Workshop on Hydrocarbon Production Accounting and Flared Gas Volume

Measurement ERCB Measurement, Accounting, Reporting,

and Audit

By Bill Cheung

OutlineOverview of Directive 017Facility Types and Measurement Overview of Directive 060Flare Measurement & Estimating

RequirementsProduction Accounting &

Reporting Auditing Protocols Compliance-Enforcement Field Surveillance

Why measure and report production, flaring, and venting?

Public Safety and EnvironmentUnderstand and monitor emissions

Reservoir EngineeringBetter understand the adverse impacts to reservoirs

ConservationTo do proper economic evaluations to conserve

Information and StatisticsBalance FacilitiesAND Calculate Production and Royalty

Directive 017 OverviewFirst 5 sections implemented in 2005Sections 6 to 9 implemented in 2007Sections 10 & 11 to be implemented soonWhat and how volumes must be measured or calculatedWhat, where, and how volumes may be estimatedAccounting procedures for volume determinationWhat data must be kept for audit purposesWhat resultant volumes must be reported

Using “Dispositions” to Calculate Production

In Alberta, oil and gas production for wells and batteries is often calculated using “Dispositions”Gas production = Gas Sales Meter (1800.0 103m3) + Vented Gas (6.0 103m3) + Lease Fuel (50.0 103m3) + Flared Gas (150.0 103m3)

= 2006.0 103m3

Oil production = Oil Sales + Inventory Change

Production from a Single Well Oil Battery

Crude Oil Multiwell Proration Battery

Oil Well

Oil Well

Oil Well

Oil Well

Treater OilStorage

Water Storage

MOil Sales to

Pipeline

Vented Gas

Flare

Fuel

Compressor

Gas Sales to Pipeline

Disposal

Accounting Meter C

Test Meter A

Test Meter B

Oil Well

M

M

M

M

M

M

M

M

Oil Proration BatteryWell tests according to the following:

Purge and stabilization time before starting test

S&W performed for every test

The total monthly battery dispositions are to be proratedback to the individual well monthly estimated production volume based on test volume and production hours for gas, oil, and water

ClassNo. Name1 High > 30 3 per month 5 12

2 Medium > 6 but ≤ 30 2 per month 10 22

3 Low > 2 but ≤ 6 1 per month 15 22

4 Stripper ≤ 2 1 every quarter 45 22

Oil rate (m3/d)Minimum test

frequencyMinimum time between

tests (days)Minimum test

duration (hours)

Multi-Well Gas Group Battery

Flowing Gas Well

Produced Water

M

M

Flowing Gas Well

M

Flowing Gas Well

To Gas Gathering or

Gas Plant Inlet

Metered and Recombined Condensate

Produced Oil

Produced Water

Compressor

Fuel to Compressor

M

M

Metered and Recombined Condensate

FR

M

Metered and Recombined Condensate

Produced Water

M

M

Multi-Well Gas Proration Battery

Multi-Well Gas Effluent Proration Battery

M

M

Condensate Metered and Recombined

Group Measurement

Point

To Gas Gathering System

Gas Meter A

Produced Water Metered and

Recombined or Disposal

M

SP

SP

M

Test Taps

Effluent Meter

M

Test Taps

Effluent Meter

M

Test Taps

Effluent Meter

Gas Well

Gas Well

Gas Well

Calibration/Proving Frequency

Gas measurement calibration requirements:within the 1st calendar month of operation of a

new meterby the end of the month following service or

repairs to the meter, semi-annually thereafter if the meter is used in

a gas plant or at royalty trigger pointsannually for all other meters

Calibration/Proving Frequency

Gas meters with internal moving parts is to be proved once every 7 years after the initial proveInternal inspection of measurement element is required for those without internal moving parts – same frequency as the calibration but with exceptions such as inside a gas plant or with internal diagnostics

Liquid Meter Proving Frequency

Meter Application Fluid Type Proving Frequency

Wellhead, group, injection

Test oil, test emulsion, live condensate, water

Annually

Gas plant, cross-border

Live condensate, NGL, LPG Semi-annually

Delivery point, LACT Oil, condensate, live condensate, NGL, LPG

Monthly (with some exceptions)

Multi-phase Metering

Suppliers are testing some multi-phase metering packages at various oil facilities within Alberta Generally in series with a production separatorMostly for production volume test of conventional oil, heavy oil, or insitu oil sand wells

Directive 60 OverviewAlberta Requirement for Upstream

Petroleum Industry Flaring – June 1999Incorporated the recommendations by the

Clean Air Strategic Alliance (CASA) made to the EUB

It’s requirements apply to all gas flaring,incinerating, and venting

Clarification updated in February 2001Revised directive implemented on

November 16, 2006

Flaring, Incinerating, and Venting Measurement

Measurement required when:Continuous or intermittent flaring, incinerating, or venting at conventional oil and gas production facilities, including gas plants, over 0.5 103m3/dAcid gas flared, either continuously or in emergency, from gas sweetening systems must be measured Fuel (dilution or purge) gas added to acid gas to meet minimum acid gas heating value or ground sulphur concentration requirements

Estimating Requirements

If it is not listed above as required to measure the flared, incinerated, or vented gas, the ERCB will accept estimates of gas usage, example:

Emergency or maintenance operations outside gas plants

Volumes outside existing meter rangeWell testingDepressurizing of pipelines, compressors, and

other vessels

Estimating RequirementsEstimates must be based on engineeringcalculationsProcedures or software use for estimating must be developed by a technically knowledgeable personConsistency and repeatability for estimationDocumentation and reporting procedure for ERCB reviewERCB may require an operator to installmeasurement devices if the above is deemed to be inadequate

Production ReportingAll production volumes are reported to: Gas Standard Conditions: 101.325 kPa at 15 oC

Liquids Standard Conditions: Atmospheric,

101.325 kPa, or equilibrium pressure and at 15 oC

The receiver of the product is responsible for measuring and reporting the volume and the sourceReporting is on a monthly basis generally from 8:00 am on first day of the production month to 8:00 am of the first day of the next month

Reporting to the Registry

The Alberta Petroleum Registry is:A web based system Developed and operated by a joint interest group composed of the Operators, Alberta Energy (royalty), and the ERCBIt provides a single database access for all interested parties to minimize duplication and improves data integrityBusiness rules set by the ERCB after consultation with the other joint interest partners

Registry Volumetric and Infrastructure Data Elements

WellsUnique IDProduction volumes

Gas, condensate, oil, water

Fuel, flare, and vent volumesProduction hours for each well

FacilitiesProduction (batteries)

Gas, condensate, oil, waterThe total for all wells

Plant Products (gas plants)Gas, C2, C3, C4, C5, NGL, MixesAcid Gas

Receipts & DispositionsFuel, Flare, and Vent Inventories

Registry Reports

Registry Reports

Registry Reports

Registry Reports

Registry Reports

Registry Reports

Reporting Flared, Incinerated,and Vented Gas

All gas flared, incinerated, and vented must be reported at the location where it occurred, including:

Well sitesCompressor SitesBatteries Gathering SystemsGas Injection FacilitiesGas Plants

Incinerated gas is reported as flared

Flare & Vent Reporting Issues

Tracking solution gas flaringAssociated gas produced from oil wells has to be

reported separately from non-associated gas (gas wells)

Gas wells may be tied into Oil Batteries (and vice versa), but they are measured and reported separately

If flaring, incinerating, and venting occurred at anon-reporting facility, such as pipelines, small compressors, pig traps, etc.

Report at the closest and connected reporting entityReport at the gas gathering system (GS) if no other

reporting entity exists within the GSReport only produced gas flare or vent volumes

excluding fuel added for purging or dilution

Audit of Measurement, Accounting, and Reporting

When a well, facility, or plant has been selected for audit by the ERCB, all streams may be audited, such as oil, gas, water, or condensate production, receipts and dispositions, including fuel, flare, and vent volumesThese are normally selected based on a Risk Matrix in which the reported production, receipt, disposition, fuel, flared, and vented volumes are tracked and risked together with other criteriaOther audits maybe initiated from internal or external request

Audit Protocol

Directive 46 – Production Audit Handbookoutlines the production audit protocols:

ERCB auditing process in the areas of production measurement, accounting, and reporting

What data is required to be submitted for an audit, and

Consequence for non-compliance in production measurement and reporting is listed as part of Directive 019: ERCB Compliance Assurance-Enforcement

Compliance Assurance-Enforcement

2 classes of non-compliances: High or Low RiskA written notice is sent to the licensee on the noncompliance(s) assessmentFor Low Risk, the approach is more collaborativeFor High Risk, the approach is more prescriptiveLicensee must take remedial action to correct the noncompliance(s) and notify the ERCB of its completion within the specified time

High Risk Non-Compliance Handling Procedures

Failure to correct the noncompliance(s) will result in escalated enforcement actions and may eventually lead to one or more of the followings:

3rd party audit of the facility

Partial or full suspension of facility operation

Focused or Global “Refer” status on the licensee

Subsequent High Risk noncompliance events that occur in the same compliance category during this time will result in additional High Risk Enforcement Actions

An appeal process is available for any noncompliance assessment

Audit Statistics

ERCB audited 27 facilities in the areas of production measurement, accounting, and reporting in the last 12 monthsLow Risk Noncompliances Findings = 153High Risk Noncompliances Findings = 83

Field Surveillance

ERCB’s Field Surveillance Branch (FS) conducts routine inspection on various facilities around the provinceThere are 9 field centers in different parts of Alberta each with inspectorsThe focus is on safety, environment, and equipment operationCheck for measurement equipment compliance and flare log as part of their inspection

Field Surveillance on Flaring

FS receives notifications from facility operators who flare for a minimum of 4hours and/or over 30 103m3

Receive complaints from residents living near the facility on odour or excessive flaringCall in from other operators or interested parties Inspectors can be dispatch to investigate when required

ERCB Website http://www.ercb.ca

Backup material following, not for presentation

Gas Facility Production –Single Well Battery

Sepa

rato

r

Heavy Oil / Bitumen Production (Density ≥ 920 kg/m3)

Measurement required ifAnnual average flare and/or vent volumes exceed 2.0 103 m3/d for primary heavy oil/crude bitumen facilities, such as Cold Production or Water-flood

Annual average flare and/or vent volumes exceed 0.5 103 m3/d for in-situ heavy oil/crude bitumen facilities, such as SAGD, CSS, THAI processes