Development Challenges

Dramatically lower crude and heavy oil prices

Capital and operating costs are so low that projects are highly economic with much lower oil prices

Major reduction in capital for the oil sands

Very low upfront capital required and much shorter time to initial production

Rapid, strong cash flow from initial 10,000 bbl/d project can largely support future expansions

Rapid cost inflation and lack of skilled labour

Capital and operating costs for new mining and SAGD projects are up 3.0-5.0x in the past 8 years.

Much simpler process with limited surface facilities and low construction and operating labour requirements

Increased regulatory & environmental challenges

New legislation regulating CO2 emissions, water usage and tailings ponds; increased environmental activism.

Essentially no onsite greenhouse gas or other emissions, no fresh water requirements, lower overall water usage, limited surface disturbance, reclamation begins within 3 years of initial project development and minimal noise pollution

New development has ground to a virtual halt

Economic at much lower oil prices and can proceed with development where others cannot

Shortage of very expensive diluents

Bitumen produced by E-T to date has demonstrated quality improvements which may result in lower blend requirements (further testing is required to confirm)