APPENDIX I

CHANGES TO GUIDE 40

• Initial pressure surveys were required, prior to any sales or production, on all wells drilled in previously undrilled tracts.

• Initial pressure surveys are required, prior to any sales or production, on all exploratory or discovery wells, and development wells drilled outside of existing pool boundaries as defined by the EUB:
  (OIL - survey one well per quarter section)
  (GAS - survey one well per section)
• Initial pressures are not required on step-out wells to existing oil pools if:
  • the well is drilled where step-out is equal to or less than one legal subdivision, and
  • the pool already consists of a minimum of 4 wells (with pressure surveys up to date), and
  • there is not another pool in the same formation in an adjacent quarter section.
  
  
  Any further development in the quarter section, outside of the one LSD buffer zone, requires a pressure survey (one well per quarter section).

• Obtain a bottom-hole deliverability relationship for all producing gas wells prior to the first 3 calendar months of sales

• No change

• Second pressure surveys were required on all wells as above within:
  • first year of sales for Oil Wells
  • second year of sales for Gas Wells

• Second pressures are now a recommended practice, not a requirement.

• Annual Survey Requirements for oil pools on the Annual Survey Schedule:
  • survey 25% of producing wells, based on quarter section spacing
  • the EUB requests that designated coordinating operators coordinate the annual survey with other operators in the pool. (coordinator may be changed upon request).

• This remains the same.
  
  
  
  
• Coordination is required with consequences for non-compliance. Cooperation by other operators in the pool is also required - with a process for non-compliance.

• Annual Survey Requirements for gas pools:
  • survey 25% of total well count or 50% of producing well count, whichever is less
  • list of survey requirements available upon request

• Surveys are now required on 25% of total gas wells in the pool .
  Annual survey schedules will be published for gas pools with designated coordinating operators. The same coordination/ cooperation requirements are in effect as for oil pools.

• Relaxation or exemption from survey requirements granted upon application only.
  • Heavy oil pools were previously granted exemption with density greater than 950kg/m3.

• The EUB will review declining pools, and pools that have reached 50% depletion, and relax survey requirements where appropriate.
  • Pools with density of 925 kg/m3 and over will only be added to the survey schedule if special require- ments exist (this does not pre- clude the initial pressure which is still required for these pools)

• Acoustic Well Sounder Requirements:
  • well must be pumping, and
  • well produces less than 10% water, or
  • acoustic method is validated for well/pool by error analysis or by pressure comparison
  
  
  Acoustics are not acceptable as initial pressure measurements

• "Pumping well" restriction has been removed. Survey results must show a representative reservoir pressure. Validation on oil wells producing greater than 10% water is still required. (See Section 5.2 of Guide 40)

• Duration of shut-in:
  Pressure surveys must report stabilized shut-in reservoir pressures by conducting:
  • buildup test with analysis, including extrapolation to average reservoir pressure
  • static test after 14 days shut-in
  • static test where lesser shut-in is indicated by previous buildup data

• The duration of shut-in remains the same, with more definition for achieving a stabilized reservoir pressure. (See Section 5.1 of Guide 40)

CALENDAR FOR NON-COMPLIANCE OF INITIAL PRESSURE AND DELIVERABILITY TESTING REQUIREMENTS

LEVEL:

Responsibility of Well Licensee/Operator for Initial Pressure Survey

Responsibility of Well Licensee/Operator for Deliverability Test

For new oil wells drilled outside of a pool as designated by Board G-Order, reporting production in 3 calendar months, where no initial pressure test has been received;

For all new gas wells reporting production in 3 calendar months, where no deliverability test has been received;

NOTICE LETTER

Day 1 - Letter to Licensee/Operator indicating 30 days to fulfil initial pressure testing requirement.

Day 1 - Letter to Licensee/Operator indicating 30 days to fulfil deliverability test requirement

LEVEL I
NON- COMPLIANCE LETTER

Day 31 - Letter to Licensee/Operator's Production Manager, outlining:

• $1000. Fee assessed against each well in non- compliance
• 30 days to fulfil initial pressure survey requirement
• Processing of applications to increase production rates for well/pool (eg. special MRL, GPP, CCP, Enhanced Recovery Recognition, penalty relief) will be deferred until pressure data from survey available for technical assessment.

Day 31 - Letter to Licensee/Operator's Production Manager, outlining:

• $1000. Fee assessed against each well in non- compliance
• 30 days to fulfil deliverability survey requirement

LEVEL II

Day 61 - Communication with Vice President of Operations of the licensee/operating company with letter confirming:

• 7 days to address initial pressure requirement
• Action plan to be submitted to the EUB
• Operator/EUB meeting may be scheduled
• Processing of applications to increase production rates for well/pool (eg. special MRL, GPP, CCP, Enhanced Recovery Recognition, penalty relief) will be deferred until pressure data from survey available for technical assessment. Existing approvals to increase production rates contingent upon pressure surveys to monitor depletion, will be reviewed and rescinded where applicable, unless conservation or equity factors prevail (application would be required to reinstate approval once pressure surveys accepted by the EUB). For repeat occurrences, a meeting with the VP will occur.

Day 61 - Communication with Vice President of Operations of the licensee/operating company with letter confirming:

• 7 days to address deliverability requirement
• Action plan to be submitted to the EUB
• Operator/EUB meeting maybe scheduled
• For repeat occurrences, a meeting with the VP will occur.

LEVEL III

Day 68 - Communication with CEO of licensee/ operating company with letter confirming:

• Immediate suspension of operations at non- complying properties
• 14 days to fulfil initial pressure survey requirement
• Copy of letter to EUB Corporate Compliance Group (CCG) and Field Office for follow-up on suspension. CCG to include non-compliance information in Corporate Performance Record and database, enforcement may be accelerated in other areas. This level may be skipped for repeat occurrences, and escalate directly to closure as detailed in Level IV.

Day 68 - Communication with CEO of licensee/ operating company with letter confirming:

• Immediate suspension of operations at non- complying properties
• 14 days to fulfil deliverability requirement
• Copy of letter to EUB Corporate Compliance Group (CCG) and Field Office for follow-up on suspension. CCG to include non-compliance information in Corporate Performance Record and database, enforcement may be accelerated in other areas. This level may be skipped for repeat occurrences, and escalate directly to closure as detailed in Level IV.

LEVEL IV

Day 69/83 - Follow-up on suspension request will begin immediately. Further Enforcement Action on the survey requirements will commence in 14 days, by CCG:

• Issuance of Formal Closure Order (which can lead to Abandonment Order in 30 days) No activity permitted by operator at wellsite without EUB permission, well(s) chained and site posted, meeting required between CCG and officers of non-complying company, corporate explanation and detailed plan filed with EUB to ensure no repeat of non- compliance, operator activities/submissions treated as non-routine, corporate focussed audit requirements reflective of non-routine status.

Day 69/83 - Follow-up on suspension request will begin immediately. Further Enforcement Action on the survey requirements will commence in 14 days, by CCG:

• Issuance of Formal Closure Order (which can lead to Abandonment Order in 30 days) No activity permitted by operator at wellsite without EUB permission, well(s) chained and site posted, meeting required between CCG and officers of non-complying company, corporate explanation and detailed plan filed with EUB to ensure no repeat of non-compliance, operator activities/ submissions treated as non-routine, corporate focussed audit requirements reflective of non-routine status.

LEVEL V

Inquiry into company operations, if necessary

Inquiry into company operations, if necessary

CALENDAR FOR NON-COMPLIANCE OF ANNUAL OIL AND GAS POOL PRESSURE SURVEY REQUIREMENTS

LEVEL:

Responsibility of Coordinating Operator for Pool Surveys

Responsibility of Well Licensees/Operators for Cooperation and Individual Well Tests

For all oil and gas pools requiring a pressure survey in the current year, as identified on the Annual Pool Pressure Survey Schedule, where requirements have not been fulfilled by 31 October (including surveys submitted that do not meet acceptable criteria):

For the Licensees/Operators of wells in the oil and gas pools requiring a pool pressure survey in the current year, that have not cooperated with the coordinated pool survey plan:

NOTICE LETTER

1 November - Letter to Coordinating Operator indicating 60 days to complete pool testing requirements. [Coordinator can submit documentation of efforts to coordinate survey, to the EUB within 14 days, to transfer responsibility and EUB enforcement actions to non-cooperative Licensee(s)/Operator(s)] See next column

15 November - Letter to non-cooperative well Licensee(s)/Operator(s) indicating:

• 15 days to provide coordinating operator with details of plans to fulfil survey requirements, with copy to the EUB
• 45 days to complete their portion of the testing requirements

LEVEL I
NON- COMPLIANCE LETTER

1 April - Letter to Production Manager of Coordinating Company outlining:

• $1000. Fee assessed against each pool in non- compliance
• 30 days to fulfil pressure survey requirements for pool
• Processing of applications to increase production rates for well/pool (eg. special MRL, GPP, CCP, Enhanced Recovery Recognition, penalty relief) will be deferred until pressure data from survey available for technical assessment.

1 April - Letter to Production Manager of well Licensee(s)/Operator(s) outlining:

• $1000 fee assessed against each non-compliant operator in pool
• 30 days to fulfil survey requirements for that portion of pool
• Processing of applications to increase production rates for well/pool (eg. special MRL, GPP, CCP, Enhanced Recovery Recognition, penalty relief) will be deferred until pressure data from survey available for technical assessment

LEVEL II

1 May - Communication with Vice President of Operations of Coordinating company with letter confirming:

• 7 days to address requirements
• Action plan to be submitted to the EUB
• Operator/EUB meeting may be scheduled
• Processing of applications to increase production rates for well/pool (eg. special MRL, GPP, CCP, Enhanced Recovery Recognition, penalty relief) will be deferred until pressure data from survey available for technical assessment. Existing approvals to increase production rates contingent upon pressure surveys to monitor depletion, will be reviewed and rescinded where applicable unless conservation or equity factors prevail (application would be required to reinstate approval once pressure surveys accepted by the EUB). For repeat occurrences, a meeting with the VP will occur.

1 May - Communication with Vice President of Operations of the Non-Cooperating company with letter confirming:

• 7 days to address requirements
• Action plan to be submitted to the EUB
• Operator/EUB meeting may be scheduled
• Processing of applications to increase production rates for well/pool (eg. special MRL, GPP, CCP, Enhanced Recovery Recognition, penalty relief) will be deferred until pressure data from survey available for technical assessment. Existing approvals to increase production rates contingent upon pressure surveys to monitor depletion, will be reviewed and rescinded where applicable unless conservation or equity factors prevail (application would be required to reinstate approval once pressure surveys accepted by the EUB). For repeat occurrences, a meeting with the VP will occur.

LEVEL III

8 May - Communication with CEO of Coordinating company with letter confirming:

• Immediate suspension of operations at non- complying properties (wells to be selected by the EUB)
• 14 days to fulfil pressure survey requirements
• Copy of letter to EUB Corporate Compliance Group (CCG) and Field Office for follow-up on suspension. CCG to include non-compliance information in Corporate Performance Record and database, enforcement may be accelerated in other areas.
• This level may be skipped for repeat occurrences, and escalate directly to closure as detailed in Level IV.

8 May - Communication with CEO of Non- Cooperating company with letter confirming:

• Immediate suspension of operations of non- complying properties (wells to be selected by the EUB)
• 14 days to fulfil pressure survey requirements
• Copy of letter to EUB CCG and Field Office for follow-up on suspension. CCG to include non- compliance information on Corporate Performance Record and database, enforcement may be accelerated in other areas.
• This level may be skipped for repeat occurrences, and escalate directly to closure as detailed in Level IV.

LEVEL IV

9 - 22 May - Follow-up with suspension request will begin immediately. Further Enforcement Action on the survey requirements will commence in 14 days, by CCG:

• Issuance of Formal Closure Order (which can lead to Abandonment Order in 30 days). No activity permitted by operator at wellsite without EUB permission, well(s) chained and site posted, meeting required between CCG and officers of non-complying company, corporate explanation and detailed plan filed with EUB to ensure no repeat of non- compliance, operator activities/submissions treated as non-routine, corporate focussed audit requirements reflective of non-routine status.

9 - 22 May - Follow-up with suspension request will begin immediately. Further Enforcement Action on the survey requirements will commence in 14 days, by CCG:

• Issuance of Formal Closure Order (which can lead to Abandonment Order in 30 days). No activity permitted by operator at wellsite without EUB permission, well(s) chained and site posted, meeting required between CCG and officers of non- complying company, corporate explanation and detailed plan filed with EUB to ensure no repeat of non-compliance, operator activities/ submissions treated as non-routine, corporate focussed audit requirements reflective of non-routine status.

LEVEL V

Inquiry into company operations, if necessary

Inquiry into company operations, if necessary