News Release August 3, 2000

FOR 2:30 P.M. RELEASE

EUB RELEASES UPSTREAM FLARING MANAGEMENT REPORT 1999 SOLUTION GAS FLARING REDUCED 30 PER CENT FROM 1996 LEVEL

Calgary, Alberta (August 3, 2000) When the Alberta Energy and Utilities Board (EUB) initiated new requirements in July 1999 for upstream flaring reductions in the province via Guide 60 Upstream Petroleum Industry Flaring Guide, it also provided for an EUB annual report on industry flaring performance. This report supports the ongoing review of all upstream oil and gas flaring but focuses on solution gas (natural gas that is produced in association with crude oil). This report (EUB Statistical Series 2000-60B: Upstream Petroleum Industry Flaring Report, 1999) is now available free on the EUB web site at www.ercb.ca and a paper copy is available by contacting EUB Information Services.

The new Alberta requirements and expectations for upstream petroleum industry flaring, which can be found in EUB Guide 60, include as key targets a firm solution gas flare reduction schedule (see table). These targets call for significant percentage reductions from a 1996 "baseline" volume. In 1996, this "baseline" volume of solution gas flared from crude oil and crude bitumen batteries was 1700 10⁶ m³ (1.7 billion cubic metres).

While no reduction targets were set for 1999, EUB data shows that for actual volumes of solution gas flared in 1999, there has been an overall reduction of approximately 30 per cent compared to the 1996 baseline. When vented volumes are included, the combined 1999 flared and vented volumes are still 23 per cent lower than the 1996 flared and vented volumes. This is significant progress by the Alberta petroleum industry toward the ultimate goal of eliminating routine solution gas flaring and exceeds the reduction targets for year end 2000 by a significant margin. Further, and as expected, the industry's solution gas conservation efficiency of 94.1% for 1999 was the highest in history.

As shown in the chart, the oil and gas industry has recorded significant results in both conserving natural gas and reducing flaring over the course of the 1990s.

Solution gas flared from crude oil and crude bitumen batteries represents 63% of the gas flared in Alberta. The EUB expects operators will remain diligent in their efforts to ensure that every opportunity to reduce flaring or venting of solution gas is examined and implemented where appropriate to do so. Another key feature of EUB Guide 60 is that flares with residents within 500 metres must be evaluated and brought into compliance with the flare performance requirements by December 31, 2000. As well, residents within 500 metres of these flares must be notified as to a company's intentions by year end 2000. Further, all solution gas flares must be evaluated by December 31, 2002 to determine if the solution gas can be conserved. Flaring of solution gas is regularly monitored by the EUB. Batteries with significant flare volumes are assessed on a case-by-case basis.

In March 2000, during the preparation of data for the annual report, the EUB encouraged companies to check the accuracy of all 1999 solution gas flared and vented data they had previously submitted to the EUB and make any necessary amendments. As a result of this review, some companies made significant amendments to their 1999 solution gas flared volumes. These amendments have had the effect of decreasing the solution gas flared volumes and increasing vented volumes originally reported to the EUB. Most of these amendments were due to industry incorrectly reporting vented gas as being flared.

Notwithstanding the significant progress made in reducing flaring and venting, the EUB is particularly concerned with the amount of vented volumes and therefore believes that it is essential to expedite a review of venting practices. The EUB plans to incorporate venting into the scheduled 2001 review of Guide 60 and plans to initiate this review in the fourth quarter of 2000. This review will determine what reduction and control requirements should be applied to vent gases. EUB staff have already initiated work with the Clean Air Strategic Alliance (CASA) and the Canadian Association of Petroleum Producers (CAPP) to set up this review.

In the new annual flaring report, the EUB has listed the percentage of solution gas that is conserved by individual companies. The report also ranked companies based on solution gas flared, solution gas vented, total solution gas production, and total oil production from crude oil and crude bitumen batteries. Companies are ranked province-wide, and also within each EUB Field Centre area. It is possible to flare a significant volume of solution gas because of the scale of a company's operations and still have a high percentage of gas conserved. The EUB notes that each individual company must deal with different geological conditions and production complexities which are unique to their operating areas within the province, and therefore impact the economics of gas conservation.

The report indicates that solution gas conservation levels in the Bonnyville and Wainwright areas, where heavy oil and crude bitumen are produced, are lower than the rest of the Province. This is related to lower volumes of gas production on an individual well basis and less favourable economics associated with gas conservation, as well as the limitations of cost effective technology for recovering solution gas under this type of production scenario. Notwithstanding this fact, the EUB believes that there are opportunities to increase gas conservation in these areas and will be pursuing the realization of those opportunities with the operators.

Work by the Clean Air Strategic Alliance (CASA), the industry and the development of EUB Guide 60 has resulted in significantly less gas being flared in Alberta today than was the case at any other time in the 1990's. The EUB believes that these reductions reflect the industry's effort to conserve gas. At the same time, the EUB will expect industry to continue to develop further opportunities for increasing solution gas conservation and reducing solution gas flaring and venting. The EUB will continue to monitor flaring and venting reduction progress and annually update flaring performance management information. In conjunction with other stakeholders, the EUB will continue to work towards the goal of eliminating all routine solution gas flaring.

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This news release and EUB Statistical Series 2000-60B: Upstream Petroleum Industry Flaring Report, 1999 - are available on the EUB web site at http://www.ercb.ca/or by contacting EUB Information Services by phone at (403) 297-8190 or by fax at (403) 297-7040.

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