Operating Costs Vs Processing Fees

Home > Data Entry > Facilities > Operating Costs Vs Processing Fees

Capital and/or operating costs entered at a facility are recorded as costs at that facility and do not get back-allocated to the wells. Some special economic models have exceptions to this rule, one of which is the GCA results in Canada. It is also possible to enter facility operating costs as processing fees. These processing fees can then be used as facility revenue, and will be added to the wells as costs.

To enter processing fees:

Select the facility (from either the Network Tab or Data Tab)
Choose "Process" from the sub menu

Processing fees can be added in the dialog above. If the checkbox “Also Add All Local Facility Operating Costs as Processing Fees (Default= False)”, located at the top of the Processing Fees dialog shown above, is checked, then the facility’s operating costs (fixed and variable) will be added to the facility’s processing fees. If you check this flag, it is advised that you also make sure you either check “Generate Process Fee Revenue at this Facility” or have a zero percent working interest in the facility. Otherwise, you will incur both processing fees at the well level and operating costs at the facility, in effect double accounting for costs with no offsetting revenue.

*Note: Processing Fees from facilities after (downstream) a sales point ARE NOT charged back the wells, but do generate revenue at the facility.

Facility operating costs are calculated based on the total volumes flowing into it from all connected wells. The ownership interest of that facility is used when calculating working interest values.
A facility can define a processing fee which gets charged to all inflowing wells and is included in the well’s operating costs. If a wells volume flows to multiple facilities, each facility can charge a different processing fee on the portion of the volume that flows through it. The Processing Fee is a revenue to the WI owners of the facility when the "Generate Process Fee Revenue at this Facility" checkbox is checked

Refer to a worked example of operating costs