VERIFICATION REPORT FOR THE CO2 CAPTURE FROM ......2016 to December 31, 2016) resulting from the capture of carbon dioxide (CO 2) (that was historically emitted to the atmosphere)

VERIFICATION REPORT FOR THE CO2 CAPTURE FROM PRENTISS2 FOR ENHANCED OIL RECOVERY

Prepared for: MEGlobal Canada ULC P.O.Bag 5501, Red Deer, AB T4N 6N1

Prepared by: Stantec Consulting Ltd. 400 – 655 Tyee Road, Victoria, BC V9A 6X5

Project Number: 123221000 December 29, 2017

VERIFICATION REPORT FOR THE CO2 CAPTURE FROM PRENTISS2 FOR ENHANCED OIL RECOVERY Version 2.0 July 2016

December 29, 2017

E.1

EXECUTIVE SUMMARY

A summary of the verification of the CO2 Capture from Prentiss2 for Enhance Oil Recovery (EOR) Offset Project (the Project) for the period of January 1, 2015 to December 31, 2015, and January 1, 2016 to December 31, 2016 is provided in Table E.1.

Table E.1 Verification Summary Project Name CO2 Capture from Prentiss2 for EOR

Project Start Date January 1, 2006

Credit Start Date January 1, 2006

Credit Duration Period January 1, 2006 through December 31, 2018 which includes the five-year extension periods from 2014 to 2018.

Verification Period January 1, 2015 to December 31, 2015 January 1, 2016 to December 31, 2016

Expected Lifetime of the Project

30-40 years

Authorized Project Proponent

Corinne Dueck Feedstock & Energy Manager MEGlobal Canada ULC P.O. Bag 5501 Red Deer, AB T4N 6N1 Ph. 403-885-7215 Fax 403-885-7270 [email protected] www.meglobal.biz

Applicable Quantification Protocol

Quantification Protocol for Enhance Oil Recovery (V 1.0, October 2007)

Ownership Carbon credits generated by the following operators: • Glencoe Resources - January 1, 2015 to June 1, 2015 • Omers Energy - July 1, 2015 to November 30, 2016. • 1994450 Alberta Inc. (company name is changed to Sequoia Resources) -

December 1, 2016 to present The above credits are owned by MEGlobal Canada ULC through the Prentiss CO2 Stream Purchase and Sale Agreement, Article 6.1.

Other Environmental Attributes

This Project is not generating Renewable Energy Certificates (RECs) or other environmental benefits/attributes.

Project Registration The Project is registered under the CSA Group Alberta Offset Registry.

GHG Assertion The fundamental GHG Assertion verified is the quantification of 64,576 t CO2e (59,577 t CO2e for January 1, 2015 to December 31, 2015, and 4,929 t CO2e for January 1, 2016 to December 31, 2016) resulting from the capture of carbon dioxide (CO2) (that was historically emitted to the atmosphere) for use in enhanced oil recovery (EOR) operations has been completed in accordance with the verification criteria.


December 29, 2017

E.2

Table E.1 Verification Summary Level of Assurance The SGER and AEP require the verifier to conduct sufficient procedures to deliver a

reasonable level of assurance. The verification was planned and executed accordingly.

Verification Criteria • Climate Change and Emissions Management Act (the Act), SA 2003, c C-16.7; • Specified Gas Emitters Regulation, Alta Reg. 139/200, with amendments up to

and including Alberta Regulation 104/2015 (Regulation); • Technical Guidance for Offset Project Developers (version 4.0, February 2013); • Specified Gas Emitters Quantification Protocol for Enhanced Oil Recovery (V 1.0,

October 2007); and • The Emission Factors Handbook (March 2015, V1.0).

Verification Objective The objective of the verification was to assess whether the Project Report dated December 15, 2017 and the GHG Assertion satisfy the following AEP requirements: • Climate Change and Emissions Management Act; • Specified Gas Emitters Regulation; • Technical Guidance for Offset Project Developers (version 4.0, February 2013); • Specified Gas Emitters Quantification Protocol for Enhanced Oil Recovery (V 1.0,

October 2007); and • The Emission Factors Handbook (March 2015, V1.0).

Verification Standards The verification was conducted in accordance with ISO 14064:3, ISO 14065, and guidance contained within the Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance, January 2013, version 1.0.

Project Activity For the verification period the Project activities at the Sequoia Resources (Sequoia) Prentiss Capture Facility (the Facility) are eligible under the SGER to generate offsets as they meet the following conditions. • Result from actions taken on or after January 1, 2002 – the Project began

operation after this date. • Be real, demonstrable, and quantifiable – the Project has been verified according

to the Verification Criteria above. • Not be required by law – the Project is not required by any current or proposed

law. • Have clearly established ownership – the Project Developer has provided sufficient

and appropriate evidence that MEGlobal Canada ULC owns the offset credits generated by the Facility.

• Be counted once for compliance purposes – the Project offset credits are serialized on the Alberta Emission Offset Registry (AEOR).

• Be verified by a qualified third party – Stantec is a qualified third party (see Section 1.0, 3.1 and Statement of Qualifications).

• Have occurred in Alberta – the Project is physically located in Alberta.

Verification Summary No unresolved material misstatements were identified in the Project Report dated December 15, 2017 and the GHG Assertion as submitted. The GHG Assertion for the Project is deemed to be fairly presented and substantiated by sufficient and appropriate evidence. A reasonable level assurance verification statement was issued.


December 29, 2017

E.3

Table E.1 Verification Summary Verification Team

Lead Verifier Daniel Hegg, M.Sc., CEM

Designated Signing Authority

Vicki Corning, P.Eng.

Project Manager Daniel Hegg, M.Sc., CEM

Independent Peer Reviewer Nicole Flanagan, M.A.Sc., P.Eng.

Quality Reviewer Vicki Corning, P.Eng.

Verifiers Rengarajan Vaiyapuri, M.Eng., EIT; Orasa Webber, M.Eng.

Verification Timeframe November 2017 to December 2017

Site Visit Date November 28, 2017

Report Date December 29, 2017


December 29, 2017

1

TABLE OF CONTENTS

EXECUTIVE SUMMARY ........................................................................................................................ E.1

1.0 INTRODUCTION ......................................................................................................................... 1 1.1 INTENDED USER .............................................................................................................................. 1 1.2 PROJECT DESCRIPTION ................................................................................................................. 1

1.2.1 Location ....................................................................................................................... 1 1.2.2 Processes and Activities............................................................................................. 2 1.2.3 Summary of Changes ................................................................................................ 3

1.3 GHG ASSERTION ............................................................................................................................ 4

2.0 VERIFICATION METHODOLOGY ............................................................................................... 5 2.1 VERIFICATION OBJECTIVES ........................................................................................................... 5 2.2 LEVEL OF ASSURANCE .................................................................................................................. 5 2.3 VERIFICATION CRITERIA ................................................................................................................ 5 2.4 VERIFICATION STANDARDS .......................................................................................................... 5 2.5 VERIFICATION SCOPE ................................................................................................................... 5 2.6 MATERIALITY ................................................................................................................................... 6 2.7 VERIFICATION PLAN ...................................................................................................................... 6

3.0 VERIFICATION TEAM: QUALIFICATIONS, ROLES AND RESPONSIBILITIES ................................. 7 3.1 STATEMENT OF COMPLIANCE WITH THE SGER ........................................................................... 7

4.0 VERIFICATION STRATEGY .......................................................................................................... 8 4.1 INHERENT RISK ................................................................................................................................ 8 4.2 CONTROL RISK ............................................................................................................................... 8 4.3 DETECTION RISK ............................................................................................................................. 9 4.4 SITE VISIT ........................................................................................................................................ 10 4.5 VERIFICATION PROCEDURES ...................................................................................................... 10 4.6 CONFIRMATIONS ......................................................................................................................... 11

5.0 SUMMARY OF FINDINGS ......................................................................................................... 12

6.0 CONCLUSION ......................................................................................................................... 22 6.1 OPINION ....................................................................................................................................... 22 6.2 SUBMISSION DOCUMENTS .......................................................................................................... 22

7.0 CLOSURE ................................................................................................................................. 23


December 29, 2017

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LIST OF TABLES

Table E.1 Verification Summary ...............................................................................................E.1 Table 1.1 GHG Assertion ............................................................................................................. 4 Table 3.1 Verification Team ....................................................................................................... 7 Table 4.1 Schedule of Verification Activities ......................................................................... 10 Table 5.1 Verification and Sampling Plan .............................................................................. 12 Table 5.2 Identified Misstatements and Resolutions ............................................................. 19

LIST OF APPENDICES

Appendix A Final Verification Plan Appendix B Submission Documents


Introduction December 29, 2017

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1.0 INTRODUCTION

Stantec Consulting Ltd. (Stantec) was contracted by MEGlobal Canada ULC (MEGlobal) to conduct an independent third-party verification of the greenhouse gas (GHG) Assertion provided in the Offset Project Report for CO2 Capture from Prentiss2 for Enhanced Oil Recovery, 2015 and 2016 Vintage Credits, dated December 15, 2017. The CO2 Capture from Prentiss2 for Enhanced Oil Recovery (the Project) consists of the Sequoia Resources (Sequoia) Prentiss Capture Facility (the Facility).

The Project is a partnership between MEGlobal and Sequoia Resources (Sequoia) Prentiss Capture Facility (the Facility). Sequoia owns the Facility, following purchase in December 2016. Previously, the Facility was owned by Glencoe Resources from January 1, 2015 to June 1, 2015 and Omers Energy from July 1, 2015 to November 30, 2016. MEGlobal operates the Prentiss 2 (Prentiss2) Ethylene Oxide and Ethylene Glycol (EOEG) Production unit, located adjacent to the Facility, and they are responsible for the collection of activity data used in the calculations and data management for facility specific data. For the Project, MEGlobal is also responsible for the completion of the calculations, presentation of the information within the GHG Assertion, Project Report, and for the supporting technical documents.

Stantec was responsible for planning and executing the verification to deliver an opinion to a reasonable level of assurance as to whether the Project Report and GHG Assertion are presented fairly and in accordance with the verification criteria. Stantec is a qualified third party verifier, as defined in Section 18 of the SGER. Stantec is accredited with the American National Standards Institute (ANSI), a member of the International Accreditation Forum (IAF), in accordance with ISO 14065 (Accreditation ID #0805 issued to Stantec Consulting Ltd. for greenhouse gas (GHG) verification and validation).

1.1 INTENDED USER

This report has been prepared for Alberta Environment and Parks (AEP) for the express purpose of facilitating the creation of Emission Reduction Credits (ERCs) under the Climate Change and Emissions Management Act and the Specified Gas Emitters Regulation (SGER).

1.2 PROJECT DESCRIPTION

1.2.1 Location

The Project consists of the capture of CO2 from the Facility for use in oil fields. The Facility and field locations are identified below. All sites listed are located in Alberta.

Sequoia Resources Prentiss CO2 Capture Site: Sec 30, Twp 39, Rge 25, W4M

The Sequoia Resources Enhanced Oil Recovery (EOR) is defined by:

• Petroleum Registry ID AB BT 2140092 for the Nelson Field



2

o LE LSD SEC TWP RGE M

o 00 08 24 042 26 W4

o License F0009027

o Linked wells associated with this license

• Petroleum Registry ID AB BT 0041254 for the Chigwell / Viking field


o 00 16 32 043 26 W4

o License F0009290


1.2.2 Processes and Activities

The Project, as defined in the Project Plan, dated September 13, 2016 (version 2.0) involves the creation of offset credits from the capture of CO2 (that was historically released to atmosphere) for use in enhanced oil recovery operations. Prentiss2 has been in operation since 1994 and is located on 688 hectares of land north of the Red Deer River, about 7 km northwest of Joffre. The plant location is described as Section 30 and the South ½ of Section 31, Township 39, Range 25, West of the 4th Meridian (30-039-25-W4M).

Prentiss2 is a chemical manufacturing facility that produces ethylene glycol products. Ethylene glycol is produced from ethylene oxide intermediate, which is produced from ethylene feedstock and oxygen (O2). Carbon dioxide (CO2) and water are by-products of ethylene oxide manufacturing. Then CO2 is stripped from the ethylene oxide stream and vented through the regenerator vent stack.

Starting in 2006, the Project has generated emission reductions by capturing the CO2 which was historically emitted to the atmosphere. The captured CO2 is gravity transferred to the Facility which is located adjacent to the MEGlobal Prentiss1 Project where the CO2 stream is processed, compressed, and transported by pipeline to injection sites in central Alberta for geological injection in enhanced oil recovery operations. The baseline emissions at Prentiss2 are the emissions that would have been produced by venting the CO2 rich stream to the atmosphere. The Project emissions occur from the operation of the Project. These include GHG emissions from venting, natural gas consumption and electricity consumption. Also, included in the Project’s GHG Assertion are indirect GHG emissions from fuel extraction and processing, as required by the Protocol.



3

The following GHGs were included within the scope of the verification as required by the SGER:

• carbon dioxide (CO2);

• methane (CH4);

• nitrous oxide (N2O);

• hydrofluorocarbons (HFCs);

• perfluorocarbons (PFCs); and

• sulphur hexafluoride (SF6).

The total equivalent GHG emissions are reported as tonnes of carbon dioxide equivalents (t CO2e).

Sources of baseline GHG emissions include:

• Venting (CO2 and CH4): venting of the CO2 rich stream to atmosphere which would have happened in absence of the Project.

Sources of Project GHG emissions include:

• Venting (CO2 and CH4): venting the CO2 rich stream to atmosphere at capture site and injection site during emergency shut down, maintenance or other operational conditions.

• Natural Gas Combustion (CO2, CH4, and N2O): emissions from combustion of natural gas at the Facility to process the CO2 rich stream and at the injection site.

• Electricity Consumption (CO2, CH4, and N2O, presented as CO2e): indirect emissions from offsite generation of electricity required used at the Facility, used to operate pipeline compressors transporting the CO2 rich stream, and to operate the CO2 injection site.

• Fuel Extraction & Processing (CO2, CH4, and N2O): indirect emissions associated with the extraction and processing of fossil fuel resources for natural gas used in the above Project sources.

Emission reductions are calculated as the difference between the baseline emissions and Project emissions.

1.2.3 Summary of Changes

The significant changes to the Project from the Project Plan are as follows: for 2015 reporting period, a booster pump previously located at Morningside was moved away from this location. As such, electricity consumed at Morningside is no longer within the project boundary on a go forward basis. For 2016 reporting period, CO2 was captured and injected during two months only (November and December 2016) due to economic conditions. During the periods where there is no capture and



4

injection, the emissions at the injection site would be recycled injection gas (P19) which have been accounted for in the Project Plan under P16 Venting at Injection Site. Therefore, the calculation of P16 Venting at Injection Site was updated from the Project Plan to ensure that any venting of recycled injection gas gets accounted for. Other insignificant changes are listed in “Project Implementation and Variances” section of the Project Report.

1.3 GHG ASSERTION

The fundamental assertion verified is that the Project Report and GHG Assertion, dated December 15, 2017, meet the verification criteria for the verification period of January 1, 2015 to December 31, 2016.

The essential information contained within the Project Report and GHG Assertion verified by Stantec is presented in Table 1.1.

Table 1.1 GHG Assertion

Facility Year Baseline Emissions (t CO2e)

Project Emissions (t CO2e)

Emission Reductions

(t CO2e) Prentiss2 Capture Facility

January 1, 2015 – December 31, 2015 92,580 33,003 59,577 January 1, 2016 – December 31, 2016 10,077 5,078 4,999

Total 102,658 38,081 64,576 Notes: *Emission Reductions are rounded down as per Guidance.


Verification Methodology December 29, 2017

5

2.0 VERIFICATION METHODOLOGY

2.1 VERIFICATION OBJECTIVES

The objective of the verification was to assess whether the Project Report and GHG Assertion (as summarized in Table 2), dated December 15, 2017, satisfy the verification criteria identified in Section 2.3.

The verification was conducted in accordance with the verification standards identified in Section 2.4.

2.2 LEVEL OF ASSURANCE

The SGER and AEP require the verifier to conduct sufficient procedures to deliver a reasonable level of assurance. The verification was planned and executed accordingly.

2.3 VERIFICATION CRITERIA

Stantec has conducted sufficient and appropriate procedures to express a reasonable level of assurance opinion as to whether the Project Report and GHG Assertion, dated December 15, 2017, satisfy the requirements of the:

• Climate Change and Emissions Management Act (the Act), SA 2003, c C-16.7; • Specified Gas Emitters Regulation, Alta Reg. 139/200, with amendments up to and including Alberta

Regulation 104/2015 (Regulation); • Technical Guidance for Offset Project Developers (version 4.0, February 2013); • Specified Gas Emitters Quantification Protocol for Enhanced Oil Recovery (V 1.0, October 2007);

and • The Emission Factors Handbook (March 2015, V1.0).

2.4 VERIFICATION STANDARDS

The verification was conducted in accordance with ISO 14064:3, ISO 14065:2013, and the Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance, January 2013, version 1.0 (Verification Guidance).

2.5 VERIFICATION SCOPE

The verification is for the Project period of January 1, 2015 to December 31, 2016.

The verification covers the specified gases under the Act and the SGER. These include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs). The total GHG emissions and reductions are reported as equivalent tonnes of carbon dioxide (t CO2e) emissions.


Verification Methodology December 29, 2017

6

2.6 MATERIALITY

AEP has set the quantitative materiality threshold at 5% of the total reported GHG emission reductions or removals asserted. Materiality of qualitative misstatements are at the discretion of the verification body.

2.7 VERIFICATION PLAN

A copy of the final verification plan is provided in Appendix A. The activities described therein were executed during the course of the verification. The sampling plan, a subset of the verification plan, is outlined along with the final results in Section 5.0 of this report.


Verification Team: Qualifications, Roles and Responsibilities December 29, 2017

7

3.0 VERIFICATION TEAM: QUALIFICATIONS, ROLES AND RESPONSIBILITIES

The verification team is identified in Table 3.1.

Table 3.1 Verification Team

Name Role Responsibilities

Daniel Hegg, M.Sc. Lead Verifier Lead desktop review, sampling plan execution and working paper completion, and prepare verification documentation.

Vicki Corning, P.Eng. Quality Reviewer / Designated Signing Authority

Review verification deliverables technical soundness and compliance with Stantec’s internal processes and AEP criteria. Designated Signing Authority on verification documents.

Nicole Flanagan, M.A.Sc., P.Eng.

Independent Peer Reviewer

Independent review of verification activities and concludes on the outcome of the verification. The independent reviewer confirms the verification activities have been completed and that the activities provide the required level of assurance.

Orasa Webber, M.Eng. Verifier Complete the desktop review of the Project.

Rengarajan Vaiyapuri, M.Eng., EIT

Verifier Complete the desktop review of the Project and lead site visit.

3.1 STATEMENT OF COMPLIANCE WITH THE SGER

Ms. Vicki Corning is the signing authority for the report. She is a professional engineer registered by the Professional Engineers and Geoscientists of New Brunswick which satisfies Section 18(a)(ii)(A) of the SGER.

With respect to the technical knowledge required under Section 18(b)(i-iii), each member of the team has the required technical knowledge of GHG emission quantification methodologies and all have experience in completing third party GHG verifications. Please refer to the team profiles included in the verification plan in Appendix A.


Verification Strategy December 29, 2017

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4.0 VERIFICATION STRATEGY

Details of the verification activities undertaken as part of the verification strategy are set out in Table 4: Verification Procedures of the final Verification and Sampling Plan included in Appendix A and summarized in Section 5.0 of this report.

The Verification and Sampling Plan for the Project was developed considering our initial assessment of the verification risk for the engagement. We assessed the initial verification risk as Medium1. Using the Verification and Sampling Plan, Stantec assessed the control procedures surrounding the GHG data and information. Important components included: processes for collecting, processing, consolidating and reporting GHG data and information; systems and processes that ensure GHG data accuracy, documenting and monitoring processes; methods to identify errors and methods to identify and report deficiencies in the reporting information and management system. Stantec verified equations used for quantification and monitoring purposes. These procedures included a site visit. Based on the results of the verification procedures undertaken, the final verification risk is deemed to be Medium. This final risk assessment is shown based on the assessment of inherent, control and detection risk as follows.

4.1 INHERENT RISK

Inherent risk is the risk of error that occurs as a result of the lack of capacity by staff; the size/complexity of the organization or GHG Project; the industrial sector; and/or, the technologies or processes being applied in the organization or GHG Project. We regard the final risk as Medium due to:

• venting at the capture site which is upstream of sales meter and injection site is not metered, it is estimated using an engineering calculation (medium risk);

• amount of electricity consumed by the pipeline compressors is estimated using an engineering calculation (medium risk); and

• emission factors are from recognized sources per AEP guidance (low risk).

4.2 CONTROL RISK

Control risk is the risk that the proponent’s control system will not detect and rectify a misstatement. We regard the final risk as Low due to:

• venting at capture site which is downstream of sales meter are internally metered with calibrated meters (low risk);

• CO2 delivered to pipeline is directly metered (low risk);

1 Possible risk ratings are “high”, “medium” and “low”. These are based on inherent, control, and detection risks as evaluated

by the Project team during the initial desktop review.



9

• natural gas consumption at the Facility is metered by third party and at injection site natural gas consumption is internally metered by annually calibrated meters (low risk);

• electricity consumption at the Facility and injection site are metered by third party (low risk); and

• quality control and assurance practices used for the Project is sufficient and consistent with the Project Plan (low risk).

4.3 DETECTION RISK

Detection risk is the risk that Stantec will not identify a material misstatement. We regard this risk as Low due to:

• Our Quality Management Procedures. We are committed to providing exceptional service to our clients in accordance with our ISO 9001 and ISO 14065 accreditations. We believe that quality is a basic principle and that quality management is an integral part of our work. We take a systematic approach to quality management to comply with requirements and to strive for continual improvement. The cornerstone of our quality management system is an entrenched process of quality and independent review where by our deliverables are vetted by senior and expert people in our firm (low risk).

• Level of Assurance. The reasonable level of assurance applied in this verification (as required by the Regulation) mandates that Stantec perform increased sampling to meet the assurance requirements, however, the level of assurance still increases the risk to Stantec as the risk-based verification approach means that not all information can be reviewed. Stantec has designed the sampling plan to target potentially material items in the GHG information to minimize detection risk (low risk).

The verification team assessed whether the Project resulted in emission reductions in a manner consistent with the Project Plan. During the verification, the verification team considered the level of audit risk noted above and incorporated necessary procedures to mitigate the audit risk. These procedures included:

• assessing conformance with applicable verification criteria, including the principles and requirements of relevant standards or GHG programs within the scope of verification;

• evaluating the establishment, justification and documentation of the Project Report; • assessing the GHG Project's quality assurance and controls; and • assessing the information for consistency with our knowledge of the Facility’s operations.

The schedule for the verification activities is presented in Table 4.1.



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Table 4.1 Schedule of Verification Activities

Verification Activity Responsible Party Date of Completion Kick-Off Meeting Stantec / MEGlobal November 7, 2017

Receive Project Documentation MEGlobal November 14, 2017 Initial Desktop Review Stantec November 20-22, 2017

Provide Verification Plan to MEGlobal Stantec November 22, 2017 Site Visit Stantec / MEGlobal November 28, 2017

Receive Additional Information MEGlobal December 4, 2017 Additional Information Request Stantec December 6, 2017

Receive Additional Documentation MEGlobal December 8, 2017 Draft Verification Report Stantec December 15, 2017 Address Follow-Up Items Stantec / MEGlobal December 15, 2017

Finalize Verification Report and Statement of Verification

Stantec December 29, 2017

4.4 SITE VISIT

Stantec Verifier, Rengarajan Vaiyapuri, conducted a site visit to the MEGlobal Prentiss2, Sequoia and Morningside Injection sites on November 28, 2017. During the site visits, the following personnel were interviewed:

• James Brown, Regulatory Manager, Dow Chemical; • Julie Kos, Regulatory Specialist, MEGlobal; • Chuck Robertson, Operator, Sequoia; • Marvin Wieler, Plant Foreman, Sequoia; • Kevin Davies, Operator, Sequoia and • Charlotte Munkedal, Sequoia.

The site visit involved a review of data collection, tracking, and retention and transfer procedures. Activities associated with operations, record keeping, data management and emissions sources were also reviewed to better understand the quantification calculations, data treatment and data management as well as changes to the Facility and its data management when the Facility’s operators and owners changed. Through interviews, and by attending the site visit, the verifier evaluated the site boundaries to confirm their veracity. Stantec confirmed emission sources, sinks and reservoirs and evaluated the potential for additional sources that were excluded.

4.5 VERIFICATION PROCEDURES

The verification team developed initial verification procedures and sampling plan during the initial desktop review, based on a review of the Project Report, Offset Plan, and available documentation and in consideration of the verification risk. The procedures were designed based on the Verification Guidance (e.g., tracing inputs to GHG emission reduction quantification which include volume of CO2 rich stream captured, gas analysis for the CO2 rich stream, natural gas consumption for the Project,



11

electricity consumption for the Project, recalculation of emission reductions, and review data management system and applicable meter calibration records). Over the course of the verification, the verification team considered whether additional verification procedures or samples were required to achieve a reasonable level of assurance.

Stantec’s final sampling plan included reviewing and sampling all data for volume of CO2 rich stream captured, representative samples of gas analyses for the CO2 rich stream, representative samples of natural gas invoices and HHV, all electricity invoices, representative samples of venting, all emission factors, as well as recalculating baseline and Project emissions. This included recalculating the GHG Assertion, independently obtaining emission factors and assessing consistency with the Project Plan, Protocol, and AEP guidance. The final verification procedures are provided in the final verification plan (Appendix A) and summarized in Table 5.1.

4.6 CONFIRMATIONS

For this Project, Stantec confirmed that:

• A Project Plan exists and is available on the Alberta Offset Registry; • Project information contained in the Project Plan was consistent with the Project Report and GHG

Assertion; • The project location is as indicated in the Project Report and there are no applicable approvals

information; • The Project Plan contains the monitoring and quantification procedures applied to this Project for

the period verified; • The Project proponent, report date, emission reduction numbers, and other related information are

accurate for the period verified; • The Project’s information systems are consistent with the descriptions contained in the Project Plan;

and • Process and data flow diagrams with respect to the information systems are complete and

accurate.


Summary of Findings December 29, 2017

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5.0 SUMMARY OF FINDINGS

A summary of the key findings from this verification is provided in Table 5.1.

Table 5.1 Verification and Sampling Plan

Parameter Procedures Sample Size Result

GHG Assertion Reviewed the Project Report for the following information: • location of the

Projects; • Project start date and

period; • Registration of Offset

Credits; • Project Plan; • GHG Assertion; • protocol followed; and • eligibility of GHGs

reduction.

All required information.

Satisfactory • The Project takes place in Alberta. • The Project took place after January 1,

2002 and the emission reductions are claimed within the allowable 5-year credit extension period.

• The emission reduction credits have been registered on the Alberta registry.

• The Project Plan is available on the Registry.

• MEGlobal has appropriately completed the GHG Assertion.

• The Project is using an appropriate Protocol and the correct version of the Protocol.

• The GHGs reduced are eligible.

Conducted a site tour to compare emissions inventory to on-site sources.

All on-site GHG sources.

Satisfactory. Stantec site staff confirmed that the GHG emission sources occur onsite are consistent with the Project Report and Protocol.

Confirmed CO2 captured and diverted to the EOR operations in November and December 2016 only.

Not applicable. Satisfactory. MEGlobal asserts (through site visit interview and written response) that CO2 was captured and diverted to the EOR operations for only two months in 2016 (November and December 2016). The Plant’s Monthly Production Reports were provided as supporting evidence.

Ownership Review ownership documents and confirmed ownership for the Project.

Not applicable. Satisfactory with Immaterial Qualitative Misstatements (2) - Resolved MEGlobal Canada ULC has provided sufficient and appropriate evidence (i.e., the Prentiss CO2 Stream Purchase and Sale Agreement) demonstrating that MEGlobal Canada ULC owns the credits. Two immaterial qualitative misstatements are noted in the initial Project Report: • The EOR company operation dates in

the initial Project Report are slightly



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Parameter Procedures Sample Size Result different from supporting documents reviewed onsite by Stantec site staff.

• There is a typo in the initial Project Report for Omers Energy operation date as there are 30 days in November.

MEGlobal updated the Project Report to address the above misstatements.

Consistency with Project Plan

Reviewed the Project Report against the Project Plan for the following criteria: • deviation of the

Project from the Project Plan;

• same baseline and Project boundaries for the Project and the Project Plan; and

• similar emission reductions claimed.

Not applicable. Satisfactory with Immaterial qualitative misstatement (1) - Resolved The Project Report is consistent with Project Plan, except that the change to a booster pump at the Morningside CO2 Facility is not disclosed in the Project Implementation and Variances section of the initial Project Report. As the CO2 captured at Prentiss no longer passes through the Morningside Facility, the electricity consumed at Morningside is no longer within the project boundary. MEGlobal updated the Project Report to address this misstatement; thus, this misstatement is resolved.

Consistency with ISO 14064-2

Assessed the Project Plan and Project Report for completeness, accuracy, and transparency.

Not applicable. Satisfactory with Immaterial qualitative misstatement (1) - Resolved The Project Report is consistent with Project Plan, except that the change to a booster pump at the Morningside CO2 Facility is not disclosed in the Project Implementation and Variances section of the initial Project Report. As the CO2 captured at Prentiss no longer passes through the Morningside Facility, the electricity consumed at Morningside is no longer within the project boundary. MEGlobal updated the Project Report to disclose this change; thus, this misstatement is resolved.

Quantification and Monitoring

Assessed the Project for missing data and confirmed records were within the reporting period.

The following inputs: amount of CO2 captured, inlet CO2 stream gas analysis, electricity consumption, natural gas consumption, and venting.

Satisfactory with Immaterial Qualitative Misstatement (1) - Resolved The inputs, used in quantification of emission reductions, are complete and meet the Protocol’s recommended monitoring frequency, except for the inlet CO2 stream gas analysis. The inlet CO2 stream (related to Baseline and Project sources: B3b and P3b) was sampled 3 times in 2015 for gas analysis (the previously measured gas compositions were carried over for the period when no



14


Parameter Procedures Sample Size Result gas sampling/analysis) but the Protocol recommends quarterly monitoring. MEGlobal asserts that historical inlet gas composition data (2014 and 2015) are consistent with standard deviation of 0.001. On this basis, and the fact that the quantitative impact to the GHG Assertion would be immaterial in nature, this item is resolved.

Assessed the Project for inconsistent quantification methodologies.

All methodologies (including baseline emissions, Project emissions, and emission reductions).

Satisfactory with Immaterial Qualitative Misstatement (1) - Resolved The quantification methodologies used for Project, Baseline, and emission reductions are consistent with the Offset Project Plan and the Protocol; however, January and March 2015 inlet vent split between P1 and P2 is not based on P1:P2 compressor outlet ratio as described in the Project Plan. Instead, they were overwritten with data that were quality controlled. See Table 5.2 for more information.

Traced Prentiss1 and Prentiss2 compressor outlet volume in the quantification spreadsheet to plant monthly production reports. These data are used in calculation of the split between Prentiss1 and Prentiss2.

All relevant 2015 data. Satisfactory with Immaterial Quantitative Misstatement (1) - Resolved The P1 and P2 compressor outlet volumes, used in the split of P1 and P2 emission reduction calculation are consistent with the Plant’s Monthly Production Reports, except August 2015 data. This affects the split between P1 and P2. This misstatement was resolved in the final data collection and quantification spreadsheets. See Table 5.2 for more information.

Traced dry inlet CO2 volume in the quantification spreadsheet to plant monthly production reports. Reviewed dry inlet meter calibration records. (related to B3b)

All relevant 2015 data. Satisfactory with Immaterial Quantitative Misstatement (1) - Resolved The dry inlet volume, used in baseline emission (B3b) calculation, are consistent with the Plant’s Monthly Production Reports, except August 2015 data (under reported by 338 e3m3). This misstatement was resolved in the final data collection and quantification spreadsheets. For more information, see Table 5.2.

Reviewed the calculator for the estimated inlet vented CO2 volume and gas analysis data and compare the data with those in quantification

All relevant 2015 data. Satisfactory with Immaterial Qualitative Misstatement (1) - Resolved Inlet vented CO2 volume and gas analysis data match the supporting records and third party gas analysis reports; however,



15


Parameter Procedures Sample Size Result spreadsheet. (related to B3b and P3b)

the use of gas analysis data for inlet CO2 stream outside reporting period (using November 2015 inlet gas analysis data for 2016) is noted as immaterial qualitative misstatement (cut-off). MEGlobal indicated that the P2 plant was shut down from January 2016 to October 2016 and no gas sampling and analysis was taken. In addition, per historical information CO2 and CH4 compositions for the inlet stream are consistent throughout 2014 and 2015. This misstatement is resolved as sufficient and appropriate evidence has been presented to show that the best available data is being applied. For more information, see Table 5.2.

Traced electricity consumed at capture/processing facility in the quantification spreadsheet to third party invoices. (related to P20)

All relevant 2015 data. Satisfactory with Immaterial Quantitative Misstatements (2) - Resolved High and Low voltage electricity consumption for Prentiss sites (combined P1 and P2) in emission reduction calculation are consistent with the third party (TransAlta) invoices, except: • June 2015 High voltage electricity

consumption for Prentiss sites (combined P1 and P2) is 14 kWh higher than the invoice data. This has negligible impact to GHG emission reductions for P1.

• June 2015 Low voltage electricity consumption for Prentiss sites (combined P1 and P2) in emission reduction calculation is 38,277 kWh higher than the invoice data.

MEGlobal addressed the above misstatements. For more information, see Table 5.2.

Traced electricity consumed at the injection sites in the quantification spreadsheet to third party invoices. (related to P20)

All relevant 2015 data. Satisfactory with Immaterial Quantitative Misstatement (1) - Resolved Electricity consumption for injection sites within Project boundary are supported by third party invoices. MEGlobal confirmed during the site visit that the CO2 captured no longer passes through the Morningside Facility (in Nelson field); however, electricity consumed by the Morningside CO2 Facility was included



16


Parameter Procedures Sample Size Result in the initial emission calculation. MEGlobal updated the emission calculation to exclude Morningside Facility’s electricity consumption; therefore, this misstatement is resolved. For more information, see Table 5.2.

Traced electricity consumed for transportation compressors in the quantification spreadsheet to client’s records. (related to P12)

All relevant 2015 data. Satisfactory. Electricity consumption for transportation compressors matches the records reviewed onsite.

Traced natural gas consumed at the capture/processing facility and heating value (HHV) in quantification spreadsheet to third party invoices. (related to P7b and P21)

Representative data within the reporting period.

Satisfactory. Natural gas consumption for capture/processing facility matches the third-party invoices reviewed by Stantec.

Review calibration records for natural gas meters for injection sites. (related to P14 and P21)

All 2015 records. Satisfactory. Natural gas meters used for metering natural gas consumed at injection sites were calibrated in 2015 and 2016.

Traced measured vent volume (downstream of the sales meter) to the plant monthly production reports. (related to P3b)

All relevant 2015 data. Satisfactory with Immaterial Quantitative Misstatement (1) - Resolved The outlet vent volume (measured vent downstream of dehydrators, used in Project (P3b) emission calculation), is consistent with the Plant’s Monthly Production Report, except for August 2015. This results in a negligible impact to emission reductions. MEGlobal updated the data collection spreadsheet and emission calculation to address this misstatement; therefore, this misstatement is resolved. For more information, see Table 5.2.

Review estimated vented volume for injection sites against the site’s records. (related to P16)

Representative data within the reporting period.

Satisfactory with Immaterial Quantitative Misstatement (1) - Resolved The estimated vented volume sampled are supported by the site’s records as reported in Petrinex. However, the initial GHG emission calculation included tank venting



17


Parameter Procedures Sample Size Result from Magee site but no venting occurs onsite because the site has a VRU (Vapor Recovery Unit). MEGlobal updated the emission calculation to exclude Magee tank venting; therefore, this misstatement is resolved. For more information, see Table 5.2.

Trended monthly CO2 capture amount and review the trends against operation notes from the plant monthly production reports.

All relevant 2015 data Satisfactory No unjustifiable anomalies are detected.

Trended monthly CO2 capture amount and dry inlet CO2 volume against the capture/processing facility’s electricity consumption at the and inquire on potential anomalies detected.


Trended natural gas consumption at the capture/processing facility and injection sites and inquire on potential anomalies detected.


Recalculated baseline emissions.

All Baseline sources. Satisfactory. The Baseline emission execution in the GHG calculator is appropriate. The misstatements noted above are not repeated here.

Recalculated Project emissions.

All Project sources. Satisfactory with Immaterial Quantitative Misstatements (2) - Resolved The CO2 emission calculation for P14 Injection Unit Operation (natural gas combustion) in the quantification spreadsheet for 2015 and 2016 are incorrect. The Project emission calculation for other sources are appropriate. MEGlobal updated the emission calculation and this misstatement is resolved. For more information, see Table 5.2.



18



Assessed whether emission factors were appropriate and agree with the source.

The following factors: • grid electricity use

factor (CO2e); • natural gas

combustion (CO2, CH4, and N2O);

• natural gas extraction and processing factors (CO2, CH4, and N2O).

• Global Warming Potentials (GWP)

Satisfactory with Immaterial Qualitative Misstatements (2) – Resolved The emission factors and GWPs used in quantification are appropriate as described below. • The electricity use factor (0.64 t

CO2e/MWh) is consistent with the 2015 Handbook.

• The emission factors used to quantify natural gas combustion emissions was appropriate.

• The emission factors used to quantify natural gas extraction were appropriate per the 2015 Handbook.

• The emission factors used to quantify natural gas processing were appropriate per the 2015 Handbook.

• The GWP applied in the GHG Assertion are appropriate.

Immaterial qualitative misstatements were noted as the Project Plan and initial Project Report contain a typo for CH4 emission factor (natural gas processing). There is no impact to the GHG Assertion as correct emission factor was applied in the GHG quantification. These misstatements were resolved by MEGlobal. See Table 5.2 for more information.

GHG Data Management and Quality Control

Assessed whether the Project’s GHG data management systems, including quality control, are adequate.

Overall system for completeness, accuracy, validity, and restricted access, through interviews, Project documentation, and site visits.

Satisfactory. Although there are multiple emission sources for Baseline and Project, data collection for the main sources is straightforward, based on direct measurement using calibrated meters and third party invoices. Quality control procedures per onsite interview and the written description from the MEGlobal are consistent with the Project Plan.



19



GHG Data Retention

Assessed whether there is sufficient document storage and retention.

Not applicable. Satisfactory. MEGlobal asserts that Project records are retained in a retrievable manner for 7 years past the end of the reporting period. This is sufficient to meet the requirements of the Protocol and the Guidance.

Misstatements identified during the verification are provided in Table 5.2.

Table 5.2 Identified Misstatements and Resolutions

Identified Misstatement Type Resolution

Consistency with ISO-14064:2 (Project Plan) • The change to a booster pump at the Morningside

CO2 Facility (related to electricity consumption in this reporting period to be excluded as the CO2 captured at Prentiss no longer passes through the Morningside Facility) is not disclosed in Section 4 of the initial Project Report. MEGlobal updated the Project Report to address this misstatement. This change from Project Plan was disclosed in the Project Report (Section 4: Project Implementation and Variances).

• The Project Plan states that the CH4 emission factor for natural gas extraction as 0.0023 kg/m3 instead of 0.0003 kg/m3. This is just a typo in the project plan as the calculations are completed using correct emission factor. MEGlobal indicated that this typo will be corrected in the next Project Plan revision. The Project Report (Section 4) was updated to clarify the Project Plan typo; therefore, this misstatement is considered resolved.

Immaterial qualitative misstatements (2).

Resolved (2).

Consistency with ISO-140064:2 (Transparency/Accuracy) • There is a typo in the Project Report for Omers Energy

ownership date as there are 30 days in November. • January and March 2015 inlet vent split between P1

and P2 is not based on P1:P2 compressor outlet ratio. This change is not disclosed in the initial Project Report. This immaterial change is disclosed in the final Project Report (Project Implementation and Variances); therefore, this misstatement is resolved.

• The Project Report states that the CH4 emission factor for natural gas extraction as 0.0023 kg/m3 instead of 0.0003 kg/m3. This is just a typo in the project report as the calculations are completed using correct emission factor. MEGlobal updated the Project Report (page 10) to address this misstatement; therefore, this misstatement is resolved.

Immaterial qualitative misstatements (3).

Resolved (3).



20


Identified Misstatement Type Resolution

Ownership • The ownership for the Sequoia Prentiss Capture

Facility shown in the initial Project Report is slightly different from supporting documents reviewed onsite by Stantec site staff. MEGlobal updated the Project Report to address this misstatement.

Immaterial qualitative misstatement (1).

Resolved (1).

Quantification and Monitoring • Inlet CO2 stream (related to Baseline and Project

sources: B3b and P3b) was sampled 3 times in 2015 for gas analysis (previous available data are carried over the months where no analysis was conducted). This does not meet the Protocol’s quarterly recommended monitoring frequency.

• The August 2015 P1 and P2 compressor outlet volumes, used in the split of P1 and P2 emission reduction calculation, are not consistent with the Plant’s Monthly Production Report. Therefore, the emission reductions for P2 is over reported by 7 t CO2e or 0.01%. MEGlobal updated the data collection spreadsheet and emission calculation to address this misstatement; therefore, this misstatement is resolved.

• The misstatement for August 2015 dry inlet volume, used in baseline emission (B3b) calculation, was identified during the site visit (under-reported by 338 e3m3). This results in misstatement of emission reductions of 339 t CO2e, 0.6% under-reported. This misstatement was resolved in the final data collection and quantification spreadsheets.

• June 2015 High voltage electricity consumption for Prentiss sites (combined P1 and P2) in emission reduction calculation is not consistent with invoice data reviewed onsite by Stantec (14 kWh over report for P1 and P2 combined). This has negligible impact to GHG emission reductions for P2. This was resolved by MEGlobal.

• June 2015 Low voltage electricity consumption for Prentiss sites (combined P1 and P2) in emission reduction calculation is not consistent with invoice data reviewed onsite by Stantec (38,277 kWh over reported for P1+P2 site). Therefore, emission reductions for P1 are under reported by approximately 14 t CO2e or 0.06%. This was resolved by MEGlobal.

• Electricity consumption for a booster pump at Morningside CO2 facility (under Nelson field) was included in the initial emission reduction. This was a misstatement of 744 t CO2e or 1.3% under-reported.

Immaterial quantitative misstatements (6) Immaterial qualitative misstatements (4)

Resolved (6). Resolved (4).



21


Identified Misstatement Type Resolution However, MEGlobal confirmed that the pump was moved to Clive, and the electricity is captured under Pipeline Transport which is already included in the project quantification. The CO2 captured at Prentiss no longer passes through the Morningside Facility.

• The outlet vent volume (measured vent downstream of dehydrators, used in Project (P3b) emission calculation) for August 2015 is not consistent with the Plant’s Monthly Production Report. This results in negligible impact to emission reductions. MEGlobal updated the data collection spreadsheet and emission calculation to address this misstatement; therefore, this misstatement is resolved.

• The initial GHG emission calculation included tank venting from Magee site but no venting occurs onsite because the site has a VRU (Vapor Recovery Unit). This misstatement has a negligible effect on emission reductions. MEGlobal updated the emission calculation to exclude Magee tank venting; therefore, this misstatement is resolved.

• Emission calculation for P14 Injection Unit Operation CO2 (natural gas combustion) in the quantification spreadsheet is incorrect for 2015. This results in 37 t CO2e over- reported for Project Emissions; thus 37 t CO2e under- reported for 2015 emission reductions (0.06% of P2 2015 emission reductions or 0.06% of overall emission reductions for this period).

• Emission calculation for P14 Injection Unit Operation CO2 (natural gas combustion) in the quantification spreadsheet is incorrect for 2016. This results in 70 t CO2e over- reported for Project Emissions; thus 70 t CO2e under- reported for 2016 emission reductions (1.4% of P2 2016 emission reductions or 0.1% of overall emission reductions for this period). MEGlobal updated the emission calculation to address this misstatement.


Conclusion December 29, 2017

22

6.0 CONCLUSION

6.1 OPINION

Based on the procedures undertaken and described in this report, the Project Report and GHG Assertion for CO2 Capture from Prentiss2 for EOR, dated December 15, 2017, satisfies the requirements of the:

• Climate Change and Emissions Management Act (the Act), SA 2003, c C-16.7; • Specified Gas Emitters Regulation, Alta Reg. 139/200, with amendments up to and including Alberta

Regulation 104/2015 (Regulation); • Technical Guidance for Offset Project Developers (version 4.0, February 2013); • Specified Gas Emitters Quantification Protocol for Enhanced Oil Recovery (V 1.0, October 2007);

and • The Emission Factors Handbook (March 2015, V1.0).

6.2 SUBMISSION DOCUMENTS

The verification documents for submission are in Appendix B and include: Statement of Qualifications, a Statement of Verification, and a Conflict of Interest Checklist.


Closure December 29, 2017

23

7.0 CLOSURE

Stantec has undertaken all assignments in its role as an environmental engineering consulting firm using professional effort consistent with the Technical Guidance for Offset Project Developers, February 2013, version 4.0, and the Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance, January 2013, version 1.0. Stantec has assessed the Project Report submitted by MEGlobal for the CO2 Capture from Prentiss2 for EOR using reasonably ascertainable information, as defined by ISO 14064-3, obtained from a review of operational records and available literature and documents. The assessment represents the conditions in the subject area at the time of the assessment. Stantec did not conduct direct monitoring or measurement or other physical sampling and analysis in conjunction with this verification report. Stantec disclaims liability for use by any other party and for any other purpose.

Stantec will retain all Project documents for a minimum of seven (7) years.

This report entitled, “Verification Report for the CO2 Capture from Prentiss2 for Enhanced Oil Recovery” was produced by Daniel Hegg (Lead Verifier). This report was peer reviewed by Nicole Flanagan and quality reviewed by Vicki Corning.

Respectfully Submitted,

STANTEC CONSULTING LTD.

Daniel Hegg, M.Sc., EMIT, ENV-SP Lead Verifier Environmental Services Tel: (250) 217-9729

Vicki Corning, P.Eng. Quality Review / Designated Signing Authority Environmental Services Tel: (506) 452-7000

Nicole Flanagan, M.A.Sc., P.Eng. Independent Peer Reviewer, Environmental Services Tel: (613) 738-6086


December 29, 2017

Appendix A Final Verification Plan


December 29, 2017

Stantec Consulting Ltd. 400 - 655 Tyee Road Victoria BC V9A 6X5 Tel: (250) 388-9161 Fax: (250) 382-0514

Template version 2.0 July 2016

VIA EMAIL <[email protected]> December 15, 2017 File: 123221000

Attention: Ms. Julie Kos MEGlobal Canada ULC Bag 16, Hwy 15 Fort Saskatchewan, Alberta T8L 2P4

Dear Ms. Kos,

RE: FINAL VERIFICATION PLAN - SPECIFIED GAS EMITTERS REGULATION VERIFICATION OF THE CO2 CAPTURE FROM PRENTISS2 FOR ENHANCED OIL RECOVERY OFFSET PROJECT (JANUARY 1, 2015 TO DECEMBER 31, 2016)

INITIAL VERIFICATION PLAN

INTRODUCTION

Stantec Consulting Ltd. (Stantec) provides this initial verification plan for the CO2 Capture from Prentiss2 for Enhance Oil Recovery Offset Project (the Project). The verification is being completed under the Alberta Environment and Parks (AEP) Specified Gas Emitters Regulation (SGER). The verification plan outlines the terms of the engagement and the planned verification procedures. The verification plan also contains a list of data and documentation required to complete the planned procedures.

The Project is a partnership between MEGlobal Canada ULC (MEGlobal) and Sequoia Resources (Sequoia) Prentiss Capture Facility (the Facility). Glencoe Resources and Omer Energy formerly owned the Facility prior to Sequoia’s purchase. MEGlobal operates the Prentiss 2 Ethylene Oxide and Ethylene Glycol (EOEG) Ethylene Glycol Production unit (Prentiss2), located at the Facility, and they are responsible for the collection of activity data used in the calculations and data management for facility specific data. For the Project, MEGlobal is also responsible for the completion of the calculations, presentation of the information within the GHG Assertion, Project Report, and for the supporting technical documents.

This is Stantec’s first verification of the Project.

VERIFICATION CRITERIA & SCOPE

The verification is being undertaken to form an opinion as to whether, materially, the GHG Assertion and information in the Project Report are presented fairly and are in accordance with the requirements of:

December 15, 2017 MEGlobal Canada ULC Page 2 of 17


• the Climate Change and Emissions Management Act, S.A. 2003, c. C-16.7; • the Alberta Specified Gas Emitters Regulation, Alta Reg. 139/200, with amendments up to and

including Alberta Regulation 104/2015 (Regulation); • the Technical Guidance for Offset Project Developers (February 2013, V4.0); • the Specified Gas Emitters Quantification Protocol for Enhance Oil Recovery (V 1.0, October

2007); and • the Carbon Offset Emission Factors Handbook (March 2015, V1.0).

VERIFICATION STANDARDS

The verification is being conducted in accordance with:

• ISO 14064 Part 3 – Greenhouse Gases: Specification with guidance for the validation and verification of greenhouse gas assertions;

• ISO 14065 – Greenhouse Gases: Requirements for greenhouse gas validation and verification bodies for use in accreditation and other forms of recognition; and

• Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance (January 2013, version 1.0).

VERIFICATION SCOPE

Stantec understands the Project is described in the following manner. The reasonableness of this Project description is subject to verification by Stantec.

Prentiss2 has been in operation since 1994 and is located on 688 hectares of land north of the Red Deer River, about 7 km northwest of Joffre. The plant location is described as Section 30 and the South ½ of Section 31, Township 39, Range 25, West of the 4th Meridian (30-039-25-W4M).


Starting in 2006, the Project has generated emission reductions by capturing the CO2 which was historically emitted to the atmosphere. The captured CO2 is gravity transferred to the Facility which is located adjacent to the MEGlobal Prentiss2 Project where the CO2 stream is processed, compressed and transported by pipeline to injection sites in central Alberta for geological injection in enhanced oil recovery operations. The baseline emissions at Prentiss2 are the emissions that would have been produced by venting the CO2 rich stream to the atmosphere. The Project emissions occur from the operation of the Project. These include GHG emissions from venting, natural gas consumption and electricity consumption. Also, included in the Project’s GHG Assertion are indirect GHG emissions from fuel extraction and processing, as required by the Protocol.




• carbon dioxide (CO2); • methane (CH4); • nitrous oxide (N2O); • hydrofluorocarbons (HFCs); • perfluorocarbons (PFCs); and • sulphur hexafluoride (SF6). The total equivalent GHG emissions are reported as tonnes of carbon dioxide equivalents (tCO2e).

Sources of baseline GHG emissions include:

• Venting (CO2 and CH4): venting of the CO2 rich stream to atmosphere which would have happened in absence of the Project.

Sources of Project GHG emissions include:

• Venting (CO2 and CH4): venting the CO2 rich stream to atmosphere at capture site and injection site during emergency shut down, maintenance or other operational conditions.

• Natural Gas Combustion (CO2, CH4, and N2O): emissions from combustion of natural gas at the Facility to process the CO2 rich stream and at the injection site.

• Electricity Consumption (CO2, CH4, and N2O, presented as CO2e): indirect emissions from offsite generation of electricity required used at the Facility, used to operate pipeline compressors transporting the CO2 rich stream and to operate the CO2 injection site.

• Fuel Extraction & Processing (CO2, CH4, and N2O): indirect emissions associated with the extraction and processing of fossil fuel resources for natural gas used in the above Project sources.

ASSERTION

The fundamental GHG Assertion to be verified for the Project is that it meets the verification criteria for the Project reporting period January 1, 2015 to December 31, 2016. The initial GHG Assertion (i.e., reductions being claimed) for the Project to be verified is 62,748 tCO2e (out of which 58,258 tCO2e is from January 1, 2015 to December 31, 2015 and 4,489 tCO2e is from January 1, 2016 to December 31, 2016). According to MEGlobal, the Project was not operational from January 2016 to October 2016 due to economic conditions.

LEVEL OF ASSURANCE

Sufficient procedures are being conducted to express a reasonable level of assurance opinion as required by AEP.



MATERIALITY

The technical Guidance has set the quantitative materiality threshold to 5% of the asserted emission reductions and removals for offset Projects. The materiality will be assessed on the net and absolute values of discrepancies. The identification of material qualitative discrepancies is at the discretion of the verification body. Stantec will execute the verification accordingly.

VERIFICATION SCHEDULE

Table 1 presents the verification schedule.

Table 1 Planned Verification Schedule

Verification Activity Responsible Party

Date of Completion

Kick-Off Meeting Stantec / MEGlobal November 7, 2017

Receive Project Documentation MEGlobal November 14, 2017

Initial Desktop Review Stantec November 20-22, 2017

Provide Verification Plan to MEGlobal Stantec November 22, 2017

Site Visit Stantec / MEGlobal November 28, 2017

Receive Additional Information MEGlobal November 29, 2017

Draft Verification Report Stantec Week of December 4, 2017

Address Follow-Up Items Stantec / MEGlobal Week of December 4, 2017

Finalize Verification Report and Statement of Verification Stantec Week of December 11, 2017

* Dates in italics are proposed.

VERIFICATION TEAM: QUALIFICATIONS, ROLES, AND RESPONSIBILITIES

As part of Stantec’s GHG Standard Operating Procedures (SOP), the competence and selection of the team is completed following ISO 14066 - Greenhouse Gases – Competence requirements for greenhouse gas validation teams and verification teams.

Table 2 presents the verification team.

Table 2 Verification Team Name Role Responsibilities

Daniel Hegg, M.Sc. Lead Verifier Lead desktop review, sampling plan execution and working paper completion, and prepare verification documentation.

Vicki Corning, P.Eng. Quality Reviewer Review verification deliverables technical soundness and compliance with Stantec’s internal processes and AEP criteria. Designated Signing Authority on verification



Table 2 Verification Team Name Role Responsibilities

documents.

Nicole Flanagan, M.A.Sc., P.Eng.

Independent Peer Reviewer

Independent review of verification activities and concludes on the outcome of the verification. The independent reviewer confirms the verification activities have been completed and that the activities provide the required level of assurance.

Orasa Webber, M.Eng. Verifier Complete the desktop review of the Project.

Rengarajan Vaiyapuri, M.Eng., EIT

Verifier Complete the desktop review of the Project and lead site visit.

TEAM PROFILE

Lead Verifier – Daniel Hegg, M.Sc.

Daniel Hegg is a Carbon Mitigation and Climate Resilience Specialist for Stantec Consulting Ltd.

Living on Canada’s west coast has deepened Dan’s passion for the development and implementation of sustainable practices. His unique perspectives and insights cross many important areas such as sustainable asset management, strategic energy and water management, sustainable ROI business case development, full value accounting, climate change infrastructure risk assessment for the private and public sectors.

In addition to providing strategy and policy advice, Daniel has specialized expertise in climate change adaptation planning. Daniel utilizes a modified risk assessment framework designed to align with ISO 31010 Risk Management Standard and the PIEVC Engineering Protocol to assess various assets and their exposure to climate change risks and hazards, determine priority areas, and develop short/medium/long term strategies to build natural and engineering resilience. Dan has prepared multiple climate-resilience strategies across a variety of sectors including buildings/real-estate, forestry, oil & gas, renewable energy, and mining. Much of his work has directly helped guide various private and public-sector organizations in sustainability and climate action decision-making. Having worked on over 130 organizational and facility GHG inventories and offset projects across a wide range of industry sectors, and on numerous GHG mitigation and energy reduction plans, Daniel has proven expertise in climate change mitigation action planning and GHG emissions reductions at the community wide and municipal/ corporate planning contexts.



Quality Reviewer – Vicki Corning, P.Eng.

Vicki has a degree in chemical engineering and over twelve years of technical and management expertise in the field of atmospheric emissions and environmental permitting. She is a subject matter expert for GHG & Climate Services at Stantec. She has been involved in over 150 verifications for organizational inventories and GHG offset projects in western Canada, Ontario, Quebec, Atlantic Canada and the United States. Vicki developed Stantec’s internal GHG program competency training process and has delivered course material on GHG verification, inventory, and data management through a contract with the Canadian Standards Association on several occasions.

Vicki also regularly leads air, noise, and climate components of environmental assessments for a range of industrial clients. These environmental assessments involve monitoring existing conditions using analytical techniques, establishing emissions inventories for new facilities, and evaluating expected environmental effects using modeling. Vicki has worked with clients in a variety of different industries in Canada and the United States, including: upstream and downstream oil and gas (gas processing plants, oil refineries, steam assisted gravity drainage facilities, pipeline operations), electrical generating stations (coal, gas, co-generation, biomass), manufacturing plants, chemical processing facilities, mining, construction projects, and pulp and paper. She has managed the preparation of several policy reports on renewable energy for the New Brunswick Department of Energy, and authored technical content on carbon capture systems for coal facilities as part of an environmental report for Carbon Capture Nova Scotia.

Independent Peer Reviewer – Nicole Flanagan, M.A.Sc., P.Eng.

Nicole Flanagan, M.A.Sc., P.Eng. has 15 years of environmental engineering, nine of which are with Stantec. Nicole’s experience is specialized in air emissions under a variety of industrial, government and corporate settings. She is currently a senior practitioner and technical reviewer for greenhouse emission quantification, reporting and verification. Nicole was the lead verifier of some of the first regulatory greenhouse gas offsets sold in North America, has completed Environmental Compliance Approvals (ECAs), and National Pollutant Release Inventory reporting for several clients facilitating regulatory compliance. In addition, she has completed projects for various facilities developing voluntary greenhouse gas inventories, and emission/energy performance key metrics and identification of reduction opportunities. Her clients include major electric utilities, energy companies, petrochemical production facilities as well as oil & gas companies.

She also spent four years with Environment Canada working on program development and program delivery of greenhouse gas inventory and reduction programs, which included meeting with stakeholders and administering procedural processes. During this time, she developed a strong understanding of the workings of government from program administration (Greenhouse Gas, NPRI Reporting Division and Canada’s Offset System) as well as regulatory and instrument development (development of regulations and Pollution Prevention Planning requirements).



Verifier – Orasa Webber, M.Eng.

Ms. Orasa Webber has conducted over 80 greenhouse gas (GHG) verifications in Canada and the United States under many jurisdictions and programs including British Columbia Reporting Regulation, Alberta’s Specified Gas Emitters Regulation (SGER), Ontario Regulation, The Climate Registry, The Massachusetts Department of Environmental Protection Regulation. The GHG verification projects have included the following sectors: oil and gas extraction, production, and refining; power generation; chemical and petrochemical production; natural gas distribution systems; metal production; mining and mineral production.

Orasa has also conducted over 15 offset credit verifications under Alberta’s Offset Credit System. Orasa completed her Master’s Degree in chemical engineering from McGill University and brings over ten years of experience. For the past five years, she has focused on climate change and environmental work including National Pollutant Release Inventory (NPRI) reporting, ambient air quality and noise monitoring, environmental impact assessment, GHG inventory, GHG verification and validation, and petroleum contaminated water/soil testing under Atlantic Risk-Based Corrective Action (RBCA) guidelines. She also has industrial experience in quality control of oil refinery products and processing and design of plastic products.

Verifier – Rengarajan Vaiyapuri, M.Eng.., EIT

Rengarajan obtained a Masters of Engineering (Environmental) from the University of Alberta. He has completed the ISO 14064-3 GHG verification training course and has been identified as a verifier at Stantec. He has conducted over 30 greenhouse gas verification by completing desktop reviews, reporting, and conducted site visits for facility under Alberta Specified Gas Emitters Regulation (SGER). The GHG verification projects have included the following sectors: oil and gas, power generation, chemical production, mining, and mineral production. Rengarajan has also conducted 4 offset credit verifications under Alberta’s Offset Credit System. Rengarajan has also been involved in air quality studies including dispersion modelling, odour monitoring, National Pollutant Release Inventory (NPRI) reporting and other assigned duties. His dispersion modeling experience includes working with the U.S. Environmental Protection Agency’s AERMOD and CALPUFF dispersion modeling systems, assessing the effect of air emissions on local air quality. He has worked on projects for industrial clients such as power plants, paper and pulp mills, OSB mills, oil and gas, and chemical plants.

RISK ASSESSMENT

Stantec has done a preliminary assessment of the potential risk associated with this verification assignment. The risk assessment is an internal procedure used to assess inherent, control, and detection risk which uses the following equation:

Audit Risk = Inherent Risk x Control Risk x Detection Risk

Detection risk is the risk that Stantec will not uncover a material discrepancy (e.g., the misstatement was present in the assertion and was not identified during the verification). The assessment of detection risk impacts the nature, timing and extent of the verification procedures that are to be performed by Stantec. Inherent Risk is the risk of a material misstatement that arises



due to error or omission as a result of factors that are outside of the failure of controls. Inherent risk is generally considered to be higher where a high degree of judgment and estimation is involved or where GHG emissions data collection and processing are highly complex and involved processes. Organizations must have adequate internal controls in place to prevent and detect instances of error, misstatements, and omissions. Control Risk is the risk of a material misstatement arising due to absence or failure in the operation of relevant GHG system controls. Control risk is considered to be high where the Project does not have adequate internal controls to prevent and detect misstatements in the assertion.

There is an inverse relationship between the inherent and control risks, and the detection risk. If the inherent and control risks are high, Stantec will perform verification and sampling procedures that reduce detection risk so that the final verification risk is maintained at a low level. Higher control and inherent risk equates to more rigorous investigation and sampling. It typically results in additional detailed on and off-site sampling, additional information requests and staff interviews. Detection risk is lowered by more rigorous sampling; however, sampling is always done as per the verification criteria and standards.

Based on the risk assessment in each of these categories, the Stantec team assigns an overall risk to the verification. The preliminary overall risk for this verification has been assessed as Medium. A summary of the risk assessment is provided in Table 3.

Table 3 Risk Summary Risk Area Preliminary Assessment Final Assessment

Inherent Risk Medium Medium

Control Risk Medium Low

Detection Risk Low Low

Overall Risk Medium Medium

We consider the initial inherent risk to be Medium based on the following:

• venting at the capture site which is upstream of sales meter and injection site is not metered, it is estimated using an engineering calculation (medium risk);

• amount of electricity consumed by the pipeline compressors is estimated using an engineering calculation (medium risk); and

• Emission factors are from recognized sources per AEP guidance (low risk).

We consider the initial control risk to be Medium based on the following:

• Venting at capture site which is downstream of sales meter are internally metered (low risk); • CO2 delivered to pipeline is directly metered (low risk); • natural gas consumption at the Facility is metered by third party and at injection site natural

gas consumption is internally metered (low risk); • electricity consumption at the Facility and injection site are metered by third party (low risk);

and



• No information has been reviewed yet on calibration and other quality control and assurance practices used for the Project (medium risk).

Detection risk is the risk that Stantec will not identify a material discrepancy. We regard this risk as Low due to:

• Our Quality Management Procedures. We are committed to providing exceptional service to our clients in accordance with our ISO 9001 and ISO 14065 accreditations. We believe that quality is a basic principle and that quality management is an integral part of our work. We take a systematic approach to quality management to comply with requirements and to strive for continual improvement. The cornerstone of our quality management system is an entrenched process of quality and independent review where by our deliverables are vetted by senior and expert people in our firm (low risk).

• Level of Assurance. The reasonable level of assurance applied in this verification (as required by the Regulation) mandates that Stantec perform increased sampling to meet the assurance requirements, however, the level of assurance still increases the risk to Stantec as the risk-based verification approach means that not all information can be reviewed. Stantec has designed the sampling plan to target potentially material items in the GHG information to minimize detection risk (low risk).

VERIFICATION PLAN

The verification and sampling plan is intended to facilitate the assessment of completeness, conservativeness, consistency, accuracy, and transparency of the responsible party’s GHG information and confirm the GHG Assertion as identified in the Project Report. The verification team has established and will modify the sampling plan to verify that sufficient and appropriate evidence is available to support the Project Report and GHG Assertion presented. Further, any discrepancies that contribute to the GHG Assertion will be assessed and documented in the verification report.

With regards to the magnitude of potential errors, omissions and misrepresentations, CO2 vented at capture site, natural gas consumption at injection site and electricity consumption represent the greatest risk of material error to the GHG Assertion (e.g., tracking of vented CO2 volume, natural gas consumption, electricity consumption). Thus, verification procedures focused on the evidence and controls related to these parameters.

Table 4 shows the planned verification procedures.



Table 4 Verification Procedures Line Item Verification Objective Risk Identified Type of Procedure Description of Procedure

Greenhouse Gas Assertion

Completeness Incompleteness of inventory.

Test of detail – inspection. Conduct a site tour of the Facilities to determine sources and compare with inventory.


Completeness Incompleteness of Project Report.

Test of detail – inspection. Inspect Project Report for missing information.


Accuracy Information not appropriately disclosed.

Test of detail – inspection. Inspect Project Report for correct reporting of emissions and related information.


Accuracy GHG Assertion is incorrect

Test of detail – inspection and reconciliation.

Check emission factors, quantification methodology, recalculate GHG Assertion and emission reductions.


Occurrence Document storage and retention practices may not be sufficient.

Test of detail – inquiry. Inquire of Proponent the location and retention period of data used for GHG Assertion.

Venting Completeness Incorrect recording of data resulting in an incorrect GHG Assertion.

Test of detail – inspection, reconciliation, tracing.

Compare raw data records against data in GHG calculator for consistency and completeness.

Venting Consistency Inconsistent quantification methodologies.

Test of detail – inspection. Assess whether quantification methodologies are consistent with offset project plan.

Venting Accuracy Anomaly in venting data

Analytical test – profile. Run profile tests for monthly data.




Venting Accuracy Inaccurate measurement of venting.

Test of control – inspection, inquiry.

Inspect calibration records for the venting meter which is downstream of sales meter at capture site. Inquire on data aggregation and quality assurance and control procedures.

Venting Accuracy Inaccurate calculation of venting volume and emissions.

Test of detail – recalculation.

Recalculate venting volume and emissions.

Venting Cut-off Improper dates of venting data.

Test of detail – inspection. Inspect the dates of data used in determining venting volumes

Natural Gas Combustion

Completeness Accuracy

Missing fuel receipts and measured data. Inaccurate natural gas consumption.

Test of detail – tracing. Test of control – inspection, inquiry.

Trace fuel volumes from receipts and measured data to emission calculations. Inspect calibration records. Inquire on data aggregation and quality assurance and control procedures.


Consistency Inconsistent quantification methodologies.

Test of detail – inspection. Assess whether quantification methodologies (including emission factors) are consistent with previous periods.


Accuracy Anomaly in emissions trend.

Analytical test – profile. Test of detail – inquiry

Run profile tests for monthly data. Inquire with operators on anomalies in natural gas use.


Cut-off Improper dates of fuel receipts.

Test of detail – inspection. Inspect the dates of natural gas invoices and metered data.

Electricity Consumption

Completeness

Incorrect recording of data resulting in an incorrect GHG Assertion.

Test of detail – inspection, reconciliation, tracing.

Compare raw data records, invoices against data in GHG calculator for consistency and completeness.






Test of detail – inspection. Assess whether quantification methodologies (including offset emission factors) are consistent with offset project plan.


Accuracy Inaccurate electricity consumption and calculation of emissions


Recalculate the electricity consumption and recalculate the emission from electricity consumption.


Cut-off Improper dates of electricity consumption

Test of detail – inspection. Inspect the dates of electricity data.

Fuel Extraction and Processing


Test of detail – inspection. Assess whether quantification methodologies (including emission factors) are consistent with offset project plan.

Fuel Extraction and Processing

Accuracy Inaccurate emission quantification.


Recalculate emissions from fuel extraction and processing.



SITE VISIT

Stantec Verifier, Rengarajan Vaiyapuri will conduct a site visit to Prentiss2 Project on November 28, 2017.

The site visit involves a review of data collection, tracking, and retention and transfer procedures. Activities associated with operations, record keeping, data management and emissions sources were also reviewed to better understand the quantification calculations, data treatment and data management. Through interviews, and by attending the site visit, the verifier will evaluate the site boundaries to confirm their veracity. The verifier will perform procedures to identify Project boundaries, confirm GHG sources, look for additional sources, visually confirm the presence of project sources. Emission sources, sinks and reservoirs will be evaluated and the potential for additional sources (omitted) will be reviewed.

The proposed site visit agenda is provided in Table 5. The agenda was structured to include a general site tour where the verification team will look at sources, meters, and calibration tags.

Table 5 Site Visit Agenda

Date Facility Item Responsible Party

November 28, 2017 (12:30 pm to 5:30 pm)

Prentiss2

Introduction, overview of verification process and site visit objectives

Stantec

Overview of facility GHG reporting boundaries

Stantec / MEGlobal

Overview of data management and storage procedures for GHG data on-site

Stantec / MEGlobal

On-site data sampling Stantec / MEGlobal

Facility Tour Stantec / MEGlobal

Follow-up questions and close-out Stantec / MEGlobal

INFORMATION REQUEST

Table 6 contains a list of documentation and data requested by Stantec to complete the proposed procedures and the outcome of the requests. This table will be updated as needed through the verification process to track requests.

Table 6 Information Requested Information Requested Request Date Obtained On

1. Offset Project Plan (latest version) November 22, 2017 December 4, 2017

2. Draft Offset Project Report November 7, 2017 November 14, 2017




3. Final and Signed Offset Project Report November 22, 2017 December 14, 2017

4. Draft GHG Assertion November 7, 2017 November 14, 2017

5. Final GHG Assertion November 22, 2017 December 14, 2017

6. Prentiss1 GHG Calculator and supporting calculators November 7, 2017 November 14, 2017

7. Contractual evidence that MEGlobal has ownership over the carbon offsets as it relates to Prentiss1.

November 22, 2017 November 28, 2017

8. Explanation of why CO2 was not captured in 2016. November 22, 2017 December 4, 2017

9. Monthly ethylene oxide production data for the crediting period.

November 22, 2017 December 4, 2017

10. Calibration records to support all the measurements taken in:

• Vent meter downstream of sales meter;

• Sales meter; and

• Natural gas meter at the injection site


11. Why is MEGlobal not using metered data to estimate the B3b Venting source?


12. Third party invoices or metered data associated with natural gas consumption at the Facility and injection site for the reporting period


13. Provide monthly electricity bills to support the data used in the calculator for the Facility and injection site for the reporting period


14. Copy of log book data to support the runtime of pipeline compressor and the calculation spreadsheet which is used to calculate the electricity consumption for the pipeline compressors. This can be reviewed during the site visit.


15. Calculation spreadsheet supporting all the venting volumes at injection site.


16. Why is the venting emission from Butte Energy November 22, November 28, 2017




reported only under Prentiss1? 2017

17. Explanation as to how the 81.17% is applied in the injection site calculations.


18. Provide details on the source, and the QAQC methods deployed to ensure that the following data used to calculate the GHG Assertion is accurate and conservative:

• natural gas consumption, electricity consumption, venting data from the Facility;

• electricity consumption data from pipeline compressors; and

• natural gas consumption data, electricity consumption data, venting data from Injection site.


19. Provide evidence that no other fuel is being used at the Project other than natural gas and electricity.


20. Explain why fugitive emissions from the capture sites are not included in the Projects (P1 and P2).

December 6, 2017 December 8, 2017

21. Stantec understands that there are four processing units at Magee facility. Why is there no electricity consumption for Magee unit 4 in the data collection spreadsheet? (see tab "Nelson.Magee kWh (13)" of the data collection spreadsheet)


22. Provide copies of the inlet gas analysis conducted in 2015 and 2016.


23. Provide a copy of the calculator used to estimate the volume of gas vented upstream of the sales meter (refer to data in tab "Inlet Vented (1)" which was used in P3b, B3b emission calculation).


24. Provide supporting data for the HHV of 37.44 MJ/m3 used to convert GJ to m3 natural gas consumption for Chain Lakes.


25. Why is there no natural gas consumption at Prentiss in August 2015? (refer to tab “Prentiss Fuel (6)” of data collection)


26. Why is September 2015 Prentiss natural gas consumption double other months? (refer to tab





“Prentiss Fuel (6)” of data collection)

27. Why was natural gas consumption at Nelson and Magee site lower in October through December 2015? (refer to tab “Nelson.Magee Fuel (11)” of data collection)


28. Provide 2015 and 2016 calibration records for Magee site’s natural gas meters.


FINALIZING THE VERIFICATION PLAN

The initial verification procedures may be adjusted to reflect changes to the risk identified during the verification and any additional verification procedures deemed necessary to provide a reasonable level of assurance. A final Verification Plan will be provided with the final Verification Report and Statement of Verification.

RISK ASSESSMENT

Stantec has done a final assessment of the potential risk associated with this verification assignment. As stated in the initial verification plan, the risk assessment is an internal procedure used to assess inherent, control, and detection risk. Based on the risk assessment in each of these categories, the Stantec team assigns an overall risk to the verification and continues to monitor the risk throughout the verification process. The final overall risk for this verification has been assessed to remain as Medium.

ADDITIONAL VERIFICATION PROCEDURES

The planned verification procedures for this assignment are outlined in Table 4, above. Since no further verification procedures were conducted, the procedures listed in Table 4, are also considered to be the final verification procedures.

ASSERTION

The initial GHG Assertion for this assignment was 62,748 tCO2e (58,258 tCO2e for January 1, 2015 to December 31, 2015, and 4,489 tCO2e for January 1, 2016 to December 31, 2016). Since the misstatements detected over the course of verification have been corrected, the final GHG Assertion is 64,576 tCO2e (59,577 tCO2e for January 1, 2015 to December 31, 2015, and 4,929 tCO2e for January 1, 2016 to December 31, 2016). This represents a percent adjustment of 2.8%.



CLOSURE

Should you have any questions or require additional information, please contact me directly. Sincerely,


This report was reviewed and approved for transmittal by:

Daniel Hegg, B.Comm, MSc. CEM Lead Verifier Tel: (250) 217-9729 [email protected]

Nicole Flanagan, M.A.Sc., P.Eng. Independent Peer Reviewer Tel: (613) 738-6086 [email protected]

Vicki Corning, P.Eng. Quality Reviewer Tel: (506) 452-7000 [email protected]

\\cd1002-f04\ghg\meglobal_offset_123221000_2017\2_ver_plan\ver_plan\meglobal_p2_sger_offset_vplan_20171215_fnl.docx

mailto:[email protected]

mailto:[email protected]


December 29, 2017

Appendix B Submission Documents


December 29, 2017

CONFLICT OF INTEREST CHECKLIST – CO2 CAPTURE AT PRENTISS2 FOR EOR (JANUARY 1, 2015 - DECEMBER 31, 2016)

CONFLICT OF INTEREST CHECKLIST Question Yes No 1. Can the verifying organization or the verification team members directly benefit from a financial

interest in the Project Developer or the Project Developer’s Project? For example: • owning shares of the Project Developer; • having a close business relationship with the Project Developer; • contingent fees relating to the results of the engagement; • potential employment with the Project Developer; or • undue concern about the possibility of losing the verification or other fees from the Project Developer.

☐ ☒

2. Can the verifying organization or verification team members be in a position of assessing their own work? For example:

• provided greenhouse gas consultation services to the project; • provided validation for the project; • if providing non-greenhouse gas work for the company, consideration needs to be given as to how

potential and perceived conflict of interests can be managed; or • a member of the verification team was previously employed with the company.

☐ ☒

3. Does the verifying organization or a member of the verification team, or a person in the chain of command for the verification, promote or be perceived to promote, a project developer's position or opinion to the point that objectivity may, or may be perceived to be, compromised?

For example: • dealing in, or being a promoter of, greenhouse gas credits on behalf of a project developer; or • acting as an advocate on behalf of the project developer in litigation or in resolving disputes

with third parties.

☐ ☒

4. Is one or more of the verification team too sympathetic to the project developer's interests by virtue of a close relationship with a project developer, its directors, officer or employees?

For example: • a person on the verification team has a close personal relationship with a person who is in a

senior greenhouse gas compilation role at the project developer; or • the verification team or a person of influence on the verification team has accepted significant

gifts or hospitality from the project developer.

☐ ☒

5. Is a member of the verification team or a person in the chain of command is deterred from acting objectively and exercising professional skepticism by threats, actual or perceived, from the directors, officers or employees of the Project Developer.

For example: • the threat of being replaced as a third-party verifier due to a disagreement with the application

of an greenhouse gas quantification protocol; • fees from the project developer represent a large percentage of the overall revenues of the

verifying organization; • the application of pressure to inappropriately reduce the extent of work performed in order to reduce

or limit fees; or • threats of litigation from the project developer.

☐ ☒


Daniel Hegg, M.Sc. Lead Verifier Environmental Services Tel: (250) 217-9729

Nicole Flanagan, M.A.Sc., P.Eng. Independent Peer Reviewer Environmental Services Tel: (613) 738-6086

Vicki Corning, P.Eng. Quality Reviewer / Designated Signing Authority Environmental Services Tel: (506) 452-7000

December 29, 2017 Issued in Victoria, BC

STATEMENT OF QUALIFICATIONS – CO2 CAPTURE FROM PRENTISS2 FOR EOR (JANUARY 1, 2015 - DECEMBER 31, 2016)

STATEMENT OF QUALIFICATIONS

Ms. Vicki Corning is the signing authority for the report. She is a professional engineer registered by the Association of Professional Engineers and Geoscientists of New Brunswick (APEGNB) which satisfies Section 18(a)(ii)(A) of the SGER. With respect to the technical knowledge required under Section 18(b)(i-iii), each member of the team has the required technical knowledge of GHG emission quantification methodologies and all have experience in completing third party GHG verifications. Please refer to the team cameos below for details.

TEAM QUALIFICATIONS AND EXPERIENCE

Lead Verifier – Daniel Hegg, M.Sc., EMIT, ENV(SP)

Daniel Hegg is a Senior Sustainability Specialist and Regional (Western Canada/US) GHG & Climate Technical Leader for Stantec Consulting Ltd.

Living on Canada’s west coast has deepened Dan’s passion for the development and implementation of sustainable practices. His unique perspectives and insights cross many important areas such as integrated carbon, strategic energy and water management, sustainable ROI business case development, full value accounting, climate change risk assessment and planning for the private and public sectors. In addition to providing strategy and policy advice, Dan has prepared multiple climate-resilience strategies across a variety of sectors including buildings/real-estate, forestry, oil & gas, renewable energy, and mining. Much of his work has directly helped guide various private and public sector organizations in sustainability and climate decision-making. In fact, Dan was recently seconded to the BC Ministry of Environment, Climate Investment Branch to assist with due diligence in the Province’s carbon offset portfolio. Daniel has also developed and validated over 130 organizational and facility GHG inventories and offset projects across a wide range of industry sectors.

Quality Reviewer and Designated Signing Authority – Vicki Corning, P.Eng.

Vicki has a degree in chemical engineering and over twelve years of technical and management expertise in many environmental services in the field of atmospheric emissions. Vicki is a GHG & Climate Services Discipline Leader at Stantec with the responsibility for growth and continuous improvement of the service line. She has been involved in over 120 verifications for organizational inventories and GHG offset projects in western Canada, Ontario, Quebec, Atlantic Canada, and the United States. She also regularly leads air, noise, and climate components of environmental assessments for a wide range of industrial clients. These involve monitoring existing conditions using analytical techniques, establishing emissions inventories for new facilities and evaluating expected environmental effects using modeling techniques.

Vicki has worked with clients in a variety of different industries in Canada and the US including: upstream and downstream oil and gas (gas processing plants, oil refineries, SAGD facilities, pipeline operations), electrical generating stations (coal, gas, co-generation, biomass), manufacturing plants, chemical processing facilities, mining, construction projects and pulp and paper. Vicki has managed the preparation of several policy reports on renewable energy for the New Brunswick Department of Energy, and authored technical content on carbon capture systems for coal facilities as part of an environmental report for Carbon Capture Nova Scotia.


Vicki developed Stantec’s internal GHG program competency training process and has also delivered course material on GHG verification, inventory, and data management techniques through a contract with the Canadian Standards Association.

Independent Peer Reviewer – Nicole Flanagan, M.A.Sc., P.Eng.

Nicole Flanagan, M.A.Sc., P.Eng. has 15 years of environmental engineering, nine of which are with Stantec. Nicole’s experience is specialized in air emissions under a variety of industrial, government and corporate settings. She is currently a senior practitioner and technical reviewer for greenhouse emission quantification, reporting and verification. Nicole was the lead verifier of some of the first regulatory greenhouse gas offsets sold in North America, has completed Environmental Compliance Approvals (ECAs), and National Pollutant Release Inventory reporting for several clients facilitating regulatory compliance. In addition, she has completed projects for various facilities developing voluntary greenhouse gas inventories, and emission/energy performance key metrics and identification of reduction opportunities. Her clients include major electric utilities, energy companies, petrochemical production facilities as well as oil & gas companies.

She also spent four years with Environment Canada working on program development and program delivery of greenhouse gas inventory and reduction programs, which included meeting with stakeholders and administering procedural processes. During this time, she developed a strong understanding of the workings of government from program administration (Greenhouse Gas, NPRI Reporting Division and Canada’s Offset System) as well as regulatory and instrument development (development of regulations and Pollution Prevention Planning requirements).

Verifier – Orasa Webber, M.Eng.

Ms. Orasa Webber has conducted over 90 greenhouse gas (GHG) verifications in Canada and the United States under many jurisdictions and programs including British Columbia Reporting Regulation, Alberta’s Specified Gas Emitters Regulation (SGER), Ontario Regulation, The Climate Registry, The Massachusetts Department of Environmental Protection Regulation. The GHG verification projects have included the following sectors: oil and gas extraction, production, and refining; power generation; chemical and petrochemical production; natural gas distribution systems; metal production; mining and mineral production. She has been identified as a lead verifier.

Orasa has also conducted over 15 offset credit verifications under Alberta’s Offset Credit System. Orasa completed her Master’s Degree in chemical engineering from McGill University and brings over ten years of experience. For the past five years, she has focused on climate change and environmental work including National Pollutant Release Inventory (NPRI) reporting, ambient air quality and noise monitoring, environmental impact assessment, GHG inventory, GHG verification and validation, and petroleum contaminated water/soil testing under Atlantic Risk-Based Corrective Action (RBCA) guidelines. She also has industrial experience in quality control of oil refinery products and processing and design of plastic products.


Verifier – Rengarajan Vaiyapuri, M.Eng., EIT

Rengarajan obtained a Masters of Engineering (Environmental) from the University of Alberta. He has completed the ISO 14064-3 GHG verification training course and has been identified as a verifier at Stantec. He has conducted over 30 greenhouse gas verification by completing desktop reviews, reporting, and conducted site visits for facility under Alberta Specified Gas Emitters Regulation (SGER). The GHG verification projects have included the following sectors: oil and gas, power generation, chemical production, mining, and mineral production. Rengarajan has also conducted 4 offset credit verifications under Alberta’s Offset Credit System. Rengarajan has also been involved in air quality studies including dispersion modelling, odour monitoring, National Pollutant Release Inventory (NPRI) reporting and other assigned duties. His dispersion modeling experience includes working with the U.S. Environmental Protection Agency’s AERMOD and CALPUFF dispersion modeling systems, assessing the effect of air emissions on local air quality. He has worked on projects for industrial clients such as power plants, paper and pulp mills, OSB mills, oil and gas, and chemical plants.


Daniel Hegg, M.Sc., EMIT, ENV(SP) Lead Verifier Environmental Services Tel: (250) 217-9729


Vicki Corning, P.Eng. Quality Reviewer, Designated Signing Authority Environmental Services Tel: (506) 452-7000

December 29, 2017 Issued in Victoria, BC

STATEMENT OF VERIFICATION – CO2 CAPTURE AT PRENTISS2 FOR EOR (JANUARY 1, 2015 - DECEMBER 31, 2016)

1.0 STATEMENT OF VERIFICATION

Stantec Consulting Ltd. (Stantec) was contracted by MEGlobal Canada ULC (MEGlobal) to conduct an independent third-party verification of the greenhouse gas (GHG) Assertion provided in the Offset Project Report for CO2 Capture from Prentiss2 for Enhanced Oil Recovery, 2015 and 2016 Vintage Credits, dated December 15, 2017. The CO2 Capture from Prentiss2 for Enhanced Oil Recovery (the Project) consists of the Sequoia Resources (Sequoia) Prentiss Capture Facility (the Facility).

In this work, MEGlobal owns and operates the Facility and thus is responsible for the collection of activity data used in the calculations and data management for facility specific data. For this Project, MEGlobal was also responsible for the completion of the calculations, presentation of the information within the Project Report, and for the supporting technical documents.

Stantec was responsible for planning and executing the verification to deliver an opinion to a reasonable level of assurance as to whether the Project Report and GHG Assertion are presented fairly and in accordance with the verification criteria. Stantec is a qualified third party verifier, as defined in Section 18 of the SGER. Stantec is accredited with the American National Standards Institute (ANSI), a member of the International Accreditation Forum (IAF), in accordance with ISO 14065 (Accreditation ID #0805 issued to Stantec Consulting Ltd. for greenhouse gas (GHG) verification and validation).

1.1 INTENDED USER

This verification statement has been prepared for Alberta Environment and Parks (AEP) for the express purpose of facilitating the creation of Emission Reduction Credits (ERCs) under the Climate Change and Emissions Management Act and the SGER.

1.2 VERIFICATION OBJECTIVE

The objective of the verification was to assess whether the GHG Assertion (as presented in Table 1.1), contained within the Project Report and GHG Assertion, satisfied the AEP Verification Criteria in accordance with the Verification Standards (Sections 1.5 and 1.6).

1.3 PROJECT DETAILS

1.3.1 Location

The Project consists of the capture of CO2 from the Facility for use in enhanced oil recovery (EOR) operations (geological injection). The Facility and field locations are identified below. All sites are located in Alberta.

Sequoia Resources Prentiss CO2 Capture Site: Sec 30, Twp 39, Rge 25, W4M

The Sequoia Resources EOR is defined by:

• Petroleum Registry ID AB BT 2140092 for the Nelson Field



o 00 08 24 042 26 W4

o License F0009027


• Petroleum Registry ID AB BT 0041254 for the Chigwell / Viking field

• LE LSD SEC TWP RGE M

• 00 16 32 043 26 W4

• License F0009290

• Linked wells associated with this license

1.3.2 Description

The Project, as defined in the Project Plan, dated September 13, 2016 (version 2.0) involves the creation of offset credits from the capture of CO2 (that was historically released to atmosphere) for use in enhanced oil recovery operations. Prentiss2 has been in operation since 1994 and is located on 688 hectares of land north of the Red Deer River, about 7 km northwest of Joffre.


Starting in 2006, the Project has generated emission reductions by capturing the CO2 that was historically emitted to the atmosphere. The captured CO2 is gravity transferred to the Facility which is located adjacent to the MEGlobal Prentiss1 Project where the CO2 stream is processed, compressed, and transported by pipeline to injection sites in central Alberta for geological injection in enhanced oil recovery operations.


• carbon dioxide (CO2);

• methane (CH4);

• nitrous oxide (N2O);

• hydrofluorocarbons (HFCs);

• perfluorocarbons (PFCs); and


• sulphur hexafluoride (SF6).

The total equivalent GHG emissions are reported as tonnes of carbon dioxide equivalents (t CO2e).

1.3.3 Baseline and Project Conditions

The baseline emissions at Prentiss2 are the emissions that would have been produced by venting the CO2 rich stream to the atmosphere. The Project emissions occur from the operation of the Project. These include GHG emissions from venting, natural gas consumption, and electricity consumption. Also, included in the Project’s GHG Assertion are indirect GHG emissions from fuel extraction and processing, as required by the Protocol.

1.3.4 Emission Reduction Credit Period

Emission reductions have been calculated and verified for the period of January 1, 2015 – December 31, 2016.

1.4 GHG ASSERTION

The fundamental assertion verified is presented in Table 1.1 below.

Table 1.1 GHG Assertion

Year Baseline Emissions (t CO2e)

Project Emissions (t CO2e)

Emission Reductions (t CO2e)

January 1 – December 31, 2015 92,580 33,003 59,577

January 1 – December 31, 2016 10,077 5,078 4,999

Total (November 1, 2016 - October 31, 2017) 102,658 38,081 64,576 Notes: Emission Reductions are rounded down as per the Guidance. Totals may not sum due to rounding.


1.5 VERIFICATION CRITERIA

Stantec has conducted sufficient and appropriate procedures in order to express a reasonable level of assurance opinion as to whether the Project Report and the GHG Assertion satisfies the requirements of the:

• Climate Change and Emissions Management Act (the Act), SA 2003, c C-16.7; • Specified Gas Emitters Regulation, Alta Reg. 139/200, with amendments up to and including

Alberta Regulation 104/2015 (Regulation); • Technical Guidance for Offset Project Developers (version 4.0, February 2013); and • Specified Gas Emitters Quantification Protocol for Enhanced Oil Recovery (V 1.0, October

2007); and • The Emission Factors Handbook (March 2015, V1.0)

1.6 VERIFICATION STANDARDS

The verification was conducted in accordance with ISO 14064:3, ISO 14065, and the verification guidance contained within the Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance, January 2013, version 1.0 (the Verification Guidance).

1.7 UNRESOLVED DISCREPANCIES

AEP has set the materiality threshold for offset projects to 5% of the total reported GHG emission reductions or removals asserted. Qualitative discrepancies were at the discretion of the Lead Verifier. No unresolved material misstatements remain in the Project Report and GHG Assertion (including the Project Offset Plan) as submitted. No unresolved immaterial qualitative or quantitative misstatements remain in the Project Report and GHG Assertion (including the Project Offset Plan) as submitted.

1.8 OPINION

Based on the procedures undertaken and described in this report, the Project Report and GHG Assertion, dated December 15, 2017, for the CO2 Capture from Prentiss2 For Enhanced Oil Recovery satisfy the requirements of the:

• Climate Change and Emissions Management Act, S.A. 2003, c. C-16.7; • Specified Gas Emitters Regulation, Alta Reg. 139/200, with amendments up to and including

Alberta Regulation 104/2015 (Regulation); • Technical Guidance for Offset Project Developers (February 2013, V4.0, or revised version at

time of verification); and • Specified Gas Emitters Quantification Protocol for Enhanced Oil Recovery (V 1.0, October

2007); and • The Emission Factors Handbook (March 2015, V1.0)

1.9 VERIFICATION CLOSURE

The findings presented herein were used to make a reasonable level of assurance opinion as required by AEP.


Stantec did not conduct direct GHG emissions monitoring or other environmental sampling and analysis in conjunction with this verification.

Because of the inherent limitations in any internal control structure it is possible that fraud, error or non-compliance with other laws and regulations may occur and not be detected. Further, the verification was not designed to detect all weaknesses or errors in internal controls as the verification has not been performed continuously throughout the period and the procedures performed on the relevant internal controls were on a test basis. Any projection of the evaluation of control procedures to future periods is subject to the risk that the procedures may become inadequate because of changes in conditions, or that the degree of compliance with them may deteriorate.


Daniel Hegg, M.Sc. Lead Verifier Environmental Services Tel: (250) 217-9729


Vicki Corning, P.Eng. Quality Reviewer, Designated Signing Authority Environmental Services Tel: (506) 452-7000

Issued in Victoria, BC December 29, 2017