canada's working interest before royalties). In September 2002, Petro-Canada completed construction of its 100%-owned in situ bitumen production facility at MacKay River. Production averaged 25,200 b/d in 2008.

The Company holds a 20% interest in Hibernia, a 27.5% interest in White Rose and a 22.7% interest in Hebron, and is the operator of Terra Nova with a 34% interest. All of these fields are located East Coast Canada. The Hibernia oilfield is approximately 315 kilometers southeast of St. John’s, Newfoundland and Labrador. The production system is a fixed gravity base structure (GBS), which sits on the sea floor. The GBS has a production capacity of 230,000 b/d gross and storage capacity of 1.3 MMbbls gross. At December 31, 2008, there were 32 producing oil wells, 17 water injection wells and six gas injection wells in operation. Hibernia production averaged 139,000 b/d gross (27,800 b/d net) in 2008. The Terra Nova oilfield is approximately 350 kilometers southeast of St. John’s, Newfoundland and Labrador. As of December 31, 2008, 15 producing oil wells, nine water injection wells and three gas injection wells were in operation. At Terra Nova, production averaged 102,700 b/d gross (34,900 b/d net) in 2008. White Rose is about 350 kilometers southeast of St. John’s and approximately 50 kilometers northeast of Hibernia and Terra Nova. As of December 31, 2008, eight producing oil wells and 10 water injection wells were in operation. White Rose production averaged 101,100 b/d gross (27,800 b/d net) in 2008. In addition to existing East Coast Canada developments, Petro-Canada holds interests in a number of discoveries, including a 22.7% interest in the Hebron/Ben Nevis oilfield discoveries.

Petro-Canada has consolidated its International activities into two core areas: the North Sea (the United Kingdom, the Netherlands and Norway sectors) and Other International areas (Libya, Syria and offshore Trinidad and Tobago). International is concentrating on countries and regions, which include North Sea, Libya, Syria and Trinidad and Tobago. International production averaged 157,200 barrels of oil equivalent/day (boe/d) net in 2008. In the North Sea, the Company is doing business around core production areas in the United Kingdom and the Netherlands sectors, with exploration activities extending into Norway. Petro-Canada’s North Sea production averaged 97,700 boe/d net in 2008. Crude oil production comes from interests principally in Libya, with natural gas production from assets offshore Trinidad and Tobago. A natural gas development is also underway in Syria.

Downstream

Downstream operations include two refineries, one in Edmonton and one in Montreal, with a total daily rated capacity of 40,500 cubic meter/day (m3/d) (255,000 b/d), a lubricants plant that produces lubricant base stocks in Canada, a network of 1,323 retail service stations, national commercial road transport network of 233 locations and a bulk fuel sales channel. Petro-Canada's refineries produce a range of refined petroleum products, including gasoline, diesel oils, heating oils, aviation fuels, heavy fuel oil, asphalts, petrochemicals and feedstock for lubricants. The Edmonton refinery produces light oils. The Montreal refinery, supplied with imported crude oil primarily through the Portland-Montreal pipeline, processes a variety of crude oils, including heavy grades and intermediate feedstock. The refinery produces gasoline, distillates, asphalts, heavy fuel oil, petrochemicals, solvents and feedstock for lubricants. Petro-Canada holds a 51% working interest in ParaChem Chemicals L.P. (ParaChem), which owns and operates a petrochemicals plant located adjacent to the Montreal refinery. The plant primarily produces up to 350,000 metric tons/year of paraxylene (PX), which is used to manufacture polyester textiles and plastic bottles. ParaChem also produces benzene, hydrogen and heavy aromatics. Petro-Canada supplies mixed xylenes and toluene to ParaChem.

At December 31, 2008, Petro-Canada's network of retail sites consisted of 1,323 outlets across Canada, of which 808 outlets were Company-controlled and the balance of the outlets were controlled by third parties. Independent dealers and agents operate all the outlets. Petro-Canada sells petroleum products into farm, home heating, paving, small industrial, commercial and truck markets. This category accounted for approximately 61% of total Downstream sales volumes in 2008. The lubricants plant in Mississauga, Ontario, produces specialty lubricants and waxes that are marketed in Canada and internationally. Petro-Canada complements its production, extraction and refining operations with ownership in crude oil and refined product pipelines. The principal pipelines in which the Company has an interest are Alberta Products Pipe Line Inc., Trans-Northern Pipelines Inc. and Montreal Pipe Line Limited.