How is the MMBTu value of unprocessed gas at the wellhead determined ?

How is the MMBTu value of unprocessed gas at the wellhead determined ?  

Is there a standard formula used to determine the value based on the price of processed gas and then decucting the processing cost to come up with the unprocessed cost?  Looks like this would be producer would then be able to come up with all kinds of expenses and cost to drive down the price of the unprocessed gas as wellhead price.

Should the unprocessed gas at wellhead be tied to some kind of index or published price?

Then determining the quality and MMBT value also comes into play.  How confusing and complicated this could become. 

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Permalink Reply by Sylvester Deal on June 4, 2016 at 10:56pm

Gas chromatograph analysis of wellhead gas will determine MMBTU/Mcf  content, gas price would be applied to wellhead volume times that value.  Gas exceeding ~1110 BTU/cf must be processed to this level for transportation on interstate pipeline.  Cryogenic plants can extract nearly all ethane plus components leaving BTU ~1000BTU/cf.  When NGL prices are higher than processing cost, more value is extracted from the gas stream than the gas price alone, with low prices, processing becomes a cost on the gas stream.

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