FORM 10-K IMPERIAL OIL LIMITED

Chemicals
The Company’s Chemicals operations manufacture and market ethylene, benzene, aromatic and
aliphatic solvents, plasticizer intermediates and polyethylene resin. Its major petrochemical and polyethylene
manufacturing operations are located in Sarnia, Ontario, adjacent to the Company’s petroleum refinery.
There is also a heptene and octene plant located in Dartmouth, Nova Scotia.
The Company’s average daily sales of petrochemicals during the five years ended December 31, 2004,
were as follows:
2004 2003 2002 2001 2000
(thousands a day)
Petrochemicals:
Tonnes............................................................. 3.3 3.3 3.5 3.3 3.1
Tons................................................................ 3.6 3.6 3.9 3.6 3.4
Research
In 2004, the Company’s research expenditures in Canada, before deduction of investment tax credits,
were $40 million, as compared with $36 million in 2003 and $50 million in 2002. Those funds were used
mainly for developing improved heavy crude oil recovery methods and better lubricants.
A research facility to support the Company’s natural resources operations is located in Calgary, Alberta.
Research in these laboratories is aimed at developing new technology for the production and processing
of crude bitumen. About 40 people were involved in this type of research in 2004. The Company also
participated in bitumen recovery and processing research for tar sands development through its interest in
Syncrude, which maintains research facilities in Edmonton, Alberta and through research arrangements with
others.
In Company laboratories in Sarnia, Ontario, research is mainly conducted on the development and
improvement of lubricants and fuels. About 120 people were employed in this type of research at the end
of 2004. Also in Sarnia, there are about 15 people engaged in new product development for the Company’s
and Exxon Mobil Corporation’s polyethylene injection and rotational molding businesses.
The Company has scientific research agreements with affiliates of Exxon Mobil Corporation which
provide for technical and engineering work to be performed by all parties, the exchange of technical
information and the assignment and licensing of patents and patent rights. These agreements provide
mutual access to scientific and operating data related to nearly every phase of the petroleum and
petrochemical operations of the parties.
Environmental Protection
The Company is concerned with and active in protecting the environment in connection with its various
operations. The Company works in cooperation with government agencies and industry associations to deal
with existing and to anticipate potential environmental protection issues. In the past five years, the Company
has spent about $825 million on environmental protection and facilities. In 2004, the Company’s capital
expenditures relating to environmental protection totaled approximately $130 million, and are expected to
be about $350 million in 2005. The increased environmental expenditures over the past three years primarily
reflect spending on two major projects. One project completed in 2004, costing $600 million, reduced
sulphur in motor gasolines, meeting a requirement of the Government of Canada a year in advance. The
second project underway in 2004 is to meet a new Government of Canada regulation requiring ultra-low
sulphur on-road diesel fuel commencing in 2006 and which is to be fully implemented in 2007. In 2004,
there were capital expenditures of about $90 million on this second project, which is expected to cost about
$500 million when completed. Capital expenditures on safety related projects in 2004 were approximately
$20 million.
Human Resources
At December 31, 2004, the Company employed full-time approximately 6,100 persons compared with
about 6,300 at the end of 2003 and 6,500 at the end of 2002. About eight percent of those employees
are members of unions. The Company continues to maintain a broad range of benefits, including illness,
disability and survivor benefits, a savings plan and pension plan.
Competition
The Canadian petroleum, natural gas and chemical industries are highly competitive. Competition includes
the search for and development of new sources of supply, the construction and operation of crude
oil and refined products pipelines and the refining, distribution and marketing of petroleum products and
chemicals. The petroleum industry also competes with other industries in supplying energy, fuel and other
needs of consumers.
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