Saleski Phase 1 Project Application Hydrogeology

Transcription

1 Saleski Phase 1 Project Application Hydrogeology Prepared for: Laricina Energy Ltd. Prepared by: Millennium EMS Solutions Ltd. #, 4 St Edmonton, Alberta T6E 5R December File # -0 Suite 4 Street Edmonton AB Canada T6E 5R Tel: Fax: info@mems.ca

2 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December Table of Contents Page 1.0 INTRODUCTION METHODOLOGY Field Investigations BASELINE SETTING Physiography and Climate Geology Quaternary Deposits Glacial Drift Cretaceous Deposits Colorado Group Grand Rapids Formation Clearwater Formation McMurray Formation Devonian Units Hydrogeology Quaternary Deposits Colorado Group Grand Rapids Formation Clearwater Formation Devonian Units Local Groundwater Users Groundwater-Surface Water Interactions ENVIRONMENTAL ASSESSMENT Potential Effects of the Water Supply Wells on Groundwater Quantity and Levels Description of Potential Effects Effects Analysis Mitigation Potential Effects of the Surface Facilities on Groundwater Quality Description of Potential Effects Effects Analysis Mitigation Potential Effects of the Production/Injection Wells on Groundwater Quality Description of Potential Effects Effects Analysis Mitigation Effects of the Disposal Well(s) on Groundwater Quality Page i -0

3 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December Description of Potential Effects Effects Analysis Mitigation Groundwater Monitoring Program Facility Groundwater Monitoring Program Water Supply Monitoring Program REFERENCES... 1 List of Tables Page Table 1 Stratigraphic Units in the Area of the Project... 3 List of Figures Figure 1 Project Location Figure 2 Well Location Map Figure 3 Drift Thickness Map Figure 4 Bedrock Topography Map Figure 5 Viking (Pelican) Formation Structure Map Figure 6 Grand Rapids Formation Structure Map Figure Upper Grand Rapids Isopach Map Figure Lower Grand Rapids Isopach Map Figure Clearwater Structure Map Figure Water Wells within km of the Project List of Appendices Appendix 1 Appendix 2 Appendix 3 Well Completion and Groundwater Chemistry Summary Tables Alberta Environment Water Well Records Authentication Page ii -0

4 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December 1.0 INTRODUCTION The proposed Saleski Phase 1 Project (Project) will use in-situ solvent-cyclic SAGD technology to recover heavy oil at 1,00 cubic metre (m 3 ) (,00 barrels) per day at full production. The proposed Project includes one well pad with stacked well pairs, a central processing facility (CPF) access road and infrastructure. In addition source and disposal water wells, offsite pipelines and services, tank farm and a waste water treatment plant (WWTP) will be constructed. In the future development, 5 additional well pads with stacked well pairs will be required to maintain the full production. The proposed CPF for the Project (Figure 1) is located approximately 0 km north-east of the community of Wabasca-Desmarais in Section, Townships 5, Ranges 1, West of the 4th Meridian. Note all locations referred to herein are west of the 4 th meridian except where otherwise indicated. The primary zone of hydrogeologic interest for the Project is the Devonian Grosmont Formation. The Grosmont is a regional marine carbonate lying below an average elevation of 20 metres, which is over 300 metres below the ground surface. The purpose of this report is to bring together the geological framework with the information that exists with respect to groundwater conditions that are of environmental significance to the Project. This will provide a concept of hydrogeological conditions as they are currently known and enable an evaluation of potential changes to groundwater conditions from the proposed Project. 2.0 METHODOLOGY The baseline study was completed based on a literature review and field investigations. Key information sources include the following: Well testing and well field design reports for water supply wells installed in the Lower Grand Rapids (Golder 0, 0 & ) and the Devonian Grosmont Formation (Golder, 0); Site specific geological mapping, piezometer data, drill stem test (DST) data and driller s reports provided by Laricina Energy Ltd (LEL); Published regional geological and hydrogeological maps and reports from the Alberta Geological Survey and Alberta Research Council; and Regional water well drilling reports and groundwater chemical analyses from the Alberta Environment (AENV) Groundwater Information Centre. 2.1 Field Investigations Field investigations relevant to this report include the following: Six shallow monitoring wells were installed in February 0 to depths of 4.5 to. m below ground level (including one nested well pair). Hydraulic conductivity testing (falling or rising Page 1-0

5 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December head) was completed and six monitoring events have been undertaken to date at selected locations. Seven shallow monitoring wells were installed in July to depths 4.5 to.2 m below ground level (including two sets of two nested). Hydraulic conductivity testing (falling or rising head) was completed and two monitoring events have been completed. Two source wells were installed into the lower Grand Rapids in February 0 and five additional water supply wells were completed and tested in February and March. Two observation wells were also constructed. Locations of existing monitoring and water source wells in the area of the Project are shown on Figure 2. A summary of well completion information, water level measurements, and summaries of field and laboratory chemistry data are provided in summary tables in Appendix BASELINE SETTING 3.1 Physiography and Climate The ground in the area of the Project slopes generally northeast towards the Athabasca River, which is approximately km to the east at an elevation of roughly 360 metres above sea level (masl). The ground surface in the area of the Project is largely between 600 to 55 masl. Surface water generally drains towards the Livock River or one of the other local tributaries to the Athabasca River. Mean monthly temperatures are below zero from November to March with a mean annual precipitation of 45 mm (Environment Canada; Wabasca station). Precipitation averages less than 50 mm on a monthly basis except for the months of June to August (inclusive) during which almost half the annual precipitation falls. July has the highest average monthly precipitation at 6. mm. 3.2 Geology The region is underlain by an unconformable sequence of Quaternary, Cretaceous and Devonian sediments on the Precambrian crystalline basement. Regional Quaternary deposits are divided into two units; undifferentiated drift deposits that thickly blanket the region and buried channel deposits. Cretaceous units include the Colorado shales, Viking and Joli Fou Formations of the Colorado Group and Grand Rapids, Clearwater and McMurray Formations of the Mannville Group. Uppermost Devonian units include mainly the Winterburn and Woodbend Groups. There are heavy oil deposits in the Grosmont Formation which are the subject of the SC-SAGD operations assessed in this report. A lower unit of the Grosmont Formation is the intended disposal unit for the Project. The stratigraphic units encountered in the area of the Project are summarized in Table 1. A discussion of the geological units is provided in the following sections. Page 2-0

6 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December Table 1 Stratigraphic Units in the Area of the Project Period Stratigraphic Unit Description Thickness (m) Quaternary Undifferentiated Drift Clay till with thin intervals of sand (typically <2 m) underneath CPF Cretaceous Colorado Group Colorado Shale (Base of Fish Scales) Shale 40-0 Viking Formation fine-grained water-saturated sandstone separated by 3-5 m of shale 5-25 Joli Fou Formation marine shale - 16 Grand Rapids Formation Two fine-grained sandstones; both water-saturated - -3 Clearwater Formation Clearwater Shales Shale with thin, silty sands not hydrocarbon-bearing at Saleski 60-0 Wabiskaw Member Interbedded, argillaceous sands and shales; poor quality sands can be bitumen-bearing 30- McMurray Formation Thin sands present only in lows on the Pre-Cretaceous unconformity, thin bitumen-stained silty sands and interbedded mudstones where present 0 Devonian Winterburn Group Nisku Formation Massive dolomite, thinning from west to east; fractured, vuggy and bitumen bearing. to 0 underneath CPF Woodbend Group Upper Ireton Grosmont Formation Lower Ireton Argillaceous dolomite with up to 25% porosity; bitumenbearing Grosmont A, the oldest unit, is water bearing limestone. Grosmont B has poor reservoir quality. Grosmont C and D are porous, bitumen- saturated dolomites. Thick calcareous shale, excellent seal -30 (Devonian subcrop at CPF) A: 40-4 B: C: - D: Cooking Lake Formation Extensive platform limestone and dolomite Leduc Formations Thick porous dolomitized and water bearing Up to 140 Beaverhill Lake Group Non porous shales and limestones of the Waterways Formation and Ft. Vermillion Formation (- m anhydrite) -15 Page 3-0

7 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December Table 1 Stratigraphic Units in the Area of the Project Period Stratigraphic Unit Description Thickness (m) Elk Point Group Muskeg Formation Prairie Evaporite Winnepegosis Formation Contact Rapids (aka Chinchaga Formation) Ernestina Formation Basal Red Beds Granite Wash Largely anhydrite Salt Dolomites Anhydritic dolomites Limestones Shales Sands and shales Quaternary Deposits Glacial Drift In the Project area, approximately 25 to 30 m of drift deposits (Figure 3) overlie the bedrock surface, which is at an elevation of approximately 560 metres above sea level (masl) (Figure 4). The drift deposits are referred to herein as the undifferentiated drift. Drilling within the lease has identified dominantly clay rich materials with intervals of sand or silt. The clay till is typically described as silty and frequently sandy. The sand intervals are fine to medium grained and generally 0.3 to 1.6 m thick. The distribution of these sand intervals appears variable and they are expected to be laterally continuous on a local scale, e.g. less than a kilometre. The maximum depth of drilling by auger methods was.2 m. There are no buried channels beneath the Project area (Pawlowicz and Fenton, 15). The bedrock topography indicates that the Saleski Lease is situated on the side of a regional bedrock high, which contributes to thinner drift deposits within the vicinity of the Lease, relatively to adjacent areas Cretaceous Deposits Colorado Group The Colorado Group includes both upper and lower Cretaceous Formations, the upper Cretaceous La Biche Formation (composed of the Colorado Shale, 2 nd White Specks and Base of Fish Scales) and lower Cretaceous Viking and Joli Fou Formations. Both the La Biche and Joli Fou consist of marine shale. Page 4-0

8 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December The Viking occurs at 40 m asl under the Project (Figure 5). In this area the Viking Formation consists of two distinct wet coarsening-upwards sands with a total thickness ranging from 5 to 25 m. The sands are separated by 3-5 m of marine shale. The lower and thickest sand is gradational with the underlying Joli Fou shale. The upper sand is thinner and poorly developed over the Project area but thickens and becomes better developed towards the west. The sands often contain cemented zones with low porosity Grand Rapids Formation The Grand Rapids Formation begins at an elevation of 444 m asl under the project site (Figure 6). The formation is approximately 0 m thick. The Grand Rapids Formation in the area of the Project generally consists of two coarsening-upward marine shoreface sands, informally named the upper and lower. A third, middle sand that is present to the west in the Germain area (i.e. Twp 5 Rge ) is generally not distinct from the lower sand in the Saleski area. The Upper Grand Rapids Formation is to over m thick and is water saturated underlying the Project (Figure ). The middle sand, where present, reaches only 2.5 m in thickness and is water-bearing. The Lower Grand Rapids Formation is to 40 m thick underlying the Project and is also water saturated (Figure ). The shale at the base of the Upper Grand Rapids is regionally extensive and ranges from 2 to 6 m in thickness. This shale separates the Upper and Lower Grand Rapids sands Clearwater Formation The Clearwater Formation occurs at an elevation of approximately 360 m asl (Figure ). The Clearwater is predominately shale, with occasional thin, argillaceous to silty sands that are not hydrocarbon-bearing in the Project area. The top of the Clearwater Formation has a short, transitional contact with the base of the Grand Rapids Formation. The sequence of marine shales is 60 to 0 m thick. The lowermost part of the Clearwater Formation is the Wabiskaw Member, which directly overlies the McMurray Formation, where present. However, in most of the study area and specifically underlying the Project, the Wabiskaw Member directly overlies the Devonian. The Wabiskaw Member represents a distal marine sequence about 30 to m thick consisting of interbedded argillaceous sands and shales. The lowest unit is a m thick shale that directly overlies the Devonian surface. This unit grades into a m interbedded bitumen-bearing argillaceous sand that shows a weak coarsening upward character and is subsequently capped by marine shale. Although bitumen from the Wabiskaw sand is currently being produced by CNRL and Cenovus to the south using primary techniques in horizontal wells it is not of commercial quality in the Saleski lease. Page 5-0

9 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December McMurray Formation The McMurray is completely absent over the Project area. Where it is present in the region, it occupies lows on the Pre-Cretaceous unconformity and appears as bitumen-stained silty sands and interbedded mudstones less than 5m thick Devonian Units Devonian sediments subcrop against the Cretaceous silts and shales. In the western portion of the Saleski Lease, the subcropping formation is the basal unit of the Winterburn Group, i.e. the Nisku Formation. The Nisku Formation is fractured, has vugular porosity and is bitumen bearing. This unit thins and is absent at the Project Site (i.e. Section -5-1). At this point, the Upper Ireton Formation is the subcropping unit, which itself is completely eroded just east of the Saleski Lease area. The underlying Grosmont Formation is encountered below an elevation of 25 m asl under the project. The Grosmont is known to hold heavy oil deposits in the area. The Grosmont C unit is the targeted bitumen bearing formation of the Project. The reservoir is characterized by a heavily karsted dolomite, fully bitumen charged, with potentially very high bulk permeability. 3.3 Hydrogeology Regional aquifers include the Cretaceous Viking and Grand Rapids Formations, the Devonian Winterburn, Grosmont and Beaverhill-Cooking Lake aquifers or aquifer systems (Bachu et al. 13). The base of groundwater protection is established at an elevation of 2.6 m asl underneath the Project (ERCB, ) and the Grand Rapids Formation is identified as the deepest protected unit. A brief description of the hydrostratigraphy is provided in the following subsections with a focus on the characteristics of the protected aquifer units. Groundwater flow within aquifers above the pre-cretaceous unconformity is expected to be driven by physiography, with recharge in upland areas and flow towards topographic lows. The Athabasca River is a regional low and groundwater flow in units above the Clearwater Formation is expected to be northeastward towards the Athabasca River. Units that play a role in the environmental assessment from a hydrogeological point of view are the glacial drift and the Grand Rapids Formation. Other units consist of heavy shales or lie below the base of groundwater protection. The Devonian is a well-established zone for wastewater disposal both locally and regionally Quaternary Deposits The undifferentiated drift is interpreted to form an overall aquitard based on the predominance of clay till deposits. Rising head and falling head tests in shallow wells (to a maximum depth of 13.3 m) identified hydraulic conductivities of 6 x - to x - m/s. Thin sand units identified have hydraulic conductivities typical of fine sands (2 x - to 3 x -6 m/s). Page 6-0

10 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December Near surface groundwater flow is expected to move generally northeastward, following the overall topography. The water table was found to be shallow, at 0.5 to 1.6 m below ground surface. Three nested monitoring well installations indicate a downward gradient which is calculated from one location as approximately 0.02 m/m. Lateral rates of groundwater flow are estimated to be on the order of millimetres to centimetres per year within the clay till and millimetres per day within the sands. Shallow groundwater chemistry is mainly of the calcium-bicarbonate type, with a few locations (MW06 and MW03-) having groundwater of a sodium bicarbonate type groundwater. Total dissolved solids (TDS) concentration ranged between 300 and 00 mg/l with the higher TDS values encountered in the slightly deeper wells. The sodium bicarbonate samples were slightly more mineralized (i.e. TDS > 600 mg/l) with higher sulphate concentrations and with sodium and TDS concentrations above the Canadian Drinking Water Quality Guidelines ( CDWQG ). Most of the samples have some metal concentrations above the Fresh Aquatic Life Guidelines ( FAL ). These include cadmium (maximum concentration mg/l), chromium (up to mg/l), copper (up to 0.0 mg/l), iron (up to mg/l) and manganese (up to 2.2 mg/l). A few groundwater samples have aluminum and arsenic concentrations slightly above the FAL Guidelines. Hydrocarbons including benzene, toluene, ethylbenzene and toluene (BTEX), fraction 1 and fraction 2 (F1 and F2) were always determined as below the laboratory detection limit. Note that groundwater concentrations in this report are compared to the CDWQG and FAL guidelines for discussion purpose only. Appropriate guidelines for monitoring programs will be identified in the future Colorado Group The La Biche and Joli Fou Formations are interpreted as forming aquitards, whereas the Viking Formation is interpreted as an aquifer. No information is available in the area of the Project regarding the groundwater within the Viking Formation Grand Rapids Formation The Grand Rapids Formation is divided into two aquifers at the scale of the Project, which corresponds to the two sand units. A total of seven water supply wells have been completed in the Lower Grand Rapids sand, which is planned to be the source of water supply for steam generation. Based on a series of pumping tests the transmissivity of the Lower Grand Rapids is established to be from 2.0 x -4 to.0 x -4 m 2 /s with a storativity of 1 x -4 to.3 x -4 (Golder, 0; Golder, ). Given an estimated aquifer thickness ranging from.4 to 5.3 m, the hydraulic conductivity is estimated to range from 4.0 x -6 to 2 x -5 m/s. Hydraulic head measurements from source and observation wells indicate groundwater flow within the Lower Grand Rapids is to the northeast. This is consistent with basin scale interpretations of flow towards outcrops along the Athabasca River. Hydraulic gradients are estimated to be roughly Page -0

11 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December m/m. Groundwater flow rates within the lower Grand Rapids are estimated to be in the order of 1 to 6 metres per year. Groundwater chemistry in the Lower Grand Rapids Formation is of sodium-bicarbonate type groundwater. Sodium and TDS are both above the CDWQG guidelines ranging respectively from 44 to 604 mg/l and from 1 to 10 mg/l. Groundwater is slightly basic with values ranging. to.0 which are within the FAL guidelines, but a little above the CDWQG guidelines (6.5 to.5). Some samples have metals concentrations above the guidelines. All samples have chromium above the FAL guideline. A few samples have arsenic (up to 0.0 mg/l), copper (up to 6.25 mg/l), boron (up to 0.00 mg/l) or lead (up to mg/l) concentrations slightly above the FAL or CDWQG guidelines. Concentrations of hydrocarbons, i.e. BTEX, F1 and F2, were always below the laboratory detection limits for all samples, except at WSW02 in February. During this event BTEX, F1 and F2 were detected in the groundwater but at concentrations below the FAL and CDWQG, except for toluene (0.00 mg/l) Clearwater Formation The Clearwater Formation mainly forms an aquitard with the Wabiskaw Member containing bitumen underlying the Project Devonian Units The Winterburn (Nisku) and Grosmont aquifers are separated by the weak upper Ireton aquitard, but hydraulically connected on a regional scale (Bachu et al. 13). The Grosmont is a regional aquifer that is often used as a disposal zone. The Grosmont A, which would be anticipated to have the best water quality of the potential Devonian aquifers underlying the Project, was determined by Laricina to have a TDS of 2,0 and hardness in excess of,000 mg (CaCO3)/L. 3.4 Local Groundwater Users Well records in the AENV databases were reviewed within a km radius of the lease boundary. Three wells were identified within the search radius (Figure ); two of these are completed in surficial sands and/or gravels at depths of 13.4 and 25.6 m (Appendix 2). The third well is completed in sandstone bedrock at a depth of 45. m. Both surficial wells are indicated as for industrial purposes, but as no licenses are on record for these locations it is assumed that neither is in use. No licence is on record for the bedrock well; however it is indicated as for domestic use and may not require a licence. Two other records for chemistry reports correspond to the location of the bedrock well and may correspond to this or other wells not on record at this location. 3.5 Groundwater-Surface Water Interactions Shallow groundwater flow follows topography to the east and northeast. The closest surface water drainage is located 400 m downslope from the Plant site. Page -0

12 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December The undifferentiated drift and Colorado shales combine to form a thick aquitard separating the surface from the underlying Cretaceous aquifers and effectively limit groundwater interaction between these zones. The Cretaceous aquifers (Viking and Grand Rapids) are anticipated to discharge along their subcrop edges, located to the east or northeast along the Athabasca River valley in the case of the Grand Rapids Formation. 4.0 ENVIRONMENTAL ASSESSMENT 4.1 Potential Effects of the Water Supply Wells on Groundwater Quantity and Levels Description of Potential Effects The water demands for the Project include mainly start-up and make-up water for steam generation with some additional water required for utility and domestic water. Water requirements are to be sourced from groundwater supply wells installed in the Lower Grand Rapids Formation. Domestic and utility water demand, including potable water, is estimated at approximately 2 m 3 /d. The water use requirements for the Phase 1 Project are estimated to be, at steady state operations, an annual volume of 2,5 m 3. During the first year, higher volumes of water are expected to be needed. The make-up and utility water use will average 1,300 m 3 /d over the first year, starting at 1,500 m 3 /d and declining to 53 m 3 /d by the end of the year. Laricina currently holds a Licence to Divert Water under the Water Act for the use of 401,000 m 3 annually (.6 m 3 per day) from the Grand Rapids Formation for the purpose of industrial (injection) activity (AENV, ). This water supply is planned to meet the projected demand of the Saleski Pilot Project of 00 m 3 /day plus 150 m 3 /day as backup. Once water use at the Pilot Plant has stabilized following start up conditions, it is anticipated that the existing license would be nearly capable of also meeting the steady state conditions of the Phase 1 Project. Additional wells are not currently anticipated to meet the start up and steady state demand of the combined water use requirements of the projects. The evaluation of the Lower Grand Rapids Formation as a water source included a review of alternate water sources. Consideration in this review was given to the Water Conservation and Allocation Guideline for Oilfield Injection (AENV 06) in which non-saline groundwater use for enhanced recovery is to be reduced or eliminated. Saline groundwater is typically considered the most feasible alternative to non-saline groundwater use, particularly in areas that are largely undeveloped such as near the Project. The review identified that saline groundwater sources are only present within Devonian units and that the water quality was sufficiently poor that it would not be economically viable to use a Devonian water source to support the Project. Page -0

13 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December Effects Analysis Pumping of groundwater from a supply well causes the formation pressure to decrease. This decrease in pressure spreads outwards over time as a cone of depression. The reduction in formation pressure could reduce available production for other wells that are completed in the same formation and could also induce seepage from hydraulically-connected surface water bodies or other aquifers. The bedrock well identified in the review of water well records is approximately km from the Project. Assuming this well is hydraulically connected; at this distance the reduction in available head is anticipated to be less than % (Golder ), which is unlikely to impact the production from that well. The presence of overlying aquitards will prevent any measurable interaction with surface water bodies and the distance to the Athabasca River is comparable to the bedrock well; therefore there will not be a substantive reduction in groundwater discharge to the river. The Oilfield Injection Policy (AENV 06), non-saline groundwater use for oilfield injection is limited to % of available drawdown within the first year and 50% over the life of the project, as measured at an observation well 150 m away from the production well. The drawdown calculations completed for the existing production wells indicate that these conditions will be met (Golder ). Two observation wells are installed and will be utilized for collecting water level data to verify these predictions. Any additional wells will be similarly evaluated and further monitoring locations established as appropriate considering the well field distribution Mitigation Future mitigation could include the adjustment of production rates or locating alternative water sources, if required. 4.2 Potential Effects of the Surface Facilities on Groundwater Quality Description of Potential Effects Details on the infrastructure and facilities are provided in the Saleski Phase 1 Project Application ( the Project Application ) Section 2 Project Description. The following is a summary. The infrastructure will include the CPF, which includes a fluid handling and treatment unit, a product storage unit, a water handling unit, a steam generation unit and some utilities and associated facilities. Other facilities include the well pads with horizontal well pairs (injector and producer), source water and disposal wells, offsite pipelines and services, tank farm and waste water treatment plant (WWTP). The Site will also comprise a flare system for emergency relief. The well pads will have stacked well pairs drilled from two rows. Drilling fluids will be reused to minimize the disposal volume. At the end of drilling, the mud will be stripped and the water treated and tested before being pumped off. The solid waste resulting from stripping will be disposed in a Class II landfill. Page -0

14 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December During SC-SAGD operations, produced fluids from the production wells will include bitumen, produced water (formation and condensed steam), solution gas (some produced as casing gas, some produced with emulsion), and solvent (propane and diluent). The Central Processing Facility (CPF) site will be graded to have an average slope of approximately 1.% and surface runoff will be collected in the storm water retention pond located on the northwest corner of the CPF. Access roads, berms, ditches and culverts will be used to divert water outside the process area and within the process area, to the runoff pond. Water from the storm water retention pond will be released to the environment (after being tested) or re-used in the SC-SAGD process. All well pads and roads will be designed to prevent erosion from surface water runoff. The facilities or locations where fluids are handled, transferred or stored include the heads of the production and the disposal wells, the blowdown tank, glycol coolers, the tank farm and the oil/water separation equipment. Storage tanks for the Project include those for glycol, diluents, dilbit, slop oil, separation of hydrocarbons and solids from produced water (skim tank), produced water, potassium permanganate, sodium hypochlorite, caustic soda, hydrochloric acid, and filming amine. All storage tanks, except boiler feed water tanks and source water tanks, will be equipped with secondary containment and leak detection to minimize the occurrence of product leaks. A berm will be constructed at the perimeter of the tank farm, containing bitumen, diluent and produced water tanks, to prevent releases into the environment in the event of a tank failure. A flare system composed of a knockout drum and a flare stack will be provided for emergency relief. All liquids from the flare knockout drum will be recycled to the slope tank for reprocessing. Diluent required for treatment, blending and the bitumen recovery process will be trucked in and the diluted bitumen (dilbit) will be transported out via underground pipeline. Domestic wastewater associated with the Project operations will be treated in a waste water treatment plant (WWTP). During normal operations the treatment system will be sized to treat 15 m 3 /d. During the construction phase ( months) a separate WWTP will be constructed with a total treatment capacity of 5 m 3 /d. The WWTP will be designed in accordance with applicable regulations. Sewage from the various buildings will be collected and trucked off site to disposal facilities. Domestic garbage will be taken from the plant site by a commercial disposal company. During the plant operations, oily rags and other waste will be placed in containers and emptied as needed by a commercial disposal company for off-site disposal at an approved landfill. As a result of best management practices and material handling methods, there should be no possibility for potential impacts to shallow groundwater quality, except through accidental spills or leaks. These accidental releases may allow fluids to seep into the ground where they could impact Page -0

15 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December shallow groundwater quality. These fluids include bitumen, produced water and small volumes of various process-related organic chemicals such as glycol, lubricants, etc Effects Analysis The CPF is located in an area of up to 30 m of undifferentiated drift composed predominantly of clay till (Section ). Groundwater flow rates area expected to be generally slow within the undifferentiated drift deposits; even within the fine sands, groundwater flow rates are estimated at no more than millimetres per day. This will act to retard any movement of spilled liquids and allow time for clean up and remediation. There are no Quaternary groundwater users within km of the Project and therefore no impacts to other groundwater users are expected. The closest surface water body is approximately 400 m downslope of the CPF footprint. The mitigation measures and material handling methods described in Section will prevent or minimize the potential for accidental leaks or spills. Groundwater monitoring will be implemented to enable early detection of any impacts to groundwater quality (Section 4.5). In the event that an impact on groundwater quality is detected, a groundwater response plan will be implemented. This response plan will include determining the magnitude of the impact and mitigation of any plumes of environmental significance. The response plan will be effective at avoiding a significant effect on groundwater quality and preventing impacted groundwater from reaching surface water bodies. As a result, potential impacts to groundwater quality resulting from operation of the surface facilities are considered low Mitigation Mitigation measures for minimizing or preventing adverse impacts on shallow groundwater quality due to spills or leaks include industry-standard operating practices, preparedness for upset conditions and appropriate management of upset conditions. 4.3 Potential Effects of the Production/Injection Wells on Groundwater Quality Description of Potential Effects The main areas of concern with respect to the SC-SAGD production and injection wells are; The integrity of the production/injection wells and potential for well bore fluids to penetrate non-saline aquifers; Thermal effects along the well bores that could cause mobilization of metals within groundwater; and The potential for failure of the cap rock and fluids associated with the steam chamber to be mobilized into adjacent non-saline aquifers. Page -0

16 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December The bitumen-water contact is below the base of the reservoir and indications are that any water present is expected to be saline. A swab sample from the Grosmont A, which is deeper than the reservoir within the Grosmont C & D, was found to have a total dissolved solids concentration of 2,0 mg/l. Considering the lack of groundwater associated with the bitumen and the expected saline groundwater quality, bitumen production does not present a risk to any directly associated aquifers. The planned drilling, completion and operational details for the production and injection wells have been provided in Section 2 of the Project Application and summarized briefly in the following; Surface casing will be set below the base of groundwater protection at an elevation of 2.6 m asl and the intermediate casing will be installed to the point at which horizontal drilling will commence. Both the intermediate and surface casing will be cemented in place with thermal cement. The intermediate casing strings (placed between the land surface and the bitumen-recovery zone) in the production and injection wells will not be subjected to abnormal pressures because tubing is used to conduct fluids into or out of these wells. The maximum injection pressures will be below the formation pressure determined as the weight of the associated overburden above the top of the Grosmont D, thus providing an adequate safety measure below the regional fracture gradient. During operations, the well pressures, temperatures and steam flow rates will be monitored to supervise casing integrity. The construction and operational monitoring of the production and injection wells will minimize the potential for damage to casing integrity. Thermal changes along the well bore of the injection wells have the potential to locally alter groundwater chemistry in non-saline aquifers due to the response of geologic materials to heating along the well bore. Dissolution of minerals resulting in increased concentrations of dissolved arsenic in the area of a thermal plume has been observed in Quaternary deposits in the Cold Lake area, but not yet identified in the Athabasca Oil Sands area or in Cretaceous units. The lifetime of each well pair is anticipated to be to years, following which temperature conditions would return to baseline Effects Analysis In view of the design and operational factors, the operation of the production and injection wells should not have any effect on the chemical quality of the groundwater in non-saline aquifers due to failure of the well casing. In addition, failure of the cap rock is considered unlikely. Operational monitoring would identify any upset conditions at which time the groundwater response plan would be implemented if potential risks to non-saline aquifers were identified. Page 13-0

17 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December The changes in temperature along the well bore are expected to be localized as would any changes in groundwater chemistry due to the potential dissolution of minerals if it occurs at all. Groundwater monitoring will be implemented to enable detection of any impacts to groundwater quality in nonsaline aquifers (Section 4.5) Mitigation The design measures and operational monitoring noted above and in the Project Application should be effective at preventing adverse impacts to groundwater quality in non-saline aquifers. 4.4 Effects of the Disposal Well(s) on Groundwater Quality Description of Potential Effects Two disposal wells are proposed for the Project. The Grosmont A has been identified as the disposal zone for the Project. The Grosmont and overlying Devonian aquifers are saline and separated from the non-saline Cretaceous aquifers by the thick Clearwater aquitard. The Alberta Energy Resources Conservation Board (ERCB) process for approval of disposal wells is a separate process that will take place only after any approval is issued under this current application. Wastewater disposal wells are common in Alberta and the ERCB has a rigorous application process along with guidelines on operation. Typically the process is as follows: Drill through the drift deposits into bedrock. Land surface casing to the base of groundwater protection (i.e. the Grand Rapids). Drill a testhole and determine a prospective zone through logging and drill stem testing. Land and cement main string casing through the prospective zone and perforate the casing within the zone Conduct injectivity test(s) to confirm the capacity of the zone Apply for ERCB approval Run tubing with packer(s) into the main string casing isolating the disposal zone Put rust-inhibiting liquid in annulus above the upper packer between the tubing and the main string Inject through the tubing into the disposal zone. Operating requirements are likely to specify that: Injection pressure is not to exceed a specified amount to avoid fracturing the rock in the injection zone. Monitoring the annulus pressure to warn of packer or tubing failure Page 14-0

18 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December Effects Analysis The probability of an adverse effect of injection is minimal. The reasons for this are as follows: Injection pressures are limited to below rock fracture pressure therefore the probability of escape of liquids through this mechanism is very low. If the packer or tubing should fail the injection pressures will be transferred into the casing annulus. Regular monitoring of the casing annulus pressure will observe this quickly, and if it occurs, the well will be shut in. Since the main string casing above the tubing packer is not subject to internal injection pressures and contains rust inhibiting liquid, the probability of it having a leak is minimal. An additional level of protection is the surface casing, which lies outside the main string casing, to the depth of groundwater protection. This provides additional protection against leaks into non-saline groundwater resources. The probability is low that wastewater injection will have an impact on groundwater Mitigation Appropriate mitigation will be determined with regulator involvement if a leak or other incident occurs. 4.5 Groundwater Monitoring Program This document has demonstrated the absence of non-saline aquifers in contact with the SC-SAGD zone. Therefore, the (draft) Policy for Assessment and Management of non-saline Groundwater in Direct Contact with Bitumen for In Situ Oil Sands Operations does not apply to this project. Groundwater monitoring program for the Saleski Project will have the following main purposes: to detect any impacts on the shallow groundwater quality resulting from spills or leaks from surface facilities at the plant site; to identify any changes of groundwater chemistry in the shallow groundwater zones associated with the steam injection wells; and to evaluate the performance of the water supply wells in the Grand Rapids Formation. The details of the monitoring programs for the Project will be the subject of: The EPEA Approval coming out of this amendment application, or The Water Act (in the case of the supply wells). This section outlines the principles of the proposed monitoring programs. Laricina understands that the existing groundwater monitoring program for the Pilot Project will need to be updated to address the proposed Project facilities. Page 15-0

19 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December Facility Groundwater Monitoring Program A groundwater monitoring network will be installed at the CPF. Currently two wells are installed at the proposed CPF site. Additional wells will be installed once the plant is fully built. The Pilot Plant site contains a network of nine wells and a groundwater monitoring program has been approved for the Pilot facility. This monitoring program will be expanded to include the proposed Project facilities. The groundwater monitoring network will focus on the more permeable zones within the shallow undifferentiated Quaternary drift deposits. Monitoring wells will be located mainly downgradient of potential sources of accidental releases with at least one upgradient monitoring well to provide both vertical and lateral delineation of the geology and hydrogeology. Wells will be monitored for groundwater levels and groundwater chemistry prior to the initiation of steaming to provide baseline groundwater conditions and on a regular basis, biannually, during operations. Monitoring parameters will include routine chemistry, hydrocarbons, dissolved metals and selected organics. Discussion regarding the baseline chemistry was provided in Sections and Results from the biannual monitoring program will be compared to the established baseline conditions. If results are within acceptable range as defined in the program, no actions will be taken. If results are outside the acceptable ranges a series of actions will be taken to establish whether this is a real trend or whether this a monitoring or laboratory error. In case of a real trend, the Groundwater Quality Contingency Plan (as defined in the Annual Groundwater Report) will be implemented Water Supply Monitoring Program Seven water source wells, including two standby wells, have been completed in the Lower Grand Rapids to supply water for the project. Two observation wells were also completed in the Lower Grand Rapids to monitor the effects of pumping on the aquifer. During operations, monitoring will include daily measurement of the total number of cubic metres of water diverted from each production well, and water levels in each of the production and observation wells. An annual water sample will be analyzed for the following parameters: total dissolved solids (TDS), hardness, alkalinity, ph, calcium, magnesium, sodium, potassium, carbonate, bicarbonate, sulphate, chloride, nitrate, iron and any additional parameter specified in the license. Monitoring and sampling results will be reported on a timely manner, at the end of the month after each event. In addition, results from ongoing monitoring will be reviewed and analysed to evaluate the aquifer performance and provide recommendations for responsible management of the groundwater supply. These results would be reported to AENV on an annual basis. Page 16-0

20 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December 5.0 REFERENCES Alberta Environment (AENV). 06. Water Conservation and Allocation Guideline for Oilfield Injection. Alberta Water Well Information Database (AENV). Accessed at on October. Alberta Environment (AENV).. License to Divert Water, License # Bachu, S., J.R. Underschultz, Brian Hitchon and D. Cotterill. 13. Regional-Scale Subsurface Hydrogeology in Northeast Alberta. Alberta Research Council. Bulletin 61. Energy Resources Conservation Board (ERCB). Base of Groundwater Protection Tool. Accessed at on October,. Environment Canada. Canadian Climate Normals 00. Accessed at on June, 0. Golder Associates Ltd. November 0. Information Review Groundwater Source and Wastewater Disposal Potential, Proposed Saleski SAGD Pilot Plant Facility W4M. Prepared for Laricina Energy Ltd Golder Associates Ltd. May 0. Well Testing Report Saleski Pilot Facility ( W4M) Lower Grand Rapids Water Source Wells Wabasca-Desmarais, Alberta. Prepared for Laricina Energy Ltd Golder Associates Ltd. July 0. Saleski Source Water Well Field Design, Laricina Saleski Pilot SAGD Project. Prepared for Laricina Energy Ltd Golder Associates Ltd. June. Saleski Source Well Investigation Well Testing Report. Laricina Saleski Pilot SAGD Project. Prepared for Laricina Energy Ltd Pawlowicz, J.G and M.M. Fenton (15): Bedrock Topography of Alberta. Alberta Geological Survey Map No. 6, August. Page 1-0

21 Laricina Energy Ltd Saleski Phase 1 Project Application Millennium EMS Solutions Ltd. December FIGURES Page 1-0

22 Main Menu Namur Lake T6 Main TOC Bitumount I ei River ge Search L T5 Fort McKay ive r T4 Area Enlarged ay Riv e Ell s R Mc K T3 r Mildred Lake Du kr r Rive T1 r as ca R b an i ve nk irk r Chipewyan Lake Wa b S te ep Tar Island T2 EdmontonChipew y an Rive i v er Calgary T0 Medicine Hat Lethbridge Ft. McMurray Cl rw ea T T TBu Tepee Lake p Tee ee Cr ) Cr ee Rive r Ho r s e k T5 ab a s T4 ca R R R R R R R1 R1 iver R16 R15 R14 R13 R R W4M R R ³ ² 63 T2 N. Wabasca Lake T1 Wabasca-Desmarais H o us e R iv er U V 54 Mariana Lake T0 S. Wabasca Lake hr C Wabasca IR T n i ve Sandy Lake i s ti ar r Map Document: (K:\Active Projects \AP -001 to -050\-0 Saleski\Final Docs\GW\Fig 1 Project Location Map.mxd) 02// -- 2:0:2 PM ffalo A th u t Ri v e r Tro r ve Ri wa k s R25 Mu 6 T6 eek Pelican Lake Sandy Lake P elica n R U V r ive T Pelican Portage T 13 LAC LA BICHE COUNTY MD OF LESSER SLAVE RIVER T6 Rock Island Lake Legend PROJECT: Proposed CPF Location Saleski Lease Area Topography (masl) Laricina Energy Ltd. Saleski Phase 1 Project High : 00 First Nations Land Low : Kilometres 36 iv er ³ ² MD OF OPPORTUNITY te rr a RM OF WOOD BUFFALO TITLE: Project Location Map DRAWN: SL CHECKED: NG DATE: Dec 2/ PROJECT: -0 FIGURE: 1

23 W4M in TOC R1 earch R in Menu I T6 616 T ! < WSW 1 OBW 13-! ( WSW 05-0-Q Well Pad 4! < MW-QS MW-QD! ( CPF Well Pad 2 Well Pad 5 WSW 0- Well Pad 6! < P OBW r! < k e iv 54 vo Li R MW06-0 MW06-56! ( WSW 14- WSW 2!! (! ( < MW03-4 MW ! ( 626 WSW 13- Well Pad 1 Well Pad 3 MW02-5! <! < < MW0-05!! P MW01-5! < MW05-05 MW Q 5 4! < Map Document: (K:\Active Projects \AP -001 to -050\-0 Saleski\Final Docs\GW\Fig 2 Well Location Map.mxd) 14// -- ::52 AM! < WSW -26! ( Legend PROJECT:! <! P Monitoring Well Project Footprint Contour (2m interval) Observation Well Pilot Plant Development Streams with Defined Channels! ( Water Source Well Approved Resource Development Area (Approval B) Drainages without Defined Channels Amended Resource Development Area REF: Laricina, November ; DEM from Geobase, 4A06e, 4A0w, 1:50K; Hydrology from NHC,. Waterbody Laricina Energy Ltd. Saleski Phase 1 Project Metres 1,0 TITLE: Well Location Map DRAWN: SL CHECKED: NG DATE: Dec 14/ PROJECT: -0 FIGURE: 2

24 I R R1 R1 W4M T T River 25.6 Map Document: (K:\Active Projects \AP -001 to -050\-0 Saleski\Final Docs\GW\Fig 3 Drift Thickness.mxd) 14// -- :55: AM Livock REF: Laricina, 0; ; Hydrology from NHC,. Legend ª Well Site Lease Boundary Project Footprint Pilot Plant Development TITLE: Drift Thickness Map PROJECT: Contour (2m interval) Streams with Defined Channels Waterbody Laricina Energy Ltd. Saleski Phase 1 Project Kilometres DRAWN: SL CHECKED: NG DATE: Dec 14/ PROJECT: FIGURE: 3 T