SPE Economics & Management
Volume 3, Number 1, January 2011, pp. 10-17

Summary

The unitization of oil and gas fields that straddle license or international boundaries traditionally has been effected with the aim of maximizing return on investment for all unit owners. The rationale is that the costs of unitization and any subsequent redeterminations of equity will be subordinate to the enhanced production and thence revenue that unitization might bring compared to a partitioned development. This outcome is more likely to be achieved in the traditional case of a sizable field with laterally consistent, discernible reservoir properties and fairly uniform hydrocarbon that is unitized before production startup with a perception of predictable commodity prices. This rationale is impacted by departures from the classical situation. These departures include field marginality, market volatility, reservoir complexity, hidden pay, the presence of multiphase hydrocarbons, cross-license trends in reservoir-rock or substance properties, and post-production unitization. Each of the major departures is analyzed from the standpoint of the challenges it presents to a value-adding unitization exercise. Part of this analysis calls for a consideration of alternatives to unitization where another avenue might prove more beneficial to the owners of straddled licenses. This evaluation is undertaken by reference to case histories, through which procedural recommendations are formulated for future guidance. Notwithstanding this collation of options, it is of paramount importance that each case be examined thoroughly so that the optimum development strategy can be identified for any straddling petroleum accumulation.

© 2010. Society of Petroleum Engineers

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History

• Original manuscript received: 9 March 2010
• Manuscript approved: 20 April 2010
• Published online: 4 November 2010
• Version of record: 14 January 2011