Directive 065: Resources Applications for Oil and Gas Reservoirs ...
Directive 065: Resources Applications for Oil and Gas Reservoirs ...
Directive 065: Resources Applications for Oil and Gas Reservoirs ...
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Requirements<br />
b) a statement of the proposed delivery<br />
point, together with a discussion of the<br />
reasons why you propose the location,<br />
c) analyses of the economics of the<br />
proposed delivery point <strong>and</strong> alternative<br />
delivery points, <strong>and</strong><br />
d) a discussion of the development <strong>and</strong><br />
probable future development in the area.<br />
Comments<br />
For each case, the economic analysis should<br />
include a detailed itemization of all costs<br />
(excluding sunk costs), <strong>for</strong>ecasts of<br />
production <strong>and</strong> revenue streams, <strong>and</strong><br />
tabulations of be<strong>for</strong>e-tax rate of return,<br />
payback, <strong>and</strong> present value analyses.<br />
14) If you are requesting, pursuant to Section<br />
48(4)(b) of the OGCA, that the ERCB, to<br />
give effect to the common carrier<br />
declaration, direct the proportion of<br />
production to be taken by the common<br />
carrier from each producer or owner offering<br />
production to be gathered, transported,<br />
h<strong>and</strong>led, or delivered by means of the<br />
subject pipeline,<br />
a) a discussion <strong>and</strong> documentation<br />
indicating what negotiations were<br />
carried out in regard to distributing<br />
production among wells in the pool <strong>and</strong><br />
where the impasse lies, <strong>and</strong><br />
b) a discussion of your proposal as to how<br />
the ERCB should distribute production<br />
from the pool that includes a tabulation<br />
of the proportion or percentage of total<br />
production that each well or group of<br />
wells should be allowed to produce,<br />
together with the details of how the<br />
proposed production scheme was<br />
obtained.<br />
The ERCB’s usual practice is to allocate<br />
production among wells in a pool on a<br />
percentage basis, rather than setting any<br />
specific rate or volume. The proportion of<br />
production allocated to each well is<br />
commonly based on the following <strong>for</strong>mula:<br />
Percentage of pool production <strong>for</strong> specific<br />
well = 100 x (wellbore net pay x porosity x<br />
gas saturation x area of spacing unit or<br />
validated area <strong>for</strong> specific well)/(sum of<br />
wellbore net pay x porosity x gas saturation<br />
x area of spacing units or validated areas <strong>for</strong><br />
all wells).<br />
<strong>Directive</strong> 032 <strong>and</strong> Decision 91-8 offer<br />
discussions on the ERCB’s commonly used<br />
allocation <strong>for</strong>mula <strong>and</strong> the validated area<br />
concept. The ERCB has not generally used<br />
mapping as a means to determine<br />
hydrocarbon pore volume in a spacing unit<br />
because in many cases such mapping is<br />
highly interpretive. The ERCB has not<br />
normally factored the deliverability of a well<br />
into an allocation <strong>for</strong>mula to avoid disputes<br />
on what constitutes appropriate testing of<br />
wells. You may propose an allocation<br />
<strong>for</strong>mula other than the commonly used one;<br />
however, you should offer detailed<br />
justification as to why the ERCB should<br />
deviate from its consistent practice in<br />
determining an allocation <strong>for</strong>mula.<br />
In some cases it may be useful to set<br />
minimum rates, with a percentage allocation<br />
above the minimum rate. If a well falls below<br />
the minimum rate, other wells are restricted<br />
only to their minimum rates <strong>and</strong> not below.<br />
ERCB <strong>Directive</strong> <strong>065</strong>: <strong>Resources</strong> <strong>Applications</strong> / Common Carrier (October 2011) • 1-19