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Enron Mail |
I would request that each of you read the following...........SF please email
me the answer to Schneider's questionwith respect to purchase contracts;GN please provide me with the same concerning transport and storage.......Thanks bng ----- Forwarded by Barbara N Gray/HOU/ECT on 08/02/2000 10:29 AM ----- Steve HPL Schneider 08/02/2000 06:37 AM To: Brian Redmond/HOU/ECT@ECT cc: Barbara N Gray/HOU/ECT@ECT Subject: Re: Processing Value We have the correct gas quality standards in place today and they are well documented. They should be an exhibit to every physical commodity contract HPL generates (sales, purchase, transport, storage) - Barbara, please confirm this is happening. The Exxon processing contract has certain tiers of value established. At greater than 4.0 GPM, we receive 92% percent of the liquids. Between 3.5 and 4.0 GPM, we receive 90%. And so on. The 100% shrinkage obligation remains the same. Therefore as lean gas is added that drives down the total GPM stream below the thresholds, we lose percentages of liquid value back to us. Even when these thresholds are not crossed, there is incremental costs (fuel, transportation fees, lean gas absorbs light end liquids from rich gas stream, etc), yet no financial benefit. Therefore our net benefit decreases. We potentially saw the first benefits of this discussion yesterday. The deal that caught my attention initially was the IFHSC minus $.13 that is on my desk for execution and the gas is already flowing. After we have improved the process, Jack Simunek worked with Jeff Austin on a similar type of package yesterday. The hurdle price was determined to be IFHSC minus $.55. Jeff quoted this to his producer, and really got no negative feedback. I think this potentially confirms what I stated in my original memo. The reason these producers are coming to us with their lean stream trying to get into a rich, processable stream is that other competing pipelines have already significantly lowered their pricing or have flat told them they would not take the gas due to the impact on processing margins. Brian Redmond 08/01/2000 08:44 AM To: Steve HPL Schneider/HOU/ECT@ECT cc: Subject: Re: Processing Value Steve, Lets discuss. I don't understand why the value of the gas stream to King Ranch was reduced? Also, are the correct gas standards set forth somewhere and well defined? In response to your AMTEL message on the PRC, I am getting the PRC results today and will be arranging a few hours/day to meet with everyone to go over the results. Brian
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