We will do our utmost to live up to the responsibility that goes with being a developer of one of Canada's most valuable resources in a way that makes Canadians proud.

Brian C. Ferguson
At Cenovus, corporate responsibility means demonstrating leadership, strengthening our governance and business practices, creating a safe and healthy organization, improving our environmental performance, engaging our stakeholders and investing in our communities.

As part of our commitment to operate in a responsible manner, we recognize the importance of reporting to stakeholders in a transparent and accountable way. We disclose not only the information that's required by law and regulation, but also information that more broadly describes our activities, policies, opportunities and risks.

Message from our president & chief executive officer

"We will do our utmost to live up to the responsibility that goes with being a developer of one of Canada's most valuable resources in a way that makes Canadians proud."

Message from our president & chief executive officer

We are proud of the work we do as a Canadian oil company. Both in being able to supply an energy source that is playing an important role in making lives better through improved living conditions and in finding innovative ways to get the oil out of the ground.

In Canada we're fortunate to have enough oil to take us into the next century. And that's because of the advances in technology that have made it possible to access the oil from the oil sands. It's our job at Cenovus to help provide the energy the world needs, energy that helps fuel world progress, and to do it in a way that all Canadians can be proud of.

In late 2012, we commissioned research in five provinces to find out how Canadians feel about oil sands development, how much they know about it and what they want to know. We learned that Canadians, from different regions, share many common views, both positive and negative, towards oil sands development. While they recognize the value of oil, and the jobs and economic benefits it provides, they are concerned about the environmental impact of our industry. So it's up to us and others in the oil sands industry to show them how we are continuously improving the way we develop oil.

Like any human activity – from building new neighbourhoods and schools to having a shower – getting oil out of the ground has an impact on the environment. We have made huge strides in our environmental performance since our first test well was drilled in the oil sands about 20 years ago. What's important is that we keep learning and getting better with every project and every pilot we undertake. Improving our environmental performance through innovation is key to this.

Our award-winning SkyStrat™ drilling rig is a great example of that. We have developed a scaled-down version of a stratigraphic test well rig that can be flown to remote locations by helicopter. By reducing the need to build access roads, we expect the rig will significantly cut our environmental footprint and operating costs in those areas.

It is important to me that Cenovus be a company where people come to work knowing that we care about improving our performance, minimizing our environmental impact and keeping our people, and the communities where we work and live, safe. In fact, nothing we do at this company is more important than safety. I regret to say that we're not doing a good enough job. Despite the many safety programs we have in place, safety incidents rose in 2012. That is a big concern to me personally, and one our entire Executive Team shares. You can read about the increased measures we have put in place this year in the report – from new programs, to increased leader visibility in the field, to working more closely with our contractors. We want to ensure everyone lives up to our high safety standards.

How we work at Cenovus is as important as what we do. So, with three years under our belt as Cenovus, we have defined our corporate culture – the reason we exist, what we do and what our values are – with a set of statements, which we formalized last fall. In addition to speaking to the importance of our work to world progress, they also speak to the kind of company we are and the kind of company we want to be. They are meant to guide us in how we do our work today and as we grow.

Our purpose, our promise and our values guide us in how we do our work today and as we grow.
Our purpose:
We inspire bright minds to help fuel world progress.
Our promise:
We work collectively to unlock challenging oil resources in a way that makes Canadians proud.
Our values: Rigorous: We're smart about the way we develop our resources. Respectful: We trust each other to do the right thing. Ready: We have the courage to embrace fresh thinking and new ideas.

That kind of commitment to walking the talk is starting to be recognized by others. We were included on an exclusive list of the world's best corporate citizens when we were the only Canadian oil and gas company named to the Dow Jones Sustainability World Index for the first time in 2012. We were also named for the first time to Corporate Knights Global 100 list, which recognizes the world's most sustainable corporations. These are strong endorsements of our efforts to develop our business responsibly and find the right balance between economic, social and environmental performance.

We will do our utmost to live up to the responsibility that goes with being a developer of one of Canada's most valuable resources in a way that makes Canadians proud – by continuing to focus on safety, invest in innovation, strengthen the integration of corporate responsibility into our business, and reinforce our culture.

In this report, you will read about the progress we have made in 2012, the areas we need to improve, the plans we have in place for 2013, and some examples of how we incorporate corporate responsibility into our daily work.

We have a great team at Cenovus who are excited about our future, and I believe we have good reason to be excited.


Brian C. Ferguson
President & Chief Executive Officer

Our approach to corporate responsibility

Our Corporate Responsibility Policy helps guide our approach to operating our business responsibly. We're putting those commitments into action by:

Demonstrating leadership

Our Executive Team ensures that safety, health, environmental, social, ethical and financial considerations are integrated into our business decisions. Leading by example, our Executive Team makes sure that performance expectations across the company are consistent with our corporate responsibility commitments and are communicated to all staff.

Strengthening our governance and business practices

Strong governance is the foundation of our business and is fundamental to delivering long-term value. Our governance framework is directed at protecting all our assets, including financial, physical, intellectual, informational and reputational, as well as the people who work for us and those in the communities where we operate. Our Board of Directors works with our Executive Team to oversee our strategy development and risk management.

Creating a safe and healthy organization

Health and safety are core values at Cenovus and apply to everyone involved directly and indirectly in our activities. We want everyone to focus on being safe not only at work but also at home. We're also committed to building a healthy organization. We want to create a work environment that attracts employees and helps them grow throughout their careers.

Improving our environmental performance

Responsible development is about finding the right balance between economic, social and environmental performance. When that balance is achieved, we believe everyone stands to benefit. It's challenging work, but we're determined to continue building and operating our projects efficiently and continuously improving our environmental performance. We're tackling these challenges every day so we can be even better at what we do.

Engaging our stakeholders

Whether we're meeting with community leaders, non-governmental organizations or landowners, working with Aboriginal communities, presenting to investors or government officials, or conducting media interviews, we remain committed to listening to our stakeholders, understanding their perspectives and telling our story. We work with our stakeholders so they better understand our company, the quality of our asset base, the strength and expertise of our teams, our solid financial position and our commitment to operating safely and responsibly.

Investing in our communities

We're a company that's committed to ensuring the communities where we live and work are stronger and better off as a result of us being there. We want these communities to share in the benefits associated with our operations. One of the ways we do this is through our community investment program, where we look to create shared value by investing in community programs that help address local needs and challenges.

Our Corporate Responsibility Policy helps guide our approach to operating our business responsibly. The policy is made up of six commitment areas:

  • Leadership
  • Governance and business practices
  • People
  • Environmental performance
  • Stakeholder and Aboriginal engagement
  • Community involvement and investment

Our approach to reporting

As part of our commitment to operate in a responsible manner, we recognize the importance of reporting to our stakeholders in a transparent and accountable way.

We continue to review our performance indicators, reporting processes and controls to ensure they align with our stakeholder expectations, our operations and our strategy.

Our report focuses on the environmental, social, and governance issues that stakeholders, both internal and external, have told us matter most to them and that they would like us to report on – we call this our reporting materiality assessment. We identified a list of 39 corporate responsibility issues based on topics and indicators that may be of key concern to our stakeholders, with specific emphasis on issues related to the oil and gas industry. We gathered feedback from our stakeholders on these issues by:

  • Working with an independent corporate responsibility advisory firm to facilitate an internal and external stakeholder workshop
  • Conducting an internal workshop with senior leaders who prioritized the issues that could have a potential impact on our business and what they believed were of interest to stakeholders. Each issue was organized by the commitment areas of our Corporate Responsibility Policy. The issues were then prioritized and placed on a materiality assessment matrix.
  • Conducting an external workshop to validate which issues, as identified by the internal workshop, were of high interest to stakeholders and then arriving at a consensus on the final placement of each issue on the matrix. This workshop included representatives from academia, community partners, Aboriginal groups, non-governmental organizations, post-secondary students, and socially responsible investors. We believe these individuals are a good representation of our corporate responsibility report audience.

The feedback we received from both the internal and external multi-stakeholder workshops helped inform our reporting approach and the topics discussed in this year's report.

Stakeholder reporting materiality assessment matrix

Biodiversity

Community investment

Economic value

Fracking

Local hiring

Local/Aboriginal spending

Stakeholder relations

Water

Aboriginal relations

Climate change

Cumulative impacts

Energy use

Ethics/corruption

Innovation

Risk management

Safety

Spills

Renewable energy

Diversity

Executive compensation

Land management

Learning & development

Privacy

Supply chain management

Volunteerism

Waste

Air emissions

Financials

Human rights

Public policy

Fines & penalties

Materials use

Political donations

Board independence

Environmental expenditures

Wellness

Employee engagement

Turnover

Wages and benefits

Note: Issues in each box are ordered alphabetically, not by relative importance.
These topics are covered in this report

Legend:

Leadership Governance & business practices
People
Environmental performance
Stakeholder & Aboriginal engagement, Community involvement and investment

The data and charts in our corporate responsibility report are based on available information from 2008 until December 31, 2012. Some of the stories we've highlighted in this report cover activities across the company up until April 30, 2013. We use the Global Reporting Initiative (GRI) G3.1 guidelines as a framework for reporting and align our performance metrics with the standards set out by the Canadian Association of Petroleum Producers Responsible Canadian Energy program. View our GRI content index.

We're committed to ensuring the report is accurate, balanced and complete. We did this through:

  • An external review by Ernst & Young LLP, an independent auditing firm, to provide assurance on 12 environmental, governance, health and safety, and social indicators identified in the Independent Assurance Report
  • A review by our Internal Audit team to assess the design effectiveness of the reporting processes and controls for a select number of our key performance indicators

We welcome your feedback - it's important to us that we continuously improve our performance and corporate responsibility reporting practices.

A well pad at our Christina Lake oil sands project.

Leadership

"How we do our work at Cenovus is as important as what we do. We are dedicated to grow responsibly and live up to our commitments."

Leadership

To help define our culture, our Executive Team and senior leaders formalized a set of statements this past year that outline why we exist as a company (our purpose), what we do (our promise) and how we behave (our values). Our purpose, our promise and our values are more than just words on a page. They speak to the pride we all have in the work we do and in the way we do it. Most of all, they speak to the kind of company we are. The kind of company we want to be. They guide us in how we do our work today and as we grow.

As part of our leadership expectations, our Executive Team and senior leaders strive to ensure that performance expectations across the company are consistent with our culture and our corporate responsibility commitments, and are communicated to all staff.

How we do our work at Cenovus is as important as what we do. Our passion drives us to grow responsibly and live up to our commitments. Learn more about our purpose, our promise and our values.

Developing our leaders

Developing our leaders is necessary to strengthen all aspects of our business and culture. An integral element of our workforce strategy is to grow our leadership capacity and improve the effectiveness of our leaders throughout the company. Our leadership development strategy influences our approach to recruitment, succession planning, and learning and development opportunities that support our people as they grow in their careers. The focus and rigour we place on executive succession planning is directed at ensuring we have the talent to meet our business objectives.

We partnered with a world-class research and development organization, the Center for Creative Leadership, to build and launch a leadership development program at Cenovus. This program sets out the accountabilities and competencies that make leaders effective. It helps build self-awareness through feedback assessments from people who work for and with them, as well as from their supervisor. Leaders are also supported through professional coaching. As of April 30, 2013, 86 percent of our leaders have enrolled in the program and the expectation is that all leaders across the company – including all of our Executives – will complete the program in 2013. We continue to build programs in-house and in partnership with the Center to further coach and develop our leaders.

Identifying ways to incorporate corporate responsibility throughout our business

We work with an extensive network of 4,000 suppliers and contractors to procure the materials, equipment and services we need to operate our business. Based on stakeholder feedback, we've identified that supply chain management is an area where we can strengthen our commitment to corporate responsibility throughout our business. A common misconception is that supply chain management is only focused on finding the lowest cost provider. For us, it's about considering all aspects of what the service provider has to offer. That includes their safety, environment and governance standards and performance. We want to do the right thing and that extends all the way to our suppliers and contractors. It's just one of a number of activities we're undertaking to integrate our corporate responsibility commitments into how we operate.

Steam generators at our Christina Lake oil sands project.

Developing a framework to continuously improve

Leadership is all about finding ways to continuously improve the way we do business. We can't be satisfied with how we've done things in the past. We have to evolve what we do, and how we do it. That means we need to be focused on finding efficiencies that save time and money, and on improving our safety and environmental performance.

One of the ways we do that is by focusing on business excellence – challenging ourselves to look at how we work and train our people, and the tools we can adapt from other industries to find new ways to become more efficient and effective as a company. In 2012, we consolidated five teams – Operations Training, Innovation and Continuous Improvement, Business Solutions, Operations Excellence, and Operations Management System – to establish the Business Excellence group. It's an integrated way of working that's designed to focus on results. The group will bring more clarity, structure and rigour across Cenovus to provide a more consistent framework for how we do our business.

"We're proud of what we've accomplished and how walking the talk is getting us recognized. It reaffirms we're on the right track and living up to our corporate responsibility commitments."

— Craig Stenhouse, who leads our Corporate Responsibility team

Walking the talk gets us recognized

It's important to us that we're open and transparent about our commitments to corporate responsibility and about what we're doing to meet those commitments. We voluntarily disclose our performance every year to socially responsible reporting programs and investor indexes. Recognition and feedback from the indexes identifies best practices and areas where we need to improve. It also provides third-party acknowledgement of the good work we're doing.

Named for the first time to the Dow Jones Sustainability Index (DJSI) World Index in 2012, an exclusive list of the world's best corporate citizens. We were also named to the DJSI North American Index for the third year in a row.

Listed as one of the 2012 Best 50 Corporate Citizens in Canada by Corporate Knights Magazine.

Named for the first time to the Corporate Knights Global 100 list for 2013, which recognizes the world's most sustainable corporations.

Included on the 2012 Carbon Disclosure Leadership Index by the Carbon Disclosure Project.

Received top honours in the category of environmental performance at the 2013 Canadian Association of Petroleum Producers Responsible Canadian Energy awards for our SkyStrat™ drilling rig.

Included on the Jantzi Social Index.

Included on the 2012 Maclean's magazine/Sustainalytics list of the Top 50 Socially Responsible Corporations in Canada.

Received recognition for best sustainability practice in 2013 by Investor Relations Magazine Canada Awards.

Governance and business practices

"It's very important to our Board and to our Executive Team to receive ongoing assurance that our operations are effectively managing different risks and making sure we're doing the right things. We put a high priority on providing this assurance through regular audits, inspections and reviews."

Governance and business practices

Good governance is about providing guidance for our business, staying on top of issues and managing risks – real or potential – to our company. Our Board of Directors oversees our governance framework of policies and practices to make sure we live up to our values, maintain our relationships and protect our ability to grow our business. Simply put, good governance is necessary to keep our business running effectively and ethically.

Our governance framework is focused on a number of elements. Some examples include:

  • Managing business risks by having a number of reporting processes in place to continually monitor and mitigate key risks to our business
  • Ensuring integrity of our people through our Code of Business Conduct & Ethics and other related policies to guide the behaviour we expect from our directors, employees and contractors
  • Ensuring compliance by assessing our projects and facilities against government regulations and our commitments and looking for ways to go beyond what is required of us where appropriate

Assessing our tolerance for risk

Our Board of Directors is responsible for ensuring that a system is in place to identify the principal risks to the company and that the best practical procedures are in place to monitor and mitigate the risks. We manage risk with a formal risk assessment and risk tolerance framework. Our risk assessment framework establishes a systematic process for identifying, measuring, prioritizing and managing risk across Cenovus. Effectively managing risk is an integral part of creating shareholder value. Our company's risk matrix is a standardized tool used to assess risk exposures in terms of impact and likelihood. The matrix provides impact criteria to quantify risk based on five broad categories: health and safety, environment and regulatory, productive assets, financial, and reputation. The risk matrix reflects our evolving business environment and risk tolerances.

Assessing our projects to find ways to improve

We regularly evaluate our facilities throughout every stage of development to assess how we're meeting or exceeding our regulatory requirements.

A key focus of our assurance activity is conducting environment, health, safety and regulatory (EHSR) audits. Each audit is carried out by a cross-functional team that includes EHSR specialists and trained subject matter experts from across the company. Through these audits, we assess and report on our compliance with regulatory requirements, industry standards, and our own policies and practices. In each case, the team looks to identify best practices and opportunities for improvement. In 2012, we carried out 10 audits across 12 of our field locations.

An operator at our Pelican Lake oil project.

Our Code of Business Conduct & Ethics defines our expectations for the behaviour of our directors, employees and contractors. It aligns with our Corporate Responsibility Policy and outlines our position on a number of issues, including fraud, conflict of interest, political activities, use of the company's assets, inducements and gifts, and harassment in the workplace.

Auditing to make our operations safer and better

When Evan Baker and his team of audit experts inspect one of our facilities, they often find areas for improvement. For him, it's a positive sign they're doing their job well.

"One of the strengths of the audit process is that these rigorous investigations help us to make our operations safer and better," says Evan, who leads our regulatory compliance audit team.

Evan recounts a recent audit of a gas plant near Bassano, Alberta. During their investigation, the audit team found a metal fence surrounding a piece of equipment that was partially hidden by crops and at risk of being hit by farm vehicles. This discovery led to a new work practice.

"Our conventional oil and natural gas team came up with a solution that could be applied across all our operations. It involved using eight-foot high fluorescent flags on the fencing to ensure the equipment can be seen even when the surrounding crops are high," says Evan.

That's one example of the numerous programs we have in place to support our governance framework.

Auditing our Suffield natural gas operation.

Addressing concerns helps to strengthen our business

It's important that we're considerate, communicate openly and address concerns which may be associated with our oil and gas operations and with the behaviours of the people who work for us. We do this through:

  • Our Expect Respect program, which focuses on strengthening relationships and demonstrating respect in the communities where we operate. We want our stakeholders to know they can expect us to be respectful in our work and interactions with them.
  • Our Integrity Helpline, which is a confidential way for concerned individuals, including staff, to let us know about issues related to how we conduct our operations or to report any potential ethical, financial or workplace issues related to our business.

Business conduct investigations
Number of emails or calls to the Integrity Helpline

Investigations of business conduct can include compliance with laws and regulations, conflict of interest, fraud, confidentiality and disclosure, and other potential breaches of policies and practices. The Investigations Committee investigated 26 complaints in 2012. Of those, 11 came through the Integrity Helpline. All of those cases are now closed. In total, the Integrity Helpline was contacted 110 times by people asking questions, seeking information, and reporting general concerns. We respond to all inquiries either through the Investigations Committee or through appropriate individuals across the company.

People

"We're committed to building a healthy organization – one that fosters a positive, safe and vibrant workplace. Our employees have the spirit, enthusiasm and energy we need to deliver on our plans."

People

We want employees to enjoy coming to work every day knowing their work matters. And at the end of every day we also want to make sure everyone goes home safely to their families.

Recruiting and retaining bright minds with a passion for new ideas and the right skills is key to our success. In just three years, we've grown our workforce by more than half – so we have a lot of new people at Cenovus. This rate of growth has motivated us to increase awareness of our culture. Our purpose, promise and values help employees understand the role they play in developing our resources in a way that makes Canadians proud. They also guide us in how we do our work every day. As a result, we're investing greater resources to help new employees become better oriented to our company and to our culture. We're focused on developing our people and providing opportunities for them to grow in their careers.

We work hard to keep our people safe. Unfortunately, in 2012 we fell short in this area. Despite the many safety programs we have in place, we had more safety incidents. We're increasing our awareness efforts to make sure safety is top of mind for everyone who works here.

Our employees sharing their thoughts about working at Cenovus. Our employees sharing their thoughts about working at Cenovus. Our employees sharing their thoughts about working at Cenovus. Our employees sharing their thoughts about working at Cenovus.
Our employees sharing their thoughts about working at Cenovus.

Our safety commitments are more than just words on a page

Our safety commitments reinforce the behaviour and attitude we want to see in our employees and contractors. Our work is never so urgent or important that we cannot take the time to do it safely.

These commitments support our goal to have an injury-free workplace. However, in 2012 the number of incidents on a per person-hour basis increased. These metrics are more than just numbers – they equate to people getting hurt.

It requires each and every one of us to work hard to improve our safety performance. That's why we're re-energizing our efforts to reduce workplace injuries by:

  • Launching our Start Safe campaign to remind us all to keep safety as our first thought. Between January and April of 2013, over 6,000 of our employees and third-party contractors have attended Start Safe meetings to talk with senior leaders about company expectations for safety and to discuss some of the hazards they may encounter in their job.
  • Having leadership more visible in the field through our Boots on the Ground program to demonstrate beyond words how seriously we take our commitment to safety
  • Focusing on new and young workers to ensure they're equipped with the right training and tools to work safely in our industry. We understand that workers new to our industry or under the age of 25 are more likely to be injured so we're doing more to engage them in our safety programs.
  • Engaging contractor leadership to reinforce their understanding of our expectations for safety values and standards
"Our safety performance over the first quarter of 2013 has improved, but it's still not good enough," says John Brannan, Executive Vice-President & Chief Operating Officer. "We need to get back on track to zero incidents."

Safety

Focusing on behaviours to improve safety performance

It's critical to look at not just the physical conditions and hazards at a work site but also how people perform their tasks. Are they using the right equipment? Are they carrying out their work in the right body position? Are they following all the right procedures? We rolled out a new behaviour-based safety observation program across our operations that provides specific feedback to workers on what they're doing well and identifies areas for improvement. As a result, we're not just focusing on what people are doing wrong, we're reinforcing what people are doing right – a key driver to improve safety performance.

Partnering with our contractors to improve safety

We work with many contractor companies. Contractors continue to represent the majority of the injuries we've had, accounting for 151 out of our 156 recordable incidents in 2012. Recordable incidents are accidents or injuries that require medical treatment. Clearly, as we grow our business and more contractors join our workforce, we need to be sure that our contractor companies significantly improve their safety performance.

We're pursuing several initiatives to raise the bar on contractor safety management. We're using ISNetworld, an online industry safety data management tool, to help us select the right contractors for our work and increase awareness of our safety policies and expectations with these companies. We're meeting with contractors and their leadership to reinforce how important it is to us that they understand and embrace our safety values and standards. We're increasing front-line supervision to verify contractor performance. We're continuing to actively involve contractors in our on-site safety meetings, making it clear that working here means working safely.

Learning from our safety investigations

We never want an injury or an accident to happen. But if it does, we investigate thoroughly so that we can prevent an incident from happening in the future. We've appointed a dedicated incident management specialist to act as a single point of contact to improve the depth of our investigations and the communication of key learnings. Our front-line safety advisors have received enhanced training on incident investigation techniques to help us fully understand what happened and why. The outcomes of these investigations are used to improve our safety programs.

See how Cenovus is committed to working safely, every day. Start Safe.

Total recordable injury frequency for employees and contractors

One of the ways we measure safety performance is by the total recordable incident rate. This measure includes incidents that require medical treatment. Our 2012 total recordable incident rate was up 42 percent from 2011. Recordable injuries increased from 90 in 2011 to 156 in 2012. Of our total for last year, 151 incidents involved contractor companies working for us.

Reducing bear encounters at Christina Lake

We're committed to protecting the wildlife in our area of operations, and to protecting our people from wildlife encounters. Our oil sands operations share the environment with many different wildlife species, including bears. Bear sightings were at an all-time high because their food supply was diminished due to a cold wet spring followed by a dry summer and a number of forest fires that swept through northern Alberta. As a result, the bears had to travel long distances to more populated areas, including our populated camps, to find food.

"We've really stepped up our effort to reduce potential human-bear interactions," says René Morales, one of our environmental compliance advisors.

In 2012, we rolled out a bear awareness training program at Christina Lake, reaching over 1,100 employees and contractors. We also added bear-proof containers around the facility and put up 'Be Bear Aware' signs to remind staff of proper waste storage practices. As a further precaution, we patrol the site with dogs trained to keep bears from entering the camp area.

"We can still see bears in the area but we've had zero interactions with them over the last year," says René.

Healthy organization

Fostering a healthy organization means creating an environment that makes people want to work here and helps employees grow throughout their careers.

Encouraging employees to choose their career path

You don't have to be a manager to advance in your career at Cenovus. We support a workplace environment that provides an opportunity for employees to explore different career paths – whether they'd like to be a manager or a technical specialist.

Nearly 75 percent of our employees work in technical career areas such as engineering, geology, field operations, law and finance. These disciplines are core to our business and will continue to be critical to our future growth plans.

In 2012, we established a technical career stream to support development and career planning for employees on the technical career path. A structure was set up that identifies both discipline managers and advisors who have started mapping technical competency requirements for 15 disciplines across the company. These competencies provide the foundation for required learning by role. Competency gap assessments have also been developed to help facilitate a robust development planning discussion between employees and supervisors.

Since the beginning of 2013, work has been underway to design a technical development framework that outlines a clear career path for employees and provides development opportunities that give them the skills required to advance in their career at Cenovus.

It's more than a pay cheque

We believe that having challenging work, developing new skills, being recognized and rewarded for a job well done, and taking time to enjoy life are all important parts of maintaining a healthy organization. We offer our employees competitive flexible benefits, earned days off, company-paid pension contributions, vacation time based on life experience rather than the number of years at the company and an annual allowance that can be used for expenses such as parking, transportation and fitness.

In 2012, we added a new incentive to the total compensation package – a defined benefits pension plan option as a way to retain our people. This represents a significant commitment for the company and is a unique and valuable approach to helping employees prepare for their retirement. To date, 75 percent of eligible employees have taken us up on this option.

Supporting our new talent

With about 400 to 600 new employees joining our workforce each year, we understand the importance of introducing them to our values and integrating them quickly into our culture. Our orientation program at Cenovus is about helping new employees become familiar with our organization, and supporting them throughout their first year. To do that, we've improved our approach to include information, tools and resources that are more engaging and interactive to help new employees understand our business, our culture and how we work at Cenovus. We've introduced our new-hire buddy program to smoothly integrate employees into the company by assigning them a go-to resource for their first few months on the job.

We also want to start graduates new to our company off on the right foot with their careers at Cenovus. Our new graduate development program is designed to develop new grads into well-rounded professionals early in their careers. The three-year program offers a combination of on-the-job training, job rotations and involvement in different projects. We currently have more than 100 employees in the program.

In 2012, we hired 751 employees and contractors, bringing our total workforce to 4,900. Our workforce has grown by 60 percent since 2009.

We continue to maintain a very low turnover rate, meaning we have very few people leaving the company, reflecting our effort to build a healthy work environment and retain staff.

Our head office is located in Calgary and we have operations in Alberta and Saskatchewan.

BAR CHART (2009-2012) - Gender breakdown of employees

We have a wide distribution of ages across the company which positively impacts innovation and helps to build a healthy organization.

Attracting more Aboriginals who live near our operations to work for us

Finding the right people to hire sometimes goes beyond posting a job on the internet or attending a career fair. Joanne Richards, from Conklin, Alberta, aspires to work in the oil industry someday as a power engineer. Joanne is one of 14 participants taking part in a new Aboriginal employment program that was introduced at our Foster Creek and Christina Lake oil sands projects.

Developed in partnership with the Alberta government and local colleges, the employment initiative provides paid work opportunities for Aboriginal participants hoping to enter the industry. They receive pre-employment training and then work for Cenovus on an internship for up to a year, with the potential opportunity to become a full-time employee at the end of the internship. Our immediate focus is to extend these training opportunities to more local Aboriginal communities near our operating projects, and then reach out to other Aboriginal communities over time. It's a chance for community members to get exposure to a variety of occupations such as power engineering, field operations, electrical work and safety.

"We hope this new employment initiative will make it easier for Aboriginal people to join our workforce. It's still early days for the program but so far the feedback from participants has been very positive," says Maureen Sander, one of our recruitment advisors responsible for the program.

Health and wellness

We also foster a healthy organization through our health and wellness programs by:

  • Promoting the health of our employees by focusing on prevention and supportive practices such as our flu shot program, health risk appraisals and ergonomic assessments
  • Focusing on wellness to provide employees with the tools and resources that promote their well-being
  • Supporting the care and rehabilitation of employees returning from an injury or illness to ensure they're supported, remain engaged and return to work safely when they're ready

Counting every step – for a good cause

10,000 steps. That's what 1,600 employees and contractors were working towards every day from May to September 2012 during the Global Corporate Challenge.

Looking for an opportunity to promote the importance of health in our workplace, we stepped up to the Global Corporate Challenge – a fun, team fitness challenge based on the number of daily steps taken. The challenge had staff moving more and teaming up with co-workers for some friendly competition and camaraderie.

Our teams walked over two billion steps on their way to improved health. Participants averaged more than eight kilometres each day and burned more than 560 calories. Many gained a new appreciation for the health benefits of exercise, with more than half reporting a significant boost in daily productivity levels after taking part.

"Our participation in the Global Corporate Challenge was a huge success," says Catherine Nelson, who heads up our health and wellness programs. "Not only did our people make a commitment to their health and well-being, but we've heard from many that they truly enjoyed the experience and the chance to connect with their co-workers in a different way."

Across the globe, over 26,000 teams from 98 countries took part. Cenovus stood out with 225 teams (34 percent of staff) – the most teams from any Canadian company.

Our employees keeping fit during the Global Corporate Challenge.

Environmental Performance

"Innovation made it possible for us to access the oil sands and innovation is helping to reduce our environmental impact."

Environmental performance

We're proud of our environmental record and our focus on continuous improvement. Like any industry, we have environmental challenges. Ensuring our operations don't affect nearby lakes and streams. Reducing the intensity of greenhouse gas (GHG) emissions produced. Reducing the amount of land we need to build each oil sands project. And striving to ensure the wildlife in the area isn't negatively impacted by our operations.

One of the biggest myths about the oil sands is that oil sands companies don't care about these environmental challenges. That's just not true. At Cenovus, taking care of the environment is part of what we do and is integral to meeting our long-term resource development goals. Our employees, many of whom live near our operations, are personally committed to making sure we find better processes, methods and technologies to get this valuable resource out of the ground.

Taking care of the environment is part of what we do. In 2012, we launched our environmental commitments which guide us as we integrate environmental considerations into our daily work. Since launching those commitments, we've identified more than 100 environmental actions that focus on reducing our impacts on air, water and land.

Incorporating environmental considerations when planning our work

Not only do we forecast views on oil price and production, we also anticipate our expected impacts on the environment before we begin a project. The more integrated our approach is, the more efficient we'll be at getting the right information into the right people's hands at the right time so that environmental considerations can help us plan our projects better.

One example is how we designed the initial road and pipeline network from our facilities to our well sites at our Narrows Lake oil sands project. By planning up front, we were better able to incorporate environmental considerations such as wildlife habitat into the overall project design. Integrating environmental considerations helps avoid or reduce impacts and can also reduce project costs by avoiding the need for expensive redesign or additional mitigation measures.

"During the environmental planning process, our teams consider environmental impacts and priorities, identifying from the beginning what we can do better," says Paul Godman, who leads our environment integration team. "This process gives us the information we need to guide us on the actions we need to take today, and in the future, to continually improve our environmental performance."

Improving environmental performance has been a business focus for us since Cenovus became a company. We now have a formalized process to integrate environmental considerations into our business strategy, similar to the formal process we use to plan our capital requirements and production growth. It involves:

1. Sharing overall strategy and environmental expectations across the company
2. Providing direction to employees on key environmental risks, opportunities and priorities
3. Assessing emerging environmental issues and trends
4. Working with our teams to help them incorporate environmental priorities and actions into their business planning and performance initiatives
5. Evaluating our environmental priorities
6. Reviewing the planning process for continuous improvement

Environmental performance: innovation

Limiting our impact on air, land and water through innovation and efficiency

We invest in innovation, applying new ideas and new approaches to improve the way we produce oil and natural gas while reducing our environmental impact. We invest in proven technologies that can make a difference to our business today and in potential game-changing technologies that will take longer to develop. Innovation has made it possible for us to access the oil from the oil sands and innovation will help to solve the environmental challenges we still face.

In 2012, we invested over $200 million in technology development. We have over 100 technology development projects underway and about three-quarters of those projects could lead to improvements in our environmental performance. See how our people take pride in turning new ideas into opportunities.

Imagine using a helicopter to place a drilling rig in a remote area. Our latest innovation is doing just that and changing the face of our stratigraphic well program in remote locations in northern Alberta.

See why our SkyStrat™drilling rig won CAPP's 2013 Responsible Canadian Energy™Environmental Performance Award.

Finding energy efficient solutions at work and at home

We also invest in energy efficiency and conservation projects, new technologies and research that will create value for our business and reduce our environmental impact. Since the start of our Energy Efficiency Fund with our predecessor company in 2007, we've committed more than $35 million to energy efficiency initiatives across our organization. These investments are leading to lower energy consumption in our operations and a reduction in our GHG emissions by more than 200,000 tonnes a year.

We also encourage our employees to adopt energy-efficient solutions at home. Our energy efficiency rebate program provides rebates of up to $600 per year to employees who purchase energy-efficient products such as household appliances, water heaters and programmable thermostats.

Learn more about how our SkyStrat™drilling rig is a game-changing technology.

In 2012, through our Energy Efficiency Fund, we invested nearly $3.7 million in projects to improve the efficiency of our operations. For example, one project involves a new technology that captures vented gas so we can recycle it and use it as fuel in our compressors. The decrease in planned spend from 2011 to 2012 is due to fewer fundable opportunities being identified in 2012. Learn more about the Environmental Opportunity Fund.

Environmental performance: air

Managing greenhouse gas emissions

As we continue to grow, we know that our overall GHG emissions will increase. Tackling this challenge begins by focusing on reducing our GHG emissions intensity – the amount of GHG emissions emitted per barrel of production. We're working to do even better by:

  • Improving energy efficiency in our operations
  • Developing technologies that reduce GHG emissions from our oil sands operations
  • Maintaining our industry-leading steam to oil ratio (SOR), which is the amount of steam needed to produce one barrel of oil
  • Evaluating opportunities to offset emissions (see end note 18)

Our ability to reduce our GHG emissions is limited by the technology that we know today. That's why we continue to focus on innovation and create new technologies that can improve our environmental performance in the future.

Across all our oil and gas operations, we emitted about 4.7 million tonnes of carbon dioxide (CO 2) equivalent in 2012. On average, that's 40 percent less than direct GHG emissions from a typical coal-fired power plant in North America, but seven times greater than the typical pulp and paper manufacturer. The 16 percent increase in company-wide direct GHG emissions in 2012 was mostly due to a 35 percent increase in oil sands production.

Despite a 35 percent increase in oil sands production, we've been able to keep our GHG emissions intensity (the amount of GHG emissions we emit per barrel of production) at relatively steady levels as a result of our energy efficiency initiatives, the quality of our reservoirs, and our drive to maintain industry-leading steam to oil (SOR) performance. Based on data from the Canadian Association of Petroleum Producers Responsible Canadian Energy 2012 Progress Report, our company-wide direct GHG emissions intensity is about 20 percent below the industry average. The direct GHG emissions intensity for industry in-situ and mining oil sands operations is 0.43 tonnes CO 2E/m³, which is 41 percent higher than Cenovus's oil sands operations of 0.30 tonnes CO 2E/m³.

In 2012, our overall energy use increased by seven percent from 2011 levels. That's because we've increased our oil sands production and used more natural gas in our operations. Natural gas is used to create steam for oil sands production and to run compressors at our conventional assets.

The life cycle of oil: from the ground to your car

Cenovus's crudes are comparable to the average crudes consumed in North American refineries and in 2012, our crudes met the GHG emissions intensity value in California's Low Carbon Fuel Standard.

According to Information Handling Services – Cambridge Energy Research Associates (IHS CERA), when you consider the entire life cycle of oil from the moment it comes out of the ground to the point of combustion in your car engine, GHG emissions from a steam-assisted gravity drainage (SAGD) oil sands drilling project is typically only five to 15 percent more than GHG-intensive from the average North American conventional oil project. On average, Cenovus's crudes are at the low-end of that range. In 2012, our Pelican Lake crude was about five percent less GHG-intensive than the typical North American conventional oil and our Foster Creek and Christina Lake crudes were about four percent more GHG-intensive than the typical North American conventional oil.

In 2012, we injected almost 2 million tonnes of carbon dioxide (C0 2) at our carbon dioxide enhanced oil recovery project in Weyburn, Saskatchewan. That's about 40 percent of our company's total direct GHG emissions. We've stored 20.1 million tonnes of CO 2 since the start of the project in 2000. Learn more about our carbon dioxide enhanced oil recovery project.

We're proposing to supplement our current CO 2 supply by building and operating a new pipeline that will transport CO 2 from SaskPower's Boundary Dam Power Station near Estevan, Saskatchewan to use in our Weyburn operations. Injecting CO 2 into the oil reservoir allows us to increase recovery from the reservoir, extend the life of the field and lower overall GHG emissions. Find out about this proposed pipeline project.

Part of the work that goes into developing our projects is identifying ways to make our SOR as low as possible. Learn how a low SOR is better for the environment.

CHART (2008-2012) Steam to oil ratio

On average, it takes about two barrels of steam to produce one barrel of oil at our oil sands operations – well below the industry average of 3.1. Less steam means using less water. It also means less natural gas is needed to create steam for the SAGD, which results in fewer emissions. For example, we've reduced our SOR by about 15 percent at our Christina Lake oil sands project by implementing innovative technologies like electrical submersible pumps.

Reducing air emissions

While producing oil, our operations emit pollutants like sulphur dioxide (SO 2) and nitrogen oxides (NO x) into the air as a result of burning natural gas in our steam generators. In 2012, we improved the way we collect emissions data from our oil sands operations through a new world-class emissions management system. Developed over two years, the system tracks real-time air and GHG emissions against regulatory requirements and our own best practices. This improves the accuracy of our data. The more accurate our data, the better we will be able to determine how to reduce our impact even further.

Empowered to continuously improve, a team of our engineers looked outside our industry for ways to reduce our emissions beyond what's required by the regulators. As a result we introduced a technology called flue gas recirculation. Learn more about flue gas recirculation and Find out how thinking outside the box leads to environmental benefits.

NO x is the by-product of the fuel combustion process. We're going beyond regulatory requirements to reduce NO x emissions in our oil sands operations. We piloted a new technology called flue gas recirculation (FGR) on one of our boilers to reduce NO x emissions. Results from the pilot showed a 50 percent reduction in NO x emissions. Next year, we'll be adding four boilers equipped with the FGR technology at our Christina Lake oil sands project.

Beyond compliance: NO x reduction through flue gas recirculation

The NO x emissions from our steam generators are already much lower than current regulations require. In fact, we've reduced NO x by about 40 percent since 2006, but are always looking for ways to improve. We've committed to using flue gas recirculation (FGR) on four additional boilers for the next expansion phase at our Christina Lake oil sands. We also continue to look for opportunities to incorporate FGR at future expansion phases at our Foster Creek and at our Narrows Lake oil sands projects.

The chart compares NO x rates found during 2012 manual stack surveys conducted by Maxxam Analytics. Manual stack surveys are short duration tests, usually consisting of three one-hour tests. Stack sampling equipment is used to collect effluent samples from the stack. These surveys are conducted by specially trained stack sampling personnel in accordance with the reference methods contained in the Alberta Stack Sampling Code.

SO 2 emissions

In 2012, our SO 2 emissions increased by 25 percent. This was due to an increase in flaring, which is a controlled burning of natural gas, as a result of unforeseen upsets to steam generators at our Foster Creek and Christina Lake oil sands projects. We recovered 70 percent of SO 2 emissions emitted from these two projects, which prevented pollutants from going into the atmosphere.

Total gas flared

Flaring is a controlled burning of natural gas. The increase in 2012 is because of higher flaring volumes due to unforeseen upsets to steam generators at our Foster Creek and Christina Lake oil sands projects, as well as more detailed reporting of flaring emissions through our new emissions management software.

Total gas vented

Venting is used to describe natural gas that's released. Both flaring and venting release GHG emissions, SO 2 and methane into the atmosphere. The decrease in 2012 is due to more detailed reporting of venting emissions through better data collection.

Using our water resources efficiently

The success of our operations depends on our ability to access and use water efficiently. We use fresh, saline and produced water in our oil sands operations. We're always looking for ways to reduce the amount of water we use and be more efficient with how we use it. We consider many options, including developing new technologies and processes to handle water, finding ways to reuse it and identifying ways to replace fresh water with more saline (or salty) water for use in our operations.

In our SAGD production process, most of the water we use to generate steam is saline water, which can't be used for human or animal consumption, or even for watering plants. We get this water from deep underground and reuse much of it over and over again. We do use some fresh water primarily for facility maintenance and to a lesser extent for steam generation. We also use fresh water for activities like drilling, ice road construction, camps and dust control. The fresh water we use comes from both surface and underground aquifer sources.

Through our efforts to become more efficient in our water use we've been able to reduce the amount of fresh water used in our oil sands operations. Total fresh water use at our Foster Creek and Christina Lake operations accounts for less than five percent of total water use.

We strive to be as efficient as we can with the water we use for production in the oil sands by reusing it as many times as possible. When steam is injected into the ground to heat the oil, it condenses and eventually the oil and water, called produced water, are brought to the surface. The oil and produced water mix is sent to a processing plant to be separated. The oil is processed and transported to be refined. The produced water is then treated so it can be reused in the SAGD process. A small portion of that treated produced water cannot be reused again due to a concentration of dissolved solids, such as salts and sand, which are left behind after the water is converted to steam. At this point, we need to safely dispose of this leftover water by depositing it via disposal wells into deep underground formations assigned to us by the Alberta Energy Resources Conservation Board (ERCB). The ERCB has strict regulations in place to govern the use and maintenance of these disposal wells. The underground formations are deeper than our SAGD wells, which means they're inaccessible to animals, humans and agriculture and cannot contaminate lakes, rivers or streams.

How technology is allowing us to reuse even more water in the SAGD process

We challenged an industry belief that the leftover water could only be reused if it was further treated, which adds cost and uses energy. We developed a process to re-boil the leftover water in a second boiler without further treatment. This second boiler – the blowdown boiler – converts the majority of the waste water into steam.

We successfully commercialized our blowdown boiler technology at our Foster Creek oil sands project in 2011 and are planning on including it as part of our planned Foster Creek expansions. We're also identifying opportunities to use blowdown boiler technology at our other oil sands facilities.

Water testing at our Christina Lake oil sands project.

How steam-assisted gravity drainage works

  1. Steam is generated
  2. Steam is injected underground
  3. Oil is softened so it can flow
  4. Oil and water are brought to the surface
  1. Oil and water are separated;water is treated for recycling
  2. Oil is transported to be refined
  3. Water that can no longer be recycled is safely disposed into disposal wells

Water use

In 2012, we used about 85.7 million barrels of fresh and saline water across all our oil sands, natural gas and conventional oil operations. In total, that's about 16 percent more water than we used in 2011. This total is about 50 percent less than the water used at a typical coal-fired power plant in North America and seven times less than a pulp and paper manufacturer. The vast majority of the water we used in 2012 – about 76 percent – was saline water. Our fresh water use went up 16 percent from 2011, due to an increase of fresh water required at our Pelican Lake operation, an increase in our production across all of our operations, and the dewatering pilot at our Telephone Lake project.

The dewatering pilot at Telephone Lake involves removing a layer of water that sits above the oil deep below the surface. For Telephone Lake to be as efficient as our other oil sands projects, and to keep our SOR low, we needed to figure out how to remove that layer of water before we begin producing oil using SAGD technology.

Water use intensity

In 2012, across all our oil sands, natural gas and conventional oil operations, we required approximately 0.16 barrels of fresh water to produce one barrel of oil equivalent. Based on data from the Canadian Association of Petroleum Producers Responsible Canadian Energy 2012 Progress Report, our oil sands fresh water intensity is 58 percent below the most recently reported industry average for in-situ oil sands operations.

Environmental performance: land

Conserving resources and reclaiming impacts

With operations across Alberta and Saskatchewan, it's clear to us that no two areas are alike. So we don't take a one-size-fits-all approach when it comes to reclamation. Reclaiming the land is about re-establishing habitat to preserve the natural diversity of plants and animals.

We're thoughtful about our approach to reclamation and we have a well abandonment strategy in place. In some cases, we reuse the land we've already disturbed for development to support the growth of our expanding operations. While the result may be that we don't receive as many reclamation certificates for these areas in the short term, this approach helps to reduce the total amount of land that's disturbed in the long run.

We're still at an early stage when it comes to developing our oil sands resources which means that many of our oil sands drilling projects are some time away from reclamation.

That's why we're doing what we can to start interim reclamation in our oil sands areas. At Foster Creek and Christina Lake, we're planting indigenous trees on land affected by past exploration wells. We're also designing borrow pits at our sites as natural water features to fit better into the long-term landscape of the area. A borrow pit is an area where material such as soil, clay or sand has been dug out to build roads and well pads.

Across all our operations, reclamation begins after a well is no longer producing oil or natural gas. In 2012, we had 2,115 wells under active reclamation. We've adopted a long-term strategy to manage our inactive wells and actively accelerate the pace of our reclamation. We track and manage wells throughout their life cycle, from planning to reclamation, and will set targets each year for well abandonment, starting in 2013.

Our exploration and production activities have a temporary impact on the landscape. We use land for roads, pipelines, well pads and facilities, including our camps. Our footprint also includes seismic lines and exploration well sites within our approval areas.

Across our operations, we have more than 4,500 hectares of land undergoing active reclamation in 2012. That's 13 times the size of Central Park in New York City.

Finding new ways to reduce our impact on wildlife

In an area near our Foster Creek oil sands project, our environmental specialists are conducting a pilot restoration project on the historic seismic lines aimed at reducing impacts to caribou. In collaboration with the Alberta government, we're testing a number of treatments – mounding the ground, planting coniferous trees, adding woody debris and leaning tree stems into the pathways – with the goal of restoring the characteristics of the forest and giving young trees a chance to grow more quickly.

We hope this lowers the rate at which caribou encounter predators, like wolves, in their habitat. In order to test our hypothesis, we've put tracking collars on packs of wolves and herds of caribou, moose and other species. We've also placed remote cameras on these lines, so we can monitor wildlife movement to see if this restoration project is having a positive impact on caribou.

"We've fulfilled our past regulatory obligation to reclaim these lands, but the seismic lines still reduce the quality of caribou habitat," says Michael Cody, a senior advisor on our Environment team. "We've made a commitment to restore 1,500 hectares of caribou habitat by 2015. It's a huge undertaking but a big step to protect wildlife habitat in the region."

Protecting wildlife and biodiversity

We manage our impact on wildlife habitat and vegetation by:

  • Planning our activities to avoid sensitive times for wildlife such as migration and nesting periods for birds and calving season for caribou
  • Monitoring wildlife using remote cameras at our operations in northern Alberta to observe and better understand when and how wildlife move around our operations so that as we grow we have plans in place to minimize our impact on them and their natural habitat
  • Working closely with government, industry partners and researchers on actions to reduce our impact on wildlife and their habitat

In 2012, we received government approval for our wildlife and caribou mitigation and monitoring programs at our Christina Lake, Foster Creek and Narrows Lake oil sands projects. These programs outline project-related impacts and identify corresponding objectives aimed at addressing these impacts through mitigation activities and actions. Within these programs, there is an additional action plan specifically related to caribou.

For example, one of our actions at our Christina Lake oil sands project is ensuring all our field workers receive job-specific training to increase their knowledge and awareness of wildlife living in the area. We believe education and awareness programs influence respect for wildlife. The Christina Lake wildlife and caribou migration and monitoring program was the first of its kind in our industry and it represented a collaboration between Cenovus and Alberta government officials. Since receiving government approval for the Christina Lake program, we've also developed and received approval for similar programs for Foster Creek and Narrows Lake, two of our other oil sands projects. In addition, we're working closely with other industry partners, government and researchers in an effort to collaborate and support caribou recovery in the areas where we operate.

Caribou near our Christina Lake oil sands project as captured by wildlife monitoring cameras Caribou near our Christina Lake oil sands project as captured by wildlife monitoring cameras Caribou near our Christina Lake oil sands project as captured by wildlife monitoring cameras Caribou near our Christina Lake oil sands project as captured by wildlife monitoring cameras
Caribou caught on our remote wildlife monitoring cameras.

Helping wildlife can be as simple as turning off the lights

Just like a light left on at night can disrupt your sleep, light from industrial activity can also disrupt wildlife behaviour and breeding. As a trial project, we're taking action at our Christina Lake oil sands project to reduce the impacts of light on nearby wildlife habitat.

In 2012, a team of environmental consultants evaluated our facility buildings, well pads, parking lots and access roads. In each case, they looked at the type of lighting, the wattage and where the lights were directed. As a result, we identified improvements we could make such as adding light shields to direct the light where it's needed, re-orienting light fixtures, installing light sensors and, in some cases, identifying areas of the plant that no longer require lighting.

"Even something as simple as minimizing the light we emit from our operations can decrease our impact on the environment," says Renee Alessio, a senior advisor on our Environment team. "Doing this inventory led to a simple but effective list of improvements. Our goal was to decrease these impacts and maintain the right amount of lighting we need to keep our workers safe. In the end, we were able to do just that."

Operators monitoring a well pad at our Christina Lake oil sands project.

Environmental performance: spills

Spills of any size are never acceptable. But they can happen. So we work to prevent and reduce the number, size and extent of any liquid spill – whether it's produced water, drilling fluids, chemicals, gasoline or oil. Our engineering and process safety procedures are designed to prevent equipment failures that can lead to spills and we've increased spill prevention awareness among workers. The more that staff are aware of the impact of spills and how they can be prevented, the more effort they'll make to ensure they're working safely by taking the time to address hazards that could cause a spill.

This year, we rolled out our Every Drop Counts program across all our operations. Over 1,500 people have participated in information sessions that reinforce the importance of spill prevention and provide practical tips to prevent even the smallest spills. We've established an Every Drop Counts employee work team. Members of the team promote spill prevention awareness across the company and help to develop new spill prevention tools. In 2012, we introduced a new process aimed at eliminating small spills that occur during the loading of hydrocarbon fluids at our sites. It's about changing behaviour and communicating to staff that it's not acceptable to spill materials in day-to-day work.

"We know we can be better when it comes to preventing spills. We're still a ways from where we want to be. But by giving staff the right tools and training through Every Drop Counts, we're on the right path to improve our performance."

– Tony Jackson, a manager on our Regulatory team

Taking action to continually improve our environmental performance

With a number of companies working in northern Alberta to develop the oil sands, the collective impacts of our industry add up over time. These cumulative impacts on the environment are a concern that we, as an industry, are addressing.

As individual operators, we can only control our own actions and performance which has made it difficult to manage cumulative impacts as an industry. In 2012, we achieved an important breakthrough when Canada's Oil Sands Innovation Alliance (COSIA) was established by several oil sands producers and championed at the CEO level. Through COSIA, our industry is able to share data and technologies and accelerate oil sands environmental performance through innovation and collaboration. In addition, COSIA provided technical input into the development of a regional oil sands environmental monitoring system that was introduced to the oil sands industry by the federal and provincial governments.

As founding members of COSIA, we're drawing upon the best minds within our respective companies to develop and implement practical solutions to environmental challenges. COSIA focuses on four key areas: water, land, GHG emissions and, for those companies that mine the oil sands, tailings. To date, the member companies have shared about 440 technologies or innovations that have cost about $700 million to develop. To find out more, visit COSIA.

Worker filling up at our Christina Lake oil sands project fuelling station.

A reportable spill is any fluid spill greater than 2m³that is reported to a regulatory agency. Fluid spills can include produced water, drilling fluids, chemicals, gasoline or oil. The number of company-wide reportable spills in 2012 went up, to 109 incidents in 2012 from 83 incidents in 2011, while the volume of spills decreased to a total of about 5,000 barrels from about 16,000 barrels. We're targeting a number of actions in 2013, including a concerted effort to decrease the number of spills by third-party contractors.

Stakeholder and Aboriginal engagement

"We work every day on building and strengthening relationships with our stakeholders."

Stakeholder & Aboriginal engagement

As we grow our business, it's important all our stakeholders understand and have confidence in the work we do and in how we do it. So we take every opportunity we can to connect with them – whether it's through face-to-face meetings or open houses, through mainstream and social media, or through tours of our operations.

We're proud of what we do and how we do it, but we know we can do better. That's why we're not just talking. We're also listening to what our stakeholders, including our critics, have to say about our company and our industry. These conversations help raise operational standards, shape public policies and overcome environmental concerns, so Canadians can be proud of the way the oil sands are developed.

Hearing from our stakeholders

We reach out on a regular basis to people living in our operating areas and in large cities across Canada. We use focus groups, and telephone and online surveys to find out what Canadians believe we're doing well as a company and an industry, and where we need to improve.

Across Canada, we've found that many Canadians have similar views when it comes to the oil sands. We commissioned surveys of residents who live in our Alberta and Saskatchewan operating areas as well as a random sample of people in British Columbia, Alberta, Saskatchewan, Ontario and Quebec.

In our survey of the five provinces, most people had either neutral or positive impressions about oil sands development. The highest support was in Alberta, with 91 percent expressing either neutral or positive sentiments; while lowest support was in Quebec, where that number was 56 percent.

Specifically, in the northern Alberta communities where our oil sands operations are located, results from the survey show that respondents feel:

Cenovus works hard to minimize its impacts on the environment 93%
Cenovus provides benefits to their community 95%
Cenovus conducts business in an honest, ethical manner 95%
Either a positive or neutral impression of oil sands development 96%

Overall, people across Canada recognize that the oil sands industry contributes to the Canadian economy, is a source of jobs, and that it provides a valuable resource that we all need. However, they also have concerns. Some of the concerns Canadians share involve the environmental impact of oil sands development and the amount of water used. We're looking to address these concerns and take the time to understand the issues that are most important to our stakeholders.

Open house with landowners near our Weyburn enhanced oil recovery project.

Engaging our stakeholders

We strive to create an open flow of communications with stakeholders to ensure that they know our company and understand our projects, and that we understand their concerns. Here are some of the ways we engaged with our stakeholders throughout the year.

Stakeholders How we engage them
investors and media
  • Held meetings with shareholders and the investment community in Canada, the U.S. and across Europe
  • Hosted tours to our operations
  • Shared details through our annual shareholder meeting, public disclosure, quarterly conference calls and webcasts
Employees
  • Held two company-wide forums where employees learned about our operations and business strategy
  • Communicated through stories and articles on our internal website
  • Supported training and development opportunities on a variety of topics to engage and educate employees through courses, conferences and lunch and learns
  • Held team information sessions to communicate specific updates about their area of business
  • Held bi-weekly orientation sessions to help new employees understand our business, our culture and how we work at Cenovus
  • Hosted tours to our operations
Industry partners
  • Met regularly with our business partners ConocoPhillips and Phillips 66
  • Participated on several Canadian Association of Petroleum Producers' committees
  • Joined together with 11 oil sands producers to form Canada's Oil Sands Innovation Alliance
Communities
  • Held meetings and open houses to consult with stakeholders, including landowners, in our operating areas
  • Conducted an external survey to hear from residents living near our operations
  • Hosted tours to our operations
Aboriginal Peoples
  • Consulted regularly with Aboriginal communities to understand the potential impacts of our operations and identified ways to mitigate these impacts and work together to build employment and business opportunities
  • Conducted a survey, through a third-party consultant, with Aboriginal communities to understand how well we are working with our Aboriginal partners and areas we can improve
  • Hosted tours to our operations
Governments
  • Engaged with government officials, answered questions and provided balanced information about our business
  • Complied with lobbying legislation and regulations in every jurisdiction where we do business
  • Supported projects that will help create market access for Alberta's oil sands products
Non-government organizations (NGO)
  • Met with organizations as part of our NGO engagement program to develop relations and become more involved in ongoing discussions about our industry

"It's important for us to know what residents in our operating communities think about Cenovus and our industry – what we're doing right and what we need to improve on."

– Sandra Barker, a manager on our Communications team

Advancing public policy

We're increasing our efforts to reach out to officials in all levels of government who design and implement the policies that affect our industry. Decisions about Canada's energy resources that are being made now and over the next several years are critical to ensure we can develop our oil sands resource base to help meet the world's growing energy needs. We have a good story to tell and it's one that all Canadians can be proud of.

One of our biggest challenges as an industry is getting our growing oil production to new markets. Oil sands critics have become increasingly vocal in their opposition to new pipelines. At Cenovus, we're tackling this market access challenge head on with our portfolio approach. In addition to pipelines, we're expanding our use of rail shipments to get oil to markets. Another important step we took recently was to establish an internal task force – made up of senior leaders and Executives – to develop innovative strategies for getting our oil to market in the future.

Aboriginal relations

We work with Aboriginal communities and organizations in our operating areas to build strong, mutually beneficial relationships. We've developed an Aboriginal engagement framework that allows us to follow a consistent approach when working with Aboriginal communities. This framework can involve looking at opportunities for employment, education, investment, consultation and business.

Establishing long-term relationships with Aboriginal communities

We've developed long-term regional agreements with our Aboriginal neighbours that will help guide our relationship with them today and well into the future. The agreements encourage engagement, help community members understand the potential benefits of our development plans, and help us understand the communities' interests in our projects.

In 2012, we signed long-term agreements with the Heart Lake First Nation and the Beaver Lake Cree First Nation. The agreements outline a number of aspects of our relationships including consultation and engagement, community investment funding, economic and business development, employment and training, and other issues specific to each community.

During the year, we also worked closely with our Aboriginal partners to implement existing long-term agreements with the community of Conklin and Cold Lake First Nations. We regularly met with the communities to make sure we're living up to commitments outlined in these agreements.

"The only way to build trust in these relationships is through consistent, constant engagement with local communities. That's something our company is especially proud of."

– Cam Kopansky, a lead on our Community Relations team

Investment in local and Aboriginal businesses

Many of our operations are located in remote and rural areas of Alberta and Saskatchewan. Hiring local businesses and sourcing local contract services, including Aboriginal businesses, are important parts of how we carry out our business. Where we can, we train and hire locally and use businesses and services in the areas around our operations. This approach helps us meet our labour and service needs and supports local businesses.

We have developed strong relationships with Aboriginal companies near our oil sands developments in northeast Alberta. We depend on these businesses for a wide range of services, including engineering and construction, site maintenance and security. We typically work with 60 to 70 Aboriginal companies each year.

Harbir Chhina, our Executive Vice-President, Oil Sands, and Heart Lake First Nation Chief Morris Monias share a good-natured handshake after signing the long-term agreement at the new Heart Lake Community Centre.

In 2012, we spent over $1 billion doing business with local and Aboriginal companies in our operating areas. Of this total, we spent $327 million on services and supplies from Aboriginal companies, up 34 percent from the previous year. The increase in Aboriginal business spending reflects increased effort by Cenovus to engage Aboriginal suppliers as well as the growing number of qualified businesses. It represents about 10 percent of total company spend.

Partnering with Whitefish Lake First Nation on new service rig

For Trent Zacharias, manager of our local community relations team, a new service rig employing Aboriginal workers at our Christina Lake oil sands project demonstrates how we can create shared value. Trent says the new service rig represents what can be accomplished when we choose to work together. Community leaders from Whitefish Lake First Nation approached Cenovus with a proposal for a new rig to be operated by Pimee Well Servicing, a local Aboriginal company associated with the community. Together, with the community and Pimee, we worked to turn the idea into reality. In January 2013, we celebrated the new rig at a ribbon-cutting ceremony, where elders performed a traditional ceremony that included drumming and singing.

"This is an innovative collaboration that benefits Whitefish Lake First Nation and Cenovus," says Whitefish Lake First Nation's Chief James Jackson. "It shows that partnering with local Aboriginal businesses makes good business sense."

Ribbon-cutting ceremony to celebrate Pimee Well Servicing's new rig, which is servicing our Christina Lake oil sands operation.

Supporting education of Aboriginal youth

We partnered with the Northern Alberta Institute of Technology (NAIT) to launch an innovative program that helps promote youth leadership skills in First Nation communities in northern Alberta. Eighteen Heart Lake First Nation students, between the ages of 15 and 18, took part in the Cenovus NAIT Aboriginal Youth Leadership program. The five-day course was taught by NAIT's project leadership and project management instructors.

The NAIT Aboriginal Youth Leadership program helps teach students how to improve their communications skills, identify and deal with risks, manage a variety of conflict situations, improve time management skills and more. Students also leave this program with a personal development plan that helps them identify their goals and the steps they need to take in order to achieve them. We plan to work with NAIT to deliver the program to students in two additional First Nation communities in 2013.

Learn about some of our other initiatives that also encourage collaboration with Aboriginal communities.

Students taking part in the NAIT Aboriginal Youth Leadership program.

Community involvement and investment

"We support our communities in a variety of ways – whether it's providing funding or our employees giving their time and talent, or making an in-kind donation. We're hearing positive feedback from our community partners that this approach to community investment is having an impact."

Community involvement and investment

Our approach to community investment helps us create a deeper connection with our communities. It's not just about financial donations. It's about demonstrating our commitment to helping communities where we live and work be stronger and better off because we're there.

We know that each and every community is unique and has different needs. Working with our community partners we look for meaningful ways to give back. It's an approach that's tailored to the needs of the community we're working with. Our involvement in the communities can be through creating programs, giving in-kind support, sharing ideas, hosting and supporting events, or providing volunteering opportunities for our employees and their families.

Measuring our impacts

As an Imagine Canada Caring company, we give a minimum of one percent of our Canadian pre-tax profits to charitable or non-profit organizations. To ensure we're employing best practices when it comes to our community investments, we have a program in place to measure the impact of our investments. We do this through stakeholder feedback, third-party evaluation, benchmarking studies and reports from our community partners.

Since 2011, we've been a member of the London Benchmarking Group (LBG) Canada, a recognized global standard for community investment management, performance measurement and reporting. Our participation includes an annual audit which helps us to maximize the impact of our investments. Recent LBG assessments indicate we continue to manage our program effectively and that the percentage of our employees who make donations is industry leading.

Total value of company investments in 2011 and 2012 as audited by LBG Canada.

We strategically concentrate our community investment efforts on three focus areas:

  • Learning
  • Safety and well-being
  • Sustainable communities

Learn more about these focus areas and what they mean to Cenovus.

Community involvement and investment

Building a strong and prosperous future

We recognize there is a need for skilled trade workers in Alberta. We know that by supporting skilled trades and technology, we're helping young people develop their talents in a rewarding career while bolstering the future workforce in the energy sector.

To keep up with the demands of our growing business we're always looking for ways to add to our talented workforce. We've developed a long-term strategy that involves collaborating with post-secondary institutions offering power engineering programs. In 2012, we committed more than $6 million to support trades education programs at the Southern Alberta Institute of Technology (SAIT), the Northern Alberta Institute of Technology (NAIT), Portage College and Lakeland College. Together these institutions have been able to add over 100 spots in power engineering programs as a result of our donations.

Enhancing personal health and safety

One of our major donations during the year was a $1 million commitment to assist in the creation of the Sheldon Kennedy Child Advocacy Centre. It delivers support, in one location, to children, youth and families impacted by child abuse. The Calgary Police Service, Calgary Child and Family Services, Alberta Health Services and Calgary Crown Prosecutors are working together at this facility to better coordinate the community's response to child abuse through treatment, prevention, education and investigation.

Fueling healthy growth within our communities

Inside Education is a non-profit organization that provides energy literacy programs and resources for Canadian teachers and students to help them understand science and technology as they relate to natural resource development and the environment. Last year, partnering with Inside Education, we helped fund classroom resources, a weekend Youth Education Summit for Alberta high school students and teachers, and a week-long tour of the oil sands (led by Inside Education) for 40 Canadian teachers. During the tour, teachers met with local stakeholders, were encouraged to ask questions and discuss any concerns they had about oil sands development.

"I left the tour impressed with the knowledge that I had gained and a further instillation of optimism that the youth that I work with have a very bright future ahead of them with lots of career opportunities. In my opinion we were exposed to first hand evidence that there is hope and spirit within the oil industry – they are trying to be stewards of the environment."

– Teacher from Hughenden, Alberta

We also partnered with Inside Education at a number of forums to help promote energy literacy including GLOBE 2012, the North East Teachers Convention and the Canadian Association of Principals Conference.

Developing our leaders is a focus for our company, and we're also extending this to our community partners by supporting their professional development. In partnership with the Banff Centre, we developed the Community of Leaders program. Now in its fourth year, the program focuses on strengthening leadership skills and behaviours through learning, networking and coaching.

We were a sponsor of the GLOBE 2012 Conference in Vancouver – one of the world's largest sustainability conferences.

We partner with both Skills Canada and Skills Alberta, organizations that promote careers in skilled trades and technology to youth. We were the presenting sponsor of the 2012 Skills Canada National Competition hosted by Alberta. Annually, more than 150,000 Canadian youth train and compete in skills competitions across the country.

Making a difference in the life of a Calgary teen

Everyone needs someone to believe in them, even those who might typically get overlooked. The In the Lead program is all about helping people realize their potential.

In the Lead is a leadership program that links vulnerable young people with employees from Cenovus. For 16 weeks, students (we call them young leaders) and employees (we call them coaches) go on a journey to help each other discover their strengths and develop leadership and life skills.

We've teamed up with the Calgary Youth Justice Society to develop the In the Lead program. This is the first year the program has been in place and over 50 young leaders have been paired with their coaches so far.

"It's about creating a community where no young leader is left behind," says Brian Palmer, a member of our human resources team and one of our coaches. "By giving these young people an opportunity to discover and develop their strengths, they're changing their outlook on life – and so am I."

The young leaders regularly meet with their coaches to share stories and ideas on life and leadership. They also attend classes where they complete a community project and work through a leadership curriculum.

Results to date have exceeded expectations. Data from third-party evaluations show significant improvement in personal development, leadership skills and overall resilience for both coaches and young leaders.

On the strength of this, and other community involvement programs, Cenovus received Volunteer Calgary's Leader in Employee Volunteering Award. This award recognizes Calgary organizations that demonstrate partnership development, leadership and innovation in employer supported volunteering. In the Lead is just one example of how we're providing an opportunity for our employees to engage in their community.

See how this program is making a difference in one young leader's life.

Finding ways to give back

Our employees not only give back through volunteer work with our community partners, they give through donations to charities and not-for-profits of their choice. Together with our employees, we donated more than $3.4 million to charitable and non-profit organizations in 2012 through our employee giving programs.

Our volunteer program also provides up to $1,000 in grants to the charitable and non-profit organizations where our employees and their immediate family members volunteer. Participation in this program has steadily increased over the last three years. In 2012, the program supported 170 organizations where our employees donated their time.

Our employees cooked dinners, read to children, packed food hampers, decorated for the holidays and everything in between. It's all about giving back to the community – not just making donations. Our employees get to see first-hand the impact of our support. In 2012, we held 46 company-sponsored volunteer events for employees and their family members.

In 2013, we'll be expanding our volunteer program to include team volunteer events. This is a fresh approach to team building and provides an opportunity for our employees to engage with their colleagues while giving back to the community.

During our annual Thanks & Giving campaign, Cenovus gives employees the opportunity to donate to the organizations that are meaningful to them and matches their donations, dollar for dollar, up to $25,000 per employee, per year.

The Cenovus Suite Give-Away: from our office to yours

The BOW stands 58 stories tall and is a new Calgary landmark. It's also our new head office. As part of our move to The BOW and other buildings, we had a large amount of quality office furniture and equipment, including projectors, white boards and microwaves that we were unable to take with us. So we launched the Cenovus Suite Give-Away. This program allowed us to repurpose the furniture and office equipment by donating it to local charities and non-profit groups in Calgary.

Charities and non-profits were invited to visit an online catalogue and apply to participate in the program. In the end, the Cenovus Suite Give-Away provided more than 7,500 items, including over 800 high-quality office suites and a significant amount of office-related equipment, to hundreds of Calgary and area charities and non-profits.

"Our organization has greatly benefited from this," says Suzanne Jackett, CEO of Between Friends. "I've been here for 14 years and this feels like an exciting new beginning. Not only will the furniture provide a better work environment for our staff, it's allowed us to focus more of our dollars and resources on our programs in the community."

The Cenovus Suite Give-Away event at The BOW.

Reporting data

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End notes

  1. Effective January 1, 2011, we adopted International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. For all periods up to and including the year ended December 31, 2010, we prepared our Consolidated Financial Statements in accordance with Canadian generally accepted accounting principles ("previous GAAP"). In accordance with the standard related to the first time adoption of IFRS ("IFRS 1"), our transition date to IFRS was January 1, 2010 and therefore the 2012, 2011 and 2010 information has been prepared in accordance with IFRS. Financial information prior to 2010 had been prepared following previous GAAP.
  2. Non-GAAP measure as referenced in our Advisory.
  3. 2009 based on NYSE closing share price at year end using annualized dividend. 2010, 2011 and 2012 based on TSX closing share price at year end.
  4. Natural gas converted using a 6:1 oil equivalent. See our Advisory.
  5. Gross production numbers are disclosed in this report as we calculate our emissions, water and spill intensities using 100 percent of production. Our financial results report our Foster Creek and Christina Lake production on a net basis to account for the 50 percent ownership of these properties with ConocoPhillips.
  6. Investigations can include (but are not limited to) compliance with laws and regulations, conflict of interest, fraud, confidentiality and disclosure and other potential breaches of policies and practices.
  7. The increase in recordable health and safety injuries in 2012 was primarily associated with our contract workforce. Contractor safety management is an area that we'll be focusing on in 2013. In addition, we continue to focus on safety by supporting our behaviour-based safety program, enhancing our existing incident management system to better identify and address improvement opportunities and by increasing leadership visibility in the field.
  8. Employee total is based on full-time equivalent.
  9. Top two reasons why employees left Cenovus were 1) Personal and family related;and 2) Better job fit and career opportunity.
  10. Generational profile definition source: Dr. Linda Duxbury, Professor, Sprott School of Business, Carleton University.
  11. Tracking of employee development is under review and will progress through 2013.
  12. Dependents of employees are eligible for student scholarships.
  13. Periodic health assessments occur every two years for safety-sensitive positions, where an employee has the responsibility for his or her own safety or the safety of other people, or as determined by regulatory requirement. The assessment includes:
    • Health history check
    • Audiometric testing (to meet regulatory requirements)
    • Vision (for driving)
    • Pulmonary function testing (to allow respirator use)
    Fitness for work requires that staff be in a condition to carry out their day-to-day job duties safely and effectively without putting at risk their own health and safety or the health and safety of other staff members, customers, the public or the environment.
  14. Increase due to the increase in reported flaring volumes as a result of unforeseen upsets to steam generators at Foster Creek and Christina Lake. We recovered 70 percent of SO 2 emissions emitted from these two projects and thus these pollutants were not emitted into the atmosphere.
  15. Decrease corresponds with improvements made to the data collection process and more accurate identification of engine types, resulting in better, more comprehensive data quality. NO x is the by-product of the fuel combustion process. We're going beyond regulatory requirements to reduce NO x emissions in our oil sands operations. We introduced a new technology called flue gas recirculation to one of our boilers which contributed to a reduction in NO x emissions. Next year, we'll be adding four boilers equipped with the flue gas recirculation technology at our Christina Lake oil sands project.
  16. Increase corresponds with the increase in flaring volumes due to result of unforeseen upsets to steam generators at Foster Creek and Christina Lake as well as more detailed reporting of emissions through new emissions management software.
  17. Decrease due to more detailed reporting of vent emissions through improvements made to the data collection process.
  18. Increase due primarily to the 35 percent growth in our oil sands production. Despite the increase in oil sands production, we've been able to keep our GHG emissions intensity at relatively steady levels as a result of our energy efficiency initiatives, the quality of our reservoirs and our drive to maintain industry-leading steam to oil (SOR) performance.

    As part of our risk management process, we evaluated the potential to offset incremental GHG emissions growth from our oil sands developments. We found limited offset supply in Canada to meet this type of objective, i.e. it could not be done at a reasonable cost, and it would not materially affect the issue globally. To continue to reduce our GHG emissions impacts, our GHG emissions strategy is to:
    • Maintain top-quartile steam to oil ratio
    • Continuously improve our energy efficiency
    • Develop a portfolio of GHG technology options that could reduce absolute GHG emissions from our oil sands development
  19. Increase due to increased fuel consumption across our oil sands facilities as well as the addition of Christina Lake phase D expansion.
  20. Increase due to increased electrical consumption from our electrical submersible pumps (ESPs) for start-up of Christina Lake phase D. Using ESPs decreases the amount of steam needed for production, lowers the steam to oil ratio and decreases direct GHG emissions, however it increases indirect GHG emissions.
  21. The decrease in 2012 corresponds to a reduced output of reclamation certificates from the Government of Alberta in the last quarter of the year. Actual numbers of reclamation certificate applications remained consistent with 2011.The increase in 2011 was due to the Government of Alberta hiring additional staff, timing of our applications and recent wet years that allow many sites to achieve satisfactory vegetation cover quicker.
  22. The decrease in 2012 corresponds directly with the quantity of well site reclamation certificates received and the actual lease size of sites that were certified.
  23. The volume of spills is the aggregate volume associated with all unintended liquid or solid releases to the environment greater than 2m3 on site;any amount that may have an adverse environmental effect or pose a danger to public safety;any amount not confined to a site;any release from a pipeline;or any release into a watercourse, groundwater or surface water.

    The increase in reportable spills was primarily due to growth of our operations. We continue to reinforce the importance of spill prevention at all our operations through our Every Drop Counts program.

    Decrease in 2012 reportable volume spilled is due to a decrease in large volume spills. The increase in 2011 was the result of three produced water spills at Foster Creek. Produced water is saline water brought to the surface when oil and gas is extracted. Over 90 percent of the produced water spilled was recovered. The increase in estimated reportable spill volume in 2009 was due to two produced water spills from a pipeline break and a spill on a drilling rig, which was contained.
  24. Increase due to the increase in demand at our Pelican Lake operation, an increase in production across all of our operations, and the dewatering pilot at our Telephone Lake project. In preparation for the steam-assisted gravity drainage (SAGD) process, the dewatering pilot removes top fresh water that sits above the oil, and injects it back into a similar aquifer below the oil formation. The increase also reflects more comprehensive water use tracking for camps, which began in mid-2011 and the tracking of water use for seismic and completions, which began in 2012.
  25. Increase due to the dewatering pilot at our Telephone Lake project. In preparation for the SAGD process, the dewatering pilot removes top fresh water that sits above the oil, and injects it back into a similar aquifer below the oil formation. The increase also reflects more comprehensive water use tracking for camps, which began in mid-2011 and the tracking of water use for seismic and completions, which began in 2012. Increase is also due to expansion of Christina Lake phase D.
  26. Increase due to the increase in demand at our Pelican Lake and Christina Lake operation projects. In 2012, saline water use at Pelican Lake returned to average levels after a large number of injectors were shut in due to an active drilling program in 2011. Additionally, the saline water use increased as a number of fresh water source wells were unavailable for use in 2012.
  27. Increase due to expansion of Christina Lake phase D.
  28. Increase due to increased production at our oil sands operations, increase in drilling activity in all areas except for our Alberta and Saskatchewan asset teams and improvements made to the data collection process through a new waste tracking system. In mid-2012, the Alberta Energy Resources Conservation Board (ERCB) implemented a new directive containing more stringent land application criteria capturing more drilling waste volumes.
  29. The Cenovus Environmental Opportunity Fund Limited (CEOFL) investments are opportunity driven. The decrease in planned spend from 2011 to 2012 is due to fewer fundable opportunities being identified in 2012, and not a change of scope for the CEOFL program. Prior to 2011, the CEOFL was known as the Cenovus Environmental Opportunity Fund.
  30. Since the inception of the energy efficiency initiative in 2007, we've committed more than $35 million (gross) to energy efficiency initiatives. We expect this investment will lead to a reduction of natural gas (or equivalent) consumption by over 4,600 Mcf/d (roughly equal to 795 BOE/d), and to a reduction of GHG emissions of over 205,000 tonnes per year. The decrease in 2012 is due to our commitments to multi-year efficiency projects in 2011, where commitment will vary year by year depending on the execution stage of the projects. This decrease is also due to smaller, less expensive, projects in 2012.
  31. Of the $5.2 million, $2.7 million is spent against the 2012 approved commitments and the remainder is spent against commitments from prior years.
  32. Our steam to oil ratio (SOR) is among the lowest in the industry. A low SOR allows us to grow and sustain production with comparatively smaller land footprint, and lower energy usage and emissions and water consumption, all of which result in a smaller environmental impact.

    The decrease in 2012 is due to improved reservoir qualities and ongoing optimization to reduce energy use. As our Christina Lake oil sands project has expanded, we've accessed higher quality reservoirs exhibiting a lower SOR. The high quality reservoirs consist of clean sand formations, high oil saturation, and high permeability with few laminations.
  33. Volume weighted average SOR for significant Alberta projects. Industry average Source: Energy Resources Conservation Board.

    On average, it takes 2.1 barrels of steam to produce one barrel of oil at our oil sands operations – well below the industry average of 3.1. Less steam means using less water. It also means less natural gas is needed to create steam for the steam-assisted gravity drainage (SAGD) process, which results in fewer emissions. We implemented electrical submersible pump technology, which reduced SOR by about 15 percent at our Christina Lake oil sands project.
  34. All goods and/or services provided by either an Aboriginal-owned company (51 percent or more ownership) or an Aboriginal joint venture. This number reflects the total at the time the Aboriginal business spend report was generated on February 15, 2013.
  35. 2012 annual capital investments.
  36. Total direct cash investments made through community investment donations and employee programs (employee volunteer grant program, matching gifts, and Thanks & Giving).
  37. Total Cenovus donations made in the employee volunteer grant program and from matching employee contributions in the Thanks & Giving and matching gifts programs. Cenovus matches employees' charitable donations dollar for dollar up to $25,000 per employee per year. Total does not include employee contribution.
  38. Cenovus recognizes and rewards the personal time contributed by our employees and their family members through volunteer grants. Cenovus will give $250 for every 15 hours volunteered (to a maximum of $1,000 per employee per year) to the organization(s) where the volunteer hours took place.
  39. Total number of organizations that received a direct cash donation through community investment funding, the employee volunteer grant program, and matched employee contributions in the Thanks & Giving and matching gifts programs.

Industry Benchmarking

Cenovus performance relative to Canadian Associate of Petroleum Producers (CAPP) Responsible Canadian Energy

CAPP RCE average A CVE % difference CVE % difference
2011 2011 2011 2012 2012
Fresh water intensity (bbls/bbls) Oil sands - in-situ 0.36 0.16 -56% 0.15 -58%
Direct GHG Intensity
(tonnes CO 2e/m³OE)
Industry B 0.29 0.22 -22% 0.22 -22%
Oil sands - mining & in-situ 0.43 0.32 -25% 0.30 -29%

A - Source: CAPP RCE 2011 National Data Table is the most recently reported industry data available.
B - Industry average is the combined weighted average of western Canada (conventional) & oil sands (mining & in-situ) emissions and production.

Environment Canada indicators by sector

Canada's GHG emissions trends 2010
(million tonnes of CO 2E/year)

Coal 80
Pulp and paper 7
Iron and steel 14
Chemicals and fertilizers 24
Cement 10
Oil sands production 48

Source: Canada's Emissions Trends 2012, Published by Environment Canada August 2012

Canada's total water consumed 2009
(million m³/year)

Oil and gas 223
Mining (not including in-situ oil sands) 497
Agriculture 1,952
Thermal power generation 507
Chemicals manufacturing 334
Paper manufacturing 1,593
Primary metals manufacturing 1,052

Source: Environment Canada

Advisory

Non-GAAP measures

Cash flow, debt and capitalization are non-GAAP measures described and presented in this report in order to provide shareholders and potential investors with additional information regarding Cenovus's liquidity and its ability to generate funds to finance its operations. Cash flow is defined as cash from operating activities excluding net change in other assets and liabilities and net change in non-cash working capital, both of which are defined on the Consolidated Statement of Cash Flows In Cenovus's interim and annual consolidated financial statements, available at www.cenovus.com. Debt is defined as short-term borrowings and long-term debt, including the current portion, excluding any amounts with respect to the partnership contribution payable and receivable. Capitalization is defined as debt plus shareholders' equity. For further information, refer to our most recent Management's Discussion & Analysis (MD&A) available at www.cenovus.com.

Oil and gas information

Certain natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of one barrel (bbl) to six thousand cubic feet (Mcf). BOE may be misleading, particularly if used in isolation. A conversion ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Forward-looking information

This report contains certain forward-looking statements and other information (collectively "forward-looking information") about our current expectations, estimates and projections, made in light of our experience and perception of historical trends. Forward-looking information in this report is identified by words such as "anticipate", "believe", "expect", "plan", "forecast", "target", "project", "could", "focus", "vision", "goal", "proposed", "committed", "potential", "may"or similar expressions and includes suggestions of future outcomes, including statements about our growth strategy and related schedules, environmental plans, targets and goals, projected future value or net asset value, forecast operating and financial results, planned capital expenditures, expected future production, including the timing, stability or growth thereof, future use and development of technology and projected increasing shareholder value. Readers are cautioned not to place undue reliance on forward-looking information as our actual results may differ materially from those expressed or implied.

Developing forward-looking information involves reliance on a number of assumptions and consideration of certain risks and uncertainties, some of which are specific to Cenovus and others that apply to the industry generally. The factors or assumptions on which the forward-looking information is based and the risk factors and uncertainties that could cause our actual results to differ materially are discussed under "Risk Management"and "Advisory"in our most recent Quarter Report. For a full discussion of our material risk factors, see "Risk Factors"in our most recent Annual Information Form/Form 40-F available at www.cenovus.com. Readers should also refer to the risk factors described in other documents we file from time to time with securities regulatory authorities, available at www.sedar.com, www.sec.gov and www.cenovus.com.

Measurement abbreviations used throughout the report

bbls barrels
BOE/d barrel of oil equivalent per day
CO 2 carbon dioxide
CO 2E carbon dioxide equivalent
GJ gigajoules
GHG greenhouse gas
m³OE cubic metres of oil equivalent
mg/L milligrams per litre
MMcf/d million cubic feet per day
SOR steam to oil ratio