The Markham Field, A Trans-Median Development

SPE Economics &Amp; Management

2011

Summary The unitization of oil and gas fields that straddle license or international boundaries traditionally has been effected with the aim of maximizing return on investment for all unit owners. The rationale is that the costs of unitization and any subsequent redeterminations of equity will be subordinate to the enhanced production and thence revenue that unitization might bring compared to a partitioned development. This outcome is more likely to be achieved in the traditional case of a sizable field with laterally consistent, discernible reservoir properties and fairly uniform hydrocarbon that is unitized before production startup with a perception of predictable commodity prices. This rationale is impacted by departures from the classical situation. These departures include field marginality, market volatility, reservoir complexity, hidden pay, the presence of multiphase hydrocarbons, cross-license trends in reservoir-rock or substance properties, and post-production unitization. Each of the major departures is analyzed from the standpoint of the challenges it presents to a value-adding unitization exercise. Part of this analysis calls for a consideration of alternatives to unitization where another avenue might prove more beneficial to the owners of straddled licenses. This evaluation is undertaken by reference to case histories, through which procedural recommendations are formulated for future guidance. Notwithstanding this collation of options, it is of paramount importance that each case be examined thoroughly so that the optimum development strategy can be identified for any straddling petroleum accumulation.

Contemporary Challenges in Unitization and Equity Redetermination of Petroleum Accumulations

SPE Economics &Amp; Management

2011

Optimization of Equity Redeterminations through Fit-for-Purpose Evaluation Procedures

SPE Asia Pacific Oil and Gas Conference and Exhibition

2011

Equity redetermination is most commonly encountered where a straddling field is developed as a discrete entity through a process of unitization. It is enacted through evaluation procedures that prescribe the technical methodology for requantifying different license shares, or tract participations, in a field unit as more data become available. The formulation of these procedures usually takes place at unitization, it is based on appraisal data, and therefore it is guided by simplified perceptions of reservoir character. For this reason, many such technical procedures have been found to be lacking when they are applied later at the equity redetermination stage. These shortcomings can take the form of ambiguous wording, misleading definitions, technically-inappropriate specifications, contradictory prescription, or simply a lack of sufficient detail to render the intended process meaningful. They have impeded the determination of revised tract participations by triggering inter-license disagreements that might otherwise have been avoided. With the objective of reducing this unhelpful impact, experience of redetermination situations is used to illustrate the nature and consequences of poorly constructed procedures for the recomputation of tract participations. The analysis is then flipped to generate a framework of key elements of technical procedures together with indications of how they are best implemented. These matters form the basis for a high-level set of protocols for a more efficient and effective redetermination of equity that would avoid the previously encountered shortcomings. The protocols encompass the proper incorporation of data character, a sound technical basis for redetermination, a balance between under- and over-prescription, an auditable deterministic ethos, and adherence to good international petroleum practice. They constitute recommendations for a better approach to the compilation of fit-for-purpose evaluation procedures within those unitization agreements that make provision for a future redetermination of equity. The recommendations are equally applicable to domestic and international unitizations. The principal benefit lies in an enhanced efficiency of the equity-redetermination process, which feeds through to a greater collective asset value.

Optimization of Equity Redeterminations Through Fit-for-Purpose Evaluation Procedures

SPE Economics &Amp; Management

2011

Equity redetermination is most commonly encountered where a straddling field is developed as a discrete entity through a process of unitization. It is enacted through evaluation procedures that prescribe the technical methodology for requantifying different license shares, or tract participations, in a field unit as more data become available. The formulation of these procedures usually takes place at unitization, it is based on appraisal data, and, therefore, it is guided by simplified perceptions of reservoir character. For this reason, many such technical procedures have been found to be lacking when they are applied later at the equity redetermination stage. These shortcomings can take the form of ambiguous wording, misleading definitions, technically inappropriate specifications, contradictory prescription, or simply a lack of sufficient detail to render the intended process meaningful. They have impeded the determination of revised tract participations by triggering interlicense disagreements that might otherwise have been avoided.With the objective of reducing this unhelpful impact, experience of redetermination situations is used to illustrate the nature and consequences of poorly constructed procedures for the recomputation of tract participations. The analysis is then flipped to generate a framework of key elements of technical procedures together with indications of how they are best implemented. These matters form the basis for a high-level set of protocols for a more efficient and effective redetermination of equity that would avoid the previously encountered shortcomings. The protocols encompass the proper incorporation of data character, a sound technical basis for redetermination, a balance between under-and over-prescription, an auditable deterministic ethos, and adherence to good international petroleum practice. They constitute recommendations for a better approach to the compilation of fit-for-purpose evaluation procedures within those unitization agreements that make provision for a future redetermination of equity. The recommendations are equally applicable to domestic and international unitizations. The principal benefit lies in an enhanced efficiency of the equityredetermination process, which feeds through to a greater collective asset value.