Electronic Permitting Initiative Update Alan Doniger, Energistics CTO 2 nd Annual Standards Summit & Reception 6 November 2007 Houston, Texas

Background Electronic Permitting Business Case. –In collaboration with U.S. federal and state agencies, Ground Water Protection Council (GWPC), and REGS User Group (PIDX) WITSML-based Electronic Permitting Standards. –Intended for first deployment in California

Background (continued) Standards Review and Revision by GWPC States –Candidates for early deployment: Colorado, Alaska, Alabama, and Kentucky Middle of U.S. Department of Energy Withdraws GWPC Funding –Substantial shared agency software exists, but –More was intended to be developed with this funding

Background (continued) Q3 of Energistics’ Industry Deployment Initiative –First State: Colorado –Business Case Developed by Pioneer Natural Resources –Work Group within the Energistics eRegulatory SIG Collaboration Shared Costs and Risks Close cooperation with agency and GWPC –GWPC software licensed to Energistics for use by operators

Current Timeline October Colorado Oil & Gas Association (COGA) Meeting –Introduction to the electronic permitting deployment opportunity By January Assess Viability to Conduct Deployment in ’08 –Present initial Business Case for refinement by other operators –Define integrated timelines for deployment: operators and agency Milestone: GWPC meeting in January in New Orleans

Current Timeline In Carry out Industry Deployment Work Group Initiative –Early testing with Colorado agency –Feedback on Standards flow through Energistics issue tracking and version management processes –Operators access to and ability to adapt GWPC software through Energistics licensing.

Business Case Highlights Business Problem –Colorado projects approving over 6,000 drilling permits in ’07 An increase of 4% over ’06 Requires a lot of manual data checking and many iterations between agency and operators –Pioneer NR is drilling over 200 wells per year in Colorado Permitting can take 30 to 60 days after all paperwork submitted Much data entry required No easy way to verify accuracy – performed by agency staff manually Agency web site is helpful to obtain status –Greater efficiency through electronic permitting and mutual use of validation automation would benefits agency and operators Leverage by using solution in other states Leverage by using solution for federal agencies

Business Case Highlights Recommendation: Energistics’ WITSML-based Electronic Permitting Data Exchange Standards –Software validation of permit application content Pre-validation by operators Confirming validation by agency –Automated notification of status and problems –Improved visibility and tracking during agency processing –Ability to submit changes online –Operators can receive and print secure permits –Extend electronic permitting for use in other states

Business Case Highlights Benefits for Operators –Improved capacity to find and manage reserves –Improved ability to plan and manage assets –Improved productivity of staff members –Improved cost of technology ownership Quantification of Operator Benefits –Minimum savings of 3 to 5 days on permit cycle time –Additional savings of 3 to 5 days where data is missing, incomplete or in error –For each 100 wells, the minimum benefit would be revenue acceleration of about $225 thousand per year Justifying investment in enabling technology Especially if this is shared technology and standards based

Call to Action Oil and gas companies involved with applications for drilling permits are invited to contact Energistics for more information. –Especially those active in Colorado, Alaska, Alabama, and Kentucky or other U.S. states with agencies associated with GWPC Standards-based Electronic Permitting: A “Win Win” for industry and U.S. state agencies –Opportunity to compare this work to other similar efforts e.g., at NDR8 Conference in S. Africa in February –Opportunities for shared learning –Opportunities to define and achieve global best practices

Thank You Contact: Alan Doniger, Energistics CTO