PRT: commingling - review of commingled systems
Since the amendments to the legislation at FA87\S63 there are no formal requirements for companies to provide details of their blended oil allocation methodology. However, from time to time LB Oil & Gas may want to conduct a review all or part of the commingling system. In reviewing a commingled system LB Oil & Gas will primarily be concerned with two areas.
- To ensure that the system allocates to each contributing field and to each participator oil which is as nearly as possible equivalent (physically) to that contributed. For instance, a field which contributes no natural gas to the commingled pipeline would not be expected to gain a gas entitlement from the FA87\S63 allocation. Also, the lifting entitlement of each participator should reflect the production of each originating field.
- To ensure that the value of oil allocated to contributing fields is proportional to the value of the oil those fields individually contribute. As an extreme example, if two fields had equal production of crude oil, but the value of one was twice the other, with no other distinguishing factors one may anticipate an allocation of two thirds of production to the field with the higher value oil.
Commingling issues are most likely to arise where there is common ownership but differing PRT liabilities between the contributing fields.