2. Vent Gas Mitigation PTAC Environmental Forum January 30, 2002 Bruce Peachey, P.Eng. New Paradigm Engineering Ltd., Edmonton

3. About New Paradigm Engineering Ltd.  Independent consulting company, Inc. 1991  Engineer “new paradigms” for industry  Small but supplement manpower with other specialists and consultants as needed for the work.  Last three years spent on assessing existing and new options for reducing methane emissions, through a series of Vent Options Studies and other activities. Vent Option Studies Total (2000-01) CHO Audits and Equipment Trials (1999-2001) New Technology Development (1998-2001)

4. Overview of Vent Mitigation Proposals Stage 1 What are the Options? How do you decide? Stage 2 Demonstrate the Economic Options Stage 3 Focused R&D on Options where needed Economics drives the Utilization of Options No economics drives the Development of Options

5. Overview of Proposals – Stage 1  Vent Options Studies ($200,000) Phase 1a – Conventional Heavy Oil Vents (complete) »Focus on casing vents Phase 1b – Thermal Heavy Oil (nearly complete) »Focus on energy efficiency options Phase 2a – Oil & Gas Production Vents (complete) »Focus on dehydrator, power gas and tank vents Phase 2b – Gas Compression/Processing (nearly complete) »Focus on fugitives and leaks Phase 3 – Ground Seeps (Planned for 2002)

6. Overview of Proposals – Stage 2  Demonstration Projects ($100,000+) Demonstrate that Vent Option Studies can be profitably applied in each type of producing operation. Proposed in November, 2001 looking for gov’t support Collaboration with Clearstone Engineering and Producers  Catalytic Converter Trials ($10,000-$15,000 per site) Field tests of low cost units to convert CH4 to CO2 Unit cost <$5000 for 50 m3/d capacity Can pay for itself on $US1.5-2 per tCO2eq Proposed January, 2002

7. Overview of Proposals – Stage 3 Basic Concept Baffles  Building  gas separator  Fugitive methane withdrawn with some air  Use waste heat in exhaust stacks, and/or CANMET reverse flow reactor to maintain catalytic reaction  Just convert CH4  CO2  Potentially enough for heating or power. Air Process or Compressor Building Engine

8. Overview of Proposals – Stage 3 Components  Opportunity Definition – New Paradigm, Clearstone, Boreal Lasers and Producer Participants. »Characterization of fugitive flows in process buildings »Proposal being prepared for work to start in April/May, 2002  Catalytic Reactor Modeling - U of A, Dr. Robert Hayes »NSERC and COURSE applications submitted ($150-$400k 2002- 04)  Prototype Reactor Development and Lab/Shop Testing »CANMET (Varennes) - Reverse Flow Catalytic Reactor »New Paradigm - Waste Heat Supported Reactor »New Paradigm – Catalytic Vent Converter (Completed in 2001)  Prototype Field Testing – 2002-2004

9. Work Scope – Overall Focus Areas  Define or Develop Economic Options for Methane Vents  Fuel Displacement by Vents in Upstream Operations Conventional Heavy Oil  200-300% of fuel demand Natural Gas and Oil Production  10-30% of fuel demand Gas Plants and Compressor Sites  <5% of fuel demand Thermal Heavy Oil  <1% focus is on demand reduction  Reduction of Vents where fuel demand < vent stream  Use of vents for power or EOR where vents >> fuel need  Convert any CH4 left over to CO2 for emission credits

10. Deliverables by Project Stage  Stage 1 – Vent Options One page option sheets, flowcharts, tools available on web Technology Transfer Workshops and courses  Stage 2 – Demonstration Projects At least one consistently documented case study on economic mitigation of methane vents in each of six main types of upstream operation  Stage 3 – Focused R&D on Small and Fugitive Streams Catalytic reactors or other options to economically recover energy and/or convert irreducible methane emissions.

11. Implications for Industry and Regulators – The Big Picture  Over $400-$800M/yr of methane vented or emitted from upstream sites (@$3-$6/GJ) Equivalent to over 20% of upstream energy use  Methane emissions from upstream sources Almost 50% of oil & gas GHG emissions Over 8% of Canada’s GHG emissions  At the same time methane is also being flared.  GHG, flaring and odour issues affecting O&G development

12. Implications for Industry and Regulators – Methane - An Economic Target  It has an economic value ($3-$6/GJ)  Opportunities to increase sales or reduce costs  It can provide the energy to support it’s own use  Enable increased recovery of other hydrocarbons  Many opportunities to use existing technology. Many existing facilities based on 1960’s design factors  Gas at C$0.30/GJ and no concerns about methane impact on the environment.

13. Implications for Industry and Regulators - What comes with the Methane Vents?  Greater GHG impact; 1 t CH4 = 20-23 tCO2e  Lower cost to convert than to sequester CO2 Sequestration  US$20/tCO2 Methane  Economic or <$US1.50/tCO2e  VOC’s, H2S and BTEX emissions Sources of Odour, Public Concern and Resistance to Development are reduced with the methane.  Regulatory Pressure to Change

14. Overall Schedule – Where are we now? 200020012002200320042005 Stage 1 – Ph 1 & 2Ph 3 Stage 2 – Demos Stage 3 – Focused R&D Stage 1 – Technology Transfer

15. Follow-up Work  Want to develop projects as Win-Win Producers get needed support for economic results Governments get results communicated widely Proponents get to apply their knowledge and expertise Public gets understanding of GHG issues Everyone gets accelerated emission reductions  Demonstrate potential benefits for all Upstream Oil and Gas Sectors and Stakeholders

16. Contact Information New Paradigm Engineering Ltd. C/o Advanced Technology Centre 9650-20 Avenue Edmonton, Alberta Canada T6N 1G1 tel: 780.448.9195 fax: 780.462.7297 email: bruce@newparadigm.ab.ca web: www.newparadigm.ab.ca