Potential Changes to OGC Regulations – January 14, 2016

Changes approved by the AER:

1. Measured Gas Source Liquids (Condy) Produced to a Gas Proration Battery

Measured gas source with recombined liquids tied into a gas proration battery where the hydrocarbon liquids at the proration battery are produced to a tank and sold without further processing.

AER Changes:

Directive 017 section 5.5.1:

In this case, the condensate from the measured gas source may be reported as a liquid condensate disposition to the effluent battery. If this reporting option is used, licensees must adhere to several conditions.

OGC Initial Response:

The OGC were receptive to this change.

2. Measured Gas Source Liquids (Condy) Produced to an Oil Proration Battery

Measured gas source with recombined hydrocarbon liquids produced to an oil proration battery.

AER Changes:

Table 5.6

Condensate from the measured gas source is < 2.0 m³/day and < 5.0 % of total prorated oil production:

· Report the C6+ as a liquid volume.

· Report the light ends H2 – NC5 as a gas.

Condensate from the measured gas source is > 2.0 m³/day and > 5.0 % of total prorated oil production:

· Perform a multiphase flash simulation of a live condensate sample to determine the gas in solution factor, analysis and shrinkage factor.

OGC Initial Response:

The OGC were receptive to this change.

3. Oil Measurement by Difference

Measured oil receipts into an oil proration battery.

AER Changes:

OGC Initial Response:

The OGC were receptive to this change.

4. Gas Measurement by Difference

Measured gas source delivered to a gas proration battery. Increase the gas measurement by difference ratio from > 35% measured to group to > 75% before a site specific application is required.

AER Changes:

OGC Initial Response:

The OGC were receptive to this change.

5. Measurement Requirements for Effluent Proration Batteries

Allow for three phase measurement as opposed to three phase separators for effluent proration batteries group separators.

AER Changes:

Directive 017 Section 4.2.2.3

At delivery points that are not royalty trigger point and where delivery point measurement is not required, the group production may be measured using “two-phase separation with three-phase measurement. This means that a two-phase separator with an on-line product analyzer on the liquid leg of the separator may be used.

OGC Initial Response:

The OGC were receptive to this change.

6. Effluent Well Testing Exemptions

Incorporate AER Box 21 & 23 within Figure 6.7-2 OGC Effluent Well Based Exemption decision tree.

AER Changes:

Box 21 & 23

Box 21

· For effluent well tests where the LGR was < 0.2 m³ liq. / 10³m³ gas and the second consecutive test the LGR was < 0.2 m³ liq. / 10³m³ gas and the test gas rate < 5.0 10³m³ / day, than no effluent well testing is required.

· For effluent well tests where the LGR was < 0.2 m³ liq. / 10³m³ gas and the second consecutive test LGR was > 0.2 m³ liq. / 10³m³ gas and the gas rate > 5.0 10³m³ / day, than no effluent well testing is required in the next year but one is required the following year.

Box 23

· For effluent well tests where the LGR was > 0.2 m³ liq. / 10³m³ gas and the gas rate < 5.0 10³m³ / day, than no effluent well testing is required in the next year but one is required the following year.

· For effluent well tests where the LGR was > 0.2 m³ liq. / 10³m³ gas and the gas rate > 5.0 10³m³ / day, than current year effluent well testing is required.

OGC Initial Response:

The OGC were receptive to this change.

7. Regarding Effluent Wells with LGR < 0.20 m³/e³m³ and are tested once every two years.

It is more equitable and more accurate to use the actual ECF, CGR and WGR from the previous year well LGR test than to calculate a ECF, CGR and WGR by difference and apply it to the test exempt wells.

AER Changes:

The AER will require wells that require biennial testing to use the ECF, CGR, WGR and sample analysis from the most current LGR test.

OGC Initial Response:

The OGC were receptive to this change.

8. Test Exempt Effluent Wells CGR and WGR

Pertaining to batteries with both tested and test exempt wells (no testing required) and where a battery CGR and WGR is calculated by difference and applied to the test exempt wells industry would like the option to use the well level CGR and WGR from the most recent LGR test for the exempt wells.

AER Changes:

The AER has agreed to allow Operators the option to use the battery calculated CGR & WGR or use the prior well test CGR & WGR.

OGC Initial Response:

The OGC were receptive to this change.

9. Facility Level Test Exempt Batteries

For test exempt wells within facility level test exempt batteries the OGC regulations require calculating a battery CGR and WGR and apply them to all the test exempt wells. Industry wants the option to use the battery calculated CGR & WGR or use the prior well test CGR & WGR.

AER Changes:

The AER has agreed to allow Operators the option to use the battery calculated CGR & WGR or use the prior well test CGR & WGR as long as all the joint venture partners and royalty stakeholders agree.

OGC Initial Response:

The OGC were receptive to this change.

10. Facility Level Test Exempt Battery Wells Sampling/Analysis Requirements

OGC Measurement Guideline 6.9.3 Effluent Gas Wells stipulates, “Wells exempt from effluent well testing are permitted to utilize samples pulled from flow line sampling. Flow line gas samples for wells that do not require testing must be obtained annually.”

AER Changes:

For effluent proration batteries where all the wells qualify for exemption from LGR testing as they meet the facility level LGR and CGR requirements the AER will allow the use of the group separator sample analysis to be applied at the well level. The group gas and condensate will be sampled annually. There will be an option to test/sample higher LGR wells if required or at the operator’s discretion.

OGC Initial Response:

The OGC were receptive to this change.

11. Gas Wells Condensate Inventory Reporting

Eliminate the requirement to report water/condy inventories for measured gas wells that produce < 2.0 m³/day of liquid (condensate and water) each month and instead employ the disposition = production accounting methodology. This eliminates the requirement to report monthly condensate and water tank inventories.

AER Changes:

The AER will employ the disposition = production accounting mythology for single well gas batteries and multiwell group gas batteries that produce < 2.0 m³/day of liquid (condensate and water) each month (draft).

OGC Initial Response:

The OGC were receptive to this change.

12. Calibration Frequency for EMF Meters

For non-delivery point meters utilizing digital (smart) transmitters connected to an RTU or EMF change the calibration/verification frequency of the transmitters to every five years.

AER Changes:

The AER has agreed to go to a five year calibration frequency on non-delivery point EFM smart meters with the several conditions.

OGC Initial Response:

The OGC were receptive to this change.

13. Changing the meter proving requirements for delivery point or LACT meters

For delivery point or LACT meters with no moving internal parts (e.g. Coriolis , ultrasonic, orifice, vortex and cone meters), if the meter factor has been found to be within 0.5% of the average of the previous three monthly meter factors, the meter proving frequency should be extended to semi-annually (once every two calendar quarters).

AER Changes:

The AER has approved the proving frequency to semi-annually for delivery point meters with no moving parts where the meter factor has found to be within 0.5% of the previous factor for three consecutive proves.

OGC Initial Response:

The OGC were receptive to this change.

14. Meter Proving Frequency for Low Flow Hydrocarbon Liquid & Water Meters

Reduce the meter proving frequency requirements for low flow condensate/oil/water meter that meter less than 2 m³/day on average to once every two years.

AER Changes:

The AER has agreed to go to a proving frequency of once every two years for low flow condy, oil and water meters.

OGC Initial Response:

The OGC were receptive to this change.

15. Fuel Gas measurement by difference

Allow fuel gas delivered to different reporting facilities to be measured by difference.

OGC Current Requirements:

Section 4.3.2 states, “If there are multiple reporting facilities on the same site, the fuel use has to be separately measured and reported to each individual facility.”

OGC Initial Response:

The OGC was not receptive to this change.

16. Effluent measurement of high LGR wells

Allow effluent metered wells where the LGR still exceeds 0.28 m³/e3m³ after initial year of monthly testing to remain on effluent measurement with monthly testing for the life of well if all effluent well owners and freehold royalties stakeholders are in agreement.

AER:

The AER has approved a few site specific applications for effluent measurement of high LGR wells and will allow effluent measurement for the Duvernay and Montney wells.

OGC Initial Response:

The OGC were receptive to this change.

OGC Update on Harmonization of the Guidelines/Regulations

I asked the OGC if they would be receptive to interprovincial harmonization of the Guidelines/Regulations.

James Gladysz, Technical Leader of Pipelines and Facilities, stated, “We are in agreement with a harmonized measurement document between the three provinces.”