Horizon Oil Sands

Horizon Oil Sands

The Horizon Oil Sands include a surface oil sands mining and bitumen extraction plant, complemented by on-site bitumen upgrading with associated infrastructure to produce high quality SCO. Canadian Natural holds extensive leases that are estimated at 3.6 billion barrels of proved and probable SCO reserves. The Horizon Oil Sands are located on these leases approximately 70 km north of Fort McMurray, Alberta in the Athabasca region. Due to the massive resource base, the mine and plant facilities are expected to produce for decades to come without production declines normally associated with crude oil production.

Canadian Natural's Board of Directors sanctioned the Horizon Oil Sands Project in February 2005 and after years of planning and construction, the Horizon Oil Sands successfully and sustainably produced its first barrels of high quality, low-sulphur, 34° API, sweet SCO in early 2009. First production of SCO was a major milestone for Canadian Natural and we were pleased with the success of the project. Acting as our own primary contractor on the Horizon Oil Sands, we built a core competency in executing large scale projects from the ground up and have learned a great deal from the construction and startup of Phase 1.

Phase 1 was just the first step in value creation from this significant asset. A considerable amount of capital for infrastructure was included in Phase 1 in anticipation of future phases. These include but are not limited to, support infrastructure such as the aerodrome, buildings, shops, warehouses, camps and roads, site preparation, the piperack, coker foundations, gas and power distributions, the majority of underground piping and so on. Canadian Natural is positioned to leverage the benefits from our existing operation into future expansions.

Horizon – Current Phase

Construction progress to date at Horizon has met or exceeded expectations on cost and performance. Canadian Natural has a disciplined execution strategy, to achieve cost certainty for a defined and stepped expansion at our Horizon operations from Phase 1 productive capacity of 110,000 bbl/d to 250,000 bbl/d of SCO. In 2014, we advanced the completion of the project through the completion and commissioning of Phase 2A. This phase added 12,000 bbl/d of production capacity through the addition of an additional coker pair. Through this phase and certain operational synergies, Canadian Natural was able to increase the name plate capacity to 137,000 bbl/d in Q4/14.

During 2015, Canadian Natural continued to advance its Horizon expansion project, the major component of its transition to a Long Life Low Decline asset base. 2016 was a milestone year for Canadian Natural, as the Company advanced the completion of the Horizon expansion, adding 45,000 bbl/d of SCO from Phase 2B with start up in October 2016 and full targeted production achieved in November 2016. With the completion of Phase 2B, Canadian Natural realized a step change in the sustainability of the production and cash flow profiles for the Company.

In 2017, Horizon project capital costs are targeted to be less than $1 billion for Phase 3 completion, which is targeted to add incremental production volumes of 80,000 bbl/d in Q4/17.  In 2018, the Company targets Horizon project capital of approximately $500 million, as the Company completes environmental work deferred from 2017. Future opportunities at Horizon will entail smaller debottlenecking opportunities, where the Company targets to add incremental production capacity of 30,000 - 50,000 bbl/d.  In the near-term, the Company is evaluating adding a Paraffinic Froth Treatment Expansion to produce marketable diluted bitumen (dilbit) from its mining operations and an expansion at the upgrader to add up to 15,000 bbl/d of Vacuum Gas Oil (VGO).