Production Allocation Factors

Production allocation factors are the factors that are used in calculations to allocate production volumes from one production entity to another.

These classes are used to allocate sales and distributions to determine well production, inventory, and sales ownership for accounting and reporting purposes. The allocation factors can be used to estimate actual production volumes for well and/or completions, based on infrequent well test data or theoretical calculations using well and reservoir characteristics. These allocations are typically performed monthly or daily.

Allocations can be based on well tests and events or can utilize complex flow equations and fluid phase compositions. Production volumes can be allocated at every point in a production network.

Back allocations are performed because of the following:

�      Regulatory mandates

�      Contractual obligation

�      Operational needs

�      Economic evaluation

There are two main types of production allocations:

�      Fiscal Allocation - originates from point of sale. It only takes into account products sold.

�      Production Allocation - originates from the first point of measurement. It takes into account all fluid produced, injected, flared, vented, fueled, and so forth.

Several methods are used to estimate production volumes:

�      Polynomial equations (rate-choke relation (oil wells), rate-tubing head pressure relation (gas wells)

�      Polynomial special (polynomial equation + linear interpolation choke equation)

�      Decline analysis models (exponential, hyperbolic, harmonic)

�      Well characteristic equation

�      Modified absolute open flow equation

�      Interpolation linear (La Grange)

Basic Methodology of allocation production volumes is as follows:

�      Determine production - sales plus other dispositions minus injection equals production

�      Determine relative production - based on theoretical numbers, determine well contribution factors (individual well theoretical production/total well theoretical production)

�      Spread actual sales and production according to allocation factors (relative contribution)

Inventory balance exceptions:

�      Sales plus ending balance plus other dispositions minus beginning balance minus injection equals production

�      FIFO layers - allocate beginning balance first by proportion to the balance on hand, then remainder if any according to production

�      Line pack, quality differences (Btu, mass balance)

Allocation Issues/Challenges:

�      Networks can change on a daily basis.

�      Fluid composition can change on a daily basis.

�      Wells can be off production for hours or days (sometimes on and off several times a day).

�      Downhole commingling cannot be measured, but still needs to be allocated.