energy. innovation. commitment. - Report on Sustainability - Suncor

energy. innovation. commitment.

2010 summary report on sustainability

what’s inside 1

introduction

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about Suncor Energy

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performance at a glance for 2009 – 2010 2010 environment progress report 2010 social progress report

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a message from Rick George environmental performance water air land tailings

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climate change our climate change performance climate change: looking ahead

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social performance safety community investment aboriginal relations Olympic and Paralympic sponsorship community infrastructure and development human rights our employees

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economic performance corporate performance contribution to economy

Eva Laou, Analytical Chemist; Robert Senden, Product Specialist; Tony Ashman, Product Development Manager, Lubricants.

energy. innovation. commitment.

In 2009, Suncor embarked on an exciting new chapter after merging with another progressive energy company, Petro-Canada. But while much has changed, our core identity remains unaltered. The new Suncor, like the old Suncor, is committed to the principles of sustainable development. This means managing our operations and growth plans in a way that enhances social and economic benefits while striving to minimize the environmental impact associated with development. Suncor’s Report on Sustainability documents our progress on a wide range of environmental and social issues. Our previous seven reports were published biennially, with the most recent issued in June 2009. We’re publishing in 2010 because of high stakeholder interest in learning more about the new company. The report explains how we’re striving to make Suncor a sustainability leader in the energy sector and beyond. About Suncor’s 2010 Report on Sustainability

indicators. The results of this review can be found on our website in the Third Party Assurance section.

Our 2010 report includes consolidated social and environmental data from both legacy Suncor and Petro-Canada. Economic data reporting is consistent with the 2009 Suncor annual report. Due to significantly different organization structures of the companies, historic data is only included where available, making year-over-year comparisons difficult.

Stakeholder feedback is also an integral part of developing this report. As in previous years, Suncor enlisted the guidance of Ceres, a network of investors, labour, environmentalists and other public interest groups to help ensure our report is relevant and meaningful. We thank Ceres and the participating stakeholders for their assistance in creating the 2010 Report on Sustainability.

The following report on sustainability was created using the Global Reporting Initiative (GRI) G3 Guidelines, to the GRI A+ reporting level. Selected performance indicators for the year 2009 were independently reviewed using the Global Reporting Initiative G3 guidelines for those

For a full report including performance data, as well as challenges and opportunities information, visit www.suncor.com/sustainability.

www.suncor.com/sustainability

Suncor Energy is Canada’s premier integrated energy company. Suncor’s operations include oil sands development and upgrading, conventional and offshore oil and gas production, petroleum refining, and product marketing under the Petro-Canada brand. While working to responsibly develop petroleum resources, Suncor is also developing a growing renewable energy portfolio.

Suncor Energy Inc.

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performance at a glance As a responsible energy developer, Suncor strives for excellence in economic, social and environmental performance. Below is a snapshot of our priorities in 2009 and how we performed. transportation framework” that could form the basis for reducing GHG emissions released in both the production and consumption of energy products.

Pursue Zero Injuries The frequency of employee lost-time injuries and recordable injuries continued to decline as employees and contractors embraced our Journey to Zero safety culture. Suncor also adopted a clear set of process safety management (PSM) standards and began assessing hazards at all of its facilities according to those standards to identify potential performance gaps and implement an action plan for improvement. The death of a contractor employee at our oil sands site in August 2009 was a tragic reminder of why we must constantly seek safety improvements.*

Invest in Healthy Communities Suncor continued to invest in the regions where we operate by supporting community, educational and environmental programs as well as the charitable giving and volunteer efforts of our employees and retirees. Many of these programs are aimed at building capacity and leadership at the grassroots level and advancing opportunities for Aboriginal peoples through education, training and cultural awareness initiatives.

Reduce Our Environmental Footprint Generate Prosperity and Opportunity

Suncor prepared to implement a new TRO™ (Tailings Reduction Operations) strategy that is expected to dramatically accelerate the reclamation of tailings ponds and mined lands and reduce the need for future tailings ponds. In 2009, we achieved an 11% reduction in fresh water withdrawal at our oil sands mining operations even as bitumen production increased. Suncor also began to implement its Environmental Excellence Plan focused on four specific performance goals to improve energy efficiency and achieve absolute reductions in fresh water consumption, air emissions, and significantly increase land reclaimed.

The 2009 merger of Suncor and Petro-Canada created Canada’s largest energy company. Suncor is now a stronger and more financially flexible company with a strategic plan to steadily increase oil sands production, supported by cash flow from existing operations. In 2009, royalties paid by Suncor totalled approximately $1.2 billion, including $645 million directed to Alberta government oil sands royalties. As well, Suncor paid more than $1 billion in taxes in 2009 to governments in Canada and internationally. We also marked a corporate milestone, surpassing more than $1 billion in goods and services spending with Aboriginal businesses in the Wood Buffalo region since 1992.

Address the Climate Change Challenge Advance Sustainable Development

Suncor achieved greenhouse gas (GHG) emissions intensity reductions at both its mining and in-situ oil sands operations. The intensity decreases were primarily due to increased reliability and productivity through most of 2009—key objectives of our corporate-wide Operational Excellence strategy. Suncor announced a $120 million expansion of our ethanol production facility as part of our ongoing commitment to invest in renewable energy. We continued to actively participate in public policy and stakeholder discussions on energy and the environment. We also developed proposals for a “low carbon

Suncor worked closely with the Oil Sands Leadership Initiative (OSLI), a group of five like-minded companies determined to make tangible improvements to environmental, social and economic performance in the oil sands industry. We continued to participate in a range of multi-stakeholder organizations dedicated to encouraging responsible energy development. Internationally, Suncor worked with authorities near our operations to improve worker training and safety and to encourage sustainable resource development practices. * In line with provincial safety regulations, this incident is not reflected in Suncor's data, but is reported in the contractor's information.

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Suncor pursues a “triple bottom line vision” of sustainable development—we maintain that energy development should occur in a way that provides economic prosperity, promotes social well-being and preserves a healthy environment.

social

environment

economic

On the web: For our full report on our performance, including performance data, visit www.suncor.com/sustainability.

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2010 environment progress report FOCUS AREA

Environment

2009-10 GOALS

• Develop and implement an environmental excellence planning process.

Environmental Excellence Plan

G O A L – WAT E R U S E

Water

• Implement new water management plan at Oil Sands. • Build strength in water partnerships. • Implement water measurement. • Add reporting functionality into Environmental Information Management System (EIMS).

GOAL – LAND DISTURBANCE

Land and Biodiversity

INCREASE RECLAMATION OF DISTURBED LAND AREA BY 100% BY 2015

• Achieve a trafficable surface and continue progressive reclamation on Pond 1. • Accelerate the pace of land reclamation. • Support efforts to secure conservation areas (land offsets). • Develop Ecosystem Principles.

GOAL – ENERGY EFFICIENCY

Energy Efficiency and Climate Change

REDUCE FRESH WATER CONSUMPTION BY 12% BY 2015

IMPROVE ENERGY EFFICIENCY BY 10% BY 2015

• Review GHG strategy. • Continue to support the development of Carbon Capture and Storage (CCS) technology. • Launch third phase of the CO2 Capture Project (CCP). • Pursue opportunities to purchase carbon credits.

GOAL – AIR EMISSIONS

REDUCE AIR EMISSIONS BY 10% BY 2015

Air

• Develop air and GHG reporting standard.

Renewable Energy

• Continue to invest in renewable energy and emerging technologies.

Tailings

• Advance “dry tailings” technology.

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This progress report provides detail on Suncor’s environmental goals and performance, as well as progress on social initiatives. Detailed information on Suncor’s economic performance is available on Suncor’s website and in our 2009 Annual Report.

2 0 0 9 - 1 0 R E S U LT S

2010 -11 GOALS

• Environmental performance goals adopted for all Suncor assets. • Environmental excellence integrated into 2010 business

• Build internal awareness of environmental planning process. • Identify and assess environmental excellence opportunities. • Define 2007 baselines for use in environmental

planning process.

excellence program.

• Water Principles approved but not yet implemented due

• Implement Water Principles. • Complete EIMS implementation for water data for

to merger integration.

• Promotion and support of four key water partnerships. • Water measurement tools enhanced. • EIMS implementation continues.

legacy Petro-Canada assets.

• On track to achieve trafficable surface and progressive reclamation

• Secure progressive reclamation acknowledgement

underway on Pond 1 by September 2010.

for Pond 1.

• Rename Pond 1 area to mark accomplishment.

• Merger and delayed progress in climate change regulations have

• Finalize review of energy management initiative and

impacted timelines. Climate change strategy review continues.

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conduct pilot at one location.

• Continue work on CCS policy, technology and

Internal Suncor team established for Climate Change Management and Solutions.

deployment through ICO2N and CCP3 consortiums.

• Continued support of ICO2N for CCS. • CCP Steam Assisted Gravity Drainage and upgrading refining

• Take a leadership role in Carbon Management Canada.

emission technologies pursued.

• Energy management initiative launched to reduce energy intensity company-wide.

• Complete EIMS implementation for air data for

• Initiated development of air reporting standard. • EIMS air module implementation continues.

all assets.

• Invest in equipment and technology to achieve emission reductions.

• Announced plans to double capacity of ethanol plant. • Received regulatory approval for fifth wind farm.

• Complete ethanol plant expansion. • Continue to invest in renewable energy projects.

• TRO™ process work continued. Stakeholder consultation and

• Commencement of commercial implementation

regulatory approval process initiated.

of TRO™ process. ™ Trademark of Suncor Energy Inc.

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2010 social progress report FOCUS AREA

Social Safety, Health and Security

Social Responsibility

2009-10 GOALS

• Continue Journey to Zero safety program. • Continue emphasis on Process Safety Management (PSM). • Develop front-line supervisor safety training program. • Develop processes and tools to drive improvements in contractor safety. • Upgrade emergency response command centre facility in Calgary.

• Recruit and retain top talent in the Wood Buffalo region and continue to forge partnerships with Aboriginal businesses.

• Update policy and introduce web-based training for the Prevention of Improper Payments. • Review and update Antitrust and Fair Competition Compliance program. • Integrate risk assessment methodology into all EHS processes. • Include social risk assessments as part of project delivery model. • Review human rights management framework. Community Investment

• Broaden stakeholder engagement capability across organization. • Integrate stakeholder engagement practices into North Africa/Near East development and exploration projects.

• Work jointly with the Libya National Oil Corporation (NOC) on Libya Sustainable Development Program projects.

• Launch 2010 Olympic campaign (glassware, “Fuel the Games”, Athlete Family Program and Totem Pole project).

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This progress report provides detail on Suncor’s social goals and performance. Detailed information on Suncor’s economic performance is available on Suncor’s website and in our 2009 Annual Report.

2 0 0 9 - 1 0 R E S U LT S

2010 -11 GOALS

• Suncor employee Lost Time Injury Frequency (LTIF) of 0.11;

• Implement new company-wide Journey to Zero safety

contractor LTIF of 0.09.

leadership training.

• Journey to Zero safety program principles updated. • New life saving rules and symbols developed to underscore

• Continue Process Safety Management implementation (planned completion 2013).

• Develop and implement employee sustainability

importance of policy adherence.

engagement strategy.

• EHS training program for leaders developed. • Contractor safety standard developed as part of the Process Safety Management system.

• Emergency response exercises planned for all business units. • Reorganized Stakeholder Relations and Aboriginal Affairs

• Update Stakeholder Relations management system. • Complete external stakeholder research and incorporate

to align with operating model.

• Policy for the Prevention of Improper Payments (PIP) updated

into business plans.

August 1, 2009.

• Develop and begin to implement a revised Aboriginal

• PIP web-based training developed, not implemented

Affairs strategy.

due to merger.

• Revise Human Rights Management framework.

• Antitrust and Fair Competition Compliance program review delayed by merger.

• Suncor Energy Foundation contribution to community in 2009

• Revise Community investment strategy inclusive of

was $18.1 million.

funding focus priorities, policies and guidelines, tools and measurements.

• Honoured grant commitments made prior to the merger. • Revised grant management system. • Launched new employee grants program. • Successfully leveraged sponsorship of the 2010 Olympic

• Provide leadership in initiatives designed to build community capacity and sustainability, and trust and respectful relations with stakeholders.

and Paralympic Games.

• Supported Aboriginal youth to attend 2010 Legacy Totem Pole blessing.

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ceo’s message I’ve always believed that when it comes to defining and communicating a corporation’s vision and goals, conciseness is a virtue. In that spirit, the theme of this year’s Report on Sustainability is built around just three words—energy, innovation and commitment. It’s no accident that these words sum up the past, present and future of what is Suncor’s core enterprise—the responsible development of energy, including Canada’s oil sands. One of the most exciting examples of innovation is the new approach to tailings reduction Suncor plans to implement on a commercial scale in 2010. The de-watering technologies we are pioneering (described in greater detail in this report) will see Suncor once again leading the way by addressing one of the biggest sustainability issues facing our industry.

Four decades ago, Suncor pioneered development of the oil sands, an important new source of energy in a world constantly seeking fresh avenues of supply. Our success is built on innovation—investing in the new technologies that first unlocked the production potential of the oil sands and that continue to drive improvements in reliability and environmental performance. Central to everything we do is a firm commitment to the principles of sustainable development, which is all about producing the energy required to fuel our economy in a way that is socially beneficial and preserves a healthy environment.

Managing mines tailings represents a significant environmental challenge and economic cost for companies like Suncor. Using technology to reduce the current backlog of tailings and the need for future tailings ponds is good for the environment and will also save us money over the long run. It’s a classic example of why sustainable development simply makes good business sense.

In 2009, Suncor embarked on an exciting new chapter after merging with another progressive energy company, Petro-Canada. The result is a larger, stronger and more financially flexible company that combines a leading position in the oil sands with complementary operations in refining and marketing, North American gas production and conventional oil and gas production internationally and offshore East Coast Canada. This merger will allow us to continue to invest in innovation and growth and to compete globally. But while much has changed, our core identity remains unaltered. The new Suncor, like the old Suncor, is strategically focused on responsibly developing Canada’s oil sands—the world’s second largest resource base. We also remain committed to our longstanding vision for sustainable energy development. We will continue to apply that vision to every aspect of our operations. Suncor’s stakeholders have come to expect a lot of us on this front. After all, we were one of the first major energy companies to adopt a climate change action plan to better manage our greenhouse gas emissions and to make industry-leading investments in renewable energy products. With the additional responsibilities—and opportunities— that flow from the recent merger, our stakeholders expect Suncor to continue to be an industry leader in social responsibility, environmental stewardship and technological innovation. We intend to do just that.

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We’ve also made significant strides in water management. In 2009 alone, Suncor’s mining operations achieved an 11% reduction in water withdrawal compared to 2008, bringing the reduction to 27.5% since 2004. Water withdrawal from the Athabasca River is now the lowest since 1998. Suncor plans to complete the reclamation of our first tailings pond to a solid surface later in 2010.

Success in this area is not the result of any single initiative, so much as a corporate-wide determination to do more with less. We realize water is a precious, finite resource. So the question for all employees is this: how little water do we need to get the job done and what are the continuous improvements required to achieve further reductions? Again, this is Sustainable Development 101.

Suncor’s performance goals In 2009, we committed to a series of strategic environmental performance goals. All of the proposed reductions are absolute, except for energy efficiency, which is intensity-based. We are planning to achieve these goals even as our production rates grow.*

Suncor continues to work on several fronts to reduce the carbon intensity of our business—investing in new technologies, developing renewable energy sources and improving the energy efficiency of all our operations. We are also active in public policy discussions and are a strong advocate of a national energy strategy for Canada that would include clear targets and goals for reducing greenhouse gas emissions. When it comes to our own performance goals, Suncor is taking a proactive approach. In last year’s Report on Sustainability we set out specific goals for achieving reductions by 2015 in four key areas—water use, land disturbance, energy efficiency and air emissions. In this report, we describe our progress in 2009 and how we intend to further move the yardsticks.

Indicator

Environmental Performance Goal

Water Use

Reduce fresh water consumption by 12% by 2015

Land Disturbance

In addition to leading by example, our stakeholders want Suncor to be candid about our sustainability challenges and forthright about potential solutions. This report is one way we attempt to meet those expectations. Another is Suncor’s longstanding willingness to engage in a dialogue with industry critics. We believe no one has a monopoly on good ideas and we will work with anyone who has constructive proposals for improved performance.

Increase reclamation of disturbed land area by 100% by 2015

Energy Efficiency

Improve energy efficiency by 10% by 2015

Air Emissions

Reduce air emissions by 10% by 2015

We will also work to align our current GHG strategy to address emerging climate change policies. This, in turn, will help us clarify our long term goals.

In that context, I ask you to read this report carefully and give us your feedback. With a shared commitment to excellence and innovation, we can work together to build a more sustainable energy future.

* The base year for the planned improvements is 2007. The goals were established in 2009 and our business units will be addressing them in the 2010 business planning cycle, with capital allocations to follow. Suncor is looking at a five-year timeframe for implementation as these performance goals will require significant resources (capital investments and people) and focus. Our approach will be to assign the right resources at the right time.

On the web: Details on how Suncor plans to achieve each of these performance goals can be found in the “What Guides Us” section.

Rick George president and chief executive officer

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environmental performance Responsible energy development means minimizing our impact on precious water, land and air resources

Suncor began implementing a new 10-year water management plan for oil sands mining in 2009. We have more than $500 million in capital to support the plan, which is aimed at making us the lowest net water intensity user in the oil sands mining business.

Water

As one of four key environmental performance goals announced in 2009, Suncor is committed to reducing our corporate-wide fresh water consumption by 12% by 2015. Fresh water consumption will be our key indicator for assessing our performance. All upstream and downstream operations are expected to improve their water use tracking and identify opportunities for more sustainable water use.

Water impacts every aspect of Suncor’s business. We use water to separate the bitumen from the oil sands in our mining operations. In some cases, we tap into ground water (most of it is saline water unsuitable for drinking or agricultural purposes) to help provide steam at our in-situ oil sands facilities. Our refineries draw on various water sources—including, in the case of our Edmonton refinery, recycled municipal wastewater from a nearby treatment plant. Our offshore operations rely almost entirely on sea water.

While our focus will be on reduced water use, we will also continue efforts to have the highest standards for water released back to source rivers and lakes after appropriate

Suncor is committed to using water wisely and well. We recycle, reuse and look for alternative water sources whenever possible. About 75% of the water used at our oil sands mining operations is recycled—including released water from tailings ponds. The recycling ratio at our in-situ facilities is even higher—90% or more—and we use mostly saline ground water or recycled wastewater from our oil sands mining operations as makeup sources. Oil sands mining represents Suncor’s biggest draw on fresh water resources. But we’ve made significant progress in reducing our water demand. Suncor’s gross fresh water withdrawal from the Athabasca River declined by 27.5% since 2004. Water withdrawal is the lowest since 1998, even though bitumen production has nearly tripled. In 2009 alone, Suncor reduced its fresh water withdrawal from the Athabasca River by 11% from 2008, primarily through the installation of a new cooling tower that allows us to more effectively re-circulate and reuse the river water. A key benchmark of progress is the amount of water consumed for each barrel of oil produced—or water consumption intensity. Water consumed is water withdrawn and not returned to source. In 2009, Suncor’s oil sands mining operations consumed 2.27 cubic metres of river water to produce one cubic metre of oil – a 47% reduction in water consumption intensity since 2003. Prit Kotecha, Environmental Engineering Specialist.

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water treatment. Suncor is committed to meeting or exceeding government water quality standards for all waters we discharge to the environment.

Air With the merger of Suncor Energy and Petro-Canada in 2009, total reported air emissions increased overall due to the combination of assets.

Suncor invests in research, monitoring and conservation efforts wherever we operate.

Reduced flaring and sulphur processing at the Sarnia refinery did help mitigate the overall increases in sulphur dioxide (SO2) emissions from the expanded refining and marketing asset group. Increased stability during 2009 at our oil sands mining operations helped to mitigate SO2 emissions from oil sands.

with the Alberta Conservation Association to voluntarily conserve environmentally sensitive boreal habitats. Suncor is also a member of the Boreal Leadership Council, comprised of conservation groups, First Nations, resource companies and financial institutions with a stake in the future of Canada’s boreal forest. Council members are signatories to the Boreal Forest Conservation Framework – a groundbreaking national conservation vision.

However, increased production at our oil sands mining operations did result in an overall increase in nitrogen oxide emissions. Improved procedural and operational controls at our Firebag in-situ facility resulted in the decreased duration and number of venting incidents, lowering hydrogen sulphide emissions during 2009. As well, on March 1, 2010, the Energy Resources Conservation Board removed an enforcement order issued in September 2007 to Firebag due to inadequate emissions control equipment which has since been upgraded.

Suncor invests in research, monitoring and conservation efforts to protect birds and other wildlife wherever we operate. Some examples include habitat restoration for caribou along our natural gas pipeline in west-central Alberta, deterrent systems to minimize contact between birds and our oil sands tailings ponds, and adjustments to our seismic activities in Syria to protect a rare bird species. Suncor actively manages liquid spills, should they occur, in every aspect of our operations, including crude oil, refined products, produced salt water and chemicals. We have emergency response plans at all our locations and spill events are recorded and thoroughly investigated to discover root causes and prevent recurrence.

Land and Biodiversity Since oil sands production began in 1967, Suncor has disturbed approximately 17,161 hectares of land through our mining operations. As of the end of 2009, we had reclaimed approximately 1,182 hectares, or about 6.9% of the total. Our goal is to return all disturbed lands to as close to a natural state as possible.

Suncor’s operations have waste management procedures in effect to ensure the production, control and disposal of liquid and solid wastes meets or exceeds regulatory requirements.

Suncor’s eight tailings ponds account for about 18% of the disturbed land Suncor is currently working to reclaim. So as we begin to implement our new TRO™ (Tailings Reduction Operations) process on a commercial scale, Suncor expects the rate of land reclamation to accelerate significantly (see page 12). We are targeting a 100% increase in land area reclaimed by 2015.

On the web: Suncor’s Gord Lambert, Vice President, Sustainability, outlines our priorities for water management: Environment/Water/Water Update. Other articles provide more details on Suncor’s water performance and ongoing efforts to minimize our impact on land resources and air quality.

Canada’s boreal forest is home to the oil sands and Suncor strives to balance resource development with the need to protect this valuable ecosystem. We work ™ Trademark of Suncor Energy Inc.

environmental performance

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innovation in action: tackling the tailings challenge In 2010, Suncor plans to mark an industry milestone by becoming the first oil sands company to transform a tailings pond into a surface solid enough to be actively re-vegetated and reclaimed.

Above: Suncor’s TRO™ process helps quickly transform mature fine tailings into a solid landscape suitable for reclamation.

It’s taken literally decades of research and innovation to get to this point and so it seems fitting that 2010 is also the year Suncor is set to pioneer a new form of tailings reclamation— one that promises to revolutionize oil sands mining by dramatically accelerating the rate at which disturbed lands are returned to a natural state. While seeking regulatory approval, Suncor plans to spend approximately $450 million in 2010 to fully implement its TRO™ (Tailings Reduction Operations) process, which is a new approach for managing mines tailings. The centerpiece of the TRO™ method is a proprietary de-watering process that will more rapidly turn fluid tailings ponds into solid landscapes suitable for reclamation. Tailings management is a key issue for many of our stakeholders, particularly the communities closest to our tailings ponds. We believe the TRO™ process is a progressive response to their concerns and will also position Suncor as a leader in meeting or exceeding recently enacted government regulations that require oil sands producers to significantly reduce the size and number of tailings ponds.

What are tailings? Like any mining process, oil sands mines produce a product, known as tailings. The tailings are a mixture of water, clay, sand and residual bitumen. When these tailings are pumped into holding ponds to begin the reclamation process, the heaviest material—mostly sand—settles Stephen Young, Operations Manager, with solidified tailings from an oil sands mine.

to the bottom, while water rises to the top and can be recycled. The middle layer, known as mature fine tailings (MFT) is comprised of about 70% water and 30% fine clay particles and has the consistency of yogurt. Left alone, that’s about as solid as it will ever get. To help transform MFT into a soil-like deposit that can be reclaimed, Suncor pioneered Consolidated Tailings (CT) technology in the 1990s. By adding gypsum and coarse sand to MFT, we accelerated the release of water, which is then recycled in our operations. While CT proved effective and became the industry standard, we weren’t satisfied with the pace of the process and its inability to keep up with the volumes of tailings being produced. Like other oil sands companies, Suncor required more and larger tailings ponds. Over the past seven years, Suncor has developed and piloted a new drying process that mixes MFT with a polymer flocculent and then deposits the MFT in thin layers over sand banks with shallow slopes. The polymer flocculent adheres to the clay particles and causes them to bundle together, accelerating the release of water. The resulting product is a dry material capable of being reclaimed in place or moved to another location for final reclamation. This drying process occurs over a matter of weeks, rather than years. What makes Suncor’s TRO™ process a potentially industrychanging innovation is that it should allow mined areas to be reclaimed much sooner. We expect the TRO™ process to result in reclaimable surfaces 10 years after initial disturbance—the comparable timeframe using CT is about 30 years. It will also help us reduce our existing inventory of tailings and the need for future ponds. The net result: a smaller environmental footprint and restoration of natural habitats decades ahead of what the industry can now achieve. On the web: Suncor’s Gord Lambert, Vice President, Sustainability, outlines our priorities for water management: Environment/Water/Water Update. Other articles provide more details on Suncor’s water performance and ongoing efforts to minimize our impact on air and land resources. ™ Trademark of Suncor Energy Inc.

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environmental performance

climate change Suncor was one of the first major energy companies to adopt a climate change action plan to better manage our greenhouse gas (GHG) emissions. We continue to adapt and refine that plan to make continuous improvements in reducing the carbon intensity of our operations. Suncor has voluntarily reported its progress in

that much more can—and must—be done as production volumes and the corresponding level of absolute emissions continue to grow.

managing GHG emissions since 1995—and significant progress has been made.

Suncor believes our single biggest near-term opportunity to reduce GHG emissions is through improved reliability and energy efficiency across our operations. We had some success in this area in 2009, and we are currently implementing corporate-wide operational reliability and energy management programs aimed at making continuous improvements in the coming years. The investment in energy management, in particular, is not a single point project or set of activities. Rather, it’s the development of a more comprehensive approach to our own energy use from design, construction, and ongoing operations to ensure we are as efficient as we can be given the physical and economic constraints of our facilities.

We have invested in technology, improved energy efficiency and reduced GHG emissions intensity at our oil sands base plant by 53.6% compared to 1990 levels. But we know

Suncor continues to invest in high-efficiency co-generation facilities and renewable energy sources and to collaboratively advance new emissions-reducing technologies, including carbon capture and storage. As a responsible energy developer, we also continue to work with governments and other stakeholders on emerging public policy solutions aimed at finding the most effective ways to reduce global GHG emissions. Following the 2009 merger with Petro-Canada, Suncor’s asset base and total production levels increased significantly and had an impact on both our absolute GHG emissions and our per-barrel emissions intensity. On these pages, we provide an overview of Suncor’s performance in 2009 as well as our major challenges and priorities going forward. More information—including details on the performance of each of Suncor’s business units—can be found in the web report: Environment/Climate Change. Sean LeBlanc, Renewable Energy Engineer.

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Total upstream production averaged 456,000 barrels of oil equivalent (boe) through the course of 2009, compared to 264,700 boe in 2008. This 2009 volume only includes production from Petro-Canada assets after merger close on August 1, 2009, but the GHG volumes that follow are for the combined company’s full-year emissions. Intensity calculations use full-year production and carbon dioxide equivalent (CO2e) volumes from both predecessor companies.

by the combined company, we recorded an 11% absolute increase from 17.5 million tonnes in 2008 (before the merger) to 19.5 million tonnes in 2009 (after the merger). Some overall absolute GHG reductions were experienced, such as 1.2% in Natural Gas (most due to lower production volumes) and 8% at Terra Nova, due to a reduction in flare volume which can be attributed to higher gas injection availability than predicted, improved asset availability and good management of the flaring strategy.

All numbers included here are for operated facilities and properties only, and represent 100% of the direct and indirect emissions at these facilities. (Data is not broken down by working interest and does not include non-operated facilities.) Absolute full-year CO2 emissions for the combined company in 2009 totalled 19.5 million tonnes, compared to 11.5 million tonnes for legacy Suncor assets in 2008— a one-time 70% increase, mainly due to the much larger combined total production levels. For the assets operated

Using globally accepted GRI protocols, Suncor’s reported corporate GHG emissions intensity experienced a significant one-time decrease year-over-year of 13%. This drop was partly due to the averaging in of legacy Petro-Canada upstream natural gas and offshore oil production that exhibits lower carbon intensity (at least in the production phase) than oil sands extraction. But there were also independent decreases in GHG emissions intensities in 2009 at our oil sands facilities.

(1) Estimates are based on current production forecasts and methodologies. The tables contain forward-looking estimates and users of this information are cautioned that the actual GHG emissions and emission intensity may vary from the estimates contained in the table. (2) Data from 1990 to 2000 does not include Suncor's U.S operations. (3) Data includes direct and indirect CO2e emissions. (4) Data and estimates for 2007 forward include the St. Clair Ethanol Plant. (5) Data and estimates have changed from last year's report due to Oil Sands methodology changes that reflect the inclusion of biomass, a methodology change in the calculation of fugitive emissions using leak detection and repair (LDAR) data, and revisions to emissions factors based upon Alberta Environment's (AENV) request. These changes are also consistent with the methodology used for Specified Gas Emitters Regulation (SGER) Bill 3 reporting. (6) Data for 2009 includes the full-year emissions for all Petro-Canada operated properties acquired in the 2009 merger, even though the merger did not close until August 1, 2009. This is to allow for a consistent comparison to past and future years. (7) The business as usual (BAU) line line shown in previous years has been removed as it is no longer applicable to the merged company. A new BAU line may be added in the future once a new baseline has been developed. (8) The Suncor-wide emissions intensity uses Net Production, which is the sum of Gross Facility Production minus all internal intra and inter-Business Unit (BU) product transfers, to remove any double counting. The sum of the BU intensities will therefore not equal the Suncor-wide intensity. Definitions: Direct GHG emissions: Emissions from sources that are owned or controlled by the reporting company. Indirect GHG emissions: Emissions that are a consequence of the operations of the reporting company, but occur at sources owned or controlled by another company (e.g. purchased electricity). Absolute (total) emissions: The total GHG emissions (direct and indirect emissions) of a facility or reporting company. Emission intensity: Ratio that expresses GHG impact per unit of physical activity or unit of economic value (e.g. tonnes of CO2e emissions per unit of gross processed volume in cubic metres).

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climate change

climate change: looking ahead

our climate change performance

For example, the emissions intensity at Suncor’s legacy mineable Oil Sands operations in 2009 was 6% less than in 2008, while Suncor’s legacy in-situ Firebag operations recorded a 2.4% decline. The emissions intensity at Petro-Canada’s legacy MacKay River in-situ plant also dropped by 8.6% in 2009, for similar reasons. The intensity decreases were mainly due to improved reliability and productivity. For example, if a plant runs well below its capacity, it continues to use significant levels of energy without producing as much finished product, thus boosting per-barrel emissions rates. Overall, the In-Situ business unit (combined Firebag and MacKay River) posted a 4% drop in emissions intensity.

Suncor’s climate change action plan includes managing our own GHG emissions as well as investments in environmental and economic research and renewable energy.

As shown below, the sum of the Suncor facilities production will not equal the reported net corporate production. Inter- and intra-business unit product transfers (hydrocarbon streams that pass through more than one Suncor facility) are removed from the corporate total to give the net production. This is done to prevent double-counting of hydrocarbon streams sent for further processing within the company. Individual facility intensities are calculated based on gross facility production; business unit intensities are calculated based on gross production minus intrabusiness unit material transfers, and the corporate GHG intensity is calculated based on gross production minus all inter- and intra-business unit transfers.

Suncor operates four refineries in Edmonton, Alberta; Montreal, Quebec; Sarnia, Ontario; and Commerce City, Colorado; as well as a Lubricants Plant in Mississauga, Ontario. The biggest performance gain was at the Commerce City refinery; although absolute GHG emissions increased, emissions intensity dropped by 4.6%. The Edmonton, Sarnia and Commerce City refineries have all recently completed major upgrade projects and are now looking to optimize operations using energy management and operational excellence initiatives.

(1) Estimates are based on current production forecast and methodologies. The tables contain forward-looking estimates and users of this information are cautioned that the actual GHG emissions and emission intensity may vary from the estimates contained in the table. (2) Data includes direct and indirect CO2e emissions. (3) Data and estimates have changed from last year's report due to Oil Sands methodology changes that reflect the inclusion of biomass, a methodology change in the calculation of fugitive emissions using using LDAR data, and revisions to emission factors based upon AENV's request. These changes are also consistent with the methodology used for SGER Bill 3 reporting. (4) Historical environment data for Oil Sands from 2005 to 2008 includes our Firebag In Situ operation, where appropriate, as well as our mining operations. In 2009 In Situ (Firebag and MacKay River) began reporting as its own business unit. Data for 2009 includes only Oil Sands Baseplant mining / extraction / upgrading and cogen operations.

climate change

15


climate change: looking ahead Suncor is resuming a growth strategy for its oil sands

the public, and measure and report our progress. We are

business. That means, in the immediate term at least,

proceeding on all those fronts.

absolute GHG emissions will increase. However, we

Suncor is on track to spend an additional $500 million

believe we can make continued progress on reducing

over five years developing wind energy and biofuels.

emissions intensity while working towards long-term

Our renewable energy projects create partial offsets for

solutions to deal with absolute emissions.

GHG emissions in our operations, simultaneously opening

While these intensity improvements often do not involve

up new business opportunities and helping Canada to

absolute reductions at our sites, they are still very real as

begin the necessary shift to a greener energy system.

they displace production emissions from energy sources

Similarly, Suncor is moving on several fronts to advance

that other companies operate in supplying the world’s total

potential carbon-reducing technologies, including carbon

energy demand. In terms of emissions intensity, there are

capture and storage (CCS). We continue to work with

several reasons for optimism.

both ICO2N and the Carbon Capture Project. These

First, there continues to be significant room to improve the

groups—which include some of the world’s leading energy

reliability and productivity of existing oil sands facilities—

companies along with both domestic and international

further reducing energy use and emissions.

governments—are working on research and development

Second, Suncor is targeting a corporate-wide 10%

aimed at making CCS more affordable and on studies

improvement in energy efficiency by 2015 through a

to guide future policy and regulations that will enable

significant new energy management system. While we

CCS to proceed.

believe energy savings can be achieved in all our

Suncor is also a founding member of two new organizations

operations, the biggest potential volume gains are

that will bring expertise—and encourage capital

with the Oil Sands operation.

investment—to address the climate change challenge.

Suncor continues to be guided by the seven-point climate

Carbon Management Canada (CMC) is a national centre of

change action plan we first adopted in 1997. This plan calls

excellence funded by federal and provincial governments

on us to manage our own GHG emissions, develop

and industry. Through work at over 20 universities across

renewable sources of energy, invest in environmental and

Canada, its key mandate is to investigate cost-effective,

economic research, use domestic and international offsets,

carbon-efficient techniques for extracting fossil fuels.

collaborate on policy development, educate employees and

The Oil Sands Leadership Initiative (OSLI), comprised

Suncor Energy Inc.

15-1

climate change

of Suncor and four other progressive-minded oil sands

petroleum-sourced fuel occur when the fuel is combusted

companies, is focused on real solutions that lead to

in vehicles, making these emissions highly dependent

improved environmental performance, including carbon-

on engine fuel efficiency and total miles driven—factors

reduction initiatives.

a California-style LCFS does not influence. For that reason, Suncor initiated discussions with critical stakeholders on

As Canada’s largest energy company by market

a proposal for an overarching “low carbon transportation

capitalization—and the fifth largest in North America—

framework” that would deal with reducing GHG emissions

Suncor is increasingly active in public policy discussions

released in both the production and consumption of

on energy and the environment.

energy products. We believe the December, 2009 Copenhagen Climate Finally, recent crude oil life cycle assessment studies

Change Accord, while not legally binding, could encourage

indicate that, on a “wells-to-wheels” basis, the carbon

countries to innovate within their own borders to help

intensity of oil sands crude is not significantly different

reduce global GHG emissions.

from conventional crudes, including offshore imports. When it comes to climate change regulations, Suncor

Displacing emissions to other jurisdictions will not create

continues to press for clarity and certainty, fairness and

a net benefit for the atmosphere and could compound

competitiveness, and harmonization across jurisdictions

energy security and social concerns associated with

to avoid overlap and inefficiencies.

reliance on foreign imports, as well as increasing the overall

Suncor sees emissions trading and other carbon pricing

carbon footprint linked with bringing crude oil from its

mechanisms as useful tools. However, we also believe that

source to consumers.

to be effective, climate change policy must encourage the development and deployment of new technologies that

On the web: Suncor’s Gord Lambert, Vice President, Sustainability, deals with ongoing public policy challenges, proactive steps to reduce GHG emissions and Suncor’s support for a national energy strategy: Environment/Climate Change/GHG Management. There are also features on Suncor’s proposed alternative to LCFS regulations and on research into emissions-reducing technologies.

will transform how we produce and use energy. Cap and trade policies alone will not accomplish this. Suncor continues to monitor initiatives by California and others to establish low carbon fuel standards (LCFS). We believe these initiatives may not have the desired impact of reducing overall GHG emissions. In particular, approximately 75-80% of the life cycle emissions of

climate change

15-2


social performance Suncor strives to be a good corporate citizen. That includes ensuring workplace safety, respecting human rights, investing in strong communities and working constructively with our Aboriginal neighbours. Safety

Community Investment

Suncor considers safety our top priority and safety leadership is one of the six Suncor values. Since 2002, when we launched the Journey to Zero program to eliminate workplace injuries, our frequency of lost-time injuries has declined by nearly two-thirds, while the frequency of recordable injuries dropped by half.

Suncor has a strong history of investing in the communities where we operate. In 2009, Suncor and the Suncor Energy Foundation continued to invest in four focus areas:

The 2009 merger of Suncor and Petro-Canada brought together two companies with very similar values and visions regarding personal and process safety. We are integrating the best practices of both companies to reinforce an even stronger safety-first mindset.

Educational initiatives, including programs to support science and technology literacy, youth leadership and Aboriginal education and training.

Programs and capacity-building initiatives that supported communities, Aboriginal Peoples and non-profit organizations.

Programs to promote environmental excellence. Grants to support the charitable giving and volunteer effort of our employees and retirees.

Suncor continues to implement its new process safety management (PSM) plan as part of its corporate-wide Operational Excellence strategy. In 2009, Suncor adopted a set of clear performance standards. All of Suncor’s major facilities are now being assessed according to those standards to identify potential performance opportunities and to develop and implement action plans.

Aboriginal Relations

Despite recent gains in safety performance, we know our Journey to Zero isn’t over—as we were reminded again in August 2009 by the death of a contractor employee at our oil sands site.

Many of Suncor's operations are located on or near the traditional lands of Aboriginal peoples. The company bears certain obligations to these peoples who are affected by the company’s operations. We are committed to working closely with these communities to build strong, mutually beneficial relationships and healthy communities. Our approach is based on principles of responsibility, recognition and respect. This includes respect for Aboriginal treaty rights.

We were deeply saddened by this tragic incident and more determined than ever to make sure all our employees and contractors go home safely, every single day.

We believe Aboriginal Peoples can benefit from industrial development through employment, training and business development. In addition to education and community

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16

social performance

Suncor is committed to enhancing the quality of life through investments in the communities where we operate.

investments, Suncor has spent more than $1 billion on goods and services from local Aboriginal companies in the Wood Buffalo region since 1992.

Community Infrastructure and Development Suncor recognizes the infrastructure pressures oil sands development places on communities in northern Alberta. We are a key player with the Oil Sands Developers Group (OSDG). The OSDG has been instrumental in working with stakeholders to identify local infrastructure needs and encourage the Alberta government to advance long-term planning and funding. One key tool industry and

Suncor is in the process of reviewing our aboriginal policy and developing a corporate-wide Aboriginal Relations strategy that will build on the best practices employed in previous years.

Olympic and Paralympic Sponsorship

Continued on page 18.

Suncor was proud to honour Petro-Canada’s longstanding support for Canadian Olympic and Paralympic athletes. Suncor played a major role as a national partner for the 2010 Winter Olympic and Paralympic Games held in Vancouver and Whistler, B.C., with a total cash and in-kind investment in 2009 of more than $20 million.

Renée Paul, Senior Advisor, Energy, Supply, Trading and Development.

As National Partner and Official Oil and Gas Sponsor, Suncor provided about 25 million litres of fuel, including gasoline for 4,500 cars and light trucks and diesel for about 1,100 buses and fuel products to operate facilities at various Games venues. In addition, Petro-Canada sold 1.8 million limited-edition Vancouver 2010 glasses, of which approximately 50% of the proceeds went to help our Canadian team. During the Games, the Petro-Canada Athlete Family Program hosted approximately 500 family members in Vancouver and Whistler to ensure every athlete had their family members on the sidelines to watch them compete. The company continues to fuel the dreams of Canadian athletes through grassroots initiatives, including annual funding for 50 pre-carded athlete-and-coach pairs through Fuelling Athlete and Coaching Experience (FACE), and the annual Petro-Canada Sports Leadership conference for coaches.

social performance

17

Continued from page 17.

governments have developed together is a new regional population model. Now all parties have a much better handle on when and where growth is going to happen— and can plan accordingly. We are also committed to supporting new community recreational facilities. In 2009, the Suncor Community Leisure Centre at MacDonald Island Park in Fort McMurray – a new state-of-the-art leisure and recreation facility opened up to the public. Suncor also helped break ground on a new high school and Performing Arts Centre, which is planned to open in 2011, and will include a 345-seat theatre and professional dance studio.

Building a workplace in which our employees succeed is an important part of Suncor’s journey to become Canada’s premier integrated energy company.

Human Rights

Our journey began in March 2009, when two great companies with proud histories and talented teams announced what would be the largest merger in Canadian history. As we came together, the most difficult decisions concerned the loss of approximately 1,000 employees as we dealt with areas of operational overlap. We did so with a firm commitment to be open, honest and transparent; we wanted to treat people respectfully and fairly while building a workplace that we all can be proud of.

Suncor supports the Universal Declaration of Human Rights and is committed to the protection of human rights within our sphere of influence. Suncor’s international presence now includes operations in Libya and Syria. We recognize operating in politically sensitive jurisdictions can involve higher security, human rights, and business risks. We continually review those risks and our ability to mitigate them.

Building a culture and workplace where employees take pride in their success is an important part of our journey; our employees continue to play a central role by living the values and behaviours we need to achieve Suncor’s business goals and ensure we continue to be a great place to work.

In Libya and Syria, we operate with experienced managers and employees under the same principles, policies and procedures. Suncor has established Principles for Responsible Investment and Operations. These principles commit us to operating with integrity and maintaining sound environmental standards, and working diligently to prevent any risk to health and safety wherever we operate.

On the web: Mark Little, Suncor’s Senior Vice President, International and Offshore, talks about the challenges of operating in developing jurisdictions: Social/Social Responsibility/Operating Internationally.

We integrate specific and consistent human rights elements into our employee practices and policies, our community and stakeholder engagement practices and policies, and in the way we manage the security of our employees and our facilities. These initiatives are all part of Suncor’s corporatewide Operational Excellence strategy.

Cathy Glover, Director, Stakeholder Relations and Community Investment, discusses post-merger priorities for community investment: Social/Community Investment/Merger Impact On Progress.

Our Employees

Brenda Erskine, Suncor’s Director, Stakeholder Relations, offers perspectives on planning for responsible growth in the Wood Buffalo region: Social/Our Stakeholders/ Community Development. Plus more details on personal and process safety, Aboriginal relations and support for Olympic athletes.

Our 12,000-plus employees are an important part of our journey to become Canada’s premier integrated energy company, focused on operational excellence and growth—with the assets, people, and financial strength to compete globally.

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18

social performance

economic performance A vibrant energy industry acts as an engine for the larger economy, creating well paying jobs, promoting economic growth and providing governments and suppliers with valuable revenues. There were few years in Suncor Energy’s 42-year history as pivotal as 2009. We started the year confronting one of the most serious global economic downturns of the past century. Commodity prices collapsed while access to credit was severely restricted. Like almost everyone else, Suncor’s initial response was to retrench. We put most of our growth projects on hold and significantly reduced capital spending.

Suncor takes an active role in connecting supply to consumer demand with a diverse portfolio of products, downstream assets and markets.

However, it wasn’t long before Suncor looked for ways to turn adversity into opportunity. The result was a historic merger with Petro-Canada, creating Canada’s largest energy company by market capitalization. Today, Suncor is a stronger and more financially flexible company. Our high-quality assets and integrated strategy provide us with a degree of protection from the volatility of commodity markets and put us in a strong position to resume prudent production growth. Suncor remains strategically focused on responsibly developing Canada’s oil sands. We also remain focused on achieving safe, reliable and cost-effective energy production across all of our operations. Here is a snapshot of Suncor’s corporate performance as well as the contribution to the economy from our operations in 2009:

Corporate Performance Total upstream production averaged 456,000 barrels of oil equivalent (boe) in 2009, compared to 264,700 boe in 2008 and 271,400 boe in 2007. The increase was due primarily to steady production from established East Coast Canada and International assets. In addition, it reflected increased operational reliability at our oil sands operations through most of the year. Oil Sands production (excluding production from our share of the Syncrude joint venture oil sands operation) averaged 290,600 barrels per day (bpd) in 2009, compared to 228,000 bpd in 2008 and 235,600 bpd in 2007. Continued on page 20.

Helen Kelly, Manager, Investor Relations.

19


looking ahead With the merger behind us and the economy recovering, Suncor entered 2010 with a plan for disciplined, but significant growth.

Suncor operates the Petro-Canada network of more than 1,500 wholesale and retail service stations across Canada. Continued from page 19.

Suncor reported net earnings of $1.146 billion in 2009, compared with $2.137 billion in 2008 and $2.983 billion in 2007. The decrease in net earnings was primarily due to significantly weaker commodity prices. Suncor’s common shares closed at $37.21 on the Toronto Stock Exchange on December 31, 2009, an increase of approximately 57% over the year before, but well below the $53.96 common share price at the end of 2007. The fluctuations in share prices reflected trends in global equity markets and, more specifically, in commodity prices for Suncor’s core products. Our focus remains on building long-term shareholder value.

Contribution to Economy In 2009, royalties paid by Suncor totalled approximately $1.2 billion, including $645 million directed to the Alberta government oil sands royalties. As well, Suncor paid more than $1 billion in taxes in 2009 to governments in Canada and internationally. Capital spending in 2009 totalled $4.2 billion, compared to $8.0 billion in 2008. The decrease reflected decisions to temporarily suspend growth projects due to weaker commodity prices and market conditions. The Suncor and Petro-Canada combined spend on goods and services was almost $11.5 billion in 2009. A look at our supply chain spending shows we had more than 17,150 Canadian vendors spanning all 10 provinces as well as the Northwest Territories. The United States was our next biggest supplier (3,680 vendors), although we also purchased from 96 other countries. The range of goods and services is extensive and includes: heavy equipment, computing, drilling, construction, engineering, environmental services, trucking, concrete, steel, electrical, catering, pipelines and tires. Whenever possible, Suncor prefers to use local vendors. In 2009, we spent $273 million on direct purchases from Aboriginal businesses in the Wood Buffalo region, home to our oil sands business. Since 1992, Suncor has directed more than $1 billion in goods and services spending to Aboriginal businesses. economic performance

20

While $4 billion of our $5.5 billion capital spending plan for 2010 is targeted at sustaining existing operations, approximately $1.5 billion is directed towards new production growth, primarily at the company’s in-situ oil sands operations. Most of the growth spending is planned for Stage 3 and Stage 4 of our Firebag in-situ oil sands expansion, with initial production expected to commence in the second quarter of 2011 and the fourth quarter of 2012, respectively. After the estimated 18-month ramp-up periods to full capacity are complete, the two projects together are expected to boost our in-situ oil sands planned production capacity by approximately 125,000 barrels per day. These are the first steps in our strategic plan to steadily increase oil sands production, supported by cash flow from Suncor’s existing operations. Suncor is targeting expansion of its oil sands production by 10% to 12% per year over the next decade in ways that maximize the benefits for our shareholders and the larger economy without contributing to the super-inflationary climate that existed during parts of the past decade while continuing to improve our environmental performance.

On the web: More details on Suncor’s economic performance can be found: Economic/Economic Performance.

Legal notice—Forward-looking statements Certain statements contained in this Report and our full 2010 Sustainability Report constitute “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward looking information” within the meaning of applicable Canadian securities legislation (collectively, “forward looking statements”). All forward looking statements are based on our current expectations, estimates, projections, beliefs and assumptions based on information available at the time the statement was made and in light of our experience and our perception of historical trends. Some of the forward looking statements may be identified by words like “expects,” “anticipates,” “estimates,” “plans,” “scheduled,” “intends,” “may,” “believes,” “projects,” “indicates,” “could,” “focus,” “vision,” “goal,” “proposed,” “target,” “objective,” “continue” and similar expressions. Forward looking statements in this Report and our full 2010 Sustainability Report include references to: operations; business strategies and goals; reclamation time-lines; future investment decisions; future capital, exploration and other expenditures; future resource purchases and sales; anticipated construction activities; future oil, natural gas and ethanol production levels and the sources of their growth; project development, expansion schedules and results; reserves and resources estimates; anticipated cost savings, and other synergies, realized from the merger with Petro Canada; contingent liabilities; the impact and cost of compliance with existing and potential environmental regulations; and future regulatory approvals. In addition, all other statements that address expectations or projections about the future, including statements about our strategy for growth, costs, schedules, production volumes, operating and financial results and expected impact of future commitments, are forward looking statements. Forward looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to our experience. Our actual results may differ materially from those expressed or implied by our forward looking statements and you are cautioned not to place undue reliance on them. The risks, uncertainties and other factors, many of which are beyond our control, that could influence actual results include but are not limited to: market instability affecting Suncor’s ability to borrow in the debt capital markets at acceptable rates; availability of third party bitumen; success of our hedging strategies; maintaining a desirable debt to cash flow ratio; risks associated with the integration of the business of Petro Canada following completion of the merger; changes in the general economic, market and business conditions; fluctuations in supply and demand for our products; commodity prices, interest rates and currency exchange rates; our ability to respond to changing markets, and to receive timely regulatory approvals; the successful and timely implementation of capital projects including growth projects and regulatory projects; the accuracy of cost estimates, some of which are provided at the conceptual or other preliminary stage of projects and prior to commencement of the detailed engineering needed to reduce the margin of error or level of accuracy; the integrity and reliability of our capital assets; the cumulative impact of other resource development; the cost of compliance with existing and future environmental laws; the accuracy of Suncor’s reserve, resource and future production estimates and our success at exploration and development drilling and related activities; the maintenance of satisfactory relationships with unions, employee associations and joint venture partners; changes in refining and marketing margins; competitive actions of other companies, including increased competition from other oil and gas companies and from companies that provide alternative sources of energy; labour and material shortages; uncertainties resulting from potential delays or changes in plans with respect to projects or capital expenditures; actions by governmental authorities including the imposition of taxes or changes to fees and royalties; changes in environmental and other regulations; international political events and actions by foreign governments in jurisdictions in which we operate (including OPEC production quotas); the ability and willingness of parties with whom we have material relationships to perform their obligations to us; and the occurrence of unexpected events such as fires, blowouts, freeze-ups, equipment failures and other similar events affecting us or other parties whose operations or assets directly or indirectly affect us. These important factors are not exhaustive. Suncor’s most recently filed Annual Information Form and its Management’s Discussion & Analysis and other documents it files from time to time with securities regulatory authorities describe additional risks, uncertainties, material assumptions and other factors (collectively, the “Factors”) that could influence actual results and the Factors are incorporated herein by reference. Copies of these documents are available without charge from Suncor at 150 6th Avenue S.W., Calgary, Alberta T2P 3Y7, by calling 1-800-558-9071, or by email request to [email protected] or by referring to SEDAR at www.sedar.com or by referring to EDGAR at www.sec.gov. Information contained in or otherwise accessible through our website does not form a part of this Report, and is not incorporated into this Report by reference. Suncor converts natural gas to barrels of oil equivalent (boe) at a 6 thousand cubic feet:1 barrel ratio. BOEs may be misleading, particularly if used in isolation. The boe conversion ratio of 6 thousand cubic feet:1 barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

As the Suncor record shows, the path to success begins with seeing what’s possible.

53

%

decrease in mineable oil sands GHG emission

intensity from 1990 levels

27

%

reduction in surface water withdrawal at oil sands operations since 2004

tell us what you think If you have comments or questions about this report, contact: Suncor Energy Inc. Box 38, 112 – 4th Avenue S.W. Calgary, Alberta, Canada T2P 2V5 tel: 403-269-8100 e-mail: [email protected] www.suncor.com Published July 2010

1.2

$

billion

actual and planned investments in new tailings technology