STUART COMMISSIONING UPDATED

In Report Number 15, dated March 16, 2001, Southern Pacific Petroleum and Central Pacific Minerals (SPP/CPM) advised that the next operational run was expected to resume at the Stuart Stage 1 plant by late March.

Since the plant run in late December 2000, work has been under way to broadly communicate to regulators and the community the significantly improved emissions performance achieved in the December run.

During this period, repairs to the large 42-inch isolation valve between the AOSTRA Taciuk Processor (ATP) and the Oil Recovery plant were carried out following the December 18, 2000 incident in which the valve failed to completely close. Shale processing resumed for a brief period on March 9 but was curtailed due to a leak in the vapor seal on the main hydrocarbon vapor line that exits the ATP.

The December run demonstrated good progress with the emissions reduction program implemented during 2000. Measurements taken during the run, at shale rates of 160 tonnes per hour (64 percent capacity), indicate the following substantial reductions in air emissions at the main stack under stable operating conditions:

• Greater than 95 percent removal of sulfur dioxide down to one-quarter of the plant license limit
• Greater than 60 percent reduction in odors which are expected to meet anticipated regulatory guidelines
• Greater than 60 percent reduction in dioxins in air emissions to below international best-practice guidelines
• Significant reductions in shale dust emissions to approximately one-third of the plant license limit

These emissions improvements resulted from a number of facility changes and operational improvements implemented during the third-quarter 2000 plant turnaround including:

• New turboscrubbers on the ATP flue gas streams
• A second thickener vessel to increase capacity of the shale dust scrubbing circuit
• Operation of the shale dryer in a low-odor generation mode
• Partial incineration of the ATP preheat flue gas stream in the main stack burner

In addition, new noise abatement measures implemented in response to community concerns contributed to progress in reducing plant noise.

In its Quarterly Report for the period ending April 30, SPP/CPM noted that the operator transition process had been relatively straightforward and expeditious given that almost all business systems were developed specifically for the project, independent from Suncor.

With the addition of Stage 1 staff of 70 employees, the SPP/CPM organization increases in size to 107 employees.

The Stuart Stage 1 Plant moved into a semi-continuous operational mode on April 9 and as of April 30 had produced an additional 35,000 barrels of naphtha and medium shale oil. This doubled oil production achieved over the past 2 years to a total of 70,000 barrels.

The plant operated on shale for about 14 days out of a total of 21 days (67 percent availability) during the run at rates of 160 tonnes per hour (64 percent capacity). This rate facilitates lower odor emissions from the shale dryer.

An extensive emissions monitoring program was carried out during the April plant run under various operating modes. This program was designed to seek confirmation of the substantial emissions reductions achieved in the December run and to test procedures to achieve further reductions. Odor emissions as measured in the plant have shown some improvement over the December results.

Comprehensive dioxin measurements have also been taken at various steps in the shale oil production process to assist the work of an international team of experts examining ways to minimize and, if possible, prevent formation of dioxins in the shale oil production process in future plants.

A significant noise monitoring program was also carried out during the run and will provide valuable input to guide further improvements.

During the April plant run, a large number of complaints were received from the neighboring rural community of Yarwun/Targinnie, primarily related to odor but also noise. The 24-hour SPP/CPM Community Response Team responded to these complaints. The Queensland Environmental Protection Authority also had a response team in the community during part of the run to help gauge the nature and severity of the complaints.

It is clear that a number of people in the neighboring community remain concerned.

As part of its commitment to reducing net greenhouse gas emissions intensity in producing shale oil, the companies recently entered into a contract with Enecon Pty. Ltd. to conduct a screening study of the best available technologies for coproduction of bio-ethanol with shale oil.