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SystemHydrocarbon Accounting, Joint Ventures & Land

Hydrocarbon Allocation Reconciliation

Hydrocarbon allocation explained band by band, from the sales meter back to each well and owner, with the record behind every move.

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Follow one misread test from month end to the rerun ↓
The problem

One misread well test rides through the month and moves barrels between owners

At a commingled battery the monthly test sets each well's rate for each day it produced. When a test separator misreads, that one reading carries the whole month, and because a separator serves only some wells, the error shifts barrels between tracts and owners as well as the total.

Month end gets a variance report scanned by eye and an email to the field. The meter diagnostics, the operator's round note and the work order that explain a jump sit in three other systems, and few accountants open them. Months later a partner or the state asks why a well moved, and the person who knew has moved on.

Built forProduction accountantsHydrocarbon accounting managersWell test engineersPartner representativesInternal auditors

The Problem Today

One bad well test sets a well's rate for a whole month and quietly moves barrels between owners.

±5%
battery factor one regulator's audit checks ask to investigate published

Read by hand today

  • Well tests
  • Meters
  • Work orders
  • Agreements
  • Asked months laterPartners and the state ask after the reason has gone
  • Small errors pass unreadInside the band, nobody opens the records

The Solution

  1. Each band tracedSales meter back through the trains to each well and its owners
  2. Each test checkedAgainst the well's history, meter readings, notes and the agreement
  3. Why it moved, citedEach change explained from its records, with what the agent cannot know
  4. People decide, engine rerunsThe accountant sets aside, the engine recalculates, a manager countersigns

Built-in controls

  • Agents never change a figure; the engine does
  • The manager reads the records himself before countersigning
  • The tract that gives up barrels can object

What You Get

Owners get statements that stand up months later, because each change carries its reason and its records.

  • Answers for partners and the stateDrafted from that month's records, cited, then approved
  • A dispute file in one downloadOne well and one period, records in order, gaps listed
  • Statements wait for the checksNothing issues until tests, runs and tracts are signed
One month end, one test

A hydrocarbon allocation month end where one test moved 1,230 barrels

It is month end at a pad battery with two contract areas, and the allocation looks routine until one well's band grows by a fifth. This is the morning that test was explained, set aside and countersigned, before the statements went out.

demoBattery, wells, owners, people and figures: all sample data.

  1. 01Month end

    169,389 barrels split to 86 wells, and three bands moved over 10%

    Production accountant

    The month opens as one picture: measured production flowing through three separator trains to 86 wells, then to two tracts and five owners, each band as wide as its barrels. The factor reads 0.9533. Three bands carry a chip because they changed by more than the flag line since September, and the note at the top names the one to open first.

  2. 02Month end

    A test read 339 against a trend that had reached 285

    Production accountant

    The explanation reads like a colleague's note, with a numbered citation on each claim. Five earlier tests declined about 3% a month, then this month's test read 19% high. For 21 of 24 hours the test meter's density sat at 0.744 against 0.905, drive gain at 61%. It is 93% sure the test is wrong, the agent says, and it cannot say what the well truly made.

  3. 0308:02

    Gas in the liquid: 61% drive gain against a normal 4%

    Production accountant

    Neither set aside nor keep is open until she has read the meter diagnostics and the night round note herself. A two-phase flow alarm ran for most of the test. According to the note, the dump valve was not seating, with gas carrying under. A rough density check on screen says plainly that it does not correct the test.

  4. 0408:04

    645 barrels change owner, worth $45,150 at $70

    Production accountant

    Before anything changes, the engine's own preview shows what setting the test aside would do. The well drops from 10,019 to 8,503 barrels, the factor rises to 0.9624, and 1,230 barrels go back to the other tract. Because the operator and the state hold on both sides, 645 barrels change owner. The state's royalty is equal on both tracts and does not move.

  5. 0508:06

    Set aside for a recorded equipment fault, under section 4.4

    Production accountant

    The reasons offered are the ones this record supports. Section 4.4 of the commingling agreement lets a test go only where a fault in the test equipment is recorded, and then the last accepted test stands. Other needs written words. The reason goes on the audit trail, and a second person checks it before anything counts.

  6. 0608:08

    The engine reran the month, and she cannot check her own decision

    Production accountant

    She reruns the allocation engine in the accounting system. The new run is a draft until it is checked, with Tract 11-N falling from 40,075 to 38,845 barrels. The agents changed no figure; the engine did. Her own countersign is refused with a plain reason, and the step passes to the hydrocarbon accounting manager.

  7. 0708:12

    He opens the run and the meter record before he can countersign

    Hydrocarbon accounting manager

    Her openings do not count for him. He opens the rerun, which shows the well at its September test, 176,007 theoretical barrels and a factor of 0.9624, and then the meter diagnostics. Only then does countersigning come on. He signs at 08:16, and the agreement check flags that 1,230 barrels leave one tract, over the 500-barrel line.

  8. 0808:20

    The partner sees her own tract, 430 barrels fewer

    Partner representative

    The partner whose tract gives up barrels sees only that tract: her share down 430 barrels, $30,100 at the sample price, and 1,230 leaving the tract in all. She may object for 30 days. She opens the meter diagnostics, the round note and the work order herself, and only then can she sign no objection, which she does at 08:26.

  9. 09After the signatures

    Factor 0.9624, and the well's band has narrowed

    Production accountant

    Back on the flow, the October rerun is now the checked run. The well's chip has gone. A pump-speed change on another well now crosses the 10% line because the factor rose, so it joins the list with its reason. The next step names the statements, which still wait for the rest of October's checks.

  10. 10After the signatures

    $11,857,230 of October oil, by owner, waiting for the last checks

    Hydrocarbon accounting manager

    The owner table shows each one's barrels for September, the preliminary run and the rerun, with the change and the value at $70. Each column adds to measured production. Beside it, issuing waits for the lot of in-range tests and one other flagged well. The accountant prepares, and the manager issues.

What the test meter read during the 24 hours that set October

The case for setting the test aside rests on these readings, each from a cited record. The gas meter held steady, so the fall in gas-oil ratio came from the oil reading alone.

ReadingExpected from the tests beforeDuring the October test
Oil, bbl/d285339
Liquid density, g/cc0.9050.744 for 21 of 24 hours
Meter drive gain4%61%
Gas, Mcf/d286287
Gas-oil ratio, scf/bbl1,004847

demoSample data, from the working solution. Rough check, density only: 0.905 ÷ 0.744 = 1.216 for those 21 hours, or 1.189 over the test. It explains the reading; it does not correct the test.

Production allocation by owner: who gave up the 645 barrels

Moving barrels between tracts is not the same as moving them between owners, because the operator and the state sit on both sides.

Given up by the operator, which holds more of Tract 11-N215
Given up by the Tract 11-N partner430
Barrels that change ownerReceived by the two Tract 11-S partners, 430 and 215; $45,150 at a sample $70645

demoSample data, from the working solution.

Behind the allocation

Flagged tests, meter provings and the battery factor over 24 months

Where the rest of the month's hydrocarbon accounting lives, each screen full size on a click.

Flagged testsSeven of 86 October tests outside their range, each with what is odd and its status: set aside, kept, or waiting for the well test engineer.
Meters and provingsThe sales meter and three test separator meters, with last proving and factor, and each meter problem on a timeline with the tests it touched.
Engine runsEach allocation run with its theoretical barrels, factor, tract totals and tie-out, and what changed from one run to the next, largest first.
The agreementThe clauses the agents work to, quoted with the agent that uses each: interests, the monthly test, setting a test aside, meter correction, moves between tracts.
Battery factor historyThe factor month by month against the company's line, with each noted move and its record. Months before September are labeled as typed sample history.
Audit trailThe morning in order: each record opened and by whom, the set-aside, the rerun, the countersign and the partner's no objection.

demoSample data, from the working solution.

The agents

The engine calculates; seven agents read, tie and explain around it

None of them decides a test, signs, sends or changes a figure.

Volume reader

Reads sales tickets, tank gauges and provings into production.

  • Never edits a meter value
  • Holds an unreadable ticket
Test checker

Checks each test against history, diagnostics, notes, work orders and the agreement, and proposes keep or set aside.

  • Never accepts or sets aside a test
Variance explainer

Explains each band move over the flag line, with citations and how sure it is.

  • Never changes a figure
  • Says what it could not find
Agreement reader

Holds each rule with its section and flags moves over the tract line.

  • Leaves a disputed clause to a person
Owner split checker

Ties each run: wells to production, tracts to wells, owners to the whole.

  • Never corrects a run
  • A break stops statements
Question drafter

Drafts answers to partner and state questions from that month's records.

  • Never sends
  • Never answers from another month
Dispute file builder

Builds one file per well and period, in order, with gaps listed.

  • Never leaves a record out quietly

Six systems the commingled production allocation is explained from

Each is read only. The allocation engine stays the calculator, and only a person reruns it.

Meter data systemSales tickets, tank gauges, provings and test meter diagnostics
Field data capture appWell tests and operators' round notes
Maintenance systemWork orders on separators, pumps and wells
Hydrocarbon accounting systemThe allocation engine and its runs
Document managementThe commingling agreement and its amendments
ERPOwners and statements

What production accountants ask about hydrocarbon allocation reconciliation

What is hydrocarbon allocation reconciliation?

Hydrocarbon allocation splits a measured total back to wells by their tests, then to tracts and owners. Reconciliation explains why each well's and owner's share moved since last month, from the tests, meter records, notes, work orders and the agreement, so the accountant can decide a suspect test before statements go out.

Does it replace our allocation engine?

No. The engine in your hydrocarbon accounting system stays the calculator. The agents read its output, tie it and explain it. Only a person reruns it, and a preview of a rerun is labeled as the engine's.

When can a well test be set aside?

Only for a reason the record supports, under your own agreement. In the sample agreement that means a recorded fault in the test equipment, after which the last accepted test stands. A test with no recorded fault cannot be set aside; the screen points to a retest instead.

What does a partner see?

Only their own tract, on its own scale. When a decision moves barrels out of their tract over the agreement's line, they open the records themselves and sign no objection or object with a reason, which goes to the manager.

Would a retest settle it?

A retest tells you whether the well really changed, and it sets next month's rate. It cannot replace the month's test once the month has passed, so the October decision still has to be made on the records.

How does it answer a question about a month long closed?

Each decision keeps its records and who opened them. A partner's or the state's question is drafted from that month's own records, cited, reviewed by the accountant and approved by the manager before it goes.

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Bring last month's allocation
and the tests behind it.

Send one battery's month, and we’ll trace each band that moved back to its own records.

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