Sequel's PostgreSQL adapter doesn't pass the URL directly to PostgreSQL. It can't really do so and keep backwards compatibility.
It looks like you can just set the application_name
at runtime. The best way to do this with Sequel is via after_connect:
DB = Sequel.connect('postgres://gator@localhost/blah', :after_connect=>proc{|c| c.execute("SET application_name TO 'blahwebapp'")})
It is possible to integrate this feature into Sequel so that using it inside the 'postgres://' URL would work correctly. I'm open to that if other people think it would be useful.