Proration (Noun)
Meaning
The proportional limitation of production or distribution of something (e.g. crude oil or natural gas) to some fractional part of the total capacity of each producer.
Classification
Nouns denoting acts or actions.
Examples
- The state's oil and gas commission implemented a proration system to prevent overproduction and stabilize the market.
- Due to the proration order, the company was only allowed to extract 75% of its maximum daily crude oil production.
- The proration formula took into account the individual well's production capacity and the overall field production to determine each operator's allowable output.
- As a result of the proration agreement, the natural gas producers had to reduce their output by 20% to meet the state's conservation goals.
- The proration rules were designed to ensure that each producer contributed to the conservation effort in proportion to their production capacity.