LLR PROGRAM PERFORMANCE MEASURES by sdaferv

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									LLR PROGRAM PERFORMANCE SUMMARY                                                                                                             Page 1 of 5
JUNE 2005


LLR PROGRAM PERFORMANCE MEASURES
The Licensee Liability Rating (LLR) program applies to upstream oil and gas wells and
facilities within the scope of the Expanded Orphan Program. Please note that these
statistics are reflective of wells and facilities included in the LLR Program and not
necessarily all wells and facilities in the province. For further details on the LLR
Program and calculations, please refer to Directive 006: Licensee Liability Rating (LLR)
Program and Licence Transfer Process.

1) Industry LLR Trend Data



                                         Industry LLR Trend
                                                                                                                            Industry Results
         10                                                                                                                 (June 04, 2005):
         9
         8                                                                                                                  Total Deemed Assets:
         7
                                                                                                                  8.09      $76 B
               7.63
         6
                                                                                                                            Total Deemed
   LLR




         5
                                                                                                                            Liabilities: $9.4 B
         4
         3
                                                                                                                            Industry LLR = 8.09
         2
         1                                                                                                                  (LLR threshold for
         0                                                                                                                  security deposits is 1.0)
              Jul-04




                                          Oct-04

                                                   Nov-04

                                                            Dec-04

                                                                     Jan-05

                                                                              Feb-05

                                                                                       Mar-05



                                                                                                         May-05

                                                                                                                   Jun-05
                                Sep-04
                       Aug-04




                                                                                                Apr-05




The LLR program started in May 2002. Industry LLR is the ratio of total “deemed
assets” to total “deemed liabilities” for all licensees subject to the LLR Program as
defined by the parameters in EUB Directive 006. The industry LLR will vary to reflect
changes in numbers and status of well and facility licenses as well as production based on
a rolling 12-month average. The EUB updates industry parameters including netback
annually. In April 2005, EUB Directive 011 was issued to update industry parameters in
average asset and liability costs. The increase in average netback and regional
abandonment and reclamation costs was reflected by a slight increase of industry LLR.
LLR PROGRAM PERFORMANCE SUMMARY                                                                                                                               Page 2 of 5
JUNE 2005
2)                          Status of Wells and Facilities

The active and inactive status of wells or facilities is based on reported production,
injection or throughput over the last twelve months. Note that prior to June 2004, the
activity status was based on the last four months of reported production. The reporting
period for the June 2005 LLR Assessment was May 2004 to April 2005. A status of
‘inactive’ indicates there was no production or injection in the specified reporting period
and includes newly drilled wells, observation/test wells, storage wells, and suspended
wells.
There are 117,841 abandoned well licences of which approximately 33,207 wells are
abandoned and unreclaimed. The ratio of producing to non-producing wells is currently
1.63. In 2004, there were 21,970 new wells drilled and 2,777 wells abandoned. The ratio
of new wells to abandoned wells is 7.91. There are over 9,322 inactive facilities
including batteries, compressor stations and gas plants and 428 abandoned and
unreclaimed facilities in the LLR Program.

                                                       Status of Wells in LLR Program

                            160000
                            140000
      Number of wells




                            120000
                            100000
                             80000
                             60000
                             40000
                             20000
                                 0
                                                                                            Nov-04
                                                        Jul-04




                                                                                                               Jan-05




                                                                                                                                                            Jun-05
                                     Dec-02

                                              Dec-03



                                                                 Aug-04

                                                                          Sep-04

                                                                                   Oct-04



                                                                                                      Dec-04



                                                                                                                        Feb-05

                                                                                                                                 Mar-05

                                                                                                                                          Apr-05

                                                                                                                                                   May-05


                                                                  Producing Wells                    Non-producing Wells


                                               Status of Facilities in LLR Program
                            12000
     Number of Facilities




                            10000
                             8000
                             6000
                             4000
                             2000
                                 0
                                                                                            Nov-04
                                                        Jul-04




                                                                                                               Jan-05




                                                                                                                                                            Jun-05
                                     Dec-02

                                              Dec-03



                                                                 Aug-04

                                                                          Sep-04

                                                                                   Oct-04



                                                                                                      Dec-04



                                                                                                                        Feb-05

                                                                                                                                 Mar-05

                                                                                                                                          Apr-05

                                                                                                                                                   May-05




                                                                      Active Facilities              Inactive Facilities
              De




                         0.00
                                0.50
                                       1.00
                                              1.50
                                                     2.00
                                                            2.50
                 c-
                    0
              De 2
                 c-
                                                                                                                     JUNE 2005




                    0
              Ja 3
                 n-
                    0
              Fe 4
                 b-
                    0
              M 4
                ar
                   -0
              Ap 4
                 r-
              M 04
               ay
                   -0
              Ju 4
                 n-
                    04
               Ju
                  l-0
              Au 4
                 g-
                    0
              Se 4
                 p-
Ratio value         0
              O 4
                ct
                  -0
                                                                                                                     LLR PROGRAM PERFORMANCE SUMMARY




              No 4
                 v-
                    0
              De 4
                 c-
                    0
              Ja 4
                 n-
                    0
              Fe 5
                 b-
                    0
              M 5
                ar
                   -0
                                                                   Ratio of Producing Wells to Non-Producing Wells




              Ap 5
                 r-
              M 05
               ay
                   -0
              Ju 5
                 n-
                    05
                                                                                                                                      Page 3 of 5
LLR PROGRAM PERFORMANCE SUMMARY                                                                                                                Page 4 of 5
JUNE 2005
3)                          Licensee Liability Rating

The following figure displays the number of licensees subject to monthly LLR
assessments with an LLR above and below the threshold of 1.0:


                                 Number of Licensees above and below LLR treshhold
                           800
     Number of Licensees




                           700
                           600
                           500
                           400
                           300
                           200
                           100
                             0
                                   Jul-04




                                                              Oct-04


                                                                       Nov-04


                                                                                Dec-04


                                                                                         Jan-05


                                                                                                  Feb-05


                                                                                                           Mar-05




                                                                                                                             May-05


                                                                                                                                      Jun-05
                                                     Sep-04
                                            Aug-04




                                                                                                                    Apr-05
                                                                         LLR < 1         LLR > 1


The general variation in the number of licensees with an LLR less than 1 results from
data corrections, identification of defunct licensees, license transfers, detailed reviews of
non-producer licensees and clarification of facility types included within the LLR
program.

Licensees with an LLR less than the threshold of 1 are required to submit a phased-in
security deposit. The number of licensees below 1.0 is based on initial LLR and security
deposit.

The LLR results for each licensee are displayed and updated on the EUB website on a
monthly basis (http://www.eub.gov.ab.ca/bbs/data/facilities/LLR_Report.txt).
LLR PROGRAM PERFORMANCE SUMMARY                                                                                                                                  Page 5 of 5
JUNE 2005

                    Distribution of Licensees within LLR Ranges
          250

          200

          150

          100

           50

            0
                0

                      0-0.5

                                0.5-1

                                             1.0-1.5

                                                               1.5 - 2.0

                                                                                 2-3

                                                                                             3-4

                                                                                                         4-5

                                                                                                                     5-6

                                                                                                                             6-7

                                                                                                                                     7-8

                                                                                                                                            8-9

                                                                                                                                                      9 - 10

                                                                                                                                                               > 10
                                                                                       LLR Range

Licensees with an LLR of 0 are those licensees that have only inactive wells and facilities
and are required to provide a security deposit based on their total deemed liability. Note
that those licensees with an LLR of 0 include 114 licensees having only abandoned and
unreclaimed wells and/or facilities.


                    Proportion of Industry Liability in LLR Ranges
          40%

          35%

          30%

          25%

          20%

          15%

          10%

           5%

           0%
                0

                     0-0.5

                              0.5-1

                                        1.0-1.5

                                                       1.5 - 2.0

                                                                           2-3

                                                                                       3-4

                                                                                                   4-5

                                                                                                               5-6

                                                                                                                       6-7

                                                                                                                               7-8

                                                                                                                                      8-9

                                                                                                                                             9 - 10

                                                                                                                                                       > 10




                                                                             LLR Range


Approximately $1.82 B (19%) of the industry deemed liability lies with licensees with an
LLR greater than 10, and $34 million (0.4%) of the total deemed liability lies with
licensees with an LLR less than 1. The EUB holds $20 M in security deposits based on
deemed abandonment and reclamation liabilities and will be collecting further security
through a phased-in payment program.

								
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