There are four steps required in order to be approved to receive incentive payments:

Step 1: Initial Application

Proponents who are interested in participating in the CO² Capture and Storage Incentive Program are invited to submit an application to NRCan no later than March 1, 2005. The application information should be sent to: (1 paper copy and 4 CD-Roms)

Natural Resources Canada
CO2 Capture and Storage Incentive Program
580 Booth Street, 17th Floor
Ottawa, Ontario K1A 0E4
Attn: Mr. Kevin Cliffe

The application must provide information that will establish:

Basic Information

• Name of operator applying
• Name, Title, Address, Phone Number, Fax Number, and E-mail address of the Contact Person
• Project Title (maximum 15 words)
• Abstract (maximum half-page)
• Location of project site and CO2 source - maps indicating the location of the project site and its proximity to the CO2 source
• Previous production history and a summary of its prospects, in the absence of a carbon dioxide enhanced recovery scheme

Notice of Confidential or Proprietary Information

• Any confidential or proprietary information contained in the project application should be specifically identified

Project Description or Plan

• This section contains the description of the work, and details of the process to be followed in carrying out the work. The details of the approach and methodology in order to achieve the project's work objectives, milestones, and deliverables must be described in this section. A work breakdown structure describing the project's tasks, costs, and the assigned responsibility for their execution, along with a project timelines chart is to be included, as is a technical risk assessment and mitigation plan. For the full cost/budget detail and project schedule, please provide it as Schedule "A".
• Below is an explanation of information required under this section.

Required information Pertinent to CO2

• CO2 Source Selection - Information on the reliability of the source, the number of suppliers used to spread the risk related to CO2 supply, the quantity and timing of CO2 deliverables (as well as the quantity and timing of CO2 injection), the CO2 price and terms, including anticipated allocation of potential CO2 emission credits.
• Transportation - The plans for transportation e.g., the right of way for pipeline, the use of existing versus greenfield infrastructure.
• Geological Features - The characteristics and benefits of the candidate site. Data characterizing the reservoir, including heterogeneity and production history. Complete reservoir rock and fluid properties, including but not limited to:
  • Gas cap;
  • Pay thickness;
  • Depth;
  • Temperatures;
  • Injectivity and productivity;
  • Permeability;
  • Hydrocarbon pore volume;
  • Sour versus sweet field; and
  • Any other geophysical or geochemical testing data possessed by the project proponent, which may have been performed on the reservoir, which may help in establishing its integrity;
• Economic Performance - An assessment of the net present value of the project, based on both burdened and unburdened (e.g., pre-royalty) scenarios. Provide information on the base case, existing production plans, and the enhanced recovery case. The recovery improvements, field life extensions, and other economic benefits should also be identified. An up-to-date Chenery Dobson price forecast and a Nominal Discount Rate of 12% shall be used in the applicant's assessment.

Project Cost/Budget

• Costs should be categorized as:
  • Capital costs (itemized for equipment > $10,000)
  • CO2 injectant cost or price (non-arms length vs. arms-length)
  • CO2 transportation cost
  • CO2 recycling costs
  • Consumed energy
  • Field labour costs for operators (direct salary and benefits at actual cost for staff assigned directly to the project on a full time or part time basis)
  • Other operating costs
• Additional categories may be used if applicable. The nature and purpose of the various expenditures should be explained.

Project Schedule

• The applicant should indicate when the project will begin, when the capital expenditures on the project will be incurred and when all work on the project, including preparation of the final technical report, will be completed.

Project Management

• This section outlines the capability, roles, and organizational structure that the team possesses to manage a CO2 project. This section will also include a risk analysis and mitigation plan [this means that the operator must identify under what circumstances the project would not proceed e.g., if the carbon dioxide supply is interrupted or if the oil price goes below $X per barrel], as well as reporting requirements.

Project Interim Reports (semi-annually)

• The applicant should specify information that will be included in the semi-annual progress reports. The interim reports should show the work-in-progress and the corresponding expenditures. The report shall also include the project's technical performance, breakdown of CO2 volumes (e.g., acquired volumes, injected volumes, recycled volumes, etc.) and the production response.

Final Technical Report

• The applicant should specify the information that will be included in the final technical report regarding the results of the project. This final report must be submitted within three months of project completion as defined in the conditions of approval.

Commercialization / Expansion / Replication Plan

• The applicant should include a description of the understanding of scope and scale of the potential for commercialization, expansion and replication. The specific commercial applications that may result from this proposal need to be identified and formally built into the proposal. Ideally, potential CO2 suppliers will participate in the proposed project. This section will demonstrate the potential for a good long-term return on investment and identify the commercialization risk.

Potential Economic Benefits

• The applicant should indicate the project's potential to lead to significant long-term economic benefits to Canada in areas such as employment, sales, provincial royalty and taxes, development of new commercial opportunities, new investment, increased exports, and reduction in greenhouse gas emissions.

Project Funding

• The applicant should indicate how much funding is needed for the proposed project (supported by relevant data).
• The applicant should also indicate if the project operator has applied for other funding, from whom (e.g. Alberta government, Federal government, etc.), how much funding has been requested, and whether that funding has been granted.

Additional Requirements

• The expected use of Canadian goods and services or the expected degree of transfer of foreign technology and expertise;
• The means to be used by the project operator to monitor CO2 injection and storage and to verify the integrity of storage;
• The possible adverse environmental effects of the project;
• The means to be used by the project operator to inform sponsors of other actual and potential projects (including provincial governments and Natural Resources Canada) of the non-proprietary technical learnings as a result of the project;
• Supporting material will include disclosure of the involvement of former public servants who are under the Conflict of Interest and Post-employment Guidelines.
• Operational safety risk analysis
• Proponents must also include an EXCEL Spreadsheet of required project information in the format provided in Annex B

Step 2: Assessment Process

• Project proposals will be assessed by an assessment committee based on the criteria located in Annex C. This committee will be comprised of representatives from Natural Resources Canada, Environment Canada, and an independent third party.
• During the assessment process, the project applicant may be asked to provide additional information, to respond to questions about the project proposal, or to make him/herself available for meetings. The assessment committee will be under no obligation to receive further information whether oral or written from any proponents. Modifications to proposals will not be accepted after the closing date and time, and no word or comments will be added to the proposal unless requested by the assessment committee.

Step 3: Project Selection Notification

• All project proponents will be notified by e-mail on April 8, 2005 of the status of their incentive application.
• The project approval decisions are final and not subject to appeal. Subject to available funds, a project proposal that is not approved may be revised and submitted for consideration in a subsequent period.

Step 4: Environmental Assessment

• Prior to the signing of a contribution agreement, proponents will be responsible to meet any requirements under the Canadian Environmental Assessment Act (CEAA). For more information, please visit the following website: www.ceaa.gc.ca.
• Please provide any existing environmental assessment that you may have for the project.

Step 5: Contribution Agreement

• Successful project proponents will be required to enter into a contribution agreement in order to qualify for incentive payments.
• If a contribution agreement cannot be concluded within 60 days of notification to a successful proponent, the Government of Canada reserves the right to award the the contribution to the next highest ranked proposal.