Directive 065 - Energy Resources Conservation Board

Requirements Comments
b) a statement of the proposed delivery
point, together with a discussion of the
reasons why you propose the location,
c) analyses of the economics of the
proposed delivery point and alternate
delivery points, and
d) a discussion of the development and
probable future development in the area.
13) If you are requesting, pursuant to Section
51(4)(b) of the OGCA, that the ERCB, to
give effect to the common purchaser
declaration, direct the proportion of the
common purchaser’s acquisitions of gas from
the pool that it shall purchase from each
producer or owner offering gas for sale,
a) a discussion and documentation
indicating what negotiations were carried
out in regard to distributing production
among wells in the pool and where the
impasse lies, and
b) a discussion of your proposal as to how
the ERCB should distribute production
from the pool, including a tabulation of
the percentage of total production that
each well or group of wells should be
allowed to produce, together with details
of how the proposed scheme was
obtained.
For each case, the economic analysis should
include a detailed itemization of all costs
(excluding sunk costs), forecasts of production
and revenue streams, and tabulations of
before-tax rate of return, payback, and present
value analyses.
The ERCB’s usual practice is to allocate
production among wells in a pool on a
percentage basis, rather than setting any
specific rate or volume. The proportion of
production allocated to each well is commonly
based on the following formula:
Percentage of pool production for specific well
= 100 x (wellbore net pay x porosity x gas
saturation x area of spacing unit or validated
area for specific well)/(sum of wellbore net pay
x porosity x gas saturation x area of spacing
units or validated areas for all wells).
Directive 032 and Decision 91-8 offer
discussions of the ERCB’s commonly used
allocation formula and the validated area
concept. The ERCB has not commonly used
mapping as a means to determine hydrocarbon
pore volume in a spacing unit because in many
cases such mapping is interpretive. The ERCB
has not normally factored the deliverability of
a well into an allocation formula to avoid
disputes on what constitutes appropriate testing
of wells. You may propose an allocation
formula other than the commonly used one;
however, you should include detailed
justification as to why the ERCB should
deviate from its usual practice in determining
an allocation formula.
In some cases it may be useful to set minimum
rates, with a percentage allocation above the
minimum rate. If a well falls below the
minimum rate, other wells are restricted only
to their minimum rates and not below.
ERCB Directive 065: Resources Applications / Common Purchaser (March 2012) • 1-11