(1) Full unitization: 1 operator, 1 development, 1 evacuation route where all costs in common, common stream at sales point; (2) Joint Development: 1 operator, 1 development, 1 or more evacuation route, some costs in common, individual sales rights; (3) Co Operative Development: 2 operators, 2 developments, 1 or more evacuation route, no costs in common, individual sales rights. What is the different basis for determining each entity’s share of gas in each license: Based on Gas in Place – Objective measure independent of development or price; Agree relevant formation by area and depth; Agree methodology and parameters; Carry out calculation jointly – If disagreement at any stage refer to expert or refer the whole process to expert, but this entails a certain amount of loss of control. How often are the shares in the different licenses determined/re-determined: Classically: First time – Pre-development decision; Second time – Post production; Other times – Possible. Current trend: Do it once pre development because it is simpler, and in any case it is never an exact science; redetermination diverts skills and resources; redetermination can sour relationships. Issues regarding cooperation between states in such cases include: States need to ensure reserve allocation and thus tax take is equitable and agree to various tax issues (agree to taxing rights, taxing jurisdiction, no double taxing); they need to agree to recognition of reserve and production allocations; to the costs allowed; they need to support project development and production (e.g. access to field); developers need certainty of government support; governments need to define who controls what, safety inspections and standards etc
03.08.2009

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