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 alternative
delivery points, and
d) a discussion of the development and
probable future development in the area.
14) If you are requesting, pursuant to Section
48(4)(b) of the OGCA, that the ERCB, to
give effect to the common carrier
declaration, direct the proportion of
production to be taken by the common
carrier from each producer or owner offering
production to be gathered, transported,
handled, or delivered by means of the
subject pipeline,
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 that includes a tabulation
of the proportion or percentage of total
production that each well or group of
wells should be allowed to produce,
together with the details of how the
proposed production 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 on the ERCB’s commonly used
allocation formula and the validated area
concept. The ERCB has not generally used
mapping as a means to determine
hydrocarbon pore volume in a spacing unit
because in many cases such mapping is
highly 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 offer detailed
justification as to why the ERCB should
deviate from its consistent 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 Carrier (March 2012) • 1-19