Thermal In Situ Oil Sands

Canadian Natural believes it holds some of the best oil sands assets in Canada, providing tremendous value and growth potential. Our thermal assets are located in two of the major oil sands deposits in Western Canada – the Athabasca and the Cold Lake deposits.

Thermal In Situ

Canadian Natural's oil sands deposits are in the form of bitumen, which in its natural state, is too viscous to flow. When bitumen is too deep (>80 m) to economically mine, steam is injected, reducing the oil viscosity and allowing it to be pumped through surface wells. Only about 7% of Canada's oil sands can be mined, the majority has to be recovered using thermal in situ recovery.

Within the Athabasca deposits, the McMurray reservoir is our primary target and steam assisted gravity drainage (SAGD) is the recovery process of choice. SAGD uses two well bores, one for continuous steaming and the other for continuous production. Within the Athabasca region, the majority of our assets are in the planning stages, which include Grouse, Birch Mountain, Ipiatik, Gregoire and Leismer. Kirby, the next phase of our Thermal Growth Plan began construction in late 2010 and is targeted to add 40,000 bbl/d of capacity with a targeted steam-in date of 2013.

In the Cold Lake deposits, we have our Primrose and Primrose East operations where we currently produce from the Clearwater reservoir using the cyclic steam stimulation (CSS) process. CSS uses a single well bore to inject and produce steam. This technology has been historically applied to reservoirs that have barriers to vertical flow. The production peaks and troughs at Primrose are a reflection of the cyclic steam process – the peaks are associated with production cycles from newer, less mature wells and the troughs are associated with production cycles from the more mature areas in the field.

Steam Assisted Gravity Drainage (SAGD)

Canadian Natural is an industry leader, successfully implementing one of the first SAGD programs in Canada at our Wolf Lake property. SAGD wells are drilled in pairs and use continuous steam injection to mobilize bitumen. As the figure below illustrates, steam is injected into the upper well mobilizing bitumen above it and causing it to drain under the pull of gravity to the lower production well.

Advantages:

• High bitumen recovery factor (typically >50%)
• High calendar day oil rates
• Continuous process

Disadvantages:

• Requires clean, continuous reservoirs
• Requires 2 wells (higher capital investment)

SAGD will be the preferred production process for the McMurray Formation at Canadian Natural's Horizon and Gregoire fields.

Cyclic Steam Stimulation (CSS)

Canadian Natural also employs cyclic steam or "huff and puff" technology to develop bitumen resources. This technology requires one well bore and the production consists of two distinct phases:

1. Injection - Steam is injected for several weeks, mobilizing cold bitumen.
2. Production - Flow on the injection well is reversed producing oil through the same injection well bore.

These two phases together comprise one cycle. Steam is re-injected to begin a new cycle when oil production rates fall below a critical threshold due to the cooling of the reservoir.

Canadian Natural is a leader in the commercial application of horizontal well CSS illustrated in the figure below.

Advantages:

• Robust, proven technology
• Requires 1 well bore (reduced capital investment)
• Adaptable to thinner inter-bedded reservoirs

Disadvantages:

• Lower recovery factor

CSS is the preferred production process in the Clearwater Formation at Canadian Natural's Wolf Lake, and Primrose (North, South, and East) fields.