January 3, 2011

RICHARD GILBERT

Suncor Energy Inc and Total E&P Canada Ltd. are planning to restart construction on the Voyageur upgrader near Fort McMurray in 2011. Suncor halted construction on the $20.6 billion project in October 2008.

Strategic Oilsands Partnership

Voyageur upgrader construction will restart in 2011 in Fort McMurray, Alberta

RICHARD GILBERT

Construction on the postponed Voyageur upgrader near Fort McMurray will be restarted in 2011, as a result of a strategic partnership between Suncor Energy Inc. and Total E&P Canada Ltd.

“The agreement with Total is an important element of Suncor’s plans to more than double our oil sands production,” said Suncor president and chief executive officer Rick George.

“The deal brings a strong partner to the table, helping us to accelerate development of our growth portfolio and share in the capital investment in a third upgrader and development of new mining projects.”

Suncor and Total E&P Canada Ltd, which is a subsidiary of French-based Total, have signed several agreements to form a strategic oil sands alliance that involves the completion of the $20.6-billion Voyageur heavy oil upgrader.

Under the agreement, Total is acquiring a 49 cent stake in the Suncor-operated Voyageur upgrader project located near Fort McMurray. Construction of the bitumen upgrading facility was suspended in 2008, when Suncor responded to falling oil prices, uncertain financial markets and high capital costs by slashing its 2009 capital budget by one-third to $6 billion.

Work on the project is scheduled to resume in 2011, once the front-end engineering design is updated. Suncor’s 2011 capital expenditure outlook allocates $260 million for construction of the project.

When the facility is completed in 2016, it will have a capacity of about 200,000 barrels per day (b/d) of upgraded products.

The partnership also includes plans for the two companies to jointly develop the Fort Hills and Joslyn oilsands mining projects, which will supply bitumen to the Voyageur project.

Suncor Energy gained a 60 per cent interest in Petro-Canada’s Fort Hills project when it took over the company in 2009. Total is acquiring 19.2 per cent of Suncor’s interest in the $20 billion integrated mine and upgrader project. This transaction gives Total a 39.2 per cent interest in Fort Hills. Suncor, as operator, will hold 40.8 per cent.

Suncor’s 2011 capital expenditure outlook allocates $100 million for construction of the Fort Hills project. Suncor and Total have agreed to develop the Fort Hills mine and Voyageur upgrader in parallel, so that both come on stream in 2016.

Total E&P Canada is currently in the Front End Engineering Design stage and in the regulatory approval process to construct and operate the proposed Joslyn North Mine Project.

Suncor is acquiring 36.75 per cent of Total’s interest in the Joslyn project. Total, as operator, will retain a 38.25 per cent interest in the project.

It is estimated that project construction will create about 16,560 person-years of direct construction employment.

The construction workforce is expected to peak at about 4,100 workers.

The Joslyn North Mine is scheduled to commence operations in 2017 and will reach a production rate of 100,000 barrels per day.

Suncor’s Board of Directors recently approved a $6.7 billion capital spending plan for 2011, which includes about $2.8 billion for growth projects at oilsands operations.

“Planned capital investment in 2011 will continue to lay the foundation for our long-term growth strategy through 2020” said George.

“We believe this plan strikes the right balance between well-managed growth and investments to support safe, steady and reliable production from our existing operations.”

The majority of growth spending will be directed toward expansion of Suncor’s Firebag in-situ oil sands facilities.

Firebag Stage 3 is targeted to begin production late in the second quarter of 2011, ramping up toward capacity of 62,500 barrels per day (bpd) of bitumen over about 24 months.

Construction at the company’s facilities will then shift fully to Firebag Stage 4 to support a planned completion target in early 2013.

Suncor’s 2011 capital expenditure outlook allocates $405 million for Firebag 3 and $875 million for Firebag 4.

Stage 4 also has a planned capacity of 62,500 bpd.

Total will pay Suncor $ CAD 1.75 billion as part of the terms of these transactions and the related net balancing of the portfolio, in particular to contribute to the past costs of the Voyageur project.

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