Midstream Gas Processing
What is it?
Why is it important?
The Midstream Value Chain
Gathering / Processing
Chemicals, fuels, blend stocks
Most Raw gas produced at the wellhead is not pipeline quality Must be processed
How midstream companies make money
Gathering – fee/ commodity based
Processing – Fee
Fractionation – fee
Transport or Storage – fee
What is the FRAC Spread?
The difference in value between NGLs locked up in a gas stream and NGLs extracted from the gas stream sold separately How do we realize Value?
Gas processing extracts NGLs from the raw gas stream
Gas Processing creates two marketable products:
Residue Natural Gas (MMBtus)
Natural Gas Liquids or NGLs
A positive FRAC spread occurs when the value of the two individual products are greater than the value of the raw (wet) gas stream Ethane Rejection
When the cost of producing ethane is not more than the cost of natural gas
Joint Interest Accounting
SFAS No. 69
Include the following in the 10K
Historical Cost – based:
Acquisition, exploration and development costs
Future Value – based:
Discounted future net cash flows relating to proved reserves Any changes in the standard measure of the future net cash flows Include for SEC Industry Guide 2
Average sales price
The average production cost
Productive Wells and acreage
Total gross and net productive wells
Total gross and net developed acreage
Undeveloped acreage both net and gross acres by area
Terms of the lease
The number of net productive and dry exploratory wells
The number of net productive and dry...
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