Abstract: Gas Balancing

DOWD, TIMOTHY C.

Problems can arise when gas that has been jointly produced is not jointly marketed. Generally, the working interest owners independently market their share of the recoverable reserves. As it is impossible to determine the exact share of the recoverable reserves, it is also impossible to determine the exact amount of gas owned by each working interest owner in a well until all gas has been removed from the reservoir.

The paper will explore production imbalance and how it occurs. It will also look into the legal rationale for the three methods of balancing recommended by courts and commentators, i.e., 1) balancing in kind, 2) periodic cash balancing, and 3) cash balancing upon reservoir depletion.

The paper will also discuss recent court cases and statutes regarding gas balancing. One major issue of importance is the liability of successive leasehold owners for over-production by their predecessors-in-title.

AAPG Search and Discovery Article #90944©1997 AAPG Mid-Continent Section Meeting, Oklahoma City, Oklahoma