WHO CHECKS THE ACCURACY OF THE REPORTED WELL OUTPUT?
No matter where your well is located, one's royalties are calculated on the basis of gross value minus the costs. I understand that-but what I have a hard time wrapping my head around is who checks up on the accuracy of the gross amount? It seems as if the assumption is that the O/G companies are squeaky clean honest and whatever they report is accurate. That may well be so, but I'd like to know that for sure and not have to take their word for it. Are there companies that can be hired by the landowner (or landowner group) that will serve as the watchdog for the landowner?
Dan
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Replies to This Discussion
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Permalink Reply by Lyn on
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Daniel,
Something is wrong with mine and I've required detail and a full accounting. Not much I can tell you except I will keep you posted. I think this will kick up some dust. We need to lobby or push or expose anything we question. The regulation in this activity is a free for all. Lyn
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Permalink Reply by Gunner Ostergard on
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When I attended a NARO convention, they had companies that checked the accuracy of royalty payments.
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Permalink Reply by daniel cohen on
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Dear Lyn and Gunner,
You are both ahead of the knowledge curve on this one compared to me. Anything that you folks could share would be of value to us newbies to the process. Any particular tips/procedures/names of companies-that sort of thing. What inaccuracies were you becoming aware of Lyn, and how did you discover them? How are you addressing the situation currently? It seems to me that if we can document rights & wrongs, as landowners we can require corrections to make things equitable & establish ourselves on a more business-like basis going forward.
Dan
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Permalink Reply by Kathi Albertson on
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I tried looking into this in early March and was left with the feeling that the only way to check on my current well with the circular paper disk was to ask the lessee for a copy of the record of the sale of my gas to whomever they sell it to and compare that to the report they send me with a royalty check. (I have yet to receive a check for production in 2012, even though the red line on the paper goes off the chart once a day every day.) However, due to the discussion on here, I have hope that if they come back to drilll a deeper well, things will be recorded more accurately. The article cited below is very important tp this discussion and indicates that no one is really watching. My county auditor agrees that he has no way of checking the circular paper disk. I think this whole issue deserves more attention from the legislature and hope to work on it through Farm Bureau.
http://www.ohio.com/news/local/tax-on-gas-wells-goes-unchecked-1.26...
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Permalink Reply by daniel cohen on
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Dear Kathi,
What you have shared is incredible. The article cited indicates that our government officials(local/state/federal) and our legislatures are not watching out for us (the little guy) and are accepting of the reports as accurate from the big boys(O/G companies). As much as I would like to assume that no one is trying to play games with numbers, the final calculations about the royalty check that one receives is based upon the number reported by the gas company. Shifts in temperature alone will affect the volume being reported-so how often are the meters being read, and how often are they being recalibrated to ensure accuracy? These are of course not questions that I would expect us (the landowner) to be able to answer, but the need for the landowner to know it is rather pressing. Hopefully there are more knowledgeable folk out there who will help us to deal with this issue.
Dan
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Great idea for a discussion! Looking forward to gleaning some valuable information from this one.
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Permalink Reply by paleface on
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Weights and measures should check those meters like they do the gas pumps at gasoline stations and the meters on fuel oil trucks.
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Permalink Reply by Kathi Albertson on
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There was a good discussion of this in March on the Ohio Landowners site titled "Reliable metering of gas/oil being produced" as a result of a question that I posted. However, much of it had to do how the new wells will be monitored and little to do with our older wells that are the majority. It is my understanding that county auditors do not have any control over the old circular graph meters and wouldn't know how to read them if they did. Something is wrong here.
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Permalink Reply by daniel cohen on
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Dear Kathi,
I understand your situation about older wells, but the current discussion deals with the issue of monitoring and ought to apply to wells in general, both old and newer,or am I wrong?
Dan
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Permalink Reply by Kathi Albertson on
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Daniel, it is my understanding that the new deep wells will have electronic metering devices that will be easier to read than the old paper versions that are on the old wells. Hopefully the weights and measures folks will then have access to them. I hope that some of the guys from the previous discussion jump in here as one of them makes a living adjusting some of these devices. I am just a well owner that believes we need to turn the tables and get some honest reporting.
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Permalink Reply by daniel cohen on
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I just came across some info that relates to our discussion here. My personal comments follow the info presented
Dan
Chesapeake Landowner Outreach Presentation
Wednesday, September 5, 2012
AFTER A WELL SITE IS PRODUCING
Team of qualified personnel maintains production site
›Routine inspection – monitor pressures, maintain optimal flowrates, calibrate flow meters
−Pumper – checks well site daily and has most knowledge of site equipment and performance. Maintains emergency safety systems.
−Production measurement – checks and maintains production metering
−Pipeline measurement – checks and maintains pipeline meters
›Maintain safety systems
−Protect environment, personnel and equipment
›Pipeline technician – Inspects and maintains pipeline, calibrates pipeline meters
›Water truck driver – Removes produced water from production tanks
−Water hauled to Aqua-Renew facilities
›Engineering firms and in house Field Representatives – Assesses pad site, ensures E&S controls and BMPs are kept to standard
AFTER A WELL SITE IS PRODUCING
Production equipment checked daily
›Wellhead – tubing pressure, casing pressure and surface casing
›Production Unit – static pressure, water productions, temperature and differential pressure. Information is remotely transmitted.
−Calculates volume of gas
−Used to validate production from each well, compare to sales meter
−Allows for remote Emergency Shut Down (ESD) of well
Metering
›Well production is calculated once a second, transmitted to management every 30 minutes
›Production reports are generated monthly – based on sales meter, used to calculate royalty
›Calibration of well head meters occurs quarterly, using certified precision gauges
›Production from each well reported to DEP every 6 months. Available to public
−https://www.paoilandgasreporting.state.pa.us/publicreports
Gas from the well is used for separation of water from gas. Sales, and therefore royalty calculation, typically is based on well head volume.
Measurement technicians calibrate pipeline meters monthly.
Compliance is monitored by headquarters.
›Production reports issues to appropriate state and federal agencies
›Subject to internal and external auditing (JV Partners)
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Personal comments- if I'm reading this correctly, the Gas company knows instantly exactly what volume is going through its pipes at any given second!! Further, they elect to calibrate their meters quarterly. Production figures are produced monthly, and it pays royalties based upon those figures. So it all comes back to a need to be accurate with the initial metered number.
From a different reading source, the following was made clear:
"In the petroleum liquid industry, no custody transfer liquid measurement system would be complete without a method to prove the meter, either as part of the equipment or there would be connections provided to connect a portable prover.
Under billing causes loss of revenue and over billing can cause a future correction that can cost the company millions of dollars to correct over billing.For this and many reasons such as loss prevention, gas meter proving is important and necessary to insure precise measurement of natural gas that is correct and in the case of custody transfer a number both the buyer and seller can agree upon."
Yet as a layman I wondered what could possibly be wrong with getting the initial meter figures. From the same source, the following was offered:
Reasons for proving a field meter
"Although the installed field meter has been completely checked and calibrated at the factory, and a performance curve developed, there are many things that can affect a meter on site causing measurement errors.Any meter system can have changes during operation that will cause errors in measurement.
Orifice plates can become damaged, bearings onTurbine Meters can wear, and dirt and trash can accumulate on flow conditioners and in piping. Trash can accumulate on straightening vanes, and Ultrasonic and other meter runs can become dirty causing the meter to error.
The inputs into flow computers and other electronic devices can be changed by mistake causing errors in measurement. New meter installations could have debris from construction that can catch on the straightening vanes or in the meter itself. Proving, checks not only the meter, but also the complete system.
One of the more important reasons for meter proving in the case of Custody Transfer is to give both the buyer and seller confidence the volumes they transfer are acceptable to both the buyer and seller, thus minimizing or eliminating disputes."
Clearly there is the recognition of the need to be transparent, yet the companies appear to act in a way to keep the landowner in the dark. Now my mind asks "why the need for the secrecy and the willingness to be transparent to and with other O/G companies but not the landowners"? And why the calibration in 3 month intervals when they know instantly what is flowing, how much is flowing, and they maintain on site folk looking after the operation? They could get anything calibrated on a daily basis if they wished-but they elect not to do so. No answers here-just questions that are starting to bother me.
Dan
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Permalink Reply by daniel cohen on
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Folks seem to be reluctant to band together to have their voices heard by the lawmakers and decision deciders. Whether you are for or against any particular issue, I believe that we are all stronger in voicing our discontent in a pointed, responsible way. With that in mind I have started a petition demanding an end to lies. You may be for or against fracking, but no one appreciates being lied to or misled.
If this is similar to how you feel, please take a look to see if you can support the petition.Just click on the URL below. Thank you for the patience and the effort.
http://www.thepetitionsite.com/422/558/322/demanding-an-end-to-the-...
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