This 3-day course will give you an in-depth understanding of the problems and solutions in unit formation, negotiation of participation factors and operating agreements.
Topics covered:
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Introduction to unitisation
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Unit negotiations
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Unit operating agreement
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Unit accounting procedures
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Government regulation of units
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Cross-border issues
Featuring: Unitisation case study
The reservoir of the Big Blue Gas Field crosses the boundaries of three offshore exploration blocks. In addition, an ‘oil rim’ is located in Block C. The Contractor for the Block B, where the discovery well was drilled, has initiated negotiations for the creation of a Unit Agreement for the reservoir.
In order to progress these negotiations, several committees (Contractors, Technical, Legal and Accounting) have been established to address specific issues.
Participants will be selected to conduct simulated negotiations on topics that are relevant for each of the committees. Ultimately, the Contractors committee will address the participation formula that will control cost sharing and production allocation for the field.
Course overview
Oil and gas discoveries can extend beyond the boundaries of an individual contract area. A similar situation arises where a petroleum reservoir extends across national boundaries. In these cases, Contractors and Host Governments must consider whether the recovery of petroleum will be maximised by the formation of a production unit that allows operations to be conducted in a manner that is consistent with the location and nature of the reservoir. Unitisation can also be established for specific formations or substances, in these situations additional consideration must be given to the operation of other petroleum discoveries within the unitised area.
Unitising petroleum fields is an ongoing process for managing a reservoir that begins with identifying the tracts that will be included in the unit, establishing the factors that will control contribution of costs, allocation of production and operatorship. In many countries, this process can be achieved either through voluntary negotiation or under compulsory order.
This course is presented in a format that includes both lectures and simulation exercises. This approach allows you to gain experience with the Unitisation process and determining the appropriate unit participation factors.
Benefits of attending: Gain an indepth understanding of the problems and solutions in unit formation, negotiation of participation factors and operating agreements. The role of governmental agencies in consent and oversight will also be discussed.
Day 1
Introduction to unitisation
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Fundamentals & goals of unitisation – correlative rights (the “fair share” doctrine)
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Approaches – voluntary v. compulsory unitisation
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Participation and investment factors
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Stock tank oil in place (stoip) v. ultimate recovery
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License area
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Reservoir definition & well production
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Investment
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Other considerations
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Determination & revision of unit factors
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Relationship to license & production sharing contract
Unit negotiations
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Five stages of negotiation
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Model unit agreement
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Inclusion of other interests (royalty & overriding royalty)
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Inclusion of non-straddling reservoirs & facilities
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Relations with third parties
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Special issues with gas fields
Day 2
Unit operating agreement
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Selection of unit operator
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Liability of unit operator
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Lifting, balancing & associated agreements
Unit accounting procedures
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Accounts
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Audits
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Retroactive adjustments
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Taxation issues
Day 3
Government regulation of units
Cross-border issues
Unitisation case study: Big Blue Gas Field
The reservoir of the Big Blue Gas Field crosses the boundaries of three offshore exploration blocks. In addition, an ‘oil rim’ is located in Block C. The Contractor for the Block B, where the discovery well was drilled, has initiated negotiations for the creation of a Unit Agreement for the reservoir.
In order to progress these negotiations, several committees (Contractors, Technical, Legal and Accounting) have been established to address specific issues.
Participants will be selected to conduct simulated negotiations on topics that are relevant for each of the committees. Ultimately, the Contractors Committee will address the participation formula that will control cost sharing and production allocation for the field.
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