Horizontal Directional Drill Feasibility Study. for the. Athabasca River Crossing

Section 58 Application Horizontal Directional Drill Feasibility Study for the

Design Report Project Athabasca River HDD Crossing Prepared for NOVA Gas Transmission Ltd. October 2014 December 2014 Page 1 of 38

HMM Document No. 20141017_HMM_332560_Athabasca River HDD Crossing Design Report _EN_0038 TransCanada Project No. 2.207584 Athabasca River HDD Crossing Design Report Issue and Revision Record Rev Date Originator Checker Approver Description Draft Issued for A 8/26/2014 S. Crouse C. Chaves G. Duyvestyn Review B 10/17/2014 C. Brock C. Chaves G. Duyvestyn Updated from Client Comments Group Disclaimer This document has been prepared for the titled project or named thereof and should not be relied upon or used for any other project without an independent check being carried out as to its suitability by, and prior written authority of Hatch Mott MacDonald (HMM). HMM accepts no responsibility or liability for the consequences of this document being used for a purpose other than the purposes for which it was commissioned. Any person using or relying on the document for such other purpose agrees, and will by such use or reliance be taken to confirm this agreement, to indemnify the above parties for all loss or damage resulting there from. HMM accepts no responsibility or liability for this document to any party other than the party by whom it was commissioned. The subsurface conditions interpreted herein are from initial site reconnaissance and a limited number of boreholes. In the event that there are changes in the nature, design, or location of proposed structures, or significant delay in project construction, HMM must be allowed to evaluate these changes and the effect they have on the validity of this study. To the extent that this document is based on information supplied by other parties, HMM accepts no liability for any loss or damage suffered by the client, whether contractual or tortuous, stemming from any conclusions based on data supplied by parties other than those listed above. HMM Project 332560 Page ii December 2014 Page 2 of 38

TABLE OF CONTENTS 1 INTRODUCTION... 1 1.1 ATHABASCA RIVER CROSSING DESCRIPTION... 1 2 ANTICIPATED GEOTECHNICAL CONDITIONS... 3 2.1 GEOTECHNICAL OBSERVATIONS... 3 2.2 SUBSURFACE GEOTECHNICAL INVESTIGATIONS... 3 2.3 SUBSURFACE GEOPHYSICAL INVESTIGATIONS... 6 3 ATHABASCA RIVER CROSSING... 11 3.1 SITE CONDITIONS... 11 3.2 BORE GEOMETRY AND HDD INSTALLATION CONSIDERATIONS... 13 3.2.1 ENTRY AND EXIT ANGLES... 13 3.2.2 HORIZONTAL AND VERTICAL CURVATURE... 13 3.2.3 INSTALLATION DEPTH... 13 3.2.4 BORE DIAMETER... 14 3.3 REQUIRED WORKSPACE AND PIPE STAGING AREAS... 14 3.3.1 LINE AND GRADE ACCURACY... 15 3.3.2 DRILLING FLUID FRESH WATER AND SOURCE... 15 3.4 DISPOSAL OF EXCESS DRILLING FLUID AND PROCESSED SPOILS... 16 3.5 SCHEDULE... 16 3.6 PRELIMINARY HDD ENGINEERING EVALUATION... 17 3.6.1 PIPE PROPERTIES... 17 3.6.2 DESIGN AND MINIMUM ALLOWABLE BEND RADII... 18 3.6.3 PRELIMINARY HYDRAULIC FRACTURE EVALUATION... 18 3.7 HDD INSTALLATION LOADS AND OPERATING STRESSES EVALUATION... 24 3.7.1 HDD PULLBACK LOADS AND STRESSES... 24 3.7.2 INSTALLATION AND OPERATING STRESS EVALUATION... 25 3.8 BREAK-OVER STRESS AND OVER-BEND STRESS EVALUATIONS... 26 3.8.1 BREAK-OVER STRESS EVALUATION... 26 3.8.2 OVER-BEND STRESS EVALUATION... 29 3.9 STATE OF THE PRACTICE IN THE HDD INDUSTRY... 30 4. TRENCHLESS RISK CHARACTERIZATION... 32 4.1 SPECIFIC CROSSING RISKS AND MITIGATION MEASURES... 32 5. CONTINGENCY INSTALLATION METHOD... 33 6. SUMMARY... 33 7. LIMITATIONS... 34 HMM Project 332560 Page iii December 2014 Page 3 of 38

TABLES Table 2-1 Summary of the subsurface information for Boring BH-E01. Table 2-2 Summary of the subsurface information for Boring BH-E02. Table 2-3 Summary of the subsurface information for Boring BH-W02. Table 3-1 Estimated schedule duration for Athabasca River HDD Crossing. Table 3-2 Pipeline properties and input parameters for the HDD evaluation. Table 3-3 Assumptions used for the Athabasca River hydraulic fracture evaluations. Table 3-4 Material property assumptions for the overburden soils. Table 3-5 Material property assumptions for the Clearwater Formation. Table 3-6 Material property assumptions for the Wabiskaw Member. Table 3-7 Material property assumptions for the Oil Saturated McMurray Formation. Table 3-8 Material property assumptions for the Basal McMurray. Table 3-9 Summary of anticipated HDD pullback loads. Table 3-10 Summary of HDD installation stress evaluation at the design bending radius of 1,000 metres. Table 3-11 Summary of HDD operating stress evaluation. Table 3-12 Summary of break-over stress evaluation. Table 3-13 Summary of support load evaluation. Table 3-14 Summary of over-bend stress evaluation (HDD Entry Point West). Table 3-15 Summary of over-bend stress evaluation (HDD Exit Point East). Table 3-16 State of the HDD Industry. FIGURES Figure 1-1 Plan View. Figure 2-1 Geophysical Survey Location Map. Figure 2-2 Electrical Resistivity Tomography on West Bank. Figure 2-3 Electrical Resistivity Tomography on East Bank. Figure 2-4 River Crossing Geotechnical Profile (WP report No. WP0050100, Drawing No. WP0050-CI-DSE-0008). Figure 3-1 Proposed HDD Profile. Figure 3-2 Single Rig Hydraulic Fracture Evaluation Limiting Formation Pressure for Athabasca River pipeline crossing. Figure 3-3 Drill and Intersect Hydraulic Fracture Evaluation Limiting Formation Pressure for Athabasca River pipeline crossing. Figure 3-4 HDD Break-Over Evaluation. APPENDICES Appendix A - Geotechnical Boring Logs by Worley Parsons Appendix B - Engineering Evaluation for the Appendix C - Risk Register Appendix D - Mainline Data Sheet HMM Project 332560 Page iv December 2014 Page 4 of 38

1. INTRODUCTION Hatch Mott MacDonald (HMM) has prepared this HDD design report at the request of NOVA Gas Transmission Ltd. (NGTL) for their proposed crossing of the Athabasca River, as part of the larger Project. The current diameter for the proposed pipeline is NPS 20 (508 mm). Specifically, this report summarizes HMM s evaluation of the design elements and risk discussions (as determined in the information provided) and presents recommendations for enhancing the success of an HDD crossing of the Athabasca River as proposed by Worley Parsons (WP). The drawings and design elements have been prepared by WP and evaluated by HMM with the aid of a completed laboratory assessment and testing analysis performed by WP. The soil boring and samples were obtained during WP s geotechnical investigation program. Discussions on geotechnical and hydrological aspects presented in this design report have been extracted from the WP report No. WP0050100, dated November 24, 2008, entitled McDermott Extension Project : Geotechnical Feasibility Report.. 1.1 ATHABASCA RIVER CROSSING DESCRIPTION The Athabasca River is located in Alberta, north of the city of Fort McMurray within the Bitumont Basin. At the crossing location the Athabasca River is approximately 800 metres wide with the west and east banks rising 35 metres and 55 metres (respectively) above the river. The proposed crossing location and geotechnical borehole locations are shown in Figure 1-1. The plan and profile developed by WP provides for temporary conductor casing pipes to be installed on both sides of the crossing, if necessary. It is believed that the casing pipe on the west side of the Athabasca River crossing (west side of CNRL Road) was intended to support the shallow soils and provide protection for an existing 42-inch water pipeline for Horizon Oilsand Mine (CNRL) and CNRL road. For a single HDD rig attempt, the west side of the crossing is the preferred HDD entry location and pipe staging area. This will allow for installation of the conductor casing on this side of the crossing to protect the water line. The length of this casing pipe is estimated at approximately 40 metres. Since this side of the crossing is the preferred pipe staging area, the drill rig spread would need to be moved to the east side of the crossing prior to product pipe installation. Installation of temporary conductor casings on both sides of the river will likely require use of the drill and intersect installation strategy. This will require setup of HDD rig spreads on both sides of the crossing. The option of using the drill and intersect method will be left up to the HDD contractor, as provided in WP original design of this crossing. Page 1 December 2014 Page 5 of 38

Figure 1-1: Plan View (WP report No. WP0050100, Drawing No. WP0050-CI-DPP-0003). Page 2 December 2014 Page 6 of 38

2. ANTICIPATED GEOTECHNICAL CONDITIONS The following discussions on the anticipated geotechnical conditions are based on the information provided by WP in their crossing-specific geotechnical report. Borehole logs for borings completed to support the design of the crossing the Athabasca River by HDD methods are appended to this design report as Appendix A. The objective of the following discussions is to aid the reader in understanding the various construction risks identified in subsequent sections related to the geotechnical conditions. Greater details on the completed geotechnical investigations can be found in WP s geotechnical report entitled McDermott Extension Project Geotechnical Feasibility Report. 2.1 GEOTECHNICAL OBSERVATIONS Coarse materials such as sands, gravels, and cobbles exist in the overburden soils along the banks of the Athabasca River and at shallow depth within the borings. The overburden is underlain by clay/shale with sandy pockets which is identified as the Clearwater Formation. The Clearwater Formation is underlain by the Wabiskaw Member which separates the Clearwater Formation from the lower McMurray Formation and can act as an aquifer. The Wabiskaw Member outcrops near the level of the river at the crossing location. Beneath the Wabiskaw Member is the McMurray Formation which has been separated into the upper Oil Saturated McMurray Formation and the Basal McMurray. The sands of the Oil Saturated McMurray are saturated with bitumen while the sands of the Basal McMurray tend to be bitumen free. Drilling fluid additives may be required to deal with the presence of bitumen, where encountered. The geotechnical investigation for the Athabasca River crossing was completed by WP between June 2 and September 9, 2008. Through these investigations and a desktop study, WP identified the potential for geohazards such as active landslides on the east bank at the crossing location. A vertical fault, identified as the Sewetakun Fault has also been identified near the crossing location. 2.2 SUBSURFACE GEOTECHNICAL INVESTIGATIONS A total of three (3) geotechnical borings were completed in the vicinity of the crossing location. Summaries of the soil and bedrock conditions for Boreholes BH-E01, BH-E02, and BH-W02 are provided in Tables 2-1 through 2-3, respectively. Locations of each borehole are provided in Figure 1-1. It is understood that Borehole BH-W01 was not completed due to time constraints, as discussed in WP s geotechnical report. Page 3 December 2014 Page 7 of 38

Table 2-1: Summary of the subsurface information for Boring BH-E01. Depth Below Ground Surface (metres) Elevation (metres) Soil / Rock Description and Additional Comments (bgs = below ground surface) From To From To 0.0 0.1 277.2 277.1 Topsoil 0.1 7.0 277.1 270.2 Poorly graded sand Some silt, trace gravel and clay. Possible cobbles and boulders encountered at 1.0m bgs. Laboratory testing at 0.6m, 2.1m, 3.7m, and 5.2m bgs showed 0-5.4% gravel, 73.1-98% sand, 1.5-18.7% silt, and 0.2-2.8% clay. 7.0 14.5 270.2 262.7 Hard fat clay (Clearwater Formation) High plasticity and fissile with some silt. Clayey siltstone layer observed from 9.7-10m bgs. Shale layer observed from 11-13m bgs. (Recovery: 53-100%, avg. 88%; RQD: 0-72%, avg. 33.8%) Table 2-2: Summary of the subsurface information for Boring BH-E02. Depth Below Ground Surface (metres) Elevation (metres) Soil / Rock Description and Additional Comments (bgs = below ground surface) From To From To 0.0 0.1 268.3 268.2 Topsoil 0.1 10.0 268.2 258.3 Silty sand Trace clay, gravel, bitumen, and oxidation observed throughout layer. Laboratory testing at 2.1m, 2.2m, 4.0m, 5.5m, 7.0m, and 8.5m bgs showed 0-1.6% gravel, 46.8-76.6% sand, 21.2-40.7% silt, and 0.3-17.1% clay. 10.0 38.0 258.3 230.3 Hard fat clay (Clearwater Formation) High plasticity with clay/shale and silty clay zones with some cemented siltstone zones. (Recovery: 0-98%, avg. 75.1%; RQD: 0-83%, avg. 51.7%) 38.0 40.0 230.3 228.3 Well cemented sandstone (Wabiskaw Member) Some clay lenses and thin beds of high plasticity clay. (Recovery: 66-98%, avg. 82%; RQD: 51-83%, avg. 67%) 40.0 64.2 228.3 204.1 Mixed fine sand and clay/shale (Oil Saturated McMurray Formation) Occasional cemented zones. Sand is bitumen saturated. Abundant clay beds and laminate observed. (Recovery: 1-100%, avg. 41.2%, RQD: 0-68%, avg. 16.9%) Page 4 December 2014 Page 8 of 38

Depth Below Ground Surface (metres) Elevation (metres) Soil / Rock Description and Additional Comments (bgs = below ground surface) From To From To 64.2 130.0 204.1 138.3 Fine sand and clay/shale (Basal McMurray) Some bitumen observed. Laboratory testing (sampled from cuttings) at 80.5m bgs showed 0% gravel, 77.2% sand, 20.7% silt, and 2.1% clay. Gas encountered at approximately 109m and 117m bgs. Laboratory testing at 115.6m, 121m, 122.6m, 124m, and 125.6m bgs showed 0% gravel, 91.7-97.4% sand, 1.8-6.2% silt, and 0.8-2.6% clay. (Recovery 1 : 0-100%, avg. 26.3%; RQD: 0-100%, avg. 18.7%) Notes: 1 Poor recovery assumed to be contributed to coring in uncemented sands. No fluid loss observed in zones of no recovery. Table 2-3: Summary of the subsurface information for Boring BH-W02. Depth Below Ground Surface (metres) Elevation (metres) Soil / Rock Description and Additional Comments (bgs = below ground surface) From To From To 0.0 0.1 259.7 259.6 Topsoil 0.1 4.2 259.6 255.5 Poorly-graded silty sand Laboratory testing at 0.1m and 2.1m bgs showed 0-0.1% gravel, 54.1-84.4% sand, 10.9-26.9% silt, and 5-18.9% clay. 4.2 26.5 255.5 233.2 Clay/Shale (Clearwater Formation) Occasional silty shale zones with some cemented layers of siltstone observed. Laboratory testing at 4.2m bgs showed 1.2% granular material and 98.8% fines. (Recovery: 35-150%, avg. 89.7%; RQD: 31-108%, avg. 69.5%) 26.5 28.7 233.2 231.0 Well cemented strong sandstone (Wabiskaw Member) (Recovery: 85-91%, avg. 88%; RQD: 75-77%, avg. 76%) 28.7 49.0 231.0 210.7 Mixed fine sand and clay/shale (Oil Saturated McMurray Formation) Sand is bitumen saturated. No recovery from 39.2-40.7m bgs attributed to drilling through uncemented sand. No evidence of fluid loss observed. (Recovery: 0-100%, avg. 84.5%; RQD: 0-84%, avg. 48.4%) 49.0 103.7 210.7 156.0 Mixed fine sand and clay/shale (Basal McMurray) Sporadic bitumen content. H 2 S (36 ppm) and CO (227 ppm) observed at 93.2m bgs. Laboratory testing at 76.7m bgs showed 0% gravel, 62.3% sand, 26.1% silt, and 11.6% clay. (Recovery 1 : 0-100%, avg. 52%; RQD: 0-100%, avg. 22.6%) Notes: 1 Poor recovery assumed to be contributed to coring in uncemented sands. No fluid loss observed in zones of no recovery. Page 5 December 2014 Page 9 of 38

The proposed HDD bore will encounter soil materials similar to the deposits identified in Borings BH-W02 in the vicinity of the HDD entry location on the west side of the Athabasca River. Beneath the river, the HDD bore will encounter oil sands of the Oil Saturated McMurray Formation and Basal McMurray. On the east side of the Athabasca River the bore will encounter deposits similar to those encountered in Borings BH-E01 and BH-E02. 2.3 SUBSURFACE GEOPHYSICAL INVESTIGATIONS A geophysical survey was conducted by WP in the vicinity of the HDD crossing location. This survey consisted of seismic refraction and Electrical Resistivity Imaging (ERI) methods to acquire detailed shallow and deep geophysical interpretations. A boat-based marine seismic reflection survey was also used to complement the seismic refraction and ERI data. In general, the geology of the crossing location, according to the geophysical data, can be interpreted as coarse grained sediments overlying the Clearwater and McMurray Formations on both sides of the crossing. These results appear to be consistent with the information collected with the three (3) geotechnical boreholes completed for this crossing. Results of the geophysical interpretations can be seen in Figures 2-1, 2-2, and 2-3. A geotechnical cross-section based on the geotechnical data from borehole drilling investigations and the geophysical surveys is provided in Figure 2-4. Page 6 December 2014 Page 10 of 38

Figure 2-1: Geophysical Survey Location Map (WP report No. WP0050100, Drawing No. WP0050-CI-DGH-0004). Page 7 December 2014 Page 11 of 38

Figure 2-2: Electrical Resistivity Tomography on West Bank (WP report No. WP0050100, Drawing No. WP0050-CI-DGH-0005). Page 8 December 2014 Page 12 of 38

Figure 2-3: Electrical Resistivity Tomography on East Bank (WP report No. WP0050100, Drawing No. WP0050-CI-DGH-0006). Page 9 December 2014 Page 13 of 38

Figure 2-4: River Crossing Geotechnical Profile (WP report No. WP0050100, Drawing No. WP0050-CI-DSE-0008). Page 10 December 2014 Page 14 of 38

3. ATHABASCA RIVER CROSSING 3.1 SITE CONDITIONS An overview of the crossing is shown in Figure 1-1. At the crossing location, the Athabasca River consists of a single channel that is approximately 800 metres wide. Upstream of the crossing site an incised channel 20 metres deep and filled with weak silt and clay has been observed and should be anticipated at the crossing location. The terrain is relatively flat and open in the vicinity of the proposed entry and exit locations. The surficial soils on either side of this crossing consist of silty sand. The proposed HDD profile is shown in Figure 3-1. The overall true length of the proposed alignment is approximately 1,629 metres. The depth of cover beneath the Athabasca River is approximately 45 metres. A horizontal tangent of approximately 689 metres has been provided in the middle of the bore to maintain sufficient depths of cover and to allow for additional steering prior to initiating the upward curve required to exit the drill. This tangent also provides sufficient space for implementation of the drill and intersect method should it be preferred by the HDD contractor. The alignment has a ground surface elevation difference of approximately 20 metres between the HDD entry and exit locations (west and east locations, respectively). The preferred HDD entry location is on the west side of the river to maintain lower drilling fluid pressures within the HDD bore, thereby reducing the hydraulic fracture risk for this crossing. The west side will also serve as the staging location of the pullback string prior to installation; therefore, the drilling rig will need to be remobilized to the exit location prior to pullback operations. Page 11 December 2014 Page 15 of 38

Figure 3-1: Proposed HDD Profile. Page 12 December 2014 Page 16 of 38

3.2 BORE GEOMETRY AND HDD INSTALLATION CONSIDERATIONS 3.2.1 ENTRY AND EXIT ANGLES HDD operations are typically designed with entry angles between 8 and 16, although steeper entry angles have been used where insufficient setback distance or steeply sloping ground exists for a given alignment. Exit angles are typically lower than a given entry angle, as consideration must be given to product pipe diameter, equipment necessary to transition the product pipe into the bore, and the induced stresses as the pipe is forced through the break-over location as it enters the HDD bore. For the Athabasca River crossing the entry and exit angles for the HDD profile have been set at 14, and 16 (respectively) relative to the horizontal (Figure 3-1). 3.2.2 HORIZONTAL AND VERTICAL CURVATURE Vertical curvature is inherent to all HDD installations. The need for horizontal curvature however, is dependent on the restrictions specific to a single crossing. While horizontal curvature is feasible, the scope of design and construction greatly increases in complexity when horizontal curves are required. The addition of horizontal curvature also increases the stress, and therefore the risk to the product pipe. Steering in both planes is not a standard industry practice and can lead to complex radii and a reduction in the overall bending radius that the product pipe will be subjected to, increasing risk to the product pipe and the overall installation. A straight alignment has been selected for the Athabasca River crossing eliminating risks associated with drilling a horizontal curve. The proposed vertical curve radius of 1,000 metres shown in Figure 3-1 is greater than the HDD industry standard of 1200 times the 508 mm outer diameter of the product pipe. This radius has been taken as the design radius for the project. 3.2.3 INSTALLATION DEPTH The depth of cover for a given HDD installation is dependent on several factors. These include the anticipated geotechnical materials, presence of preferential flow pathways, design bending radius, presence of existing utilities and/or structures, and installation length. The most important factor in determining the appropriate depth of cover for a given HDD installation is the material properties of the overlying geotechnical material and the resistance that it provides against the required installation induced bore fluid pressures necessary to remove the cuttings. Another important factor in establishing the proper installation depth is the ability to maintain bore stability over the course of the installation. This is accomplished by placing the HDD bore through geotechnical materials that are favourable to HDD operations. The minimum depth of cover for the alignment is approximately 45 metres at the thalweg of the river. For construction purposes, this depth of cover should be taken as the minimum allowable depth of cover for the crossing. This depth Page 13 December 2014 Page 17 of 38

of cover places the bore at an elevation of approximately 180 metres beneath the river. For construction purposes, the actual drilled depth should not be less than this depth of cover. Similarly, the maximum depth should consider an allowance of an additional depth of 5 to 10 metres for the actual installation than what has been shown to provide flexibility for steering corrections. 3.2.4 BORE DIAMETER The final diameter of the HDD bore must be greater than the outer diameter of the product pipe to facilitate the flow of drilling fluids around the product pipe, reduce the frictional force acting on the product pipe as it is installed, and to help the product pipe negotiate curves in the alignment. The acceptable HDD industry standard for the final bore diameter is generally 1.5 times larger than the outer diameter of the product pipe (for pipe diameters up to 500 mm) and 300 mm larger than the outer diameter of the product pipe for diameters greater than 500 mm. These guidelines may need to be adjusted based on the anticipated geotechnical conditions and required bore geometry. To increase the likelihood of success, it is highly recommended that the final bore diameter be selected by the Contractor based on their experiences with similar geotechnical materials, pipe diameters, and installation lengths and to suit their means and methods. Based on typical HDD industry standards, the anticipated bore diameter for the NPS 20 (508 mm) product pipe is 762 mm. 3.3 REQUIRED WORKSPACE AND PIPE STAGING AREAS A typical staging area of approximately 60 metres long by 60 metres wide is required at the drill rig site. This area is required to stage equipment necessary for the installation, which includes the drill rig, stacks of drill pipe, operator control cabin, tooling trailers, crane or excavator, separation plant, mud tanks, mud pumps, Baker storage tanks, office trailer, and support trailers. A typical staging area of approximately 30 metres long by 30 metres wide is required to accommodate pipeline installation equipment at the exit location. Larger HDD staging areas have been provided on both sides of the crossing to accommodate drilling from the west to east and installing the product pipe from the west to east as well. In addition to the entry and exit staging areas, a staging area is also required for fabricating sections of the pipe string, and preferably the entire pipe string when possible, prior to installation. A typical pipe staging area requires an area 15 to 25 metres wide by a distance equal to the length of the installation. The west side of the HDD crossing has been selected for staging the product pipe. However, this area does not provide sufficient laydown area to fully fabricate a single pipe string prior to installation with HDD methods. This will require delays for at least one intermediate weld during pullback operations. Page 14 December 2014 Page 18 of 38

3.3.1 LINE AND GRADE ACCURACY The horizontal and vertical position of the bottom hole assembly is tracked using a downhole survey tool, consisting of a probe that utilizes Earth s gravitational and magnetic fields. These tools have a nominal accuracy of approximately: Inclination: +/- 0.1 o Azimuth: +/-0.3 o to 0.5 o Tool-face: +/-0.1 o The accuracy of these tools can be enhanced through the use of a surface wire/coil loop established over the alignment. Inducing an electrical current through the wire creates a localized magnetic field that the probe can then use to determine its location relative to the surveyed coil and magnetic field. These enhanced guidance systems include TruTracker and ParaTrack systems. The Trutracker guidance system relies on a closed loop surveyed wire layout that is at least as wide as the depth of the HDD installation. For river crossings, individual coils are often established on each side of the crossing feature. A ParaTrack system relies on a single wire placed directly over the HDD alignment centerline, with a return wire offset several hundred feet from the alignment to form a closed loop system. When augmented with a surface coil, the lateral and vertical position of the survey probe is plus or minus two (2) percent of the depth separating the location of the probe and the surface coil. Fiber-optic gyroscopic guidance systems have also been used to track downhole tooling. This type of system relies on an inertial measurement unit to calculate the position of the bottom hole assembly and are not affected by magnetic interference. However, this tooling is sensitive to vibrations, which can decrease its effectiveness when drilling through bedrock materials. With all of these methods, survey readings can be taken at the end of each drilled joint or every half of a joint. Stand-alone surveys can be completed where the surface coils are established. Here the inaccuracy is a function of the specific depth of cover at the location in question. Where the surface coils cannot be established such as beneath the river, the position of the bottom hole assembly is built based on the calculated position of the previous measurement. In this manner, any inaccuracy built into the measured position is additive as the drill length increases. However, as the bottom hole assembly reencounters the surface coil on the opposite side of the river, the inaccuracy is once again a function of a stand-alone measurement based on the specific depth of cover at the location in question. 3.3.2 DRILLING FLUID FRESH WATER AND SOURCE HDD operations require a continuous source of water to support construction activities. It is typical for contractors to make use of an onsite source or have water hauled or delivered from a nearby source. In each case the contractor should verify that the water source is suitable for HDD operations or treat it (filtration, ph, etc.) so that it is suitable for use. Page 15 December 2014 Page 19 of 38

For the proposed crossing, the Athabasca River could be used for as a potential source of fresh water to support construction activities. Estimates of fresh water requirements is a function of maintaining drilling fluid flow within the bore during the course of the HDD installation and water requirements to adjust for hole volume, minor losses to processed spoil and surrounding geotechnical materials, wash water, etc. Daily fresh water usage typically ranges from 75 to 150 m3, depending on the process and storage capabilities of the Contractor. Total fresh water requirements can be estimated as a function of the final reamed diameter. Factors of between two (2) and seven (7) times the final reamed diameter have been used to estimate the required fresh water requirements necessary to support HDD operations. Based on a factor of five (5) to account for the high clay content within the shale bedrock, the estimated total water usage (assuming no loss in circulation) is on the order of 3,700 m3. This volume estimate assumes good HDD industry practices and procedures are followed and that no fluid losses occur during the course of the installation. This volume does not include fresh water required for buoyancy control during the HDD installation. Increased water demands may occur where contamination is encountered. 3.4 DISPOSAL OF EXCESS DRILLING FLUID AND PROCESSED SPOILS Excess drilling fluids and processed spoil will need to be disposed during the course of the installation. The direct area around the HDD is not expected to be suitable for permanent disposal (based on Provincial Regulations) of drilling fluid or processed solids. Local temporary storage will be required either in above ground tanks or a lined burrow pit. A suitable offsite disposal site should be located for disposal of drilling fluid and processed spoil, per the Provincial Guidelines. Disposal volumes of excess drilling fluid and spoil are estimated at approximately 3,000 m3 and 1,300 m3, respectively. 3.5 SCHEDULE The duration of the HDD installation (single drill rig option) is conservatively estimated to take a total of 151 shifts to complete (Table 3-1). This estimate is based on a 12-hour shift, regardless of whether 24-hour operations are conducted to complete the crossing. No provisions have been included for pad construction and erection and tear-down of a shelter (if used) in these durations. In addition, no contingency has been provided for weather or harder drilling conditions. Mobilization duration assumes mobilizing equipment from a central staging area located within the site vicinity of the Fort McMurray, Alberta area. The estimated scheduled includes a move around of the drill rig from the west side to the east side, to account for drilling of the pilot bore from the west towards the east and staging the product pipe on the west side. Page 16 December 2014 Page 20 of 38

Table 3-1: Estimated schedule duration for Athabasca River HDD Crossing. Activity Duration (shifts) Mobilization 3 Rig Up / Equipment Setup 5 Temporary Casing Pipe Installation 6 Pilot Bore Drilling 50 Reaming 75 Relocate Drill Rig to East Side 4 Swab Pass 2 Product Pipe Pullback 2 Temporary Casing Pipe Removal 3 Rig Down and Demobilization 5 Total Number of Shifts 155 3.6 PRELIMINARY HDD ENGINEERING EVALUATION 3.6.1 PIPE PROPERTIES The pipeline properties used for the evaluation of the Farrell Creek HDD crossing have been provided by NGTL and are summarized in Table 3-2 below. Table 3-2: Pipeline properties and input parameters for the HDD evaluation. Evaluation Parameter Value Pipe Size NPS 20 Outer Diameter 508 mm Wall Thickness 10.45 mm Pipe Grade Grade 483 Maximum Allowable Operating Pressure 9930 kpa Minimum Operating Temperature -5 C Maximum Operating Temperature 49 C Poisson s Ratio 0.30 Elastic Modulus 207,000 MPa Coefficient of Thermal Expansion 1.2 x 10-6 1/ o C Design Factor 0.8 Location Factor 0.625 Temperature Derating Factor 1.0 Joint Factor 1.0 Page 17 December 2014 Page 21 of 38

3.6.2 DESIGN AND MINIMUM ALLOWABLE BEND RADII As stated previously, the design bending radius for developing the preliminary Athabasca River profile has been established at 1,000 metres, greater than the HDD industry standard of 1,200 times the outer diameter of the project pipe. This bend radius is well above the recommended minimum allowable bend radius established at 610 metres and the ultimate minimum allowable bending radius of approximately 435 metres for the proposed NPS 20 (508 mm) product pipe. Calculations for the minimum allowable bending radius is provided in Appendix B. These calculations are based on a design factor of 0.8 and a location factor of 0.625, yielding a combined design factor of 0.5 (0.8 multiplied by 0.625 equaling 0.5) per CSA Z662-11. 3.6.3 PRELIMINARY HYDRAULIC FRACTURE EVALUATION The hydraulic fracture evaluation for this crossing has been completed in general accordance with the Delft Geotechnics Method outlined in Appendix B of the Army Corps of Engineers 1998 Report CPAR-GL-98 (Installation of Pipelines Beneath Levees Using Horizontal Directional Drilling) by Staheli, et. al. This method is used to estimate the maximum effective pressure (i.e. drilling fluid pressure) that can be induced during an HDD operation within a particular soil horizon. This pressure is then compared with the fluid pressure required to induce slurry flow within the HDD bore to determine the potential for a hydraulic fracture for a given HDD alignment. The required fluid pressure for an HDD installation is governed by the drilling fluid weight (commonly referred to as the mudweight), installation length and depth, and drilling fluid flow properties (plastic viscosity, yield point, etc.). The hydraulic fracture evaluation method described above and used in the HDD industry was developed for soil installations. Currently, no accepted method is available to model/predict the maximum allowable drilling fluid pressure within bedrock materials. While bedrock tensile strength and unconfined compressive strength evaluations have been used to estimate the allowable drilling fluid pressure within bedrock materials, these methods tend to provide results that are not considered suitably conservative and greatly over predict the true maximum allowable drilling fluid pressures. These over-predictions are a result of laboratory testing on sound or high quality bedrock samples that are not representative of the strengths of the weaker bedrock materials that contain natural fractures/joints that are washed out or impacted by the geotechnical coring process. Hence, for the bedrock hydraulic fracture evaluation, HMM has elected to model the Clearwater Formation, Wabiskaw Member, Oil Saturated McMurray Formation, and Basal McMurray as very stiff clay, very dense sand, stiff clayey sand, and dense sand, respectively. This conservative approach has been used by HMM on several HDD installations successfully completed in similar bedrock materials. The Delft Geotechnics Method assumes a uniform column of soil above any point of interest along the alignment. Where an increased risk of hydraulic fracture is identified, it does not necessarily mean that a hydraulic fracture will occur. A proper HDD execution plan based on HDD industry standard construction practices can reduce the risk of a hydraulic fracture from occurring. Page 18 December 2014 Page 22 of 38

In order to complete the hydraulic fracture evaluation it is necessary to make several assumptions relative to the bore diameter, drilling fluid pumping rate, and drilling fluid properties. Parameters used in HMM s evaluation are provided in Table 3-3. These parameters have been selected based on HMM s experience in drilling within similar anticipated geotechnical materials. Table 3-3: Assumptions used for the Athabasca River hydraulic fracture evaluations. Evaluation Parameter Value Pilot Bore Diameter 311 Drill Pipe Diameter 168 mm Drilling Fluid Pumping Rate 2.3 m 3 /min Drilling Fluid Weight (Specific Gravity) 1.32 Yield Point 129.3 dyne/cm 2 Plastic Viscosity 18 cp In addition to the assumptions provided in Table 3-3 (above), assumptions are also required for the anticipated soil formation(s) and their properties including, but not limited to soil strength, unit weight, cohesion, friction angle, and shear modulus. These assumptions are provided in Tables 3-4 through 3-8 for the varied subsurface materials that are anticipated for this crossing. For this evaluation, HMM assumes that the encountered subsurface material will consist of silty sand over medium hard shale and clayey sand on the west side of the crossing, dense sand in the middle of the crossing, and silty sand over medium hard shale and clayey sand on the east side of the crossing. For the following evaluation, two scenarios have been investigated. The first assumes a single HDD rig is located on the west side of the crossing and the second assumes drill and intersect installation methods. Table 3-4: Material property assumptions for the overburden soils. Evaluation Parameter Value Soil Unit Weight Above / Below Water 18.9 kn/m 3 / 20.4 kn /m 3 Effective Cohesion 0 kpa Internal Friction Angle 30 Young s Modulus 35,000 kpa Poisson s Ratio 0.30 Page 19 December 2014 Page 23 of 38

Table 3-5: Material property assumptions for the Clearwater Formation. Evaluation Parameter Value Soil Unit Weight Above / Below Water 17.3 kn/m 3 / 18.9 kn /m 3 Effective Cohesion 191.5 kpa Internal Friction Angle 0 Young s Modulus 60,000 kpa Poisson s Ratio 0.33 Table 3-6: Material property assumptions for the Wabiskaw Member. Evaluation Parameter Value Soil Unit Weight Above / Below Water 19.6 kn/m 3 / 21.2 kn /m 3 Effective Cohesion 0 kpa Internal Friction Angle 36 Young s Modulus 70,000 kpa Poisson s Ratio 0.30 Table 3-7: Material property assumptions for the Oil Saturated McMurray Formation. Evaluation Parameter Value Soil Unit Weight Above / Below Water 19.6 kn/m 3 / 21.2 kn /m 3 Effective Cohesion 0 kpa Internal Friction Angle 30 Young s Modulus 45,000 kpa Poisson s Ratio 0.30 Table 3-8: Material property assumptions for the Basal McMurray. Evaluation Parameter Value Soil Unit Weight Above / Below Water 19.6 kn/m 3 / 21.2 kn /m 3 Effective Cohesion 0 kpa Internal Friction Angle 32 Young s Modulus 50,000 kpa Poisson s Ratio 0.30 The results of the single rig hydraulic fracture evaluation for the proposed crossing are provided in Figure 3-2 for the pilot bore phase of the installation process. As shown in the figure, the required bore pressure to facilitate the installation process is below the allowable bore pressure for the majority of the installation. Only in the vicinity of the entry and exit locations does the required bore pressure approach the allowable bore pressure of the overlying soil. The increased risk in the vicinity of the HDD exit area on the east side of the crossing represents a normal risk common to all HDD installations and arises as the pilot bore is steered downward from the entry location or upwards Page 20 December 2014 Page 24 of 38

towards the drill rig exit location while the depth of cover above the bore increases near the entry and continually decreases approaching the exit location. A mitigation measure that has worked well on previous HDD installations is to decrease the pumping rate to theoretical volumes thereby eliminating any excess drilling fluids available for hydraulically fracturing the overlying geotechnical materials. The results of the drill and intersect hydraulic fracture evaluation for the proposed crossing are provided in Figure 3-3 for the pilot bore phase of the installation process. As the pilot bore progresses from either side the required drilling fluid pressure increases. As shown in Figure 3-3, the required bore pressure to facilitate the installation process is well below the allowable bore pressure for the installation. Once the pilot bore is completed, the hydraulic fracture risk associated with the reaming, swab, and pullback phase of the installation typically decreases, assuming the bore is reamed to its full extent and a subsequent swab pass is completed through the bore prior to installing the product pipe. However, it is important to note that although the hydraulic fracture potential is significantly reduced, a hydraulic fracture event may still occur during the reaming pass if the bore becomes plugged or blocked such that the required drilling fluid pressure increases in magnitude to the point where it exceeds the estimated allowable mud pressure for the overlying soils. HDD industry standard construction practices, such as pumping sufficient drilling fluids, maintaining drilling fluid returns, monitoring and maintaining drilling fluid and returning slurry properties, etc., should decrease this potential. Page 21 December 2014 Page 25 of 38

7000 West Side Rig Side Pipe Side EastSide 300 6000 280 Fluid Pressure (kpa) 5000 4000 3000 2000 260 240 220 200 180 Elevation (m) 1000 160 0 140 0+000 0+100 0+200 0+300 0+400 0+500 0+600 0+700 0+800 0+900 1+000 1+100 1+200 1+300 1+400 1+500 1+600 Station (m) Pallowable Prequired Ground Surface Bore Profile Figure 3-2: Single Rig Hydraulic Fracture Evaluation Limiting Formation Pressure for Athabasca River pipeline crossing. Page 22 December 2014 Page 26 of 38

7000 West Side Secondary Rig Side Pipe Side East Side Primary Rig Side 300 6000 280 Fluid Pressure (kpa) 5000 4000 3000 2000 260 240 220 200 180 Elevation (m) 1000 160 0 140 0+000 0+100 0+200 0+300 0+400 0+500 0+600 0+700 0+800 0+900 1+000 1+100 1+200 1+300 1+400 1+500 1+600 Station (m) Pallowable Prequired Ground Surface Bore Profile Figure 3-3: Drill and Intersect Hydraulic Fracture Evaluation Limiting Formation Pressure for Athabasca River pipeline crossing. Page 23 December 2014 Page 27 of 38

3.7 HDD INSTALLATION LOADS AND OPERATING STRESSES EVALUATION 3.7.1 HDD PULLBACK LOADS AND STRESSES A total of six (6) pull load evaluations were completed for the proposed bore profile. These calculations are based on a modified version of the installation load calculation method provided in American Society of Civil Engineer MREP 108 (2005) and the Pipeline Research Committee at the American Gas Association publication entitled Installation of Pipelines by Horizontal Directional Drilling, an Engineering Guide. The modification includes inclusion of an updated fluidic drag calculation based on observed drilling fluid properties and the anticipated bore diameter. The pull load evaluation includes assumptions for final bore diameter, soil and pipe roller friction coefficients, drilling fluid yield point and plastic viscosity, drilling fluid pumping rate, and other installation parameters such as buoyancy control measures (i.e., whether or not the pipe will be filled with water during pullback operations). In addition, the evaluation accounts for the capstan effect induced by curves in the alignment, fluidic drag, buoyancy of the pipe string within the bore, and the weight of the tail string at startup and throughout the installation process. Six (6) installation evaluations have been completed to investigate the effects of varying mud weights and buoyancy control measures during the installation of the product pipe. The six (6) scenarios evaluated include: Case 1: Drilling Fluid Weight 10 ppg (Specific Gravity of 1.20) Product Pipe No buoyancy control (pipe empty of water) Case 2: Drilling Fluid Weight 10 ppg (Specific Gravity of 1.20) Product Pipe Full buoyancy control measures (pipe full of water) Case 3: Drilling Fluid Weight 11 ppg (Specific Gravity of 1.32) Product Pipe No buoyancy control (pipe empty of water) Case 4: Drilling Fluid Weight 11 ppg (Specific Gravity of 1.32) Product Pipe Full buoyancy control measures (pipe full of water) Case 5: Drilling Fluid Weight 12.0 ppg (Specific Gravity of 1.44) Product Pipe No buoyancy control (pipe empty of water) Case 6: Drilling Fluid Weight 12.0 ppg (Specific Gravity of 1.44) Product Pipe Full buoyancy control measures (pipe full of water) A summary of the pull load evaluation for each pull load scenario is provided in Table 3-9. Detailed calculations are provided in Appendix B. The anticipated installation loads shown in Table 3-9 are well below the ultimate allowable load of the steel product pipe of approximately 6,316 kn (1,419,893 lb), based on a tensile stress equivalent to 80 percent of the yield stress. It is important to note the difference in pull loads when buoyancy control measures are implemented and water is added to the product pipe during pullback, as the Page 24 December 2014 Page 28 of 38

estimated installation loads are much lower when buoyancy control measures are used. Drilling Fluid Specific Gravity Table 3-9: Summary of anticipated HDD pullback loads. Product Pipe Buoyancy Condition Estimated Pullback Force (kn) Initial Start-Up Force-String 1 (kn) Initial Start-Up Force-String 2 (kn) 1.2 (Case 1) Empty 1,290 309 1,795 1.2 (Case 2) Full 928 309 1,351 1.3 (Case 3) Empty 1,445 309 1,986 1.3 (Case 4) Full 905 309 1,347 1.4 (Case 5) Empty 1,599 309 2,177 1.4 (Case 6) Full 932 309 1,399 The results of the installation stress evaluation based on a design radius of 1,000 metres is summarized in Table 3-10. Table 3-10: Summary of HDD installation stress evaluation at the design bending radius of 1,000 metres. Stress Condition Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Maximum Tensile 78.9 MPa 56.8 MPa 88.3 MPa 55.4 MPa 97.7 MPa 57.0 MPa Stress (16.3%) (11.8%) (18.3%) (11.5%) (20.3%) (11.8%) (Percent of Allowable) Maximum Bending Stress (Percent of Allowable) Maximum Hoop Stress (Percent of Allowable) Maximum Unity Check Tensile and Bending Maximum Unity Check Tensile, Bending, and Hoop 52.6 MPa (10.9%) 27.8 MPa (5.8%) 52.6 MPa (10.9%) 27.8 MPa (5.8%) 52.6 MPa (10.9%) 30.5 MPa (6.3%) 52.6 MPa (10.9%) 30.5 MPa (6.3%) 52.6 MPa (10.9%) 33.3 MPa (6.9%) 52.6 MPa (10.9%) 33.3 MPa (6.9%) 0.37 0.31 0.40 0.31 0.42 0.31 0.47 0.41 0.55 0.47 0.65 0.54 3.7.2 INSTALLATION AND OPERATING STRESS EVALUATION Evaluation of operating loads for pipelines installed by HDD methods is generally similar to the evaluation for pipelines installed by open-cut construction methods. The main difference between the two scenarios is that the condition of elastic bending has to be considered for HDD installations. Elastic bending stresses occur as the product pipe takes on the final shape of the HDD bore. As a rule, the bending stresses induced are not a critical stress condition on its own, but must be considered in a combined loading condition with other stress conditions such as hoop stress and longitudinal stress. The operating stress evaluation has been completed in compliance with the Page 25 December 2014 Page 29 of 38

American Society of Mechanical Engineers B31.4 and B31.8 and CSA Z662-11 (Revised August 2013). The input parameters for this analysis are provide Table 3-2. The results of the evaluation are provided below in Table 4-11 and are based on the minimum allowable bending radius of 610 metres. This is to account for the minimum allowable bending radius established for the HDD contractor, as noted on the HDD drawings. Detailed calculations are provided in Appendix B. Table 3-11: Summary of HDD operating stress evaluation. Percent of SMYS 1 (%) Maximum Allowable Percent of SMYS 1 (%) Estimated Stress Stress Condition (MPa) Longitudinal Bending Stress 86.2 17.9 -- Hoop Stress 241.0 49.9 50 (2) Longitudinal Tensile Stress from Hoop Stress 72.3 15.0 -- Longitudinal Stress from Thermal Expansion -128.6 26.6 90 (3) Net Longitudinal Stress (Compression Side of the Curve) -142.5 29.5 90 (4) Net Longitudinal Stress (Tension Side of the Curve) 29.9 6.2 90 (4) Maximum Shear Stress 191.7 39.7 45 (3) Combined Biaxial Stress 383.5 79.4 90 (4) Notes: 1 Specified Minimum Yield Stress 2 Limited by design factor multiplied by location factor (0.8 x 0.625 = 0.5) per CSA Z662-11 3 Limited by ASME B31.4 4 Limited by ASME B31.8 3.8 BREAK-OVER STRESS AND OVER-BEND STRESS EVALUATIONS 3.8.1 BREAK-OVER STRESS EVALUATION Stresses are induced within the product pipe as it transitions from above ground into the completed HDD bore. This stress is commonly referred to as the break-over stress and is temporary. A break-over stress evaluation was completed to evaluate pipe supports, loads and pipe stresses while the product pipe is pulled into the HDD bore. The evaluation was performed utilizing Autopipe Version 9.6 and reflects the stresses and loads induced within the product pipe as it transitions from the staging area on the ground surface, into the air, and into the HDD bore. Input parameters include the pipe properties provided in Table 3-2, site-specific topography, staging area constraints, and the HDD bore geometry. In addition, a support spacing of 30 m, an allowable bending radius of 300 m (based on an non-pressurized pipe configuration), and the weight of a 200-mm diameter highdensity polyethylene water line installed within the product pipe for buoyancy Page 26 December 2014 Page 30 of 38

control were incorporated into the evaluation. It is assumed that the portion of the product pipe above ground will not be filled with water (for buoyancy control). Break-over stresses are determined by deforming the product pipe into the required break-over geometry as shown with the assumed pipe supports in Figure 3-4. The resultant pipe stresses are provided in Table 3-12. Table 3-12: Summary of break-over stress evaluation. Lifting Point Induced Pipe Stress (MPa) Percent of SMYS 1 (%) 1 324 67.1 2 170 35.2 3 89 18.4 Notes: 1 Maximum allowable percent of SMYS is 80 percent per CSA Z662-11 Support loads associated with each lifting point are provided in Table 3-13. Table 3-13: Summary of support load evaluation. Lifting Point Lifting Height (mm) Support Load (kn) Support Load (Kg) 1 4000 63 6,500 2 4000 48 4,900 3 2000 62 6,300 It should be noted that the support and lift heights shown in Figure 3-4 have been prepared for use as a guide for the Contractor in preparation of their sitespecific work plan. The Contractor should be required to verify their sitespecific lifting plan and confirm the break-over induced stresses are within acceptable limits based on their means and methods and specific equipment. Page 27 December 2014 Page 31 of 38