A review of hydrocarbon allocation methods in the upstream oil and gas industry

Commingling of hydrocarbon from difference producing sources or streams into a shared production or transportation facilities offers a significant cost savings advantage. Usually, the operator of the shared facility would have to back allocate the total quantity of the hydrocarbon fluids received (or the imbalance) at the shared facility to all the contributing streams. This review paper has evaluated the often confused hydrocarbon allocations concepts such as allocation structure, allocation types, and allocation measurement and allocation methods. The author has reviewed various hydrocarbon allocation methodologies and identified the most accurate and fairest method used in the industry. The review paper also presented some challenges that are often faced by operators in executing hydrocarbon allocation. Some of the challenges of allocation include variation in measurement uncertainty of the allocation flowmeter, pipeline theft, process upset, shrinkage factor and flash factor. Based on the available pieces of literature, the author has presented some best practices in ensuring equitable and transparent hydrocarbon allocation.