1. Natural Gas Measurement, Meters and Pipelines

2. Royalty Calculation
Produced oil and gas is measured prior to leaving the well site, as required by law
In New York all production must be metered from each individual lease as well as from each individual zone
The gross volume from which your royalty share is calculated is based on this measurement
Today’s measurement technology is generally accurate to within +/-1.5 %

3. How Do You Know It’s Fair?
It is in the well Operator’s best interest to insure proper measurement
Operators want to get paid properly on their share just as much as you want the same on your share
While there are recorded cases of theft, it is uncommon to find systematic theft of hydrocarbons through oil and gas measurement manipulation
Measurement components should be inspected and tested regularly

4. Gas Measurement
A 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.

5. Pressure Differential

6. Units of Measurement
The unit of measurement for volume of natural gas is the MCF, or thousand cubic feet
A related unit of measurement, based on the heating (or energy) value of natural gas is called the MMBTU, or British Thermal Unit 1

7. How is the Gas Measured
Typically, the gas is measured at the wellhead and the sales delivery point
There are various types of meters used for recording well flow depending on the needs of the operator
Complex systems including telemetering are used to provide access to data for the operator
All 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

8. Calculations
Calculation 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

9. Wellhead 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 production
These records must be integrated to get the actual volume produced

10. Wellhead Rotary Meter
Rotary metering is also used for gas wells and is a simple way to accumulate production volumes

11. Wellhead 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’s
This device can typically be seen at both wellhead and sales meters

12. Sales Meters
Separate 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.

13. Sales Metering
Both Orifice and Rotary measuring instruments are commonly used at sales points. This facility is typically the custody transfer point for gas sales.

14. Sales Metering
Rotary meters are also used for custody transfer recording at sales points

15. Meter Run to Sales Meter

16. Gas Production Unit

17. Chesapeake Sales Point to RG&E

18. RG&E Meter Station at Gas Sales Point

19. Pipelines

20. Pipelines and Infrastructure
Pipelines are needed to take the gas to market
Compressors are needed to maintain pressures and move the gas through the pipeline system
Gas Processing Plants are needed when there are liquids associated with the gas. (Natural gas liquids include propane, butanes and pentanes and heavier hydrocarbons C5+)

23. Major Types of Pipelines
Gathering Pipelines – from wellhead to sales point
Intrastate Pipelines – large transportation lines within the state regulated by the NYS Public Service Commission
Interstate Pipelines - large transportation lines transporting gas between states regulated by the Federal energy Regulatory Commission
Distribution Pipelines – Local lines that bring the gas to homes and business

24. New Capacity Planned
The existing network of pipelines likely inadequate to bring Marcellus gas to market as production levels increase
Transmission companies have announced 24 new and expanded pipeline projects with projected in-service dates over the next 3 years
6+ Bcf/d of new pipeline capacity planned

25. Tennessee Gas Pipeline
Source: Tennessee Gas Pipeline, LDC Gas Forum, June 8, 2010

26. Pipelines
Permanent” easements –filed in the courthouse. Limits the use of property afterwards
Value of the easement to both parties
$3/lineal ft to $25/ft +
Width of easement vs. work space
30/40 ft vs. 60/80 ft
Critical to development of well
Legal Review
Addendums to protect unique concerns

27. Pipeline ROW Use of existing ROW Valuation of trees Use of forester
Soil replacement
top soil/subsoil
Impact on crops
multi-year
Visual impacts
long-term planning
tourism