What is Oil and Gas Unitisation?
While oil and gas unitisation is something that typically only happens once in the lifetime of an oil or gas field, it is a very important process nonetheless. Typically, unitisation cases happen when an oil or gas field straddles differing territories, be those of different domestic blocks, or even different countries.
Oil and Gas deposits in the earth are of course, entirely natural and predate civilisations themselves- tending to not be things that tend to obey the laws of mankind’s borders.
When there is an oil field which spans multiple territories, what is to be done? Of course, an option is to treat each “side” as a separate entity and have differing fields on each side, but such is hardly efficient in terms of cost, efficiency or safety. Because of course oil and gas is a finate resource, one side can be accused of taking more than the other, and all manner of issues can arise from that perspective, as well.
Oil and gas unitisation serves to be the governing of oil fields subject to this sort of dilemma. A unitisation agreement is agreed upon by both (or more, on occasion) parties, and a unitisation agreement is penned by a specialist oil and gas unitisation and expert service.
These services are not something your average company on the street can arrange – it requires an oil and gas expert witness company to go through the documentation of the oil field, take a look through seismic logs and generally have a picture of the technical evaluations, and procedures of a particular site, as well as the arbitration. This company will set into motion the management and operation of a single oil field, of which is divided, when the oil is extracted, to percentage shares to each party.
Typically, most would expect the percentage to be about even, but this is hardly ever the case. Should an oil field mostly be in one country’s borders, the oil and gas expert witness will make calculations accordingly. All manner of situations, such as one party being financially responsible for a larger share of the research into the prospect are considered, and the process of oil and gas unitisation can be considered, at its heart, a balancing act.
