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Permalink Reply by Henry on May 9, 2011 at 12:44

Les,

Can you elaborate on what these three indicies are?  How are these prices determined?  How do they affect the price for which an operator sells a mineral owner's gas?  Feel free to assume I'm ignorant, when you explain this (i.e., start from the basics).  Thanks.

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Permalink Reply by Les Bamburg on May 10, 2011 at 15:46

Henry, these are three gas price indices published in Platt's Inside FERC.  They represent baseload "first of the month" pricing for natural gas sold during bidweek (last five business days) immediately prior to the calendar month in question.  Most natural gas is bought and sold on a baseload basis with lesser amounts bought and sold on a daily cash basis.  Platt's surveys gas buyers and sellers and generates a single value for each index based on statistical analysis including some data screening.

 

The three indices were selected because they were the only ones that covered areas in general proximity to the North Lousiana / East Texas region and the pipelines are connected to some of the Haynesville Shale gas gathering systems.  Other pipelines in the area do not have relevant published gas indices. 

 

The values shown are "basis" and are added to the NYMEX final settlement value for the calendar month to obtain the gas index price.  These values be general indicators of prices received for gas delivered into the interstate pipelines but will vary dependent upon each operator's specific gas market connections and contracts.    

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