About New Paradigm Engineering Ltd.

1. Vent Gas MitigationPTAC Environmental ForumJanuary 30, 2002Bruce Peachey, P.Eng.New Paradigm Engineering Ltd., Edmonton

2. About New Paradigm Engineering Ltd. • Independent consulting company, Inc. 1991 • Engineer “new paradigms” for industry • Small but supplement manpower with other specialists and consultants as needed for the work. • Last three years spent on assessing existing and new options for reducing methane emissions, through a series of Vent Options Studies and other activities. • Vent Option Studies Total (2000-01) • CHO Audits and Equipment Trials (1999-2001) • New Technology Development (1998-2001)

3. Overview of Vent Mitigation Proposals Stage 1 What are the Options? How do you decide? Economics drives the Utilization of Options Stage 2 Demonstrate the Economic Options Stage 3 Focused R&D on Options where needed No economics drives the Development of Options

4. Overview of Proposals – Stage 1 • Vent Options Studies ($200,000) • Phase 1a – Conventional Heavy Oil Vents (complete) • Focus on casing vents • Phase 1b – Thermal Heavy Oil (nearly complete) • Focus on energy efficiency options • Phase 2a – Oil & Gas Production Vents (complete) • Focus on dehydrator, power gas and tank vents • Phase 2b – Gas Compression/Processing (nearly complete) • Focus on fugitives and leaks • Phase 3 – Ground Seeps (Planned for 2002)

5. Overview of Proposals – Stage 2 • Demonstration Projects ($100,000+) • Demonstrate that Vent Option Studies can be profitably applied in each type of producing operation. • Proposed in November, 2001 looking for gov’t support • Collaboration with Clearstone Engineering and Producers • Catalytic Converter Trials ($10,000-$15,000 per site) • Field tests of low cost units to convert CH4 to CO2 • Unit cost <$5000 for 50 m3/d capacity • Can pay for itself on $US1.5-2 per tCO2eq • Proposed January, 2002

6. Overview of Proposals – Stage 3 Basic Concept • Building  gas separator • Fugitive methane withdrawn with some air • Use waste heat in exhaust stacks, and/or CANMET reverse flow reactor to maintain catalytic reaction • Just convert CH4CO2 • Potentially enough for heating or power. Air Air Baffles Engine Process or Compressor Building

7. Overview of Proposals – Stage 3 Components • Opportunity Definition – New Paradigm, Clearstone, Boreal Lasers and Producer Participants. • Characterization of fugitive flows in process buildings • Proposal being prepared for work to start in April/May, 2002 • Catalytic Reactor Modeling - U of A, Dr. Robert Hayes • NSERC and COURSE applications submitted ($150-$400k 2002-04) • Prototype Reactor Development and Lab/Shop Testing • CANMET (Varennes) - Reverse Flow Catalytic Reactor • New Paradigm - Waste Heat Supported Reactor • New Paradigm – Catalytic Vent Converter (Completed in 2001) • Prototype Field Testing – 2002-2004

8. Work Scope – Overall Focus Areas • Define or Develop Economic Options for Methane Vents • Fuel Displacement by Vents in Upstream Operations • Conventional Heavy Oil  200-300% of fuel demand • Natural Gas and Oil Production  10-30% of fuel demand • Gas Plants and Compressor Sites  <5% of fuel demand • Thermal Heavy Oil  <1% focus is on demand reduction • Reduction of Vents where fuel demand < vent stream • Use of vents for power or EOR where vents >> fuel need • Convert any CH4 left over to CO2 for emission credits

9. Deliverables by Project Stage • Stage 1 – Vent Options • One page option sheets, flowcharts, tools available on web • Technology Transfer Workshops and courses • Stage 2 – Demonstration Projects • At least one consistently documented case study on economic mitigation of methane vents in each of six main types of upstream operation • Stage 3 – Focused R&D on Small and Fugitive Streams • Catalytic reactors or other options to economically recover energy and/or convert irreducible methane emissions.

10. Implications for Industry and Regulators – The Big Picture • Over $400-$800M/yr of methane vented or emitted from upstream sites (@$3-$6/GJ) • Equivalent to over 20% of upstream energy use • Methane emissions from upstream sources • Almost 50% of oil & gas GHG emissions • Over 8% of Canada’s GHG emissions • At the same time methane is also being flared. • GHG, flaring and odour issues affecting O&G development

11. Implications for Industry and Regulators – Methane - An Economic Target • It has an economic value ($3-$6/GJ) • Opportunities to increase sales or reduce costs • It can provide the energy to support it’s own use • Enable increased recovery of other hydrocarbons • Many opportunities to use existing technology. • Many existing facilities based on1960’s design factors  Gas at C$0.30/GJ and no concerns about methane impact on the environment.

12. Implications for Industry and Regulators - What comes with the Methane Vents? • Greater GHG impact; 1 t CH4 = 20-23 tCO2e • Lower cost to convert than to sequester CO2 • Sequestration  US$20/tCO2 • Methane  Economic or <$US1.50/tCO2e • VOC’s, H2S and BTEX emissions • Sources of Odour, Public Concern and Resistance to Development are reduced with the methane. • Regulatory Pressure to Change

13. Overall Schedule – Where are we now? Stage 1 – Ph 1 & 2 Ph 3 Stage 1 – Technology Transfer Stage 2 – Demos Stage 3 – Focused R&D 2000 2001 2002 2003 2004 2005

14. Follow-up Work • Want to develop projects as Win-Win • Producers get needed support for economic results • Governments get results communicated widely • Proponents get to apply their knowledge and expertise • Public gets understanding of GHG issues • Everyone gets accelerated emission reductions • Demonstrate potential benefits for all Upstream Oil and Gas Sectors and Stakeholders

15. Contact Information New Paradigm Engineering Ltd. C/o Advanced Technology Centre 9650-20 Avenue Edmonton, Alberta Canada T6N 1G1 tel: 780.448.9195 fax: 780.462.7297 email: bruce@newparadigm.ab.ca web: www.newparadigm.ab.ca