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News Release July 24, 2001

FOR IMMEDIATE RELEASE

EUB RELEASES 2000 FLARING & VENTING MANAGEMENT REPORT: ALBERTA EXCEEDING TARGETS FOR REDUCING SOLUTION GAS FLARING; VENTING REDUCTIONS TARGETED

CALGARY (July 24, 2001) - Today the Alberta Energy and Utilities Board (EUB) released its annual report on industry flaring performance. This is the second year of the EUB's flaring report, which comes as a result of requirements initiated by the EUB in 1999 to reduce upstream petroleum industry flaring and encourage further gas conservation.

The work of the Clean Air Strategic Alliance (CASA) and the development of requirements, which are found in the EUB's upstream petroleum industry flaring guide, Guide 60, have resulted in significantly less gas being flared in the province.

The EUB reports that in 2000, flaring of solution gas has been reduced by approximately 38% from the 1996 "baseline" level, exceeding the 15% reduction target for 2000, as well as the 25% reduction target for 2001, and improving upon the 30% reduction recorded in 1999 (see table).

With the release of its flaring guide, the EUB required operators of 149 batteries conducting routine (continuous) flaring to consult with all residents living within 500 metres of the flaring. The EUB is encouraged by the positive outcome of these personal consultations between landowners and the industry. The EUB reports that 60 of the 149 batteries located near residents have already begun conserving solution gas, or are committed to begin by September 30, 2001. As a result, the number of continuous flares in the vicinity of residents has been successfully reduced.

While significant progress has been made in reducing flaring, this is partially offset by an increase in volumes of solution gas vented, primarily at bitumen wells. Reporting showed that only a small volume of solution gas was being vented on an individual well basis. However, overall, venting occurred at a large number of wells (over 3,600 individual wells).

The volume of venting recorded in 2000, was 735 million cubic metres. Although the volume of gas reported as vented in 1999 was 491 million cubic metres, changes in measurement show that the actual volume was some 560 million cubic metres; therefore the increase in venting from 1999 to 2000 was about 31 per cent. The Board believes concerted attention must be given to reducing venting, and is targeting for its reduction.

In 2000, the issue of solution gas venting prompted the EUB to initiate additional measures designed to achieve a reduction in vented volumes. These include increasing field inspections of facilities throughout the province, placing more emphasis on measurement and reporting of flared and vented solution gas, and requiring that all operators applying to develop new oil and bitumen batteries be able to demonstrate to the EUB that they have assessed every opportunity for reducing flaring and venting. These efforts continue, and the EUB is undertaking further initiatives in the areas of production accounting, production audits and monitoring of flaring/venting batteries.

As well, in September 2000, the CASA Board approved formation of a second flaring/venting project team to conduct a comprehensive review of all flaring and venting practices. Co-chaired by the EUB, the CASA flaring/venting project team's review will make recommendations on what reduction and control requirements should be applied to vent gases. Interim recommendations will be issued in the third quarter of 2001, and a final report in early 2002.

As the chart shows, the oil and gas industry has recorded significant progress in both conserving natural gas and reducing flaring over the course of the 1990s. In 2000, the EUB recorded a 93% solution gas conservation rate, compared to 94% in 1999; however, the majority of the change can be attributed to changes in accounting practices rather than an actual decline in gas conserved. The EUB estimates that a decline of 0.4% in solution gas conservation is the result of actual industry development activity.

Combined, the volume of solution gas flared and vented has declined from a decade high volume of 2,016 million cubic metres in 1993, to 1,534 million cubic metres in 2000. This represents a 15% reduction from the 1996 "baseline".

The EUB's report also lists the percentage of solution gas that is conserved by individual companies, as well as ranking companies based on solution gas flared, solution gas vented, total solution gas production and total oil production from crude oil and crude bitumen batteries. It should be noted that because of the scale of a company's operations it is possible to record a significant volume of solution gas flared and still have a high percentage of gas conserved. It should also be noted that each individual company must deal with different geological conditions and production complexities unique to their areas of operation in the province, and which therefore impact the economics of gas conservation.

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. And the EUB will continue to monitor flaring and venting reduction progress and annually update flaring performance management information, while working with stakeholders towards its goals of eliminating all routine solution gas flaring, significantly reducing solution gas venting, and minimizing flaring associated with other petroleum industry activities.

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This news release and EUB Statistical Series 2001-60B: Upstream Petroleum Industry Flaring/Venting Report 2000, are available free on the EUB web site at http://www.ercb.ca/, or copies of the report can be obtained for $55.00 from EUB Information Services at (403) 297-8190.

For further information please contact:

NR 2001-26