Oil Sands Mining and Upgrading

Oil Sands Mining and Upgrading

The Company owns and operates substantial world class oil sands mining assets. The Horizon Oil Sands and the Athabasca Oil Sands Project (AOSP) are approximately located 70 km north of Fort McMurray, Alberta in the Athabasca region. These assets offer decades of no decline synthetic crude oil (SCO) production with no reserve risk. Canadian Natural holds extensive leases that are estimated at 7 billion barrels of proved and probable SCO reserves. The two mine sites are adjacent to one another allowing the Company to take advantage of certain synergies through the power of our performance driven culture. The Company continues to focus on maximizing value through continuous improvement and adoption of technology to deliver safe, steady, reliable SCO production. 2019 production guidance for Oil Sands Mining and Upgrading is between 415,000 bbl/d and 450,000 bbl/d of SCO and capital expenditures are targeted to be $1.5 billion.

Horizon

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The Horizon Oil Sands include a surface oil sands mining and bitumen extraction plant, complemented by on-site bitumen upgrading with associated infrastructure to produce high quality SCO. In late 2017, the Phase 3 expansion was completed at Horizon, the final step in the Company's transition to a Long Life Low Decline asset base. In 2018, the Company is evaluating opportunities to increase reliability, lower costs and add production growth in the near and long-term.

In the third quarter of 2018, the Company acquired the Joslyn Oil Sands project, referred to as the Joslyn lease, which is located directly south of the Company’s current Horizon Oil Sands. The Joslyn lease has the potential to add significant long life low decline reserves as well cost savings through the extension of existing Horizon South Pit operations. The lease-line development opportunities reduce he need to relocate Horizon operation to the North Pit, resulting in targeted cost savings of over $500 million. At Canadian Natural’s Horizon operations, there are significant opportunities to enhance capacity and increase reliability. The Paraffinic Froth Treatment (PFT) expansion has targeted diluted bitumen production of 40,000-50,000 bbl/d. the Company plans to complete Engineering Design Specifications (EDS) in early 2019 and a targeted project sanction potentially in late 2019. Reliability opportunities target to add an incremental 35,000-45,000 bbl/d of SCO production through step wise stages.

Canadian Natural is currently piloting the In Pit Extraction Process (IPEP) at Horizon. The IPEP project replaces the traditional bitumen extraction process by processing the bitumen right at the mine face. The targeted extraction facilities are modular components that can be moved with the mine face. This project, if successful, has the potential to reduce mining costs by $2.00-$3.00 per barrel, and significantly reduce greenhouse gas emissions from the mine, and eliminate the need for tailings ponds.

Canadian Natural’s oil sands mining portfolio includes its 70% operated working interest in the AOSP mines and 70% non-operated interest in the Scotford Upgrader, located north of Edmonton. Combined, the two mines at the AOSP produce diluted bitumen via a paraffinic froth treatment process. Produced bitumen is then shipped via the Corridor pipeline to the Scotford Upgrader where it is upgraded via LC Fining technology to SCO, which is sold in the Edmonton refining complex. In addition to the AOSP assets, the Company also owns a 70% interest in the Quest Carbon Capture & Storage facility near Scotford, further demonstrating the Company’s commitment to environmental leadership.