Syncrude is one of the largest operators in Canada's growing oil sands industry, with a 34-year history of responsible operations and ongoing innovation.

Based in Fort McMurray, Alberta, Syncrude operates technologically-advanced oil sands mines, extraction and upgrading facilities, as well as utilities plants. A large research and development facility in Edmonton supports operations and has pioneered many of the technologies used today in the industry. Current production capacity is 350,000 barrels per day of high quality light, sweet crude oil, and cumulative production now exceeds 2.2 billion barrels.

The Syncrude Project is a Joint Venture undertaking among Canadian Oil Sands Partnership #1 (36.74%), Imperial Oil Resources (25%), Mocal Energy Limited (5%), Murphy Oil Company Ltd. (5%), Nexen Oil Sands Partnership (7.23%), Sinopec Oil Sands Partnership (9.03%), and Suncor Energy Oil and Gas Partnership (12%).

This report is a comprehensive discussion of the environmental, social and economic impacts of Syncrude's business activities during 2010 and 2011. This is our eighth sustainability report, which will be published on an annual basis going forward. More information about Syncrude and access to past reports, including our most recent 2008-09 edition, can be found through the contacts listed at the end of the Corporate Information chapter.

The long life and high quality resource base of Syncrude's oil sands leases provide our Joint Venture participants with a sound platform for continued sustainable operations and future growth. All of Syncrude's leases can be mined and are among the best in the Athabasca deposit for quality of ore, low stripping ratios, and low total volume-to-bitumen in place, all of which enhance the economics of the Syncrude project. Syncrude uses the Dean & Stark extraction quality assurance method to test core samples and provide an accurate picture of the oil contained within its leases.

Enlarge to View

Syncrude Canada Ltd. is a private company incorporated under the Business Corporations Act of Alberta.

Syncrude's bylaws stipulate that shares in the corporation may be held only by the shareholders in proportion to their interest in the Syncrude Project, a joint venture, and that Syncrude Canada Ltd. may not carry on business or activities other than to act as operator of the Syncrude Project on behalf of the shareholders.

Board of Directors

The Board of Directors of Syncrude is responsible for providing corporate oversight and direction. The Board of Directors takes seriously its duties and responsibilities, and it is the view of the Board that its approach in directing the business of Syncrude Canada Ltd. is comprehensive, effective and consistent with generally accepted standards of Canadian corporate governance. The whole Board meets at least annually and fulfills all statutory and other legal requirements that have not been delegated to the Committees of the Board. There are four Committees of the Board, which meet on a more frequent basis: CEO Committee; Human Resources & Compensation Committee; Pension Committee; and Safety, Health, Environment & Corporate Sustainability Committee. The Board and its Committees are composed of Directors appointed by the shareholders of the Corporation.

CEO Committee

The CEO Committee assists the Board in providing corporate direction and oversight for the Corporation's business and strategic plans and specific matters pertaining to its executive and senior management team, including:

• To review and endorse the long-term strategic plan of the Syncrude Project and the business plans of the Corporation;
• To review and approve the Corporation's succession plans for its executive and senior management team;
• To review and approve annual adjustments to the compensation of the Chief Executive Officer of the Corporation. as well as the other officers of the Corporation, as recommended by the Human Resources & Compensation Committee.

Human Resources & Compensation Committee

The Human Resources & Compensation Committee assists the Board in providing corporate direction and oversight for the Corporation's principal compensation and benefit programs and human resource policies and succession plans, including:

• To review and approve annual adjustments to the salaries and benefits of the Corporation's employees;
• To review and approve principal human resource policies and programs of the Corporation and significant changes thereto and to provide advice and direction on major human resource issues;
• To approve changes in any benefit plan texts, including the Retirement Plan for the Employees of Syncrude Canada Ltd. and Member Corporations ("Retirement Plan"), that require Board approval;
• To approve any post-retirement pension payment adjustments and adhoc increases, and to authorize the Corporation, as sponsor of the Retirement Plan, to make such payments; and
• To review and approve changes to management structure and senior management succession plans of the Corporation or to provide guidance on significant issues regarding those matters.

Pension Committee

The Pension Committee assists the Board in providing corporate direction and oversight for the Corporation's responsibilities as administrator of the Retirement Plan for Employees of Syncrude Canada Ltd. and Member Corporations ("Retirement Plan") pursuant to the Employment Pension Plans Act ("Act"), including:

• To monitor the Retirement Plan assets and approve the appointment of the Actuary and the Trustee & Custodian of the Retirement Plan;
• To review and confirm or amend the Statement of Investment Policies and Procedures ("SIPP") each year on behalf of the Board;
• To review and recommend to the Board that the Board approve the annual audited financial statement of the Retirement Plan; and
• To review and approve financial assumptions and actuarial valuations of the Fund when required by the Act or when the Committee deems that additional Fund valuations are necessary.

Safety, Health, Environment & Corporate Sustainability Committee

The Safety, Health, Environment & Corporate Sustainability Committee assists the Board in fulfilling its corporate direction and oversight responsibilities for the Corporation's safety, health and environmental requirements, policies, practices, compliance systems and performance, and in monitoring current and future trends in safety, health and environmental laws and practices, including:

• To review and approve the Corporation's SH&E policy and significant revisions to that policy and the principal programs and processes supporting it;
• To review, assess and approve the Corporation's processes for the selection, preparation and disclosure of sustainability performance criteria and information and sustainability targets and measures as well as the programs and initiatives to address sustainability objectives and issues;
• To monitor and assess the Corporations performance in complying with its SH&E policy, procedures, standards and related requirements by receiving and reviewing regular or special reports from the Corporation outlining such performance;

• To confirm that the Corporation has implemented and continues to maintain and audit appropriate policies, procedures, controls and due diligence systems with respect to safety, health and environmental requirements and issues including, without limitation, compliance with all applicable laws, appropriate plans or responses to deal with emerging issues, or trends, and procedures for notifying the Board and Management Committee of the Syncrude Project of any significant or material incidents and, when necessary, to recommend to the Corporation revisions or amendments to such policies, procedures, controls and due diligence systems; and
• To review reclamation and closure plans and receive updates on reclamation activities, including tailings management.

Management Committee

Each of the Participants of the Syncrude Project, a joint venture, appoints two representatives to the Management Committee, which meets regularly and provides oversight and governance for the project on behalf of the Participants. The weight assigned to each Participant's vote through the Management Committee is proportionate to its interest in the Syncrude Project.

The Management Committee reviews and approves the Syncrude Project's strategic plans, business plans, annual budget and major capital appropriations. In addition, it reviews overall performance, both operationally and financially.

The Management Committee is chaired by one of its members. The current Chair is Marcel Coutu, Chief Executive Officer of Canadian Oil Sands Limited.

The Management Committee has created subcommittees and delegated the indicated powers and duties to support Syncrude and the Participants. Each Participant, as well as Syncrude, is entitled to nominate two representatives to each of the subcommittees. Each subcommittee reports to the Management Committee, which appoints the chair and secretary of each subcommittee.

Operations Subcommittee

The Subcommittee assists the Management Committee of the Syncrude Project on operations matters, including:

• To monitor the performance of the Syncrude operations and provide advice and guidance to the Management Committee and Syncrude on plans designed to address improvement opportunities;
• To provide advice and guidance to the Management Committee and Syncrude on each Business Plan and Annual Budget for the Syncrude Project, including:
  • sustaining capital or significant changes to operating expenditures;
  • material regulatory matters, including those related to reclamation approvals and requirements;
  • procedures and controls for safety, health, environmental and security matters; and
  • the Pembina crude pipeline for the Syncrude Project.

Growth & Development Subcommittee

The Subcommittee assists the Management Committee of the Syncrude Project on capital growth and development opportunities, including:

• To identify and evaluate such opportunities and make recommendations concerning same;
• To provide advice and guidance to the Management Committee and Syncrude on each Business Plan and Annual Budget for the Syncrude Project with respect to growth and development opportunities and major capital projects in progress;
• To monitor the status and performance of all major capital projects in progress under its mandate, including cost and schedule relative to applicable work programs and budgets; and
• To establish appropriate business controls for major capital project spending and performance.

Audit & Business Controls Subcommittee

The Subcommittee oversees all aspects of Syncrude's internal control systems and financial and related disclosures as required by law and good accounting practice, including:

• To review the adequacy of internal control systems and the scope and adequacy of the Corporation's internal audit program and the results of their activities;
• To review the scope, timing and findings of the external audit;
• To review and approve the selection and application of accounting principles and practices applied to the Syncrude Project;
• To review and recommend to the Board and/or Management Committee for approval all annual financial statements and/or related information;
• To review the quarterly and annual representations made by Syncrude to the Participants, as well as changes to the form of those representations; and
• To review and recommend new or additional Syncrude reporting disclosures as a result of changes in and/or emerging reporting, accounting or internal control issues affecting Syncrude Canada Ltd. financial statements or Participants' respective regulatory reporting requirements.

Code of Ethics and Business Conduct

Syncrude has a Code of Ethics and several other Business Conduct policies that are designed to foster a high level of ethical conduct expected by our many internal and external stakeholders. The Corporation stewards the application of these policies and reports regularly periodically to the Audit and Business Controls Subcommittee and makes representations to the Board to confirm compliance. In addition to internal processes, Syncrude has an external system for the reporting of concerns about corporate conduct. Employees, contractors and members of the public may file their concerns anonymously and confidentially through EthicsPoint, at www.ethicspoint.com or 1-800-493-1866. This information is available internally and through Syncrude's external website at www.syncrude.com.

Board of Directors

Canadian Oil Sands Partnership #1

Marcel Coutu^1,2,3
Trudy Curran⁵
Ryan Kubik
Darren Hardy⁴

Imperial Oil Resources

Chris Ford^2,3,5
Glenn Scott¹
Dee Brandes⁴

Mocal Energy Ltd.

Kazuo Tanabe¹
Steve Fly³
Kemmei Nakata

Murphy Oil Company Ltd.

Dennis Ward⁵
Cal Buchanan
Ron McIlwrick^1,3,4

Nexen Oil Sands Partnership

Kevin Reinhart¹
Jim Arnold³
Bern Frasson^2,4,5

Sinopec Oil Sands Partnership

Lianhua Zhang^1,2,3
Pengfei Yin^4,5
Weiquan Xiao

Suncor Energy Oil and Gas Partnership

Don Goodrow^2,4
Stephen Reynish¹
Richard Brown³
Pat Suzuki⁵

1. CEO Committee
2. Human Resources & Compensation Committee
3. Management Committee
4. Safety, Health, Environment & Corporate Sustainability Committee
5. Pension Committee

Officers of Syncrude Canada Ltd.

Marcel Coutu
Chairman of the Board

Scott Sullivan
President and CEO

Gord Ball
Vice President, Strategic Planning

Harold Kunas
Chief Financial Officer and Vice President, Business Services

Ray Hansen
General Counsel and Corporate Secretary

External Financial Auditors

Pricewaterhouse Coopers LLP
111-5^th Avenue S.W., Suite 3100
Calgary, AB T2P 5L3
Canada

Further Information

Syncrude Canada Ltd.
Government and Public Affairs
P.O. Bag 4023 M.D. 1000
Fort McMurray, AB T9H 3H5
Canada

Phone: (780) 790-6403
Toll-free: (800) 667-9494
Fax: (780) 790-6270
Media Relations: (780) 970-6923
E-mail: info@syncrude.com
Website: www.syncrude.com

Advisory

In the interest of providing readers of this report with information regarding Syncrude, including management's assessment of Syncrude's future technologies, emissions and production levels and Syncrude operations, certain statements and graphs throughout this sustainability report contain "forward-looking information" under applicable securities law. Forward-looking statements in this report include, but are not limited to, statements and graphs with respect to: the expectations regarding Syncrude's sustainability initiatives in the areas of land use and biodiversity, water, tailings, Aboriginal relations, regulatory and government relations, employment and labour, community, air quality, energy and climate change and safety and health; the expected emission reductions relating to the Syncrude emissions reduction project (the "SER Project"); the anticipated start-up date of the SER Project; the expectations with respect to reducing emissions such as nitrogen oxide; the expected improvement in energy efficiency; the expected reduction in emissions of carbon dioxide; the estimated value and amount of reserves recoverable; the timing and amount of bitumen production from Aurora South; the expectation that the mine train relocations/replacements should position Syncrude for as many as 20 years of production at current rates; the land reclamation plans and targets; Syncrude's tailings management plan and the timeline for the implementation of the various components of such plan; the anticipated benefits resulting from the tailings management technologies (water capping, composite tails, centrifuged tails, filtration of tailings water and rough mulching); the expectation that Syncrude's tailings management plan will enable Syncrude to meet the long term intent of ERCB Directive 074 as of 2015 and the timeline for the implementation of the ExxonMobil Operations Integrity Management System.

The factors or assumptions on which the forward-looking information is based include, but are not limited to: the successful and timely implementation of capital projects; major project spending plans; the ability to obtain regulatory and Syncrude joint venture owner approval; the continuation of assumed tax, royalty and regulatory regimes and the success of the tailings management technologies.

You are cautioned not to place undue reliance on forward looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Although Syncrude believes that the expectations represented by such forward-looking statements are reasonable and reflect the current views of Syncrude, there can be no assurance that such expectations will prove to be correct.

Some of the risks and other factors that could cause results to differ materially from those expressed in the forward-looking statements contained in this sustainability report include, but are not limited to: the impact of technology on operations and processes and how new complex technology may not perform as expected; risks inherent to the operation of any large, complex refinery units, especially the integration between mining operations and an upgrader facility; changes in business strategy; imprecision of reserve and resource estimates; regulatory decisions; the effects of competition and pricing pressures; shifts in market demands; potential increases in costs; timing of completion of capital or maintenance projects; various events which could disrupt operations including severe weather conditions; technological changes; management retention and development; skilled labour shortages and the productivity achieved from labour in the Fort McMurray area; the supply and demand metrics for oil and natural gas; the unanimous joint venture owner approval for major expansions; the impact of Syncrude being unable to meet the conditions of its approval for its tailings management plan under ERCB Directive 074; the impacts of legislative or regulatory changes, especially as such relate to royalties, taxation, the environment and tailings and such other risks and uncertainties described from time to time in the reports and filings made with regulatory authorities by Syncrude.

You are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the forward-looking statements contained in this report are made as of the date of this report and unless required by law, Syncrude does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this report are expressly qualified by this cautionary statement.

Jantzi Social Index

The Index has included Joint Venture owner Canadian Oil Sands Limited since 2006, recognizing the performance of the Syncrude Project through a set of broadly based environmental, social and governance rating criteria. Jantzi Research is Canada's leading provider of social and environmental research for institutional investors.

Further information about Syncrude's business performance and investing in Syncrude can be obtained through the web sites listed here.

Canadian Oil Sands Limited
(COS – TSX)
www.cdnoilsands.com

Imperial Oil Resources
(IMO – TSX/AMEX)
www.imperialoil.com

Mocal Energy Limited
(5020 – TSE)
www.noex.co.jp

Murphy Oil Company Ltd.
(MUR – NYSE)
www.murphyoilcorp.com

Nexen Inc.
(NXY – TSX/NYSE)
www.nexeninc.com

Sinopec Corp.
(386. HK – HKEX, 600028 – SSE, SNP – NYSE/LSE)
http://english.sinopec.com

Suncor Energy
(SU – TSX/NYSE)
www.suncor.com

Syncrude has many partners in its sustainability journey. Together, we are working to address and improve the economic, environmental and social performance of Canada's resource industry. In many cases, Syncrude is a leading contributor through the provision of staff expertise and funding. Readers are invited to learn more by visiting the websites listed below.

Aboriginal Human Resource Council
www.aboriginalhr.ca

Alberta Chamber of Resources
www.acr-alberta.com

Canadian Association of Petroleum Producers
www.capp.ca

Canadian Business for Social Responsibility
www.cbsr.ca

Canadian Council for Aboriginal Business
www.ccab.com

Canadian Oil Sands Network for Research and Development
www.conrad.ab.ca

Mining Association of Canada
www.mining.ca

Oil Sands Developers Group
www.oilsandsdevelopers.ca

Responsible Canadian Energy™ (RCE) is an industry performance program developed by the Canadian Association of Petroleum Producers (CAPP) with support and leadership from across the upstream oil and gas industry. The program is about performance and reflects industry's ongoing commitment to responsible resource development and to continuous improvement in environment, safety and health, and social performance.

Syncrude is a participant in the Towards Sustainable Mining (TSM) initiative of the Mining Association of Canada, which is a strategy for improving the sustainability performance of Canada's mining industry.

Syncrude is a member of Canadian Business for Social Responsibility (CBSR), a business-led, non-profit Corporate Social Responsibility consultancy and peer-to-peer learning organization. CBSR provides its members with candid counsel and customized advisory services to improve their social, environmental and financial performance.

Syncrude is accredited at the Gold Level in the Progressive Aboriginal Relations (PAR) Program of the Canadian Council for Aboriginal Business. PAR measures corporate performance in Aboriginal employment, business development, capacity development and community relations.

Syncrude is a participant in the Integrated CO₂ Network, or ICO₂N, which is exploring the viability of large-scale carbon capture, transportation and storage for a cross-section of Canadian industry.