2. Quantifying Vent Gas Footprints Bruce Peachey, P.Eng. PTAC’s Green Toolbox September 29-30th, 2003

3. Heavy Oil Vent Quantification Project  Project Background  Summary of Project Objectives  Key Issues and Quantification Factors  What Standards are Being Developed?  Where we are now?  Where we go from here?

4. Background  Nexen Sponsored JIP: Launched through PTAC  Target is to Economically Reduce Methane Vents First need to understand how much methane there is  Current Participants: Nexen; Husky; ExxonMobil; Petrovera; CNRL Budget $75k  Invited Participation by AEUB and SIR  Intended that results be made public through Industry Standards

5. Methane is Important in Both Alta and Sask 230 Mt 16Mt 48 Mt 23Mt 160 Mt 69 Mt Kyoto Target for Canada? Emissions? Population? 69Mt 23Mt Alta Upstream* Oil&Gas Total & Methane* Methane reduction is important - No matter what the target 18Mt 9Mt Sask Upstream* Oil&Gas Total & Methane* *Oil &Gas Sector based on NRCan 1997-2020 Emission’s Projection for 2000 Alberta’s Share Of National Target? Based on…….?

6. Vent Quantification Project  Main result is to improve quality and consistency of heavy oil vent gas numbers in use Both Produced and Vented  Better understand variability observed in vent measurements and reasons for it To help understand the numbers and to reduce variability  Increase ability to forecast vent volumes to facilitate mitigation Economically manage the opportunities and the risks

7. Standards Needed to Improve Data

8. Key Findings - Factor #1  Well Profile Types (24-hour tests) Type A - Best Results - Repeatable GOR’s Type B - Pumped-off wells (Assumed) Type C - Gas Well Behaviour Type D - Mix of Behaviours - Operational Impacts? Type F - Difficult to Explain at this Point

9. Type A - Avg 694 m3/d (720- 684) Est. 75-80% of wells

10. Type B - Avg 708 m3/d (1944-288) Well Pumped Off?

11. Type C - Gas Well Behaviour Wells on Same Lease; Tested at the Same Time; Diverted from Compression Rates (m3/d) Well #1 Avg 25,635 (31,680-23,400) Well #2 Avg 3,409 (11,664 - 1,728) Well #3 Avg 2,997 (10,080 - 1,944) Well #1 Well #2 Well #3

12. Type D - Operational Changes? Example 1 - Type C? Vent Valve Adjustment? Avg 225 m3/d (540-108) Pump Speed Change? Example 2 - Type A? or B? Avg 557 m3/d (1,296-288)

13. Type F - Avg 1,253 m3/d (6,264-0) Older wells? - Pumping Problems? Trapped Flow? Vent on Another Well Shut-in?

14. Key Findings - Factor #2  Impacts of Well Phases (Working Theory) Early Production - Near well oil being produced, fine foam (Dream Whip) Established Cold Heavy Oil Production (CHOP) - Sand production causes flow channels or wormholes, coarse foam (Beer suds) Late Production - Oil and gas separate in the reservoir, slug flow, trapped flow, interwell communication (End of the shaving foam can)

15. Well #2 - Early Phase & Established Summer 2001 No gas venting from annulus All from tank? Summer 2002 Gas venting from annulus Relatively Stable GOR

16. Well #3 - Established CHOP Production Summer 2001 Stable GOR Summer 2002 Higher oil and gas rates Same stable GOR

17. Well #4 - Instability due to Pump Summer 2001 Stable GOR Summer 2002 Pump Failing then Replaced Causes Type D/F Behaviour

18. Well #5 - Transition Between Phases Summer 2001 Transition from Early Phase Balance of Gas to Tank? Summer 2002 Production Stabilizing GOR Becoming more Stable

19. Well #6 and #7 - Late Phase CHOP Lost? Oil = 0.44 m3/d GOR = 1193 m3/m3 WOR=0.8 m3/m3 Oil = 0.82 m3/d GOR = 1495 m3/m3 WOR=2.1 m3/m3

20. Key Findings - Factors #3- 6  Obtaining a Well GOR Accounting for Fuel Use - Should be proportional to production and single source Tank Vents - Suggested add 5% to Type A for Established CHOP Phase. Others????? Meters Used - Standardized methods and configurations for various types of meters used. Oil Rate Used - Ensure rate is stable and matches conditions during the period of gas measurement.

21. Suggested Format for Standards  Basic Content for each Key Area Why – The standard is necessary When – Is the standard applied Who – Is responsible for what; who is affected What – Should be done in what order Where – Should the standard be used How – Should the work be done  Clear Language – Minimum length to do the job  Adjust based on end-user targeted Operators, technical staff, management, admin

22. Key Area – Regulations and Assessment  Separate Standards for each Province  Target – Those who manage operations  Content: Minimum spec for triggers to require a test Measurement accuracy required Frequency of testing Royalty rules Any mandated assessment requirements for conservation or license impacts

23. Key Area – Criteria for a Successful Test  Should be the same independent of province  Target – Field Technical, Operators, 3 rd Party Testers  Content: Description of flow types and causes Description of allowable Type A »Deviation from average Data collected to document test and allow adjustment for fuel use etc. Checklist What to do if test not acceptable

24. Key Area – Testing Non-A Type  Independent of Province  Target – Technical staff controlling testing  Type C – Gas Well Behaviour Initial test procedure with imposed step change in pressure (up or down) Standards for continuous testing  Type F – Sporadic Gas Flow Needs more work to define Assess by grouping wells in an area? Simultaneous testing of wells thought to be linked?

25. Key Area - Metering Equipment  By type of meter being used  Target – Technical staff controlling testing  Content: Basic properties of meter Minimum features meter should have Minimum specs for test set-up Set-up based on flow ranges and stream being measured – Tank, total or vent to atmosphere Calculations and factors to be used specific to heavy oil and low pressures

26. Key Area – Maintaining Revising Standards  Separate for H.O. Producers or Integrate with other Standards Groups?  Target – Industry group of knowledgeable people  Content: Reference to available information on each issue area Triggers to revise standards Issues to investigate further Consensus process for setting and rolling-out revisions

27. Example - Photon Control – New Atmospheric Gas Flow Meters 1” pipe optical gas flow meterTCPL & Daniel 4” optical plate Based on technology developed by NOVA Being developed by Photon Control - Vancouver Project supported by Husky for Vents

28. Where are we now?  Working on drafts of standards  Investigating some issues that are still unresolved  Documenting observations to date  Defining potential follow-up projects to improve quality of information and analysis  Planning for roll out of standards once they are completed and reviewed by participants.

29. Where do we go from here?  Producers need to assess use of vent gas measurement to: Produce more oil - Improved understanding of CHOP Mechanism Reduce operating costs - Use gas to monitor pump operation and extend run life  Move the standards into widespread use  Once initial standards are implemented monitor results and revise standards if necessary

30. Vent Gas Footprints - Summary  Defining the footprint of an emission stream can lead to insights and understanding  Collaboration provides insights by bringing in data and opinions from a number of sources.  Results should lead to increased vent gas conservation and improve the economics of heavy oil production  Similar methods might be applied to other vent streams (Dehydrators and Tanks)

31. Acknowledgements  Nexen (Garry Mann et al) for initiating the project  CNRL, ExxonMobil, Husky and Petrovera for seeing the benefits of collaboration  AEUB and SIR contacts for participating  Support from PTAC to launch  Support from ADOA Consulting

32. Contact Information New Paradigm Engineering Ltd. 10444 - 20 Avenue Edmonton, Alberta Canada T6J 5A2 tel: 780.448.9195 fax: 780.462.7297 email: bruce@newparadigm.ab.ca or newparadigm@shaw.ca web: www.newparadigm.ab.ca