THE ECONOMIC POSSIBILITIES OF NATURAL-GAS CONSERVATION - ANTITHETICALRESULTS OF PRORATIONING REGULATION

State prorationing regulations for natural gas production are intended to conserve resources, prevent waste, and, if necessary, protect the rights of property owners. This paper examines the effects of conserva tion regulations on the stock of the resource and on production costs. Results indicate rules that do not consider the nature of the physica l stock and how it is recovered, as well as the heterogeneous nature o f the reservoir, may result in sub-optimal production paths for indivi dual wells. Such inefficiencies increase production costs and may in s ome cases, reduce the recoverable stock; results antithetical to the i ntended goals of the regulation.