Directive 065: Resources Applications for Oil and Gas Reservoirs ...

3.4 Application for Gas-Oil Ratio Penalty Relief
GOR penalties are applied to an oil well’s MRL when the producing GOR exceeds the base
GOR. The penalty factor is calculated by taking the ratio of the base GOR to the producing
GOR. The MRL is then multiplied by this penalty factor to determine the adjusted MRL (the
permitted production rate). GOR penalty relief is applied for under Section 10.060 of the Oil
and Gas Conservation Regulations.
GOR penalty relief applications face the same issues as GPP. For this reason, when
processing a GOR penalty relief application, the ERCB will often grant GPP, with full gas
conservation as a condition. GOR penalty relief is approved through the application of a net
GOR penalty factor, which reduces the GOR penalty by subtracting out any fuel gas or gas
delivered to an approved gas gathering system.
GOR penalty relief is not automatic when gas is conserved. When GORs rise significantly
above the solution GOR of the oil, this indicates that pressure depletion and/or gas cap coning
is occurring, neither of which is desirable for optimum oil recovery. These issues must be
addressed before an application can be approved, despite ongoing gas conservation.
3.4.1 Using the O-33 Form
To apply for GOR penalty relief, operators often use the O-33 form, which was introduced in
1989 as part of Informational Letter (IL) 89-14. The O-33 form is specifically targeted at
small (one or two wells), low-quality pools (rates below minimum allowable initial highwater
cuts). Directive 065 supersedes the requirements set out in IL 89-14, but the ERCB will
continue to accept the O-33 form for small, low-quality oil pools if the conservation and
equity issues are not complex. See Appendix C for a copy of the O-33 form.
3.4.2 Requirements for an Application for GOR Penalty Relief
For GOR penalty relief application requirements, please use the GPP application
requirements and comments (Section 3.3.1). Note that CCP must also be applied for (see
Section 2.4) if the high GORs are a result of production from a gas cap. You should also state
in your application why you are applying for GOR penalty relief rather than GPP.
3.5 Application for Special Maximum Rate Limitation (MRL)
A Special MRL is an MRL approved by the ERCB that is greater than the reserves-based
MRL. Special MRLs can be applied to entire pools or individual wells. Relatively few
Special MRL applications are received or approved each year because, like GOR penalty
relief, Special MRL applications have the same issues involved as GPP. For this reason, when
processing a Special MRL application, the ERCB will often grant GPP. A Special MRL is
applied for under Section 10.060 of the Oil and Gas Conservation Regulations.
3-36 • ERCB Directive 065: Resources Applications / GOR Penalty Relief (October 2011)