Why does Connacher use an integrated approach?
Our involvement in conventional production and refining was chosen to mitigate key risks inherent in SAGD oil sands operations, while enabling higher realizations from a heavy crude oil barrel than can be achieved by a pure-bitumen operator. It has resulted in what we call an “integrated approach” to developing our oil sands properties. Our production from the oil sands uses SAGD technology, which we recognized as the most appropriate approach, especially for deposits such as we have, located at depths of up to approximately 1,500 feet subsurface. SAGD involves burning natural gas to produce steam, with the cost of natural gas being a major operating cost component in our oil sands operations. Given the historical volatility of natural gas prices, we addressed this risk by securing and continuing to expand our natural gas reserves and production, with a view to hedging our exposure to natural gas price volatility. While this approach was originally adopted to provide a hedge, particula
