6Phase points of integrated operation

## 6 Phase points of integrated operation > Note: This regulation divides the integrated operation into phases in such a way that petroleum product is not brought into or taken out of the operation except at the beginning or end of a phase. In obtaining the cost‑plus and netback prices: the costs for the assessment year are apportioned between the project product and other product, using an energy coefficient appropriate for the phase (regulation 37). > Note: This procedure assumes that the same phase points apply over the life of the project. If a new phase point emerges that was not identified before the production year, there may need to be a recalculation of the annualised capital costs. (b) any point in the flow of project product through the operation at which there is expected to be a difference in the ratio of project product to total product flowing through the operation before and after the point. > Note: Example 1: An integrated GTL operation begins with the recovery of natural gas and liquid petroleum, using the same extraction facilities. Separate pipelines are used to carry off the natural gas and the liquid petroleum, so that only the gas pipeline is part of the operation. The total product flowing through the operation is reduced, as the liquid petroleum is removed. The ratio of project product in relation to total product therefore changes at the beginning of the gas pipeline, and the beginning of the pipeline is therefore a phase point. > Note: Example 2: At the sales gas production facility of an integrated GTL operation, natural gas from another source is added to the project natural gas. The point at which the natural gas is added is a phase point. > Note: Example 3: Some of the sales gas produced in an integrated GTL operation is transported in a pipeline that is part of the operation, and therefore enters the down stream phase; it is then sold before liquefaction. The ratio of project product to total product changes when the sales gas is sold before liquefaction, as the total product in the operation is reduced. The point of sale is therefore a phase point. (1A) However, paragraph (1)(b) does not apply to an integrated GTL operation for which an election has been made under regulation 43. > Note: In general terms, a phase is a stage of an operation during which the ratio of project product to total product flowing through the operation remains the same (and is expected to remain the same). (a) in the financial year before the production year, notify the Commissioner of any phase points of the operation that are apparent to any of them at that time; and (3A) However, subregulation (3) does not apply if an election has been made in relation to the integrated operation under regulation 43. (4) The participants in the integrated operation must satisfy the Commissioner that they can provide accurate records of the quantities of petroleum product before and after each phase point (for example, by including metering facilities at the phase point or using other reliable estimation techniques).