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SAP PRA Overview

PRA is called Production Revenue accounting and the product is designed to support Upstream Oil business process. 

The SAP PRA supports both Gas and Oil network processes. The physical network(gas/oil) will be drawn to logical network(PRA-Devliveray network) for Oil/Gas networks. The logical networks are defined as SAP PRA Delivery Networks. The oil will be stored in a tank. Once the Oil is separated from the well, the Oil network can contain multiple measurement points(TANKS) to store the Oil and LACT Meters(Sales Meters). The gas network contains the pipeline with a compressor and a gas check meter(gas sales meter). The gas can not be stored in a tank. The gas that can not be stored or sold will be flared. Flaring is the burning of natural gas when it can not be stored and sold. 
    
SAP PRA has four main modules(Production/CA/Ownership and Revenue Accounting) and integration with sub-systems. 
 
Once the logical network is defined and all the master data is entered in the PRA system, the core PRA process is automated through integration’s from third party systems(PI/Scada/JVA/Tobin etc.,) and feeding daily/monthly volumes through the integration’s and running month end processing.
 
The SAP PRA Business Process :
 
In production module, you setup a field, reservoir, Well, MP, DN and other master data needed to map all the configuration required to enable the logical network in the PRA system. 
The Delivery Network allocation profile to define allocation rules for a delivery network. The allocation rules include the details of product an volume types to be allocated. The allocation rules defined in the DN profile will affect how the allocations are distributed for a transaction in a given delivery network. The MP allocation profile is to define the allocation rules for a given MP for a DN. The MP allocation rules determine the product and volume types of all volumes to be captured at a measurement point and the method used to capture the volumes. The WC/DN theoretical calculation method determines theoretical or estimated production at a well completion. The theoretical production may vary based on the combination on allocated production and allocation profile(monthly or daily) which results the WC/DN theoretical calculation method. Well tests help determine estimated volumes of various products at a well completion. The well test is used when there is not enough information is available to determine the products available at the well. The well test can be used to test oil/gas and water contents in barrels,heating value and volume pressures. The MP volumes are either entered manually or interfaced from PI/Scada(third party) to Production module.
One the volumes are entered, the production close process “Allocate and Close Production” can be run. The results can be viewed through spools and verify an errors. If there are errors during the production close process, further analysis needs to be done either by debugging the process Or working with a technical team.
 
Contract Allocation module, allocates volumes of oil and gas transported from sales points or well completions to multiple contracts and owners. The volumes from sales contracts and well completion will be allocated to working interest owners in marketing groups and makes these volumes available for balancing and valuation. The CA retrieves sales volumes from production module and allocates volumes and energy quantities in the following order : marketing groups, contracts and WI owners.  CA calculates entitled volumes by WI owner by a well completion or measurement point based on volumes maintained in production and GRI maintained in Ownership module.
Ownership module is designed to manage DOI for producing properties operating interests(gross working interests) for producing and non-producing properties. The master data defined in the Ownership module is used throughout the PRA module. The modules is used as a single source for ownership to support revenue distribution.  SAP Ownership module integrates with TOBIN(third party) system to integrate the Ownership information. The Ownership module also integrates with JVA module from SAP which is to support the Joint Venture Accounting to manage joint interest billing. Ownership modules supports the maintenance of ownership history and the ability to link the burden groups to specific working interest owners. It also helps track unit property information(unitization). It also helps with Ownership transfer requests and ownership change.
Ownership module integrates with SAP accounting (FICO) to transfer funds from suspense to pay and from pay to suspense based on owner interest transfer requests and changes. Ownership module integration with other PRA modules, as such, generates prior period notifications(PPN) for changes that impact both valuation and contract allocation processes, including automatic updates of marketing group changes, when necessary.  The check-out and check-in DOI in Ownership process controls when maintenance can be applied to the system without impacting work in progress from the other components.  The Create DOI to MP/WC XRef creates the relationship between a well completion and a DOI for a given material and date range. The purpose of the DOI/WC cross reference is to link a DOI to WC and MP. This information must be setup up before a Valuation cross reference can be setup either at the measurement point or well completion level. The DOI accounting in Ownership is used to define tax and revenue information specific to a DOI. Each product can be mapped to different accounting codes which can create multiple accounting records for a DOI. 
 
The Create Tax Calculation Data process defines the criteria for tax calculation by stat, tax type and major product. The other criteria such as exempt entities, marketing costs and reimbursements can also be defined with CTC Data process. In ownership module, you can define the valuation formulas in which you define how the system values a product. The Create VCR establishes a set of effective dated data by product that allows product to be valued. The Set of data includes : production entities (DN, MPs WCs, contractual allocation marketing groups, owner entities(unit properties, DOIs, DOI to MP/WC Cross Reference, Approved contracts and approved formulas.
The Create Marketing Costs transaction is used to create and maintain marketing costs at the contract, contract/measurement ponit or contract/WC level. Marketing costs are the costs involved in taking a product to the market. This transaction can be used to capture marketing costs for multiple materials.The Contracts and Pricing application area in Production Revenue Accounting (PRA) supports the maintenance of contracts and related marketing costs, pricing terms, and prices for the sale of products including crude oil, condensate, and natural gas. Settlement diversity occurs when one or more owners in the DOI needs to be handled differently than the other owners in the DOI with regards to the contract.  For example, one owner could be paid a price different than the price paid to the other owners, or a particular owner could be paid on a sliding scale basis.
Settlement diversity owners will be identified on the DOI, and a different formula can be tied specifically to these owners.

Contracts –  identify an agreement to sell a particular product (oil, gas, condensate, etc) to a certain purchaser at an agreed upon price. The contract type determines which fields in the transaction are required, some of the most common contract types are (1. Gas Sales contract 2. Oil Sales Contract). A valid customer master record should exist for the customer to be referenced in the contract. Customer master records are created in the Ownership module using master data maintenance. A transporter is a third party who picks up and delivers product to a purchaser. You link a transporter with a specific measurement point or Well completion which means that the transporter can be used to transport volumes from that measurement point or WC. The link is maintained using MP / WC Transporter Cross Reference. The relationship between transporter and purchaser is defined in a contract using MP / WC Transporter Contract Cross Ref.

Marketing Costs – Marketing costs are the costs involved in taking a product to market, they are deductions from the price paid for product for items such as transportation, handling, gathering, compression, etc.
Marketing costs are created at the contract, contract / measurement point, or contract / well completion level.

Prerequisites for Creating Marketing Costs:

• Valid Contract
• A venture
• An approved division of interest
• Either a well and well completion or a measurement point, if applicable

Marketing costs can be setup as a deduction or reimbursement amount, you also enter a rate which is a rate per volume. It specifies the amount per measurement unit that the system multiplies by the volume in order to obtain either the deduction or reimbursement amount in Valuation. The rate must be used in a marketing reserve word before it can be used in Valuation. After the required marketing cost reserve word(s) are entered in the valuation formula(s), the Valuation batch process performs the actual deduction or reimbursement in order to carry out the marketing cost calculation.

Pricing- PRA Pricing functions capture the pricing data required to value oil and gas sales, and are also used to set up formulas, oil price postings, and gravity pricing adjustment tables. Pricing functions can be used for fixed as well as formula-based pricing. In PRA we use EP01 to enter fixed pricing data and use condition records to enter prices for each Material and effective date, user has to select the level to which the condition record will apply (either measurement point or well completion or Material), prices are entered in the rate field along with the currency and effective date of the pricing as shown below.

Formulas-Formulas define how the system values a product. They provide the means for the system to value any volume type or disposition being maintained in sales, production, on-lease, off-lease, etc. Formulas are a critical component of the valuation cross reference relationship providing the ability for the system to use production and revenue allocation information; contract, pricing, and marketing cost/reimbursement information; and ownership and accounting information.

Formulas are also used to calculate deducts for marketing costs as spelled out in the Contracts and Pricing DCA and they also calculate royalty pricing in cases where pricing for royalty differs from the actual sales price. It specifies the amount per measurement unit that the system multiplies by the volume in order to obtain either the deduction or reimbursement amount in Valuation. The rate must be used in a marketing reserve word before it can be used in Valuation. After the required marketing cost reserve word(s) are entered in the valuation formula(s), the Valuation batch process performs the actual deduction or reimbursement in order to carry out the marketing cost calculation

Valuation Cross Reference-A valuation cross reference represents an effective-dated link by product.

The link includes:

• Entities from Production – delivery networks, measurement points (MP), wells, and well completions (WC)
• Marketing groups from Contractual Allocations
• Entities from Ownership – unit properties, divisions of interest (DOIs), DOI to MP Cross Reference, and DOI to WC Cross Reference
• Approved contracts and approved formulas

Settlement diversity – Settlement diversity occurs when one or more owners in the DOI needs to be handled differently than the other owners in the DOI regarding the contract. For example, one owner could be paid a price different than the price paid to the other owners, or a particular owner could be paid on a sliding scale basis.By identifying settlement diversity owners on the DOI, a different formula can be tied specifically to these owners using Settlement Diversity forumula.

Using SD formula setup you can assign a different price for the royalty owner compared to that of Workign interest owner. Settlement Diversity is integrated with valuation cross-reference (which designates the settlement entity, such as delivery network, venture, contract, well, and so on) and ownership setup. For example, to be viable an owner must be in a DOI associated to the venture in the VCR. VCR, ownership, and SD setups are independently effective dated. To avoid the complexity of managing effective dates across the three setups, the SD setups are allowed to be maintained independent of the related VCR and ownership setups.

Check Input – The Check Input application area processes payments received from third party purchaser or remitter remittance statements into the SAP Oil and Gas system and involves the standardization of data (editing and translation of purchasers’ data into the necessary standard data types and formats so that it can be processed).

Payments can be processed automatically, through CDEX, or they can be entered into the system manually. Further, there are options to process payments for recording income, expenses, and royalty payments for non-material interests. Check Input allows you to define formats that represent the remitter’s check stub layout in order to facilitate data entry. Further, Check Input utilizes batch data input to organize and process information.

Check Input automated processing:

• Credits accounts receivable and debits cash clearing

• Creates valuation input

• Suspends line correction – errors are automatically suspended, then automatically reprocessed upon completion of master data set up. A write – off process is also available to remove unwanted or non-material errors.

• Supports intercompany receivables with cash transfers from affiliated companies and makes the corresponding intercompany journal entries.

• With the Check Stub Data Exchange (CDEX) interface , Check Input receives check detail and processes payments from purchasers electronically

Check Layout – The Check Layout allows you to define formats that represent a remitter’s check stub layout in order to facilitate the recording of the check data to accounting output. There will be one layout for CDEX and at least one for other checks. For non-CDEX checks, we’ll try to create a standard template that works for most checks received. We can create one-off layouts for checks that don’t meet the standard template. The check layouts will be manually created in PRA.

Remitter Layout Cross Reference – The Remitter / Layout Cross Reference ties a remitter to a check layout number. The remitter can be tied to multiple check layouts but one has to be designated as the default. This assignment must be established before the layout can be accessed in other Check Input transactions

Remitter / DOI Cross Reference – The Remitter / DOI cross reference ties a remitter to a Venture/DOI or AP Measurement Point. This cross reference is effective dated if a remitter changes for a particular venture.

SAP PRA End to End implementation Steps

Production:
1.Create Field and Reservoir
2.Create Well, WC, WC dated
3.Create MP, MP Dated
4.Create DN, DN dated
5.Create DN Structure
6.DN Allocation profile
7.MP Allocation Profile
8.Th Calc Allocation profile
9.Well test and Downtime
10.Enter MP Volumes
11. Allocate and – Close Production
12.Review Spools
13.Review WC Volumes and confirm allocation was correctly done
Contractual Allocations
14.Create Sales Contracts  such as Gas sales contracts, Oil sales Contracts, TIK etc..
14a-Maintain Contract pricing and Marketing Costs
14b. Setup Delivery Network dated Characteristics
         Division order of sales for Oil
         Sales point Originated for Gas
         SPF for NGL products
15.Create MP Contract Transporter XRef
16.Refreshed network for SPO – only for GAS ( For Oil use Division order of Sales )
17.Enter contract Qty by sales point – Only for GAS from the plant statement
18.Enter Contract volumes for CA Manual
19.Enter Simple Plant Function – SPF Volumes for NGL products from plant statement
20.Contractual allocation and  Close CA
21.Review CA Volumes
Ownership:
22.Create Venture in JVA module
22 a. Create Base DOI and Division of Interest  in PRA ownership module
22 a. Create Burden group
23. Create the Venture DOI  ( RI and WI percent’s and entity types)
24.Create DOI to MP/WC Xref
25.Create DOI Accounting ( System Valued, Check Input or settlement statement )
25-a. Ownership Transfer
25-b. Transfer with Funds
25-c. Transfer without Funds
Revenue
26.Maintain Tax Calculation data
26a. Maintain State Tax Rates
26b . Maintain Tax Classification data
27.Create Formulas, Maintain Accounting Control
28.Create VCR
29. Maintain Marketing Costs
30.Create Pricing for contracts  and for Settlement Diversity Owners
31. Value and Post in DN Workplace
31a. Review Combined Run Report
32. Review Posted accounting document to FI
33. For Settlement Statement Properties ( Maintain Purchasing XRef, and Create Settlement Statement)
34. Run Payment Processing ( Populate, Validate, Process, Journalize , Finalize )
35. Review Owner payment checks
36. Create ACH File to be sent to Bank for Royalty owners
37. Create CDEX File and send to Portal for review by Owners
38. Run Check Input Process for Inbound Payments from Remitter
39. Review AR WorkPlace
Compliance
 40 Create Tax master and Leases for State Severance for Valid States that are in Scope such as Texas, Oklahoma, North Dakota, Wyoming, Louisiana
41  Run Severance Tax Compliance Reporting ( Prepare, Validate , Extract, Journalize , Finalize )
       File TX1 , TX2, GLO1, GlO2 reports to state
42. Submit forms and Pay Severance Taxes in FI
43. Maintain  State Royalty Master file and leases for all Valid states ( State properties )
44. Run Royalty Compliance Reporting ( Prepare, Validate , Extract, Journalize , Finalize )
45. Submit forms and Pay State or Agency Royalty Owners
46. Maintain Federal Tax Master file and Leases
47. Run Federal ( ONRR 2014 ) Compliance Reporting ( Prepare, Validate , Extract, Journalize , Finalize )
48. Submit Forms and Pay Federal Agencies
49. Review Taxes Payable Workplace

Other Month end Steps for PRA
Accounts Receivable workplace review and recon
Check input for operated and non operated properties
Run Payment process pay Royalty Interest Owners
Run JIB Payment process and pay Working interest owners
Value inventory
Close PRA

FICO Month End Process for Oil and Gas
Execute PPA Interface
Load SABRIX Sales Tax Rates
Load foreign currency rate
Close AP and MM for Close Month and open next Month
Accrual Reversals
Recurring Entries
Asset Depreciation
Overhead allocation
Manual SKF loads
Intercompany Billing
Settlement for projects Allocations Run
UOP Depreciation
JV Cutback Activities
CUTOFF All non billable revenue, cash postings, outside operated JIBs
JV Billing, Netting, Dunning Activities
Final Adjustments for the Business Units
Currency Revaluation
Consolidation

Canadian PRA Basics

One of the key functions in CPRA is Product Allocation (PA). This section discusses the process steps for using the Product Allocation Workbench or PA Workbench. The PA workbench provides the functions for performing the processes of Alignment, Balancing and Allocation. The transaction code to launch the PA Workbench is /CPRA/ALLOC_WP_PA. Execute transaction /CPRA/ALLOC_WP_PA to launch the PA Workbench. Then select following Volume categories.

CPRA Product Allocation, Revenue, and MD/TD

In this option only residue gas is used that is coming from the same owner as the “should’ be source at the consumption point.
Process Type
This field determines if an entry created via this prioritization rule should be considered a purchase scenario or a normal transfer of residue gas.

GJ Swap Process Introduction
GJ Swap Process is executed as the last step of Product Allocation.
For this process, you should maintain a set of master data for a facility as dated information.
Master Data NGL Material that will participate in the GJ Swap Process Facility Owners
The NGL materials that have been maintained as part of master data will participate in this process.
All the non-facility owners having Available for Sales for these NGL materials have to give up their energy and volume and will receive an equivalent amount of Residue gas energy or volume.
The facility owners who will participate in the GJ Swap process are maintained in the master data as described above.
These facility owners will receive the NGL energy or volume and will give up an equivalent amount of Residue gas energy or volume to the non-facility owners.

Actual (A)
Defines volume types that are calculated by the system. The alternative volume type is the manually-maintained volume types.

Fuel (F) Defines product dispositions (volume types) that are considered fuel consumption volumes. These can be calculated by the system based on operating hours and consumption or firing rates of the device, or by providing the volumes.

Upstream Fuel (U)
Defines product dispositions (volume types) that are considered fuel consumption volumes (for the scenario where stream is measured after fuel consumption). These can be calculated by the system, based on operating hours and consumption or firing rates of the device, or by providing the volumes.

Sales (S) Defines product dispositions (volume types) that are considered to have been sold. Note that calculated production is determined at a well level based on the volume type categories: CALCULATED PRODUCTION = Fuel + Inventory + Non Sales + Sales – Lease – Receipts

Receipts (R)
Defines volume types (VT) that are considered to have been received from an outside source – from another well on the same lease, from a well on another lease, from a plant, facility, or a third party. This VT does not include the portion of a product disposition produced by the well. Transfer (T) Defines volume types that are used for transfer dispositions.

Other (O)
Defines volume types that are considered non-final product disposition volume types (plant total PVR is an example of “other”). This VT is not considered to be part of “calculated production,” but its volume needs to be captured. This VT has little effect on PRA processing.

Receipts (R) Defines volume types that are considered to have been received from an outside source – from another well on the same lease, from a well on another lease, from a plant, facility, or a third party. This VT does not include the portion of a product disposition produced by the well.

Fuel Credit (C)
Fuel credit is a negative fuel volume which is allocated as other fuel volume at component level. Since fuel volume is a negative number, it increases the well theoretical volume (available for sale)

If the calculation method is Complex Sliding Scale, then it is mandatory to enter calculation parameters in the following fields:
Royalty Price Type
Royalty Payment Price Type
Royalty Factor %
Roy Quan Comp ID

Double-click the entered ALV row to maintain Calculation Parameters.
If the calculation method is fixed, then it is mandatory to enter calculation parameters in the following fields:
Royalty Price Type
Royalty Payment Price Type
Fixed %
Allocation %.

To maintain values for Royalty Quantity Component ID in SPRO, go to ->Industry Solution Oil & Gas (PRA) ->Canadian PRA->Revenue Accounting->Maintain Royalty Quantity Component.
To maintain values for Royalty Price Component ID in SPRO, go to ->Industry Solution Oil & Gas (PRA) ->Canadian PRA->Revenue Accounting->Maintain Royalty Price Component.

Following steps are for gas. FHMT process for oil is explained in the previous sections.
FHMT Unit Value Calculation Process for Gas can be performed at either Facility Level or Well Level. To choose either, maintain Customizing for the same. For details, refer the customizing guide section FHMT Unit Value Calculation.
Double-click on an existing row or select a row and choose Display Details buttons. The system displays the run details as show in the following figure.
If the calculation method is Simple Sliding Scale then it is mandatory to enter calculation parameters in the following fields:
Royalty Price Type
Royalty Payment Price Type
Allocation %
Min Royalty Rate %
Max Royalty Rate %
Divisor.

FHMT unit value calculation workplace can be used for calculating the unit value based on production year, company code and product type.
The transaction code for FHMT Unit Value Calculation workplace is /CORA/FHMT_UV_WP
The system displays FHMT UV Workplace selection screen as show in the following figure.

PRA Terms and Terminology

Area Network – An area network is a network of delivery networks. Area Networks includes network links which are directed, effective dated and link facilities with each other.

Associated Gas – Natural gas which is found with deposits of petroleum dissolved in the oil or as a free cap gas.

Available for sale  AFS  – Quantity of product available for processing at a gas plant or facility.

Battery BT – A system or arrangement of tanks or other surface equipment receiving the effluents of one or more wells prior to delivery to market or for other kinds of disposition. A battery may include equipment or devices for measurement and for separating effluents into oil, gas, or water.