Canadian Natural: Construction Milestone on Horizon Oil Sands Project

Canadian Natural Resources Limited says during the first quarter of 2006, we achieved major construction milestones sooner than expected and our safety performance remained ahead of target, commented Real Doucet, Senior Vice-President, Oil Sands. "The placement of the four coke drums, each weighing 400 tonnes, was completed. We placed our first piperack module on its foundation and continue to place modules on an ongoing basis. Additionally, with the new 40m3 hydraulic shovel being commissioned, we expect to clear sufficient overburden to enable the start of the construction of the Ore Preparation Plant on schedule in the second quarter. While our progress to date, which has been achieved despite numerous challenges, remains on budget and ahead of schedule, we recognize there will be continued challenges due to the high level of economic activity currently being experienced in Alberta and as a result of last fall's strategic decision to defer the award of several contracts. These contract packages have since been adjusted to better suit the contractor marketplace and many have recently been awarded near the original budgeted values. This has resulted in keeping project costs in line and maintaining the overall project schedule. Still, some project costs are now forecast to be higher than budgeted. Construction fuel costs associated with natural gas are $44 million higher than budget, and those associated with diesel are $36 million higher than budget, both due to higher commodity prices existing in today's environment. We are, however, still within our $6.8 billion cost estimate and are continuing to meet the challenges associated with managing the Horizon Project."

                                   March 31, 2006      June 30, 2006
                                 -----------------     --------------
                                   Actual    Plan               Plan
                                   ------    -----              -----
Phase 1 - Work progress
 (cumulative)                          26%     22%                31%
Phase 1 - Construction
 capital spending (cumulative)         27%     29%                39%

Accomplished During the First Quarter of 2006

Detailed Engineering

- Completed 60% of detailed engineering model reviews in all areas.

- Completed hazard and operability reviews for all plants, a major hurdle to ensure scope changes are not required.


- Awarded in excess of C$200 million of contracts and purchase orders in the quarter bringing awards-to-date to over C$4 billion, with a further C$600 million in various stages of the tender process.

- Awarded key mechanical contracts for Bitumen Production.

- Completed "Contractor Open House" sessions across Canada to attract new contractors and skilled trades people to the oil sands industry. Over 300 contractors participated in these sessions.

- Completed transport of the naphtha reactor to site from the rail staging area south of Fort McMurray.

- Site assembly of gas oil and distillate reactors on track for completion in the fourth quarter.

- Issued purchase orders for long lead equipment (cokers and reactors) for Phase 2 and 3 Upgrading.


- Delivered 164 oversized loads to site, out of approximately 1,500 total loads to be delivered during the construction period.


- Site safety performance remains ahead of benchmarked targets.

- Delivered four coke drums to site as planned and erected on schedule.

- Started setting of piperack modules on foundations.

- Commissioned operation of permanent water and waste water treatment plants.

- Main administration building, security building, plant maintenance shop and fire hall were completed and occupied.

- Mine overburden removal has moved 10.8 million bcm (bank cubic meters) compared to a plan of 10.4 million bcm with commissioning of a new 40m3 hydraulic shovel planned for the second quarter.

- Completed 98% of site preparation and undergrounds.

Milestones for the Second Quarter of 2006

- Overall detailed engineering to surpass 80% completion.

- Occupancy of the second of three camps.

- New 40m3 shovel expected to be in operation for mine overburden removal.

- Occupation of Mine Overburden Administration and Maintenance Facility to take place.

- Ore Preparation Plant site turnover by Mining to Bitumen Production.

Canadian Natural is a senior oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore West Africa.


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