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Introduction to the Enhanced Production Audit Program

This document outlines the Enhanced Production Audit Program (EPAP) established by the ERCB. It highlights EPAP's goals, major components, and implementation strategies aimed at ensuring compliance with measurement and reporting requirements. Key aspects include operator declarations, evaluation of controls, compliance assessments, and the escalation process for noncompliance. The program promotes continuous improvement, emphasizes collaboration, and provides resources for operators to enhance their compliance and reporting practices.

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Introduction to the Enhanced Production Audit Program

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  1. Introduction to theEnhanced Production Audit Program ISA January 25, 2010

  2. Outline • EPAP Goals • Overview of EPAP • Implementing EPAP • Question Period

  3. New Directive 076 • Title: “Operator Declaration Regarding Measurement and Reporting Requirements” • Effective January 4, 2010 • Directive available for download at:www.ercb.ca • Operator’s Handbook

  4. Two Main Goals • Raise level of assurance over compliance with ERCB measurement and reporting requirements • Raise level of compliance with ERCB measurement and reporting requirements

  5. EPAP Overview

  6. 5 Major Components • Declarations • Controls & Evaluation of Controls • Compliance Assessment • Action Items • Escalation

  7. Declarations • State key operator assertions • Involve senior executives • Report evaluations at a summary level • Create through EPAP system Declaration does not require perfection

  8. Controls & Evaluation of Controls • Every well-managed business operates controls • EPAP is based on operators evaluating their measurement & reporting controls

  9. Overview of Relationship Evaluation of Control Assesses Control Monitors Business Process

  10. Oil & Gas Example For sample of Well Tests, examine review of the log Assesses Review Well Test log Monitors Conduct Well Tests

  11. Compliance Assessment • Based on Compliance Assessment Report • Contains Registry and FIS data • Available monthly • Basis for regular contact Indicators are not noncompliance events

  12. Action Items • Some contacts become action items • EPAP system provides support • Documents discussion and actions • Communicates to operator • Provides basis for follow-up Action items are enforceable

  13. Escalation • More information requested on: • Controls • Evaluation procedures • Evaluation results • Controls-based audit • Substantive audit

  14. Connection to D-019 • Lack of progress • Assistance • Education • Lack of co-operation • No or inadequate response • Failure to submit a declaration Directive 019 Enforcement is avoidable

  15. EPAP Philosophy “Trust, but verify” - Ronald Reagan

  16. EPAP Approach • Use of judgment • Focus on collaboration • Continuous improvement takes time • Operators will need support

  17. Implementing EPAP

  18. Implementation Schedule

  19. Implementation Activities - 1 • Select your declaration month • Meet with senior executives • Build understanding of the controls-based audit approach • Build understanding of current work • Deliver a communication presentation about EPAP

  20. Implementation Activities - 2 • Create an evaluation plan • Strengthen business processes and controls • Perform trial evaluations of controls • Act on the Compliance Assessment Report

  21. Implementation Resources • Questions: • www.ercb.ca • epap@ercb.ca • Assigned PAT member • IMG – Industry Measurement Group • CAPPA – Canadian Association of Petroleum Production Accounting • IIA – Institute of Internal Auditors

  22. Future EPAP Related Events • CSHM Conference – April 2010 • IMG EPAP Course – later in 2010 • EPAP Industry briefing – later in 2010 • CAPPA Conference – October 2010

  23. Question Period

  24. Common Misconception Low ComplianceAssessment scores = ≠ High Compliance

  25. Indicators of Deficienciesin Controls • Amendments • Compliance assessment report • Voluntary self-disclosures • Field inspections • Audit findings • ERCB Volumetric Noncompliance Report • Provisional assessments

  26. Suggestions for Continuous Improvement • Recent production audit findings • Recent field inspection findings • PAT Top 10 or 20 list of audit findings • ERCB Noncompliance Report • Integration • Schematics and drawings

  27. Suggestions for Continuous Improvement • Data quality enhancement initiatives • Review current practices • Perform self-inspections • Review the findings of internal audits • Review the findings of recent joint venture audits

  28. Suggestions for Continuous Improvement • Review noncompliance event list • Review items on the current ERCB risk matrix • Review the Registry warning report • Review Provisional Assessments • Synchronize property setup among: • Production accounting system • Field data gathering system • Financial accounting system

  29. Suggestion for Industry Cooperation • Participate on IMG subcommittee • Participate on CAPPA subcommittee • Work with Registry to implement enhancements • Work with PA and Field Data Gathering software vendors

  30. Eventually, all operators will • be aware of their state of compliance with ERCB requirements • have the infrastructure in place to mitigate risk of noncompliance • raise their level of compliance

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