Replies to This Discussion

Permalink Reply by tc on July 9, 2015 at 16:25

I would think that there is no normal.  How far do the gathering lines run? 100 yards,1 mile, 10 miles?  There is a fixed cost associated with this fee so the more gas in theory the lower the fee per mcf, but the opposite is also true.  The higher the gas price the smaller the percentage of the royalty check and again the opposite is also true. Look at your local utility bill, I bet it has a set distribution fee and the lower that the bill is the higher % of the total bill is attributed to the distribution fee.  Finally gathering fees are many times set by long term contracts (5-20 years) that the operators entered into with 3rd party pipeline operators and depending on when they negotiated the contract (2009 vs. 2013) can have an impact on how good of a price they got

• ▶ Reply

Permalink Reply by kittycatmama on July 10, 2015 at 1:16

How are they assessed to a royalty owner?  By percentage of minerals they own in a section?

• ▶ Reply

Permalink Reply by Henry on July 12, 2015 at 6:49

Back when I conducted my brief survey on gathering fees, I found these fees ranged from about $0.25 to $1.00 per mcfe.  The $1.00 was usually charged by CHK and is now the subject of the McDonald law suit regarding unreasonable fees.  

• ▶ Reply

Permalink Reply by kittycatmama on July 12, 2015 at 14:11

my friend is leased with CHK. He got his first check after 1.5 years that the well was online. The gathering fees are one fourth of his check!!!!!!!!

• ▶ Reply

Permalink Reply by Chad Ellis on July 22, 2015 at 3:14

Gathering fees are normally assessed on a $/MBTU basis.  I.E. $0.10/MBTU.  (Older contracts may have this on a $/MCF basis).  In addition to Gathering, you could have Transportation, Compression, Treating, and Processing fees.  All of these are dependent on location, type of gas, and proximity to processing.  Since they are tied to the volume of gas and not the price of gas, the lower the price of gas, the larger percentage of the gross that these fees consume.  Typically, the mineral owner shares these costs proportionally to their royalty interests.  Some of the fees can be offset by Natural Gas Liquids (processing) sales, thus minimizing or eliminating their effects (Cotton Valley and other high liquids gas).  On the other hand,  Haynesville Shale gas, with it's high H2S and CO2 content, requires expensive treatment before it can be used commercially.  Unfortunately, it doesn't have any NGL's that can offset this either.  Hope this helps.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on July 22, 2015 at 3:20

Good answer, Chad.  Welcome to GHS.  How much of the Haynesville Shale basin gas contains H2S by general area?  CO2?

• ▶ Reply

Permalink Reply by Chad Ellis on July 22, 2015 at 3:51

All of the Haynesville Shale basin gas contains H2S and CO2 in excess of contractual limits.  It just varies slightly by area and sometimes by the age of the well.  Some of the older wells have seen their H2S levels rise.   

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on July 22, 2015 at 4:37

Thanks.  I wasn't aware that the H2S was that wide spread.  I had always associated it with the more southern and deeper TVD wells.

• ▶ Reply

Permalink Reply by Steverino86 on July 27, 2015 at 5:19

It seems about 38cts may near "normal" gathering and transportation.  CHK, on the other hand, may try to get as much 1.98, or even more.

 

• ▶ Reply