Since federal law charges the Secretary of the Interior with determining MERs (Maximum Efficient Rates) for oil and gas reservoirs on selected federal lands, this report aims to provide some insights into the technical consequences and shortcomings of one MER specification versus another. Six possible MER definitions are investigated by simulating the operation of several gas reservoirs in which encroaching water entrapment of gas provides a production-rate-dependent ultimate recovery function. The different definitions of MER involve maximizing, as a function of initial production rate, the quantities ultimate recovery, present value of net revenues, internal rate of return, and production rate, sometimes subject to the restriction that the internal rate of return be equal to or greater than an acceptable rate of return.
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