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CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Committee's General Membership:

high level of concern that the Procedures Task Force may be working too quickly towards the implementation of a new set of procedures
successfully curtail the ability of the producer community to exaggerate its available supply
other areas of the industry free to continue with practices achieving similar results

Intent of the Task Force:

provide its recommended solution to the General Membership as soon as possible
General Membership not expected to approve implementation of proposed procedural changes until it is satisfied that all areas of concern addressed and changes affecting the rest of industry are ready for simultaneous implementation
Committee Executive will seek approval of the proposed package of new procedures in principal in the next several days. Approval for implementation will be sought separately once all the areas requiring simultaneous implementation are ready.

CRUDE OIL LOGISTICS COMMITTEE PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Other areas requiring simultaneous implementation:

control on IPL of the nomination of materials downstream of an apportionment point that are actually intended to be delivered upstream of that apportionment point
control of the nominating of the same volumes to IPL and TMPL or Express
control of volumes nominated to IPL and/or TMPL that are actually committed to local markets
control of double nomination of volumes on bi-directional pipelines
Committee is prepared to assist industry in the resolution of these issues.

CRUDE OIL LOGISTICS COMMITTEE PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

CAPABILITY NUMBERS

Capability numbers for all batteries, cleaning plants, truck terminals, gathering pipelines and feeder pipelines not directly connected to trunk lines or local markets shall be split into two distinct processes:

Base Capability numbers shall be set on an historic basis using the existing Capability number formula being half the sum of the average of three months deliveries and the highest of the three months all stated in cubic metres.

The applicable three months shall be those three months ending two months before the month being forecasted.

Base Capability number shall be calculated by the operator of the facility for which the Base Capability number is being set and shall be verified for accuracy by the downstream receiving facility operator.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

Base Capability numbers adversely affected by the reduction of actual deliveries by a force majeure incident as set forth in the then current IPL tariff regulations, shall be subject to review and possible adjustment.

Base Capability numbers adversely affected by the reduction of actual deliveries by apportionment on gathering pipelines, feeder pipelines, trunk lines or other facilities, shall not be subject to review or adjustment.

Operator of each facility responsible for issuing Forms 'A' forecasts shall present an original Form 'A' or original Transfer Form 'A' or equivalent to each downstream receiving facility operator each month a Base Capability number is required at the time and date specified in the Committee's Forecast Reporting Calendar.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

If additional space is requested, the original Form 'A' or original Transfer Form 'A' or equivalent presented to the downstream receiving facility and to the Committee's Administrative Office shall indicate what individual requests for increases to the Base Capability number are being made.

To the Base Capability number may be added approved new production forecasts covering new wells with the option of applying for:

specified volumes for new vertical and new horizontal wells set to a maximum of the monthly equivalent of 20 cubic metres and 100 cubic metres per day respectively. New production allowances shall be at full volume for three months, one-third volume for a fourth month and one-sixth volume for a fifth month. The factored volumes for the last two months allow actual production to catch up to the historic formula and create a full and accurate history.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

The first month of such forecast shall be the first forecast month after the date the well licence information is verified. Except in a case in which the well begins production in the month it is licenced, the second month of such forecast shall be the month in which the new well is spudded as published in the "Daily Oil Bulletin".

New production status shall be approved by the Committee's Administrative Office utilizing information provided by the appropriate drilling licence granting agency in each jurisdiction and information then currently published in the Daily Oil Bulletin;

or,

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

specified volumes for new vertical and new horizontal wells set to a maximum of 2400 cubic metres and 12000 cubic metres respectively over a five month initial production period with the production profile set at the outset and with the first forecast month being the month containing the original spud date.

or,

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

specified volumes for new vertical and new horizontal wells set to maximum cubic metre volumes and production profile at the outset by the operator of the new production well and with the first forecast month being the month containing the original spud date.

In instances where this option is chosen, volumes forecasted and not met shall be subject to an equivalent space penalty at the battery level during the immediately upcoming time period equivalent to the time period during which the shortfall occurred.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

The Well operator has the option to have forecasted space turned back with no penalty as long as the space is returned by the end of business two days before the Form 'C' release date.

'S' Report or equivalent proof shall be required to be submitted to support actual production claims. Base Capability numbers adversely affected by the reduction of actual deliveries by a force majeure incident as set forth in the then current IPL tariff regulations, shall be subject to review and possible adjustment.

Base Capability numbers adversely affected by the reduction of actual deliveries by apportionment on gathering pipelines, feeder pipelines, trunk lines or other facilities, shall not be subject to review or adjustment.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

New production at bitumen mining facilities shall be set to maximum cubic metre volumes and production profile at the outset by the operator of the new production and with the first forecast month being the month set by the operator. The operator will provide volumes and a delivery profile for five months. By the end of this period, a history shall be in place.

Volumes forecasted and not met shall be subject to an equivalent space penalty at the facility level during the immediately upcoming time period equivalent to the time period during which the shortfall occurred.

The operator has the option to have forecasted space turned back with no penalty as long as the space is returned by the end of business two days before the Form 'C' release date.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

Base Capability numbers adversely affected by the reduction of actual deliveries by a force majeure incident as set forth in the then current IPL tariff regulations, shall be subject to review and possible adjustment.

Except in the case of new production or in other cases stated herein, where wells/batteries do not deliver every month, formulae have been developed to allow a protection for the production involved.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

If one or two of the three months used to calculate the Base Capability number has a zero volume, then the operator of the battery or other facility may apply to the Committee's Administrative Office for permission to use the zero delivery formulae set out below. The operator shall provide the Committee's Administrative Office with a fully documented delivery profile for all of the crude and/or condensate out of their facility over the past six months.

Applications shall be submitted along with all required information five working days before the end of the second month before the month of production. (Eg. For the production month, March, the application shall be submitted not later than five working days before the end of January.)

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

If the application is approved, and if one or two of the months used to create the Base Capability number has a zero volume, that month's volume shall be deemed to be the average of the other two months or the volume of the one month with a non-zero volume.

Volumes forecasted and not met shall be subject to an equivalent space penalty at the battery level during the immediately upcoming time period equivalent to the time period during which the shortfall occurred.

The Well operator has the option to have forecasted space turned back with no penalty as long as the space is returned by the end of business two days before the Form 'C' release date.

'S' Report or equivalent proof would be required to be submitted to support actual production claims.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

Where no deliveries have been made during the three months used to calculate the Base Capability number and where the producer wishes to forecast production coming back on stream from Restarted production or other deliveries, a volume of not more than 100% of the average of the volume delivered during the last three months of continuous delivery shall be forecasted.

Failure to deliver volumes forecast shall be met with a freeze on forecasting this facility in future at the level of actual first month deliveries until a history is developed.

'S' Report or equivalent shall be required to be submitted to support actual production claims.

This process shall be overseen by the Committee's Administrative Office.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

Where deliveries have been made during the three months used to calculate the Base Capability number but these are considered non-representative of producibility, and where the producer wishes to forecast a ramping up of production, the operator of the production facility shall apply for an increase to the Base Capability number on the basis of Ramped up production of a volume of not more than 10% of the Base Capability number.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

Failure to deliver volumes forecast shall be met with a freeze on forecasting this facility in future at the level of actual first month deliveries until a history is developed.

This process shall be overseen by the Committee's Administrative Office.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

Where a producing well is granted G.P.P. status by the Alberta Energy and Utilities Board, the operator of the well shall apply for a Capability number increase to match the new M.R.L.

Failure to deliver volumes forecast shall be met with a freeze on forecasting this facility in future at the level of actual first month deliveries until a history is developed.

This process shall be overseen by the Committee's Administrative Office.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

Increased volumes as a result of well-work overs or secondary or tertiary recovery schemes or heavy crude oil steaming or equivalent projects shall be accepted as additions to Base Capability numbers with volume limits of up to 200% of the average of the volume delivered during the last consecutive three months of delivery. Well-work overs or tertiary recovery scheme or heavy crude oil steaming or equivalent projects allowances shall be at the 200% volume for three months, one-third of that volume for a fourth month and one-sixth for a fifth month.

Failure to deliver forecasted volumes shall be met with a setting of the Capability number for month 3 and forward to the level of actual first month deliveries until a history is developed.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

This process shall be overseen by the Committee's Administrative Office.

Field inventories shall not be accepted as an increase to the calculated Capability number.

Tank farm inventories shall be accepted as additions to Base Capability numbers with failures to deliver forecasted volumes met with a freeze on forecasting tank farm volumes in future to the level of actual deliveries for a period of one, two and three months.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

This process shall be overseen by the Committee's Administrative Office.

Storage facility inventories (large, non-tank farm storage locations, usually at production facilities or cleaning plants) shall be accepted as additions to Base Capability numbers with failures to deliver forecasted volumes met with a freeze on forecasting storage facility volumes in future to the level of actual deliveries for a period of one, two and three months.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

This process shall be overseen by the Committee's Administrative Office.

All redirection of forecasted crude from one receiving location to another shall be handled by the Committee's Administrative Office.

Capability numbers for feeder pipelines and pipeline terminals directly connected to trunk lines or local markets shall have their Capability numbers calculated as the sum of all volumes approved for forecasting into their systems plus approved storage volumes.

This process shall be conducted by the Committee's Administrative Office.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

The appropriate government licencing agency for each jurisdiction shall make oil well drilling licence information and relevant gas well drilling licence information and project and plant licence information available on their site or electronically to Committee Administrative staff. Some training of Committee staff shall be provided by each agency.

FORECAST OF BATTERY SUPPLY - FORMS 'A' AND 'B'

Forms 'A' and 'B' shall continue to be produced and directed as currently done except for the request for increases in Capability numbers. In this case, a copy of the Form 'A' shall be directed to the Committee's Administrative Office.

Transfers of deliveries from one receiving facility to a new facility shall have to be approved by the Committee at the forecasting level only.

Actual crude movements shall be allowed with no interference.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

No gathering pipeline, feeder pipeline, terminal or other facility shall be bound to accept crude from any producer or shipper approved by the Committee's Administrative Office if crude from that producer or shipper has been refused entry to the system as the result of a dispute with the operator. Decisions to accept or reject volumes shall be made by the operator involved.

Double forecasting to more than one feeder or other facility shall be drastically reduced.

FORECAST OF INITIAL SHIPPER FIELD SUPPLY - FORM 'C'

Form 'C' volumes shall be limited only by the system's Capability number.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

SHIPPER ORIGINAL AND REVISED NOTICES OF SHIPMENT - GATHERING AND FEEDER PIPELINES AND OTHER UPSTREAM FACILITIES

Original notices of shipment shall be based on Form 'C' volumes adjusted for commercial storage volumes, purchases and sales, upstream of the trunk line or local market.

Shipper to shipper transfers shall be closely controlled with automatic balancing. Where transfers do not balance, the operator of the facility in which the transfer occurs shall notify both participants of the discrepancy. The parties shall be given two business hours to correct the imbalance. At the end of this period, if no resolution is at hand, the lower of the two volumes shall be applied to both sides of the transfer. Once verification to the trunk lines is complete, no change shall be made to any transfer volume until after trunk line apportionment is announced.

CRUDE OIL LOGISTICS COMMITTEE

PROPOSED CHANGES

FORECASTING AND ORIGINAL NOTICE OF SHIPMENT PROCEDURES

Proposed Changes:

Notices to bi-directional pipelines shall be controlled to mirror physical flow with trucking to another location allowed.

multi-market pipelines shall provide controls to avoid double nominating.

Accuracy and timeliness of revised notices shall be paramount.

More objective controls shall remove most current double nominating.

SHIPPER ORIGINAL AND REVISED NOTICES OF

SHIPMENT - TRUNK LINES AND LOCAL MARKETS

Local markets (Western Canadian refineries, upgraders and heavy oil and bitumen blenders) shall require notices of shipment for all volumes directed to them. They shall share the information with the Committee's Administrative Office and shall enforce accuracy from shippers directing volumes to them.