Given that a well is a good producing well… I’ve often wondered who exactly controls the volume of oil that well can produce. Is this controlled by law, operator or some other entity. Can $ per barrel be a consideration. It seems that it would be most beneficial to the operator to run full open at higher prices and squeeze it down as prices fall. Is there any regulation of this?
Sort of, but not really. Hey NoBS. Wells do have what are called allowables, but very, very few wells can produce cumulatively what they are allowed. Most wells these days produce on full open chokes. After 120 years of wells the pressures in most reservoirs have been reduced so they aren’t able to use the choke to control production. Another component is the fracs these days use incredible amounts of water so the quicker you get that water out of the formation the better, therefore open chokes. Hope that helps.
In addition to what Todd said, the operator decides how they want to choke the wells. They take into account their larger portfolio strategy. If prices are good, they may increase the flow in some fields, but not others or other operators may go wide open. They want to make as much money as possible, but also have a long term view (hopefully). During the Covid drop in demand and low prices last spring, many wells were shut in or cut back until prices were better. They did not want to waste volume on low prices. Many of those are back running strong now.
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