GENALTA POWER AND REPSOL+1 (604) 353-0264 • • [email protected] Aggregated Waste Heat Recovery Offset Project GENALTA POWER AND REPSOL Verification Report

+1 (604) 353-0264 • www.brightspot.co • [email protected]

Aggregated Waste Heat Recovery Offset Project

GENALTA POWER AND REPSOL Verification Report

May 19, 2017

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Statement of Verification

May 19, 2017

Alberta Environment and Parks 12th Floor, Baker Centre 10025 – 106 StreetEdmonton, Alberta T5J 1G4

INTRODUCTION

Genalta Power Inc. and Repsol Oil & Gas Canada Inc. (the Responsible Parties) engaged Brightspot Climate Inc. (Brightspot Climate) to review their greenhouse gas (GHG) emission reduction and removal project, Aggregated Waste Heat Recovery Offset Project (the Project). The Project was developed in accordance with the Quantification Protocol for Waste Heat Recovery Projects (Version 1.0, September 2007) (the Protocol) published by Alberta Environment and Parks.

The Responsible Party’s “GHG Assertion” is comprised of the Offset Project Plan, Offset Project Report and supporting documentation. The GHG Assertion covers the reporting period February 1, 2017 to March 31, 2017, states an emission reduction and removal claim of 13,334 tonnes CO2e over this period.

The emission reduction and removal claim consists exclusively of 2017 vintage credits.

The Responsible Party is responsible for the preparation and presentation of the information within the GHG Assertion. Our responsibility as the verifier is to express an opinion as to whether the GHG Assertion is materially correct, in accordance with approved Protocol, the Specified Gas Emitters Regulation (Alta. Reg.139, 2007) (the “Regulation”), and the Alberta Environment and Parks Technical Guidance for Offset Project Developers, Version 4.0, February 2014.

SCOPE

We completed our review in accordance with the ISO 14064 Part 3: Greenhouse Gases: Specification with Guidance for the Validation and Verification of Greenhouse Gas Assertions (ISO, 2006). As such, we planned and performed our work in order to provide positive, but not absolute assurance with respect to the GHG Assertion.

The verification procedures that were performed through the course of the verification were developed based on the results of a risk assessment that was completed during the verification planning stage. These verification procedures are described in the Verification Plan. Certain verification procedures included data sampling. The sampling type, sample size and the justification for the planned sampling type and size are detailed in a Sampling Plan, which is included in the Verification Plan.

CONCLUSION

I believe our work provides a reasonable basis for my conclusion.

There were no unresolved misstatements in the final GHG Assertion.

Based on our review, it is my opinion at a reasonable level of assurance that the GHG Assertion is materially correct and presented fairly in accordance with the relevant criteria.

Sincerely,

Aaron Schroeder, P.Eng. Brightspot Climate Inc. Issued in: Vancouver, British Columbia

Brightspot Climate Inc. – Verification Plan Genalta Power Inc. and Repsol Oil and Gas Canada Inc.


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Verification Summary This Verification Report follows the standardized format prescribed in the Alberta Environment and Parks guidance document, Section 5.2.1

Table 1: Verification Summary

Project Information:

Project Name: Aggregated Waste Heat Recovery Offset Project

Geographic Boundary: Cadotte, and West Cadotte: LSD: 10-28-84-18 W5M Latitude: 56.3137291 N Longitude: 116.7786604 W

Bigstone: LSD: 14-28-59-22 W5M Latitude: 54.135833 N Longitude: 117.240833 W

Project Contact Information:

Tooraj Moulai Senior Engineer, Carbon Services Blue Source Canada ULC Suite 700, 717 – 7th Avenue SW Calgary, AB T2P 0Z3 Phone: 403-262-3026 x259 Fax: 403-269-3024 Email: [email protected]

Alberta Offset System Criteria Evaluated (see Verification Activities):

The project must meet the eligibility criteria stated in Section 7 of the Specified Gas Emitters Regulation (SGER). In order to qualify, emission reductions must:

• Occur in Alberta; • Result from actions not otherwise required by law and be

beyond business as usual and sector common practices;

• Result from actions taken on or after January 1, 2002; • Occur on or after January 1, 2002; • Be real, demonstrable, quantifiable and verifiable; • Have clearly established ownership; and • Be counted once for compliance purposes.

1 Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance, Version 1.0, January 2013. Alberta Environment and Parks.



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Verification Objectives:

• issue a verification statement on whether the GHG assertion is without material discrepancy;

• issue a verification report that provides details of the verification activities; and

• complete the “confirmations” activities defined in the Alberta Environment and Parks Verification Guidance Document, Section 5.4, Table 26.

Verification Summary: No discrepancies were detected in the final GHG Assertion.

Verification Team Members:

Lead Verifier: Aaron Schroeder, P.Eng.

Associate Verifier Will Grundling, M.Sc.

Peer Reviewer: Nathan Muegge, P.Eng.

Project Start Date:

Repsol Bigstone WHR was installed in 2009 and the first Genalta project began May 14, 2012.

Galloway WGP and Judy Creek Waste Heat to Power (WHP) were commissioned in March and April of 2013.

The West Cadotte WGP facility was commissioned on February 15, 2015.

Credit Start Date: January 1, 2013.

Credit Period:

January 1, 2013 to December 31, 2020 (8 years).

All subprojects including West Cadotte WGP and Bigstone WHR added in the 2015 calendar year conform to the credit period. At the end of the credit period, the Project will be re-assessed for additionality and, as circumstances permit, may apply for a 5-year extension period.

Offset Project Report Date: May 15, 2017

Expected Lifetime of Project:

The micro-turbine module at the Cadotte WGP site has a lifetime expectancy of approximately 10-15 years.

The power generation reciprocating engines at the West Cadotte facility and the Bigstone WHR unit have a lifetime expectancy of 10-15 years.

Actual Emissions Reductions Achieved:

13,334 tonnes CO2e

Other Environmental Attributes: The Project is only registered with the AEOR. It does not generate Renewable Energy Certificates (RECs) or other environmental attributes.



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Ownership:

Genalta Power Inc. and its subsidiaries hold ownership of the Cadotte, West Cadotte Waste Heat Recovery subprojects.

The Bigstone WHR unit is part of the Repsol Bigstone plant. Repsol Oil & Gas Canada Inc. is listed as the majority owner and operator of the Bigstone Gas Plant. There are four other parties that have a working interest in the site through joint venture (JV) arrangements. Each party is entitled to their share of offset credits according to their working interest. Each of the JV partners has agreed to Blue Source Canada acting as the Authorized Project Contact and Repsol as the Responsible Party for the purpose of reporting the GHG Assertion on their behalf.

Project Registration:

Brightspot Climate is not aware of any other systems or registries where the Project has been registered. The Responsible Party has not disclosed registration of the Project on any other system or registry.

Verification Report Date: May 19, 2017



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Introduction This document contains the following six sections:

1. Verification Summary: as shown in Table 1 above.

2. Verification Report Introduction: this section defines the parties associated with this verification, a description of the project and the verification objective, scope and criteria applied to the verification. A list of the Responsible Party’s documents reviewed through the course of the verification is also provided in this section.

3. Verification Schedule: lists important verification activities and dates.

4. Verification Findings: this section includes a discussion of the results of each verification procedure and each qualitative and quantitative discrepancy identified as well as a summary of the total materiality of discrepancies.

5. Confirmations: a table provides details of the “confirmation” activities completed by the verifier, as required by Alberta Environment and Parks2.

6. Statements: Verification team biographies, Statement of Verification, Conflict of Interest statement and Statement of Qualifications.

The final Verification Plan is a separate document that was developed at the outset of the verification. The Verification Plan includes a description of the final verification strategy, verification procedures and sampling that was applied to the verification. The final Verification Plan is appended to this report.

Parties Associated with the Verification

ISO 14064-3 defines the following terms used in the context of a GHG verification:

GHG Assertion: a declaration or factual and objective statement made by the Responsible Party.

The Alberta Environment and Parks Technical Guidance Document extends this definition to include the information included in the Baseline Emissions Inventory Application and the Specified Gas Compliance Report.

GHG Project: activity or activities that alter the conditions identified in the baseline scenario, which cause GHG emission reductions or GHG removal enhancements.

The GHG Project that is the subject of this verification is Aggregated Waste Heat Recovery Offset Project, which will be referred to throughout this document as “the Project.”

ISO 14064-3 defines the following parties associated with the verification:

Responsible Party: person or persons responsible for the provision of the greenhouse gas assertion and supporting GHG information.

The Responsible Party for this verification consists of Genalta Power Inc. (Genalta) and Repsol Oil & Gas Canada Inc. (Repsol).

2 See Section 5.4 of Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance, Version 1.0, January 2013. Alberta Environment and Parks.



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Intended User: individual or organization identified by those reporting GHG-related information as being the one who relies on that information to make decisions.

The Intended User for this verification is Alberta Environment and Parks.

Verifier: competent and independent person, or persons, with responsibility for performing and reporting on the verification process.

The Verifier for this verification is Brightspot Climate Inc. The members of the verification team are provided in section 3 of this document.

Principles

ISO 14064-3 defines four fundamental principles to conducting a greenhouse gas verification, namely independence, ethical conduct, fair presentation and due professional care.

Brightspot Climate has implemented processes, including requiring appropriate training for all verification team members, to ensure the application of these principles for this verification.

A final “Conflict of Interests Checklist” is included in Section 6 of this report.

Project Description

The Aggregated Waste Heat Recovery Offset Project includes five waste heat recovery sub-projects. Only three of the subprojects have emission reductions occurring during the reporting period within the scope of this verification.

The asserted emission reduction results from the utilization of waste heat energy from flaring waste gas. This waste heat is utilized to generate electricity and displace grid-generated electricity (Cadotte and West Cadotte subprojects) or to displace natural gas for the generation of useful heat (Bigstone subproject).

Verification Details

Verification Parameters

Table 2: Verification Objectives, Criteria and Scope

Verification Objectives • issue a verification statement on whether the GHG assertion is without material discrepancy;


• complete the “confirmations” activities defined in the Alberta Environment and Parks Verification Guidance Document, Section 5.4, Table 26.



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Criteria • Climate Change and Emissions Management Act • Specified Gas Emitters Regulation (Alta. Reg.139, 2007) • Technical Guidance for Offset Project Developers, Version 4.0,

February 2013 • Technical Guidance for Greenhouse Gas Verification at

Reasonable Level Assurance, Version 1.0, January 2013

• Quantification Protocol for Waste Heat Recovery Projects (Version 1.0, September 2007)

Scope Project Name: Aggregated Waste Heat Recovery Offset Project

Geographic Boundary: Cadotte, West Cadotte and Galloway WGP: LSD: 10-28-84-18 W5M Latitude: 56.3137291 N Longitude: 116.7786604 W

Judy Creek WHP: LSD: 07-06-064-010 W5M Latitude: 54.5067970 N Longitude: 115.4978737 W

Bigstone WHR: LSD: 14-28-59-22 W5M Latitude: 54.135833 N Longitude: 117.240833 W

Physical Operations: Production of electricity utilizing waste heat from gas turbines, sales compressors or waste gas that otherwise would have been flared.

Emission Sources: Fuel extraction and processing Generation of heat and power Electricity generation (Alberta Grid) Unit operation

IPCC GHGs Emitted: CO2, CH4 and N2O

Reporting Period: Feb. 1, 2017 to Mar. 31, 2017



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Documents Reviewed

The following Responsible Party’s documents were reviewed through the course of the verification (only the most recent version is listed in instances where multiple versions were reviewed):

• Genalta_WHR_GHG_Calculator_v0.3_2017-5015.xlsx • Respol_Bigstone_GHG_Calculator_v0.1_2017-5-2.xlsx • Gas Composition – Baytex (Feb 2017 – Mar 2017).xlsx • West Cadotte Hourly Gas Flow Data_MMM 2017.xlsx • GENALTA III GP LTD. ### May 2 2017.pdf (electrical consumption) • Bigstone_Flow_Meter(340)_Calibration_Report_July-2015.pdf • Bigstone_Temperature_Meter_Calibration_Report_June-2015.pdf • Bigstone P&ID – Glycol Heater.pdf • Bigstone P&ID – Hot Oil Heater.pdf • Bigstone WHR control screen diagram – Cropped.png • Bigstone_WHR_Design_P&ID.pdf • Bigstone Fuel Gas Composition (Feb-Mar 2017).xlsx • TechData_IM-7849E.pdf (hot oil product description) • Bigstone_WHR_Glycol_Pump_Description and Flow Rate.pdf • Bigstone WHR – Ownership and mail ballot.msg (and attachments) • Bigstone WHR Temperature and Flow Data (Feb-Mar 2017).xlsx

Site Visit

The site visit was conducted on May 5, 2017 by Aaron Schroeder. The site visit included observation of the emission sources, metering and data systems used for recording metered quantities. The following Responsible Party staff were interviewed regarding various aspects of the Project.

• John Boulton, Site Operator, Genalta Power Inc. • Tooraj Moulai, Senior Engineer, Blue Source Canada ULC

Further details of the verification activities that were conducted on site, including observations and inquiries, are provided in Table 4 of this report.

Verification Schedule

The verification was completed according to the schedule established between the Responsible Party and the Verifier in the Verification Plan. The verification reached the following important milestones:

• Verification Kickoff Meeting April 26, 2017 • Draft Verification Plan May 5, 2017 • Site Visit May 5, 2017 • Final GHG Assertion May 16, 2017 • Draft Verification Report May 17, 2017 • Peer Review May 18, 2017 • Final Verification Report May 19, 2017



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Verification Findings The results of the verification risk assessment provided the basis for the verification procedures. Table 3, below, provides a summary of the verification procedures where discrepancies were detected. Table 4, which follows, provides a description of every verification procedure that was completed.

Table 3: Verification Findings Summary

Activity Data / Inventory Component Description

Discrepancy Description Discrepancy Type

Discrepancy Magnitude

There were no discrepancies detected in the final GHG Assertion.



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Table 4: Findings of Verification Procedures


Verification Procedures Verification Findings

PROTOCOL APPLICABILITY REQUIREMENTS

1. Heat was not being used in the baseline condition in either a passive or active manner

Substantive test: Confirm that the most likely outcome for the waste gas would be flaring in the absence of the waste heat recovery project.

The gas suppliers confirmed that there is no useful purpose for the waste gas supplied to the project sites. This waste gas is associated gas, which is produced as a by-product of oil production. There are no natural gas processing facilities in the region. Prior to the project, the gas was flared.

No discrepancies were detected in the appropriateness of the baseline condition.

2. The quantification of the emission reduction is based on actual measurements.

Substantive test: Confirm that all quantification data is metered data.

All quantification data are based on actual measurements, as confirmed through review of the project data.

No discrepancies were detected in the appropriateness of the quantification data measurement.



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3. The project must meet the eligibility criteria stated in section 7 of the Specified Gas Emitters Regulation (these are the requirements of the Alberta Offset System)

Substantive test: Review the evidence provided by the Responsible Party related to the requirements of the Alberta Offset System.

Occurs in Alberta – The Cadotte and West Cadotte facilities are located near Cadotte Lake, Alberta, as confirmed during the site visit. The Bigstone facility is located near Fox Creek, Alberta, as confirmed by project documents. The waste gas is sourced from oil wells in Alberta, as confirmed by the Responsible Party.

Actions not otherwise required by law – confirmed that waste heat recovery is not a required activity. The sources of waste gas were not required to conserve the waste gas for a useful purpose during the reporting period, as confirmed by documentation from the Alberta Energy Regulator.

Actions taken on or after January 1, 2002 – commissioning of the waste heat recovery facilities occurred in May 2012 , as confirmed by project documentation.

Real, demonstrable, quantifiable – the verification procedures confirmed that the emission reductions in the assertion meet these requirements. The specific verification procedures supporting this conclusion include observation during the site visits, review of supporting meter calibration reports and documentation and the recalculation of the emission reduction.

Clearly established ownership – Genalta Power Inc. and its subsidiaries hold ownership of the Cadotte, West Cadotte Waste Heat Recovery subprojects.

The Bigstone WHR unit is part of the Repsol Bigstone plant. Repsol Oil & Gas Canada Inc. is listed as the majority owner and operator of the Bigstone Gas Plant. There are four other parties that have a working interest in the site through joint venture (JV) arrangements. Each party is entitled to their share of offset credits according to



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their working interest. Each of the JV partners has agreed to Blue Source Canada acting as the Authorized Project Contact and Repsol as the Responsible Party for the purpose of reporting the GHG Assertion on their behalf.

Counted once for compliance purposes – The Responsible Party provided a Statutory Declaration that the emission reduction will be registered only in the Alberta Offset System.

No discrepancies were detected in the eligibility of the Project within the Alberta Offset System.

PROTOCOL FLEXIBILITY

Protocol flexibility #1 is not applicable to this project.

2. Waste heat recovery projects may occur within a single site or across multiple sites.

Substantive test: Conduct a review of eligibility and data requirements for each sub-project. Additionally, conduct an independent recalculation of the emission reduction for each sub-project.

The project data was reviewed for each sub-project and found to be complete. The recalculation of the emission reduction reasonably matched the Responsible Party’s quantification for each sub-project.

No discrepancies were detected in the completeness of each sub-project within the aggregated project.



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3. Site specific emission factors may be substituted for generic emission factors.

Substantive test: Evaluate the appropriateness and accuracy of the site-specific emission factors and energy ratios through review of the Offset Project Plan and Offset Project report, through recalculation of the emission reduction and through observations and interviews during the site visit.

Since only a portion of the waste gas utilized in the West Cadotte sub-project is eligible for crediting, a site-specific attribution factor was applied. The site-specific attribution eligible portion of the emission reduction was calculated appropriately.

No discrepancies were detected in the site-specific calculations.


QUANTIFICATION DATA

Glycol heater efficiency (manufacturer), hot oil heater efficiency (manufacturer)

Substantive test: Review the efficiency factors to confirm that they are applicable to the project and have been transcribed correctly.

The glycol heater and hot oil heater efficiencies applied in the quantification are the appropriate efficiencies to be applied for the equipment used on site, as confirmed through review of project documentation.

No discrepancies were detected in the appropriateness or application of the glycol heater or hot oil heater efficiencies.

Hot oil and glycol flow rates and temperatures

Control test: Confirm that meter calibration has been completed and documentation is on file.

The hot oil and glycol flow rate and temperature meters were calibrated during the project period and meter calibration documentation is on file.

No discrepancies were detected in the calibration of the hot oil and glycol flow rate and temperature meters.



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Electricity production Substantive test: Compare total electricity produced to quantity stated on Alberta Electricity System Operator website.

The total electricity production applied in the quantification matched the electricity production stated on the AESO website.

No discrepancies were detected in the quantity of electricity production.

Electricity consumption Substantive test: Compare total electricity consumed to invoices from electric utility.

The quantity of electricity consumption was substantiated by utility.

No discrepancies were detected in the quantity of electricity consumed.

Combustion emission factors; Alberta Grid Displacement Factor

Substantive test: Confirm that emission factors have been accurately transcribed from reference documents to the quantification spreadsheet.

The combustion emission factors and Alberta Grid Displacement Factor were correctly transcribed into the emission reduction quantification.

No discrepancies were detected in the emission factor transcription from reference documents.

EMISSION REDUCTION QUANTIFICATION AND REPORT

Application of the approved quantification protocol

Substantive test: compare the methodologies described in the Responsible Party’s Offset Project Plan to the methodologies described in the approved quantification protocol.

The verification team compared the methods described in the Offset Project Plan to the methods described in the approved Quantification Protocol.

The quantification methods described in the Responsible Party’s Offset Project Plan adhere to the methods described in the approved Quantification Protocol.

No discrepancies detected.



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Substantive test: Recalculate the emission reduction using original metered data.

The independent recalculation of the emission reduction reasonably matched the emission reduction quantity asserted by the Responsible Party. Therefore, the approved Protocol quantification methods were applied in the Responsible Party’s emission reduction quantification.


Quantification of emission reduction


The independent recalculation of the emission reduction reasonably matched the emission reduction quantity asserted by the Responsible Party. Therefore, the verification team concluded that no arithmetic or calculation errors were made by the Responsible Party in the emission reduction quantification.


Transcription of final emission reduction into Offset Project Report

Substantive test: compare the final emission reduction quantity reported by the Responsible Party to the quantity reported in the Offset Project Report. Also, compare these quantities to the recalculated quantity in previous verification procedures.

The emission reduction quantity was accurately transcribed into the Offset Project Report.




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Additional Findings

The application of the Alberta Electricity Grid Displacement Factor and the Grid Consumption Factor was closely reviewed through the course of the verification. The Responsible Party applied the factors published in the current version of the Alberta Environment Emission Factors Handbook for the West Cadotte sub-project, which began operations after publication of the handbook. The factors were not updated for the existing Cadotte sub-project, based on guidance received by the Responsible Party from AEP. The difference in the total asserted GHG emission reduction between using these two emission factors is approximately 4.6%.

The immaterial qualitative issues identified by the previous verifier, which are listed in the Verification Plan appended to this report, persist in the project. All of these issues are minor irregularities in the Offset Project Plan and have no consequence on the reported GHG Assertion.

Confirmations Section 5.4 of the Alberta Environment and Parks Verification Technical Guidance document lists six activities that are beyond the scope of a typical greenhouse gas verification, but are required by Alberta Environment and Parks.

The “confirmations” refer to information contained in the Specified Gas Compliance Report (Excel spreadsheet) submitted by the Responsible Party.

Table 5: Confirmation Findings

Confirmation Confirmation Findings

Consistency of offset project information across offset project documentation

Offset project information in the Offset Project Plan is consistent with the information in the Offset Project Report. Any changes to the project since the Offset Project Report date have been described in the Offset Project Report. The information in the Offset Project Report is consistent with the requirements described in the relevant criteria.

Offset project location and any applicable approvals information

The offset projects and associated emission reductions occur in Alberta, as confirmed through observations made during the site visit and a review of project documentation.

Methodology documents or procedures manual exist

The Responsible Party has documented all relevant methodologies, procedures and controls in the Offset Project Plan.



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Appendices The following documents are appended to this report, as follows:

Peer Review Report

Statement of Qualifications

Conflict of Interest Statement

Final Verification Plan

Offset project contact, report dates, emission reduction numbers, etc. (part of one above)

All values and information in the Offset Project Report was reviewed and found to accurately represent the project, the Responsible Party and the Authorized Project Contact.

Completeness and accuracy of process and data flow diagrams

The Responsible Party’s data flow chart, which is included in the Offset Project Plan, accurately describes the data flows within the project.

Peer Review Report

Verification Activities Reviewed

Verification Process Comments

Verification Risk Assessment

The verification risk assessment identified all relevant emission sources described in the Offset Project Documentation and site visit notes.

Verification activities were designed to mitigate the inherent and control risks defined during the risk assessment.

Data Sampling No data sampling was performed for this verification.

Verification Activities Working notes provide sufficient detail to demonstrate that all verification activities were completed through the course of the verification.

Issues raised during the verification

All questions and issues raised during the verification were sufficiently addressed by the Responsible Party.

Conflict of Interest An assessment for threats to independence was conducted before the verification began and after the verification was completed. No real or perceived conflicts of interest were identified.

Verification Conclusion

Verification Evidence Comments

Eligibility Evaluation Sufficient evidence supporting the eligibility of the project was provided by the Responsible Party.

Sufficient and Appropriate Evidence

The evidence collected through the verification activities reduces the overall verification risk and supports the verification conclusion.

Discrepancy Analysis The discrepancy descriptions accurately represent the underlying issues. Quantitative discrepancies are calculated accurately.

Verification Report All documentation required in the Verification Report is included and complete.

Based on the documentation reviewed during the peer review process, I believe the verification of the 2017 (February 1st to March 31st) Offset Project Report for the abovementioned Project was completed in accordance with the ISO 14064-3 standard and the criteria established in the Alberta Environment and Parks document, ”Technical Guidance for Greenhouse Gas Verification at Reasonable Level of Assurance, Version 1.0 January 2013.” Sincerely, Nathan Muegge, P.Eng. (p)

Responsible Party: Genalta Power Inc. and Repsol Oil & Gas Canada Inc.

Facility: Aggregate Waste Heat Recovery Project (multiple facilities)

Date Peer Review Completed: May 18, 2017

647.280.0410

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Statement of Qualifications Lead Verifier Details

Lead Verifier Name: Aaron Schroeder Professional Designation: Professional Engineer Email: [email protected] Phone Number: +1 (604) 353-0264 Verifying Company Name: Brightspot Climate Inc.

Lead Verifier Training

• GHG Verification - ISO 14064-3, Canadian Standards Association, 2012 • CCP 403 - GHG Validation and Verification, University of Toronto, 2016 (Instructor)

Verification Team Biographies

Lead Verifier: Aaron Schroeder, P.Eng. has eleven years of professional experience analyzing, quantifying and auditing greenhouse gas emissions in North America. Aaron’s hands on experience conducting over 150 greenhouse gas verifications includes numerous engagements for industrial facilities in power generation, oil and gas production and processing, natural gas pipelines and a wide range of emission reduction projects in beef and dairy management, conservation cropping (zero-tillage) and nitrogen fertilizer management in addition to renewable energy and waste management. Mr. Schroeder is a sessional instructor at the University of Toronto’s School of Environment for professional development. He instructs the school’s greenhouse gas quantification and verification courses.

Associate Verifier: Will Grundling is a communications professional who turned his attention to the climate industry in early 2016. His excellent writing, critical and analytical abilities have made him an asset within GHG verification teams during his employment at Brightspot Climate. Will’s work is grounded in analytical support, internal communications, and data management. Beyond the environmental industry, Will has varied experience in marketing and communications.

Peer Reviewer: Nathan Muegge, P.Eng. has a broad background in the application and evaluation of conventional and emerging energy technologies with over a decade of experience in the fields of energy & environment. He has completed over 30 greenhouse gas verifications of annual SGER compliance reports as Lead Verifier or Technical Expert, including reports for several natural gas processing and power generation facilities. Nathan completed verification through the Canadian Standards Association in 2009 – Verification of Greenhouse Gas Reports using ISO 14064 as well as additional training through the Jacques Whitford Training Institute in 2008 – Environmental Auditing, Legislation, Regulations and other Canadian Requirements.

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Statement

I, Aaron Schroeder, meet or exceed the qualifications of third party auditors described in Section 18 of the Specified Gas Emitters Regulation.

Signed: Date:

Aaron Schroeder, P.Eng. Brightspot Climate Inc. Vancouver, British Columbia

May 19, 2017

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Conflict of Interest Brightspot Climate monitored threats to independence throughout the duration of the project. The following declaration affirms that:

1. The verifying organization or the verification team members do not financially benefit directly from the Project Developer or the Project Developer’s Project.

2. The verifying organization or verification team members are not in a position of assessing their own work.

3. The verifying organization, members of the verification team, or persons in the chain of command for the verification do not promote, nor can be perceived to promote, the Project Developer's position or opinion to the point that objectivity may, or may be perceived to be, compromised.

4. No member of the verification team is too sympathetic to the Project Developer's interests by virtue of a close relationship with the Project Developer, its directors, officer or employees.

5. No member of the verification team or 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.

Date: May 19, 2017

Location: Vancouver, BC

Signed:

Aaron Schroeder

Lead Verifier. Brightspot Climate


Genalta Power Inc. and Repsol Oil & Gas Canada Inc.

Aggregated Waste Heat Recovery Offset Project Verification Plan

May 5, 2017

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Terminology

ISO 14064-2 defines the following terms used in the context of a GHG verification:

GHG Assertion: a declaration or factual and objective statement made by the Responsible Party.

The Alberta Environment and Parks Technical Guidance Document1 extends this definition to include the document that identifies the greenhouse gas emission reduction and/or removals and offset credits being claimed by the offset project over a defined period of time.

Project: activity or activities that alter the conditions identified in the baseline scenario which cause greenhouse gas emission reductions or greenhouse gas removal enhancements.

The GHG Assertion subject of this verification is for the Aggregated Waste Heat Recovery Offset Project, which will be referred to throughout this document as “the Project”.

ISO 14064-2 defines the following parties associated with the verification:

Responsible Party: person or persons responsible for the provision of the greenhouse gas assertion and supporting GHG information.

The Responsible Parties for this verification are of Genalta Power Inc. (Genalta) and Repsol Oil & Gas Canada Inc. (Repsol).

Intended User: individual or organization identified by those reporting GHG-related information as being the one who relies on that information to make decisions.

The Intended User for this verification is Alberta Environment and Parks (AEP).

Verifier: competent and independent person, or persons, with the responsibility of performing and reporting on the verification process.

The Verifier for this verification is Brightspot Climate Inc. (Brightspot Climate). The members of the verification team are provided in section 3 of this document.




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Introduction This document serves to communicate information between the parties associated with the independent verification of the Offset Project Report for Genalta and Repsol’s Aggregated Waste Heat Recovery Project.

This document contains three sections:

1. The introduction, which defines the principles by which this verification will be conducted;

2. The GHG Assertion, which describes the subject matter of the verification; and

3. The Verification, which defines the verification parameters and the GHG inventory principles that will be tested by the verification. This third section also provides information regarding the verification team and any findings from previous verifications for this Project.

The verification procedures, including the sampling plan and the results of the verification risk assessment, will be appended to this verification plan in the final verification report.

The Responsible Party developed the Project in accordance with the requirements of the Quantification Protocol for Waste Heat Recovery Projects (Version 1.0, September 2007) (the Protocol) published by Alberta Environment and Parks.

Principles

ISO 14064-3 defines four fundamental principles to conducting a greenhouse gas verification, namely independence, ethical conduct, fair presentation and due professional care.

Brightspot Climate has implemented processes, including mandatory training for all verification team members, to ensure the application of these principles for this verification.

Regarding the principle of independence, Brightspot Climate conducted an assessment of threats to independence prior to initiating this verification. No real or perceived threats to independence were identified. Brightspot Climate will continue to monitor for threats to independence throughout the course of this verification. A final “Conflict of Interests Checklist” will be appended to the Verification Statement.



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GHG Assertion

Project Subject Matter

The Technical Guidance Document2 defines “subject matter” in Section 2.2.3.2 as follows:

“The subject matter for an offset project is the greenhouse gas emissions from the offset project and baseline, including the total greenhouse gas emission reduction and/or removals achieved by the offset project that can be appropriately evaluated against the program criteria.”

The subject matter for the Project is defined in the verification scope, which is described in Table 4.

GHG Assertion

The Responsible Party’s asserted emission reduction is provided in the following table:

Table 1: Baseline and Previous GHG Assertions

GHG Emission Reduction 13,334 tonnes CO2e Source: Aggregated Waste Heat Recovery Offset Project Report (May 3, 2017).

Changes to Operations and Boundaries

This is the first year that Brightspot Climate has provided verification services for the Project.

The following changes have been made to the Projects’ operations and boundaries since the original Offset Project Plan was developed (note that this reporting period does not include emission reductions from the Galloway or Judy Creek sub-projects and therefore, these sub-projects are outside the scope of this verification).

• The “non-conserving” status of the gas supplied to West Cadotte was confirmed through a letter from the Alberta Energy Regulator. The waste heat recovery associated with this gas is included in the West Cadotte sub-project.

• The “non-conserving” status of the gas supplied to Galloway and West Cadotte from Shell has not been confirmed and therefore, the waste heat recovery associated with this gas is not included in the aggregated project.

• Updated Electricity Grid Displacement Factors – through communication with AEP, the Responsible Party confirmed that the Grid Displacement Factor published in the Carbon Offset Emission Factor Handbook, Version 1.0, March 2015 should be applied to the West Cadotte sub-project since this sub-project was added to the aggregated project following the release of this handbook. The Grid Displacement Factor for the sub-projects that were originally in the aggregated project were not revised, based on guidance provided by AEP.




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Responsible Party’s Data Management Systems

Table 2, below, describes the data measurement, estimation and data storage locations for all GHG information used by the Responsible Party to produce the GHG inventory. The final column in this table describes the data storage location and the path (intermediate data transfer) prior to use in the GHG inventory.

Table 2: GHG Inventory Data Management

Activity Data Description Measurement Type Data Storage Location / Path


Extrapolated from reference values

Reference documents >> Emission Reduction Quantification


Continuous measurement; recorded hourly

Repsol DCS >> Data historian >> Emission Reduction Quantification

Electricity production Continuous measurement; recorded hourly

ATCO meters >> Emission Reduction Quantification

Electricity consumption Continuous measurement; invoiced monthly

Utility invoices >> Emission Reduction Quantification


Reference values Emission Factors Handbook >> Emission Reduction Quantification



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Responsible Party’s Control Environment

The following table describes the Responsible Party’s quality assurance controls applied to the GHG information used to produce the GHG inventory. Note that the verification procedures may not rely upon these controls to establish sufficient and appropriate evidence to support the GHG Assertion.

Table 3: Responsible Party Data Controls

Activity Data Description Responsible Party Controls


Meters are calibrated on a regular preventative maintenance schedule.

Verification

Principles

ISO 14064-2 defines six principles that are fundamental to the fair accounting and reporting of GHG information. The verification procedures will test that these principles have been upheld through the Responsible Party’s inventory, accounting and reporting processes.

Section 3.2 – 3.6 of ISO 14064-1 defines these principles as follows:

Accuracy: reduce bias and uncertainty as far as practical

Completeness: include all relevant emission sources

Conservativeness: use conservative assumptions, values and procedures to ensure that GHG emission reductions or removal enhancements are not over-estimated

Consistency: enable meaningful comparisons of reported emissions (from year to year or between facilities or between companies)

Relevance: select GHG sources, sinks and reservoirs, data and quantification methodologies appropriate to the needs of the intended user

Transparency: disclose sufficient and appropriate GHG information to facilitate verification and to allow intended users to make decisions with relative confidence



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Verification Parameters

The verification will be conducted according to the parameters defined in the following table:

Table 4: Verification Parameters

Level of Assurance Reasonable assurance

Objectives

• issue a verification statement on whether the GHG assertion is without material discrepancy;


• complete the “confirmations” activities defined in the Alberta Environment and Parks Guidance Document3, Section 5.4, Table 26.

Criteria

• Climate Change and Emissions Management Act

• Specified Gas Emitters Regulation

• Technical Guidance for Offset Project Developers, Version 4.0, February 2013

• Technical Guidance for Greenhouse Gas Verification at Reasonable Level Assurance, Version 1.0, January 2013

• Quantification Protocol for Waste Heat Recovery Projects (Version 1.0, September 2007)




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Scope

Project Name: Aggregated Waste Heat Recovery Offset Project

Geographic Boundary: Cadotte, and West Cadotte: LSD: 10-28-84-18 W5M Latitude: 56.3137291 N Longitude: 116.7786604 W

Bigstone WHR: LSD: 14-28-59-22 W5M Latitude: 54.135833 N Longitude: 117.240833 W

Physical Operations: Production of electricity or thermal heat utilizing waste heat from gas turbines, sales compressors or waste gas that otherwise would have been flared.

Emission Sources: Fuel extraction and processing Generation of heat and power Electricity generation (Alberta Grid) Unit operation

IPCC GHGs Emitted: CO2, CH4 and N2O

Reporting Period: February 1, 2017 to March 31, 2017

Materiality Quantitative materiality threshold is 5% of asserted greenhouse gas emission reduction.

Tolerable Error Thresholds

An unqualified verification conclusion may be issued despite immaterial quantitative discrepancies that do not exceed the materiality threshold in aggregate (calculated as both net and gross overall discrepancy).

The tolerable error threshold per issue in either the baseline or project condition will be graduated as follows for emission sources:

• 2% for emission sources greater than 50% of total baseline or project emissions;

• 5% for emission sources between 20% and 50% of total baseline or project emissions; and

• 10% for emission source less than 20% of total baseline or project emissions.

All discrepancies will be described in the Verification Report.



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Preliminary Verification Schedule

Verification Kickoff Meeting April 26, 2017

Draft Verification Plan May 4 – 5, 2017

Site Visit May 12, 2017

Draft Verification Report May 18, 2017

Final Verification Report May 19, 2017

Findings from Previous Verifications

The previous verification report was issued by Stantec Consulting Ltd. on March 16, 2017. The verification report lists the following immaterial misstatements:

• Several project details described in the Offset Project Plan do not accurately represent the project, including

o Listing supplemental fuel consumption for the Bigstone subproject; o Incorrect date reference to the quantification protocol; o Description or a single flare on the project site when there are, in-fact, two flares on the

project site; and o Missing diesel power skid-steer equipment on the project site.

Verification Team

Aaron Schroeder, P.Eng., will be the Lead Verifier and Designated Signing Authority for this verification. His extensive experience quantifying and verifying greenhouse gas emissions satisfies all sixteen subject matter areas defined in the ISO 14064-3.

Will Grundling, MSc. will provide analytical support to the verification team through the completion of the verification procedures and the development of the Verification Report. His verification experience includes event inventories, Alberta’s SGER compliances, Ontario GHG Reporting Regulation verifications, and Fed Cattle Aggregation and Vent Gas and Instrument Air offset projects.

Nathan Muegge, P.Eng., will conduct an independent peer review of the verification. Nathan has completed over 30 greenhouse gas verifications of annual SGER compliance reports as Lead Verifier or Technical Expert, including reports for several natural gas processing facilities.

Additional information regarding the qualifications of the verification team will be provided in a Statement of Qualifications, which will be appended to the Statement of Verification.

Site Safety Requirements

Personnel conducting site visits are required to wear personal protective equipment including steel-toed boots, Nomex coveralls, hard hat, safety glasses with side shields and gloves.

A site orientation must be completed before entering the site.



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Verification Risk Assessment and Verification Procedures

The Verification Risk Assessment was completed prior to issuing the draft version of this document. Verification procedures were developed to reduce the overall verification risk to facilitate the objectives of the verification. Each inherent and control risk is provided with the risk evaluation (high/medium/low). The risk evaluation considers both the magnitude of the activity data or inventory component on the overall GHG assertion as well as the probability that the risk will result in a discrepancy, as assessed by the verifier.

In instances where a substantive approach is applied in the verification procedure (i.e. the procedure tests the data, rather than the Responsible Party’s controls), the Responsible Party’s control is not listed, but is denoted “N/A”; however, this does not imply that the Responsible Party does not have a control in place.

Verification risk is defined as the risk of an incorrect verification conclusion. It can be calculated as the product of the Project’s inherent risks, the Responsible Party’s control risks and the Verifier’s detection risks. The verifier cannot affect the inherent risk or the control risk. Therefore, in order to reduce the overall verification risk and reach the agreed level of assurance (defined in the verification scope), the verifier must design verification procedures that reduce the detection risk.



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Table 5: Verification Risk Assessment Summary

Activity Data / Inventory Component

Inherent Risk Control Risk Detection Risk Design

Description of Verification Procedure

PROTOCOL APPLICABILITY REQUIREMENTS

1. Heat was not being used in the baseline condition in either a passive or active manner

Relevance (low):

The heat recovered in the project may have been used for a useful purpose.

N/A – controls are not being considered for this verification procedure.

Low Substantive test: Confirm that the most likely outcome for the waste gas would be flaring in the absence of the waste heat recovery project.

2. The quantification of the emission reduction is based on actual measurements.

Accuracy (low):

The quantification of the emission reduction may rely on estimated data with high levels of uncertainty.

N/A – controls are not being considered for this verification procedure.

Low Substantive test: Confirm that all quantification data is metered data.

3. The project must meet the eligibility criteria stated in section 7 of the Specified Gas Emitters Regulation (these are the requirements of the Alberta Offset System)

Relevance (high)

Responsible Party may not be able to demonstrate that the offset projects meets the requirements of the Alberta Offset System.

N/A (controls not considered for verification)

Low Substantive test: Review the evidence provided by the Responsible Party related to the requirements of the Alberta Offset System.

PROTOCOL FLEXIBILITY




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2. Waste heat recovery projects may occur within a single site or across multiple sites.

Completeness (low)

GHG information required to quantify and report the emission reduction may be incomplete due to aggregation of multiple sub-project sites.


Low Substantive test: Conduct a review of eligibility and data requirements for each sub-project. Additionally, conduct an independent recalculation of the emission reduction for each sub-project.

3. Site specific emission factors may be substituted for generic emission factors.

Relevance (medium) Accuracy (medium)

Site specific emission factors and energy ratios may not accurately or appropriately represent operations at the Project facilities.


Low Substantive test: Evaluate the appropriateness and accuracy of the site specific emission factors and energy ratios through review of the Offset Project Plan and Offset Project report, through recalculation of the emission reduction and through observations and interviews during the site visit.


QUANTIFICATION DATA


Relevance (low) Accuracy (low)

The referenced heater efficiencies may not be applicable to the Project.


Low Substantive test: Review the efficiency factors to confirm that they are applicable to the project and have been transcribed correctly.



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Accuracy (medium) Completeness (low)

Metered flow rates and temperatures may not be accurate or values may be missing.

Meters are calibrated on a regular preventative maintenance schedule.

Control risk: meter calibration may not have been completed or documentation may be missing (low risk).

Low Control test: Confirm that meter calibration has been completed and documentation is on file.

Electricity production Accuracy (medium)

Quantity of electricity produced may be inaccurately recorded.


Low Substantive test: Compare total electricity produced to quantity stated on Alberta Electricity System Operator website.

Electricity consumption Accuracy (low) Completeness (low)

Total electricity consumption may be inaccurately recorded.


Low Substantive test: Compare total electricity consumed to invoices from electric utility.


Accuracy (medium) Emission factors may be transcribed incorrectly from reference documents.


Low Substantive test: Confirm that emission factors have been accurately transcribed from reference documents to the quantification spreadsheet.



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EMISSION REDUCTION QUANTIFICATION AND REPORT

Application of the approved quantification protocol

Accuracy (high)

The project developer may not have implemented approved quantification methodologies or applied additional methodologies.

Responsible Party has developed an Offset Project Plan that is intended to conform to the requirements of the approved quantification protocol.

The protocol requirements may not have been implemented correctly (medium)

Low Substantive test: compare the methodologies described in the Responsible Party’s Offset Project Plan to the methodologies described in the approved quantification protocol.


Quantification of emission reduction

Accuracy (high)

Emission reduction calculation may contain arithmetic errors.


Low Substantive test: Recalculate the emission reduction using original metered data.



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Transcription of final emission reduction into Offset Project Report

Accuracy (high)

Final emission reduction may not have been transcribed accurately from calculation spreadsheets into the Offset Project Report.


Low Substantive test: compare the final emission reduction quantity reported by the Responsible Party to the quantity reported in the Offset Project Report. Also, compare these quantities to the recalculated quantity in previous verification procedures.

Sampling Plan

The verification procedures that could apply sampling of the project data are listed in the following table.

The sampling size, the sampling methodology and their respective justifications are also described in the following table.

Table 6: Sampling Plan


Detection Risk Design


Sampling Methodology and Justification

Sample Size

Sampling was not used for any of the verification procedures in this verification.