Introduction
The Energy Resources Conservation Board (ERCB) is proposing to change the process for auditing oil and natural gas volumetric data submitted by operators to meet the ERCB’s measurement recording and reporting requirements. This change in audit process will result in the creation of a new directive and the rescinding of
Directive 046: Production Audit Handbook.
The ERCB has created a project team to design and implement an Enhanced Production Audit Program (EPAP). The program will
- raise the level of assurance regarding compliance with ERCB measurement recording and reporting requirements,
- lead to increased levels of compliance with those requirements,
- be cost effective for both the operators and the ERCB, and
- be sustainable for both industry and the ERCB.
Background
The ERCB conducts production audits of oil and gas facilities to determine the degree to which volumetric data reporting is in compliance with ERCB measurement recording and reporting requirements. As volumetric data are used for many purposes by industry, the ERCB, and other stakeholders, quality data are essential.
The ERCB relies on accurate and complete volumetric data to fulfill its role related to responsible development, public safety, environmental protection, public confidence in the regulatory framework, and energy resource conservation.
Currently the ERCB audits facilities by conducting substantive audits, which produce detailed, quality audit findings and provide a high level of assurance of the accuracy and completeness of the volumetric data for that specific facility. These audits are resource intensive for both the operator and the ERCB. The current audit approach is not providing the level of assurance regarding compliance with ERCB measurement recording and reporting requirements. These proposed changes will significantly enhance the level of assurance and reduce the number of noncompliance events.
Project Description
Key components of the proposed EPAP are
- operator self-evaluations,
- a certification letter, signed by the operator’s officers, certifying compliance with ERCB measurement recording and reporting requirements,
- connection to
Directive 019: ERCB Compliance Assurance—Enforcement
,
- a materiality threshold for noncompliance findings,
- monitoring of operator certification, and
- an operator and facility risk assessment process.
In conjunction with this project, the ERCB will work with the Petroleum Registry of Alberta (Registry) to investigate the potential for improvements to enable operators to become aware of risks associated with data entered into the Registry. The project proposes to implement additional Registry reporting functions to provide early feedback to operators on the risks identified through analysis of their data.
Industry Consultation
The ERCB is seeking input from operators on a wide range of topics related to the design and implementation of the proposed EPAP process, including
- wording of the certification letter,
- appendices to the certification letter,
- process for submitting the certification letter,
- design of the related ERCB monitoring processes that are invoked when the ERCB determines that a significant risk of noncompliance remains,
- guidance for operator self-evaluations,
- enhancements to the Petroleum Registry of Alberta,
- indicators of risk and their ratings,
- process and timing for the transition to EPAP, and
- noncompliance events and their risk rating that determines the level of Directive 019 enforcement.
The ERCB is committed to working with operators to ensure that their concerns are considered and reflected in the new audit process and related requirements. A number of industry consultation activities will be undertaken so that operators have an opportunity to discuss issues, concerns, and alternatives.
Benefits of an Enhanced Production Audit Program
The ERCB believes that the proposed EPAP will produce a number of benefits for both operators and the ERCB. Moving away from the ERCB-conducted substantive audits will save operators the significant resources consumed by this type of facility audit. In addition, the proposed program is expected to help operators increase their level of compliance with measurement recording and reporting requirements and avoid the costs associated with the Directive 019 process.
With a focus on operator self-evaluations, the ERCB expects operators to see a decrease in revisions and amendments in both production accounting and joint venture accounting. Furthermore, standardization of processes should reduce operating costs.
Increases in the accuracy and completeness of volumetric data will improve the reliability of the data. This will be valuable for production and revenue forecasting and reservoir management. Furthermore, increased confidence in the data can lead to increased confidence in the operator and the industry by shareholders and the public alike.
Timelines
The development phase of the project is currently under way. The planned project timeline is as follows:
|
Time period
|
Activity
|
| October 2008 to January 2009 | Industry consultation regarding the audit approach, design, and implementation |
| January to February 2009 | Writing of the first draft of the new directive |
| March to June 2009 | Industry consultation regarding the new directive and related documents |
| July 2009 | Approval of the new directive |
| August 2009 to July 2011 | Phased-in implementation of EPAP |
To Submit Comments
The ERCB welcomes comments, suggestions, and questions from operators with regard to this program. For further information and to discuss the program, please contact the EPAP team by e-mail at epap@ercb.ca or by telephone at 403-297-2194.
D. K. Boyler, P.Eng.
Executive Manager
Compliance, Environment, and Operations Branch
