ERC calculator petroleum and gas - Module 5 transcript

Watch the video Petroleum and gas ERC calculator training – Module 5 – Main to learn about entering data into the Main sheet.

Welcome back to the training for the 2022 edition of the estimated rehabilitation cost calculator for petroleum and gas.

This is Module 5. This module will work through entering data into the Main sheet. Users can prepare their whole ERC submission using just the Main sheet and not use the user input sheets. The Main sheet groups activities into sections. For most of the activities discussed below, further detail will be provided in the module for the corresponding input sheet.

The first section is Exploration, which contains rates from other sections and is split out so that smaller exploration only companies need only view this section. If the exploration project has activities not included in this section, the user can use the additional line item rows and reference the rate number in the comments. Otherwise, the user must enter those quantities to other sections in Main.

The next section is roads, tracks, laydown, and borrow pits; followed by camps, buildings, and sewerage treatment plants; power generation and distribution; well pads and associated infrastructure; pipelines; gas processing and oil storage facilities, which include unconventional gas facility types, conventional gas and oil facility types and LPG facilities; LNG plants; water treatment plants and transfer stations, which includes water management items such as salt reduction by reverse osmosis; then water storage infrastructure including a range of different dam and pond options, as well various tanks including panel tanks; general land rehabilitation to allow for items like rehabilitation of subsidence or erosion as well as allowance for miscellaneous activities to include things like additional soil amendments not already covered by other activities, or if soil amendment activities are known to be beyond those reasonably expected. It is important to keep in mind that default rate will cover seeding and soil amendments unless specifically stated that they do not.

Following this is the land investigation and contamination section. Where they are required, costs for investigation are included in rolled-up rates for items such as dams and ponds. So this section allows for activities not covered elsewhere, or where activities are known to be in excess of what is reasonably expected, or if the user wishes to list out investigation areas. This section is also where the Waste Levy costs are applied. Finally there are sections for mobilisation and demobilisation and additional activities.

At the bottom of each section there is an allowance to add additional items not covered by any other activities in that section. To use an additional item, provide a clear activity description, enter the quantity and unit for the item, and add your own rate in the alternative rate column with justification. You then provide a detailed scope for that item to clearly define what the additional item does and does not cover. Each of the sections has a subtotal which is reported to the Summary sheet. At the top is the total ERC amount. That is not the total for the Main sheet, but the total from the Summary sheet, including multipliers.

As discussed briefly in an earlier module, some sections in the Main sheet have a row or rows that draw from the total costs calculated in the user input sheets. For example, the total costs for quantities entered into the Seismic and Infrastructure user input sheet are reported to the Main sheet here for seismic (row 7), here for tracks and roads (row 51), and here for camps (row 88). Here is another example, where the total costs for quantities entered to the Wells user input sheet are reported to the Main sheet here (for presenter: row 151). To enter data into the Main Sheet simply input the quantities as they are in your disturbance schedule.

Throughout the calculator, there are now additional area-based rates in addition to the length and number based. For example, in the exploration section there are options to enter the area of the track in addition to total length of a track. Remember that you only need to enter an item once, so if you enter the total length of a track in the length item, you do not need to enter the road again in the area item.

Each item in the Main sheet has a corresponding use and scope definition. The use box describes how a rate is intended to be used, and sometimes contains additional information defining the quantity. For example, here (cell O572) this cell informs the user that the area to be entered is the crest area of the dam. The scope details what is covered in the rate, which generally includes what is reasonably expected to cover an activity. This is where items specifically included are identified, for example costs for management of any residual water in ponds are not included in those rates.

The Main sheet also offers the user the ability to enter an alternate rate. If you have suitable justification for using a rate different from the default rates provided, for example third party quotes, you can enter that rate in the alternate rate column. The calculator will then use the alternate rate to calculate the cost instead of the default rate. The cell will turn red to visually indicate to the department that an alternate rate has been used, and the user must provide a justification in the justification for alternate rate column. Remember to include a blank line before and after your justification using Alt + Enter key to ensure the text displays properly.

In the exploration section, there are two items for the selection of camps. The user selects an option from the drop-down, which selects the appropriate rate, and then enters a quantity to allow calculation of the total for those line items. There are two rows allowing two types of camps to be selected. If more camps are required, the user can enter these in the additional rows in the exploration section or use the camps rates further down.

The items in the Main sheet are generally for groups of items. For example, if you are entering the length for 6 metre wide, earthen track to be revegetated to pasture, then you enter the total length for all roads in that category. Then add a comment in the user comments column to describe the item, like 'group of tracks in area A'. If you would rather itemise out items such as tracks, use the input sheets.

You will notice here the different rates for pasture, native and arid. These are present throughout the calculator for a range of items as the cost to rehabilitate for each land type is different. That is, it costs more to replace with native vegetation than with pasture, and it costs less in arid, desert environments as the natural state in arid environments does not include vegetation, for example in South West Queensland.

For camps there are two options. The first is that the user can enter the area of a camp, whereby the default rate assumes an amount of space between and around components of the camp, as well as decommissioning of all reasonably expected camp components. If the area disturbed by a camps is significantly larger than what might reasonably be expected, the additional area will need to be added separately in the general land rehabilitation section. This may happen for example if an area of land has been set aside for camp expansion.

Alternatively you can enter camps by number of people, where the assumption is that the more people the camp accommodates the more components will be present, like a larger or multiple mess areas and recreation areas. A temporary camp is typically constructed for relatively short-term activities such as drilling campaigns or one-off activities such as construction of a process facility. Permanent camps are typically anticipated to be required for more than five years, and include more hardstand such as asphalt and concrete and facilities such as recreation modules with well stocked exercise equipment, tennis and basketball courts. It is up to the user to determine the type of camp that is applicable in each case. The user may make a case that a camp that has been in use for more than five years is a temporary camp by demonstrating the absence of hardstand. That is, the surface is predominantly compacted earth and gravel and only has simple facilities, such as very basic recreational facilities.

The building items have been significantly improved. Buildings associated with camps, process facilities, and the like are included in those rates so additional entries do not need to be added in the buildings section. These rates only cover the footprint of the building, so if for example the disturbance from a building impacts an area of land around the building, this area will need to be captured in the general land rehabilitation section. Check the use and scope for each building item to ensure you are applying the correct building type. Note that the unit for portable skid mounted or portable building is per item, not per area like the building items above. Also note that sewerage treatment plants have changed from an area based calculation to a kilolitres per day calculation. The rates for power generation and distribution have been revised and many changed to bring them in line with industry rates across petroleum and gas, and mining.

The options for wells, pads and associated infrastructure have been expanded to reflect the characteristics associated with the different resources. For example, conventional gas wells typically have less wellhead infrastructure than coal seam gas wells. The stage of each well is now better accommodated with sets for plugged and abandoned, suspended, shut-in, appraisal or development, and production or operation. As always, carefully read the use and scope of each item to ensure the correct items are being used. Towards the end of this section there is now a selection of items to cover wells in arid land as the rate to rehabilitate these items is less than their equivalents above.

For pipelines, the user input sheet only covers land rehabilitation for pipelines and does not include allowance for additional activities like flushing or purging. These additional activities need to be entered into the Main sheet in addition to the lengths or areas in the user input sheet.

In the Main sheet, the options for pipeline land rehabilitation include the rehabilitation of the full width of the easement, rehabilitation of operational area, which is generally less than the full width, and an inspection only option where the easement has already been rehabilitated and only ongoing inspections are required to monitor performance. These inspection-only items are for pre-department sign-off of rehabilitation as once the disturbance is formally certified rehabilitated, further costs are assumed to be part of the overall ERC maintenance and monitoring allowance. For each of these options there are several width categories, however if the user wishes to improve the accuracy, there is a user defined option where you can enter your own width to be calculated. In these cases, the calculator is based on the specific width entered rather than an average of the range.

The number of road, rail, and stream crossings needs to be counted for all pipelines and the total number included in the relevant item. At the end of the pipeline section there is allowance for pipeline facilities and hubs. It is up to the user to choose the most appropriate item and further details on these can be found in the user guide.

As with pipelines, in gas processing and oil storage facilities the user can either use one of the provided categories, or enter their own item. There are some limitations on what values are appropriate in these items so please carefully read the use section to ensure appropriate values are entered. LNG Facilities are now separate and are specific to the Curtis Island facilities, but could be used if new LNG Facilities are constructed elsewhere in the state assuming the general characteristics are similar.

For water treatment plants, the user can enter their own rate in megalitres per day and a quantity specific to their activity, or use the selection of different size items available for each facility type. The Main sheet includes rates for management of residual water and salt. Petroleum and gas projects typically manage liquids as part of their routine operation and management practice and consequently, the inclusion of quantities for these items is not always expected. Oily water in process ponds is typically routinely disposed of off site or processed. For coal seam gas activities, large quantities of brine and salt can be generated, and it is not typical to transport these off-site during routine activities. Consequently, the inclusion of salt is likely to be required for coal seam gas operations. The default method used in the calculator is load, haul, and dispose at an off-site facility. If a different method will be used, the user must develop an alternate rate.

The water transfer items are for facilities separate to water treatment plants and are typically comprised of tanks and pumps and piping. For guidance on what constitutes a small, medium or large facility, the user can check the user input sheet for water storage to see what elements make up the different sized facilities.

The water storage infrastructure section includes a wide range of items with the cost determined by the capacity or size of the item, whether sediments are assumed contaminated, whether the item is lined or unlined, and the land rehabilitation type. This section includes a range by capacity and by footprint area. In both cases these are the crest values for dams and ponds or full height for tanks. It is up to the user to make the decision as to whether dams, ponds and tanks are clean or contaminated and enter values into the appropriate items. The user is encouraged to provide notes that will support their selection.

The general land rehabilitation section includes a range of treatments and it is up to the user to determine whether these are needed. In general, the land rehabilitation costs are included in the rolled-up rates for the other items. For example the rehabilitation of the land upon which a camp was constructed is included in the camp rates.

In the investigation and contamination section, you will notice a range of items where the waste levy is applied. These are reporting from the user input sheet in column G, and quantities from the rows above reported in column H. The sum of these two values for each line are multiplied by the levy for that item to get the total.

The mobilisation and demobilisation section requires a simple quantity entry against the appropriate category. The user guide provides further explanation on the use of the mobilisation and demobilisation rates. In general it is intended that only one rate need be used and this should reflect the fleet that would most likely be used across the project. For example if the project is mostly wells then a small fleet is likely appropriate. If the project has several large process facilities and large dams a larger fleet is likely appropriate. The distance selection shown in each rate description is the one-way distance to the site. If the project is all wells and located less than 150 kilometres from an appropriate equipment supply centre, rate #13.01 is appropriate.

As always, for more information or specific instructions, please consult the user guide which is also available on the Business Queensland website, below the download for the calculator. See you in the next module.

Watch the video: Module 5 – Main.