Managing Complex Processing Agreements in CTRM

Currently, there are about 500 operational natural gas processing plants in the US, processing up to 80 Bcf of gas daily. With the advances in shale gas development, new plants continue to be brought on line; while at the same time, older plants are retired as the conventional natural gas resources with which they were developed are depleted. As producers open up new fields and bring new wells on-line, those producers and the plant operators that service those fields are faced with negotiating new processing agreements that reflect not only mutually acceptable commercial terms, but are also reflective of the physical attributes of each of the individual facilities. Despite much standardization in many parts of the energy value chain, such as NASB contracts for wholesale interstate gas transmission and trading, natural gas processing has remained essentially untouched by regulatory or industry mandated standardization. Processing agreements reflect the reality of the business they encompass – these contracts are extremely complex; each is negotiated with terms that are bound only by the physical constraints of the processing facility. And just as there is no “standardized processing facility”, there is no “standardized processing contract”.