NOTICE OF BOARD INITIATED PROCEEDING
APPLICATION NO. 1513726
INQUIRY INTO NGL EXTRACTION MATTERS

WHEREAS:
(a) the Alberta Ethane Policy ¹ will expire on June 30, 2008;

(b) there has been significant evolution of the Alberta natural gas, pipeline, extraction and petrochemical industries and the related gas, transportation and natural gas liquids (NGL) markets since the implementation of the Alberta Ethane Policy in July 1990;

(c) in Decision 2004-006 ² the Board requested parties to work with NOVA Gas Transmission Ltd. (NGTL) to review the current conventions and practices for extraction for NGLs off the NGTL system which resulted in the NGL Extraction Convention Task Force Report dated September 2005 (the Task Force Report); and

(d) the Board in a letter dated July 24, 2006 reluctantly accepted the Task Force Report despite concerns that many of the key issues and perceived inequities relating to extraction remained unresolved and indicated that it would consider further processes to address these issues,

Take Notice that The Alberta Energy and Utilities Board (EUB or Board) pursuant to Section 21 of the Energy Resources Conservation Act RSA 2000, c. E-10, Section 94 of the Oil and Gas Conservation Act RSA 2000, c. O-6 and Section 46(1) of the Public Utilities Board Act RSA 2000, c. P-45 will hold an inquiry into matters related to NGL extraction from the common natural gas stream transported through pipeline transmission systems or processed by facilities that are regulated by the EUB (the Inquiry).

The Inquiry will examine issues related to NGL extraction from the perspective of maximizing the economic, orderly and efficient development of Alberta’s natural resources in the public interest. The issues that the Inquiry will examine include, without limitation:

• existing extraction conventions
• potential dilution of the common stream energy content by lean gas associated with Coal Bed Methane (CBM)
• growing intra-Alberta consumption demand for natural gas
• potential for northern gas; and
• Alberta regulated Straddle facilities on NEB regulated pipelines.

Purpose of the Inquiry
The evolution of the Alberta natural gas, pipeline, extraction and petrochemical industries and the related gas, transportation and NGL markets since the implementation of the Alberta Ethane Policy in July 1990 (set to expire June 30, 2008) have convinced the Board that there is a need for a timely and comprehensive re-examination of historical conventions and practices with respect to the extraction of NGLs on EUB regulated pipelines and facilities. The need for such a review is made further apparent in light of anticipated future developments including the use of EUB regulated pipelines to transport increased amounts of gas sourced outside of Alberta, development of sources of CBM and the growing market for gas within the Province. This Inquiry will consider these conventions and practices to determine if changes are required in the public interest.

Particulars of the Inquiry
A Preliminary Scoping Document and a Preliminary List of Issues to be addressed by the Inquiry and a Tentative Procedural Schedule have been documented and are available for review on the Board’s Web site through IAR Query by selecting Application No. 1513726. The Board requests that parties express their intent to participate in this Inquiry by submitting their intention to participate and comments on the Preliminary Scoping Document and a Preliminary List of Issues.

Please note that neither the EUB cost claim nor intervener funding process will apply to this matter and that all costs incurred by parties will be of their own account. Despite this, the Board is hopeful that parties representing all affected business areas will participate in this Inquiry including:

• Producing companies
• Midstream companies
• Aggregators
• Straddle plant owners and operators including proponents of EUB regulated facilities on NEB regulated pipelines
• Gas transmission pipeline owners and operators
• Shippers on gas transmission pipelines
• Liquids pipeline operators
• Field plant operators with interests in NGLs
• Alberta based Petrochemical plant owners and operators
• Industry groups including IGCAA, CAPP, SEPAC, Canadian Society for Unconventional Gas
• Propane plus market stakeholders
• Consumer groups
• Alberta Government Ministries including those responsible for energy and industry related matters; and
• The Governments, producers, pipeline operators in British Columbia, the Northwest Territories, Yukon and Alaska to the extent they have interests in the transportation of natural gas through EUB regulated facilities.

To File an Intention to Participate
Any party (Participant) wishing to register their intention to participate and submit comments on the Preliminary Scoping Document and a Preliminary List of Issues should submit a letter (Participation Letter) setting out their interest in the Inquiry and contact information by June 15, 2007. Each Participant should include with the Participation Letter any comments it wishes to make on the Preliminary Scoping Document, the Preliminary List of Issues or the Tentative Procedural Schedule. Following submissions, the Board will communicate the Final Scoping Document and a Final List of Issues for the Inquiry. Please submit the Participation Letter and comments on the Preliminary Scoping Document and a Preliminary List of Issues electronically to the Board at EUB.UTL@eub.ca. Notification regarding further scheduling or process will only be provided to registered parties.

Process
The Tentative Process Schedule stipulates the filing of Direct Evidence by Participants on matters identified within the Final List of Issues by July 23, 2007. Participant submissions will be followed by Information Requests and Responses, Rebuttal Evidence and an oral hearing anticipated to be held in November 2007. The Board anticipates engaging the services of an independent consultant whose Report would be filed in the Inquiry. Direct Evidence submissions by Participants should address all matters on the Final List of Issues on which the Participant has a position (supporting or opposing) utilizing, where possible, the format employed in the Preliminary List of Issues.

Parties to this proceeding should comply with the Board’s general electronic filing guidelines, which require that all e-mails clearly indicate in the “subject” line, the relevant application number, the date, the nature of the submission and the party making the submission. The Board further requests the cooperation of parties by submitting any documents in either Microsoft Word format or an OCR version of any PDF documents.

If you have any questions regarding this matter, please contact either Kim Eastlick by email at kim.eastlick@eub.ca or (403) 297-4325 or Heather Gnenz by e-mail at heather.gnenz@eub.ca or by telephone at (403) 297-3539.

Issued at Calgary, Alberta on June 4, 2007.

ALBERTA ENERGY AND UTILITIES BOARD
Douglas A. Larder, Q.C., General Counsel

¹ As reflected in IL 90-09 dated July 16, 1990, Section 35 of the Oil and Gas Conservation Act RSA 2000, c. O-6 and Part 9.1 of the Oil and Gas Conservation Regulations AR 151/71

² Decision 2004-006 Solex Gas Processing Corp Application to Amend a Gas Processing Scheme and for Natural Gas Pipelines, dated January 27, 2004