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The  AER  requires  “production  hours  for  gas  wells  designed  to  operate  on  an  on/off  cycle  basis  that  are  operating  normally  on  repeated  cycles,  and   where  part  of  the  operation  involves  shutdown  of  pump  equipment  and/or  shut-­‐in  as  part  of  the  repeated  cycles  are  to  be  considered  on   production  even  when  the  wells  are  not  flowing”  (see  D17,  clause  4.3.3.1  for  complete  wording  and  clause  6.4.1  for  the  regulation  for  oil  wells).   Due  to  higher  producing  hours  lowering  the  producing  rate,  and  this  generally  lowering  the  provincial  royalty  payable,  these  are  important  rules  to   follow.  There  is  a  similar  impact  in  British  Columbia,  but  not  currently  in  Saskatchewan,  likely  not  until  mid  2016.

Measurement  schematics  in  Alberta,  Saskatchewan,  and  B.C.  are  required  to  identify  all  wells  that  are  on  artificial  lift.  The  reported  production   hours  for  each  of  these  wells  should  be  reviewed  to  ensure  that  they  are  the  maximum  allowed.  The  reported  production  hours  are  typically   accessed  by  your  Production  Accountants  from  either  a  production  accounting  system,  or  indirectly  by  anyone  elses  from  a  commercial  service   such  as  AccuMap  or  IHS.

If  the  reported  hours  are  consistently  less  than  the  full  hours  in  a  month,  it  is  a  strong  indicator  that  the  well  is  on  an  artificial  lift,  and  its  production   hours  are  being  under-­‐reported.  Due  diligence  with  this  process  presents  a  significant  revenue  opportunity  for  companies,  in  our  experience   companies  have  recovered  sums  in  the  millions  as  a  result  of  this  process.  The  applicable  section  in  B.C.  is  from  the  Ministry  of  Finance  Mineral,  Oil   and  Gas  Revenue  Branch  Report  Completion  Guidelines  for  the  BC  S1,  which  reads,  “Production  hours  for  wells  with  intermittent  timers,  pump-­‐off   controls,  plunger  lifts,  well  cycling  control,  well  throttling,  etc.,  that  are  “operating  normally  and  as  designed”  are  to  be  considered  on  production   even  when  the  wells  are  not  flowing  or  pumping.  Physical  well  shut-­‐ins  and  emergency  shutdowns  (ESDs)  are  considered  downtime”.

How  FacilityStudio  provides  value  

The  following  are  the  different  artificial  lift  options  to  select  from  in  FacilityStudio:

  • Plunger
  • Pump  Jack
  • Timer
  • Manual(Offf/On)
  • Foam/Soap
  • Gas  Lift
  • Elect Sub Pump
  • Progressive Cavity Pump
  • Unknown

The  below  image  shows  a  well  that  is  flowing  (does  not  have  an  artificial  lift)  and  a  well  that  has  a  Pump  Jack  artificial  lift,  which  is  represented  with   a  PJ  to  the  left  of  the  well.

Part  of  the  FacilityStudio  Data  Cross  Check  report  verifies  all  producing  well-­‐events  have  the  correct  producing  status  for  their  artificial  lift   status.  All  producing  well-­‐events  that  have  a  “Pumping”  producing  status  are  checked  to  ensure  they  include  an  artificial  lift  on  the   measurement  schematics.

1. Any  artificial  lift  wells  that  appear  in  the  Data  Cross  Check  report  needs  to  be  looked  into  further.  Verify  the  following:

  •   Artificial  Lift  Wells:  Verify  any  artificial  lift  well  has  a  status  of  “Pumping”  in  Petrinex  and  that  it  is  represented  properly  in  your   measurement  schematic.
  •  Non-­‐Artificial  Lift  Wells:  Verify  any  well  that  does  not  have  an  artificial  lift  has  a  status  of  “Flowing”  in  Petrinex  and  that  it  is   represented  properly  your  measurement  schematic.

2. Each  well  with  any  form  of  artificial  lift  should  then  be  reviewed  for  suspect  under-­‐reported  production  hours  over  the  last  5  years  to   determine  if  a  correction  is  required.  It  is  useful  to  review  all  wells  feeding  a  common  facility  (field  compressor  or  gas  plant)  at  the  same   time  to  see  if  the  reported  hours  are  similar  for  all  wells  (i.e.  reflecting  a  plant  turn-­‐around  or  compressor  problem)  or  unique  to  only  one   or  two  wells.

3. For  wells  that  require  the  production  hours  to  be  updated,  ensure  the  Petrinex  status  is  set  to  “Pumping”  before  submitting  the  updated   hours,  otherwise  the  changes  will  be  rejected  by  the  Department  of  Energy.

4. Once  the  increased  production  hours  are  uploaded  into  the  Provincial  Royalty  Calculation  System,  reduced  royalties  will  automatically  be   calculated  for  each  month  of  the  last  5  years  with  larger  production  hours.  The  royalty  credits  will  be  applied  to  the  following  month’s   royalty  invoice.

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