How to submit information for gas cost allowance (Allowable Costs in Petrinex)

If a capital addition is used in both plant and field operations, it can qualify under both Allowable Costs (gas cost allowance) and producer cost of service allowance (PCOS). In this case, you must allocate the capital addition between the two allowances.

Do not enter the price you paid for the facility as a capital addition. Instead, use E4 Closing Balance of undepreciated capital as at December 31 that the previous producer reported on their last Allowable Costs submission for the facility before it was sold.

If you operate your gas plant only for a portion of the calendar year, prorate the calculation of depreciation and return on rate base based on the number of operating months divided by 12.

You can include costs for the following things when you report your depreciable capital additions:

• Commissioning and start-up
• Communication controls not associated with the production functions
• Corrosion protection
• Fire fighting and safety equipment                                               
• Loading facilities, railway spur lines, storage or other facilities on the plant site, meter runs and measurement equipment    
• Process and sales compression                                                                 
• Pollution monitoring and seepage detection equipment
• Processing facilities (including sulphur recovery facilities) and associated piping
• Processing studies that relate directly to the plant process used
• All weather main access roads located in B.C. to producer-owned gas plants located in B.C. When calculating this cost, note the following:
  • If the road originates in Alberta, only capital costs for the portion of the road located in B.C. is eligible
  • If the road was constructed before January 1, 2000, add the undepreciated capital costs of the producer-owned road as a depreciable capital addition into the rate base of the gas plant
• Interior plant gate roads, bridges, walkways and fences
• Sales gas pipeline (only if producer-owned)                     
• Warehouses, laboratories, plant offices and buildings for processing facilities only
• Water treatment facilities if water is used for processing
• Construction overhead equal to one percent (1%) of the total capital additions in the claim year

You cannot include costs for the following things when you report your depreciable capital additions:

• Communication controls associated with the production function (in other words, production SCADA systems, SCADA dish and modem)            
• Downhole, wellhead, protection, controlling, servicing, testing, salt water and other production facilities or equipment relating to the production function    
• Wellhead equipment relating to the production function    
• Field compression                
• Field dehydration and compression within the plant gate            
• Field related equipment located within the plant gate of a producer-owned plant that has been included in the determination of a producer cost of service rate    
• Field dehydration within the plant gate                        
• Gathering systems including line heaters, dehydration, sweetening and pigging facilities
• Housing, other than those costs directly attributable to the processing function as they relate to natural gas    
• Interest costs
• Lines, compressors, wells and other significant facilities or equipment relating to the injection function                            
• Roads, bridges, walkways and fences other than all weather main access roads to producer-owned gas plants located in B.C.
• Storage, separators, dehydrators, scrubbers, boots and any other facilities or equipment relating to gas conservation and oil        
• Costs already recovered from other government agencies or ministries such as infrastructure credits, CIIP payments, and electrification projects

Eligible labour costs include:

• Direct supervision of employees at the gas plant or sales line
• Labour, such as salary and wages paid to employees whose jobs directly involve processing at the plant

Ineligible labour costs include:

• Employee relocation
• Area supervision
• Transportation for employee and staff
• Salary and wages for roles not related to direct operations, including:
  • Field operators
  • Head office staff
  • Administrative support staff
  • Second and third level supervision

Eligible material costs include:

• Pipe tape
• Aggresol road dust reducer

Ineligible material costs include:

• Hydrogen peroxide
• Caustic soda
• Waxtreat

Eligible chemical costs include:

• Chemicals used in the plant process

Ineligible chemical costs include:

• Chemicals for field use
• Chemical containers (such as methanol, TEG Inhibitor)

Eligible transportation costs include:

• Transportation of materials and chemicals for use in the plant

Ineligible transportation costs include:

• Automotive or vehicle operating costs, including cost of gasoline
• Employee or staff transportation

Eligible direct insurance costs include:

• Insurance covering the plant or sales line  

Ineligible direct insurance costs include:

• Insurance covering things that are not the plant or sales line
• Loss of revenue insurance
• Business interruption insurance
• Hurricane insurance
• Life insurance

Eligible property taxes costs include:

• Property taxes for the plant site or sales line

Ineligible property taxes include:

• Property taxes for property other than the plant site or sales line
• Property taxes associated with any production facilities or pipelines, which would be covered by producer cost of service allowance

While these are not existing categories in the submission, you can add any of them as direct operating costs:

• Fuel tax
• Surface rentals    
• Licenses, dues, fees, surveys and inspections relating to the processing function
• Maintenance for all weather main access roads located in B.C. to producer-owned gas plants located in B.C. 
  • If the road originates in Alberta, only costs for the portion of the road located in B.C. is eligible
  • If you recover road maintenance costs by charging the road’s users, the recovered amount should be deducted from total road maintenance costs                

You cannot include any of these as direct operating costs:

• Goods and services tax 
• Income tax
• Oil and gas royalties
• Interest costs
• Overhead, administrative and indirect charges
• Operating costs relating to production, gathering systems, field compression, field dehydration, gas conservation, injection or oil functions
• Water and fluid disposal costs
• Costs already recovered from other government agencies or ministries such as infrastructure credits, Clean Industrial Initiative Program payments, and electrification projects    

Provide any of the following background information:

• Current metering schematic
• Gas flow diagram and schematic that identifies all locations delivering gas to the plant or sales line
• Schematic of plan that shows:
  • How the processing of raw natural gas yields by-products, including ethane, propane, butanes and pentanes, liquefied petroleum gas (LPG), and natural gas liquids (NGLs)
  • By-product delivery locations
  • By-product removal locations
• Detailed written description that describes:
  • All the facilities at the plant
  • Gas sources (raw, sweet and sour) received at the plant
  • Processes within the plant
  • Sales gas meter(s)
  • Pipelines
  • Delivery and removal locations
• Plot plan: a scale drawing that gives an overview of the entire plant, including:
  • All roads
  • Pipeline right-of-ways
  • Buildings (process function)
  • Major equipment units (gas sweetening units, refrigeration units, dehydrators, separators, meter runs not housed in buildings)
  • Tank farms
  • Employee entrances
• Facility operating cycles (in other words, whether you operate 24 hours a day and 7 days a week, year-round, or follow an alternate cycle)

Provide names and phone numbers for your:

• Production accountant contact
• Field office personnel contact, such as foreman, warehouse, etc
• Engineer for plant and field contacts
• Land department contact
• Emergency contact
• Other contacts relevant to the Allowable Costs submission

• Description of all capital additions claimed on your Allowable Costs submission
• Electronic copy of the general ledger for all capital additions included on your Allowable Costs submission
• Document to note if there are any allocations included in the costs claimed, including the allocation method and evidence if available

For generally demonstrating direct operating costs:

• Electronic copy of the general ledger detail for all cost centers containing operating costs claimed
• Electronic worksheet reconciliation between the general ledger and the costs claimed on the Allowable Costs submission
• Document to note if there are any allocations included in the costs claimed, including the allocation method and evidence if available
• Explanation for significant year over year changes (in other words, changes that qualify as material amounts)

For specific cost categories:

• Labour:
  • Daily or weekly operating labour routine description and any significant changes (including how many hour shifts, how many days off and days on, number of crews)
  • Percentage of workers who are employees and percentage who are contractors
• Property taxes: Tax notices, property record card
• Insurance: Original insurance documents or renewal documents
• Power, hydro, or utilities: Invoices details and supporting documents if claimed
• Explanation for significant year over year changes (in other words, changes that qualify as material amounts)

Identify changes to ownership interests from the previous year.

Submit a document with the following information, where applicable:

• Name of the operator of this facility
• For gas plants: What months was processed gas sold from the facility?
• For sales lines: What contract carrier line is the sales line connecting to?
• If the plant control room uses a SCADA type monitoring system, describe usage and cost
• If a GCA (Allowable Costs) was previously filed for this location, provide BCER Facility ID(s) and Licence Number(s)
• If there are facilities other than yours at this location, provide the following information on the other facilities:
  • A description of those facilities and their BCER Facility ID(s)
  • A description of how the facilities interact with each other