A limited number of gas wells produce oil. The classification factor that determines if a gas well produces condensate or oil is called the Volumetric Gas Well Liquid (VGWL). Historically the VGWL factor was determined approximately six months after a well came into production, and was not reported by Petrinex, thus it often went unnoticed by production accountants. Now that the VGWL factor is a requirement as per measurement schematic regulations, it will appear on measurement schematics. Oil and condensate have different royalty rates, failure by Production Accountants to report the production as oil results in an economic loss to the company.
How FacilityStudio provides value
FacilityStudio’s Inventory Report captures the VGWL for all gas wells and correctly identifies them as either Gas Wells (produce condensate) or Gas Well Producing Oil (produce oil). The image below represents a Gas Well producing Condensate and a Gas Well producing Oil in FacilityStudio. Make sure any Gas Wells producing Oil are flagged appropriately in your internal databases.
Companies should review the last five years of reported production for all gas wells with a VGWL factor of oil (i.e. Gas Well Producing Oil on their measurement schematic) and identify if oil production is being reported against it. If the production is being reported as condensate, corrections should be made to avoid paying a higher royalty rate than required.