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Oil and Gas

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Oil and Gas
Midstream Gas Processing
Frac Spread
What is it?
Why is it important?
The Midstream Value Chain
Gathering / Processing
NGLs
Fractionation
Transportation
Storage
Marketing
Chemicals, fuels, blend stocks
Residue Gas
Transportation
Storage
Marketing
Utilities, industrial
Most Raw gas produced at the wellhead is not pipeline quality
Must be processed
Ethane
Propane
Normal Butane
IsoButane
Natural Gasoline
How midstream companies make money
Gathering – fee/ commodity based
Processing – Fee
NGLs
Fractionation – fee
Transport or Storage – fee
Marketing trading
Residue Gas
Transport/ storage
Gas Marketing

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

Chapter 12
Joint Interest Accounting

SFAS No. 69
Include the following in the 10K
Historical Cost – based:
Proved Reserves
Capitalized Costs
Acquisition, exploration and development costs
Production information
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
Production
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
Undeveloped acreage both net and gross acres by area
Terms of the lease
Drilling Activity
The number of net productive and dry exploratory wells
The number of net productive and dry
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