JUN 1 ^ 1985

Energy Resources 640 Fifth Avenue SW
Conservation Board Calgary, Alberta
Canada T2P3G4

Informational
Letter

I L 85-5

Interim

3 June 1985

To: All Operators, Purchasers of Gas, Transmission
Companies, Utility Companies, IDP List, etc.

METHOD OF PROCESSING AND REQUIREMENTS OF THE BOARD FOR
INFORMATION IN SUPPORT OF APPLICATIONS FOR REMOVAL OF
SMALL VOLUMES OF GAS FROM ALBERTA

The Gas Resources Preservation Act was substantially amended and re-issued in
November 1984. The most significant changes to the legislation were:

o to add "the expected economic costs and benefits to Alberta of the

removal of the gas or propane from Alberta" as an element of the public
interest which the Board must have regard to in assessing removal
applications,

o to allow the Board to permit the removal of volumes of not more than
3 billion cubic metres of gas without a hearing and without publishing
notice but with the approval of the Lieutenant Governor in Council,

o to allow the Board to permit the removal of volumes of not more than

1 billion cubic metres of gas within a period of 2 years of the date of
the permit, without a hearing and without publishing notice and without
approval of the Lieutenant Governor in Council but with approval of the
Minister of Energy & Natural Resources.

The latter two items were intended to allow the Board to expedite the
processing of applications for the removal of small volumes of gas from the
province. This was considered particularly important during the current
period when a large volume of shut-in gas exists in Alberta and there appear
to be opportunities for short-term spot sales of gas provided arrangements
can be made in a relatively short time period.

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The Board has received a significant number of applications for the removal
of volumes of less than 3 billion cubic metres and indications are that more
will be forthcoming. This informational letter outlines requirements for
such applications and the procedure which the Board will follow in processing
them in the interim. These matters will be altered as appropriate on the
basis of experience gained with the system and comments from involved
parties .

The Board will be issuing, within a few months, a more detailed informational
letter respecting requirements for applications for removal volumes in excess
of 3 billion cubic metres. It will likely incorporate the contents of this
interim IL, adjusted to reflect experience.

Requirements of Application

Applications to remove gas from Alberta in volumes of less than 3 billion
cubic metres will require, in addition to the general information identifying
the applicant, the volumes to be removed, the removal rates, the mode of
transporting the gas, and other pertinent aspects of the project, the
following information:

(a) Details of reserves under control, information demonstrating that the
applicant has the reserves under its control and available for removal
from the province, and a general statement respecting the surplus
situation in the province.

(b) Information demonstrating that the proposed sale would be incremental
and would result in an increase in the total sales of Alberta gas.

(c) Information demonstrating that the gas would be priced competitively
in the market place (at the point of consumption) with respect to
competing fuels. A copy of the sales contract or some proof and
relevant terms of the sales arrangement should be submitted.

(d) Information demonstrating that the net-back to the Alberta border (the
market price less transmission and other costs) would be reasonable in
comparison to net-backs resulting from sales to other markets. The
application would have to demonstrate that suitable transportation
arrangements have been made to move the gas to market.

The Board is not defining in this interim informational letter for small
volume applications, the type of information required for each of the items
(a) to (d) above. It would, however, generally expect that as the volume of
gas to be removed increases, the evidence would be more detailed.

Method of Processing Applications

The Board will use the following method of processing applications for the
removal from the province of gas volumes of less than 3 billion cubic
metres .

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1. Where items (a) through (d) above have not been addressed in the
application, the Board will send a deficiency letter and processing of
the application will be delayed pending response.

2. Where items (a) through (d) above have been addressed in the
application, the Board will give notice of it in accordance with the
following items 3 and 4.

3. Notice of the application will be published in the Daily Oil Bulletin.
Additionally, for those parties that expect to have an interest in all
such applications, the Board will enter their names on a circulation
list and automatically send them copies of all notices. Those parties
wishing to be on the list should contact the Resource Allocation Section
of the Board's Gas Department.

4. Notices will normally be issued within 3 to 4 days of receipt of the
application. The notice will indicate the volumes to be removed, and in
summary form, the position of the applicant respecting items (a) through
(d) above. The notice will also indicate that processing of the
application is continuing and that the Board may require further details
respecting items (a) to (d) .

5. Parties will be given approximately 10 days from the notice to file a
submission with the Board. The submission must outline the position of
the party and, where the application is opposed, the reasons for that
position.

6. Where submissions of opposition have not been received within the
allotted time, the Board will continue processing the application and
will likely decide it without further public review.

7. If submissions of opposition are received, and following the completion
of internal processing of the application, the Board may:

(i) Require additional information.

(ii) Decide the application without further public review where it is

satisfied that it can make a proper disposition having regard only
for the written representations of the applicant and other
interested parties.

(iii) Whether or not it has required additional information, arrange for
a hearing to include the applicant and opposing party(s), and
decide the matter following that hearing. The degree of formality
of the hearing and the extent of notice will depend on the volumes
of gas to be removed, the number of parties opposing, and the basis
for the opposition.

8. The Board will seek any necessary authorizations from the Lieutenant
Governor in Council or the Minister of Energy and Natural Resources and
will do so by way of a written report, copies of which will be made

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available to the applicant and to parties that have an interest in the
matter.

9. A monthly report will be prepared by the Board which will summarize the
status of applications before it or recently approved, for volumes of
less than 3 billion cubic metres. The report will be made available to
interested parties.

The Board is immediately implementing, on a trial basis, the procedures
described in this document. It will modify those procedures as warranted,
with the twin objectives of assuring that the Alberta public interest is
being protected and that a process exists which will allow the handling of
applications for small removal volumes on an expedited basis.

Questions or comments respecting this policy should be directed to the
attention of Mr. W. J. Schnitzler (297-7322) or Mr. M. E. Mumby (297-3564) of
the Board's Gas Department.