2000 ANNUAL REPORT

Conventional Heavy Oil

Drilling

e-Business

Environmental

Fundamental Research

Health and Safety

Inactive Well Management

Natural Gas Production

Oil Production

Oil Sands

Reservoir Recovery / Geoscience

Well Completion Facilitating Innovation, Technology Transfer and Research & Development R&Din the Upstream Oil & Gas Industry PETROLEUM TECHNOLOGY ALLIANCE CANADA

Key Accomplishments

Record Number and Value of R&D Projects Launched Natural Gas Technology Transfer Program Funding Obtained R&D Project Results Realized Membership Increased Successful Workshops, Forums and Technology Information Sessions Hosted

Growth and technology transfer Achievements funding 2 Message from the Board of Directors PTAC continued to grow in 2000 and realized several significant mile- stones. We added 60 new members, hosted 30 Technology Information Sessions, sponsored 9 workshops and forums and facilitated the launch of a record 38 R&D projects valued at $30.8 million. PTAC has facilitated the launch of 89 R&D projects valued at $42 million since inception in 1996. The results for many of these projects have been provided to funders and whenever possible, been made available to the public via our website. In December 2000, PTAC and Gas Technology Inc. (GTI) signed a three- year contract for PTAC to provide a Canadian Regional Technology Transfer Agent (RTTA) Program for natural gas. This has resulted in a significant expansion for PTAC with the establishment of a Natural Gas 0 Technology Centre and the hire of three additional staff. We recently moved to new office space to accommodate the expansion and to co-locate with GTI. PTAC hosted our first safety event, a forum on “Ways and Means to Reduce Wildlife/Vehicle Strikes on an Industry-Wide Basis.” The response to this and subsequent driving safety events has been very positive. Two Environmental research groups, the Soil Long Term Planning Committee and the Salinity Working Group, were formed in 2000 to provide direction on research needed in these technical areas. Our collaborative approach to challenges faced by the industry has proven to be very effective in facilitating innovation and change with a diverse 0 group of stakeholders. On behalf of the Board, we would like to express our appreciation to PanCanadian Petroleum for the provision of office space and services support to PTAC since December 1998. This support has been instrumen- tal to our success over the past two years. We would also like to thank PTAC staff and volunteers for their contribution to the planning and holding of events and the initiation of new R&D needed by the Canadian 0 upstream oil and gas industry. Eric Lloyd Alan Archibald President of PTAC Chairman of PTAC R&D Project Results RealizedCompleted

A total of 29 PTAC facilitated Environmental Conventional Heavy Oil projects have been completed to date and the results reported to z Options for Conventional z Thermal Solvent Process – funders and whenever possible, to Heavy Oil Vent Gas Field Scale Engineering and other interested parties. Most Utilization and Mitigation Economics project results have been made z Flaring Technology Field Test z In Situ and Refinery Upgrading available through PTAC, however Facility: Phase 1a – of Vapex Heavy Oil Production some project results are propri- Flaring Mitigation Centre for Increased Value and etary and only available to funders. Market Assessment Reduced Emissions The following 11 projects were z (VAPEX Phase 2) completed in 2000. Flare Speciation – Part I z z Flare Performance – Part I Vapex Refinery Upgrading Project z Flaring – Improved Liquid z Separation Heavy Oil Vent Gas Utilization Projectsz Flaring – Alternate Technologies – Part I z R&D Projects Fugitive Emissions Launched in 2000Launched

PTAC facilitated the Conventional Heavy Oil Environmental z Fundamental Study of Bitumen Digestion Process* launch of 38 projects z Progressive Cavity Pump z Assessment of Phytore- valued at $30.8 Run-Life Improvement z Development of a New Technol- million during 2000. mediation as an In Situ ogy to Improve the Equipment z Vapex Engineering and For further informa- Technique for Cleaning Oil Utilization Rate in Mining Economics – Phase 3 tion, please refer to Contaminated Sites – Phase 3 Operations* our 2000 newsletters z Foamy Oil Behaviour: Beyond z Development of Soil and Water z Research into Cold (25°C) or to the project the Cold Production Process Quality Guidelines for Sulfolane index on our website Conditioning of Oil Sands with z Cyclic Solvent-Based Process and DIPA: Environmental and (www.ptac.org/ Regard to Solids Reduction in for Heavy Oil Reservoirs Human Health projects1.html). Froth through Solvent/ z z SAGD Application in Reservoirs Natural Gas Losses Demulsifier Nascent Froth and with Depleted Gas Caps z Monitored Natural Attenuation Naphtha/Paraffinic Diluent Prost-Production Froth z Characterization of Conven- z Evaluation of Hydrocarbon Treatment Schemes* tional Oil and Gas, Heavy Oil Degradation and Uptake by z and Bitumen Formations using Plants At Face Slurrying: Advancing Low Field NMR Spectroscopy* Innovative Technology for Oil z Options for Conventional Heavy Sands Production* z Asphaltene Deposition* Oil Vent Gas Utilization and z Impact of Residual Bitumen z Mitigation Intermetallic-Based Alloy- Removal Methods on the Coatings on Steel Structures z Weyburn C02 Monitoring Separation of Heavy Minerals in Used in Oxidation, Project the Oil Sands Tailings* Sulphidization and z Improving the Performance of Carburization Environments* High Temperature Fuel Cells* Reservoir Recovery / Geoscience z Enhanced Oil Recovery by z Degradation of Petroleum Unrease-Catalyzed, Microbial z Hydrocarbons at the Soil/Root Enhanced Waterflooding using Calcuim Carbonate Blocking* Interface in Contaminated Toe-to-Heel Displacement z In-Line Multiphase Flow Meter Soils* z Improved Water Production Development* z Prediction in Carbonates Natural Attenuation of z z Performance Evaluation of Petroleum Hydrocarbons at Seismic Velocity Anisotropy and Shale for Ensuring Hydraulic Upstream Oil and Gas Depth Imaging* Isolation around Thermal Facilities* z Evaluation of Miscible and Wellbores* z Submiscible Flue Gas Injection Combustion Enhancement and for Improved Recovery of Light Drilling Emission Reduction from Flare Oils and Sequestering of Green Stacks Using Passive Jet-Flow House Gases* Control* z Evaluation of Coiled Tubing Well Completion Serviceability for Sour Service Natural Gas Production Applications z Gel-Foam Applications z Borehole Stability and Sand z Optimization of Steam z Water Abatement in Gas Production Risk Assessment Generator Performance* Software – Phase 2 Reservoirs z Oil Sands A New Measurement while * Launched in conjunction with Coordina- Drilling Surveying Technique z tion of University Research for Synergy Employing the Technology of Geotechnical Behaviour of Oil and Effectiveness (COURSE) Sands Paste Tailings/ Fiber Optic Gyroscope in a ** Results completed and reported to funders Strap Down Inertial Navigation Geotechnical Physics of in 2000 System* Producing Thickened Tailings (Paste)* 100 28Producers 1Service00 & Supply Companies Alberta Energy Company Ltd. Passage Energy Inc. Adams Pearson Associates Inc. Computalog Ltd. Anadarko Canada Corporation Penn West Petroleum Ltd. Advanced Geotechnology Inc. Computer Modelling Group Ltd. Anderson Exploration Ltd. Petro-Canada Resources AGRA Earth & Environmental Ltd. C,ESU D.E. Towson and Associates Inc. BP Canada Energy Company Pointwest Energy Inc. Air Liquide Canada Inc. Digital Oilfield Inc. Burlington Resources Canada PrimeWest Energy Inc. Alpine Environmental Ltd. Duke Engineering Services Energy Ltd. Shell Canada Resources Ltd. Amtech Aeronautical Limited e-Energy Inc. Canadian Hunter Exploration Ltd. Suncor Inc. – Resources Group Aqueolic ElectroBusiness.com Chevron Canada Resources Talisman Energy Inc. Arkril Enterprises Engineering Seismology Group Canada Crestar Energy Barlon Engineering Group Inc. ESG International Ltd. Encal Energy Ltd. Benhope Energy Inc. Fire Creek Resources Ltd. Enerplus Group BJ Services Company Canada G-Chem Environmental Ltd. Gascan Resources Ltd. Boreal Laser Inc. Global Industrial Solutions Network Inc. Gulf Canada Resources Limited Bowridge Resources Group Inc. Governors Technologies Corporation Husky Energy Inc. Brine-Add Fluids Ltd. GTI E&P Services Canada Inc. Imperial Oil Limited Canwell Enviro-Industries Ltd. Gowling Lefleur Henderson Maxx Petroleum Ltd. CE Franklin eBusiness (Intellectual Property Department) Murphy Oil Company Ltd. Centre for Passive Sampling Technology Halliburton Energy Services Nexen Inc. CHEM-PET Process Technology Ltd. HCI Canada Northstar Energy Corporation Clean-flo Gas Filtration Systems (1987) Ltd. Hycal Energy Research Laboratories Ltd. Numac Energy Inc. Clearstone Engineering Ltd. IVRnet PanCanadian Petroleum Limited Colt Engineering – Core Projects Group John Zink Canada Members KBL Land Use Consulting Ltd. 160 As of March 26, 2001

Outlook for 2001Outlook Membership by Category PTAC expects the RTTA Program for natural gas to generate considerable demand for technology transfer events and information that will assist in the challenge of expanding an economical and environmentally friendly supply of natural gas for North American energy markets. The additional capability provided by the program to PTAC members and industry is expected to expand our role as a facilitator and increase the value that stakeholders realize from our services. PTAC recently initiated a widespread survey on Canadian upstream oil and gas technology and research needs and expertise across all technical areas. The survey results will be utilized by PTAC to determine priorities for events and initiatives, and be incorporated into an overall R&D Strategy The number of PTAC members increased to document. We plan to release the requirements for utilization by govern- 155 by year-end 2000. PTAC signed up our ment, academia and industry in an effort to facilitate the required R&D 160th member in March 2001, continuing our pattern of steady membership growth. Our related investment, initiatives and resulting application of new technology. current members produce approximately 60% We expect to see new technical groups or initiatives in the areas of: flaring; of Canadian Conventional Oil and Gas. greenhouse gas (GHG) and fugitive emissions; human, ecological and animal health; heavy oil enhanced recovery; driving safety; and fundamen- tal research. We have set a goal of launching a minimum of 30 projects with a value of $10 million in 2001. We are predicting a significant increase in our annual Project Expenditure by Technical Area budget to $1 million based on the RTTA Program funding and our growing membership and event revenue. PTAC will continue to encourage member participation in workshop and forum planning to ensure collaborative R&D is focused on relevant issues.

PTAC has facilitated the launch of 89 projects valued at $42M since inception in 1996. 19 1Individuals9 7Research Providers 3Learning Institutions 3Government Komex International Ltd. Oilsphere.com SAIC Canada Ayasse, Conrad Alberta Research Council University of Alberta Alberta Energy Research KPMG Consulting - Oil & Gas Practice Omnicon Consultants Inc. Sanjel Corporation – Burnside, Wayne Alberta Sulphur Research Ltd. University of Calgary Institute (AERI) KPMG High Technology Practice Group OnX.com Eng. and Tech. Services Carleton, Mike C-FER Technologies Inc. University of Regina, Province of British Columbia Kudu Industries Opsco Energy Industries Ltd. Schlumberger of Canada Century, Jack Natural Resources Canada Faculty of Engineering Saskatchewan Energy and Lionhead Engineering & Pason Systems Inc. Sibex International Inc. Driedger, Dirk (CANMET) Mines Consulting Ltd. PCP International Inc. Sierra Systems Elias, Craig Petroleum Technology Lloyd Energy Inc. PetroCosm TankSafe Inc. Logan, Al Research Centre Founding Supporter: Lockheed Martin Ness – Mitchel Field Petro-Studies Consultants Inc. The Petroleum Place, Inc. Maier, Len Saskatchewan Research Macleod Dixon Pinnacle Technologies, Inc. Thomson Hydrogeologic Consulting Mathew, Roy Council Canadian Business Networks (Technology Enterprise Group) Proalta Machine & Total Combustion Inc. McCann, Tom TIPM Laboratory (Perm Inc.) Coalition (CBNC) Mactronic Ltd. Manufacturing Ltd. Trican Well Service Ltd. Neulander, John Matrix Solutions Inc. Prolift, a division of CEF Universal Separations Systems Inc. Penhale, Bill Mercury Electric Corporation Technologies Ltd. Unotec – Unique Oilfield Porteous, Bob Millenium EMS Solutions Ltd. Prudential Steel Ltd. Technology Services Putt, Ken MJ Blair Corporation Q’Max Solutions Inc. Variperm Canada Ltd. Stephens, Mark NetworkOil Canada Inc. Quality Certification Bureau Inc. VECO Canada Ltd. Todd, Murray New Paradigm Engineering Ltd. Questor Technology Inc. VentureBC Tzanco, Elena NEWALTA Corporation Radian Canada Wellogix Willson, Diana Noetic Engineering Inc. Real Time Measurements Inc. Winterhawk Marketing Services Inc. Wilson, Kenneth Nordic Acres Engineering Rejuvenation Resources Ltd. Wireless Matrix Corporation Norwest Labs Ryan Energy Technologies Inc. Ziff Energy Group OilPro Industries Inc. Board of Directors Board of Directors As of March 26, 2001

Alan Archibald, Chairman, PTAC President, Pointwest Energy Inc. Larry Bell, Past Chairman, PTAC Vice President Operations Services, Gulf Canada Resources Limited Eric Lloyd, President, PTAC Auditor’s Report Petroleum Technology Financials Alliance Canada Denis Gaudet, Director, We have audited the financial Summarized Balance Sheet Technology Transfer, PTAC Petroleum Technology statements of PTAC Petroleum As at December 31, 2000, with comparative figures for 1999 Alliance Canada Technology Alliance Canada for the Bob Hill year ended December 31, 2000 and Vice President, have reported thereon without Assets 2000 1999 Technology and Operations, reservation under date of January Cash $ 27,672 $ 20,843 Canadian Energy Pipeline 19, 2001. The accompanying Marketable securities 46,639 43,896 Association (CEPA) summarized balance sheet and Accounts receivable 52,686 46,049 Eddy Isaacs summarized statements of Prepaid expenses 612 – Managing Director, AERI Alberta Energy Research Institute revenues, expenses and surplus 127,609 110,788 Rich Kerr have been prepared from the Capital assets 39,900 28,661 Chief Engineer, Nexen Inc. audited financial statements. $167,509 $139,449 Neil McCrank In our opinion, the accompanying Chairman, Alberta Energy and summarized balance sheet and Liabilities and Surplus Utilities Board statements of revenues, expenses Frank McIntrye Accounts payable, accrued liabilities $ 11,093 $ 341 and surplus fairly summarize the Reservoir Engineering Manger, GST payable 5,133 – information as to the financial Rainbow Lake, Deferred revenue 148,227 121,035 Husky Oil Operations Ltd. position of PTAC Petroleum Payable to members 3,493 16,050 Pat McLellan Technology Alliance Canada and the President, Advanced results of its operations contained 167,946 137,426 Geotechnology Inc. in the audited financial statements. Brian Moreland Net Assets Hamilton Rosenthal VP Engineering & Production, Burlington Resources Canada Chartered Accountants Invested in capital assets 39,900 28,661 Unrestricted (40,337) (26,638) Energy Ltd. Calgary, Alberta Bruce Peachey January 19, 2001 (437) 2,023 President, New Paradigm $167,509 $139,449 Engineering Ltd. Ken Putt Summarized Statement of Revenue and Expenses President, K.W. Putt Consulting Inc. Laurie Schramm Expenses and Surplus for the year ended December 31, 2000, with comparative Vice-President, figures for 1999. Energy Technologies Alberta Research Council Revenues 2000 1999 Bruce Stewart Director, Western Research Centre, Membership $337,582 $336,992 Natural Resources Canada CAPP 35,000 – (CANMET) Events 21,135 – Bill Svrcek In-kind revenue 12,000 11,500 Professor, Department of Interest income 4,021 3,086 Chemical and Petroleum Other – 14,586 Engineering, University of Calgary Paul Swinton $409,738 $351,578 Reservoir Engineering and Technology Manager, Expenses BP Canada Energy Company Operating $412,198 $368,985 Murray Todd President, Todd Resources Excess (short) of rev./exp. (2,460) (17,407) Surplus, beginning of period 2,023 19,430 Don Towson Industrial Technology Advisor, Surplus, end of period $ (437) $ 2,023 National Research Council’s Industrial Research Assistance Program (IRAP) – The complete audited financial statements of PTAC for the year ended Hosted at Petroleum Services December 31, 2000 are available from PTAC offices upon request. Association of Canada (PSAC) SessionsTechnology Information Sessions

PTAC hosted 30 Technology Information Sessions attended by a total of over 800 participants in 2000. These sessions provided our members with the opportunity to obtain funding and technical input for proposed R&D, learn about new R&D initiatives and emerging technology, report on project and field test results, and transfer and market new technology in the conventional oil and gas industry. If you have a particular technical focus area that needs to be addressed, please contact PTAC with your ideas. and Forums WorkshopsWorkshops and Forums PTAC sponsors workshops to provide opportunities for people to clearly define R&D issues and identify potential solutions and the best approach to move forward. Potential suppliers of R&D have the opportunity to hear first hand about such issues and to contribute their expertise and ideas for solutions. PTAC hosts the workshops and provides the necessary facilita- Technical tion, administrative support and coordination to launch projects. When Technical Areas required, PTAC widely distributes Request for Proposals (RFPs) with Areas Expressions of Interest for each priority issue from workshops. Once we have identified those who will consider supporting the R&D, proposals are PTAC now has 12 Technical then solicited from potential suppliers. PTAC brings together the inter- Areas of interest and over ested organizations in a structured way that leads to new R&D, while 3600 contacts in: protecting proprietary interests. z Conventional Heavy Oil In 2000, PTAC sponsored four workshops in Drilling, Environmental (Flaring and Soil Remediation) and Reservoir Recovery. z Drilling Forums that are focused on a specific need or technical area are conducted z e-Business to communicate information on new technologies or case studies, or on the z Environmental objectives and results of current research. z Fundamental Research Five forums were held in 2000: the Annual Environmental Forum, Flare Gas Incineration, Health and Safety, Conventional Heavy Oil z Health and Safety and e-Business. z Inactive Well Management Over 700 people participated in these nine workshops and forums held in 2000. z Natural Gas Production The continued involvement of industry personnel is needed by PTAC in z Oil Production 2001 to plan workshops or forums in areas such as Environmental, Drilling, z Oil Sands Heavy Oil, Natural Gas, Well Completion, and Reservoir Recovery. We encourage you to contact PTAC if you have ideas for such workshops, z Reservoir Recovery / Geoscience forums or working groups. z Well Completion Association and Regulator WorkingCollaboration Relationships PTAC requires participation from senior technical people to identify important issues that require PTAC believes that working with industry associations and regulators to technology transfer or R&D. jointly plan and sponsor events and distribute information is an important If you are interested in component of the overall approach to collaborative R&D and technology transfer. participating, or seeing particular issues addressed, When our approach yields potential solutions to industry challenges that we encourage you to contact are not R&D related, PTAC will transfer those items to interested associa- PTAC to provide input or to tions or regulators for their further development and implementation. obtain additional information.

For further information please contact: PTAC Petroleum Technology Eric Lloyd, President Brenda Belland Alliance Canada phone: (403) 218-7701 Information Specialist Suite 750, Hanover Place e-mail: [email protected] Natural Gas Technology Centre 101 - 6th Avenue S.W. Denis Gaudet phone: (403) 218-7712 PTAC Calgary, Alberta T2P 3P4 Director, Technology Transfer e-mail: [email protected] website: www.ptac.org phone: (403) 218-7710 Lorie Frei fax: (403) 263-3041 e-mail: [email protected] Administrative Assistant e-mail: [email protected] Arlene Merling phone: (403) 218-7700 An Association that Facilitates Innovation, Executive Coordinator e-mail: [email protected] phone: (403) 218-7702 Kerri Markle Technology Transfer, and Research & Development e-mail: [email protected] Technology Transfer Coordinator Jane Arnall phone: (403) 218-7711 Event Coordinator e-mail: [email protected] in the Upstream Oil & Gas Industry phone: (403) 218-7704 Tannis Such e-mail: [email protected] Environmental Coordinator phone: (403) 218-7703 e-mail: [email protected]