The Petroleum Registry of Alberta Energizing the flow of information

1. The Petroleum Registry of AlbertaEnergizing the flow of information Registry Information Session September 21, 2006

2. Agenda • Registry Pipeline Splits Initiative • DOE Oil Penalty Shadow Billing • EUB Water Reporting • Did You Know? • Changes to the Registry Allocation OAF & WIO Reports • New “Report” Button on Query Volumetric Screen • TCPL Split and Invoice Changes • New DOE RMF2 Report • Changes to the Ministry Invoices & Statements area • DOE Report Package Name Changes • Strong Passwords • Questions

3. 1. Registry Pipeline Splits Initiative

4. 1. Topics • Registry Pipeline Splits: Backgrounder • Introducing: “Full” and “Lite” Registry Splits • Overview of “Current”, “Full” and “Lite” Approaches • Project Status and Benefits • Non-participating Pipeline Option • Next Steps

5. 1a. Registry Pipeline Splits: Backgrounder • Pipeline splits is the process where operators report to Pipelines, Owners, Shippers and Purchasers their share of sales volumes delivered to the pipeline each month. • The Registry splits process was developed and in place at Registry go-live October 2002, but full implementation was deferred. • Industry currently uses Registry split capability for: • APMC reporting (mandated) • Partner Reporting (optional) • IBC has ranked extended Registry splits as a high priority initiative for many years.

6. 1a. Registry Pipeline Splits: Backgrounder • In discussions with pipeline companies, it is clear that two models for Registry split reporting are required: Full and Lite Participation Models. • There are benefits to loading pipeline splits to the Registry, even for “Non-participating” pipelines. • The IBC, RAC, RSC, CAPP and SEPAC have endorsed an initiative to facilitate “Full”, “Lite” and “Non” Participation models in the Registry. • A project is currently underway to make required changes to the Registry. • Communication plans are in place to assure all stakeholders are ready for the change.

7. 1b. Introducing: “Full” and “Lite” Registry Splits • “Full” Approach • Pipelines will provide Estimated Splits and receive Operator-prepared Splits exclusively through the Registry. • The Registry will provide Splits results to Shippers, Owners, and Purchasers at the appropriate level of detail (e.g. total, or at a well level).

8. 1b. Introducing: “Full” and “Lite” Registry Splits • “Lite” Approach • The pipeline will communicate Estimated Splits and receive Operator prepared Splits outside the Registry using existing pipeline processes…plus standardized “Registry-like” (XML, CSV) batch uploads and downloads. • Operators will upload “confirmed” split results to the Registry. The Registry will make Splits results available to Shippers, Owners, and Purchasers at the appropriate level of detail (e.g. total, or at a well level).

9. 1c(i). Current Pipeline Splits Process Delivering Facility Operator 6 Registry 5 WIO’s 3 2 4 1 Purchasers Pipeline or Terminal Operator 7 Shippers

10. 1c(i). Current Pipeline Splits Process • The Pipeline or terminal operator reports volumes to be split, expected shippers and estimates and forecasted split volumes via fax to the Delivering facility operator (or CSO). • The Delivering facility operator calculates the pipeline split and reports the volumes for each shipper back to the pipeline or terminal operator via fax (Part A of split file). • The Delivering facility operator reports to each shipper their share of the split volume. (subset of Part A of split file). • The Delivering facility operator reports to each purchaser their share of the split volume. (subset of Part A & part B of split file).

11. 1c(i). Current Pipeline Splits Process 5. The Delivering facility operator reports to each owner their share of the split volume at the well/stream level. (subset of Part A & part B of split file). 6. The Delivering facility operator reports to the Registry the APMC (shipper) share of the split volume to the Registry. Only applicable for Oil. 7. The pipeline or terminal operator reports to each shipper their share of the split volume as reported to them by the delivering operator. * The pipeline split data reported by Industry can be broken into two parts: • Part A – Details the volumes for each shipper. • Part B – Details the volumes under each shipper for each owner, purchaser, and lists the applicable well/stream IDs.

12. 1c(ii). “Full” Pipeline Splits Process Delivering Facility Operator 3 WIO’s 2 4d Registry 4c Purchasers Pipeline or Terminal Operator 1 4a 4b Shippers

13. 1c(ii). “Full” Pipeline Splits Process • The Pipeline or terminal operator reports volumes to be split, expected shippers and estimates and forecasted split volumes to the Registry. • The Delivering facility operator (or CSO) retrieves the pipeline split data from the Registry. • The Delivering facility operator calculates the pipeline split and reports the volumes for each shipper, owner, purchaser and well/stream ID information (Part A & B of split file) to the Registry.

14. 1c(ii). “Full” Pipeline Splits Process 4. The Registry creates reports for: • the pipeline or terminal operator • the shippers including the APMC • the purchasers • the owners * The pipeline split data reported by Industry can be broken into two parts: • Part A – Details the volumes for each shipper. • Part B – Details the volumes under each shipper for each owner, purchaser, and lists the applicable well/stream IDs.

15. 1c(iii). “Lite” Pipeline Splits Process Delivering Facility Operator WIO’s 5c 4 2 3 1 Registry 5b Purchasers Pipeline or Terminal Operator 5a Shippers 6

16. 1c(iii). “Lite” Pipeline Splits Process • The Pipeline or terminal operator reports volumes to be split, expected shippers and estimates and forecasted split volumes to the Delivering facility operator (or CSO). • The Delivering facility operator calculates the pipeline split and reports the split volumes to the Pipeline or terminal operator. Includes the shipper level details only (Part A of split file). • The Pipeline or terminal operator confirms the split is correct and supplies a confirmation number to the Delivering facility operator. • The Delivering facility operator reports the pipeline split data to the Registry including the confirmation number. Includes all details regarding shippers, owners, purchasers and well/stream Ids (Part A & B of split file).

17. 1c(iii). “Lite” Pipeline Splits Process 5. The Registry creates reports for: • the shippers including the APMC • the purchasers • the owners 6. The pipeline or terminal operator reports to each shipper their share of the split volume as reported to them by the delivering operator. * The pipeline split data reported by Industry can be broken into two parts: • Part A – Details the volumes for each shipper. • Part B – Details the volumes under each shipper for each owner, purchaser, and lists the applicable well/stream IDs.

18. 1d. Project Status and Benefits Current Status: • Registry pipeline splits will be implemented on a pipeline-by-pipeline basis over time. • Pembina intends to use the “Full” Registry Splits approach, exclusively, for all their pipelines. • A smaller Pembina pipeline will be used for a “pilot project”, targeted for March/April 2007 implementation. • TCPL to utilize “Lite” Registry approach (subject to review with TTFP Committee). • Implementation timing is subject to confirmation, but is expected to be in place before the end of 2007.

19. 1d. Project Status and Benefits Current Status: • ATCO has indicated their strategic intent to use the “Lite” Registry approach. • Other pipelines have expressed interest and support for Registry splits. The IRT will work with any pipeline interested in exploring these Registry options. Support and encouragement from the pipeline customers will accelerate the adoption of the Registry approach and help to standardize this business process across Industry.

20. 1d. Project Status and Benefits Project Benefits: • Standardized processes to electronically upload splits (to the pipeline or to the Registry) from users’ PA vendor systems or spreadsheets (versus keying and faxing). • Reduced partner reporting distribution costs (“It’s in the Registry”). • Access to data in electronic format.

21. 1d. Project Status and Benefits Project Benefits: • Reduced data chasing. • Reduced time spent keying or writing out split data. • Reduced time identifying and correcting errors due to re-keying/rewriting mistakes. • Industry can confirm that “ROYALTY” reported in volumetrics and APMC pipeline split volumes are reconciled.

22. 1e. Non-participating Pipeline Option • A number of companies have for some time uploaded all pipeline split information (oil and gas) to the Registry for partner reporting purposes. • While the Pipeline Split Adjustment project will greatly facilitate this process, a number of vendor systems are already set up to accommodate this activity…and the Registry can accept .CSV uploads as well. • You may want to consider loading splits now to get a head start on communicating splits to partners through the Registry.

23. 1f. Next Steps • CAPP and SEPAC executive committees have endorsed this initiative. Registry change costs will be borne by Industry through a draw on past IRT surpluses and a voluntary billing. • A pipeline splits billing will be included as part of an overall Industry (IRT) billing to producers later in the Fall. • The Registry team and Fujitsu are well advanced in the development process, and are on-budget, on-time for the March 07 completion target. • The IRT will continue to work with PA system vendors to encourage and support their full participation. • Communication plans are in place to assure all stakeholders are aware and ready for the change. • The Registry Training System will be updated to reflect these changes.

24. 2. DOE Oil Penalty Shadow Billing

25. 2. DOE Oil Penalty Shadow Billing Background • Alberta Energy implemented new Petroleum Marketing Regulation on July 11, 2006. • No change to existing oil royalty delivery process and reporting requirements. • Regulation does include provisions for non-compliance penalties and interest on unpaid invoices. • Several Information sessions have been held, additional sessions to follow.

26. 2. DOE Oil Penalty Shadow Billing Background • Non-Compliance penalty shadow billing commenced with the July 2006 production period and will continue for six months. • Shadow billing reports are available in the Registry – Ministry Invoices and Statements area. • Dates on when shadow billing reports are available is being added to the monthly Registry reporting calendar.

27. 2. DOE Oil Penalty Shadow Billing Penalty Type Summary • Reporting type penalties: • Late/Non-reporting of current month Crown royalty splits • Inaccurate reporting of current month Crown royalty splits • Failure-to-submit amended records for previously overdelivered volumes • Over/Under delivery as compared to DOE Oil royalty calculation.

28. 2. DOE Oil Penalty Shadow Billing Benchmarking – Overall Statistics • August Reporting - $168,123.69 • Late/Non-reporting - $26,000 • Inaccurate reporting - $13,100 • Under/Over delivery - $129,023.69 • Failure to Amend – Not applicable for August reporting • Initiative - Comparative penalty ratios have been distributed to Registry Change Leaders, contact Registry Service Desk.

29. Average # of Penalties per Operated Facility Based on Shadow Billing Charges for the August 2006 Reporting Period Penalty Types included: - Late/Non-reporting of current month royalty splits - Inaccurate current month royalty split reporting - Over/Under delivery as compared to DOE royalty calculation Does not include Penalties for Failure-to-Amend Over-deliveries (not applicable) 2.50 2.00 1.50 1.00 0.50 0.00 1 6 146 171 151 156 161 166 176 141 131 136 126 121 101 111 116 106 96 21 31 36 41 46 51 56 61 66 71 76 81 86 91 11 16 26 Company

30. 2. DOE Oil Penalty Shadow Billing Clarification Points • Failure-to-submit overdelivery amendment penalties not applicable until October. • First request for amendments was communicated at the end of August via Reconciliation report • With a (approx) 60 day deadline, no amendment deadlines are reached until the end of October • Current Benchmarking statistics, as a result, do not include this penalty type

31. 2. DOE Oil Penalty Shadow Billing Clarification Points • Shadow Billing Penalty reports are available at two separate points in the monthly cycle. • Due to timing of the availability of information. • Reporting type penalties – available upon the completion of Crown split verification process • Generally around the 20th of each month • Delivery type penalties – available upon receipt of the DOE royalty calculation • Generally at the end of each month

32. 2. DOE Oil Penalty Shadow Billing Clarification Points • Overdelivery amendment penalties are unrelated to initial over delivery penalty. • Once overdelivery occurs, it cannot be “reversed”, only penalty liability can be questioned via an appeal • Occurrence of initial overdelivery also results in a request for an amendment to trigger financial settlement • If applicable deadline passes (approx 60 days), a failure-to-amend penalty is charged

33. 2. DOE Oil Penalty Shadow Billing Clarification Points • Overdelivery claim processing where original reported delivery volume did not match Crown Shipper’s Balance • PRA - Edit TAOC functionality updated to provide a warning rather than error message when the Claim volume plus Overdelivery is greater or less than the APMC volume • Claim volume should always be adjusted to equal DOE royalty calculation • Special circumstances, contact DOE

34. 2. DOE Oil Penalty Shadow Billing Clarification Points • Error in previous communication of Over/Under delivery penalty maximum. • Incorrectly used a maximum penalty of $5,000 rather than $10,000 per BA monthly • This impacted only five BAs in the first month of shadow billing • Updated guidelines have been posted and revised Information session presentation distributed

35. 2. DOE Oil Penalty Shadow Billing Penalty Appeals • General list of appealable items were agreed to with Industry during Consultation • Underlying appeals principle for over/under delivery penalties established: • If a royalty variable has changed since last communicated by the DOE • Reporting type penalty appeals will generally be due to system deficiencies or Acts of God (Waivers)

36. 2. DOE Oil Penalty Shadow Billing Penalty Appeals • Specific forms used and procedure for submission are under development. • Industry will be consulted during process development. • “Decision tree” type document will be developed for Industry use for determining whether a cause is appealable. • An additional round of Information/Training sessions will be offered.

37. 2. DOE Oil Penalty Shadow Billing Upcoming Training Session(s) September 26th, 1:30 – 3:00 pm AMEC Place, 801, 6th Ave SW Contact David Creig for registration at: (403) 297-5480 or david.creig@gov.ab.ca Additional Resources Petroleum Marketing Guidelines www.energy.gov.ab.ca/862.asp

38. 3. EUB Water Reporting

39. 3. Topics • Background • Daily Operations & Reporting • Volumetric Reporting Deficiencies • We Need to Solve the Problem • Water Balance/Water Management • Water for Life • Water Management: Timeline • Water Management: Summary

40. 3a. Background Why Water …. We Need to Manage our Water resources now. • Demand for water (Industrial, Residential, Agriculture, etc) continues to increase. • Alberta Environment is reassessing allocation policy; aligning water use with allocations. i.e. Oil Field Injection use is less then allocation. • Unconventional Gas Production (CBM) impacting ground water management because of potential for fresh water production or contamination.

41. 3b. Daily Operations & Reporting Creating new subtype to track Brine production reporting New battery subtype of 903 – Brine Production • Expected implementation date: Dec 2006 • Allows the reporting of Brine • Brine production for commercial use • Benefit to DOE Brine audit • Today business rules do not exist to allow a Brine well to be linked to a facility; therefore volumetrics cannot be reported. • No impact to most users

42. 3c. Volumetric Reporting Deficiencies EUB has always monitored water reporting. The main source of your water reporting errors is the EUB noncompliance report which is found in the Registry inbox. The error codes are: • VME0015 – Metering difference is greater then 5% and less then 20% • VME0020 – Metering difference is greater then 20% The following graphs show an increase in the error count. Note: The graphs show the error count and volumetric values for complete production years 2003 to 2005 and partial values for the current year ending July 2006.

43. 3c. Volumetric Reporting Deficiencies Water Balance Number of Errors are Increasing

44. 3c. Volumetric Reporting Deficiencies Water Balance Volume Differences are Increasing I.e. Metering difference – Receipts & Dispositions

45. 3d. We Need to Solve the Problem Every year • 5 Million cubic meters (5 Billion litres) of water are accounted for as metering difference! • Count of errors is increasing year after year. • For water errors • Check the Registry inbox for your EUB noncompliance report • Query Volumetric Submission Screen • Summary View will display noncompliance errors Two possible solutions: • No Process Changes if the error count is lowered. • Possible Enforcement Process Path. • In consultation with Industry

46. 3e. Water Balance Overview • New Directive resulting from Industry activity • Water Balance Directive • Draft Q4, 2006 • Final Water Directive released after Industry feedback • Final Water Directive date is yet to be determined • No Directive number yet assigned • Will Replace Bulletin 2006-11 dated March 28, 2006: Water Recycle, Reporting, and Balancing Information for In Situ Thermal Schemes. • Draft Directive will have an impact on daily operations in the following areas: • New Business Rules • Regulatory Changes

47. 3f. Water for Life Water for Life is a provincial water strategy initiative. • Safe drinking water • Healthy aquatic ecosystems • Reliable quality systems for sustainable economy Future Environment– life cycle management. • Impact: Track the fresh water related to Oilfield injection, CBM, etc. Will effect future reporting requirements. • Future information check http://www.waterforlife.gov.ab.ca

48. 3g. Water Management: Timeline Phased approach • Daily Operations & Reporting Ongoing • Water Balance Delivery of New Business Rules • Water for Life Overarching Strategy

49. 3h. Water Management: Summary Short Term • Improve reporting method by implementing new facility subtype. Due Dec 2006 • Draft Water Directive due Q4 2006 Medium Term • Final Water Directive based on Industry input • Determine how to manage the high volumetric reporting error count Long Term • Water for Life – Ability to better track / manage Water Resources

50. 4. Did You Know? • Changes to the Registry Allocation OAF & WIO Reports • New “Report” Button on Query Volumetric Screen • TCPL Split and Invoice Changes • New DOE RMF2 Report • Changes to the Ministry Invoices & Statement area • DOE Report Package Name Changes • Strong Passwords