Husky Oil Operations Limitedregistry.mvlwb.ca/Documents/S14A-003/S14A-003 - Husky's Respons… ·...

Husky Oil Operations Limited

707 8th Avenue S.W.Box 6525, Station DCalgary, Alberta, CanadaT2P 3G7

May 05, 2014

Sahtu Land and Water BoardP.O. Box #1Fort Good Hope, NTXOE OHO

By e-mail: ian.brown(c~slwb.com

Attention: Ian Brown, Regulatory Specialist

Dear Ian:

Re: Land Use Permit Amendment Application - S14A-003Water Licence Application — S14L1-002Slater River Exploratory Horizontal Program ApplicationComments received From GNWT-Lands

Bus: (403) 298-6111Fax: (403) 750-1722

Husky Oil Operations Limited (Husky) has received comments from GNWT-Lands dated April28, 2014 regarding the subject applications. Husky submits the following information inresponse to the letter. GNWT Land's comments are listed below with their respectiveresponses.

ENVIRONMENTAL PROTECTION

1.Storage of Liquid Drilling Waste and Flowback Fluid Storage

CommentIn the Husky Oil Operations Limited ("Husky" or the "Proponent") water licence (WL) application,Section 8, Waste Deposited (quantity, quality, treatment and disposal), Drilling Waste, it statesthat: "Husky intends to store all freshwater residual solids and fluids in tanks or in a lined metalor plastic-sided berm containment system. Following toxicity testing, these wastes may betransported to bermed storage pits in existing quarries in EL494." In the Horizontal WellProgram Waste Management Plan (WMP), Table 2, Waste management activities associatedwith drilling and completing wells at A-52 and 0-80 (page 6), it is stated that flowback fluidstorage will be contained in a tank farm on each well pad. However, it is not clear upon reviewof supplied documentation that the tanks used for flowback fluids storage will be within bermedareas to ensure flowback fluids are contained in the case of an operational upset spill on lease.Also, in Section iii, page 11 and 12 of the WMP, it states that disposal options for Invert Fluidsand Cuttings, Kill Fluid and Flowback Fluids may be captured and transported or utilized byother operators in the area. However, the other operators are not listed in associated Table 5,examples of approved waste receiving facilities used for the Slater River Project, page 15.

Sahtu Land 8~ Water Board Husky Oil Operations LimitedIan Brown Land Use Permit S14A-003 andMav 5, 2014 Water Licence S14L1-002 Application

Recommendation1.) On-site storage tanks containing liquid drilling waste and flowback fluids will be confinedwithin an impermeable bermed area with secondary containment and leak detection systems inplace, until transported off-lease to approved disposal sites in either Alberta or British Columbia.The secondary containment of the bermed area is required to be capable of containing 110% ofthe largest storage vessel/tank.2.) In regard to the use of pits/quarries for drilling waste and/or hydraulic fracturing flowbackfluids storage, and if this method is approved for use, the Department of Environment andNatural Resources (ENR) recommends the Proponent develop and supply the Sahtu Land andWater Board (SLWB) with a "Hydraulic Fracturing Fluids Management Plan" (HFFMP) thatincludes, but is not limited to: •Primary containment device; •Secondary containment system; •Leak detection system between the primary and secondary containment; • A monitoring planthat includes frequent inspection; •Mitigation methods for preventing wildlife access, bothterrestrial and avian; • A containment, detection, and monitoring system demonstrated to beapproved by a professional engineer licenced to practice in the Northwest Territories (NWT);and At minimum addressing applicable requirements for flowback fluid storage in pits asrequired by Alberta and British Columbia, including that required by the Alberta EnergyResources Conservation Board (ERCB) Guide 55, Section 8, Requirements for Lined EarthenExcavations, and that required by the BC Oil and Gas Commission Information Letter, Storageof Fluid Returns for Hydraulic Fracturing Operations .3.) In the case that drilling or flowback fluids are stored and transported for use by otheroperators in the area, the Proponent update Table 5, examples of approved waste receivingfacilities used for the Slater River Project, page 15, to list the operators that may receive invertfluids/cuttings, kill fluid, or flowback fluid for beneficial reuse, and provide the conditions of thetransfer of these fluids to other operators in its WMP so that these waste streams do not resultin an unauthorized discharge to the environment.

Response1.) Freshwater, non-toxic drilling waste fluids and solids derived from the surface holes for

each well will be contained in lined berms (metal or plastic-sided) as described in theapplication. This practice has been previously approved by the SLWB as an alternativeto using a well site sump for the management of freshwater drilling waste fluids andsolids and was previously used in the drilling of the vertical wells at H-64 and N-09 (WL-S11 L1-003) in 2012 and for the groundwater bedrock aquifer investigation program(LUP- S12X-006) conducted in 2013.

Invert (oil-based) drilling fluids, contaminated fresh water drilling fluids wastes andflowback fluids will be stored in 400 bbl tanks within a lined berm until transported offsite. Invert drilling fluids may be re-used in the drilling of multiple wells and will be storedon site until no longer required, then transported to an approved and licenced facility fordisposal

2.) To clarify, the only drilling waste that may be disposed of to a pit/quarry will be the non-toxic freshwater drilling fluid and solid wastes derived from the surface holes of eachwell. This disposal method will only be considered if the testing (as described in theWaste Management Plan — Appendix 6) of the solids and liquids meet the end points ofthe Alberta Energy Regulator (AER) Directive 050- Drilling Waste Management. Ifdisposal is to a pit/sump, an assessment of the proposed site will be governed by AERGuide 50.No fluids recovered from hydraulic fracture treatment operations will be stored in anearthen excavation or open containment at any time during the project.

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Sahtu Land 8~ Water Board Husky Oil Operations LimitedIan Brown Land Use Permit S14A-003 andMay 5, 2014 Water Licence S14L1-002 Application

3.) Husky has had only cursory discussions with local oil and gas operators in the arearegarding the beneficial re-use of wastes. Should this option become feasible duringoperations, permission will be sought from the SLWB prior to the direction of any wastesto local facilities.

2. Drilling Waste Management

CommentHusky has proposed to transfer drill wastes into lined bermed pits located at quarries in EL494.Separated water is then to be discharged from the pits to land and the residual solids areproposed to be disposed via a land application and/or potentially incorporated into aggregatematerial used for constructing roads or well pads. This is detailed specifically within the WLapplication, Section 8, Waste Deposited (quantity, quality, treatment and disposal), DrillingWaste: "Husky intends to store all freshwater residual solids and fluids in tanks or in a linedmetal or plastic-sided berm containment system. Following toxicity testing, these wastes may betransported to bermed storage pits in existing quarries in EL494. Husky is then proposingcontrolled discharge of any separated water onto adjacent lands, and completing a landapplication of the non-toxic residual solids into the sub-soil of the quarries. This material willthen be incorporated into quarried material and used for constructing roads and well site pads."Further, Page 6, Table 2 of the supplied Horizontal Well Program WMP summarizes wastemanagement activities associated with drilling activities and lists quarry site M as the location forthe discharge of gel Chem drill cuttings and fluids as well as cement returns. Although theDepartment is not opposed to the deposit of freshwater based drilling waste in a manner otherthan to an in-ground sump, it is the opinion of the Government of the Northwest Territories(GNWT) that the approach proposed by Husky for the handling and deposit of drilling fluids andcutting must be authorized through the issuance of a Type "A" WL. Husky's proposal to depositdrilling waste (fluid and cuttings) in a manner other than to a sump triggers this licenceclassification, in accordance with Schedule D, Item 3, of the Waters Regulations. The deposit offreshwater based drilling waste into a sump could be authorized under a Type "B" WL, as wellas the trucking out of such wastes to approved disposal facilities outside of the NWT. Shouldthe Proponent wish to re-visit its application to consider or pursue these disposal options,departmental experts would be willing to work with the Proponent and the SLWB to ensureappropriate standards are met with respect, but not limited, to: •Site selection (e.g., constructionin low permeability materials; presence of permafrost, etc.) •Engineering design (e.g., use of aliner; cap design, etc.) •Analytical testing of fluids and cutting prior to deposition (e.g.,hydrocarbon testing; toxicity testing, etc.) Closure (e.g., cap design; evaluation of re-vegetation, etc.) Post-Closure (e.g., surface and subsurface monitoring of water;electromagnetic surveys to identify migration of fluids, etc.) •Transport of wastes (e.g.,manifests; containment; spill preparedness, etc.). With respect to the Husky proposed drillingwaste management approach for freshwater gel-slurry fluids and cuttings, it is noted that Huskyhas not provided specific construction and monitoring standards to ensure containment of fluidsin the proposed pits/quarries. Storage in a lined open pit or quarry with minimal and/orinadequate contingency and mitigation measures is concerning as it may ultimately result in therelease of waste to the surrounding environment. Further, additional detail is required on theanalytical testing of the waste itself prior to storage in bermed pits and prior to land disposal, aswell as the standards that will be met for land deposition. Additional requirements/targets needto be established for these wastes (in addition to toxicity tests) to determine if they should betransferred to bermed pits and ultimately disposed to adjacent land. Finally, no details regardingmonitoring of areas where drilling wastes are proposed for deposition is provided. It is also notclear whether or not the Proponent will submit a final report to the SLWB that lists the actualused fracture stimulation chemical additives, fluids composition and volume upon completion of

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Sahtu Land &Water Board Husky Oil Operations LimitedIan Brown Land Use Permit S14A-003 andMay 5, 2014 Water Licence S14L1-002 Application

operations.

Recommendation1.) ENR is of the opinion, based upon details contained within the Project application, that aType A WL is required, as per the Waters Regulations, Schedule D, Licencing Criteria forIndustrial Undertakings, 3.(a) oil and gas exploration, Column IV, Water Use and Deposit ofWaste Requiring a Type A Licence, Deposit of drill waste other than deposit of drill waste to asump or by injection into an underground formation or reservoir.2.) ENR supports the storage of drilling wastes (gel-slurry fluids and cuttings) in tanks or linedcontainment systems on-site.3.) ENR recommends the sampling and testing of these wastes prior to transferring them to thebermed pits in quarries located in EL494. Criteria need to be established within the WL. As thiswater will be high in total suspended solids (TSS) and could be contaminated with hydrocarbonsand other contaminants (i.e., major ions, metals, etc.), this would provide an added level ofprotection and prevent the transfer of wastes to bermed pits that ultimately may not be suitablefor discharge. Additional requirements/targets/criteria should be imposed on these wastes priorto transfer (e.g., pH, hydrocarbons, metals, chloride, etc.).4.) ENR recommends effluent quality criteria (EQC) for drilling wastes transferred from thebermed pits include, at minimum, the following: pH, chloride, hydrocarbon fractions, heavymetals and TSS.5.) ENR recommends the following for inclusion in the HFFMP: •The Proponent clarify what"organics" will be contained in the freshwater-based drilling system used for the surface holeportion. •Confirmation that any liquid waste considered for land spreading is only from thefreshwater-based drilling system used for surface hole drilling only, and that no additionaladditives will be used other than bentonite gel, organics and rock cuttings. •Confirmation thatthe Proponent will not mix contaminated and non-contaminated material prior to testing, as thiscan be interpreted as dilution of contaminants in order to meet discharge criteria. •The SLWBensure that suitable reclamation end land use criteria is selected, and that is suitable to localnatural background sampling, for use in testing residual drilling solids and drilling fluids prior toauthorization to discharge release of any materials to adjacent lands. In the case ERCBGuidance documents are used when developing WL terms and conditions, that Directive 50revised edition May 2, 2012, is the version applied and referenced throughout the plans as thefundamental guideline. However, where the directive refers to Alberta Environment guidelinesfor required end use and loading criteria, that comparable NWT and/or federal guidelines areemployed in its place, such as: •Government of the Northwest Territories (2003). EnvironmentalGuideline for Contaminated Site Remediation. • CCME (2003). Canadian Environmental QualityGuidelines. CCME (2008). Canada-Wide Standards for Petroleum Hydrocarbons (PHC) inSoil. • ENR recommends the annual report include details regarding the amount of drilling wastedeposited and the location where it was deposited, in addition to details regarding the chemistryof the waste itself. • ENR recommends a monitoring plan be developed for waters adjacent toareas where drilling waste is being deposited.6.) To ensure public disclosure of fracture fluids and additives, ENR recommends the Proponentcommit to submit to the SLWB a final report that lists the actual fracture stimulation chemicaladditives, fluids composition and volumes, upon completion of the fracturing process

Response1.) Husky proposed a land application option for freshwater based fluid and solid residuals

based upon the previous approval of this method of management by the SLWB in LUPS12X-006 (Groundwater Baseline Drilling Program) and in LUP S13A-002/WL S13L1-005 (Slater River Drilling, Completions and Testing Program — Little Bear 0-41 and LittleBear G-70). Since the freshwater drilling fluid will be identical to those used in theGroundwater Baseline Drilling Program and the 0-41 and G-70 drilling program, it was

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considered reasonable to adopt this method for the horizontal well program. If however,there is some question as to whether this will trigger a Type A Licence, Husky willconsider the use of a sump or earthen pit as a disposal alternative. The sump would belocated in Quarry M.

2.) Husky acknowledges the support for the methods of managing drilling wastes on site.3.) Section 3 of the Waste Management Plan and AER Directive 50 outlines the testing

criteria that will be performed on the wastes. Pre-screening and preliminary lab resultswill assist in determining if the waste will be stored at the quarry site.

4.) See 3.) above.5.) Husky confirms that only freshwater-based gel-chem drilling fluid components will be

considered for disposal on-site and that no dilution will occur prior to testing. Albertaguidelines have been used to develop the proposed waste management strategy asdescribed in the Waste Management Plan. "Organics" refers to lost circulation materialthat can include cellulose, sawdust, walnut shells and other inert or non-toxic material.

6.) Husky will track all drilling and completion chemicals used in the project and will providea report to the SLWB at the completion of the program.

3. Manifesting Hazardous Waste and Hazardous Waste Movement

CommentIn the WL application, Section 8, Waste deposited (quantity, quality, treatment and disposal),Drilling Waste, it states that: "All solid mineral oil drilling waste will then be transported under amovement document by truck or barge, depending on the time of year, to an approved Class IILandfill. As this waste stream is not regulated under Transportation of Dangerous Goodsregulations and is considered anon-dangerous oilfield waste, the movement document will beused for waste-tracking purposes only." ENR requires the movement of drilling waste be trackedas a hazardous waste (such as drill cuttings/fluids, kill fluid and flowback fluids) whentransported to appropriately registered receiving facilities. Drill cuttings/fluids, kill fluids andflowback fluids have an associated environmental liability and ENR requires they be managedcradle to grave, and their ultimate disposal is tracked on hazardous waste movementdocuments. The transfer of these waste streams to unspecified operators may contribute to anunauthorized discharge or disposal of a contaminant.

Recommendation1.) ENR recommends Husky clarify and outline in its WMP how hazardous waste movementdocuments are to be utilized and ensure copies are distributed to all respective parties to trackthe ultimate disposal of hazardous waste generated from its operations.2.) Husky is a registered generator of hazardous waste in the NWT and the generator isultimately responsible for the proper waste management of hazardous waste from itsoperations. Where non-domestic waste streams are generated from Husky oil and gasoperations and are not suitable for on-site management, ENR requires the use of hazardouswaste movement documents to track the ultimate disposal of hazardous waste. ENR will followup with the Proponent directly regarding the use of hazardous waste movement documents.

Response1.) The statement in Section 8 of the application is misleading in that, while it is true that this

waste is not regulated as hazardous waste in Alberta (it is anon-dangerous oilfieldwaste), it is considered a hazardous waste in the NWT. Section 6. of the WMP(Appendix 6) describes the process for manifesting wastes for transport and the WMPwill be followed when transporting wastes.

2.) Acknowledged.

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4. Spill Response Waste Materials

CommentOn Page 13, of the Horizontal Well Program WMP (j. Spill Response Materials), it is stated that"Hydrocarbon-contaminated soil and vegetation can be shipped off-site for treatment (landfarming) at a local soil treatment facility." ENR is unaware of a local soil treatment facilityavailable for use for oil and gas related operation spills.

Recommendation1.) Please provide the name and location of the referenced local soil treatment facility availablefor use for oil and gas related operation spills, and demonstrate it is authorized for this purpose.This information could be included in Table 5 of the Horizontal Well Program WMP.

Response1.) At the time of preparation of the application, Husky was in discussion with a firm looking

to construct a soil treatment facility in Norman Wells and in Hay River. We are notaware of the current status of the proposed facility. If this facility is not available prior tothe Project operations, soil will be shipped to an approved and licenced wastemanagement facility elsewhere. However, if during the life of the land use permit, a localfacility becomes licenced, Husky may consider this as an alternative to shipping wastesouth.

5. Swill Continaencv Plan and Swill Kits

CommentThe supplied documentation, Spill Contingency Plan (SCP) Part 2 — Figures (PDF page 16/35),includes a table that contains Spill Kit Location, Potential Spill Sizes &Sources for Hazrdour[sic] Materials, and Potential Environmental Impacts of Spill. It also includes a list of Bulk PlantSpill Contents, and states that they "may include" the listed items.

Recommendation1.) Update the SCP to clarify what Bulk Plant Spill Contents will be available on site. The SCP isfor use by employees and contractors on site, and must provide accurate information forimmediate use.2.) ENR recommends that spill kits and containment equipment should be available on alltransport trucks and/or barges.3.) Agencies and contacts in the SCP and Emergency Response Plan need to be updated toreflect the devolution changes to the GNWT such as staff or other organizational changes.

Response1.) See Pg. 37-40 of the SCP for the Nuisance Spill Unit inventory. The NWT Spill

Contingency Plan will be amended to include a separate inventory table for roadside spillkits. The plan will be amended to include tactical spill response guides.

2.) The SCP will be amended to include wording which states the requirement for vehicles(including contract transport vehicles/vessels) to be fitted with vehicle spill response kits.Contracted transport providers are required to have spill response kits in-place on alltransport vehicles/vessels.

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Sahtu Land 8~ Water Board Husky Oil Operations LimitedIan Brown Land Use Permit S14A-003 and

Mav 5, 2014 Water Licence S14L1-002 Application

3.) Contact details throughout the plan will be amended to represent the current state ofGNWT devolution.

6. Dehydration of Waste Fluids and Contaminated Snow/Water from Spills

CommentThe Horizontal Well Program WMP states that a variety of contaminated water and waste fluidsources will be treated using dehydration technology. The units proposed are six (6) CleanSteamTM Dehydrators. The sources of waste fluids proposed to be treated in the dehydratorsinclude: •Off-site fluid residuals from gel chem fluids and cuttings — potentially 150m3 per well(Section 3, a, iii); •Water (dirty hole) — 90 m3 per well (Table 3); • Flowback fluids — 5,000 to11,000 m3 per well (Table 3); • "Any dirty water captured on site that is not suitable for reuse"(Section 3, h); and •Contaminated snow or water from spill response (Section 3, j). TheProponent has not described the chemical makeup of the multiple waste fluid streams to betreated by dehydration, and therefore, it has not been demonstrated whether this technology issuitable for treatment of these waste fluids. In addition, the Proponent should clearly identify thecomposition of additives that will be included in the fracturing fluids and chemicals to be used in

the horizontal fracturing operations (refer to Topic 2, Recommendation 6). Quantification andassessment of the emissions from the dehydration process have also not been provided. TheEmissions Inventory in Appendix E quantifies select parameters from the combustion of diesel

associated with operating the dehydrators, but this does not account for the actual emissionsresulting from the dehydration process. Therefore, ENR believes an assessment ofenvironmental impacts resulting from this process has not been conducted, and associatedmeasures or standards to mitigate potential impacts from these atmospheric emissions have notbeen included. Dehydration of waste liquids is a vector for the transport and transfer of

contaminates to the air, land and water, which if not appropriately mitigated can be a health,safety and environmental risk. ENR further notes that an assessment of alternative waste fluidtreatment options/technologies has not been presented, and therefore, it is not clear whetherthis process will be the least impactful to the environment or the preferred waste fluidmanagement option for the Project.

Recommendation1.) ENR recommends the Proponent quantify the chemical makeup of the waste fluids proposedfor treatment in the dehydrator units. The CleanSteam Dehydrator units must be demonstratedto be designed for and capable of treating the intended waste fluids.2.) ENR recommends quantification and dispersion modeling of the resulting atmosphericemissions be included as part of the Project assessment, including, but not limited to, criteria air

contaminants, relevant air toxics, volatile organic compounds (VOCs), polycyclic aromatichydrocarbons (PAHs) and any parameters associated with the chemicals present in thedehydrator input stream.3.) ENR recommends an assessment of alternative technologies/options for treating ormanaging waste fluids from the Project is conducted in order to demonstrate the preferredmethod for waste fluid treatment that will be the most protective to the environment.

Response1.) A technical specification sheet is attached. This technology is approved for use in

Alberta by the AER. Evaporation tanks are no longer permitted since volatiles areuncontrolled. This technology captures both volatiles and salts.

2.) See Dehydrator Process Emissions under 1.) for Topic #9, Air Emissions Assessment.3.) The current alternative to this technology is limited to trucking undiluted volumes south

to an approved disposal facility. Shipping the concentrate substantially reduces the

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volume of fluid to be transported, thus reducing pressure on the winter road and thediesel consumed in hauling the increased volume. It is noted that this technology hasbeen previously approved by the Board (LUP S13A-002/WL S13L1-005 and LUP S13X-003/WL S13L1-006) for similar purposes.

7. Emissions and Air Qualit

CommentPreamble for Topic #8, #9, #10: The current SLWB water licencing process for the Huskyoperations is an open public process for these operations. ENR provides the followingrecommendations here for two reasons: 1) information pertaining to emissions of waste to airfrom an oil and gas facility should be appropriately placed on the SLWB public registry to ensuretransparency and public accountability of the operations, and, 2) for use by the regulatorresponsible for waste-gas-management related authorizations.

RecommendationSee Topic #8, #9, #10 for respective recommendations

ResponseSee responses below.

8. Emissions Reduction

CommentENR notes that the Proponent has not indicated any efforts of resource (i.e. gas) conservationor efforts to reduce atmospheric emissions resulting from the proposed Project. Primarily, 230days of well flow testing and associated emissions have been proposed. ENR understands thistranslates to the incineration of up to 2,000,000 m3 of gases throughout the duration of the 230-day well flow test. ENR is interested to see an economic analysis that was used to determinethe practicality of conserving the gas, by trapping or using the produced gas, versus burning it.This analysis should consider possible future well-test scenarios, production scenarios, andother operators in the region.

Recommendation1.) ENR recommends the Proponent conduct an economic evaluation of alternatives toincineration of the waste gases during well flow testing. This should be conducted with theintention of gas conservation and emission reductions.

Response1.) Industry experience with hydraulically fractured unconventional plays has determined thatextended flow tests are required to properly evaluate the reservoir capabilities. The proposed 9-month flow test will provide critical information that will allow a better determination of theeconomic viability of the Canol Shale. This Program is specifically designed to test anunconventional oil and gas reservoir. The 3-day limit for flaring applies to a conventionalreservoir with higher in situ formation permeability (ERCB Directive 060).

Based on initial testing of the vertical well at N-09, Husky has found that gas is associated withliquids production and this is expected to be the case for the flow testing planned for thehorizontal wells. There is no current technology that can selectively produce liquids from thereservoir while leaving the gas in place. Since there is no existing infrastructure to conserve thegas, the only available option is flaring or incineration.

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While Husky in not aware of the specifics of ConocoPhillips evaluation program, it should benoted that there is no all-weather infrastructure in place for ConocoPhillips to conduct anextended flow test beyond the winter season. Husky has permitted and constructed all-weatherinfra-structure in advance of this Program with an extended flow test in mind; the purpose being,to make a determination of economic viability of the Canol Shale in a shorter overall time period.

Since no technology exists to conserve associated gas production from flow testing in an areawith no infra-structure to handle the gas, a detailed feasibility assessment would not be helpful.Given the exploration nature of this Project, disposal of produced natural gas in high-efficiencyincinerators is the most environmentally responsible manner to manage natural gas producedduring flow testing. If this project becomes economically viable, the development plan willinclude options for installing infrastructure to collect, use and/or conserve produced associatednatural gas.

9. Air Emissions Assessment

CommentThe Proponent conducted an air emissions inventory and screening-level air dispersionmodeling as part of their application, which is included in the Horizontal Well Program WMP.The emissions inventory included vehicles, generators, engines and boilers, and thedehydrators. The screening level dispersion modeling included the waste gas incineratorsproposed for use during flow testing. The emissions inventory and dispersion modeling exerciseconducted are incomplete without including an inventory of all emission sources for a givenproject and refined dispersion and deposition modeling for those sources. If all sources are notincluded in an assessment, then the resulting ambient air quality assessment is notrepresentative of predicted conditions. For example, the emissions inventory was limited inscope, both in terms of emission sources and parameters included. Some items that wereomitted include: •Fugitive emission sources; •Emergency flaring emissions; •Dehydratorprocess emissions; •Parameters associated with any chemicals used in downhole workings,which are then combusted/dehydrated/incinerated; and •Volatile parameters associated withfugitive emissions, dehydrator emissions, etc., (e.g. VOC's). The modeling exercise was alsolimited in scope, including: •The model was limited to the incinerator emissions only, omittingthe remaining Project-specific sources as listed in the emissions inventory; •Backgroundconcentrations of ambient air quality parameters were not included in the model; and •Themodel was only ascreening-level tool rather than a refined model that would incorporatecumulative concentrations associated with, for example, 230 days of incineration. Acomprehensive atmospheric emissions assessment is required that incorporates an inventory ofall emission sources and includes refined dispersion and deposition modeling for those sources.The modeling exercise would include existing background ambient air concentrations of selectparameters, and incorporate other emissions sources from the regional study area in order tounderstand the predicted ambient air quality during proposed operations. This information willbe useful to understand inputs to the land and water via deposition, as well as the atmosphericenvironment, and will be useful to the GNWT for assessments of future development proposalsfor determining cumulative effects.

Recommendation1.) ENR recommends the air quality assessment for the proposed project be re-evaluated. Theair emissions inventory should be expanded upon to also include fugitive emissions, dehydratorprocess emissions and emergency flaring emissions.2.) ENR recommends the parameters associated with emission sources include, but not belimited to, criteria air contaminants, relevant air toxics, VOCs, PAHs, and any parametersassociated with the chemicals used in drilling, fracturing and well completion processes.

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3.) ENR recommends the Proponent use a refined model, rather than ascreening-level model,and expand the scope to include all the sources and parameters listed above.

Response1.) During a review of the emissions stated in the EER some errors were found in

Table 5-38 where some values were reversed and others were reported in units of kg/dinstead of Ud or kilogram instead of tonnes. The corrected table is shown below. Itshould be noted that the emissions stated in Appendix E are in kg/d or kilograms withthe exception of the CO2 potential emissions which are reported in t/d and tonnes.

Table 5-38 Construction and Operations Emissions (Corrected)

ActivityTotal Emissions (t/d)

Total Emissions in Tonnes

(Duration of Project)

NOx PM~o CO S02 NOx PM~o CO S02

A-5z Wellsite Construction

Vehicles and equipment 0.5 - 1.8 - 13.8 - 53.6 -

0-8o Wellsite Construction


Drilling operations

Generators, engines and boilers 14.9 1.1 3.2 1.0 358.6 77.3 25.4 23.7


Dehydrator 0.008 8x10' 0.002 - 1.98 0.198 0.495 -

Well Completion Operations

Generators, engines and boilers 1.9 0.1 0.4 0.1 107.2 23.1 7.6 7.1


These emissions are associated with temporary installation of equipment and operatedon for a short duration of time (10 days to 250 days; on average 65 days) during theduration of the program. These emissions will be localized to the well pads and the campfor stationary sources or transient for the vehicle and equipment sources along the allseason roads and sites and any effects on local air quality would be reversed once theactivities are concluded with negligible long term effects on the area.

The Alberta Energy Regulator (AER), Alberta Environment and Sustainable ResourceDevelopment (ESRD), British Columbia Ministry of Environment (B.C. MOE), and B.C.Oil and Gas Commission do not currently require the assessment of temporaryexploration program emissions except for the flaring or incineration of down hole gasesthat contain measurable concentrations of hydrogen sulfide (H2S). The results fromtesting Little Bear N-09 indicated no hydrogen- sulfide and the Norman Wells fieldproduces sweet oil so there is no reason to believe that hydrocarbon produced from thehorizontal wells in the Program will contain hydrogen sulfide. It was based on thisguidance that the emissions from the incinerators used to oxidize the well gases weremodeled and the other equipment was not used in dispersion modeling but theemissions were presented in Appendix E and summarized in Table 5-38.

The effects associated with power generation, engines, boilers, and vehicles wasassessed qualitatively as stated in Table 5-37 of the assessment. Effects are expectedto be managed to acceptable levels through use of standard equipment, standardoperating practices, best management and regulatory emission standards. As there are

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no identified potential receptors of concern near or within the project area the qualitativeassessment approach was considered adequate. The following should address thespecific statements of concern from ENR:

Fugitive EmissionsIn other jurisdictions there is currently no regulatory requirement to track fugitiveemissions for exploration drilling and testing programs. This is due to the short,temporary nature of the fugitive emissions from the exploration and testing programs. Assuch any fugitive emissions from this program would be expected to be negligible in thecontribution to any effects on ambient air quality.

Emergency Flaring EmissionsThere will not be a flare stack on site. All gases from the wells will be directed to theincinerator.

Dehydrator Process EmissionsThe system that is proposed for use for this program is not expected to have anymeasurable emissions beyond water vapour. According the company literature (seetable below) there is no detectable BTEX emissions from the process for drilling fluids.

Boiler

Slowdown

(Pure)

Washtub

Water

(Pure)

Stripped

Drilling

Fluid

(Pure)

Wash Boiler,

Water (Mix Wash,

- 400 bbl) Cement:

(Mix)

pH 11.88 10.67 12.32 9.67 8.75

CCMETierl-Flmg/L <2 <2 <2 <2 <2

Benzene mg/L < 0.001 c 0.001 c 0.001 < 0.001 < 0.001

Ethylbenzene mg/L < 0.001 c 0.001 c 0.001 < 0.001 < 0.001

Toluene mg/L < 0.001 < 0.001 < 0.001 c 0.001 < 0.001

Ttl Xylenes (m,o,p) mg/L < 0.001 < 0.001 < 0.001 < 0.001 < 0.001

Source: Horizon Oilfield Solutions CleanSteamT"' Wastewater Dehydrator— Technical Summary,http://www.horizonoilfield.ca

2.)

• Parameters associated with anv chemicals used in downhole workingsIt is expected that all down-hole fluids would be treated in the CleanSteamWastewater Dehydrator and not incinerated. These concentrated dewateredfluids would be collected for off-site disposal at an approved and licenced facility.

• Volatile parameters associated with fugitive emissionsThe volume of volatile organic compound VOC fugitive emissions expected fromthe concurrent testing of two wells, as envisioned in this Program, would besmall and temporary in nature, and therefore negligible in the contribution to anyeffects on ambient air quality.

3.) ModelingAir quality screening dispersion modeling is the first tier evaluation of the potentialdownwind effects from single or multiple source releases into the atmosphere. Thescreening models are a cost-effective way to estimate potential ground levelconcentrations. These models are used to determine if more refined modeling isrequired to characterize the effects of the emissions of concern. This is done becauseimplementing a refined modeling assessment requires additional effort, data, and is

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Sahtu Land &Water Board Husky Oil Operations LimitedIan Brown Land Use Permit S14A-003 and

Mav 5, 2014 Water Licence S14L1-002 Application

more costly than a screening level assessment. In cases where the screening model

indicates that there is a low potential impact from the emissions (i.e., the model predictsconcentrations are far below the applicable air quality guideline), the screeningassessment is sufficient. If the screening model indicates that there is a potential effectfrom the emissions (i.e., the model predicts concentrations close to or greater than theassessment criteria) then a refined assessment would be required, otherwise thescreening assessment is usually acceptable by most regulatory authorities.

Selection of the screening level dispersion model was based upon guidance contained inthe Alberta Environment and Sustainable Resource Development Air Quality ModelGuideline (ESRD 2013) and British Columbia Ministry of Environment Guidelines for AirQuality Dispersion Modeling in British Columbia (B.C. MOE 2008). At the time of that theassessment was conducted there was no formal removal of the SCREEN3 model foruse in assessments in Canada by Environment Canada, Provincial governments, orTerritorial Governments. The U.S. EPA still maintains SCREEN3 on the TechnologyTransfer Network, Support Center for Regulatory Atmospheric Modeling as a screeningmodel.

The Alberta Air Quality Model Guideline (Section 3.1) states that Alberta EnergyRegulator (AER; formerly the Energy Resources Conservation Board (ERCB)) providesacceptable modeling tools for the intended purpose of evaluating emissions from routineand non-routine flaring and incineration. The AER Directive 060 tools for calculatingemissions and evaluating dispersion of emissions from flaring (ERCBFIare Version 1.05)and incineration (ERCBlncin Version 1.05) are currently based upon application of theSCREEN3 dispersion model. Last month the AER has released an updated AERFIaretool that uses AERSCREEN instead of SCREEN3 for the evaluation of flaring in Alberta.But these updates were not available during this assessment and only address flaringnot incineration. To date AER and ESRD will still accept assessments using SCREEN3on a case by case basis.

The Guidelines for Air Quality Dispersion Modeling in British Columbia recommend useof SCREEN3 as an acceptable screening level model (Section 2.3.1 of the Guideline).The B.C. Oil and Gas Commission Flaring and Venting Reduction Guideline Version 4.3(OGC 2013) states that the ERCBFIare and ERCBlncin spreadsheets can be usedwhere the gas contains less than 5°/o H2S. For sites over 5% H2S the B.C. modelingguidance would have the assessment start with a screening level assessment usingSCREEN3. There has been no indication from the B.C. MOE or the OGC that they willnot accept modeling using SCREEN3.

While SCREEN3 can only model each source individually, cumulative effects can beconservatively evaluated by adding the individual maximums determined from eachsource. It should be noted that U.S. EPA AERSCREEN, the screening level modelrecommended by ESRD is also limited to a single source evaluation and a similarmethodology would have to be adopted to assess cumulative effects using screeningmodels.

Based on the screening level assessment using SCREEN3 it was determined that usingrefined modeling was not required based on the recommendations by the guidanceprovided by ESRD, AER, OGC, and B.C. MOE.

Although SCREEN3 is only capable of modeling one point source at a time, the resultingpredicted ground level concentrations from each individual source could beconservatively added together to gain an estimate of cumulative effects. The overallmaximum predicted 1-hr S02 concentrations of 1.922 Ng/m3 and 1.932 ~g/m3 from the A-52 and 0-80 well test operations combined with the overall maximum monitored

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background concentration of 2.5 ~g/m3 resulted in a total cumulative concentration of6.354 ~g/m3 which is well below the NWT AAQS of 450 ~g/m3. For both the A-52 and O-80 well test operations the maximum predicted ground level concentrations for S02,PM2,5, and NO2 were less than the maximum background monitored values for allaveraging periods recorded in 2011. All of the maximum background monitored valuesfor S02 and NO2 were less than 10% of for each respective averaging periods. Themaximum monitored 24-hr PM2.5 concentration of 23.0 Ng/m3 was recorded in July andcan most likely be attributed to forest fire activity.

"Fire danger in eastern Northwest Territories, Canada, was very high to extreme in lateJuly 2011. Conditions were dry enough that summer thunderstorms triggered one or twonew forest fires every day.

(http://earthobservatory.Hasa.qov/NaturalHazards/view.php? id=51455)

The Alberta Acid Deposition Framework is intended to addresses long term effects on aregional scale and is not applied to assess deposition on a local scale for short durationwell testing and intermittent emissions sources.

10. Air Monitorin

CommentENR notes the Proponent has not included any plans for monitoring emissions or ambient airquality associated with the Project. Monitoring is important to verify model predictions, to act asa site management tool for ensuring appropriate site operations performance and equipmentefficiencies, to measure impacts of the Project to human health and the environment, and toconduct trend analysis over time.

Recommendation1.) ENR recommends the Proponent design and implement an emissions management andmonitoring plan in collaboration with ENR. This plan will verify the predictions of the emissionsinventory and modeling assessment, and act as an ongoing tool for on-site adaptivemanagement aimed at reducing emissions at the source, ensuring appropriate site operationsand equipment efficiencies, and ensuring impacts to the environment and human health aremitigated.

Response1.) It is not customary for an emission management and monitoring to be implemented for

this type of operation. Emissions from exploration and testing programs envisioned forthis Project are temporary, short-term and intermittent.

11. Husky Drilling Waste Management — Consolidated Water Licence S13L1-006 and LandUse Permit S13X-003

CommentUpon review of the WL for S13L1-006, a total of eight sampling stations identified as "StoragePonds" were included in the Surveillance Network Program (SNP) section; one at each ofQuarry A, B, C, D, E G, H, J and M. ENR is concerned that the disposal of waste within

quarries was not part of the scope of the undertakings licenced under the S13L1-006 WL andwas not specified in the S13L1-006 WL application. Furthermore, no reference to disposal ofdrilling wastes in quarry pits was included within Husky's S13L1-006 Environmental ProtectionPlan (EPP — Appendix 1) or in Husky's S13L1-006 WMP (WMP — Appendix 4). ENR further

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notes that no EQC are provided in the WL or SNP. However, the SNP station S13L1-006 (1) isdefined as "Treated effluent prior to disposal".

Recommendation1.) ENR recommends all waste management practices proposed for this Project be fullyreviewed and EQC be derived immediately for existing or future discharges from these areas.Note: the discharge from these areas will require a Type A WL in accordance with the NWTWaters Regulations.2.) ENR recommends that all WMPs and SCPs be updated as appropriate following a completereview of this disposal method.3.) ENR recommends that contingency plans be identified for handling and disposing drillingwastes as well as the discharge of drilling fluids that do not meet EQC.

ResponseThe storage ponds identified in S13L-006 were storm water and melt water management pondsfor proposed quarries. Only Quarries B and M were opened. Husky has a standard assessmentfor testing standing and ponded water on sites derived from AER Directive 55, Section 11 thatincludes testing for salinity, pH and visible sheen. These tests were conducted prior to pumpingwater from these ponds and this information is provided in the Annual Report for S13L-006.

1.) As discussed above, Husky has proposed testing of all fresh-water non-toxic drillingwaste solids and fluids proposed for disposal in the quarry. Husk will apply the AERDirective 050 criteria for EQCs for any drilling waste prior to discharge. Should it bedetermined that a Type A water licence is required, Husky will mix/bury/cover in a sumplocated on the quarry site in accordance with AER Directive 050. It is pointed outagain, that this disposal method has been previously approved for LUP S13A-002/WLS13L1-005.

2.) The current version of the WMP describes the method of testing and handling of thiswaste.

3.) Should the threshold criteria be exceeded, the drilling wastes will be transported off siteto a licenced waste management facility for disposal.

12. Well Pressure Testing

CommentLiterature suggests poor well designs or poor well construction (wellbore casings andcementing) increase the risk of groundwater contamination. Using a surface casing from thesurface to depth and conducting down-hole pressure testing and casing integrity testing iscritical for the Project to be successful. The use of intermediate casings is also suggested forthe Project as an added layer of protection. ENR believes the following recommendations areappropriate for SLWB consideration as they are directed to ensure that groundwater and, inparticular, potable ground water near the surface is protected and that mitigations are imposedto ensure it is not impacted by the project.

Recommendation1.) ENR recommends Husky follow best practices and technologies. The implementation ofexisting best practices such as surface casings, wellbore cementing, wellbore integrity testing,micro seismic testing, groundwater monitoring, etc., will help ensure the Project does not impactlocal groundwater and surface waters.2.) ENR recommends Husky meet well casing and cementing standards and requirements (i.e.,well logging, cementing and casing) as well as other testing and monitoring requirements. Wellpressure measurements and casing integrity testing must be conducted at an appropriatefrequency with reports provided to the SLWB as part of the WL.

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3.) ENR recommends Husky consider installing intermediate casings that would be cementedback to surface as an added layer of groundwater protection.4.) ENR recommends that if there is a loss of pressure during the course of operations, that thedrilling/fracturing/production testing operations be suspended immediately until investigationsare completed, the cause of the issue identified, and actions implemented to preventreoccurrence.

Response1.) Acknowledged. Husky follows best industry practices in drilling and completions

operations.2.) Husky follows best industry practices in drilling and completions operations. The

information that is described above is submitted to the National Energy Board as arequirement of the Operating Licence. Following a period of confidentiality mandated bythe Canada Oil and Gas Land Regulations they are available for public review. Sincethe requirement to supply this information falls under GNWT (formerly NEB) jurisdiction,Husky will not be providing this information in a separate submission to the Sahtu Landand Water Board.

3.) Husky includes cementing intermediate casing to surface as a standard practice.4.) This is standard practice.

13. Fracture Propagation Monitoring

CommentDifficulty in predicting fracture networks generated by fracturing and fluid injection heightens therisk of operations potentially impacting groundwater resources through migration of drillingfluids. These fractures can be complex and difficult to predict for numerous reasons such as thenature of the shale (anisotropic granular rocks) making them more or less resistant. Assessingpropagation heights in the underground is important in real-time and therefore recommended forthe Project. The results of each fracturing stage should be used to adaptively manage thepropagation operations at subsequent stages.

Recommendation1.) ENR recommends the real-time propagation heights be monitored for the Project.2.) ENR recommends hydraulic fracturing operations immediately cease if a seismic eventoccurs during active fracturing operations.

Response1.) The proposed project will be initiating fractures in wellbores located between 952 - 1371

metres TVD (true vertical depth). If the wellbore has been constructed in accordancewith Industry Best Practices and based upon the proposed fracturing volumes, fracmodeling indicates the fractures generated would have their height growth containedwithin the Canol Shale formation. Husky's 3D seismic data has been used to map theextent of the Cretaceous Little Bear sandstone aquifers encountered in the MW-09 andN-09 boreholes. This aquifer has been eroded and is missing at both of the proposed G-70 and A-52 locations, reducing the likelihood of these wells encountering non-salinegroundwater. Husky's 3D seismic data indicates that none of the proposed wellboreswill encounter a fault.

2.) Husky is looking to apply micro seismic monitoring for real-time monitoring for some ofthe wells to confirm and calibrate modeling results. This monitoring includes thecalculation of fracture propagation lengths and direction.When monitoring operations, Husky will cease operations if anomalous natural occurringseismic events are detected. Passive seismicity monitoring stations recently installed in

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the Tulita District by the Northwest Territories Geoscience Office will also monitor anynatural and induced earthquake activity.

14. Potable Water Monitoring at Horizontal Well Sites

CommentUnderstanding the depth and condition of the potable water zone is important to ensure it is notimpacted during the Project. The potable water zone should be delineated (depth) andcharacterized (analyzed) at the existing well sites and the newly proposed horizontal wells.Some of this information may already exist from the previous groundwater monitoring programs.However, the depth of the water table and potable water zone, as well as its chemistry, maychange in different areas of EL494. ENR notes the protection of surface and groundwater iswithin the jurisdiction of the SLWB, particularly the potable water zone near the surface.

Recommendation1.) ENR recommends the potable water zone be delineated, characterized and reported at theproposed well sites. This includes chemical characterization of the groundwater itself.2.) ENR recommends the potable water zone be sampled and analyzed at or near the well sitesprior to and following completion of drilling, fracturing and production testing operations todetermine if changes to the potable water zone have occurred.3.) ENR recommends Husky consider the use of a tracer to provide a fingerprint of the fracturefluids.

Response1.) A groundwater baseline investigation was conducted in 2013 that included the drilling of

four deep wells to investigate the fresh groundwater potential over the explorationlicence. Of those wells, only two wells (MW-09A and MW-09B) encountered bedrockaquifers associated with the Cretaceous Little Bear Formation. The same zone wasencountered in Husky's Little Bear N-09 well. The groundwater well drilled to thenortheast (MW-06) encountered bedrock of the Slater River Formation with no aquifers,indicating that the subcrop of the Little Bear Formation occurs to the southwest of thatlocation. The subcrop has been identified using 3D seismic and is presented as CrossSection A-A' (Figure 5-18) in Section 5 of the EER. Based on this assessment, it hasbeen determined that the two well sites (A-52 and 0-80) are located on bedrockassociated with the Slater River Formation and the likelihood of encountering afreshwater aquifer at these locations is low. Further discussion is provided in Section5.6.2 of the EER

2.) Husky is proposing to install shallow monitoring wells at each location to determine ifsurficial groundwater is present, and if so, will sample before and after operations todetermine if any impacts are present. These wells will be incorporated into the existinggroundwater monitoring program.

3.) Husky will be using tracers in the fracture stimulation fluid to provide a fingerprint offracture fluids.

15. Surface and Groundwater Monitoring

CommentAdequately establishing a surface and groundwater monitoring program is key to the successfulmonitoring of potential impacts from the Project on the water environment. The base of themonitoring program must be fixed and occur annually to assess seasonal and annual variability.However, in addition to this base program, the monitoring of surface waters near the proposedaccess roads, staging sites, camp sites, well pads, quarries and the proposed land disposal

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area for separated fluids must be determined and sampled prior to the operation. Monitoring atall proposed discharge areas is also important (e.g., camp wastewater discharge, quarry decantareas, etc.) for the term of the licence and for a sufficient post-operation period. The frequencyand sample parameters must be specified and fixed. ENR notes there were numerousexceedances of aquatic life and drinking water guidelines recorded during the 2012 monitoringprogram. At this time it is unclear if these conditions are natural and limited discussion isprovided by Husky on the results. In total, 39 exceedances were recorded for total coliforms; 30for iron, 23 for aluminum, 11 for manganese and copper, as well as others. The exceedanceshighlight the importance of conducting baseline monitoring at proposed discharge sites prior tothe deposit of waste. Groundwater monitoring details, specific to the Project, should be providedin the revised plan. Details should include sampling location GPS coordinates; assessment ofthe groundwater flow direction in the area; depth and type of conditions found in their welldrilling program (e.g., permafrost, bedrock, water table, etc.); monitoring plans for each year;etc.

Recommendation1.) ENR recommends the WL require a surface and groundwater monitoring program thatincludes specific locations, frequencies and associated parameters for the Project.2.) ENR recommends that the WL require surface and groundwater monitoring occur for theduration of the Project and for a sufficient period post-operation, to ensure no impacts to surfaceor groundwater are occurring.3.) ENR recommends specific surface and groundwater monitoring locations be added to themonitoring program that will be used to assess potential impacts from specific activities (i.e.,near the well sites).4.) ENR recommends contingency measures and triggers be identified by Husky in the eventthat monitoring at the land discharge areas indicate impacts are occurring.

Response1.) Husky self-initiated surface water monitoring program in 2012 and a groundwater

monitoring program in 2013. The surface water monitoring program includes 39selected water bodies that are representative of the Exploration Licence. Exceedanceswere found at sample points throughout the study area and are believed to be naturallyoccurring since most occur at some distance from any past or current activity. It shouldbe noted that aquatic life and drinking quality guidelines are for determining remediationcriteria in the event of an anthropogenic impact (for the former) or water potability (forthe latter) and are not objectives for existing naturally occurring conditions. In Husky'sexperience, natural conditions regularly exceed these objectives.

2.) Husky reviews the surface and groundwater monitoring plan annually and makesrecommendations for changes to the plan based on proposed activity. Additionalgroundwater and surface water monitoring locations may be added at that time.

3.) See response 2.) under Topic 14.

16. Effluent Quality Criteria

CommentEQC will need to be established for sewage and/or grey water under the existing campauthorization. In addition, EQC need to be established for the proposed discharge of separatedwater from the quarry pits (as per the current WL application). The EQC need to be specific tothe type of waste that is being discharged, for example, the treated sewage EQC would bedifferent from EQC imposed for quarry-pit discharges. Contingency measures (e.g., storage anddisposal) will be required for both waste streams in the event that the effluent quality exceedsthe discharge criteria. The location of proposed discharge areas must also be provided and

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assessed in order to ensure impacts do not occur such as ponding, rutting, permafrostdegradation, etc. These locations must be specified in the water licences along with theircoordinates.

Recommendation1.) ENR recommends EQC be included in existing camp authorizations for treated sewageand/or grey water.2.) ENR recommends specific EQC be developed for waste discharged from the quarries aspart of this WL application.3.) ENR recommends specific soil quality targets be established for drill solids that will betransferred to the bermed pits and potentially reused.4.) ENR recommends contingency measures be developed for all wastes (e.g., gel-slurry fluidsand cuttings, treated sewage, etc.) that cannot be discharged (exceed EQC) or reused (exceedsoil quality targets).5.) ENR recommends the discharge locations be described and assessed in order to ensureimpacts do not occur as a result of discharges from the Project.

Response1.) Effluent Quality Criteria (EQC) is in place for treated sewage/grey water.2.) Husky follows an industry standard practice for testing of storm water and surface water

prior to release derived from AER Directive 55, Section 11. This includes:a. Chloride content not to exceed 500mg/Lb. pH between 6.0 and 9.0c. no visible hydrocarbon sheend. no other chemical contamination (water not impacted from chemical spills such

as glycol, used oil, etc.e. no direct discharge into a water body or streamf. information from each release is recorded.

3.) Soil quality targets have been defined by AER Directive 050 for drilling solids.4.) All wastes that exceed criteria so that they cannot be discharged, reused or mixed/

buried/covered in accordance with the requirements of AER Directive 050, will betransported to an approved and licenced waste facility for disposal.

5.) Husky will not discharge onto land within 100m of a lake stream or water body.

17. Management Plans —Waste Management Plan, Water Management Plan, SpillContingencv, Adaptive Management, etc.

CommentThe Project will utilize existing access, staging, camp and storage areas authorized underseparate permits (i.e., S13X-003 and S13L1-006). Because the nature of the activities will besomewhat different, various management plans should be modified to include the specifics ofthe Project. It is important that the modifications to the various management plans are clearlyidentified/highlighted, in some way or form, in order to facilitate easier review and assessment ofthese plans. Specific management plans that will likely be required for the horizontal fracturingproject include: WMP (fuels, fracturing fluids, glycol, additives, acids, etc.), SCP (tanks, transferareas, waste storage areas, fuel transfers, truck spills/accidents, etc.), Water Management Plan(water sources/rates/volumes and waste streams), Erosion and Sedimentation ManagementPlan (all season operation), Surface and Groundwater Monitoring Plan, and AdaptiveManagement Plan. ENR notes that an Adaptive Management Plan (or Management ResponsePlan) is something that is becoming a standard requirement in WL authorizations. The conceptof adaptive management is applied to the operation in that if there are issues with waste

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Sahtu Land &Water Board Husky Oil Operations LimitedIan Brown Land Use Permit S14A-003 andMav 5, 2014 Water Licence S14L1-002 Application

handling, effluent discharge, spills, etc., then a proponent responds by changing the StandardOperating Procedures to prevent such incidents from re-occurring. An example would beadditional erosion control measures at the point of discharge from the quarry sites. However,adaptive management can also help prevent issues from re-occurring such as continuedexceedances of EQC at the quarry locations due to high TSS (e.g., the addition of flocculants).

Recommendation1.) ENR recommends various management plans be required as conditions in the WL for reviewand approval by the SLWB (i.e., WMP, Water Management Plan, Erosion and SedimentationPlan, Surface and Groundwater Monitoring Plan, Adaptive Management Plan, etc.).2.) ENR recommends existing plans be revised and updated to include new aspects of theProject.3.) ENR recommends the SLWB consider requiring the submission of an Adaptive ManagementPlan for the Slater River Horizontal Exploration Project as a condition in the WL.

Response1.) A Waste Management Plan is included in the application and is reviewed and updated

as required. A Water Management Plan will be prepared prior to the commencement ofoperations. A Surface and Groundwater Monitoring Plan is on file with the SLWB and isreviewed annually.

2.) The review of the above plans includes consideration for new activities as they areidentified.

3.) Husky manages adaptive change through the Husky Operational Integrity ManagementSystem (HOIMS). HOIMS establishes processes, procedures and expectations tosupport a safe work environment where hazards should be identified and then ifpossible, eliminated, mitigated or controlled. Residual hazards are also effectivelycommunicated to relevant stakeholders.Husky's Operational Integrity Management System (HOIMS) is the foundation forHusky's approach to safety. It is underpinned by the belief that no task is too routineand no job too urgent that it can't be done thoughtfully and safely.HOIMS establishes procedures that reinforce grocess and occupational safety that drivereliability, operational integrity, and high performing people resulting in the protection ofpeople, the environment and assets. When this happens, a corporate culture is createdwhere all decisions are based on safety and Husky operates more efficiently and withfewer incidents.HOIMS is composed of 14 fundamental elements. HOIMS sets the standard foreffectively managing business risks in an effort to create a safe and secure workenvironment. The fundamental elements that comprise HOIMS are listed below:Element 1 - Leadership, Commitment and AccountabilityElement 2 - Safe OperationsElement 3 - Risk Assessment and ManagementElement 4 - Emergency PreparednessElement 5 - Reliability and IntegrityElement 6 - Personnel Competency and TrainingElement 7 - Incident ManagementElement 8 - Environmental StewardshipElement 9 - Management of ChangeElement 10 - Information, Documentation and Effective CommunicationElement 11 - Compliance Assurance and Regulatory AdvocacyElement 12 - Design, Construction, Commissioning, Operating and DecommissioningElement 13 - Contracted Services and MaterialsElement 14 - Performance Assessment and Continuous Improvement

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More detail is provided in an attachment and is the information provided to the NationalEnergy Board (NEB) as a requirement for obtaining an Operations Authorization for thedrilling of the proposed wells.

18. Management Plan Updates and Revisions — Tracking

CommentWhile companies are encouraged to update their management plans so that changes inactivities and technology/mitigation are adequately reflected, the current submission systemallows for companies to submit a revised WMP without review or approval. WMPs submittedunder different authorizations should not immediately be accepted without a review andapproval process. This is required because the scope of activities under which this revisedWMP is submitted may differ from authorizations under which the former plan was approvedand alternate mitigation strategies may be required for the proposed activities.

Recommendation1.) ENR recommends the following condition be added to Part D — Conditions relating to WasteDisposal: a. "The Waste Management Plan should be submitted in accordance with the Landand Water Board's Waste Management Plan Guidelines.", and b. "The Cover Pages of anupdated Waste Management Plan (or Submitted Waste Management Plan Revisions) shallclearly identify and summarize which sections of the WMP have been modified, along with arationale why each modifications) are deemed necessary."

Response1.) The Waste Management Plan includes a Document Control Table found on page i.

Should there be a revision to the plan, the SLWB will be informed and approval soughtprior to implementing any changes. This will be reflected in the document control tableand updated sections will be appropriately identified.

19. Reclamation Security

CommentENR conducted a security estimate for the proposed Project. The scope of work is directlyrelated to the activities described in the application as was the number of tanks, volume of fueland amount of wastes to be hauled to approved disposal locations outside the NWT. Securityrelated to access, staging sites, the camp, etc., was not included in this estimate as it has beenincluded in securities held under those authorizations. The estimate and associated costbreakdown is attached for SLWB consideration. Please note that the Oil &Gas RECLAIM Modelwas recently updated and unit costs have been updated to reflect northern reclamation costs.Further, if additional information is provided by Husky about their operation and closureactivities, then the security estimate may be reassessed.

Recommendation1.) ENR recommends the reclamation security for the Project be set at $5,660,725. This securityshould be separated and held under the associated land ($3,639,216) and water ($2,021,509)authorizations.

Response1.) Since acquiring the Exploration Licenses in 2011 and drilling the first wells in 2012, Huskyhas seen a significant escalation in security deposits being required by AANDC and now theGNWT for its oil and gas exploration projects. For example:

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Sahtu Land ~ Water Board Husky Oil Operations LimitedIan Brown Land Use Permit S14A-003 andMay 5, 2014 Water Licence S14L1-002 Application

i. In 2011, Husky's LUP SLA-003 which encompassed the drilling program for the N-09and H-64 exploration wells, required a security deposit of $142,000 with no securitydeposit required for the Water License;

ii. In 2013, Husky's LUP S13A-002 required a security deposit of $244,946 for 9.85 haof new disturbance plus a security deposit of $361,659 for WL S12L8-007, for a totalsecurity deposit of $606,605 for a program that encompassed construction of two all-season well site pads and access plus drilling, completions including hydraulicfracture treatments and flow-testing of two vertical exploration wells. By comparison,the recommended security deposit of $5,660,725 for this application is 9 times larger;

iii. If the new land disturbance for LUP S13A-002 of 9.85 ha or $24,868/ha is contrastedto the 6.15 ha of new disturbance or $591,742/ha required for this Project, the resultis a staggering 24 times increase compared to the previous security deposit.

iv. The WL S13L1-004 for ConocoPhillips' two horizontal well drilling program in 2014,had a water budget of 30,570 m3 and required a security deposit of $512,682 or$17/m3. For comparison, the recommended security deposit of $2,012,509 forHusky's current application to construct two all-season well sites and conduct a fourhorizontal exploration well drilling Program has a water budget of 58,480 m3 or$34/m3, which results in a 50% increase in the security deposit required compared toConocoPhillips program.

In addition, the National Energy Board (NEB) has typically required a security deposit of$10,000,000 be put in place before issuing an Operations Authorization for a drilling project.This double-bonding (multiple security deposits being required by different regulators for thesame project) imposes a significant financial burden on the Proponent. Post-Devolution, theGNWT as the single regulator, will now be collecting multiple security deposits to coveroverlapping environmental risks for the same projects. The escalation in the level of securitydeposit demanded is excessive and unreasonable when compared to other on shorejurisdictions in Western Canada, and contributes to the high cost of exploration in the CentralMackenzie Valley.

Husky respectfully requests that the GNWT reconsider the level of security deposit beingrecommended for this application.

20. Cumulative Effects on Wildlife (including Species at Risk)

CommentThe cumulative incremental effects on wildlife, including species at risk, from multiple oil andgas exploration projects within the Sahtu settlement region is a main concern for the GNWT.Cumulative effects of development may include the direct footprint of past, current, andproposed projects (i.e., other projects currently submitted for review) within the region as well assensory disturbances (traffic, noise, light), habitat degradation, or wildlife mortality due to vehiclecollisions, defense of life and property kills or increased accessibility for harvesters. Theseeffects may also act in combination with existing natural stressors such as climate, fire andpredation. In order for the GNWT to evaluate and track potential cumulative effects, it isessential to position proposed projects in the context of past, current and future developmentactivities within the region. EL494 overlaps with the range of boreal woodland caribou, afederally and territorially listed species at risk. Section 76 and 77 of the NWT Species at RiskAct requires the Minister of Environment and Natural Resources to make a submission to thebody responsible for assessing the potential impacts of a proposed development, or forconsidering a land use permit (LUP) or WL application, respecting the potential impacts of theproposed development, permit or licence application on apre-listed or listed species or its

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habitat. GNWT requires spatial data on project footprints to track the condition of boreal caribourange with respect to the 35% habitat disturbance threshold set out in the national recoverystrategy for boreal woodland caribou, and to inform development of range plans for this species.Construction of well pads 0-80 and A-52 will result in 6.12 ha of new habitat disturbance.Although Husky considers that the well pads will not increase the total extent of Husky'sdisturbance footprint because they occur within the existing 3D seismic survey boundary, ENRis of the view that the well pads are likely to have alonger-term footprint and shapefiles forthese well pads should be provided in order to account for their footprint into the future. Thecontribution of the activities described within this LUP application to cumulative effects shouldalso be provided in the context of the total footprint of Husky's past, ongoing and proposedactivities within EL494, as well as the footprint of other projects identified in Husky's "ProjectInclusion List" (Table 6-1) for the cumulative effects assessment. The full extent of Husky'scurrent footprint was not provided in the cumulative effects assessment, nor was there abreakdown of the total footprint by project components (camps, roads, well pads, quarries,seismic lines, etc.). Similar information was also not provided for other developmentsconsidered by Husky in their assessment. Amore detailed breakdown and quantitativedescription of the regional disturbance footprint is required to assess the cumulative effects ofhabitat disturbance. ENR also notes that the assessment of factors contributing to cumulativeeffects such as effective habitat loss and wildlife mortality pathways is primarily qualitative innature, even though these factors should be measurable and quantifiable (e.g., noise levels andtraffic volume). Increased vehicle traffic is identified as a source of sensory disturbance andpotential wildlife mortality as a result of collisions and is mentioned as a measurable parameterin Appendix 1 - Environmental Effects Report (EER), Table 5-13 and Section 6.3.5.1, but noestimates of project-related traffic volumes within EL494 have been provided. Given that Huskymaintains a checkpoint at the intersection of the GNWT winter road and the project access road,and requires all vehicles and personnel to register (Section 2.3.2.1), it should be feasible forHusky to monitor and report on traffic volumes within their exploration licence area. The extentof the zone of influence (ZOI) and the amount of effective habitat loss for wildlife arounddifferent project components due to sensory disturbance from construction, drilling operations,vehicle noise and human access is never explicitly defined (although Section 5.8 states thatnoise is expected to attenuate within 3 km of project facilities). Quantitative predictions aboutthe extent of the ZOI from noise on wildlife habitat, noise monitoring and reporting of project-related air, road and barge traffic volumes, noise levels and wildlife mortalities resulting fromvehicle collisions would be valuable contributions to cumulative effects assessment andmonitoring in the region.

Recommendation1) ENR recommends Husky continue to provide the SLWB with updated shapefiles of theirproposed and existing project footprint, including any amendments to the footprint ofcomponents within the scope of previous LUPs, for posting on the Public Registry.2) ENR recommends Husky include a more detailed breakdown of the footprint of existing andproposed components of their activities within EL494 in cumulative effects assessmentsassociated with future LUP or WL applications.3) ENR recommends Husky monitor noise emissions to measure their ZOI for sensorydisturbances, volumes of project-related road traffic, air traffic and barge traffic, and public useof their all-weather road, and that the results of monitoring be provided in an annualEnvironmental Management Report.4) Records of any wildlife sightings (including, if possible, GPS locations), or project-relatedwildlife mortality, should be compiled annually and provided to ENR's Sahtu Manager of WildlifeResearch and Monitoring, Richard Popko, (867) 587-3517 ([email protected]) and toNorman Hodgson Sr. (Norman Wells RRC) at (867) 589-6696(c) or (867) 587-2455.

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Response1.) Husky will continue to provide the SLWB with shapefiles for posting on the Public

Registry.2.) Acknowledged.3.) Husky will take the recommendation for noise monitoring under advisement.4.) Husky has established an ongoing wildlife sighting reporting system using reporting

cards. These sightings are tabulated regularly and the information can be provided toENR and the RRC as requested. Husky plans to continue to use local wildlife andenvironmental monitors for all aspects Project. The monitors will be supplied through acontract with one or both of the RRC's in the Tulita District. In addition to the dataprovided by Husky, it is our expectation that the monitors will also report back to theRRC's and to the local communities.

21. Wildlife Mitigation and Monitoring Plans

CommentAssessment, monitoring and management of cumulative effects will require a coordinatedregional approach that includes Aboriginal, territorial, and federal governments, wildlife co-management partners, project proponents, and other parties as appropriate. This will also assistENR in assessing the potential impact of cumulative effects on species at risk such as borealwoodland caribou as required under section 76 and 77 of the NWT Species at Risk Act.Consistency in mitigation and monitoring across development projects, as well as monitoring atmultiple scales, is beneficial for assessing, monitoring and mitigating cumulative effects onwildlife and wildlife habitat. ENR is pleased to see that Husky has committed to implementing awildlife effects mitigation and management plan (EER Section 6.3.3.1) and are consideringparticipation in a regional wildlife monitoring program (EER Section 6.3.3.2). ENR looks forwardto seeing a draft plan and encourages Husky to divide the plan into two component documents:a Wildlife and Wildlife Habitat Protection Plan (WWHPP) and Wildlife Effects MonitoringProgram (WEMP). General guidelines for the contents of a WWHPP and a WEMP can be foundattached to this submission. The WWHPP should include a compilation of the various wildlifemitigation measures identified in various sections of the EPP. ENR encourages Husky toengage with the ENR Wildlife Division and Sahtu region in the development of the plan. ENRalso looks forward to seeing the full reports of results from wildlife monitoring, field surveyprograms, bear den surveys, habitat assessments and habitat suitability modeling that Huskyintends to provide to the SLWB (as stated in Section 5.3.2, page 5-48 of the EER). Pages 1-11and 1-12 of the EER state that daily reports from wildlife monitors will be included in a summaryreport at the end of the program, and that copies of the report will be provided to the TulitaRenewable Resource Council, Norman Wells Renewable Resource Council, SLWB andAANDC. The results of wildlife monitoring should be shared with all regional wildlife co-management partners, including ENR, Environment Canada (Canadian Wildlife Service) andthe Sahtu Renewable Resources Board. Section 6.3.3.2 (Wildlife Monitoring) of the EER statesthat animal abundance and distribution within the predicted ZOI of sensory disturbance will bemonitored. The size of the expected ZOI for sensory disturbance has not been defined. Huskyshould provide further detail about predicted ZOI on wildlife habitat and about the methods usedto monitor animal abundance and distribution within the ZOI. Husky should extend monitoringbeyond the ZOI to test predictions about the extent of the ZOI

Recommendation1) ENR recommends Husky gather commitments and mitigation measures related to wildlife in ashort WWHPP. Such a plan would include components related to wildlife that are currentlyincluded in the EER, appendices provided with current and previous LUP and WL applications,and recommendations contained within the GNWT's letter to the Proponent.

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2) ENR recommends submission of the WWHPP be included as a condition of the LUP and besubject to approval of ENR and the Board. ENR notes that such a condition was recentlyincluded in the LUP for Fortune Minerals Limited NICO mine (W2008D0016).3) ENR requests Husky provide a draft WEMP that outlines, in greater detail, the methods usedto collect wildlife baseline information within EL494 and ongoing monitoring to assess animalabundance and distribution within the ZOI of sensory disturbance.4) ENR recommends Husky extend monitoring of animal abundance and distribution beyond theexpected ZOI of sensory disturbance in order to test whether predictions about the ZOI areaccurate.

Response1.) Husky is in the process of developing a wildlife effects mitigation and management plan, andwill incorporate the WWHPP/ WEMP guidelines as suggested by ENR.2.) Husky agrees with this suggestion for future submissions. Also, as much of the informationrequired to develop a WWHPP and WEMP are for the most part already in existence as notedby GNWT (e.g. information on wildlife that are currently included in the EER, appendicesprovided with current and previous LUP and WL applications), Husky agrees to provide theWWHPP for this LUP in an agreed upon timeline.3.) As mentioned in the WEMP guidelines, to be effective, the WEMP will:

a.). Identify and address outstanding wildlife concerns;b.) Be focused on key Valued Ecosystem Components (VEC) and other species ofimportance that are typically found in or near the area surrounding the project;c.) Be conducted within a study area that is appropriate to the proposed predictionsfor the project VEC;d.) Have clear objectives and testable predictions, questions or hypotheses;e.) Define the metrics that will be used to measure progress towards an objective orto test predictions, questions or hypotheses;f.) Demonstrate that survey design, methodology, sample size, analysis andreporting will adequately meet the objectives of the monitoring program;g.). Identify any underlying assumptions that may affect interpretation and validity ofresults;h.) Use tested standardized protocols/methods/approaches that are in use by otherdevelopment projects so that monitoring results can be combined at a regionalscale;i.) Be developed and reviewed in collaboration with Aboriginal partners, government,regulatory agencies, and other affected parties including other project proponentsas appropriate; andj.) Be developed such that monitoring and mitigation techniques can be revisited andrevised pending new information (e.g., developed using an adaptive managementframework). Any changes made to methodologies should be made in consultationwith appropriate parties in order to ensure consistency with other monitoringprograms.

All of points 1 through 10 have been addressed in some capacity within reports such as theBiophysical Baseline — 2012/2013 Vegetation Survey and Ecological Land Classification, theBiophysical Baseline — 2012/2073 Wildlife Survey and Habitat Suitability Modeling Results, andHusky Oil Operations Limited 2013 Fish and Fish Habitat Survey Results. Additionally, reportingon 2013/2014 data is currently underway. The 2013 Denning Survey Husky EL 494 — All—Weather Road and Well Sites report was completed prior to winter activity, and analyses for the2013/2014 wildlife survey and habitat suitability modeling results are being conducted.

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As Husky's is currently preparing a WWHPP and WEMP, a draft forms of these documents isnot available at this point in time. However, Husky recognizes the importance of thesedocuments. Husky will ensure all reviewed 2012/2013 reports are made available to ENR tofulfill the request for a draft WEMP.

4.) Husky's current wildlife tracking and camera survey extends along the all-weather road andthroughout the EL to capture areas with little or no disturbance as well as the ZOI.

22. Caribou Habitat Ma

CommentFigure C, Appendix 1 C, EER, titled "Land Resources — Caribou Habitat" suggests that woodlandcaribou winter habitat only occurs to the west of EL494 and does not overlap with the footprintof Husky's current activities. In a previous letter to Husky regarding LUP application S13A-002,ENR noted this figure did not represent the full extent of overlap of EL494 with the ranges ofboth the mountain and boreal populations of woodland caribou, and requested that Husky clarifythe source of the data used in Figure C or provide a corrected version of Figure C to the SLWB.The map of woodland caribou habitat in the region has not been corrected for the present LUPapplication. In order to avoid confusion about the distribution of woodland caribou populationswithin the region, ENR submits the following figure (see PDF version of the GNWT submissionof comments/recommendations on this application) that shows the current understanding ofpopulation ranges for both mountain and boreal ecotypes of woodland caribou. The populationranges of both woodland caribou ecotypes overlap with oil and gas exploration licences in thecentral Mackenzie Valley.

Recommendation1) ENR recommends Husky contact Bonnie Fournier (Bonnier [email protected]) of theWildlife Division, ENR, to obtain the most up-to-date shapefiles for woodland caribou populationranges and that Husky re-submit a corrected version of Figure C (Appendix 1C) to the SLWB forposting on the public registry.

ResponseFigure C: Land Resources — Caribou Habitat from Appendix 1 C has been corrected and will beresubmitted indicating the proper population ranges.

23. Preventative Measures to Protect Birds and Wildlife from Coming into Contact withPotentially Harmful Fluids

CommentFluids and solids used in well drilling, completions, and testing, and fluids and solids producedas wastes from these activities, may contain substances that are potentially harmful to birds andwildlife. Open top tanks, C-rings, berm containment systems, and excavated pits used to storefluids and solids may be accessible to birds and wildlife. Preventative measures should be takento ensure that birds and wildlife will not come into contact with any potentially harmfulsubstances used in or produced by well drilling, completions, and testing. Husky intends to storefreshwater drilling residual solids and fluids in tanks or in a lined metal or plastic-sided bermcontainment system. Drilling wastes may then be transferred to bermed storage pits withinexisting quarries. During completions and testing, fluids will be stored at the well site in up toninety six 400 bbl single-walled tanks. Husky has also indicated that a 3000 m3 C-ring may beinstalled at the well site or near the Mackenzie River water source to handle any additionalwater storage or handling requirements (EER page 2-21). It is not clear whether this C-ring

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would only contain freshwater, or if it could potentially be used to contain waste fluids as well.

Recommendation1) Husky should clarify whether storage tanks intended for storage of drilling and completionsfluids described in sections 2.3.9 of the EER will have open or closed tops.

2) Husky should implement preventative measures to protect birds and wildlife from coming intocontact with potentially harmful fluids or solids stored in open top containment systems. Suchmeasures could include one or more of the following: •Noise repellents/scare cannons; •Decoys/scarecrows; •Reflectors; •Netting; •Wires/reflectors; •Wildlife fencing with a minimumheight of 2.13 metres; •Regular inspection of open top tanks, C-rings and earthen excavations;and •Observation to ensure bird and wildlife deterrents are in place and working effectively.

3) Selected wildlife protection measures and monitoring programs to ensure their effectivenessshould be included in a WWHPP.

Response1.) All fluids, with the exception of freshwater will be contained in close-topped 400 bbl

tanks. Fresh water supplied either from the groundwater wells or the river may bestored in an open-topped C-Ring prior to use. Freshwater drilling waste located in opentopped bermed liners or pits will be fenced to keep out wildlife.

2.) No harmful fluids will be stored in open top containment systems. Open-topped mudtanks used in the drilling operations are close to the drilling rig and will not likely beapproached by birds and wildlife due to local noise and activity.

3.) The aforementioned wildlife protection measures (See response to Topic #21) are beingincorporated into the WWHPP. These primarily include fencing open topped bermedliners or pits to keep out wildlife. Fencing will ensure access is restricted for any speciesthat may be more accustomed to human activity or attracted to water sources. Asdetailed in the WWHPP guidelines, to be effective the WWHPP will include:

a.) Guidelines to reduce or prevent the potential for interaction between peopleand wildlife to ensure human safety;b.) Guidelines to reduce or prevent any direct impacts from the project to wildlifeand/or wildlife habitat;c.) Day-to-day standard operating procedures (SOPs) that detail protocols to beused

24. ERP — Section 4.1-Site Specific — 4.1.3 Wildfire Mitigation —All Terrain Vehicles withinEL474 (sic).

CommentThe use of all-terrain vehicles off-road can compress soils. Compaction and disturbance of soilsaffects the ability of the soil to retain water. Compaction of soil can change erosion patterns andcreate permanent ruts, increasing the flow of water away from areas, and with it the flow ofnutrients and minerals. Erosion also adds sediment to streams, which increases thetemperature and alters the quality of water. Increased sediments in waters may also havenegative impacts on fish and wildlife.

RecommendationENR recommends a section is added into the Environmental Protection Plan and EER thataddresses the negative environmental effects associated with the use of ATVs if they are to beused off-road, and to detail the mitigation measures that will be used to address the negativeeffects to the land and wildlife.

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ResponseSection 4.1 of the ERP is designed to encompass all of Husky's Slater River operations. ATVsmay be used on this program to access the water wells at MW-09 during the summer and fall.Access will be along the existing permitted all-weather right-of-way. Husky will provide anupdate to the EER that provides mitigation measures for ATV use. Condition 14 "SuspendOverland Travel" of the Recommended Land Use Permit Conditions also addresses this issue.Husky policy also restricts the use of ATVs to project activities and leisure and recreational useis prohibited.

25. Land Use Permit Conditions

Comment GNWT review of the application also includes recommended conditions for theLUP, should the SLWB determine the Project may proceed for regulatory permitting.

Recommendation For the recommended draft LUP conditions, see PDF version of the GNWTsubmission of comments/recommendations on this application.

ResponseHusky has reviewed and acknowledges the recommend draft LUP conditions. Concernregarding the Security Deposit is presented under Topic #19.

We hope the Sahtu Land and Water Board finds these responses satisfactory. Should you haveany further requests for information, please contact the undersigned by telephone at (403) 298-6655, by fax at (403) 750-1722, or by email at ken.hansen(a~huskyenergy.com.

Sincerely,ill OIL PERATIONS LIMITED

~~~-

Kenneth F. Hansen, P. Geol.Slater River Project Manager, NWT

Attachments: Clean Steam Dehydrator Technical SummaryHusky Operational Integrity Management System (HOIMS) DescriptionLand Resources — Updated Figure C. — Caribou Habitat Map

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The CleanSteam™ method reduces wastewater volume, on-site, that would otherwise be transported to a certified disposal location, thereby greatly reducing the cost, and environmental footprint, of wastewater disposal.

The CleanSteam™ System employs proprietary German-Engineered “Emissions Scrubbing / Thermal Separation” Technology that separates, and evaporates to atmosphere, the pure water molecules within contaminated liquid.

CleanSteam™ Features & Benefits: No filtering necessary No chemical pre-treatment 2 minute start-up time Volume reduction - upwards of 90% Automated for unmanned operation Roughneck-proof: only start/stop/reset

Drilling Site / Operator Benefits: Significant Cost Savings Reduced: trucking cost ($200/hour, $1400/day) Reduced: high-cost disposal fees ($900-$3600/truckload) Reduced: risk of off-location spill, accident or injury Preserves useful life / environmental footprint of sumps

CleanSteam Wastewater Dehydration SystemCleanSteam Wastewater Dehydration System

TM

Horizon Oilfield Solutions Inc.CleanSteam™ Systems are all constructed using only CSA, ULc and/or ULus approved components.Upstanding members of ISNetworld and ComplyWorks’ Canadian HSE Registry

System Specs:

Liquid Reduction: 10-15m3 per dayPower Supply: 110v Heat Supply: Diesel BurnerDay Rate: Call for PricingFuel Consumption: $20/hr Skid Specs: 20ft Skid holds 9m3 water

Wastewater Types:

Boiler-BlowdownCement water (displacement water)Washwater (equipment or laundry)Contaminated rain/snow runoffContaminated lease waterStrip Water

Horizon Oilfield Solutions Inc.Beacon Hill 80083-11700 Sarcee Trail NW Calgary Alberta T3R 0A0

Phone: 403 809 4632 Fax: 403 366 5823 www.horizonoilfield.ca

The “Mist-Pad Layering” design prevents steam droplets containing oils, salts, or other contamination, from atmospheric discharge by cycling them back into the system until correct thermal separation is achieved.

A portion of toxic combustion chemicals (SOx, carbon soot, and particulate matter) present in diesel exhaust are neutralized and/or removed from emissions prior to atmospheric discharge

Emissions Scrubbing/ Thermal Separation Technology separates pure water molecules from waste water volumeGreen process recycles cleaned water vapour into atmosphereGreen process “scrubs” toxic chemicals from diesel emissionsPreserves useful life of sump and reduces environmental footprintNo land spreading or injecting volumes of contaminated wastewater

State-of-the-art Exhaust Emissions Scrubbing

Environmentally Friendly CleanSteam™ Benefits

Current Disposal Method

“All In” cost very high: disposal fees ($900-$3600/truckload)Transport cost ($200/hour); fuel ($40/hour - supplied by rig) Generates high volumes of emissions at each stage of processDischarges large volumes of contaminated water onto earth (landspread) or into the earth (injection)

Regulation heading towards greener methods

ERCB “Bulletin 2011-12” prohibits useVery low actual evaporation ratesTakes hours to begin evaporatingProblematic cleaning and maintenanceBoiling toxic water at personnel levelFoam spillage into environment

Alternative: “Boiling-Tank” Evaporators

CleanSteam Wastewater Dehydration System

Sump Pit Filling

Current Disposal Method

NEW Reduction

Method

OR

OR

OR

Rain

Water

EmissionsWaste Water

Scrubbed Emissions

CleanSteam

Landspreading

Under GroundInjection

Alternative

Well injection, sump injection or land spreading

Horizon Oilfield Solutions

CleanSteam™ Wastewater Dehydrator – Technical Summary

Overview: The CleanSteam™ Dehydrator’s design is based on industrial distillation technology. Its

purpose is to reduce wastewater volume onsite, at point of creation, thereby providing an

environmental, economic and logistics benefit to operators. When integrated into the daily wastewater

management process, the CleanSteam™ Dehydrator provides a net reduction in environmental

disturbance to air emissions, surface land and underground disposal wells. CleanSteam™ Dehydration

technology aligns with EUB’s strongly encouraged practice of minimization prior to disposal of residual

waste.

Generally, the CleanSteam™ Dehydrator thermally separates water molecules from chemical salt

contamination, and then discharges the warm steam to atmosphere. Contaminated water droplets

entrained in the discharging steam are captured and recycled into the system until correct thermal

separation is achieved. Organics discharged into the tank separate from the water being drawn into the

system and are further separated from steam discharge via mist elimination pad.

Authorized Waste Streams:

Wash water

Boiler blow-down

Stripped Drilling Waste

Cement water

Contaminated lease water (Left) Mass Balance: A field test was conducted in which the total water volume of Stripped Drilling Fluid was reduced by half resulting in an approximate double increase of chemical salts. (Below) VOC: Samples of waste streams

were taken and tested for pH, CCME Tier

1- F1 (mg/L) and BETX (mg/L)

Sample 1 Sample 2 pH 9.32 9.16

Bicarbonate mg/L 7835 2355 Carbonate mg/L 1464 1464 % change

Chloride mg/L 832.2 1698 204%

Nitrate mg/L < 5.1 < 5.1 Nitrite mg/L 31 61.2 197%

Phosphate mg/L 181.6 308.3 170%

Sulfate mg/L 822 1717.7 209%

Calcium mg/L 45.7 106.9 234%

Magnesium mg/L 48.5 95.3 196%

Potassium mg/L 952.9 1999.9 210%

Sodium mg/L 3449.8 5769.8 167%

Boiler Blowdown

(Pure)

Washtub Water (Pure)

Stripped Drilling

Fluid (Pure)

Wash Water (Mix -

400 bbl)

Boiler, Wash,

Cement: (Mix)

pH 11.88 10.67 12.32 9.67 8.75

CCME Tier 1 - F1 mg/L < 2 < 2 < 2 < 2 < 2

Benzene mg/L < 0.001 < 0.001 < 0.001 < 0.001 < 0.001

Ethylbenzene mg/L < 0.001 < 0.001 < 0.001 < 0.001 < 0.001

Toluene mg/L < 0.001 < 0.001 < 0.001 < 0.001 < 0.001

Ttl Xylenes (m,o,p) mg/L < 0.001 < 0.001 < 0.001 < 0.001 < 0.001

8.0 Management Systems

8.1 Overview This section of the application addresses the Filing Requirements requested in Section 3.3, Management Systems of the “Filing Requirements for Onshore Drilling Operations Involving Hydraulic Fracturing”.

Husky’s Operational Integrity Management System (HOIMS) establishes processes, procedures and expectations to support a safe work environment where hazards should be identified and then if possible, eliminated, mitigated or controlled. Residual hazards are also effectively communicated to relevant stakeholders.

Husky’s Operational Integrity Management System (HOIMS) is the foundation for Husky’s approach to safety. It is underpinned by the belief that no task is too routine and no job too urgent that it can’t be done thoughtfully and safely.

HOIMS establishes procedures that reinforce process and occupational safety that drive reliability, operational integrity, and high performing people resulting in the protection of people, the environment and assets. When this happens, a corporate culture is created where all decisions are based on safety and Husky operates more efficiently and with fewer incidents.

HOIMS is composed of 14 fundamental elements. HOIMS sets the standard for effectively managing business risks in an effort to create a safe and secure work environment. The fundamental elements that comprise HOIMS are listed below:

Element 1 - Leadership, Commitment and Accountability Element 2 - Safe Operations Element 3 - Risk Assessment and Management Element 4 - Emergency Preparedness Element 5 - Reliability and Integrity Element 6 - Personnel Competency and Training Element 7 - Incident Management Element 8 - Environmental Stewardship Element 9 - Management of Change Element 10 - Information, Documentation and Effective Communication Element 11 - Compliance Assurance and Regulatory Advocacy Element 12 - Design, Construction, Commissioning, Operating and Decommissioning Element 13 - Contracted Services and Materials Element 14 - Performance Assessment and Continuous Improvement

Husky is currently in the process of implementing this system throughout its operations. Additional corporate policies that are utilized in conjunction with HOIMS are listed below:

• Access Control Policy• Acceptable Use Policy• Business Code of Conduct• E&PS HSE Policy• E&PS Drug & Alcohol Policy• Husky Electronic Policy

• IT Management Policy• Privacy Policy• Purchasing Practice Policy• Record Management Policy• Respectful Workplace Policy• Workforce Diversity Policy

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• Information Security Policy • Work Place Adaptation

At a corporate level, Husky’s Chief Executive Officer, Asim Ghosh, has approved the corporate version of HOIMS and all associated documentation and is responsible for the establishment, implementation and maintenance of this system at a corporate level. At a Divisional Level, the Vice President of Exploration and Production Services, Al Pate, approves the Divisional version of HOIMS and all associated documentation. Mr. Pate is responsible for the implementation and maintenance of the divisional system.

In conjunction with HOIMS, Drilling and Completion Operations (D&C), utilizes an online system called the “Drilling and Completions Manual” (DACOM) to organize and store information critical to its business.

The documents describing components of Husky’s management systems and the processes for making personnel aware of their roles and responsibilities are addressed in DACOM.

The DACOM program is intended to be an interactive and flexible medium by which information can be exchanged and best practices captured. Its primary goal is to strengthen Husky’s D&C identity by developing a consistent approach to drilling, completions and workovers. This ensures that these operations are conducted in a safe, efficient, and cost effective manner throughout the Husky D&C department. To achieve this, the program focuses on several key objectives within the D&C department.

• Documents existing processes, policies and procedures in one electronic location to improve theireffectiveness and increase visibility

• Provides a learning environment where knowledge is easily accessible to all D&C staff &consultants. Will also facilitate training through links to e-learning modules and the internet.

• Provides a platform upon which revised procedures can be updated quickly and distributedelectronically, with the added benefit of eliminating the outdated record to avoid confusion.

• Provides a mechanism where key learning’s and best practices can be captured and distributedto ensure continuous improvement.

DACOM continues to evolve and grow as more information becomes available, as processes and procedures are changed, and new practices are put in place.

Listed below is a copy of the organizational structure (Attachment 1) that shows the responsibilities for the operational planning and execution of Husky’s Slater River Project. This organization has evolved over time based on key learning’s observed during the execution of previous phases of the project.

The Project Manager (PM) has ultimate responsibility for delivering the Slater River Project. The PM is responsible to ensure the “Scope of Work” undertaken by the Operations Team is well defined and meets the objectives of the Business Unit. The PM is also responsible to ensure the project is executed within the limits of the approved Budget. The PM reports directly to the Vice

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President Oil & Gas Resource and New Ventures and with respect to the Slater River Project the PM also reports to the NWT Steering Committee.

It is the responsibility of the Operations Manager to ensure that the project is executed in alignment with the statements made in this application, all regulatory requirements and Husky policies. There are several key positions in the organization that are fundamental to the safe execution of this project including the Regulatory Compliance Advisor, Environmental Advisor, Safety Advisors and the leadership roles in Drilling, Completions, Construction and Logistics. This organization currently has the size and expertise to plan and execute the scope of work that has been included in this application.

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Positions that are critical to safety within the organization include the following positions:

• Operations Manager• Site Wide Services Manager• Regulatory Compliance Advisor• Safety Advisor• Drilling Superintendent• Completions Superintendent• Construction Lead

A description of each positions roles and responsibilities has been attached to this application.

The process for setting goals for the improvement of safety, environmental protection and waste prevention are addressed in HOIMS Element 14.

HOIMS Element 14 – Performance Assessment and Continuous Improvement provides the management framework to confirm that HOIMS processes are implemented and assesses whether they are working effectively. It strives to measure progress and continually improve towards meeting HOIMS objectives, targets and key performance indicators. Under this element, Husky monitors numerous leading and lagging indicators which provides the basis for setting goals for the improvement of occupational safety, operational integrity / process safety, environmental protection and waste prevention.

The processes for identifying hazards and for evaluating and managing associated risks are addressed in HOIMS Element 3.

HOIMS Element 3 – Risk Assessment and Management provides the management framework to manage risks by performing comprehensive risk assessments to provide essential decision-making information. The Safety Plan attached to this application outlines several methodologies that are utilized to identify and evaluate risks.

Within DACOM there is a section titled “E&PS Assessment Forms” which includes documentation on hazard assessment, templates and guidelines that are to be applied at the field level during operational activities. Husky also maintains an Inherent Operational Risk Register for major risks that have been identified for this project.

The processes for ensuring and maintaining the integrity of all facilities, structures, installations and equipment necessary to ensure safety, environmental protection and waste prevention are addressed in HOIMS Element 12.

HOIMS Element 12 – Design, Construction, Commissioning, Operating and Decommissioning provides the management framework to ensure integrity of facilities, structures and installations. Specifically for Drilling and Completion Operations, Husky utilizes its Drilling and Completions Manual (DACOM), AER Regulatory Requirements with respect to drilling and service rig operations and well construction, ENFORM’s Industry Recommended Practices and learning’s from previous operations to ensure process safety and operational integrity is maintained.

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The project team has compiled and will continue to compile obligations specific to our licenses and approvals to operate in the NWT. The role of the Regulatory Compliance Advisor is to ensure that obligations specific to our licenses and approvals are understood by the project team and are being complied with in the field. The Construction Lead, and Drilling and Completion Superintendents have, and will continue to review the Act and Regulations that govern operating in the NWT and it is their responsibility to ensure that the planning and execution of their operations are being conducted in compliance with regulatory requirements and Husky Policies. Each discipline lead is responsible to communicate expectations to their respective Wellsite Leaders and to spend time in the field to ensure operations are compliant to all requirements.

The processes for ensuring changes are implemented in a safe and environmentally respectful manner are addressed in HOIMS Element 9.

HOIMS Element 9 – Management of Change is a process to control and track deviation in procedure, process or materials from a known standard having assessed and mitigated the risks.

The processes for ensuring personnel are trained and competent to perform their duties are addressed in HOIMS Element 6.

HOIMS Element 6 – Personal Competency and Training provides the management framework for assurance that personnel possess the necessary competencies, knowledge, abilities and demonstrate behaviors to perform their tasks and designated responsibilities effectively, efficiently and safely.

Husky also ensures that its Well Site Leaders, Drilling Superintendents and Completion Superintendents are compliant with Industry Recommended Practice 7 – Standards for Wellsite Supervision of Drilling, Completions and Workovers. Prior to mobilizing men and equipment to site Husky will be engaging all contractors to ensure they understand the scope of work to be performed and to ensure they provide workers that are competent to perform the work. The Well Site Leaders will identify areas of concern during operations so appropriate actions can be taken when required.

The processes for ensuring effective internal and external communication to support safety, security and environmental protection are addressed in HOIMS Element 10.

HOIMS Element 10 – Information, Documentation and Effective Communication outlines how to identify, maintain and safeguard important information. This element also identifies how to promote and encourage constructive dialogue within the organization to share industry recommended practices and acquired knowledge. Safety and environmental learnings are routinely shared throughout the company through various methods of communication to ensure the learning’s are understood in the office as well as the field.

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The process for the internal reporting and analysis of hazards, minor injuries, incidents and near-misses and for taking corrective actions to prevent their recurrence are addressed in the DACOM program.

Within DACOM, there is a section titled “E&PS Incident Management” that contains the documents that describe the management of internal reporting and analysis of minor injuries, incidents and near-misses and for taking corrective actions to prevent their recurrence. Some of the documents in this section include:

• E&PS Near Miss Notification• E&PS Site Level Incident Management• E&PS Critical and Non-Critical Incident Notification Flow Paths• Corporate Incident Management Flow Path• E&PS Injury Classification• E&PS Incident Management Standard• E&PS Incident Management Procedure

The processes for ensuring effective Emergency Preparedness procedures are in place are addressed in HOIMS Element 4.

HOIMS Element 4 – Emergency Preparedness ensures the following:

• Emergency Response (ER) processes are suitable for the area of application,• Participation in ER activities, training, and live events are required or

requested.• Proactively take actions required to protect assets, people and environment

in the event of an emergency or security threat• Ensure all ER processes are documented and clearly conveyed to all relevant

personnel.

Husky has developed a site specific Emergency Response Plan for activities in the Northwest Territories. This plan is reviewed annually and emergency preparedness drills are performed throughout the year. A copy of this plan is on file with the NEB.

The Slater River Management Team and Steering Committee monitor ongoing activities conducted in the Northwest Territories. If required, immediate changes are made to improve efficiencies and maintain safe operations. Once activities have been completed, all aspects of the project are reviewed and learning’s are documented and implemented during the next cycle of operations.

8.2 Management System Implementation This section of the application addresses the Filing Requirements requested in Section 3.4 Management System Implementation of the “Filing Requirements for Onshore Drilling Operations Involving Hydraulic Fracturing”.

Husky Management evaluates its management systems with respect to regulatory requirements, industry best practices and project specific requirements. Husky Work Site Leaders are provided training and resources to effectively implement management

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system requirements on Husky locations. The Safety & Loss Prevention Team conducts audits on Husky Work Site Leaders and Contractor Representatives verifying the implementation and effectiveness of Husky’s management systems. Results of the audits are distributed to Husky Management for review. Corrective measures are applied when required and changes are followed through to conclusion.

8.3 Safety Culture This section of the application addresses the Filing Requirements requested in Section 3.5 Safety Culture of the NEB “Filing Requirements for Onshore Drilling Operations Involving Hydraulic Fracturing”.

The HOIMS Corporate HSE Performance Standards document (Revision 4, July 25, 2011), Exploration & Production Services HSE Program Manual (Revision 1, January 2007) and the Exploration & Production Services Contractor HSE Requirements document no: 54140635 provides the supporting evidence of the commitments, policies, practices, and programs that support continual improvement of the organization’s safety culture, including that of contractors, subcontractors, service providers and any other persons who could be working with or on behalf of Husky Oil Operations.

The Corporate Leadership, Commitment and Accountability Standard document no: 51813981 and the Corporate Procedure Leadership, Commitment and Accountability Standard document no: 52009887 describes and provides evidence of leadership commitment and acceptance of accountability for safety performance by the most senior executive of Husky Oil Operations.

Husky employed an Employee Safety Perception Survey in 2012. 4,304 employees responded to the survey and the survey results are provided below:

“This company offers a working environment as safe or safer than most othercompanies in our industry”:

• Total Favorable: 79%• Total unfavorable: 5%• Undecided: 16%

“My work area is a safe place to work”:• Total Favorable: 93%• Total unfavorable: 3%• Undecided: 4%

“Corrective action is usually taken when unsafe conditions are brought tomanagement’s attention”:

• Total Favorable: 75%• Total unfavorable: 8%• Undecided: 17%

“Safety rules are carefully observed, even if it means work is slowed down”• Total Favorable: 71%• Total unfavorable: 7%• Undecided: 22%

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Enterprise-wide results were communicated to employees at town halls throughout June, July and August 2012. In parallel, a steering committee was formed and was tasked with developing plans to make meaningful progress on the opportunities for improvement outlined in the survey results.

The priorities for improving Husky’s safety performance include:

o New Leadership: The introduction of a new VP of Process andOccupational Safety to provide singular oversight and drive greateraccountability;

o Organizational Restructuring: The re-structuring of the SafetyDepartment to improve overall alignment and communication;

o Leadership Program: The Operational Integrity Leadership program wassuccessfully piloted to enhance awareness and understanding aroundprocess and operational safety issues and behaviours;

o Ethics Hotline: The implementation of an ethics hotline (Ethics Point) toprovide another option for both staff and the public to anonymously reportunethical, unsafe or discriminatory behaviours; and,

o HOIMS Re-energizing Campaign: A HOIMS re-energizing campaigndesigned to create a platform for information and deliver branded toolsinto the field as part of the sustainment (Q4 of 2012).

Workers will be actively engaged in the process of safety throughout the life cycle of the project by various methods such as:

a. Kick-off meetings;b. Daily tailgate meetings;c. Weekly safety meetings;d. Daily scheduling meetings;e. Toolbox meetings;f. Post incident review meetings; andg. Supervisor safety/operations meeting.

Husky Oil Operations utilizes various industry and company safety “stand down” programs during its operations. Participation and support is mandatory for all workers, supervisors and management as defined in Corporate Leadership, Commitment and Accountability Standard document no: 51813981 and the Corporate Procedure Leadership, Commitment and Accountability Standard document no: 52009887

These programs include:

• ENFORM’s annual Safety Stand Down Program;• Husky E&PS’ Safety, Metrics, Accountability, Reporting, Tasks

SMART Start Program; and,• Husky E&PS’ “Stop-Think-Go” Program.

Husky requires every staff member and those who work on our behalf: to report all incidents regardless of severity. Incidents will be investigated to determine the root

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https://secure.ethicspoint.ca/domain/media/en/gui/100344/index.html

cause, lessons learned will be shared, and, corrective actions will be taken. Husky aims to sustain an incident free workplace.

Husky requires every staff member and those who work on our behalf:

• to be a leader in HSE; and,• to exercise personal responsibility in preventing harm to themselves, to others, to

the environment and to physical assets; and, to stop any work that is or becomesunsafe.

The Corporate Procedure Leadership, Commitment and Accountability Standard document no: 52009887 and Husky EPS’ “Stop-Think-Go” program defines the workers authority. This is initially communicated during the site orientation and reinforced in daily operations and safety meetings.

The safety culture is maintained, assessed and improved throughout the project through a number of different strategies. This includes but is not limited to the following:

• Kick-off meetings• Daily tailgate meetings• Weekly safety meetings• Daily scheduling meetings• Toolbox meetings• Inspections• Audits• Orientations• Training• Drug & Alcohol Program

Item # 9 explains how the safety culture is maintained during periods when there is no activity or when there is a change to the crew.

8.4 Human Factors This section of the application addresses the Filing Requirements requested in Section 3.6 Human Factors

Human factors are identified and addressed during the project planning phase with the service provider in order to effectively manage the potential for human error during drilling and completion operations. Project Management, with the assistance of Corporate H&S, will develop and implement a process to identify, assess and address human factor considerations that may impact health and safety in critical operations activities. The process will be documented in the Area HSE Program Manual. Human factors to be considered will include, but are not limited to:

• Job factors such as change in job function and assignment of new tasks;

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• Human characteristics such as fatigue management and physical and mentaldemands; and,

• Individual characteristics.

8.5 Lessons Learned This section of the application addresses the Filing Requirements requested in Section 3.7 Lessons Learned

Husky utilizes a system of distributing lessons learned throughout the company for safety and integrity incidents. With respect the Slater River Project, all Safety and Integrity incidents that occur on the project are shared amongst the immediate team. If there are learnings that can benefit other Husky Teams, the incident and learnings are summarized and distributed to other teams or departments that would benefit. If an incident is deemed important, a special safety alert is issued. In some cases the safety alert is forwarded to ENFORM for distribution to industry. Husky also receives industry alerts and learnings from ENFORM and distributes them through the organization. These learnings and alerts are topics of team meetings, field operations meetings, Safety Stand Downs and SMART Starts.

Using the 2013 NEB Safety Order issued to Husky (with the camp deficiency) as an example, below is a description of how the lessons learned were communicated with learnings incorporated into processes to foster continuous improvement.)

During a regulatory inspection in January 2013, the NEB Inspecting Officers discovered several items that did not meet regulatory requirements in the Caribou Camp at km 24 of the Slater River Project. Two of these items resulted in the NEB requesting immediate rectification before allowing the Caribou Camp accommodation extension to remain occupied. As a result of this inspection, Husky implemented the following controls to prevent this situation from occurring in the future.

• Camp inspections will be completed by a competent camp manager or camprepresentative ensuring the accommodations are acceptable and the camp iscompliant with all regulations before personnel are allowed to reside in the camp.This inspection will be completed prior to a Husky Well Site Leader completingtheir inspection. This should be completed no later than maximum 2 days afterset up.

Quality Control / Quality Assurance

• Camp inspection will be completed by competent Husky Representative as soonas possible (maximum 2 days after set up) once camp is set up and campmanager or camp representative have completed their inspection. Anydeficiencies will be documented and corrected immediately.

• Husky will ensure that all camps within the Slater River Project have adocumented maintenance program that addresses the requirements of theBuilding Code, the National Fire Code and the Oil and Gas Occupational Safety

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and Health Regulations. The program will at a minimum, define the inspection and testing frequency of all fire safety systems that are used to ensure the safety of personnel residing in the camp.

• Husky has added three additional roles within the Slater River Project. Positionsfor a dedicated Site Wide Services Manager, Logistics Lead and a CampManager have been created to oversee the general operations of all camps. TheLogistics Lead and Camp Manager will have specific responsibilities around themanagement of the camps and ensuring that safety systems are beingmaintained by the contractors.

8.6 Risk Assessment and Management This section of the application addresses the Filing Requirements requested in Section 3.9 Risk Assessment and Management

The processes for identifying hazards and for evaluating and managing associated risks are addressed in HOIMS Element 3.

HOIMS Element 3 – Risk Assessment and Management provides the management framework to manage risks by performing comprehensive risk assessments to provide essential decision-making information.

Husky utilizes numerous methods and processes to identify occupational and process safety risk that are referenced within this Safety Plan. Risk is identified at numerous levels throughout the project through the processes listed below:

• Risk workshops;• Risk registers (Inherent);• Contractor selection process;• Management of change;• Safe work permits;• Field level hazard assessments; and,• Safety meetings.

Prior to conducting operations on the Slater River Project, the Project Team met to discuss project risks and compiled a list of the higher level systemic risks associated with the project and documented these risks in the Inherent Operations Risk Register. After the risks were compiled, mitigation measures were discussed for each risk utilizing recommendations from existing regulations and Industry Best Practice. The final mitigations measures were then documented in the Inherent Operations Risk Register.

Husky follows various processes to identify as listed in a paragraph above. The risk is then analyzed for Severity and Probability given a set of safeguards. The risk is then quantified into one of four levels. If the Risk is placed at a higher level, then additional safeguards must be added to reduce the risk. If the risk cannot be reduced to a level that is as low as reasonably practicable then it must get escalated to Husky Management for

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approval. This process is documented in the Exploration and Production Services Procedure for Risk Assessment and Management.

A copy of Husky’s Inherent Risk register is presented below to provide a description of the high level hazards identified and a summary of the mitigation measures that have been taken to manage the risks to a level that is as low as reasonably practicable.

Structures, facilities, equipment and systems critical to safety and environmental protection include the following:

• Drilling Rig Masts / Derricks;• Drilling Rig Substructures;• Drilling Rig Overhead Lifting Equipment;• Drilling Rig Blowout Prevention Equipment;• Drilling Rig Electrical Systems and Electrical Area Classification;• Drilling Rig Derrick Egress Procedures;• Service Rig Masts / Derricks;• Service Rig Substructures, Drawworks & Carriers;• Service Rig Overhead and Lifting Equipment;• Service Rig Blowout Prevention Equipment;• Service Rig Electrical Systems and Electrical Area Classification;• Service Rig Derrick Egress Procedures; and,• Blowout Prevention Equipment for Coiled Tubing Units and Wireline Units.

Husky will request the Inspection and Certification for the aforementioned equipment from the Contractors prior to performing any work on location.

Hazards that are Critical to safety identified for all phases of activity will include the following:

• Failure of the rig mast and or substructure;• Failure of any component in the Overhead Lifting Equipment;• Failure of any component in the Blowout Prevention Equipment;• Improper Egress Systems to evacuate personnel from the derrick;• Electrical Equipment placed in an inappropriate area of Electrical Classification;• Casing Failure;• Workstring Failure;• Wellhead Failure;• Failure of any component of the pressure piping system of the fracturing

operation; • Failure of any component of the pressure piping system in the well testing

operation; • Sand erosion of the pressure components of the fracturing operation and well

testing equipment; and, • Extreme weather conditions while travelling or working alone.

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• Ice bridge construction and maintenance• Working with Explosives• Explosions and Flash Fires due to flammable gases and liquids• Well Control events

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