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Canada’s Oil Sands: Challenges and Opportunities

Canada’s Oil Sands: Challenges and Opportunities . Mike Ashar Executive Vice President Suncor Energy Inc. Woodrow Wilson Forum October 17, 2005 Washington DC. Legal Notice.

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Canada’s Oil Sands: Challenges and Opportunities

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  1. Canada’s Oil Sands: Challenges and Opportunities Mike AsharExecutive Vice President Suncor Energy Inc. Woodrow Wilson Forum October 17, 2005 Washington DC

  2. Legal Notice • This presentation contains certain forward-looking statements, including statements about Suncor's growth strategy and expected and future production, operating and financial results that are based on Suncor's current expectations and assumptions. The forward-looking statements, identified by words such as “vision”, “goal”, “targets”, “estimates”, “plans” and “objectives”, are not guarantees of future performance. Actual results may differ materially as a result of risks, uncertainties and other factors, such as changes in general economic, market, regulatory and business conditions; fluctuations in commodity prices and currency exchange rates; the successful and timely implementation of capital projects; the accuracy of cost estimates and uncertainties resulting from potential delays or changes in plans, among others. See Suncor's current Annual Report and other documents Suncor files with securities regulatory authorities for further details, copies of which are available from the company. The forward-looking statements speak only as of the date hereof, and Suncor undertakes no duty to update these statements to reflect subsequent changes in assumptions (or the trends or factors underlying them) or actual events or experience. • Unless noted otherwise, financial information is for the most recent quarter or year end. • A boe conversion ratio of six thousand cubic feet of natural gas: one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Accordingly, boe’s may be misleading if used in isolation.

  3. Suncor Energy at a Glance • Integrated energy company with more than 4,500 employees • Crude oil production capacity of 260,000 barrels/day • Refining capacity of 160,000 barrels/day • Market capitalization about US$24 billion

  4. Resources 11 billion barrels reserves and resources All company data, except Suncor, is based on 2003 year-end proved reserves. Under U.S. reporting requirements, companies cannot disclose resources. Accordingly, Suncor’s reserve and resource estimate will not be comparable to those made by U.S. companies. Source: Oil and Gas Journal

  5. Comparative Advantages • No exploration costs • High recovery rates • Competitive fiscal regimes • Secure connection to North American markets

  6. Suncor Oil Sands Production Growth Thousands of barrels per day ** *Production capacity targets **Includes in-situ bitumen production

  7. Challenges • Costs – operating, capital and labor • Environmental impacts • Pipeline capacity • Refinery capability

  8. Operating costs • Industry average about US$20 for upgraded product • Constant cost pressure • Natural gas a major cost component risk

  9. Capital Costs • US$35 billion planned in next five years • Industry working to manage project costs and infrastructure impacts • Peak labor force of 25,000

  10. Environmental Issues • Must manage impacts to air land and water • Collaboration is key • Progress is being made

  11. Pipeline Access Fort McMurray Edmonton Hardisty Vancouver Kerrobert Puget Sound Regina Cromer Gretna Great Falls Clearbrook Montreal Billings Superior Mandan St. Paul Toronto Casper Salt Lake City Sinclair Buffalo Detroit San Francisco Cheyenne Toledo Chicago Canton Lima Denver McPherson Robinson Bakersfield El Dorado Patoka Wood River Los Angeles Coffeyville Catlettsburg Ponca City Tulsa Cushing Memphis Borger/Sunray Ardmore Artesia Canadian Supplied El Paso Big Spring Port Arthur Lake Charles Houston Not Canadian Supplied Texas City New Orleans Freeport Corpus Christi Source: Enbridge, Terasen, ExxonMobil

  12. 1.6 35 % of Sulphur has been increasing from 0.9% to 1.5 API Gravity Sulfur 1.5 34 1.4 33 1.3 32 % Sulphur 1.2 API 31 1.1 30 1 Average API is going down as more Canadian crude is heading to the US 29 0.9 0.8 28 1988 1990 1992 1982 1984 1986 1994 1996 1998 2000 2002 2004 Apr'05 Feb'05 Source: EIA, January 2005 Refinery Capability: Heavy/Sour Crudes Processed in the U.S.

  13. Canada’s Oil Sands: Challenges and Opportunities Mike AsharExecutive Vice President Suncor Energy Inc. Woodrow Wilson Forum October 17, 2005 Washington DC

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