SECTION 1.0 – OVERVIEW TABLE OF CONTENTS PAGE 1.0 … · Page 1-1 1.0 OVERVIEW 1.1 Background The Korea National Oil Corporation (KNOC) holds 100% ownership of three oil sands leases

Application for Approval of the BlackGold Expansion Project Volume 1 – Project Description

December 2009

Table of Contents

SECTION 1.0 – OVERVIEW TABLE OF CONTENTS

PAGE

1.0 OVERVIEW....................................................................................................................1-1 1.1 Background ........................................................................................................1-1 1.2 Proponent...........................................................................................................1-1 1.3 Overview.............................................................................................................1-1 1.4 Public Consultation.............................................................................................1-6 1.5 Need...................................................................................................................1-9 1.6 Schedule ..........................................................................................................1-10


December 2009

Table of Contents

TABLE OF CONTENTS (cont) PAGE

LIST OF FIGURES

Figure 1.1-1: Project Location..................................................................................................1-2 Figure 1.1-2: KNOC Oil Sands Leases and Project Area ........................................................1-3 Figure 1.3-1: Project Area........................................................................................................1-4 Figure 1.3-2: Project Layout ....................................................................................................1-5 Figure 1.3-3: Project Footprint Photo Mosaic ..........................................................................1-7 Figure 1.3-4: Project Footprint Topography.............................................................................1-8 Figure 1.6-1: Development Schedule ....................................................................................1-11 S:\Project Ce\Ce03745\EIA\Vol 1\fnl rpt-Sec 1 overview vol 1 EIA-ce03745_100-10dec.doc


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1.0 OVERVIEW

1.1 Background

The Korea National Oil Corporation (KNOC) holds 100% ownership of three oil sands leases covering 15 sections of land in Township (Twp) 76, Range (Rge) 7 West of the 4th Meridian (W4M), located approximately 10 km southeast of Conklin, Alberta (Figures 1.1-1 and 1.1-2). KNOC acquired the leases in August 2006 and immediately began an exploration program to determine the potential for commercially viable oil sands resources. Based on positive results from this exploration program, KNOC applied in March 2008 for approval to construct, operate and reclaim the BlackGold Initial Project (Initial Project). KNOC proposes to increase production through the development of the BlackGold Expansion Project (Expansion Project), which will produce an additional 3 180 m3/d (20 000 b/d) of bitumen over a period of approximately 25 years using conventional steam assisted gravity drainage (SAGD) technology. Combined, the Initial Project and the Expansion Project are referred to as “the BlackGold Project”.

1.2 Proponent

KNOC was founded by the Korean government in 1979 to explore for and develop petroleum resources. KNOC established an office in Alberta in 2006 and presently has nine employees in Alberta, all based in Calgary. The BlackGold Project represents KNOC’s first venture into Alberta’s oil sands resources. KNOC is presently involved in 46 projects in 17 countries, including the BlackGold Project in northern Alberta. Further information on KNOC’s operations can be found at KNOC’s website at http://www.knoc.co.kr/eng/index.php.

1.3 Overview

In March 2008, KNOC submitted a joint application for the Initial Project to the Alberta Energy Resources Conservation Board (ERCB) and Alberta Environment (AENV) requesting approval to produce 1 590 m3/d (10 000 b/d) of bitumen from the McMurray formation, using conventional SAGD technology. Approval of the Initial Project development is anticipated in early 2010. Assuming regulatory approval, KNOC anticipates that it will begin construction on the Initial Project in 2010 with production commencing in 2012. KNOC proposes to increase production through the development of the Expansion Project, which will produce an additional 3 180 m3/d (20 000 b/d) of bitumen over a period of approximately 25 years. Combined with production from the Initial Project, total production design capacity will be 4 770 m3/d (30 000 b/d). The Expansion Project will be integrated with the Initial Project development (Figures 1.3-1 and 1.3-2). The design of the Initial Project incorporated some pre-investment elements to accommodate potential future expansions. This pre-investment strategy enables easier integration of the Expansion Project into the Initial Project.

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Project Location

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Project Area


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Project Layout


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The Expansion Project has been designed to minimize environmental disturbance. KNOC’s pre-investment strategy significantly reduces surface area requirements for the Central Processing Facilities (CPF) and reduces the environmental impact of the expanded development. The project footprint is shown on the air photo mosaic (Figure 1.3-3) and topographic map (Figure 1.3-4). Facilities will be located to avoid surface water bodies. Additional surface disturbance will be minimized through making use of as much of the existing infrastructure as possible. KNOC has maximized the use of existing roads and gathering lines corridors for gathering and distribution lines. The Expansion Project will use the export and import pipelines established for the Initial Project. Facilities required for the Expansion Project will be integrated into the Initial Project where practical. The Expansion Project will include additional facilities, such as well pads, gathering and distribution pipeline networks, steam generation, oil treatment, water treatment associated roads, and utility facilities. Initially, a total of 28 well pairs will be drilled from 3 well pads. The CPF for the Initial Project is sized to accommodate the Expansion Project. Additional production wells and well pads will be developed for the Expansion Project, as required, to maintain production throughout the project life.

1.4 Public Consultation

Prior to submitting an application for approval of the Initial Project, KNOC has undertaken an extensive consultation program with the Aboriginal communities in the area. During this process issues and concerns related to the Initial Project were raised. KNOC has continued working with the Aboriginal communities to address the identified issues and concerns. The consultation activities have been ongoing and will remain so throughout the regulatory review and approvals process for the Expansion Project. KNOC anticipates that many of the concerns raised by the Aboriginal communities during the Initial Project will also be raised about the Expansion Project. Identified concerns raised by the Aboriginal communities relate to potential effects to the biophysical environment, human environment, and traditional land use. Concern has also been expressed by Aboriginal communities about their lack of capacity to fully partake in the consultation program without support from KNOC. Furthermore, Aboriginal communities have expressed a desire to benefit from the project through economic and business opportunities. Environmental concerns that have been raised include potential impacts to air, water, fish, vegetation, and wildlife. For example, prevalent concerns have been raised about potential impacts to Christina Lake, and cumulative effects. The environmental effects assessment associated with this application discusses potential effects to the environment, and identifies the steps that KNOC will take to mitigate potentially adverse effects and enhance positive effects. KNOC will develop the project in an environmentally responsible manner.

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Project FootprintPhoto Mosaic


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Aboriginal communities have indicated that traditional land use activities occur in the vicinity of the proposed project, and that they would like to work with KNOC to minimize effects to traditional land use. KNOC has indicated their willingness to work with Aboriginal communities to complete traditional land use studies. KNOC will make best efforts to minimize effects to traditional land use. Aboriginal communities have also suggested that it is time consuming to participate in consultation processes and have requested that KNOC provide them with resources to facilitate their participation, which KNOC has done. KNOC will continue to engage and consult with Aboriginal communities, and will continue considering requests for resources that will be used by Aboriginal communities to enhance their capacity to be engaged and consulted. Interest has also been expressed with respect to monitoring programs to be established as part of the operational phase of the BlackGold Project. KNOC, together with regulatory authorities, will develop robust monitoring programs for the project. KNOC has also committed as part of its ongoing consultation, to keep stakeholders informed about its operations on an ongoing basis. Aboriginal communities have expressed an interest in business opportunities for their members. KNOC has indicated that the tendering process will consider Aboriginal content in awarding contracts for work on its site. KNOC has encouraged the Aboriginal communities to provide information about their businesses that may be able to provide products and services to KNOC during construction and operations. KNOC expects that through this exchange of information and with competitive bid processes, Aboriginal businesses will have opportunities to benefit from the project. Aboriginal communities have also raised issues with respect to cumulative effects of development within their traditional lands and the quality of direct consultation with government. Through its project design and mitigation measures described in this application, KNOC has endeavoured to minimize its environmental footprint. As a part of its consultation process, KNOC keeps regulators informed about stakeholder issues and the company’s efforts to address these issues. KNOC is also supportive of direct government consultation with Aboriginal communities.

1.5 Need

The project will assist in satisfying the growing energy needs of the marketplace. The Expansion Project will recover sufficient bitumen reserves from the McMurray and Wabiskaw Formation underlying its leases to produce approximately 3 180 m3/d (20 000 b/d) of bitumen over a period of approximately 25 years. Combined with production from the Initial Project, total production design capacity will be 4 770 m3/d (30 000 b/d).


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At the same time, the project will provide direct benefits to the region, the province and Canada, as follows:

• project construction is expected to cost approximately $540 million;

• estimated total annual operations expenditures (including wages/benefits) are expected to be $112 million;

• the project will contribute taxes and royalties to municipal, provincial, and federal governments; and

• the project will employ approximately 500 people during construction and approximately 50 people on a full-time basis for operation.

1.6 Schedule

Project construction is scheduled to begin in 2013. Steaming will begin in 2015 when construction is completed. The project will continue production for approximately 25 years. Figure 1.6-1 shows a development schedule for the project.

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BlackGold ProjExpansion ect

Engineering Study

Public Consultation

Prepare Regulatory Application

Regulatory Application Process

Detailed Engineering

SAGD Well Pair Drilling & Tie-In

Facility Construction

Commissioning and Start-up

Development Schedule

2009 2010 2011 2012 2013 2014 2015

Q1 Q4 Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4

BlackGold

Expansion

Project

(20,000b/d)

First Oil

Documents

SECTION 1.0 – OVERVIEW TABLE OF CONTENTS PAGE 1.0 … · Page 1-1 1.0 OVERVIEW 1.1 Background The Korea National Oil Corporation (KNOC) holds 100% ownership of three oil sands leases