APACHE ZAMA BATTERY 12 ENHANCED OIL RECOVERY PROJECT Greenhouse Gas Emissions Reduction Offset Project Report For the Period January 1, 2013 – December 31, 2013 FINAL REPORT, Version 3.0 19 February, 2014 Prepared by: Blue Source Canada ULC (Authorized Prepared for: Apache Canada Ltd Project Contact) (Project Proponent) Suite 700, 717-7th Avenue SW 421 7th Avenue SW, Suite 2800 Calgary, Alberta T2P 3R5 Calgary , Alberta T2P 2S5 T: (403) 262-3026 T: (403) 261-1200 F: (403) 269-3024 F: (403) 266-5987 www.bluesourceCAN.com www.apachecorp.com Page 2 Contents Contents ........................................................................................................................................................ 2 List of Tables ................................................................................................................................................. 2 List of Figures ................................................................................................................................................ 2 List of Abbreviations ..................................................................................................................................... 3 1 PROJECT SCOPE AND PROJECT DESCRIPTION ....................................................................................... 4 2 PROJECT CONTACT INFORMATION ....................................................................................................... 7 3 PROJECT DESCRIPTION AND LOCATION ................................................................................................ 8 4 PROJECT IMPLEMENTATION AND VARIANCES ..................................................................................... 9 5 REPORTING PERIOD ............................................................................................................................ 11 6 GREENHOUSE GAS CALCULATIONS ..................................................................................................... 11 7 GREENHOUSE GAS ASSERTION ........................................................................................................... 17 8 OFFSET PROJECT PERFORMANCE ....................................................................................................... 18 9 PROJECT DEVELOPER SIGNATURES ..................................................................................................... 20 10 STATEMENT OF SENIOR REVIEW .................................................................................................... 21 11 REFERENCES .................................................................................................................................... 22 List of Tables TABLE 1 - EMISSION FACTORS USED FOR THE PROJECT .............................................................................................. 16 TABLE 2 - OFFSET TONNES CREATED BY VINTAGE YEAR AND GHG ............................................................................. 17 List of Figures FIGURE 1 - LOCATION OF ZAMA EOR PROJECT.............................................................................................................. 8 FIGURE 2 - CREDITS CREATED BY THE PROJECT, BY VINTAGE YEAR ............................................................................ 18 FIGURE 3 - RELATIONSHIP BETWEEN ACID GAS INJECTION VOLUMES AND OCS CREATED ........................................ 19 Prepared by: Blue Source Canada ULC 700, 717 7th Ave. SW, Calgary, AB, T2P 0Z3 Tel: (403) 262-3026 Fax: (403) 269-3024 Page 3 List of Abbreviations AEOR Alberta Emissions Offset Registry AENV Alberta Environment (now Alberta Environment & Sustainable Resource Development) AESRD Alberta Environment & Sustainable Resource Development (previously Alberta Environment) AGI Acid Gas Injection Blue Source Blue Source Canada ULC CH4 Methane CO2 Carbon Dioxide CO2e Carbon Dioxide equivalent e3m3 Thousand cubic meters EOR Enhanced Oil Recovery ERCB Energy Resources Conservation Board ft foot/feet GHG Greenhouse gas Hrs hour/s H2S Hydrogen sulphide HFC Hydrofluorocarbon/s HP Horsepower kg Kilogram km Kilometre kPa Kilopascal kW Kilowatt LHV Lower Heating Value m3 Cubic metres/s MJ Megajoule MWh Megawatt-hour N/A Not applicable N2O Nitrous Oxide PFC Perfluorocarbon/s QA/QC Quality assurance and quality control SF6 Sulphur Hexafluoride SGER Specified Gas Emitters Regulation SRU Sulphur Recovery Unit SO2 Sulphur Dioxide SSs Sources and sinks SULSIM Sulphur Recovery Unit Simulation VRU Vapour Recovery Unit Prepared by: Blue Source Canada ULC 700, 717 7th Ave. SW, Calgary, AB, T2P 0Z3 Tel: (403) 262-3026 Fax: (403) 269-3024 Page 4 1 PROJECT SCOPE AND PROJECT DESCRIPTION The project title is: Apache Zama Battery 12 Enhanced Oil Recovery Project (herein referred to as ‘the Project’) The project’s purpose(s) The opportunity for generating carbon offsets with this project arises from and objective(s) are: the direct and indirect reductions of greenhouse gas (GHG) emissions resulting from the geological storage of carbon dioxide contained in acid gas as part of an enhanced oil recovery (EOR) scheme. Date when the project Initiation of the commercial injection of acid gas for EOR was December 1, began: 2004. Expected lifetime of the It is anticipated that this EOR project will continue until it becomes project: economically unviable for oil production in the field. Credit start date: The credit start date was December 1, 2004. Credit duration period: The initial project credit duration is for 8 years starting December 1, 2004 and ending November 30, 2012. Alberta Environment and Sustainable Resource Development have granted, in a letter dated February 12, 2013, a 5 year Crediting Extension Period, to run from December 1, 2012 – November 30, 2017. Reporting period: January 1, 2013 – December 31, 2013 Actual emissions Previously registered and calculated project emission reductions from this reductions: project are, per vintage year, shown below in tonnes CO2e: 2004: 17,150, of which December 1 – December 20, 2004: 11,065* December 21 – December 31, 2004: 6,085* 2005: 203,923 2006: 157,951 2007: 88,077 2008: 79,589 2009: 61,409 2010: 41,811 2011: 16,145 2012: 3,776 2013: 24,633 Total – 694,464 tonnes CO2e *Note that there were 20 days at the beginning of the project period where the project was licensed as an acid has injection (AGI) rather than an EOR project. Although the project was still avoiding GHG emissions via the geological sequestration of carbon dioxide, no oil was being recovered. The appropriate protocol for this period was the AGI protocol, which was used in the calculations. This use of two protocols for one project was discussed with and approved by Alberta Environment. Applicable The quantification protocol used is for this reporting period is the Quantification Quantification Protocol for Enhanced Oil Recovery – Streamlined (v1, October Protocol(s): 2007) as published by Alberta Environment. Protocol(s) Justification: The Project is an enhanced oil recovery (EOR) project in northwest Alberta, Prepared by: Blue Source Canada ULC 700, 717 7th Ave. SW, Calgary, AB, T2P 0Z3 Tel: (403) 262-3026 Fax: (403) 269-3024 Page 5 therefore the use of the EOR protocol for the Project is appropriate. Prior to EOR, carbon dioxide contained in acid gas associated with the produced gas was processed through sulphur recovery and incineration and the formation CO2 was vented to the atmosphere. Note that there were 20 days at the beginning of the project period where the Project was licensed as an acid gas injection (AGI) rather than an EOR project. Although the Project was still avoiding GHG emissions via the geological sequestration of carbon dioxide, no oil was being recovered. The appropriate protocol for this period was the AGI protocol, which has been used in the calculations. This use of two protocols for one project has been discussed with and approved by Alberta Environment. Other Environmental There are no other environmental attributes (e.g. RECs, etc) being claimed by Attributes: this project. Legal land description of The Project is located in Alberta. The nearest settlement is Zama City. EOR is the project or the ongoing in multiple pools within the oil reservoir, but the recovered oil flows unique latitude and to the oil battery (00/14-12-116-6W6), therefore the battery location is used longitude: for this project. Latitude: 59° 03' 57" N Longitude : 118° 52' 16" W Ownership: Apache Canada Ltd. (herein referred to as ‘the Proponent’) is the sole owner of the assets and project in the Zama oil field. Reporting details: This project has already claimed historic credits from December 1, 2004 – December 31, 2012. This report covers the period January 1, 2013 – December 31, 2013. It is anticipated that subsequent reporting will occur annually. Verification details: The verifier, RWDI Air Inc, is an independent third-party that meets the requirements outlined in the Specified Gas Emitters Regulation (SGER). An acceptable verification standard (e.g. ISO14064-3) has been used and the verifier has been vetted to ensure technical competence with this project type. This is the 3rd consecutive verification carried out by the verifier for this project. Project activity: This project meets the requirements for offset eligibility as outlined in section 3.1. of the Technical Guidance for Offset Project Developers (version 4.0, February 2013). In particular: 1. The project occurs in AB: as outlined above; 2. The project results from actions not otherwise required by law and beyond