Natural Gas Measurement, Meters and Pipelines

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 %

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

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.

Pressure Differential

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

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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

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

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

Wellhead Rotary Meter

• Rotary metering is also used for gas wells and is a simple way to accumulate production volumes

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

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.

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.

Sales Metering

• Rotary meters are also used for custody transfer recording at sales points

Meter Run to Sales Meter

Gas Production Unit

Chesapeake Sales Point to RG&E

RG&E Meter Station at Gas Sales Point

Pipelines

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+)

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

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

Tennessee Gas Pipeline

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

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 space30/40 ft vs. 60/80 ft

• Critical to development of well• Legal Review

Addendums to protect unique concerns

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 planningtourism

http://extension.psu.edu/naturalgas/publications