Allowables and Allowances

Abstract

Introduction The problem of proration to market demand has always been highlycontroversial. Because another hearing is to be held on November 5th, 1963 -the last one of importance was in 1961 - this review is an attempt to compile arepresentative bibliography and to present the issues for debate which havearisen in the past and those which can be anticipated in the future. From thispoint of view, it is hoped that it will provide some background and avoid someduplication of research for those who propose to take an interest in thesecoming hearings. Whether from the standpoint of equity or of economics orfurther development and investment, these hearings will be vital to the futureof the oil industry in Alberta. No recent hearing has been more important. This paper does notrepresent the views of any group and does notpurport to offer any solution. The writer reserves the right to advocate orjoin in advocating such solutions as may be considered appropriate at the timeof the hearing. Historical The competence and jurisdiction of the Oil and Gas Conservation Board of theGovernment of the Province of Alberta in the matter of proration of crude oilto market demand does not call for any lengthy discussion. It is contained inSection 36 (1) of the Oil and Gas Conservation Act, which, amongst otherthings, states that each owner should have an opportunity of obtaining his justand equitable share of the production of any pool. Until 1949 the Oil and Gas Conservation Board set certain standards, in anattempt to preserve good engineering practices, of so-called "maximumproduction" (2). However, following the discovery of Redwater, the provincialproducing potential on this "maximum production" basis grew to a figure which, by 1950, exceeded the available demand by a wide margin. Nearly all the demandat that time was in Alberta.