Business Development

Canadians from all regions participated directly in the development of our projects. Major expenditures across the country demonstrate how all regions participate and benefit from energy development.

In 2010, Canadian Natural spent over $5.2 billion on goods and services for our North American Conventional and oil sands operations combined. Although the majority of contracts were with Alberta businesses, the economic contributions of our operations have extended across Canada, and beyond the border as well.

The regional distribution of the combined spending was (in millions of dollars): $4,675 in Alberta; $189 in British Columbia; $169 in Saskatchewan; $87 in Ontario; $14 in Northwest Territories; $12 in Quebec; $8 in Manitoba; $13 in Atlantic Canada and Nunavut. Another $14 billion corresponded to spending on materials and services from the United States, and the rest from other countries.

Read our special feature about Canadian global energy leadership in page 12 of our 2010 Stewardship Report to Stakeholders.

Western Canada is Canadian Natural’s main production area, accounting for 90% of the company’s total output in 2010. Our operations cover most of Alberta and we have eight field offices in support of conventional oil and gas operations. Our focus areas of oil activity in the province are Bonnyville, Lloydminster and Wabasca/Demarais for heavy oil production, and Cold Lake, Lac La Biche and Fort McMurray for thermal and mining bitumen production.

All of our bitumen production and most of our primary heavy oil and natural gas production is located in Alberta. Our Alberta 2010 production accounted for 16% of all oil and bitumen production in the province and 8% of all natural gas production.

In 2010, Canadian Natural paid over $1.4 billion in provincial royalties. Being subject to federal and provincial income taxes, we paid a combined rate of approximately 28% after allowable deductions for 2010. We were also able to deliver returns to shareholders and increased dividend distribution. More details on our royalties and taxes are available on our 2010 Annual Information Form.

Canadian Natural is part of a consortium of Western Canadian producers that has blended a number of heavy oil streams into a new stream named Western Canadian Select (WCS). This blend was established in 2004 and provides a stable and reliable heavy oil crude benchmark for producers and refiners in Canada and the United States. In the second quarter of 2011 Canadian Natural contributed 57% of the total blend in Western Canada. The majority of the WCS production is exported to the United States.

Canadian Natural has partnered with North West Upgrading Inc. (NWU) to engineer a bitumen refinery in Alberta’s industrial heartland, Edmonton. The facility will produce the first fuels from bitumen that will meet the Low Carbon Fuel Standard being proposed under legislation introduced in the United States. The facility also produces bitumen diluent and petrochemical feedstocks for both the Alberta and international markets.

Phase 1 of the proposed facility will process 50,000 barrels per day of bitumen and it represents the world’s first facility with a one step conversion process of bitumen to finished products and an integrated CO2 management solution. To this end, it will set a new global standard for environmental performance. CO2 from the facility will be used for Enhanced Oil Recovery purposes, which will reduce carbon emissions by approximately 3,500 tonnes per day for each of the three targeted phases. The process incorporates gasification to convert the residual oil to hydrogen and reduce the need for natural gas. The proposed facility can be expanded in two additional identical phases of 50,000 barrels per day of bitumen, provided economics justify the investment.