ngl training oct 2002

7/27/2019 Ngl Training Oct 2002

1/47

Natural Gas Liquids Royalty

Framework Changes

Production Month 2002-10

Implementation


2/47

NGL Royalty Framework Changes- May, 2004 2

Agenda

Introductions

Background

Key Outcomes

Implementation Details

In-Stream Component (ISC) Reporting

Royalty Calculation using Facility Averages

Facility Average Illustration


3/47

NGL Royalty Framework Changes- May, 2004 3

List of Acronyms/Abbrev.

BT Battery

C1 Methane

C2 Ethane

CAP Corporate Average Price

CGF Corporate Gas Factor CSO Common Stream Operator

FAP Facility Average Price (Net of Gas Trans Adj)

FARR% Facility Average Royalty Rate

GJ gigajoules

GP Gas Plant GRP Gas Reference Price

GS Gathering System


4/47

NGL Royalty Framework Changes

- May, 2004 4

List of Acronyms/Abbrev.

IATD Intra-Alberta Transportation Deduction

IF Injection Facility

ISC In-Stream Component Within Residue Gas

MS Meter Station

NGL Natural Gas Liquids OAF Owner Allocation Factor

PL Pipeline

R% Royalty Rate

RARR% Raw Gas Average Royalty Rate

RGA Raw Gas Allocation Registry The Petroleum Registry of Alberta

SAF Stream Allocation Factor


5/47


- May, 2004 5

Background

Policy Announcement Dec 1999 to align royaltyframework with Industry and marketdevelopments.

Key Changes:Distinct royalty treatment for recovered Ethane (Field

Ethane)

Royalty recognition of NGL components (In-Stream

Components or ISC) in residue gasSub-Committees (Industry/Govt) established

between Jan 2000 July 2001 to definebusiness rules.


6/47


- May, 2004 6

Key Outcomes

Field Ethane will be assessed at C2 R% and C2 NetReference Price ($/gj) that will be different from the GasR% and Gas Net Reference Price.

Royalty rates for Propane and Butanes will change fromthe flat rate of 30%. Subject to an expected maximumrate of 30% and minimum rate of 15%, the followingformula will be used:

R% = 15SP + 40(PP-SP)

PPSP is the select price for the product

PP is the Propane par price for the Propane royalty rate and theButanes par price for the Butanes royalty rate.


7/47


- May, 2004 7

Key Outcomes..Contd

No change to royalty trigger points.

Gas royalty will be assessed on the basis of In-StreamComponents (ISC). This will be achieved by assessing

royalty on product GAS using facility averages (rate andprice) that are based on the ISC compositions of theroyalty trigger volumes.

Gas royalty for CAP clients will be based on facility

average rates but valuation continues to be based onCAP, where monthly CAP estimate is Client CGF x GRP.


8/47


- May, 2004 8

Key Outcomes..Contd

Each ISC product will have its own distinct royalty rate,reference price and adjusted IATD which will be used inthe facility average royalty rate and price calculations.

Department of Energy (DOE) will invoice royalty onproduct GAS using the SAF/OAF and volumetric detailsfrom the Registry.

Implementation coinciding with the Registry

Production Month 2002-10.


9/47


- May, 2004 9

Gas & ISC Relationship

Gas View Product Code

Gas* Gas

*has old/new vintage

ISC View of GasProduct Code Methane ISC* C1-IC

Ethane ISC* C2-IC

Propane ISC C3-IC

Butanes ISC C4-IC Pentanes Plus ISC* C5+-IC

Carbon Dioxide ISC** CO2-IC

Helium ISC** HE-IC

Hydrogen ISC** H2-IC

Nitrogen ISC** N2-IC

Oxygen ISC** O2-IC

Sulphur ISC** Sul-IC Hydrogen Sulphide ISC**H2S-IC

*has old/new vintage

**inert


10/47


- May, 2004 10

Implementation Details

Current

C2 R% = Gas R%

C2 Ref Price = GRP

($/gj)Gas Royalty based on

Gas GJ @ Gas R% andGRP

Gas GJ subject toOld/New Gas R%

At Implementation

C2 R% Gas R%

C2 Ref Price = C2-IC

Ref Price ($/gj)Gas Royalty based on

Gas GJ @ Gas R%(=FARR%) and FAP

Gas GJ subject toOld/New Gas R%(=FARR%)


11/47


- May, 2004 11

FARR% & FAP for Gas

Facility level royalty rate and valuation price for Gas.

Used to assess royalty trigger Gas quantities at chargefacility.

Uses the ISC compositions (excluding inerts) of royaltytrigger quantities at the charge facility to calculate thatfacilitys weighted average royalty rate and valuationprice (see example illustration).

ISC compositions are reported to the Registry by meter

station operators, common stream operators and somefacility operators (see Registry ISC Reporting Tableslide).


12/47


- May, 2004 12

FARR% & FAP for

Gas..Contd

The royalty rates for the individual ISC products will bethe same as the royalty rates for the extracted products(e.g. C2-IC R% = C2 R%).

The vintage for the individual ISC products will be thesame as the old/new vintage for the extracted products.

The reference prices for the individual ISC products willdiffer from the reference prices of Gas and the extracted

products (exception C2 Ref Price=C2-IC Ref Price).


13/47


- May, 2004 13

Low Productivity

Allowance Adjustment

No change to low productivity well allowance eligibility.

Low productivity allowance adjustment continues toapply to eligible Gas and Ethane production.

For eligible Gas and Ethane production, the Crownroyalty rate is calculated as:

R% = RC (RM 5) x (16.9 ADP)2

16.92ADP is the average daily production of gas for the well event for

the production month (103

m3

).RC is the Old/New FARR if production is Gas and the Ethane

Old/New royalty rate if production is Ethane.

RM is the Old/New royalty rate for Methane ISC


14/47


- May, 2004 14

Registry ISC Reporting

ISC volume and energy information are reported in theRegistry, as a further breakdown of the Gas volume andenergy.

ISC factors are reported on Registry RGA submissions. Submissions to the Registry can be online entry or batch

file entry, along with other volumetric submissions.

Not all volumetric activities in the Registry require ISC

reporting (see Registry ISC Reporting Table slide).


15/47


- May, 2004 15

Registry ISC

Reporting..Contd

ISC volume and energy must be reported to 3 decimalplaces for desired precision.

Where ISC reporting is required, aggregate ISC volumeand energy must equal corresponding Gas volume andenergy (within a tolerance of 0.100 103m3 and 1.000 gj)or both ISC and Gas volumetric submissions will berejected.

ISC heat value (gj/103m3) must be within the specifiedheat value range for each ISC product (see ISC HeatRange Table slide).


16/47


- May, 2004 16

ISC Heat Range Table

ISC Product Code ISC Product Description Heat Value Range

C1-IC Methane 36.00038.700

C2-IC Ethane ISC 63.00069.000

C3-IC Propane ISC 91.00097.000

C4-IC Butanes ISC 118.500124.700

C5+-IC Pentanes Plus ISC 145.700

290.000CO2-IC Carbon Dioxide ISC 0.0000.000

H2-IC Hydrogen ISC 9.00015.000

H2S-IC Hydrogen Sulphide ISC 20.80026.800

HE-IC Helium ISC 0.0000.000

N2-IC Nitrogen ISC 0.0000.000

O2-IC Oxygen ISC 0.000

0.000SUL-IC Sulphur ISC 0.0000.000


17/47


- May, 2004 17


TableISC Reporting Table Legend

AB Alberta IF Injection Facility

BT Battery IN Industrial

CO Commercial MS Meter Station

DISP Disposition PL Pipeline

EG Electrical Generation RE Residential

GP Gas Plant REC Receipt

GS Gathering System R1/R2 Residential Pipeline

MC Miscellaneous OT Other

CT Custom Treatment Plant


18/47


- May, 2004 18


Table..Contd

For activity at reporting facility and from/to location, submitter must reportISC, along with the Gas volumetric submission to the Registry.

Submitter Reporting Facility Activity From/To Location

Pipeline/MeterStation Operator

AB MS subtype 631or 637 whereRegistry autopopulation flowthrough is notelected

DISP AB PL auto-createdREC (no ISC)

Common StreamOperator

AB MS subtype 631or 637 where

Registry autopopulation flowthrough is notelected

REC AB BT/GS/GP/IFauto-created DISP


19/47


- May, 2004 19


Table..Contd

For activity at reporting facility and from/to location, submitter must report ISC,along with the Gas volumetric submission to the Registry.


Pipeline/Meter StationOperator

AB MS subtype 631 or637 where Registry

auto population flowthrough is elected

DISP AB PL auto-createdREC (no ISC)

AB MS auto-createdREC

AB BT/GS/GP/IF auto-created DISP

Pipeline/Meter StationOperator

AB MS subtype 632 or638 where Registryauto population flowthrough is not elected

DISP AB BT/GS/GP/IF auto-created REC(ISC created for IFonly)


20/47


- May, 2004 20


Table..Contd




AB MS subtype 632 or638 where Registry

auto population flowthrough is not elected

REC AB PL auto-createdDISP (no ISC)


AB MS subtype 632 or638 where Registryauto population flow

through is elected

REC AB PL auto-createdDISP (no ISC)

AB MS auto-createdDISPAB BT/GS/GP/IF auto-created REC(ISC created for IFonly)


21/47


- May, 2004 21


Table..Contd



Pipeline/Meter Station

Operator

AB MS subtype 633 or

639 where Registryauto population flowthrough is not elected

DISP AB BT/GS/GP/IF auto-

created REC(ISC created for IFonly)

Common Stream

Operator

AB MS subtype 633 or

639 where Registryauto population flowthrough is not elected

REC AB PL auto-created

DISP (no ISC)


22/47


- May, 2004 22


Table..Contd



Pipeline/Meter

Station Operator

AB MS subtype 633

or 639 whereRegistry autopopulation flowthrough is elected

DISP AB PL auto-created

DISP (no ISC)AB MS auto-createdRECAB/BC/SK/AnyAB BT/GS/GP/IFauto-created REC

(ISC created for IFonly)

Mainline StraddlePlant Operator

AB GP subtypeMainline Straddle

REC AB BT/GS/GP auto-created DISP


23/47


- May, 2004 23


Table..Contd



Field Straddle PlantOperator AB GP subtype FieldStraddle (terminatedeffective 2006-01)

REC AB BT/GS/GP auto-created DISP

Injection FacilityOperator

AB IF REC AB/BC/SK Any(except MS)

Battery, Gathering

System or Gas PlantOperator

AB BT/GS/GP DISP Non reporting AB

MS/PL

Battery, GatheringSystem or Gas PlantOperator

AB BT/GS/GP DISP AB RE/CO/IN/EG/R1/

R2/MC/OT/CT


24/47


- May, 2004 24


Table..Contd



Battery, GatheringSystem or Gas PlantOperator

AB BT/GS/GP DISP Any non AB location

Raw Gas Seller Report ISC factors of raw gas stream on RGA submission.


25/47


- May, 2004 25

ISC Volumetric Submission

in Registry

Illustration of ISC Reporting at MS


26/47


- May, 2004 26

ISC Volumetric Submission

in Registry

Illustration of ISC Reporting at MS


27/47


- May, 2004 27

Raw Gas Sale and ISC

Factor Reporting on RGA

Raw Gas Sales are identified on Registry RGAsubmissions.

Raw Gas Sales that are subsequently processed or used

as lease fuel are assessed royalty at RARR%, ratherthan FARR%.

All other Raw Gas Sales will be assessed at FARR %.

RARR% is based on the ISC factors (excluding inerts)identified by the seller on the RGA, rather than the ISC

composition of the facility. Old/New RARR% = (ISC Product Factor on RGA x ISC

Product Old/New R%) / ISC Product Factor on RGA(see example illustration).

R G D li i T


28/47


- May, 2004 28

Raw Gas Deliveries To

Injection

Crown royalty for raw gas delivered to injection(reported in Registry at a Battery or Gathering Systemas a disposition to an Injection Facility) is assessed at

the FARR% of the Injection Facility and the FAP of theReproducing Facility.


29/47


- May, 2004 29

Royalty Variables for Crown Royalty

and Injection Credit Calculations

Charge Type Product

Unit

R% Valuation Price

Crown Royalty Gas

GJ

FARR% of Producing

Facility(based on all ISCroyalty triggerdispositionsatproducingfacility)

FAP of Producing

Facility(based on all ISCroyalty triggerdispositionsatproducingfacility)

Injection Credit Gas

GJ

FARR% of Injection

Facility(based on all ISCroyalty triggerreceiptsatinjectionfacility)

FAP of Reproducing

Facility(based on all ISCroyalty triggerdispositionsatreproducingfacility)


30/47


- May, 2004 30

Royalty Variables for Crown Royalty and

Injection Credit Calculations..Contd

Charge Type Product

Unit

R% Valuation Price

*Crown RoyaltyExceptions -

Raw Gas Deliveredto Injection

Gas

GJ

FARR% of InjectionFacility

(based on all ISCroyalty triggerreceiptsatinjectionfacility)

FAP of ReproducingFacility

(based on all ISCroyalty triggerdispositionsatreproducingfacility)


Raw Gas SaleSubsequentlyProcessed

Gas

GJ

RARR%

(based on ISCcomposition factorson RGA)

80% GRP


31/47


- May, 2004 31

Royalty Variables for Gas Crown

Royalty and Injection Credit..Contd

Charge Type Product

Unit

R% Valuation Price


Raw Gas Sale Usedas Lease Fuel

Gas

GJ

RARR%

(based on ISC

composition factorson RGA)

100% GRP


Special Agreements

e.g. Medicine HatAgreement

Gas

GJ

FARR% of ProducingFacility

(based on all ISC

royalty triggerdispositionsatproducingfacility)

% GRP based onAgreement


32/47


- May, 2004 32

Rate/Price Defaults

If no. Use

RARR% FARR%

FARR% C1-IC R%

FAP (for Crown royalty) 100% GRP

FAP of ReproducingFacility (for injectioncredit and Crown royaltyof raw gas delivered toinjection)

FAP of Injection Facility

(based on all ISC royalty

trigger receiptsatinjectionfacility)

If defaults are used, they will be identified on the Default Report. (see

sample report)

ISC B l i d FARR%/FAP


33/47


- May, 2004 33

ISC Balancing and FARR%/FAP

Using ISC Default

Effective December 2004 calendar month, theISC receipts at meter stations reported by meterstation operators or common stream operators

(CSO), must equal the meter station dispositionactivities reported by pipeline operators. Meterstation receipts impact the FARR% and FAPcalculations.For ISC imbalances that existed prior to this

change, the DOE continues to perform ISCBalancing and uses the ISC default in calculatingthe FARR%/FAP calculations.


34/47


- May, 2004 34

ISC Balancing and FARR%/FAP

Using ISC Default..Contd

If there is a discrepancy in meter station receipts for anISC product, the C5+-IC R% and C5+-IC Net Ref Pricewill be used for that product in the FARR% and FAPcalculations. (see example illustration)

The meter station operator or CSO who submitted themeter station receipts will receive a discrepancy noticefrom DOE. Notice is generated on day 35 followingmonth of production. (see sample report)

Royalty clients will be notified in Default Report and insupporting reports of FARR%/FAP calculations whereISC default values have been used. (see sample report)

FARR% RARR% FAP


35/47


- May, 2004 35

FARR%, RARR%, FAP

Illustration

See Excel attachment


36/47


- May, 2004 36

FARR% Calculation for Gas

Old FARR% = (ISC Product Energy x ISC Product Old R%) / ISC Product Energy

New FARR% = (ISC Product Energy x ISC Product New R%) / ISC Product Energy

ISC product energy refers to ISC dispositions at the chargefacility that are royalty triggers. If charge facility is aninjection facility, ISC product energy refers to ISC receiptsrather than dispositions.

Energy from inerts are not included in FARR% calculation.

RARR% C l l ti f


37/47


- May, 2004 37

RARR% Calculation for raw

gas sales

Old RARR% =

(ISC Product Factor on RGA x ISC Product Old R%) / ISC Product Factor on RGANew RARR% = (ISC Product Factor on RGA x ISC Product New R%) / ISC Product Factor on RGA

ISC factors of inerts are not included in RARR% calculation.


38/47


- May, 2004 38

FAP Calculation for Gas

FAP =Facility Reference Price Facility Gas Transportation

Adjustment

Facility Reference Price = (ISC Product Energy x ISC Product Ref Price) /

ISC Product Energy

Facility Gas Transportation Adjustment =[Royalty Trigger Factor 1] x Facility Adjusted IATD

Royalty Trigger Factor = (ISC Product Energy x Meter Station Factor) /

ISC Product Energy

FAP Calc lation for


39/47


- May, 2004 39

FAP Calculation for

Gas..Contd

Facility Adjusted IATD = (ISC Product Energy x Adjusted IATD of ISC) /

ISC Product Energy

ISC product energy refers to ISC dispositions at the chargefacility that are royalty triggers. If charge facility is aninjection facility, ISC product energy refers to ISC receiptsrather than dispositions.

ISC product energy in FARR% and FAP calculation is thesame.

If the delivery/receipt location of the ISC product energy isnot an included pipeline meter station, the meter stationfactor for the product energy will be 1.00.

Sample Crown Royalty


40/47


- May, 2004 40


Calculation Detail Report

Issue Date: 2002-11-30 Royalty Payer Code:

Royalty Client: 0A0A Name:

Name: BOB'S RESOURCES LTD Address:

Facility: AB-GS-0003941

Production Period: 2002-09

Raw Corporate Royalty

Royalty Reference Price Gas Gas Adjusted Trigger Transportation Fractionation Valuation Conversion

Product Price Adjustment Factor Factor IATD Factor Adjustment Rate $ Price Factor

GAS 4.29 0.111 0.95 -0.01 4.30 1

1

Royalty Crown Gross Royalty

Product Quantity Heat Interest% Type % Rate Quantity Heat Royalty $ Exemption $

Charge Type: Crown Royalty Stream Id: AB-WI-100142201914W400

GAS 1063.3 42402 100.0000000 OLD 100 34.85075 370.56 14777.50 63,543.24 0

Charge Type: Provisional Assessment Stream Id:

GAS 759.5 31141 100.0000000 OLD 100 35.00000 265.84 10899.40 46,758.21 0

Charge Type: Injection Credit Stream Id: AB-WI-1D0020204302W400

GAS 790.9 31540 100.0000000 NEW 100 34.85075 275.63 10991.93 -47,265.28 0

TOTAL

FACILITY: AB-GS-00048

CHARGE TYPE: Crown Royal

Provisional

EOR Adjustm

Injection C

INTEREST CHARGE

CROWN ROYALTY DETAIL

CALCULATION

Vintagelient_Volumetric_Totals

Invoice #: 00000180171

Crown_Royalty



41/47


- May, 2004 41


Calculation Detail Report(Raw Gas)

Issue Date: 2002-11-30 Royalty Payer Code:

Royalty Client: 0A0A Name:

Name: BOB'S RESOURCES LTD Address:

Facility: AB-GS-0004841

Production Period: 2002-09

Raw Corporate Royalty

Royalty Reference Price Gas Gas Adjusted Trigger Transportation Fractionation Valuation Conversion

Product Price Adjustment Factor Factor IATD Factor Adjustment Rate $ Price Factor

GAS 3.33 0.290 1.12 0.03 3.30 1

GAS 3.33 0.80 0.290 1.00 0.00 2.66 1

Royalty Crown Gross Royalty

Product Quantity Heat Interest% Type % Rate Quantity Heat Royalty $ Exemption $

Charge Type: Crown Royalty Stream Id: AB-WI-10141304220W400

GAS 25.6 1091 100.0000000 NEW 100 34.80211 8.91 379.69 1,251.16 0

Charge Type: Provisional Assessment Stream Id:

GAS 333.3 13176 100.0000000 NEW 100 35 116.66 4611.60 15,356.63 0

Charge Type: EOR Adjustment Stream Id: AB-IS-0010400

GAS 59.7 2422 100.0000000 NEW 29.37 34.80211 6.10 247.56 659.50 0

Charge Type: Injection Credit Stream Id: AB-IS-0000400

GAS 15.9 680 100.0000000 NEW 29.37 34.80211 1.63 69.51 185.16 0

TOTAL

FACILITY: AB-GS-00048

CHARGE TYPE: Crown Royal

Provisional

EOR Adjustm

Injection C

INTEREST CHARGE

CROWN ROYALTY DETAIL

CALCULATION

Vintagelient_Volumetric_Total

Invoice #: 00000180171

Crown_Royalty

FAP,

80% GRP,

100% GRP,

FARR%,

RARR%,

C1-IC R%


42/47


- May, 2004 42

Sample FARR Report

Issue Date: 2000-11-30

Royalty Client: 0JPA Royalty Payer: 0JPA

Name: FRANKS DRILLING Name: FRANKS DRILLING

Address: 350 7 AVE SW SUITE 4000

RED DEER, AB

Facility

Prodctn

Period

Vintage

Type Product

Delivery

Location

Out of

Bal ance? Heat (G J) R oyalt y Ra te %

Base Royalty

Heat (GJ)

Avg.

Royalty

Rate %

AB GP 0123456 2002-10 OLD C1-IC AB GP 1234567 100.000 35.00000% 35.000

AB IF 1234567 200.000 35.00000% 70.000AB M . . .

-I AB P . . .

AB IF 1234567 35.000 35.00000% 12.250

AB MS 1234567 80.000 35.00000% 28.000

C3-IC AB GP 1234567 100.000 35.00000% 35.000

AB IF 1234567 200.000 35.00000% 70.000

AB MS 1234567 50.000 35.00000% 17.500

C4-IC AB GP 1234567 200.000 35.00000% 70.000

AB IF 1234567 300.000 35.00000% 105.000

AB MS 1234567 Y 175.000 43.55748% 76.226

C5+-IC AB GP 1234567 200.000 43.55748% 87.115

, . . .

AB GP 0123456 2002-10 NEW C1-IC AB GP 1234567 100.000 28.64423% 28.644AB IF 1234567 200.000 28.64423% 57.288

AB M . . .

-I AB P . . .AB IF 1234567 35.000 30.00000% 10.500

AB MS 1234567 80.000 30.00000% 24.000

C3-IC AB GP 1234567 100.000 30.00000% 30.000

AB IF 1234567 200.000 30.00000% 60.000

AB MS 1234567 50.000 30.00000% 15.000

C4-IC AB GP 1234567 200.000 30.00000% 60.000

AB IF 1234567 300.000 30.00000% 90.000

AB MS 1234567 Y 175.000 32.00883% 56.015

C5+-IC AB GP 1234567 200.000 32.00883% 64.018

1,710.000 515.788 30.1630

Reference Number: 3475153 Page

Facility Average Royalty Rate (FARR) Supporting Details

Invoice #:00000146038


43/47


- May, 2004 43

Sample RARR Report


44/47


- May, 2004 44

Sample FAP Report


45/47


- May, 2004 45

Sample Default Report

Billing Period: 2002-10-01

Issue Date: 2002-12-23

Royalty Payer Name: FRANK'S DRILLING

Royalty Payer Id: 0066

Invoice Number: 143241234

Charge Production Default Default

Type Facility Stream Id Period Item Form Description

Royalty Client: 0066 FRANK'S DRILLING LTD

Crown Royalty AB-GP-0001004 WG1 2002-05 Royalty Trigger TC20 TC20 not filed: 0.0

Crown Royalty AB-BT-1330492 UN01112 2002-06 Crown Interest Exhibit A 100.0% Crown Interest

Crown Royalty AB-GS-0002228 UN00911 2002-07 Crown Interest Exhibit A 100.0% Crown Interest

Crown Royalty AB-GS-0002228 UN00911 2002-08 Royalty Trigger TC20 TC20 not filed: 0.0

Crown Royalty AB-GS-0002228 UN44855 2002-09 Royalty Trigger TC20 TC20 not filed: 0.0

Crown Royalty AB-GS-0002228 2002-10 Facility Averages Volumetric ISC Imbalance: C5+-IC

Crown Royalty AB-GS-0002228 2002-10 FARR Volumetric ISC not filed: C1-ICCrown Royalty AB-GS-0002228 2002-10 FAP Volumetric ISC not filed: GRP

Injection Credit AB-GS-0002228 2002-10 FAP Volumetric ISC not filed at Reproducing

Facility: FAP at IF

Reference Number: 87931 Page 1

CROWN ROYALTY CALCULATION

DEFAULTS REPORT

Sample ISC Balancing


46/47


- May, 2004 46

Sample ISC Balancing

Discrepancy Notification


47/47


The End

ngl training oct 2002

Documents