Newspaper article THE JOURNAL RECORD

Expansion of Anadarko Basin Gathering System Announced

Newspaper article THE JOURNAL RECORD

Expansion of Anadarko Basin Gathering System Announced

Article excerpt

Expansion of an Anadarko Basin natural gas gathering system announced Thursday is expected to more than double current volumes transported from certain fields in the area, according to the project's joint venture partners, Standard Gas Marketing Co. and Dyco Petroleum Corp.

The existing Roger Mills Gas Gathering System in Roger Mills and Beckham counties in Oklahoma will be extended into Hemphill and Wheeler counties of Texas at a cost of $13 million, the companies said.

The 40-mile system currently collects and transports between 70 million and 90 million cubic feet of natural gas daily into any one of six major pipelines operated by ANR Pipeline Co., Oklahoma Natural Gas Co., Northern Natural Gas Co., El Paso Natural Gas Co., Delhi Gas Pipeline Corp. and Arkansas-Louisiana Gas Co.

"Just like everybody else in Oklahoma and Texas, we've got a lot of wells shut in, either through FERC 500 (Federal Energy Regulatory Commission's Order 500) or whatever," said Mike Dyer, manager of natural gas gathering for Dyco Gas Marketing, a division of Tulsa-based Dyco Petroleum. "This is an opportunity to get the best net back price for our gas, and it gives us flexibility."

FERC Order 500 has a provision for natural gas producers to offer a credit to pipelines for each cubic foot of natural gas transported. Pipelines have accrued millions of dollars in liability through their failure to follow take-or-pay clauses in their contracts with producers.

The take-or-pay clauses call for a pipeline to take a certain volume of natural gas or pay for that volume and take it at a later date.

The commission's crediting system was set up to alleviate the liability accrued by the pipelines, but some industry members have said producers would stop producing the natural gas rather than offer the credits to the pipelines.

"If you're hooked up to a major pipeline and you have take-or-pay problems, you can't run the gas through those lines unless you want to lose the credit on that gas," Dyer said. …

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