The Allowable Rate of Production (ARP) controls the volume of oil that can be produced from a well, or a combination of wells in a block, in a 24-hour period.
This rate can be authorized by the Minister of the Economy in the form of a:
With the exception of the Minimum Allowable and GPP, an ARP can be affected by a gas-to-oil (GOR) ratio penalty.
- Minimum Allowable
- Maximum Permissible Rate (MPR)
- Maximum Permissible Rate Off-Target Penalty (MPR – OTW Penalty)
- Economic Allowance (EA)
- Good Production Practice (GPP)
The Integrated Resource Information System (IRIS) assigns an ARP to a well at the time of license based on its location and proposed completion as described in Directive PNG012: Allowable Rate of Production: Oil Wells.
The IRIS assigned ARP is either:
- GPP: For a well completion within a pool or spacing area where GPP has been granted; or
- EA: For a well completion that is within a pool or spacing area that has not been granted GPP; or
- Minimum Allowable: For non-horizontal well completions where a licensee identifies a proposed well completion as off-target and subject to an off-target penalty. The Minimum Allowable for an oil well is 3.0m3/day. A minimum allowable overrides both GPP and EA.
An operator can make an application for a different ARP other than the one assigned by IRIS:
- A well under EA can make an application for an MPR or GPP.
- A well under MPR can make an application for GPP.
- A non-horizontal well completion that is subject to an off-target penalty can make an application for a MPR – OTW penalty.
Although IRIS displays the daily ARP, it doesn’t multiply in the GOR penalty factor. The Ministry does factor in the applicable GOR penalty as part of its production reviews, so it’s recommended operators include the GOR penalty factor when monitoring their own production. An operator is responsible for monitoring their production and correcting any over-production.