Simplify hydrocarbon allocation and production reporting . You can achieve great success for your company with the right practices, tools, and partner — including a trusted partner like Value Global. 4 Best Practices for Oil Production Allocation, 3 Software Tools for a Remote First Working Culture, 10 Ways an MSP Can Help Manage Your Cloud Apps, How AI Is Transforming the Oil & Gas Industry, Managed Services Providers: Partners, Not Replacements. Copyright 2020, Value Global LLC. While an oil and gas allocation can range from simple to complex, I have put together some fundamental principles that deliver consistently correct results in allocations and their auditability. Requirements for the measurement processes and the associated allocation process are set by legislation and the relevant government authority, contract documents governing the relationship between the operator, partners, licensor, and government may also provide guidelines for allocation. With new production measurement techniques, electronic and automated measurements are more achievable than ever before. Business leaders have a lot to consider when it comes to production allocation. Details of design configuration and setup can be read out of available piping and instrumentation diagrams, process flow diagrams and other documentation showing flow measurement and connections between measuring points via flow from wells to sale points. Changes that occur mid-month in a delivery system must maintain accurate daily tracking that will lead to proper monthly allocations of sales. For an upstream oil and gas operator, Production Allocation is an ongoing accounting process that is a subset of hydrocarbon accounting. These principals will also facilitate improved management for the variety of events that occur in daily oil and gas production… Our mission is to provide agile, scalable, and cost-effective information technology solutions that drive your business forward. The various allocation methods which are currently available to the industry are comprehensively reviewed, and worked examples are provided to illustrate how these operate in practice. , All Rights Reserved. This new method has allowed allocation of commingled production from wells at less than 2-5% of the cost of production logging. I have seen cases where a well test from 3 years back was being used as the basis for allocation. An Allocation Well is a Texas Railroad Commission designation for a proposed horizontal well for which the operator does not have a Production Sharing Agreement or at least sixty-five percent (65%) of the working interest owners and royalty interest owners signed up for each included oil and gas lease and unit. By tracking and rolling up accurate field tickets as they occur in oil sales and liquids sales, you will have the base of information that can reconcile differences and then allocate reconciled monthly volumes against the summation of solid daily estimates and measurements. How is oil and gas allocation handled in your fields? For example, though meters for collecting, analyzing, and reporting on oil data exist, many are too expensive to install or maintain. This document can be applied to any oil and gas production network and it is an essential piece of guidance for anyone engaged with allocation operations. Creating color cuts on tanks to measure water is more meaningful than many companies realize. You can selectively provide your consent below to allow such third party embeds. This new method has allowed allocation of commingled production from wells at less than 2-5% of the cost of production logging. Daily values should be kept on each producing point, so that downtime is adequately accounted for as well. Moreover, it will leave the company at risk of an audit that would reveal lack of integrity between true field performances. Three main types of oil and gas exploration methods 1. This process will lead to both auditable values that can be traced back to source measurements and standards in your field, and greater insights to the profitability of each contributing point of production in the field. As valuable team members, production accountants handle vast amounts of data derived from oil wells and gas lines. Unless industry insiders design their production allocation processes with adaptability in mind, these calculations will inevitably be less than practical. Furthermore, the implemented processes should be cost efficient as well as practical to operate. Beyond that, knowing the efficiency and accuracy with which fuel is being used is very helpful in optimizing production and preventing equipment and fuel loss. We get asked all the time about the method we use to allocate Texas production data. In practice, it is unlikely to find a situation where the commingled streams have equal measurement uncertainty. The Importance of Production Allocation in Oil & Gas by Joseph McMullen, Director, SimSci Marketing Executive summary Production Allocation allows the allocation of production to each well which is crucial for financial and technical reasons. However, a few prohibitive factors make the calculation more complex in execution. Electronic measurements at the wellhead are more accurate, and desirable wherever possible. We are always on the lookout for talented people. Especially in fields where gas can be sold, or re-utilized in various gas lift methods for optimization. On the surface, calculating oil allocation is a simple equation: Beginning Inventory (BI) + Production – Sales = Ending Inventory. And, to properly interpret those numbers, you’ll need to place the production in the context of the well and method of production. This means we have to take a stab at dividing the production up between all wells included in the lease. If you continue to use this site we will assume that you are happy with it. Here are four best practices to help manage operations productively and gain a competitive advantage: Production accountants and company leaders alike can greatly benefit by working with a partner who understands how to properly allocate oil production. Accounting for oil production. Transparency, fairness and compliance with audit requirements are fundamental criteria for the design of allocation practices and methods. When working with companies to get accurate oil and gas allocations, a common problem that is often encountered is lack of adequate data from the field. Four case studies are shown here. Simple measurements and accounting for fuel can lead to better insights for a field when evaluating the true cost of production. Visit. We have made substantial improvements to the previously published methods for geochemical allocation of commingled oil production and/or commingled gas production. P&ID showing downhole sensors may also contribute to the design of an allocation process. The simple things in measurements, such as color cutting a tank when measuring, can give good insights into actual production and cause the month-end process to be much more accurate. While an oil and gas allocation can range from simple to complex, I have put together some fundamental principles that deliver consistently correct results in allocations and their auditability. As a result, operators often rely on manual mathematical models to calculate production from each well or line.

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