Western Canada

ConocoPhillips is one of the top three natural gas producers in Canada. In 2011, total net production averaged 193 MBOED. Its operations are located primarily in Alberta and British Columbia, with some production in Saskatchewan. The company has an ownership position in 80 natural gas processing plants in the region. As of Dec. 31, 2011, the company held leasehold rights in 8.8 million gross acres (6.1 million net acres) in western Canada.

In 2011, our western Canada operations were reorganized into three core development areas – Deep Basin, Kaybob and O’Chiese. These are situated in the gas-saturated corridor that extends from central Alberta to northeastern British Columbia. Assets outside of these three core development areas are managed through an Asset Optimization group that focuses on production optimization. As of Dec. 31, 2011, the Asset Optimization assets held 3.8 million gross acres (2.7 million net acres) and produced 47 MBOED net.

Deep Basin

ConocoPhillips is the largest operator and producer in the Deep Basin, located in northwestern Alberta and northeastern British Columbia. As of Dec. 31, 2011, the company held leasehold rights in 2.4 million gross acres (1.6 million net acres) in this area.

The Deep Basin provides production potential from 14 prospective geological formations and is a mature area historically developed with conventional vertical well technology. ConocoPhillips is now shifting toward more horizontal-focused development. The company drilled approximately 23 wells in 2011, of which 12 were horizontal wells with multistaged completion stimulation. In 2011, net production in the Deep Basin averaged 60 MBOED.

The primary processing facility in the Deep Basin is the ConocoPhillips-operated Elmworth Plant. The company holds significant working interests in seven other major natural gas processing facilities in the region.

Kaybob

As of Dec. 31, 2011, the company held leasehold rights in 0.6 million gross acres (0.4 million net acres) in the Kaybob Area, which is situated south of the Deep Basin in west-central Alberta. Target development is in the Jurassic and Lower Cretaceous formations. Net production averaged 43 MBOED in 2011, and the company drilled approximately 13 horizontal wells out of a total of 27 wells drilled.

O’Chiese

The O’Chiese Area is also in west-central Alberta, south of Kaybob. As of Dec. 31, 2011, the company held leasehold rights in 2 million gross acres (1.4 million net acres). ConocoPhillips’ assets in the O’Chiese Area are characterized by multihorizon reservoirs at medium depths ranging from 6,500 feet to 10,000 feet. Net production averaged 43 MBOED for the year.

This is a mature area, historically developed with conventional vertical well technology. ConocoPhillips is currently pursuing more horizontal-focused development and in 2011 drilled approximately 60 horizontal wells out of a total of 64 wells drilled. The company operates several gas processing facilities in the area.

Oil Sands

ConocoPhillips holds approximately 1 million net acres of land in the Athabasca Region of northeastern Alberta. The significant bitumen deposits on these lands are estimated to contain more than 15 billion net barrels of resources, making ConocoPhillips the holder of one of the largest land and resource positions in the region.

ConocoPhillips’ bitumen resources in Canada are produced via SAGD technology. SAGD involves injection of steam into the reservoir, effectively liquefying the heavy bitumen, which then is recovered and pumped to the surface for further processing. .

ConocoPhillips’ net bitumen production from the FCCL Partnership and Surmont SAGD operations has grown by an average of 23 percent over the past three years to 67 MBD in 2011, second among SAGD producers in Canada. ConocoPhillips has a number of ongoing development projects and further opportunities in these assets. Net bitumen production is targeted to double by 2016, with a further doubling from 2016 to 2020, achieving a 17 percent compounded annual growth rate over the next 10 years. Additional opportunities in its portfolio have ConocoPhillips well-positioned to continue as a leading SAGD producer in Canada in the future.

Operator: Cenovus (50.0%)
Co-venturer: ConocoPhillips (50.0%)

In 2007, ConocoPhillips closed on a 50/50 upstream business venture between ConocoPhillips and Cenovus Energy Inc. The partnership includes Foster Creek, Christina Lake, Narrows Lake and other properties located on the eastern flank of the Athabasca Trend. The partnership is progressing expansion plans with an ultimate goal of increasing gross production to more than 650 MBD.1

• Foster Creek
  Gross production at Foster Creek in 2011 increased by more than 7 percent after the project reached royalty payout in 2010, the largest SAGD project in Alberta to achieve this milestone. In addition, a new daily gross production record of 126 MBD was achieved for this field in December 2011. In 2010, FCCL received regulatory approval for Phases F, G and H at Foster Creek. Foster Creek F, G and H were sanctioned in May 2011, with startup for Phase F in 2014. Foster Creek Phases F, G and H are expected to contribute more than 100 MBD.1
• Christina Lake
  Gross production at Christina Lake in 2011 increased by more than 48 percent, and a new daily gross production record of 50 MBD was achieved for this field in December 2011.
  
  Construction of Phase C was completed in 2011, achieving first production, and will ramp up to full capacity in 2012. Construction of Phase D continued, with first production expected in 2012. A regulatory application for three more phases of expansion (E, F and G) was filed in 2009 and received approval in 2011.
  
  Phase E was sanctioned in June 2011, with startup by early 2014. Christina Lake Phases E, F and G are expected to contribute more than 110 MBD.1
• Narrows Lake
  Narrows Lake is an emerging opportunity within the FCCL Partnership. A regulatory application for development of Narrows Lake was submitted in the second quarter of 2010, with potential development in two or three phases. Production at Narrows Lake is expected to be onstream within the next six years and grow to more than 130 gross MBD.1

Operator: ConocoPhillips (50.0%)
Co-venturer: Total (50.0%)

Commercial production from Surmont Phase I began in 2007. In 2011, gross production increased by more than 7 percent, and a new monthly gross production record exceeding 24 MBD was achieved for this field in September 2011.

In 2010, ConocoPhillips commenced construction of the Surmont Phase II Project, with targeted first production in 2015. Gross production at Surmont is expected to exceed 100 MBD by 2017. Further opportunities for expansion are being progressed.

Operator: ConocoPhillips (100%)

ConocoPhillips holds other lands in the Athabasca Trend that contain substantial bitumen resources. These resources are being evaluated using 2-D and 3-D seismic surveys. The resources are expected to be developed using SAGD technology.

Exploration and Business Development

ConocoPhillips has been one of the principal players in the Mackenzie Delta and Beaufort Sea areas since the late 1960s and is the operator of the Parsons Lake and Amauligak discoveries. The company holds interests in 48 significant discovery licenses. At Dec. 31, 2011, the total leasehold for the region exceeded 1.9 million gross acres (1.2 million net acres).

Operator: ConocoPhillips (75.0%)
Co-venturer: ExxonMobil (25.0%)

Discovered in 1972, the Parsons Lake natural gas field is located in the Mackenzie Delta, 45 miles north of Inuvik and about 35 miles southwest of Tuktoyaktuk. Parsons Lake is one of three anchor fields that would produce into the proposed Mackenzie Gas Project. In the first quarter of 2012, the co-venturers elected to suspend capital funding of the project due to a continued decline in market conditions and the lack of acceptable commercial terms. 

Operator: MGM (40.0%)
Co-venturers: ConocoPhillips (40.0%), KOGAS Canada (20.0%)

Discovered in 2004, the Umiak Field is located in the Mackenzie Delta, 75 miles northwest of Inuvik. Umiak is the fourth-largest discovery onshore Mackenzie Delta. Plans to commercialize this discovery will be linked to the progress of the Mackenzie Gas Project and its infrastructure development.

Operator: ConocoPhillips (53.8%) Co-venturers: Chevron (35.4%), ExxonMobil (7.5%), Other (3.3%)

Discovered in 1984, Amauligak is the largest oil and gas field in the Mackenzie Delta and Beaufort Sea areas. It lies approximately 31 miles offshore in shallow water. A range of possible development options is being evaluated. Front-end engineering analysis to assess development options is being initiated in 2012.

Arctic Islands

In the Arctic Islands, ConocoPhillips holds interests in 14 significant exploration licenses. At Dec. 31, 2011, the total leasehold for the region was approximately 400,000 gross acres (176,000 net acres).

In the southern Grand Banks Area offshore Newfoundland, ConocoPhillips holds an interest in two noncontiguous exploration licenses, which total approximately 500,000 net acres. In addition, the company holds a non-operated 35 percent interest in four natural gas discoveries offshore Labrador. Future development of these fields depends on several factors, including continued advancement of industry infrastructure.

Shale Plays

As of Dec. 31, 2011, the company holds 812,000 net acres in the emerging Montney, Muskwa, Duvernay and Canol shale plays in Alberta, northeastern British Columbia and the Northwest Territories. Drilling and seismic activities are ongoing to assess potential.