IOGC Petrinex Inclusion Project Overview

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Last Revised: September 1, 2020

As some of you may be aware, Indian Oil and Gas Canada (IOGC) has been working on a project to use Petrinex to support their internal systems and the calculations of royalties payable to IOGC. This project has been going on for quite a while and will be ongoing for a while yet, as they work through upgrading and integrating all their systems. For more detailed information on this project, access the documents on the Petrinex website  Petrinex IOGC Inclusion Project .

The most recent phase of this project, being launched in  November 2020, is the first phase that has impacted the Qbyte Metrix application. In this phase, batteries in Alberta with at least one well that has a First Nation mineral ownership, are required to complete an Oil Valuation RTP submission. This requirement starts for  October 2020 Production .

General

Alberta already uses Petrinex for all its current reporting, so for this project, only the additional requirements surrounding Oil Valuation RTP submissions for IOGC need to be addressed. There is some additional master information that may need to be set up for Alberta properties that require an Oil Valuation RTP to be submitted.

In Petrinex, clients will have to set up First Nation mineral ownership for applicable properties and set up Royalty Tax Payers for First Nation Interest at the well-level. The Oil Valuation RTP submission in Alberta can only be at the battery. The battery submission will include both non-unit and unitized volumes, unlike the other provinces which submit at the battery for non-unit volumes and the unit for unitized volumes. Only producing batteries that have at least one well with a First Nation mineral ownership are required to submit Oil Valuation RTP, however, any battery in Alberta can submit Oil Valuation RTP data. The IOGC will only have access to data for the batteries that are of First Nation Interest.

The Oil Valuation RTP submission in Alberta, although it looks the same as in the other provinces, is fundamentally different in that it does not get generated from the data on the Oil Pipeline Split. In Alberta, the Oil Pipeline Split is mandatory only for Alberta Crown. This means that the Oil Valuation RTP cannot be generated or "triggered" from the Oil Pipeline Split as it is in the other provinces. Instead, Petrinex determines the Alberta batteries that require Oil Valuation RTP submissions based on the OIL/COND PROD activities on the Volumetric submission for wells that have been flagged as having First Nation interest. Even though the Oil Valuation RTP is not "triggered" from the Oil Pipeline Split, the Oil Valuation RTP still has the same rules regarding Receiving Facility, Custody Transfer Point, Purchaser, etc.

Qbyte Metrix Implementation

• To enable Petrinex functionality for Oil Valuation RTP submissions in Alberta, the client must activate the Functional Implementation option within System Configuration called Alberta Oil Valuation RTP Implementation for IOGC  and provide the Start Date for the functionality. 

• Unlike typical Regulatory options, this option will default to No instead of Yes. This was done to try to reduce confusion for those clients that have no entities with First Nation Interest. Since the Oil Valuation RTP submission is only required for Alberta properties with First Nation Interest, and a relatively small portion of our client-base have Alberta properties with First Nation Interest, it was felt that having the client explicitly enable the functionality may help reduce the confusion of seeing Oil Valuation processes and data for Alberta properties for those clients that do not need this functionality.

• Partner Operated batteries in Alberta can be set up to have Oil Valuation RTP data generated, if required, on the Battery Maintenance > Production screen. This option will only be visible for Alberta batteries when the Production Date is greater than or equal to the Alberta Oil Valuation RTP Implementation for IOGC date.

  • For more information on Oil Valuation RTP for Partner Operated batteries, see:

• Royalty Tax Payers can be set up for non-unitized wells and/or units in Alberta, if required, on the Well Maintenance > Royalties > Crown or Unit Maintenance > Crown screen, as applicable. The RTP Owners for Alberta non-unitized wells or units will only be visible when the Production Date is greater than or equal to the Alberta Oil Valuation RTP Implementation for IOGC date.

• For more information on Royalty Tax Payers, see:

• To control the volumes that are included on the Alberta Oil Valuation RTP, Batteries and Delivery Systems have an AB IOGC Oil Valuation option on their Maintenance screens that should be set to Yes for those batteries and/or delivery systems that have First Nation Volumes. These options can be set to Yes for any Alberta volumes if the client wants to report more than just those properties with First Nation Volumes.

Battery Master 

Open

Delivery System Master

Open

• Since the Oil Pipeline Split is not mandatory in Alberta, except for Crown, we did not want the client to have to start reporting full Oil Pipeline Splits simply to generate the Alberta Oil Valuation RTP for IOGC. So the Alberta Oil Valuation RTP for IOGC process will look at the AB IOGC Oil Valuation option at batteries and delivery systems instead of the Produce Pipeline Split and Oil Pipeline Split options used for Oil Pipeline Splits (and also for Oil Valuation RTP submissions in all other provinces), to determine which volumes to include.

Oil Valuation RTP

The rules regarding the volumes that need to be included on an Alberta Oil Valuation RTP submission are like Saskatchewan and Manitoba.

• Only Load Injection sales flagged as Purchased will be included.

  • The Purchased flag on Oil Dispositions and Receipts will be visible on Alberta batteries for production dates greater than or equal to the Alberta Oil Valuation RTP Implementation for IOGC date. 
    Note: Unlike the other provinces, Alberta will still report these as DISP/REC Petrinex activities on other Petrinex reports, as PURDISP/PURREC is not valid for OIL in Alberta.

• Oil sales from Royalty Taken-in-kind will not be included.

• Alberta does not use WO as a special Shipper Owner Contract, so even volumes associated with a WO contract will be included.

• Gross Price must be greater than zero.

Qbyte Metrix Implementation

• The Generate Oil Valuation Data process can be submitted for the province of Alberta, for facilities in Alberta for Production Dates after the Alberta Oil Valuation RTP Implementation for IOGC date . Previously, Alberta facilities could be selected only when submitted for a province of Saskatchewan or British Columbia to capture cross-border oil sales in Alberta for entities in those provinces.

• Due to the possibility of cross-border transactions between Alberta and Saskatchewan, or Alberta and British Columbia, we allow for batteries in either province (Saskatchewan or British Columbia) to run the Generate Oil Valuation Data for Alberta.

  • If the Production  Date is after the Alberta Oil Valuation RTP Implementation for IOGC date :

    • A Saskatchewan battery with at least one AB well being processed can have the Oil Valuation RTP generated for the province of Alberta.

    • A British Columbia battery with at least one AB well being processed can have the Oil Valuation RTP generated for the province of Alberta.

• Alberta only uses Royalty  Tax  Payer on the Oil Valuation RTP, so only OIL Royalty Tax Payers will be allowed on Alberta non-unitized wells and/or units. 

• The Oil Valuation RTP screen can now be accessed for batteries in Alberta for Production Dates greater than or equal to the Alberta Oil Valuation RTP Implementation for IOGC date.

• The Oil Valuation RTP by Control Group can now be submitted for Alberta for Production Dates greater than or equal to the Alberta Oil Valuation RTP Implementation for IOGC date.

• The Oil Pipeline Split Import will still not be allowed for Alberta, as the Oil Valuation RTP data does not come from the Oil Pipeline Split for Alberta properties like it does for the other provinces. 

IOGC Royalty Impact

There will be no changes to how Qbyte Metrix calculates the IOGC Royalties. However, when IOGC starts using the data it receives from Petrinex in their calculations, there may be some discrepancies due to pricing. Although it seems reasonable to use pricing data that, in the case of Saskatchewan, is already being submitted to Petrinex and enhance Alberta reporting to include the submission of pricing information, the pricing data submitted to Petrinex is not the same as the pricing data that is typically used currently in the Industry calculation of IOGC Royalties.

The most obvious difference is the fact that the Oil Valuation RTP pricing is at the Battery level (or Battery or Unit level in Saskatchewan), whereas the price used in IOGC Royalty calculations currently is typically a well-level or tract-level price. There are exceptions to this in Qbyte Metrix, as the client can set up the IOGC Royalty Formula to use a different price or the price can also be overridden through the Royalty Entity data. In Saskatchewan, this means that for non-unitized wells the IOGC will do their calculations based on the pricing data entered at the battery the well is attached to. For units, the IOGC will use pricing data entered at the unit. In Alberta, non-unitized wells are treated the same as in Saskatchewan with the pricing data coming from the battery the well is attached to. However, for units, battery pricing is still being used since Alberta is submitting Oil Valuation RTP for batteries only.

The difference between the use of a battery average price and well/tract average price may not be significant depending upon the flow of the oil and the contracts, but there may be minor rounding differences in the price which may or may not impact the result of Royalty calculation being done by IOGC.

Another potential difference is the volumes that are submitted on the Oil Valuation RTP to determine the pricing in the first place. In Saskatchewan and now in Alberta, volumes from Royalty Taken-In-Kind are not reported on the Oil Valuation RTP and are therefore not included in the determination of the price. The price used in IOGC Royalty calculations currently typically includes those volumes when determining the price. Again, hopefully, any difference this makes in the price is the result of minor rounding differences and therefore, has little or no impact on the resulting Royalty calculation being done by IOGC.

It is unknown what kind of impact these changes will have on the result of the IOGC Royalty calculations being done by IOGC and how closely those will reconcile to IOGC Royalty calculations being done by Industry. As you are reconciling your assessments from IOGC, pricing may be one of the areas to check if you encounter discrepancies.