Corvelle Drives Concepts to Completion EPAP Compliance Guidance Zedi EPAP Education Seminar October 27, 2009

Corvelle Drives Concepts to Completion Agenda  Who is Corvelle  Review of ERCB’s EPAP  Impact on Operators  Operators Preparedness  Implementation Approach 2

Corvelle Drives Concepts to Completion Corvelle Profile  Consulting firm focused on the oil & gas industry – Experience with oil & gas spanning more than 20 yrs – field data capture, production accounting, financial accounting  Management consulting, data management & IT – Project leadership – Process review & redesign – Data quality & integration – Facilitation 3

Corvelle Drives Concepts to Completion Corvelle – FocQus Alliance FocQus™ Canada  Independent Consultancy Service Organization specialized in Flow Measurement  Operating in Canada, US, UK, Brazil, Venezuela, Colombia 4

Corvelle Drives Concepts to Completion What is EPAP?  E nhanced P roduction A udit P rogram (EPAP)  New ERCB approach to auditing compliance with ERCB directives and requirements  ERCB Objectives: – Raise level of compliance on measurement & reporting – Raise level of assurance on measurement & reporting 5

Corvelle Drives Concepts to Completion Risk of Noncompliance  EPAP goal is to reduce noncompliance  Requires operators to identify areas of risk where there can be noncompliance  Ensure controls are in place to mitigate risk of noncompliance 6

Corvelle Drives Concepts to Completion Controls 7 7 Business Processes Volumetric Data Process Creation, Collection, Processing & Reporting Control Evaluate Control Evaluate Control Evaluate Control Evaluate Control

Corvelle Drives Concepts to Completion Nature of Controls  Company, Area & Facility Level  Manual vs. Automated  Preventative vs. Detective  Frequency of Controls 8

Corvelle Drives Concepts to Completion EPAP Components 9 Compliance assessment process Operator evaluations of controls Declaration process Action item process D-019 Enforcement

Corvelle Drives Concepts to Completion EPAP Schedule 10 Implementation Phases EPAP Directive Issued Trial Declaration Period First Declaration Period Ongoing Declarations Q Q – Q Q Q – Q3 2011

Corvelle Drives Concepts to Completion EPAP Impact on Operators  Operators need to understand: – Areas of risk of noncompliance – Controls – Organizational processes related to EPAP – Volumetric data flow through their organization – Measurement  Apply Resources  Act, Develop, Implement & Review 11

Corvelle Drives Concepts to Completion Some Perceptions by Operators 12 Operators believe they currently have few controls. Do controls already exist? Potential of increased operating costs with no potential benefits. What are some benefits? There are costs to implement EPAP. Is there any ROI?

Corvelle Drives Concepts to Completion Options for Implementing EPAP 13  Do nothing – Submit declaration only  Do minimum using existing staff – Review as part of normal operations – Conduct small projects focused on key areas  Pursue detailed implementation – Comprehensive review and implementation

Corvelle Drives Concepts to Completion Operator Actions  Production / Operations – Identify areas where there is a risk of non-compliance – Identify & implement controls to mitigate risk – Evaluate effectiveness of controls  Revenue / Production Accounting – Identify areas where there is a risk of non-compliance – Identify & implement controls to mitigate risk – Evaluate effectiveness of controls  Audit Group – Assist in evaluating & strengthening controls  Senior Management – Review / approve annual evaluation plan & results – Issue declaration 14

Corvelle Drives Concepts to Completion Recommended Approach 15 Conduct initial assessment Develop controls & evaluations Scope & plan implementation Carry out pilot project Company wide implementation

Corvelle Drives Concepts to Completion Estimating Effort 16 Estimating FactorLowMediumHigh Formal business processesYesSomeFew Comprehensive controlsYesSomeFew Processes & controls standardizedYesSomeNo Currency of meter calibrationsCurrentModerateSome Amount of rework & amendmentsSomeModerateLots Operated facilities10%50%100% Volumetric noncompliance report errorsNoneSomeLots ERCB field inspection findingsNoneSomeLots Number of acquisitionsNoneSomeLots Staff turnoverNoneSomeLots Compliance assessment scoresLowModerateHigh EPAP Action ItemsNoneSomeLots

Corvelle Drives Concepts to Completion EPAP Compliance Guidance 17 Corvelle Consulting 700, Ave. S.W. Calgary, Alberta T2P 2V7 Phone: (403) Web: Focus™ Canada 700, Ave. S.W. Calgary, Alberta T2P 2V7 Phone: (403) Web: