Enhanced Production Audit Program EPAP

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Enhanced Production Audit Program(EPAP)
CAPPA Conference Panel Hosted by Al McCue 21
October 2009
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How we will proceed

• Each panellist will present for 6 7 minutes
• Well spend the bulk of the time responding to
  your questions
• Well close with short remarks from some
  panellists

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Question period

• After all panellists have made their
  presentations, we will open up the session to
  your questions
• Your package contains index cards
• Write your questions legibly on a card
• Hold it high in the air where a volunteer will
  run it up to the podium

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Todays Panel

• Colby Ruff
• Rhon Rose
• Al Davis
• Eric Hazeldine
• Yogi Schulz
• Earl Quantz

• ERCB
• BP Canada (IMG)
• NAL Resources (CAPPA)
• Quorum Business Solutions
• Corvelle
• (ERCB EPAP Project Manager)
• CAPPA

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Enhanced Production Audit ProgramERCB Overview
CAPPA Conference Panel Presented by Colby
Ruff 21 October 2009
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Presentation Outline

• EPAP Goals
• EPAP Philosophy
• EPAP Benefits

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EPAP Goals

• Raise level of compliance to ERCB measurement and
  reporting requirements
• Raise level of assurance over compliance to ERCB
  measurement and reporting requirements

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EPAP Philosophy

• Trust, but verify
• - Ronald Reagan

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Benefits to Operators

• Appropriate level of assurance over compliance
  with ERCB requirements
• Improved compliance with ERCB requirements
• Improved volumetric business processes controls
• Higher quality volumetric data

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Enhanced Production Audit ProgramNew Business
Practices
CAPPA Conference Panel Presented by Rhon Rose 21
October 2009
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General Context

• EPAP targets long term improvement in the
  compliance to
• Directive 007 reporting
• Directive 017 measurement
• Reporting is more visible
• IMG is building a set of business practices for
  measurement
• Most of the IMG areas will impact/involve the
  Production Accounting community

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IMG Business Practices

• PA Impact
• Schematic Metering Diagrams High
• Gas and Liquid Analysis High
• Gas Chart Readings Low
• Calibrations and Proving Low
• SCADA/EFM/Automation Low
• Fuel, Flare, and Vent Medium
• Oil Well Testing Medium
• Gas Well Testing Medium
• Effluent Well Testing Medium

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Impacts on You from Measurement Practices

• In the Compliance Assessment Report you will get
  bad point (s) for
• Data anomalies
• Field inspection findings
• Your Senior Executives will have to sign an
  annual Declaration
• You will generally need to implement more
  controls and have clearer lines of accountability

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Metering Schematics

• Do you have current ones?
• Does it match how you do your allocations?
• Do they contain the required information?
• Has someone been assigned responsibility to
  maintain them?
• Does your company have a control in place to
  ensure they are done and kept up to date?

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Metering Schematics

• IMG Document BP Example

Note Any party tied to a BP plant is asked to
request and review these with your PA
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Enhanced Production Audit ProgramPA Business
Process Best Practices
CAPPA Conference Panel Presented by Al Davis 21
October 2009
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CAPPA Objectives

• Strengthen the profession of Production
  accounting
• Represent P.A. industry technically and
  procedurally
• Provide education program for P.A.
• Promote cordial relations among members
• Provide production statistics forum

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CAPPA Best Practices Committee Mandate

• To develop and document Production Accounting
  best practices
• initially focusing on required EPAP procedures

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Process

• ERCB has identified 74 non-compliance issues
• CAPPA has determined that 33 of these are
  production accounting
• Committee is developing processes
• Using ERCB process template

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Status

• 33 processes to be developed
• 9 are high risk, 24 are low risk
• Draft completed for 6 high risk processes
• Draft completed for 16 low risk processes
• 66 have drafts completed
• currently starting draft reviews

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Next Steps

• Complete remaining drafts Nov.
• Review and finalize all drafts Jan.
• Standardize formats Feb.
• Review with CAPPA board - ongoing
• Post on CAPPA website, access to industry
• Plan to post some processes for year end

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ERCB Process Template Components

• Process Description
• Process background
• Risk of noncompliance
• Process owners
• Process description
• Process map/flow chart
• Process control matrix

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Process ExampleGas Disposition Reporting

• Background
• Gas disposition volumes are used to calculate gas
  volumes at a facility or well therefore the gas
  volumes must be reported in an accurate and
  timely manner

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Process ExampleGas Disposition Reporting

• Associated risk of non-compliance
• Incorrect reporting results in inaccurate
  production, inaccurate revenue, incorrect royalty
  payments, increased government monitoring, audits
  and penalties, incorrect partner information and
  additional costs associated with reworks.

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Process ExampleGas Disposition Reporting

• Process owners
• Field operator
• Production accountant for the receiving facility
• Production Accountant for the delivering
  facilities

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Process ExampleGas Disposition Reporting

• Process description
• The following process is performed monthly
• The receipt facility/pipeline field operator
  measures gas volumes coming into the receiving
  facility/pipeline with a compliant gas
  measurement device and also spot checks gas
  analysis as required.

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Process ExampleGas Disposition Reporting

• Process map/flow chart
• Outlines the process steps, how they all hang
  together and associated controls.

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Process ExampleGas Disposition Reporting

• Process control matrix
• Defines the details of every associated control

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Enhanced Production Audit ProgramPreparing for
EPAP
CAPPA Conference Panel Presented by Eric
Hazeldine 21 October 2009
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High-Level Considerations

• All operators have measurement and reporting
  business processes
• Are they documented?
• Do they leave an audit trail?
• Also have controls that assure timely and quality
  results from processes
• Automated or manual?
• Facility-level or Company-level?
• Do they assure D007 D017 compliance?
• Answers influence EPAP approach

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Measurement ProgramBest Practices

• Processes and Controls
• Strengthening is easier than creating and
  replacing
• Modifications that move toward automation with
  full audit trail are most valuable
• Consideration of D-007 and D-017 requirements in
  context of process modifications will yield
  appropriate controls

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Measurement ProgramBest Practices, continued

• Strive for uniform processes and controls across
  fields / assets
• Greatly simplifies evaluations of controls
• Lower cost to implement and maintain processes
  and controls
• Job sharing and job transfers are easier
• Change Management is key when processes are being
  changed
• Increases long-term adherence and buy-in
• More than documentation and training

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Specific Example

• D017 8.4 Sampling and Analysis Frequency
• Process Considerations
• Does your meter setup process include designation
  of required sample frequency?
• Is your sampling process driven off a schedule?
• Are all new and accepted samples recorded
  centrally?
• Controls
• Preventive Control The sample schedule itself
• Detective Control A report of overdue samples

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Specific Example

• D017 4.3.3 Measurement Data Audit Trail
• Process Considerations
• Where are raw volumes first recorded?
• Raw volumes EFM, SCADA, Data Historian, Chart
  Integrator, 3rd Party
• How do they propagate into
• Field Data Capture / Measurement system?
• Production Accounting system?
• Registry?
• Controls
• Detective Controls Reconcile
• Production Accounting inputs to Registry inputs
• Field Data Capture inputs to Production
  Accounting inputs

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Enhanced Production Audit ProgramProject Summary
CAPPA Conference Panel Presented by Yogi
Schulz 21 October 2009
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Presentation Outline

• EPAP development
• EPAP components
• Implementation schedule
• Operator role

Please e-mail any questions you may have to
epap_at_ercb.ca EPAP is further described under
Projects Issues at www.ercb.ca
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EPAP Development
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EPAP Components

• Operator evaluations of controls
• Declaration process
• Compliance assessment process
• Action item process
• D-019 Enforcement

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Overview of Relationship
Evaluation of Control
Assesses
Control
Assesses
Business Process
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Oil Gas Example
For sample of Well Tests, examine review of the
log
Assesses
Review Well Test logs
Assesses
Conduct Well Tests
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Implementation Schedule
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Operator Role

• Operations Production Accounting
• Execute business processes
• Execute controls
• Implement remediation plan
• Audit group
• Create the annual evaluation plan
• Evaluate strengthen controls
• Develop remediation plan for findings
• Senior management
• Review / approve annual evaluation plan
• Review evaluation results
• Issue declaration

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Operator Next StepsInternal EPAP implementation

• Conduct an assessment
• Plan for evaluations of controls
• Communicate EPAP implementation plan internally
• Respond to Compliance Assessment Report
• Conduct trial evaluations of controls
• Strengthen processes controls

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Enhanced Production Audit ProgramEPAP Actions
for PA
CAPPA Conference Panel Presented by Earl
Quantz 21 October 2009
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EPAP Actions forProduction Accountants

• Embrace and build EPAP visibility
• Action monthly compliance assessment report
• Collaborate with field operations and measurement
  staff
• Identify the controls on your desk and confirm
  are they working
• Respond to evaluation of controls findings

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Annual Operator EPAP Work

• Create annual evaluation plan
• Conduct evaluations of controls
• Remediate deficiencies
• Collaborate in the compliance assessment process
• Submit the annual declaration

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Discussion
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Extra Slides
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ERCB RoleProduction Audit Team

• Review declarations
• Perform compliance assessment process
• Interact with operators on action items
• Monitor execution of remediation work
• Perform operator escalation process
• Apply D-019 compliance enforcement

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