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Oil and Gas

4 Best Practices for Oil Production Allocation

As valuable team members, production accountants handle vast amounts of data derived from oil wells and gas lines. Company leaders then use this collected data to determine an entire operation’s overall production. However, since this data comes from a wide variety of sources and industry experts use different allocation techniques for different cases analysis can become complicated and time-consuming. Fortunately, accountants can utilize a few process upgrades and best practices to significantly reduce their manual processes, improve productivity, and increase accuracy.

Accounting for oil production

On the surface, calculating oil allocation is a simple equation: Beginning Inventory (BI) + Production – Sales = Ending Inventory. However, a few prohibitive factors make the calculation more complex in execution. For example, though meters for collecting, analyzing, and reporting on oil data exist, many are too expensive to install or maintain. As a result, operators often rely on manual mathematical models to calculate production from each well or line. However, the information they derive can become inaccurate, especially as parts degrade over the life of each well or line. Unless industry insiders design their production allocation processes with adaptability in mind, these calculations will inevitably be less than practical. Here are four best practices to help manage operations productively and gain a competitive advantage:

  1. Consult your schematics. Whether you’re in oil or gas, it’s important you consult your schematics — layouts of all your tanks and how they flow — as your first step. Many production accountants do not consider schematics because they are mainly designed by and for managers and engineers. However, schematics can help accountants allocate accurately by allowing them to visualize oil flow. Schematics can also alert production accountants to important changes such as a tank having been moved.
  2. Implement a process for run ticket reconciliation. Each time a transporter arrives to pick up oil, he or she submits a run ticket to report how much oil she or he removes. However, compiling and reconciling these tickets at the end of each month can be a tedious process for production accountants, especially if they do it manually. Automated workflows can significantly increase data integrity and improve efficiencies for production accountants each month.
  3. Leverage new technologies. Implementing new systems and updated technologies can help streamline operations. For example, a sensor that can detect and send information from the tank strapping factory directly to your production allocation application can help you reduce errors and alert production accountants to potential loss during reconciliation early in the process.
  4. Choose the right application. The days of Excel may seem long gone, but many production accountants still utilize spreadsheet formats to organize information. Similar but more up-to-date applications like P2 Merrick offer built-in workflows and adaptors. These applications help automate processes such as reconciling run tickets and come with built-in validations.

Production accountants and company leaders alike can greatly benefit by working with a partner who understands how to properly allocate oil production. Don’t be afraid to leverage new technology: Production allocation applications can reduce manual efforts, increase accuracy, and improve data integrity. This, in turn, can save production accountants both time and hassles.

Business leaders have a lot to consider when it comes to production allocation. You can achieve great success for your company with the right practices, tools, and partner — including a trusted partner like Value Global. Visit Value Global online today to get started.
Oil and Gas

P2 ASCEND Conference

ASCENT 2017

Discover the ways to streamline efficiency in production and reduce costs! P2 ASCEND will be hosted in San Antonio from Nov. 13-15, 2017. Learn how those in the oil and gas industry are achieving a competitive edge and becoming more successful using the P2 Oil & Gas Platform. With more than 500 oil and gas professionals expected to be in attendance and over 100 session presentations, the insights and expert advice on how to maximize use of the platform will be invaluable.

On Tuesday, Nov. 14 at 3:10 p.m., Shree Sannabhadti, managing principal at Value Global LLC, will deliver a presentation entitled, “BoxBridge: Bridging the Gap Between EBS and the Cloud.” Sannabhadti will discuss the transformation into a hybrid enterprise and how it is imperative for all businesses across industries today. Oil and gas companies rely on the security, flexibility, and scalability of applications such as Oracle E-Business Suite (EBS) — and this is where Value Global LLC’s BoxBridge comes in. It serves as a multifunctional plug-in that allows users to store and access content, taking the pain out of transitioning to a hybrid enterprise.

To find out more about Value Global LLC, visit their latest blog regarding the challenges in the oil and gas industry by clicking here.

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