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Information | Analytics | Expertise

MARCH 2015

ALLOCATED PRODUCTION
WHITE PAPER

Bruce Smith, Sr. Director, U.S. Data


+1 303 736 3117
Bruce.Smith@ihs.com
Dick Catto, Sr. Director, Global E & P Content
+1 303 736 3220
Dick.Catto@ihs.com
2014 IHS / ALL RIGHTS RESERVED

TEXAS ALLOCATED PRODUCTION

This allocation white paper is intended to provide the user


with a basic understanding of the allocation process
developed by IHS . The allocation process talked about in
this paper is currently being used in the states of Texas and
Louisiana only. Although the algorithm use in this routine is
based on sound petroleum engineering principles, the results
can vary due to the accuracy and timing of the data coming in
from the State and federal agencies.
The allocation examples displayed in this paper are primarily
associated with the Texas allocated production file. Although
similar, the allocation routine for Texas and Louisiana are
different due to recent modification to the Texas Algorithm.
The enhancements made in Texas are currently being made
to the Louisiana Algorithm and is scheduled for release later
this year. At that time, this paper will be updated to include
various examples of the Louisiana Allocated Production file.
2014 IHS

TEXAS ALLOCATED PRODUCTION

What is Allocated
Production?

In some states, operators report a single


monthly volume for a group of wells. Data
users want to know how much did each
well produce? but there is only a single
volume for a group of wells.
Allocation is the process of estimating the
portion of the monthly volume from each
well on the lease.

2014 IHS

TEXAS ALLOCATED PRODUCTION

Unallocated vs
Lease-level

IHS uses both these termsUnallocated


and Lease-level.
They both mean production reported as
single volume from a group of wells

2014 IHS

TEXAS ALLOCATED PRODUCTION

Where does IHS perform production allocation?

IHS allocates Crude Oil leases


IHS allocates Crude Oil and Gas leases

Louisiana required Gas wells to be reported by well until 2002.


The IHS allocated production for gas wells uses the by well production through 2002 then allocates the
production to individual wells starting January 2003.

2014 IHS

TEXAS ALLOCATED PRODUCTION

Why doesnt IHS


allocate production
in all states?

Many states require production to be


reported by well or by completion
within a well. No allocation to the well
level is needed. Although IHS Allocates
Crude Oil and Casinghead Gas in Texas,
GWG and Condensate are reported at Well
level and Allocation is not needed.
There is no good basis for the allocation
from lease-level volumes to well-level
volumes.
For example, production is often reported
at the lease-level in Kansas and
Oklahoma. These states do not require
regular testing of wells on a lease. Without
well tests, there is no reasonable basis for
allocation from lease-level volumes to by
well volumes.

2014 IHS

TEXAS ALLOCATED PRODUCTION

Choosing Allocated Production in Enerdeq Browser

You can choose either Allocated or Unallocated


production to query in Enerdeq Browser.
The query results will be the SAME in states other
than Texas Crude and Louisiana

NOTE: When you query Production Allocated for Texas, you will get the allocated Crude Oil production
and also the Gas well production that is reported at the well level and does not require any allocation.

2014 IHS

TEXAS ALLOCATED PRODUCTION

Level of Production Reporting

TEXAS ALLOCATED PRODUCTION

Production can be reported at different levels


Possible Reporting levels
Field

Unit (Some TX Crude Oil)


Lease (Most TX Crude Oil)
Well

Completion (TX Gas well)


Transporter pickup point

The RRC decides if a well is an Oil Well or Gas Well.


Oil well production is reported as part of a total Lease-level volume. In the example
above, there are 15 wells all on the same lease entity. The operator reports a SINGLE
production volume each month that is the total of all producing wells on the lease.
Gas well production is reported by well-completion. The volumes are for a specific
reservoir within a specific well each month.

2014 IHS

TEXAS ALLOCATED PRODUCTION

One well three


different leases

This well has 3 tubing strings


producing from 3 different reservoirs:
Upper Morrow
Lower Morrow
Mississippian

Upper Morrow lease: 4 wells

The RRC requires operators to file


production separately for each
reservoir.

Lower Morrow lease: 2 wells

The allocation is performed separately


for each oil reservoir.

Mississippian lease: 1 well

2014 IHS

There can be different wells associated


with the lease-level production for each
reservoir

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TEXAS ALLOCATED PRODUCTION

Example:
Lease-Level Production
vs
Allocated By Well Production

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TEXAS ALLOCATED PRODUCTION

Cusack Ranch Oil Lease, Gonzales County, TX


Monthly Rate vs Time Plot for Unallocated (Lease-level) Production. The entity is a
Lease that has 9 separate wells. The operator only reports a single volume each month
for the lease. There is no information filed about each wells production.

Notice how the production history has numerous small peaks as new wells come online.
IHS has a single Primary API number for this lease. It is a representative well. The Unallocated record
also has the other 8 well API numbers associated on the lease and these are included in exports and
downloads.
2014 IHS

12

TEXAS ALLOCATED PRODUCTION

Cusack Ranch Oil Lease, Gonzales County, TX


Monthly Rate vs Time Plots for Allocated Production for all 9 wells associated with the Cusack Ranch Lease.
The sum of all these volumes equals the total Unallocated (lease-level) production shown on the previous slide.

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Map view of Allocated vs Unallocated Production


Allocated Production

The 9 Wells producing on the Cusack Ranch Lease


have a green circle with black dot at the bottom hole
location of each well. The allocated cumulative volume
for each well is shown by the size of the circle. The total
of the Allocated Volumes is 1,536,395 BO matching the
total volume of the unallocated production.

2014 IHS

Unallocated Production

All 1,536,395 BO reported for the Cusack Lease is


reported to a single API number. Bubble mapping will
assign all volume to the single Primary API number
associated with the lease.

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TEXAS ALLOCATED PRODUCTION

Production Data
Reporting Levels
on Enerdeq
Browser

Three Entity Types: Well, Allocated, or Lease


Well
Production reported for a single well
Entity type on Enerdeq output listed as Well

Completion
Production reported for a reservoir in a single
well
Entity type on Enerdeq output listed as Well
Lease
Production reported by Lease and includes
volumes from all producing wells

Entity type on Enerdeq output listed as Lease

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Production Data
Reporting Levels
on Enerdeq
Browser

Three Entity Types: Well, Lease or Allocated


Unit
Unit is a combination of leases or wells that
are managed as a single unit
Production is reported at the unit level and
includes volumes from all producing wells
on the Unit.

Entity type on Enerdeq output listed as


Lease
Allocated Volume
Entity type on Enerdeq is Allocated for
Crude Oil that has been allocated

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Entity Type on Enerdeq


Unallocated Production

Primary API number for an Lease production is just ONE well. There could be
many other API numbers associated with this lease.

Allocated Production

17
2014 IHS

Primary API number for an Allocated entity is for the one well being allocated

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TEXAS ALLOCATED PRODUCTION

Key Concepts for Texas


Allocated Production

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TEXAS ALLOCATED PRODUCTION

Key Concept:
Total of all Allocated Volume equals the Unallocated Volume
IHS allocation method always has the sum of volume of allocated entities
for a lease equal the unallocated volume for that lease
Example: Smith Lease with 2500 Barrels monthly volume
Allocation routine uses well tests to assign 35% of production to Smith
#1, 45% of volume to Smith #2 and remaining 20% to Smith #3. The
Total of all wells is 100% and the volume equals the lease-level volume.
IHS ALLOCATION ROUTINE
35 %

Well Level
Smith # 1
VOLUMES
875 BBLS

2014 IHS

45%

Well Level
Smith # 2
VOLUMES
1125 BBLS

What if you see a case where the allocated


volumes do not sum up to the lease-level
volume?
20 %

Well Level
Smith # 3
VOLUMES
500 BBLS

Please send that question to


production.data@ihs.com for explanation.
Typically, the answer will be related to how a
customer sums the allocated production. Were
all the entities included? Our
production.data@ihs.com research team is
happy to explain specific situations.

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TEXAS ALLOCATED PRODUCTION

Key Concept:
Allocation is highly
dependent on good
well test info

Q: How does IHS do the allocation?


A: We use well information to allocate the
lease-level production by well.
(Note: Well Allowables are used when there are no tests for
a well)

Q: How often are wells in Texas tested?


A: Crude oil wells are only required to be
tested once per year. This is not a lot of
testing. Much better allocation occurs with
multiple tests per well.

What is an Allowable?
The amount of oil or gas which a well or
lease may produce per month under
proration orders of the RRC
2014 IHS

Q: Are the well tests accurate?


This depends on the operators testing
and reporting. For new wells, IHS often
uses Initial Potential (IP) Tests. IP tests
may have somewhat inflated voumes
compared to initial production rates when
a well is brought online.
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TEXAS ALLOCATED PRODUCTION

Key Concept:
IHS runs allocation
every month and
prior months will
change volumes

Allocated production can change for 3


reasons
1.

The unallocated (lease-level) volumes are re-stated by


the operator. IHS then has different total volumes to
allocate to wells on the lease

2.

IHS receives a new well test for a lease and reallocated going forward and going back in time. The
previous slides show an example where the allocation
changes in prior months based on new well test
information.

3.

A new well is added to the lease for prior months


IHS ALLOCATION ROUTINE

When loading allocated production, you


want to reload all volumes each month so
you have improved allocation for all prior
months.

This is good for unallocated (lease-level)


production too. Sometimes operators restate the prior months lease-level
production and you want those corrections
in your database.

2014 IHS

35 %

45%

Well Level
Smith # 1
VOLUMES

Well Level
Smith # 2
VOLUMES

875 BBLS

Well Level
Smith # 4
VOLUMES

1125 BBLS

20 %

Well Level
Smith # 3
VOLUMES
500 BBLS

? BBLS

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TEXAS ALLOCATED PRODUCTION

Key Concept:
IHS runs allocation every
month and prior months
will change volumes

The Smith #4 well now is on the lease


It can take several months AFTER production starts for the
well to be assigned to the
Once the RRC shows Smith #4 well, then the allocation is
re-run.
In this example, the Smith #4 well test indicates 10% of
lease-level production should be allocated

IHS ALLOCATION ROUTINE


before Smith #4
35 %

Well Level
Smith # 1
VOLUMES
875 BBLS

45%

Well Level
Smith # 2
VOLUMES
1125 BBLS

IHS ALLOCATION ROUTINE


with Smith #4
20 %

31.5%

Well Level
Smith # 3
VOLUMES

Well Level
Smith # 1
VOLUMES

500 BBLS

787 BBLS
10%

Well Level
Smith # 4
VOLUMES
? BBLS

2014 IHS

Well Level
Smith # 4
VOLUMES
250 BBLS

40.5%

Well Level
Smith # 2
VOLUMES
1012 BBLS

18%

Well Level
Smith # 3
VOLUMES
451 BBLS

TEXAS ALLOCATED PRODUCTION

Example: Where
Allocation Works Well

6 producing wells drilled in Buda Limestone


No longer producing

Production Cumulative
by Well

Still producing
No new wells on lease. All wells drilled in 1990s

2 wells still producing, several wells shut-in, one


well plugged
IHS tracks changes in well status,
allocating only when RRC oil master file
indicates well is producing
All wells have many tests

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Example: Where
Allocation Works Well

Which wells are still producing?


Relative ratio of cumulatives for wells on a lease?
Which wells have high water cut, according to well tests?

What is the history of wells producing vs shut-in?

Well drilled in 1991. Annual tests through late 2002. Well


status then changed to Shut-in. Well status changed to
producing and well test in late 2009. Well plugged in 2012.

2014 IHS

Well started low and was Shut-in after only a few years.

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TEXAS ALLOCATED PRODUCTION

Ideas for Best


Practice with
Allocated
Production

2014 IHS

1.

Allocation works best with leases that have been


producing for more than a year and have no new wells in
past year. Best: all wells have an IP test and a 1 st annual test.

2.

Update the entire allocated record each month so you get


changes in prior months. If you only append the latest
months volume, then you will miss the prior month
improvements as new tests are added to the allocation.

3.

If working with allocated volumes in actively drilling lease,


its better to use First 12 months volume than to use
Max Month or 2 nd Month or First 3 months.

4.

Small differences in early performance of a well are often


due to limited test data, not to actual well performance.

5.

Work with Multi-well Records with care. These are


lease-level volumes that could not be allocated to a
specific wells. There is an API number on the Multi-well
Record, but the volume likely came from more than this
one well.

6.

The allocation process is not a substitute for good


reservoir engineering practice. If you have time, your
results will be better if you look at the lease, evaluate the
timing of well drilling, and decide on your own best-fit
allocation.

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TEXAS ALLOCATED PRODUCTION

Key Concept 1:
Only Oil Leases are
Allocated

In Texas, only Crude Oil Leases and Units are


allocated by IHS
Gas wells are reported by well so no allocation
is needed
Allocation is for Crude Oil volume and
Casinghead Gas volume
Water volumes are estimated on both the
Allocated and Unallocated production files
Operator do not report water volumes

IHS estimates water volumes using well test


information

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Key Concept 2:
Total of all Allocated Volume equals the Unallocated Volume
IHS allocation method always has the sum of volume of allocated entities
for a lease equal the unallocated volume for that lease
Example: Smith Lease with 2500 Barrels monthly volume
Allocation routine uses well tests to assign 35% of production to Smith
#1, 45% of volume to Smith #2 and remaining 20% to Smith #3. The
Total of all wells is 100% and the volume equals the lease-level volume.
IHS ALLOCATION ROUTINE
35 %

Well Level
Smith # 1
VOLUMES
875 BBLS

2014 IHS

45%

Well Level
Smith # 2
VOLUMES
1125 BBLS

What if you see a case where the allocated


volumes do not sum up to the lease-level
volume?
20 %

Well Level
Smith # 3
VOLUMES
500 BBLS

Please send that question to


production.data@ihs.com for explanation.
Typically, the answer will be related to how a
customer sums the allocated production. Were
all the entities included? Our
production.data@ihs.com research team is
happy to explain specific situations.

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TEXAS ALLOCATED PRODUCTION

Key Concept 3: No Allocation needed when only one well on lease


Some oil leases only have a single well
IHS allocated all production from the lease to the allocated entity for that
one well
When is a single well lease not really a
single well lease? Sometimes a lease only
has a single well assigned to it, according to the
RRC, but production is from more than one well.
Typically, the 2nd well is added to the lease by
the RRC within a month or two and then the
allocation process divides the lease-level
volume between the 2 wells according to test
records.
Also if IHS only has a test for one well then all
volume is allocated to that well. We might have
indication that a 2nd well is added, but the
allocation routine requires EITHER a well test or
well allowable for that 2nd well before the
allocation goes to both wells.

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Key Concept 4:
Allocation is highly
dependent on good
well test info

Q: How does IHS do the allocation?


A: We use well information to allocate the
lease-level production by well.
(Note: Well Allowables are used when there are no tests for
a well)

Q: How often are wells in Texas tested?


A: Crude oil wells are only required to be
tested once per year. This is not a lot of
testing. Much better allocation occurs with
multiple tests per well.

What is an Allowable?
The amount of oil or gas which a well or
lease may produce per month under
proration orders of the RRC
2014 IHS

Q: Are the well tests accurate?


This depends on the operators testing
and reporting. For new wells, IHS often
uses Initial Potential (IP) Tests. IP tests
may have somewhat inflated voumes
compared to initial production rates when
a well is brought online.
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TEXAS ALLOCATED PRODUCTION

Key Concept 5:
Some lease-level
volume cannot be
allocated to a specific
well Pre-1970

RRC did not require oil well testing prior to 1970.


IHS cannot allocate production prior to 1970 and
assigns this production to a Multi-Well Record.
Multi-Well Record is a placeholder entity.
The Multi-Well Record ensures that the sum of
the allocated production always adds up to the
unallocated production.
Multi-Well Records have a representative API
number for one well from the lease, but the
volume came from multiple wells.

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Multi-Well Records on Texas Allocated


These oil leases all started producing in early 1965, before the RRC required well tests. IHS cannot allocate this lease-level volume to
a specific well and assigns it to a Multi-well record for the lease. There is a Primary API for each Multi-well record. This API is just
ONE of the wells contributing to production on the lease.
Be careful when you download Multi-well records to a project. Your software may load all that production to the single API number.

Recognizing Multi-well Records. All of the Production IDs have MULTIWELL01 at the end. The Well Number is also MULTI.

31
2014 IHS

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TEXAS ALLOCATED PRODUCTION

Key Concept 5a:


Lease-level volumes
assigned to Multi-Well
Record if no wells
have test info

Sometimes IHS knows that multiple wells are on a


lease but we have no wells tests or well allowables
and cannot allocate.
IHS assigns these volumes to a Multi-Well
Record.
When new Test is added, the allocation is re-run
Often the new test info will result in the Multi-well
record being removed and all production being
allocated to a well.

A good way to think of the Multi-well Record:

No Test = No Allocation = Production assigned to Multi-well record

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Multi-Well Records
on Texas Allocated

Q: Why do I see two allocated production entities that


have the same API number and the same reservoir?
A: The most common answer is One of the entities is a
Multi-well Record. Rememberthe Multi-well record is a
placeholder for volumes that can not be allocated. That
Multi-well volume may or may not have been from that
placeholder API number.

Example: API number 42-003-10816-0000 has 4 different allocated production entitiestwo in the Ellenburger Formation and 2 in the
Devonian. Notice that the pre-1970 production volumes that start in March 1965 are on a Multi-well record. This is a placeholder for
production that could not be allocated because there are no well tests prior to 1970.
This well is a dual completion with 2 tubing stringsone to the Devonian and the other to the Ellenburger. DO NOT ASSUME that all
the production listed in the Multi-well record for the Devonian or the Ellenburger ALL came from API 42-003-10816-0000. There were
other wells on this lease and the Multi-well record just shows you the lease-level volume that could not be allocated.
2014 IHS

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TEXAS ALLOCATED PRODUCTION

Key Concept 6:
Allocation is best on
leases producing
more than a year
with no new wells

IHS Allocation is highly dependent on well


tests and only one well test is filed each year.
Allocation does not do a good job of
estimation when new wells are being added
to a lease.
The allocation improves significantly once
every well on a lease has two well tests.
With tests being filed once per year, it takes
13 to 24 months for the 2nd well test to be
filed on all wells on a lease provided no
new wells are being drilled.

Summary #1: The allocation works well after drilling is completed on a lease and production has been
for more than a year
Summary #2: The allocation does not usually work well during a time a lease is being actively drilled.

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Example: Where
Allocation Works Well

6 producing wells drilled in Buda Limestone


No longer producing

Production Cumulative
by Well

Still producing
No new wells on lease. All wells drilled in 1990s

2 wells still producing, several wells shut-in, one


well plugged
IHS tracks changes in well status,
allocating only when RRC oil master file
indicates well is producing
All wells have many tests

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Example: Where
Allocation Works Well

Which wells are still producing?


Relative ratio of cumulatives for wells on a lease?
Which wells have high water cut, according to well tests?

What is the history of wells producing vs shut-in?

Well drilled in 1991. Annual tests through late 2002. Well


status then changed to Shut-in. Well status changed to
producing and well test in late 2009. Well plugged in 2012.

2014 IHS

Well started low and was Shut-in after only a few years.

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TEXAS ALLOCATED PRODUCTION

Examples
1. Hypothetical 3-well lease
2. Eagle Ford lease with 2 wells

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Hypothetical 3-well Lease


Lease Level Production
Example Lease has 3 wells. Wells 1 and 2 start in the first
month of the lease and Well 3 starts in Month 7. All 3 wells have
same production profile and the same IP test of 240 BOPD.

Month

Well 1

2014 IHS

Well 2

Well 3

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TEXAS ALLOCATED PRODUCTION

Hypothetical Lease
Comparison of Actual by well vs Allocation after only IP tests
Wells 1 and 2

Summary
In month 7, there are 3 wells on the
lease. All 3 wells have the SAME
IP test rate. Therefore the
allocation routine assigns 1/3 of
lease production to each well. This
is too much for wells 1 and 2
starting in Month 7 and too little
volume for Well 3.

Allocated
Actual

Wells 1 and 2 allocate correctly for the first


6 months. When Well #3 is added in
Month 7, then too much of the lease-level
production is allocated to Wells 1 and 2.

2014 IHS

Well 3

Allocated
Actual

Well 3 allocation is too low from the start.

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TEXAS ALLOCATED PRODUCTION

Hypothetical Lease
Comparison of Actual by well vs Allocation after Annual Tests
for Wells 1 and 2. Well 3 still only has IP Test.
Wells 1 and 2

Summary
Well 3
With annual well tests on Well 1 and
2, the allocation improves significantly.
Summary 2
Be careful when using First Month,
Maximum Month, First 3 Months or
other early month parameters. First
12 months of allocation is a better
measure of actual well performance.

Allocated
Actual

Wells 1 and 2 allocate correctly for the first


6 months. The over-allocation in month
7 is less. The 12-month total for Allocation
is 1% below the Actual by well volume for
Wells 1 and 2.

2014 IHS

Allocated
Actual

Well 3 is under-allocated initially and


then over-allocated. The 12-month total
for Allocation is 2.7% above the Actual
volume for Well 3.

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TEXAS ALLOCATED PRODUCTION

Two well lease


First drilled early 2012, second drilled mid-2012
Lease Level Production Henning Lease Eagle Ford Gonzales County, TX

Henning #1H Completion

Henning #2H Completion

This Rate vs Time shows the Production record through early


2013. At that time, all IHS had were IP tests for each well.
The IP rate was 1056 BOPD for #1 well and 940 BOPD for #2

2014 IHS

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TEXAS ALLOCATED PRODUCTION

Allocated Production for Early Life of Lease


First 11 months
Much of the added lease volume in August is due
Henning #1H

to the #2 well. But the allocation process assigns


too much of the lease volume to the #1 because we
only have IP test for each well.

Henning #2H

All production is allocated to #1


well until the #2 well is drilled.

August 2012

August 2012

Aug. 2012: # 2 well drilled with IP


rate of 940 BOPD. IP rate for #1
was 1056 BOPD. Allocation takes
the ratio of those IP tests, starting
in August 2012.
If the #1 and #2 were completed at same time, then
using IP tests yields better allocation. But with the wells
6 months apart, the rate on the #1 would have dropped
a lot prior to the #2 well being completed.

2014 IHS

Sum of IP rates is 1056 + 940 BOPD = 1996


BOPD. #1 is allocated 1056/1996 = 53% of
monthly lease volume and #2 is allocated to 47%
of monthly lease volume

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TEXAS ALLOCATED PRODUCTION

Allocated after 21 months, both wells have two well tests


With 2 well tests, there is still likely
over-allocation to the #1 well, but
much less than occurred in the
earlier slide. Once IHS gets
another test for #2 well, then the
allocation will improve further

August 2012

Later, IHS receives a 2nd well test


for #1 and #2 wells and the
allocation is re-run.

2014 IHS

August 2012

IHS re-runs the allocation every


month. If we get a new well test,
that test will affect monthly
allocation going forward AND
going backward.

Operator last filed tests in Nov.


2012. Once IHS has the next
annual tests, the allocation will
improve further.

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TEXAS ALLOCATED PRODUCTION

Key Concept 7:
IHS runs allocation
every month and
prior months will
change volumes

Allocated production can change for 3


reasons
1.

The unallocated (lease-level) volumes are re-stated by


the operator. IHS then has different total volumes to
allocate to wells on the lease

2.

IHS receives a new well test for a lease and reallocated going forward and going back in time. The
previous slides show an example where the allocation
changes in prior months based on new well test
information.

3.

A new well is added to the lease for prior months


IHS ALLOCATION ROUTINE

When loading allocated production, you


want to reload all volumes each month so
you have improved allocation for all prior
months.

This is good for unallocated (lease-level)


production too. Sometimes operators restate the prior months lease-level
production and you want those corrections
in your database.

2014 IHS

35 %

45%

Well Level
Smith # 1
VOLUMES

Well Level
Smith # 2
VOLUMES

875 BBLS

Well Level
Smith # 4
VOLUMES

1125 BBLS

20 %

Well Level
Smith # 3
VOLUMES
500 BBLS

? BBLS

44

TEXAS ALLOCATED PRODUCTION

Key Concept 7:
IHS runs allocation every
month and prior months
will change volumes

The Smith #4 well now is on the lease


It can take several months AFTER production starts for the
well to be assigned to the
Once the RRC shows Smith #4 well, then the allocation is
re-run.
In this example, the Smith #4 well test indicates 10% of
lease-level production should be allocated

IHS ALLOCATION ROUTINE


before Smith #4
35 %

Well Level
Smith # 1
VOLUMES
875 BBLS

45%

Well Level
Smith # 2
VOLUMES
1125 BBLS

IHS ALLOCATION ROUTINE


with Smith #4
20 %

31.5%

Well Level
Smith # 3
VOLUMES

Well Level
Smith # 1
VOLUMES

500 BBLS

787 BBLS
10%

Well Level
Smith # 4
VOLUMES
? BBLS

2014 IHS

Well Level
Smith # 4
VOLUMES
250 BBLS

40.5%

Well Level
Smith # 2
VOLUMES
1012 BBLS

18%

Well Level
Smith # 3
VOLUMES
451 BBLS

TEXAS ALLOCATED PRODUCTION

Texas RRC may not


put a well on a
lease for months
after it starts
producing

For those working leases with drilling activity,


we often hear:
Why isnt API 42-xxx-yyyyy in the allocated
production file? We know it is producing
Answer: Sometimes newly producing wells have not yet
made the RRC listing of wells on that lease. The well is not
yet receiving an allowable and does not yet have a test in
the RRC test file.

IHS allocates once we see either an allowable


or a well test. If no allowable and no well test
are in RRC files, then none of the lease
volume is allocated to that well.
This is typically a problem for only a month or
two. Typically, the allowable or test will go
back to the first month the well produced.

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TEXAS ALLOCATED PRODUCTION

Addition of Well
Tests may cause
Multi-Well Records
to be removed

Common customer question:


I have a list of Production IDs for entities.
Why are some IDs missing from IHS
allocated production file this month?
Answer:
IHS re-allocates the lease-level volumes
when we get new test data. New test
information may allow IHS to remove the
Multi-Well Record.

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TEXAS ALLOCATED PRODUCTION

Example:
Allocation change
with addition of test

Why did the allocation change so much?


1. Operator reported higher lease-level volumes
2. Initially IHS had no well tests. IHS based
allocation on the allowable that started
October
3. IHS then added the July 2013 IP test so
allocation starts in July 2013
4. IP test has gas rate, so IHS allocates gas
volume to this well
5. IP test has water rate, so IHS estimates a
water volume for this well

Allocation as of June 2014

2014 IHS

Allocation as of August 2014

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TEXAS ALLOCATED PRODUCTION

Key Concept 8:
Allocation to a well
stops when that well
is shut-in or plugged

IHS puts significant amount of effort to get


the well status correct
RRC is not always complete or current
with well status
RRC buries some of the status
information in remarks
IHS digs these out and applies them to the
allocation

Example: well test of 3 BOPD in


January, well plugged July

IHS has been allocating for decades and


has had years of customer input help get
status right

IHS interpolates from 3 BOPD down


to 0 BOPD assuming that the well
didnt drop to 0 BOPD in the month
of plugging.

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TEXAS ALLOCATED PRODUCTION

Key Concept 9:
Pending Production
a special situation of
By Well volumes?

Operators report Pending production before lease code assigned by RRC


This pending production is reportedly by well
Many pending production reports are by well. Some customers use
these Pending entities as by well production

Wells may be on pending status for a month to more than a year.


After the RRC approves and assigns a Lease Code, then the Pending
entity is deleted and these volumes move to a Lease.

IHS treats Pending like a Multi-Well record because we have no well tests
You can identify Pending records by the P in the Production ID.

CAUTION: Although many pending production reports are by well, some are NOT. IHS recommends
looking at the decline profile and offset wells to determine if the pending production is by well

50
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TEXAS ALLOCATED PRODUCTION

Key Concept 10:


Each month, some
entities are removed
from the Allocated File

Key Concept 9 discusses Pending


production and the likelihood this is
By Well volume. Once the Lease
code is approved, the production is
moved off of a Pending record to an
approved Oil Lease. IHS then starts
allocating lease volumes to the well
and the Pending record is removed
from the Allocated file.
2014 IHS

Its very rare that an entity is removed from


the Unallocated File, but that happens
more frequently in the Allocated File.
If you are loading a set of Production IDs
from the allocated file, be ready for when
the entity no longer is on the IHS file.

Two common reasons that an allocated


entity is removed
1. Multi-well records may be removed
once IHS has enough test info to allocate
all the lease-level volume
2. A Pending production Multi-Well
Record will be removed once the
production is assigned to an approved Oil
Lease or Gas Well ID

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TEXAS ALLOCATED PRODUCTION

Key Concept
Review

1. Only oil leases are allocated in Texas


2. Total of all allocated volumes equals the unallocated
volumes
3. No allocation needed when only one well
4. Allocation is highly dependent on good well test info
5. Some lease-level volume cannot be allocated to a specific
well. IHS assigns unallocated volumes to Multi-Well Record
6. Allocation works best on leases that have been producing
for more than a year with no new wells
7. IHS runs allocation every months and prior months will
change volumes
8. Allocation to a well stops when that well is shut-in or
pluuged
9. Pending Production a special situation by By Well
volumesusually, but not always

10. Each month, some entities are removed from the


Allocated File
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TEXAS ALLOCATED PRODUCTION

Ideas for Best


Practice with
Allocated
Production

1. Allocation works best with leases that have been producing


for more than a year and have no new wells in past year.
Best: all wells have an IP test and a 1st annual test.
2. Update the entire allocated record each month so you get
changes in prior months. If you only append the latest
months volume, then you will miss the prior month
improvements as new tests are added to the allocation.
3. If working with allocated volumes in actively drilling lease,
its better to use First 12 months volume than to use Max
Month or 2nd Month or First 3 months.
4. Small differences in early performance of a well are often
due to limited test data, not to actual well performance.
5. Work with Multi-well Records with care. These are leaselevel volumes that could not be allocated to a specific wells.
There is an API number on the Multi-well Record, but the
volume likely came from more than this one well.

6. The allocation process is not a substitute for good


reservoir engineering practice. If you have time, your results
will be better if you look at the lease, evaluate the timing of
well drilling, and decide on your own best-fit allocation.
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TEXAS ALLOCATED PRODUCTION

Questions?

Please send your questions about this white


paper to Production.Data@ihs.com
bruce.smith@ihs.com
dick.catto@ihs.com

2014 IHS

54

Contact us
Americas:
+1.800.IHS.CARE (+1.800.447.273);
customercare@ihs.com

Europe, Middle East, and Africa:


+44.(0).1344.328.300;
customer.support@ihs.com

Asia and the Pacific Rim:


+604.291.3600;
supportapac@ihs.com

2014 IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal
client distribution as may be permitted in the license agreement between client and IHS. Content reproduced or redistributed with IHS permission must display IHS legal
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