introduction to hca awareness v7

8/6/2019 Introduction to Hca Awareness v7

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Hydrocarbon Allocation

Awareness Training

Introduction toHCA

Welcome to the first of the Hydrocarbon Allocation Awareness training modules.


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Slide no 2

Introduction to HCA

EP Learning and Leadership Development

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Slide no 3

Introduction to HCA


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Module Aims

1. To explain what allocation is

2. To explain what Hydrocarbon Allocation means

3. To explain why we have to allocate

When you have completed this module, you should be able to do thefollowing:

Explain what allocation is,

Explain what Hydrocarbon Allocation means,

Explain why we have to allocate.

The second module in this awareness training covers basic terminology

should you be unfamiliar with any of the terms in this presentation.


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Slide no 4

Introduction to HCA


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Agenda

What is Allocation?

What is Hydrocarbon Allocation?

Why do we need to Allocate?

Why is it important?

Let us first look at what allocation is


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Slide no 5

Introduction to HCA


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What is Allocation ?

B

Concession A

Concession B

A1

B1

A

Fiscal Production

Production Allocation is thesplitting of accurately measured

total production back to the

individual wells and reservoirsthat produced them.

Production Allocation is thesplitting of accurately measured

total production back to the

individual wells and reservoirsthat produced them.

Sales Allocation is the splittingof fiscal sales amounts back tothe individual companies that

produced them.

Sales Allocation is the splittingof fiscal sales amounts back tothe individual companies that

produced them.

Allocation is the process of allotting portions of an amount back to contributors of that

amount. It can be split into two types; production allocation and sales allocation.

Volumes are only measured accurately in the terminal or at the sales point. Production is

then calculated from these accurately measured volumes.

Production allocation is the allocation of production to fields, wells and reservoirs, and salesallocation is the allocation of sales volumes to companies.


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Slide no 6

Introduction to HCA


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What is Hydrocarbon Allocation?

Sales Production Waste Emissions Entitlements

HYDROCARBON ALLOCATION

M M

Hydrocarbon Allocation transforms data from the production process into information for different stakeholders, such asreservoir management, forecasting, partners, customers, and the government.

This includes using data from the reservoir, wells, stock tanks, and tankers or pipelines.It then processes this data to produce reports that contain sales, production, waste, emissions, and entitlements information.

This involves activities such as Allocation, Reconciliation and Balancing. These terms will be explained in the next module.It also involves ensuring rules and regulations laid down in sales contracts and concession agreements are adhered to.

Sales data includes information about how much production actually passes through the custody transfer point, and providesinformation to finance about how much to invoice the relevant buyer.

The MRPW is part of production allocation it stands for the monthly report of producing wells. Similar reports exist for

reservoirs and injection systems. Allocated volumes per well and reservoir are used by reservoir management, as will behighlighted on on the next slide.

Waste and emissions reporting provides information about the efficiency of production process and fulfils any governmental

requirements.

Companies are entitled to lift production from terminals based on:their share of the production,their entitlement carried over from previous months,

and contractual rules, such as those specified in production sharing agreements.

Hydrocarbon Allocation includes calculation of the entitlements, as indicated by the pie chart on the stock tank. However,sometimes the contractual rules are very complicated. For example, in Production Sharing Contracts the entitlement takesinto account recovery of capex, opex, and the price of crude or gas. In these cases, Hydrocarbon Accountants within Finance

will calculate the entitlements.


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Slide no 7

Introduction to HCA


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Rsi

Oil rateProduced GOR

Reservoirpressure

Water cut

P i

First oil Time (years)

PlateauBuildup Decline

Oil rateProducedGO R

ReservoirpressureWater cut

Rsi

P i

First oil Time (years)

Reservoir Management

Reservoir Engineers have different models for different drive mechanisms. In order tocalibrate the models and identify which model is valid, production data is required. This

includes the total volumes produced from and re-injected into reservoirs. It also helps tomonitor for changes in reservoir characteristics, and to check that production policies are

being adhered to.

This diagram shows how historical oil rate, watercut, GOR, and reservoir pressure, could beused to confirm or reject possible scenarios for reservoir drive mechanisms.


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Slide no 8

Introduction to HCA


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Production Allocation (to Wells & Reservoirs)

M

1. Well ProductionVolumes

4. AllocatedVolumes / Well

SplitFactors

5. AllocatedVolumes / Reservoir

PRODUCT

DATA

Non-Fiscal Metering

M Fiscal MeteringData Flow Path

Hydrocarbons Flow Path

Reservoir Wells Stock Tanks

MM

Export

2. Fiscal ProductionVolumes

3. AllocationMethod

Lets look at how production should be allocated back to wells and reservoirs.

In an oil system, hydrocarbons flow from the reservoir to the wells, on to the stock tanks, and then areexported. Volumes are measured, or calculated, at various points in the process. Sales are measuredby meters referred to as fiscal meters, which are considered accurate.

To allocate oil production from the stock tanks back to the wells and reservoir, we follow a 5 stepprocess. The data flow path is indicated with red arrows:

1 Determine the well production volumes - if wellhead meters aren't in place, these volumes must be

estimated, either by testing the wells at regular intervals or using a data driven model like Production Universe.

2 Determine the fiscal production volumes, from sales, changes in stock etc.

3 Choose an allocation method to allocate the fiscal production back to the wells, via any intermediate datapoints. The most common allocation methods use a mathematical process called reconciliation to do this .

4 Determine these allocated well volumes. If reconciliation has been performed, this is done by multiplyingthe unreconciled well volumes by the appropriate reconciliation factor.

5 Determine the allocated volumes per reservoir by multiplying the allocated well volumes by split factors.

Split factors and reconciliation are covered in more detail in a subsequent awareness module.

From this schematic we can see that production allocation is a two-way process. First, the productflows from reservoir to stock tank, generating measurements along the way. Secondly, the allocation

data is calculated from fiscal meter to reservoir using the measurements from the first step.


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Slide no 9

Introduction to HCA


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Why do we need to Allocate Production ?

Production from ReservoirNot measured

Production from ReservoirNot measured

Measured AccuratelyMeasured Accurately

Increasing uncertainty in measurements

3 phase flow from wells cannotbe measured accurately3 phase flow from wells cannotbe measured accurately

M

Down-hole meters to measure production from reservoirs have not been installed in many

wells.

Water, oil, and gas are produced commingled from each well and it is not economic tocontinuously and accurately measure this multi-phase well production. Multi-phase metersare not very accurate and are expensive.

So we can only accurately measure single fluid phases, i.e. oil, water, and gas, after theyhave been separated and conditioned, such as sales gas and oil, and the stock in the

terminal.

Therefore we allocate and reconcile to improve the accuracy of the volumes produced fromeach well and reservoir.


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Slide no 10

Introduction to HCA


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Sales Allocation

Several Parties

Buyers

Pipeline / Platform Operators

Shippers

Agreements between Parties

Transport Agreement

Sales Agreement

Sales Allocation

Balancing Volumes

Calculating Relevant Volumes

Monitoring Volumes

In most cases, sales allocation only applies to gas systems. A good example of this is a

pipeline system and gas processing plant, delivering treated gas and condensate to buyers,where there are several companies producing into the system. The gas sold at the end of thepipeline has to be allocated back to the companies.

There are several parties involved in sales allocation; the buyers, the pipeline and platformoperators, and the companies who own a percentage of each field, known as shippers.

Various agreements exist between these parties, such as transport agreements and salesagreements. Transport agreements cover how shippers pay the pipeline operator for the

volumes they produce through the pipeline. Sales agreements exist between the shippersand the buyers and cover prices and procedures that must be followed.

Sales allocation involves keeping track of the volumes that have been requested, produced,

transported and delivered. It also involves the calculation of relevant volumes and insuringcontractual requirements are being met. For example, a shipper may borrow a volume from

stock in the pipeline, or from another shipper, in order to meet the sales nomination.Therefore they will have to pay it back at a later date. Moreover, volumes must be monitored

to avoid incorrectly allocating sales back to a company. The sales agreements cover howallocation is done and how under- and over-deliveries should be handled.


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Slide no 11

Introduction to HCA


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Why is Hydrocarbon Allocation important?

Sales Production Waste Emissions Entitlements

HYDROCARBON ALLOCATION

M M

In summary, Hydrocarbon Allocation provides information for the following:

1 Finance and partners are provided with sales, volumes transported, and productionvolumes, to calculate how much to invoice, tax, and pay in royalties.

2 Allocated production volumes per well and per reservoir are provided to calibrate models

for forecasting and reservoir engineering.3 Monthly and sometimes daily reports are provided to meet government regulatory

reporting requirements.

4 The data is also used in processes to reduce waste, emissions, and deferment.

5 Tanker scheduling, Partners and Third Parties are provided with entitlement volumes so

that they can plan to lift these volumes from the terminal.


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Slide no 12

Introduction to HCA


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Module Aims

1. To explain what allocation is

2. To explain what Hydrocarbon Allocation means

3. To explain why we have to allocate

This brings us to the end of the module. You should now be able to do the following:

Explain what allocation is,

Explain what Hydrocarbon Allocation means,

Explain why we have to allocate.


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The End

This is the end of the first Hydrocarbon Allocation Awareness module.

If you are still unsure about content that appeared in this module, you can go back to any of

the slides.

Otherwise, you should now continue with the next module.

introduction to hca awareness v7

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