TRC AMENDMENT TO FIX GAS PRORATION RULE'S FLAW

The Texas Railroad Commission has passed an emergency amendment to a state gas proration rule believed to be systematically reducing production allowables. The amendment will alter for 3 months beginning this month the way the commission calculates forecast correction adjustments (FCAs), a step used by TRC proration analysts to adjust monthly gas well allowables to meet market demand.

Aug. 2, 1993

2 min read

The Texas Railroad Commission has passed an emergency amendment to a state gas proration rule believed to be systematically reducing production allowables.

The amendment will alter for 3 months beginning this month the way the commission calculates forecast correction adjustments (FCAs), a step used by TRC proration analysts to adjust monthly gas well allowables to meet market demand.

TRC commissioners said the temporary change was needed because FCAs were inappropriately reducing reservoir allowables. Because the effect was cumulative, increasing with time, commissioners said they likely have been setting monthly gas allowables below market demand.

Commissioners used the emergency proration amendment in late July to set August 1993 allowables for the state's prorated gas wells. Production from prorated gas wells in Texas was set to meet market demand of 176 bcf. The August 1993 allowable represents an increase of 10.65 bcf of gas compared with production in August 1992 of 165.4 bcf. Meantime, the commission has begun a formal rulemaking to permanently deal with the underlying problem. The rulemaking is to be complete within 6 months.

FCA EMERGENCY BASIS

TRC commissioners said the emergency amendment will help the commission fulfill its statutory mandates of accurately determining market demand for gas, setting reservoir allowables to meet market demand, and protecting correlative rights.

Under the emergency rule, monthly FCAs are to be the difference between monthly allowables assigned 3 months earlier and production reported during the same months. The TRC needs 3 months to compile accurate production data from prorated gas wells in Texas.

For example, TRC based the August 1993 FCA on the difference between the May 1993 allowable and May production from prorated gas wells. Similarly, the September 1993 allowable will be the difference between the June 1993 allowable and June production and the October 1993 allowable the difference between the July 1993 allowable and July production.

Beginning in November 1993, monthly FCAs are to be based on the difference between each reservoir's most recently reported production and the adjusted reservoir market demand forecast-including the commission adjustment in column 6 of TRC's A sheet-less the difference between special allowable wells' allowables and production in the month of most recently reported production.