Nexen's Long Lake facility is located 40km south east of Fort McMurray, Alberta, Canada.

Nexen is a Major Player in the Oil Sands

As an early entrant in Canada's oil sands, Nexen recognizes the long-term value of this abundant, secure and reliable energy source. More than a decade ago, we began to build a significant land position in Northern Alberta.

Today, Nexen has an interest in more than 300,000 acres in the Athabasca region, with billions of barrels of contingent recoverable oil sands resource.1

Long Lake

Long Lake, which began producing bitumen in 2008, is an integrated steam assisted gravity drainage (SAGD) and upgrading operation that uses a proprietary OrCrude™ technology as well as hydrocracking and gasification to produce Premium Synthetic Crude (PSC) oil. Production capacity at Long Lake is 72,000 barrels of bitumen per day which, when upgraded, is capable of generating approximately 58,500 barrels per day. Work is underway to increase bitumen production to enable operation of the upgrader at full capacity.

Kinosis

Nexen is accelerating development of K1A, a stand-alone SAGD project in the Kinosis area, 12 kilometres (km) south of the Long Lake facility. Bitumen from K1A will be upgraded at Long Lake. In total, Nexen expects to drill 29 wells, with steam injection expected in 2014. Production from these wells is expected to average 15,000 to 25,000 bbls/d at peak rates. Steam for the K1A wells will be provided by four generators installed at Kinosis, while using water supplied by the Long Lake facility.

By developing Kinosis in phases, we expect to see additional bitumen production much sooner than would have been the case under the larger projects originally planned for this field. This is consistent with a key learning – that smaller SAGD projects should focus on the best reservoir within our leases, enabling us to better manage capital requirements and facilitate shorter ramp up of the Long Lake upgrader to reach its capacity.

Syncrude Canada Ltd

Nexen has a 7.23% interest in Syncrude’s oil sands mining and upgrading facility, located about 40 km north of Fort McMurray, Alberta. The facility’s current production capacity is 350,000 bbls/d (25,000 bbls/d net to Nexen).

MEG Energy

CNOOC Limited holds an equity interest that as of December 28, 2012 stood at 12.39% in MEG Energy, a Canadian oil sands developer.

Hangingstone

Nexen has a non-operating 25% working interest at this SAGD project being developed by Japan Canada Oil Sands (JACOS), which is located about 50 km southwest of Fort McMurray, Alberta. Initial production at Hangingstone is expected to average about 20,000 bbls/d of bitumen (about 5,000 bbls/d net to Nexen). Production start-up is expected to begin in the first half of 2016.

Future opportunities

Nexen is strategically positioned for future in-situ oil sands development, with land holdings in a number of Athabasca prospect areas including operated leases at Leismer and Cottonwood and non-operated leases at Meadow Creek, Corner and Chard.

1For more information about resources and reserves see our legal notice.