2Royalty CalculationProduced oil and gas is measured prior to leaving the well site, as required by lawIn New York all production must be metered from each individual lease as well as from each individual zoneThe gross volume from which your royalty share is calculated is based on this measurementToday’s measurement technology is generally accurate to within +/-1.5 %
3How Do You Know It’s Fair? It is in the well Operator’s best interest to insure proper measurementOperators want to get paid properly on their share just as much as you want the same on your shareWhile there are recorded cases of theft, it is uncommon to find systematic theft of hydrocarbons through oil and gas measurement manipulationMeasurement components should be inspected and tested regularly
4Gas MeasurementA gas measurement device (regardless of brand or type) is only as accurate as the maintenance and calibration allows.Test equipment and standards are used to calibrate the three components used in the gas flow equation which are differential pressure, static pressure, and flowing temperature.
6Units of MeasurementThe unit of measurement for volume of natural gas is the MCF, or thousand cubic feetA related unit of measurement, based on the heating (or energy) value of natural gas is called the MMBTU, or British Thermal Unit1
7How is the Gas MeasuredTypically, the gas is measured at the wellhead and the sales delivery pointThere are various types of meters used for recording well flow depending on the needs of the operatorComplex systems including telemetering are used to provide access to data for the operatorAll of the systems will meet standards set by the AGA ( American Gas Association) and the ASME ( American Society of Mechanical Engineers) and local state standards if applicable
8CalculationsCalculation of total gas flow is done on a monthly basis, usually by a third party gas measurement contractor. These calculations are passed along to the Operator who enters the natural gas measurements into their revenue accounting system, the software through which royalty owners are paid
9Wellhead Orifice Flow Metering Orifice meters are commonly used for wellhead measurement because they provide a visual presentation of well production on a chart showing differential and pressure to record productionThese records must be integrated to get the actual volume produced
10Wellhead Rotary MeterRotary metering is also used for gas wells and is a simple way to accumulate production volumes
11Wellhead and Sales Metering Rotary meters will commonly have correction devices attached to the meters to convert the positive displacement of the meter to volumes in MCF’sThis device can typically be seen at both wellhead and sales meters
12Sales MetersSeparate from the wellhead metering is a facility at the connection of the gathering line and a distribution or interstate pipeline system known as the sales point.
13Sales MeteringBoth Orifice and Rotary measuring instruments are commonly used at sales points. This facility is typically the custody transfer point for gas sales.
14Sales MeteringRotary meters are also used for custody transfer recording at sales points
20Pipelines and Infrastructure Pipelines are needed to take the gas to marketCompressors are needed to maintain pressures and move the gas through the pipeline systemGas Processing Plants are needed when there are liquids associated with the gas. (Natural gas liquids include propane, butanes and pentanes and heavier hydrocarbons C5+)
23Major Types of Pipelines Gathering Pipelines – from wellhead to sales pointIntrastate Pipelines – large transportation lines within the state regulated by the NYS Public Service CommissionInterstate Pipelines - large transportation lines transporting gas between states regulated by the Federal energy Regulatory CommissionDistribution Pipelines – Local lines that bring the gas to homes and business
24New Capacity PlannedThe existing network of pipelines likely inadequate to bring Marcellus gas to market as production levels increaseTransmission companies have announced 24 new and expanded pipeline projects with projected in-service dates over the next 3 years6+ Bcf/d of new pipeline capacity planned
25Tennessee Gas Pipeline Source: Tennessee Gas Pipeline, LDC Gas Forum, June 8, 2010
26PipelinesPermanent” easements –filed in the courthouse. Limits the use of property afterwardsValue of the easement to both parties$3/lineal ft to $25/ft +Width of easement vs. work space30/40 ft vs. 60/80 ftCritical to development of wellLegal ReviewAddendums to protect unique concerns
27Pipeline ROW Use of existing ROW Valuation of trees Use of forester Soil replacementtop soil/subsoilImpact on cropsmulti-yearVisual impactslong-term planningtourism