Canada Strategic Performance Unit Gas Operations. Verified Site Report: 2008

Canada Strategic Performance Unit Gas Operations Verified Site Report: 2008

BP Canada Energy Company is part of the BP p.l.c. group of companies. BP is one of the world's largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items. BP Canada explores for, develops, produces and processes natural gas. We also market natural gas and natural gas liquids (NGL). Through our Western Canadian facilities, we produce over 300 million cubic feet of natural gas and trade over 130,000 barrels of NGL each day. Our success comes from the enthusiasm and dedication of our nearly 1,500 employees. Headquartered in Calgary, Alberta, we are active in four provinces and the Northwest Territories, while our marketing and trading activities span the nation and expand into the US. 3 Foreword 4 Introduction 5 Description of our operations 6 Management systems 7 How we identify and manage environmental impacts 8 Our aspects and performance 9 Climate change and energy consumption 11 Air emissions (other than GHG) 12 Spills 13 Waste 14 Regulatory compliance 15 Physical and ecological impacts 17 Water 18 Personal safety performance 20 Communities 21 Glossary Verification Statement: Matrix Solutions Inc. was commissioned to undertake independent verification of the data provided in the 2008 Verified Site Report for the BP Canada Strategic Performance Unit Gas Operations. Data verification activities included sampling of information and data in the 2008 Verified Site Report. The verification process included reviews of documentation provided by BP, access to publicly available websites containing relevant information, and discussions with BP personnel. Substantiation of a sample of statements and claims made in the report has been undertaken and evidence sought where deemed appropriate. Ultimately, the report as well as the health, safety and environmental performance of Gas Operations remain the responsibility of BP Canada Energy Company. The verification was completed by a Professional Engineer and Certified Environmental Auditor familiar with BP operations. Matrix Solutions Inc. is of the opinion that the data presented in the report accurately reflect the observations made during the on-site verification process on December 10, 2009. www.bp.com/canada

Forward At BP Canada Energy Company, we strive for continuous improvement in our performance: We aim to be better each year than we were the year before as we work towards our goal of no accidents, no harm to people and no damage to the environment. We are guided in all of our decisions by BP s determination to be a progressive, responsible, innovative and performance-driven operator. This means that: We value the communities in which we operate. We value the dedication and expertise of our employees. We value the best practices shared by others. We value and respect the natural environment and strive to reduce the risk of detrimental impacts from our activities. This Verified Site Report outlines the environmental management system in place for BP Canada s Gas Operations, which includes our well sites, associated gathering systems and plants. In the following pages, you will learn about the scope of our upstream operations, and about the challenges and successes that characterized our health, safety, and environmental performance during the period January 1 to December 31, 2008. Within Gas Operations, environmental performance is at the forefront when planning our activities, with emphasis on greenhouse gas management, waste reduction, spill prevention, and regulatory compliance. We strive to ensure a safe work environment for everyone at our sites, everyday, and we seek ways to ensure that our presence has a positive impact on the communities in which we operate. This report is both a look back at a year in the life of Gas Operations, and a look ahead to what comes next. When it comes to forward planning, we know that the right thing to do as a responsible operator is to keep our focus on some key goals: Keep people safe, keep the environment safe, and keep looking for ways to do our jobs better as we help to meet future demand for reliable energy. Randy McLeod Vice President, Operations Among the successes for 2008: continued reductions in greenhouse gas emissions and the introduction of a standardized Operating Management System (OMS) across our operations. Among the challenges: looking for new and innovative ways to continue reducing emissions, waste, and releases of hydrocarbons. Where we have made mistakes, we strive to correct them in a timely manner and prepare action plans to prevent recurrence. Where we have made significant achievements, we consider how to build on those successes to improve performance even further. This report is part of our commitment to openly report our environmental performance good or bad to stakeholders and interested parties, and reflects the value we place on social responsibility and sound stewardship. Verified Site Report: 2008 3

Introduction Environmental protection is critical to the Gas Operations of BP Canada Energy Company. The basis of our commitment is described in the Health, Safety, Security and Environment Policy below: BP Canada SPU Exploration and Production Health, Safety, Security and Environment Policy Our goals are simply stated: no accidents, no harm to people and no damage to the environment Everyone who works for or on behalf of BP Canada SPU - Exploration and Production is responsible for health, safety, security, and the environment (HSSE). Making this a priority in our everyday performance is critical to our individual success and the success of our business. Our goals are simply stated: no accidents, no harm to people and no damage to the environment. In addition, prevention of pollution, management of natural resources for sustainability and continual improvement are vital components and key to our success. As a team, we will set and review objectives and targets as a part of continual improvement to drive down HSSE impacts of our operations by reducing waste, emissions and discharges, using energy efficiently, and assuring a safe work environment for our workforce. We are committed to: systematically manage our operating activities to continuously reduce risk and deliver performance improvement. comply with relevant legislation and regulations, and with other standards to which the Canada SPU subscribes; consult, listen and respond openly to customers, colleagues, neighbours, public interest groups and those who work with and on behalf of us; work with others - partners, suppliers, competitors and regulators - to raise the HSSE standards of our industry; openly report our HSSE performance, good and bad; recognize those who contribute to improved HSSE performance. continuously improve our performance by improving the leadership, capability and capacity of our organization. As employees, contractors, managers and leaders of BP Canada SPU, we are committed to making this HSSE Policy our priority. President and CEO - Anne Drinkwater BP Canada SPU January 1, 2009 XGS/posters.Feb.09 4 Canada Strategic Performance Unit Gas Operations

Description of our operations The BP Canada Strategic Performance Unit (SPU) explores for, develops, produces, and processes natural gas and liquids in the Western Canada Sedimentary Basin where we produce over 300 million cubic feet of natural gas a day. In addition to conventional production we also seek out unconventional gas production from tight gas formations. Approximately 350 people are employed with the SPU s Gas Operations in Alberta and British Columbia. Our operations include both sweet and sour gas operations composed of wellsites, gathering systems, pipelines, compressors, facilities and other infrastructure that are located as shown in Figure 1. BC Operating Centre Alberta Alberta British Columbia Canada NW Operating Centre East Operating Centre Fort St. John Noel Ojay Valhalla Marten Hills Grande Prairie S. Wapiti Bigstone Pine Creek Leismer St. Lina Kirby operating area community British Columbia West Central Operating Centre Ricinus Sundre Edmonton Red Deer Lanaway Garrington Calgary Mist Mountain Figure 1: Canada SPU Gas Operations Production Assets Verified Site Report: 2008 5

Management systems BP Canada began the implementation of its Operating Management System (OMS) at the Gas Operations sites in 2008. OMS is a global BP framework that defines a set of operating requirements. It sets out a systematic way to improve local business processes to deliver these requirements. When fully implemented, it helps to deliver safe, responsible and reliable BP operating activity and enables continuous performance improvement. Sites and businesses within BP use management systems to set priorities and manage risk. The OMS builds on and is replacing our existing Getting HSSE Right system by setting out BP s principles for operating and providing a framework to help deliver the essentials, then excellence, in operating. The OMS framework operates by applying the Performance Improvement Cycle to local business processes. This is developed, implemented and sustained locally. The local OMS translates business needs, relevant legal and regulatory requirements and OMS requirements into practical plans to reduce risk and deliver strong, sustainable performance. The system s elements of operating describe eight dimensions of how people, processes, plant and performance operate within BP. The OMS performance improvement cycle defines six steps of local business processes, that drive change to, and improvement of, local business processes to deliver the elements of operating. Informs Leadership Organization People Results Optimization Performance Plant Privilege to Operate Assets Process Elements of Operating Risk Procedures Delivers Within the OMS Elements of Operating it is mandated that major operating sites maintain external ISO 14001 certification. ISO 14001 is an international standard consisting of a set of requirements for Environmental Management Systems (EMS). The system is built on our three fundamental commitments: To meet or exceed legal requirements and industry standards. To prevent pollution. To continually improve. The keys to a successful EMS are to have the commitment of senior management and the involvement of operations personnel. Environmental management is the responsibility of all our employees, not just environmental specialists. Overall responsibility for coordinating the implementation and maintenance of the EMS rests with the leadership team. The HSSE manager is responsible for reporting environmental performance to the leadership team. At the site level, Management System Coordinators have responsibility as representatives for their site EMS, reporting on results to the site management team. The EMS is based on the ISO 14001 plan-do-check-act cycle, which is also fully incorporated into the OMS Performance Improvement Cycle. Facilities within Gas Operations are collectively managed under one ISO 14001 registration. The production facilities within these areas are audited internally by BP Canada personnel to verify conformance to the ISO 14001 Standard. Production facilities within the scope of the Gas Operations registration are sampled for conformity through third-party audits conducted on an annual basis, with re-certification occurring on a three-year audit cycle. Alberta assets have been externally audited against and exhibit conformance to the ISO 14001 Standard. British Columbia operations are currently outside of the ISO 14001 certification, however they have implemented a similar EMS but have not yet been incorporated into the umbrella certificate. Currently, BP s HSSE policy and EMS conform to the requirements of the ISO 14001:2004 Standard. Intent Risk Assessment & Prioritization Planning & Controls Management Review & Improvement Implementation & Operation Local Business Processes Measurement, Evaluation & Corrective Action Applied to OMS Performance Improvement Cycle Business Processes 6 Canada Strategic Performance Unit Gas Operations

How we identify and manage environmental impacts We identify the potential environmental impacts associated with all activities conducted in each of our operating centres. The significance of these environmental impacts is ranked and recorded in lists called Environmental Aspects Matrices. For each identified environmental aspect, an impact rating is calculated using the following criteria: potential scale of environmental impact, probability of impact, potential regulatory/legal exposure, potential public concerns, and other factors such as cleanup cost, operational controls, history, mitigating factors, etc. The ratings are used to assess priorities when we are setting targets for improvement. The lists are reviewed and revised periodically. For each identified significant environmental aspect, we document plans and processes to eliminate or control potential impacts. The plans include processes to monitor the effectiveness of our mitigation measures to eliminate or control potential impacts and instructions for employee training, and responding to emergency situations. Our aspects This section describes significant environmental aspects identified through the risk ranking process at our Gas Operations and the environmental management plans that are developed to improve our performance. The highest ranked environmental aspects in 2008 for Gas Operations were: Emissions to air. Spills (hydrocarbons, chemicals and produced water). Waste generation. Regulatory compliance. Additional issues identified through the risk-ranking process and managed through various programs include: Physical and ecological impacts. Water use and discharge. Interactions with local communities. Our operations manage the important environmental aspects of our activities through engineered controls, equipment, detailed work instructions for staff and contractors, training, setting targets, and learnings from incident investigations to prevent future incidents. Engineered controls and automated monitoring: Equipment and processes are designed to maximize environmental protection. Sites use computerized maintenance management systems to schedule safety, environmental, and regulatory tasks and monitoring. A variety of monitoring systems are in place, including automated monitoring at some facilities. This monitoring equipment is calibrated and tracked through the maintenance management system. Work instructions: Environmental procedures are documented and available to all personnel. Additionally, OMS standards, such as the flaring and venting standard, are developed to provide guidance on completing work tasks safely, while reducing our impact on the environment. Verified Site Report: 2008 7

Objectives and targets: Environmental objectives and targets are in place at the local operating level. Objectives and targets are set by the leadership team (including the Vice President HSSE), with input from Operations and HSSE personnel to help BP meet its global goals and manage high-ranked environmental aspects. A key goal of the Canada SPU is to be a recognized industry leader in environmental protection and long-term sustainability within the areas in which we operate. Specific environmental objectives within Gas Operations for 2008 included: 1,600 e 3 m 3 reduction in fuel gas usage, contributing to greenhouse gas reductions. 10-15% reduction in the number of spills from previous year results, with varying specifics dependent on each operating centre. Maintain 100% regulatory compliance. Waste did not have a volumetric target in 2008. The focus was directed towards setting high expectations in our operational practices, training and record keeping to ensure waste is managed in an efficient, reliable, and compliant way. Champions from each Operating Centre are identified for the high-ranked aspects and responsible for developing and managing an Environmental Management Program (EMP) to assist in meeting the respective target. Actions are assigned and documented in the EMP and reviewed regularly to ensure progress is being made towards meeting the targets. At the end of each year the EMPs are closed out, reviewed with leadership and documented as to whether the targets were achieved. Investigations: Investigations may be initiated at the SPU or local level, depending on the scope of information required. They identify a root cause(s) as well as underlying factors that contributed to an incident. As a result, appropriate actions are developed and assigned to prevent future occurrences. Lessons learned from the investigation are shared accordingly. Performance: Performance is tracked through monthly scorecards that are maintained separately for each Operating Centre, all Gas Operations, and at the SPU level. The targets are compared and evaluated as satisfactory, unsatisfactory, or at-risk. Many of these measures are also reported to BP s corporate environmental team for tracking. The efficiency and effectiveness of the EMS System is evaluated within all levels of the organization. EMS Management Review Meetings are held at each Operating Centre, a minimum of twice per year with site management. EMS Management Review Meetings are also held with senior management for Gas Operations twice per year, reviewing combined information from all the Operating Centres. The meeting agenda includes the requirements from the ISO 14001:2004 Standard including: Overall suitability and effectiveness of the EMS. Key performance indicators. Development and advancement of objectives, targets and action plans. Status of corrective and preventative actions. Summary of internal/external audit and inspection results. Views of interested parties public and regulatory concerns. Changes to legislation. Follow up actions from previous management reviews. Recommendations for improvement. Confirm priorities. The meetings provide the opportunity to identify deficiencies within the system and develop corrective and preventative action plans to improve efficiency. The Management System Coordinator is a liaison between the facilities to share learnings and best practices. 8 Canada Strategic Performance Unit Gas Operations

Climate change and energy consumption Climate change continues to be an important global issue. Climate change is caused by the accumulation of certain atmospheric gases that inhibit the earth s ability to moderate its temperature. Carbon Dioxide (CO 2 ) and methane (CH 4 ) are the most significant greenhouse gases of concern to the upstream petroleum industry. BP supports action on climate change. We recognize the need to face up to the energy paradox : the fact that increases in energy consumption vital to raise living standards in the developing world, improve health and support human innovation currently rely on carbon-based fuels. Energy and climate change are inextricably linked, as the key greenhouse gases emitted to our atmosphere are a result of energy generation from hydrocarbon combustion. Impact: The upstream petroleum industry requires energy to produce oil and natural gas for sale to end users for domestic heating and industrial uses. The energy used comes in several forms resulting in different types and intensities of greenhouse gases: Electricity consumed to power equipment and lighting. Generally purchased from a third party resulting in indirect CO 2 emissions. Fuel gas gas consumed to power equipment may be purchased or taken from the facility s inlet or sales gas stream. Pressure many controllers and valves are pneumatically controlled using natural gas. This gas is then vented to the atmosphere unless controls are in place. Flare gas gas recovered from pneumatic controllers or gas that requires release from the system for safety purposes may be flared at a facility. Fugitive emissions unintentional leaks of gas (typically methane) from joints, valves, fittings packing or seals. The combination of electricity, fuel gas, gas used for pneumatic controls, flared gas and fugitive emissions gives a total energy use number. Management: In 2008, Gas Operations managed greenhouse gas emissions by optimizing equipment and targeting fugitive emission reductions. BP s ongoing management to reduce energy use and emissions in our field locations is performed using best practice guidelines and newer, more efficient technologies. Results are shared semi-annually across BP Canada, via the Greenhouse Gas Network of Excellence chaired by the Calgary-based Greenhouse Gas/Energy Efficiency team. Results are also posted on the BP Canada GHG intranet site. This group has now been in place for 10 years resulting in significant sharing of best practices and emission reductions. combustion projects and 20 were venting projects (refer to Table 2). Operating Centres Target e 3 m 3 Actual e 3 m 3 Actual Tonnes CO 2 E 1 BCOC 150 105 775 EOC 700 1013 5996 NWOC 250 251 1,759 WCOC 500 4,076 7,785 Total 1,600 5,445 16,316 Table 1. Gas Operations Real Sustainable Reductions (Actual vs. Target) Operating Centres # of Projects e 3 m 3 CO 2 E (Tonnes) Combustion Venting Combustion Venting Combustion Venting BCOC 1 4 52 53 99 676 EOC 4 5 637 376 1,215 4782 NWOC 1 11 133 119 253 1,505 WCOC 41 0 4,076 0 7,785 0 Sum 47 20 4,898 548 9,352 6,963 Total 67 5,445 16,316 Table 2. Gas Operations Real Sustainable Reductions (Actual vs. Target) BP Canada implemented various projects and programs which either reduced energy use or increased efficiencies. These projects and programs were achieved using the following: Objectives and targets: Gas Operations assigned itself a combined target across the operating centres to reduce fuel gas (combusted and vented) by 1,600 e 3 m 3 in 2008. GHG reduction resulted in 5,445 e 3 m 3 in fuel reductions which equated to approximately 16,316 tonnes of CO 2 equivalent (refer to Table 1). Of the 67 projects completed, 47 were 1 N2 O was not included in the in the estimated CO 2 E savings. CO 2 E Savings are based on the following factors: Combustion Project - 2.16 Tonnes CO 2 E/e 3 m 3 Venting Project - 12.79 Tonnes CO 2 E/e 3 m 3 Verified Site Report: 2008 9

Leak Detection and Repair (LDAR): BP inspects equipment at operating sites to check for leaks. Where leaks are identified they are repaired immediately if possible or flagged for repair, when shut down is required, to reduce fugitive emissions released from operations. LDAR programs are completed through manual checks, gas detection monitors and infrared camera technology on a regular basis utilizing work orders issued from the preventative maintenance system. In 2008 a total of 623 gas batteries, 90 compressor stations and 29 gas plants within Gas Operations were inspected for leaks. Operational improvements and controls: Operational controls were installed to help meet our 2008 reduction targets. These included the continued implementation of the previous year s REMVue air/fuel ratio controllers to reduce fuel consumption of our large compressors, and using Flexxaire technology which reduces the shaft horsepower requirements for compressor engines. BP also executed several projects on pneumatic-driven pumps, including the replacement of existing pneumatic-driven pumps with solar pumps for zero greenhouse gas emissions or with electrical pumps to eliminate vented gas. Research: We have an ongoing goal of increasing the amount of measurement at sites to better understand all sources of emissions. BP staff also work with suppliers, industry groups, and BP colleagues globally to find new technologies and methodologies to help the SPU meet its goals. Performance: As projects that contribute significant reductions are completed, it becomes more difficult to find opportunities to reduce GHG emissions. The Gas Operations team continues to challenge itself to reduce energy consumption and associated greenhouse gas emissions, and as such has become more innovative in its thinking. The 2008 target was exceeded with energy saving projects resulting in sustainable savings of 5,445 e 3 m 3 of natural gas. A large reduction of fuel gas usage was a result of shutting down line heaters in the West Central area and installation of a sour flare enrichment gas controller in Marten Hills. The targets were met in other areas by shutting down a fractionation plant and converting meter skids to low pressure meter skids. Cumalative GHG Reductions (CO2 Equivalents) 12 10 8 6 4 2 0 00 01 02 03 04 05 06 07 08 Figure 2. Gas Operations Real Sustainable Reductions (Cumulative) Future plans: In 2009 the gas reduction target is a 1,700 e 3 m 3 reduction in fuel use. This translates to an estimated 9,500 tonnes of CO 2 E. We will be completing projects to meet our GHG reduction target by reducing fuel usage through equipment conversion, controller removal, dehydrator removal and REMVue installations. Another focus will be the continued implementation of LDAR programs that will reduce leaks and fugitive emissions from facility equipment. 10 Canada Strategic Performance Unit Gas Operations

Air emissions (other than GHG) Air emissions of concern (other than GHG) include volatile organic compounds (VOCs), carbon monoxide (CO), sulphur oxides (SOx), nitrogen oxides (NOx), and particulate matter (PM). These are also referred to as Criteria Air Contaminants when reporting our facilities to Environment Canada for the National Pollutant Release Inventory. Impact: Some VOCs have potential impacts, such as benzene which is a known carcinogen. Benzene may be released into the atmosphere from glycol dehydrators, incomplete combustion of natural gas in flares, fugitive emissions from tank vents and sumps, and from leaks in processing equipment. CO emissions are the result of incomplete combustion, typically related to insufficient oxygen. In addition to its effect on health, CO also contributes to ground level ozone. SOx can be emitted during flaring of sour gas production. NOx emissions are associated with hydrocarbon combustion. NOx and SOx can combine with water in the atmosphere to form acids, ultimately resulting in acidification of soils and lakes in some regions. PM is emitted from vehicles and industrial processes such as compression and flaring. PM is composed of particles that are light enough to be suspended in the air, and may cause human health and aesthetic concerns due to reduced visibility. Management: Emissions from facilities that emit pollutants of concern, such as SOx, are monitored and reported to Alberta Environment. BP is a member of a number of airshed zones that also monitor and report ambient air quality. Operational controls: Operational and engineered controls are in place to reduce emissions from production operations. Gas Operations is designing and managing glycol dehydrators in accordance with Canadian Association of Petroleum Producers (CAPP) Best Management Practices for the Control of Benzene Emissions from Glycol Dehydrators (November 2000) as per ERCB Directive 039: Revised Program to Reduce Benzene Emissions from Glycol Dehydrators. A systematic review is completed prior to the installation of new glycol dehydrators to assess the sustainability of alternate non-emitting options. Compressors must meet the Alberta Environment Code of Practice for Compressor and Pumping Stations and Sweet Gas Processing Plants which identifies limits for NOx emissions. Objectives and targets: Emissions of CO, SOx, NOx, or PM are tracked and reported within BP and to regulatory agencies. New projects are encouraged to utilize energy efficient equipment that results in lower NOx and CO emissions. Additionally, efforts are in place to reduce benzene and other VOC fugitive emissions with programs such as LDAR. Reporting: Benzene emissions are reported annually to the ERCB in Alberta and Oil and Gas Commission (OGC) in British Columbia. Criteria Air Contaminants (CAC) such as CO, SOx, NOx, PM and VOCs are monitored and reported to BP p.l.c., Environment Canada, BC Environmental Protection, and/or Alberta Environment, as required. Research: BP representatives collaborate on continued research and multi-stakeholder efforts facilitated by the Petroleum Technology Alliance Canada (PTAC) to work towards responsible Canadian hydrocarbon industry practices. As well, through the Canadian Association of Petroleum Producers (CAPP) BP supports the Clean Air Strategic Alliance (CASA), a non-profit association composed of diverse stakeholders from three sectors. Senior representatives from each sector government, industry, and non-government organizations (such as health and environment groups) are committed to developing and applying a comprehensive air quality management system for the people of Alberta through a collaborative, consensusbased process. Performance: BP Canada SPU reports non-methane hydrocarbon, SOx, and NOx emissions to BP p.l.c. for inclusion in the global environmental scorecard. Facilities that meet specified emission thresholds specified by Environment Canada report emissions data to the National Pollutant Release Inventory (NPRI). Table 3 summarizes these emissions for Gas Operations in 2008. Non-GHG Emissions to Air 2008 (tonnes) Non-Methane Hydrocarbons 483 Oxides of Sulfur (SOx) 374 Oxides of Nitrogen (NOx) 15,384 Carbon Monoxide 2,836 Volatile Organic Compounds (VOC) 532 Total Particulate Matter 24 Table 3. Non-GHG Emissions to Air Future plans: BP will continue to look for ways to reduce emissions through installation of improved technology and increased efficiency of existing infrastructure. Alternatives to larger emitting historical options are considered in the planning stages of new projects to look for opportunities to reduce BP s contribution to the carbon footprint. As well, BP Canada is working on a project to improve efficiency of data collection and standardization to improve data quality used in emissions reporting. Verified Site Report: 2008 11

Spills Spills of hydrocarbons and other chemicals are a possibility in all areas of our operations, from drilling to production to transportation. We consider any unplanned release of liquids from primary containment to be a spill, even if the liquid is contained within secondary containment such as a tray. All spills must be reported internally within BP, while spills which meet certain criteria (volume, on-lease/off-lease location) are reported to the regulatory authorities. Spills are addressed immediately and cleaned up to minimize impacts to the environment. Impact: Spills have the potential to impact soil, surface water, groundwater, and/or air quality. They can occur on our leases or in off-lease areas such as on roads or pipeline right-ofways during transportation. Performance: In 2008 Gas Operations had two regulatory reportable spills, which was a 82% reduction from 2007. Spills greater than a barrel dropped by 27% from 2007. Management: There is a major focus on spill prevention throughout the Canada SPU. Spills are required to be reported internally, with information recorded in our incident database. Spills are categorized by actual and potential severity and are investigated, where considered appropriate by leadership. In addition to recording information in our database, spills are reported monthly in the Gas Operations scorecard that is shared with leadership and spills that exceed government limits are reported to the appropriate regulatory authorities. Objectives and targets: As part of our goal of no damage to the environment, our ultimate goal is to have zero spills. Each operations centre has annual continual improvement objectives and targets. In 2008 the target was to have a 10-15% reduction in the number of spills from 2007, with varying specifics dependent on each Operating Centre. Operational controls: Spill prevention controls in place include: HSSE assurance plans for construction projects, monthly tank and berm inspections, the use of high level and other alarms on tanks, where appropriate, and a comprehensive program of integrity management covering pipelines, tanks, pressure vessels, etc. Environmental Management Plans are developed in each Operating Centre that identify actions to be completed to assist in meeting the target to reduce the number of spills that occur. These actions are specific to the operating centres and are agreed upon by the Spill Champion, site leadership and HSSE coordinators. Focus has been put on the highest causes of spills, which are equipment failure and human error. Investigations: An investigation is completed following a large spill or a spill which is assessed as having high potential consequences. The investigation includes analysis of the immediate and fundamental cause of the spill. Actions are identified to prevent future occurrences and learnings are shared across the SPU. Future plans: The objective for 2009 is to continue to review and evaluate spills to determine where there are common causes and learnings for all areas within Gas Operations. The target for each Operating Centre is to reduce the number of spills by 10% from 2008 numbers. EMPs will continue to be utilized to develop action plans to meet the objectives and targets in each Operating Centre. These will be reviewed regularly to ensure progress is being made and targets are on track. 12 Canada Strategic Performance Unit Gas Operations

Waste Management of both hazardous and non-hazardous wastes is an important issue for the energy industry. Waste disposal and recycling are strictly regulated in Alberta and British Columbia, where our Gas Operations activities are focused. Impact: Wastes generated by Gas Operations include hazardous wastes such as used lube oil, rags, filters, pigging waste, and small amounts of naturally occurring radioactive materials (NORM). Non-hazardous wastes include produced water, camp wastes, metal, wood, plastic, etc. Options for dealing with our wastes include reuse, recycling, thermal or chemical processing, or disposal in landfills or injection into deep well facilities. Even when properly handled, wastes fill up space in our landfills and represent a potential risk to our soil and groundwater if spilled during transport; therefore, it is critical that BP choose its waste haulers and management facilities very carefully. Management: The first step in successful waste management is minimizing the volume of waste generated. BP Canada s maintenance personnel work hard to optimize the operation of our equipment, resulting in benefits such as generating less used oil. Another source of waste is contaminated soil caused by a spill; through our spill reduction efforts we work towards reducing that waste stream. Our corrosion monitoring programs and rigorous inspections of tanks and pipelines help prevent waste, as well as impact to soil and water. We hire outside experts to track all the oilfield waste we generate, including where we sent it for disposal and the disposal method used. Our disposal sites are chosen carefully from amongst a list of companies that we have assessed and approved, based on their environmental programs, on-site controls, permits, and operating record. Operational controls: We have written procedures for dealing with the various types of waste we generate, and train our employees in how to handle the wastes. We monitor our waste storage facilities, and control access to prevent collection of non-bp waste. Camp wastes are handled very carefully to avoid attracting bears or other animals. The Canada SPU participates in the coordinated industrywide audits of waste receivers, through the Waste Receiver Assessment Program (http://www.wrapaudit.com/). Waste management is also actively managed through the supply chain management process including ongoing HSSE meetings with our primary waste management contractor. Objectives and targets: Our goals for improvement in waste management are in the area of improving our operational practices, training, and record keeping, rather than having set targets for reduced waste volumes. Our reasoning for focusing on management rather than bottom line waste numbers is because if we are dismantling facilities, cleaning up sites, or conducting plant turnarounds, the amount of waste we generate may increase from year to year. Performance: Figure 3 shows the trending of Gas Operations waste disposal for 2004 to 2008. This total number includes both hazardous and non-hazardous oilfield waste streams. In 2008 Gas Operations recycled 112.5 tonnes of oilfield waste. Total Waste (tonnes) 23 22 21 20 19 18 17 16 04 05 06 07 08 Figure 3. Gas Operations waste generations from 2004 to 2008 Future plans: Waste management will continue to be a priority for BP in 2009, with a focus on ensuring personnel have appropriate training. We will continue to look for opportunities to improve waste management by reviewing and updating procedures to increase efficiency and clarification for handling, storing and documenting. Alternatives to current waste disposal practices will be reviewed allowing BP the opportunity to ensure that generated wastes are securely handled, be it at a disposal, recycling, or processing facility. Additional metrics will be developed to allow for close monitoring of waste generation volumes and disposal handling. This trending will allow for identification of opportunities to improve re-use, reduction and recycling. Verified Site Report: 2008 13

Regulatory compliance It is a high priority within BP Canada that all operations meet and/or exceed regulatory requirements. Not only are we legally obligated to do so, but we believe it is necessary to maintain our privilege to operate. The importance BP places on regulatory compliance is reflected in the BP Canada HSSE policy that we comply with relevant legislation and regulations, and with other standards to which the Canada SPU subscribes. Impact: The consequence of not meeting regulatory requirements can result in incidents that compromise safety and environmental integrity, diminished reputation, fines, and loss of production. Management: In 2008 BP Canada completed the implementation of its HSSE Compliance Management System (CMS), which aims to identify all tasks within Gas Operations associated with regulatory compliance. These tasks are reviewed, frequencies determined and actions scheduled through the preventative maintenance program. They are highlighted as regulatory tasks and as such given high priority to ensure they are completed by the specified due date. By using the preventative maintenance program they can be scheduled on a re-occurring frequency to ensure that they are completed as required. BP Canada also tracks and monitors all non-compliance events internally to assist in the management of regulatory compliance. A non-compliance event within BP Canada is defined as an enforcement letter, fine or regulatory inspection regardless of severity. Therefore, minor non-compliances that are rectified immediately are still tracked as a non-compliance event and responded to accordingly. This information is communicated monthly in the Gas Operations scorecard to ensure that the leadership team and all others affected are aware of opportunities for improvement. Where there is opportunity for learnings, non-compliance events are investigated and lessons learned shared with other operating centres in order to prevent future occurrences. As part of BP s continuous improvement cycle we are always checking to ensure that we are operating within compliance of regulations through routine inspections, internal audits, management reviews and monthly newsletters outlining changes to legislation. If it is identified that we are operating out of compliance and the issue can not be resolved immediately, an action plan is developed to bring our operations into compliance. This is shared with the regulator through a self disclosure report in an effort to be open and transparent. Performance: In 2008 Gas Operations did not incur any fines or penalties associated with regulatory non-compliance or contraventions. There were four low-risk non-compliance events in British Columbia and five high-risk non-compliances. In Alberta there were 14 low-risk non-compliances and five high-risk non-compliances. All findings were closed with the appropriate regulator. Both low-risk and high-risk non-compliances are categorized as per the applicable regulating agencies' definitions, which may relate to HSSE, operational, accounting and other issues. The high-risk non-compliances related to HSSE issues have been summarized below in table 4. Gas Operations identified and completed five self disclosures related to HSSE non-compliances to regulatory agencies, including actions plans with associated timelines for completion British Columbia Two locations where bypass valve around ESD device was not locked in closed postion. Updated emergency response plan not submitted to regulator. Inspection findings including an equipment leak and inappropriate chemical containment. Inspection findings including cutslope/erosion issues and facility within 100m of waterbody without equipment to contain spills. Alberta Improper well suspension. Failure to notify of production above the base of groundwater production. Table 4. 2008 HSSE high-risk non-compliance events associated with Gas Operations. Future plans: In 2009 monitoring of non-compliances will be expanded to include satisfactory inspections completed by regulators to better understand the frequency of non-compliances. The Compliance Management System will continue to be implemented and quality assurance and control will be completed to ensure no essential regulatory tasks have been missed in implementation. Training will be provided on the compliance management system and a monitoring system will be developed to ensure completion of tasks as required. 14 Canada Strategic Performance Unit Gas Operations

Physical and ecological impacts The search for oil and gas resources is moving to more technically challenging, remote, and environmentally sensitive locations. Physical and ecological impacts address a range of issues such as spacial footprint, habitat loss and degradation. Our ability to effectively manage our operational activities with respect to such impacts can be considered one measure of our overall environmental performance. Impact: The cumulative impact of oil and gas-related and other industrial activities in the greenfield areas of Alberta, northeast BC and in the territories could contribute to a loss of biodiversity in these regions. Although BP is not the only oil and gas company in these areas, our activities could potentially contribute to this threat. In particular, some of our operations are within the habitat of a threatened species of woodland caribou and/or grizzly bear habitat. Management: BP is committed to keeping the footprint of our facilities and activities to a minimum to limit environmental disturbance. BP designs, builds, operates, and maintains its facilities in a manner that allows them to function safely, efficiently and responsibly throughout the entire life cycle. At the end of the life of our facilities, we remove our surface equipment and reclaim disturbed land. BP s Remediation Management team works with existing assets to reduce their industrial footprint and rebuild native ecology. New projects follow BP s Environmental Requirements for New Projects (ERNP), which aims to ensure that we design, build and operate new projects to consistent and high environmental standards and to help transfer learning across the organization. The ERNP defines the environmental impact management processes and requirements that must be met by all new BP projects and with which they must comply as they begin operations. BP Canada has used the ERNP in the Noel Major Project, now under construction in northeast British Columbia, and in the proposed Mist Mountain project in BC s Crowsnest Coalfield, which is still in the early stages of assessment. The intent of ERNP is to: Ensure a systematic and formal delivery of environmentally sound operations in new projects across BP through a full life-cycle process. The process is aimed at identifying, understanding, avoiding, minimizing, mitigating, and remediating the impacts of operations on the environment Ensure that internal decision makers are informed about significant environmental issues and risks prior to making key decisions. The purpose of the practice is to set out clear and consistent principles for environmentally sound operations in new projects where: We will identify and understand our impacts. We will consult with others. We will design to avoid adverse impacts and minimize the use of natural resources. We will reduce the adverse residual impacts of our wastes, emissions, and discharges. Under ERNP the intent of our consultation and disclosure process is to ensure that BP projects give due importance to the stakeholders concerns and opinions, and integrate them into the project decision-making process. By guiding appropriate planning in the initial stages of new projects, the ERNP ensures that facilities are efficient, safe, compliant with regulations and designed for minimal impact on the environment when handed over to Gas Operations as operating facilities. Operational controls: Best practices applied, where feasible, include: Maximizing the use of previously disturbed land where technically practical, in cooperation with surface rights holders. Working with others to maximize joint use and minimize new disturbance where possible. Planning and designing the layout, location and capacity of our facilities to avoid environmentally sensitive areas and to blend aesthetically with the natural surroundings, considering the needs of other users. Evaluating timing of construction activities to avoid critical periods for wildlife and plants. Constructing and monitoring stream crossings to ensure protection of fish and fish habitat. Managing erosion risks from road and lease construction. Ensuring all waste products are managed in an environmentally responsible manner. Incorporating native vegetation species into our reclamation program where possible. Verified Site Report: 2008 15

Objectives and targets: As part of our goal of no damage to the environment, our ultimate goal is to effectively and consistently manage our physical and ecological impacts and to act in an environmentally responsible manner while we plan, build, operate and decommission our facilities. Investigations: All BP projects undertake appropriate environmental assessments to inform project design and decision-making personnel, by identifying key environmental issues and sensitivities associated with the project. Performance: The work BP Canada completed on the proposed Mist Mountain project to apply the ERNP resulted in a Steward of Excellence Award nomination in 2008 through the Canadian Association of Petroleum Producers. The Remediation Management team in Canada is responsible for inactive well management and end of life liability management, including wellbore abandonment, pipeline abandonment, facility decommissioning, remediation, and surface reclamation. They take over from Gas Operations once facilities have been shut down and are no longer operating. Since its inception in 1994, the group has obtained reclamation certificates for 872 dispositions (authorizations to use/develop land surfaces). Remediation Management works cooperatively with Alberta Environment, the British Columbia Oil and Gas Commission, and local forestry companies to incorporate native regeneration reclamation practices for leases in the boreal forest natural region. In 2008, BP Canada obtained 14 reclamation certificates. Future plans: Our future plans include continuing to develop asset management strategies to incorporate the findings of environmental impact assessments, then design and operate facilities in an environmentally responsible manner. Controlling and limiting physical and ecological impacts, especially in environmentally sensitive areas, will remain a high priority in all BP operations. 16 Canada Strategic Performance Unit Gas Operations

Water Gas Operations do not require significant water usage; therefore we do not develop EMPs specifically for water use. We do, however, track our water consumption for reporting to CAPP and BP p.l.c. Water is a growing global issue that is gaining the attention of the public. Key concerns include the current and future cost and security of clean water supplies to our operations and the potential social and environmental impacts of our consumption and discharge of all water types. Contamination of groundwater from historical industrial practices is a concern to BP and our stakeholders. Impact: Impacts to water by Gas Operations include the use of fresh water, and the generation and disposal of produced water. Impacts to water resources also include the crossing of waterways with pipelines, roads, and other infrastructure needs. Previous operations acting under generally acceptable operating practices at the time and historical spills have the potential to contribute to the contamination of soil and groundwater at industrial sites. m3 12 10 8 6 4 Management: We manage water use by measuring and estimating overall fresh and potable water use to establish baselines for future conservation efforts. We continue to track produced water and to ensure that it does not impact the surface environment by ensuring appropriate handling, transport and disposal. 2 0 03 04 05 06 07 08 Fresh Water Potable Water Table 3. Gas Operations water usage. 2 Impacted groundwater issues are managed through routine groundwater monitoring and remediation. This is done by Gas Operations at active facilities and by the Remediation Management group where operational activities have been decommissioned. Performance: Fresh water usage is collected and reported to BP p.l.c for global reporting. The water usage trend in the last seven years is shown in Figure 3. Potable water increased in 2007 when an improved template was developed and utilized to estimate consumption. The potable water value is the estimated amount of water consumed by people on our sites. The fresh water value is derived from both estimation and measurement and accounts for fresh water utilized at our field locations, whether for operations or domestic use at field office locations. Future plans: To meet future water withdrawal reporting requirements and to fully identify BP Canada s water consumption, BP intends to develop a water resource database. Currently, the consumption of water for our operations is well defined; however, we must continue improving our understanding of the consumption of water from all sources. We will continue to review each component of our operations on an annual basis and risk rank environmental aspects; therefore should our operations change and water consumption becomes a significant aspect in the future it will be managed accordingly by setting objectives and targets and developing Environmental Management Plans. 2 Field operation location only, Calgary head office not included. Definitions: Fresh water is defined as naturally occurring water having a low concentration of salts which is often suitable for abstraction and treatment to produce potable water. Potable water is defined as water that is fit for human consumption. It is obtained (purchased or free issue) from municipal or local suppliers, or from industrial neighbors. It includes bottled water. Verified Site Report: 2008 17