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Generally, natural gas emerges from a well as a mixture of
gas and liquids, and the gas is separated from the liquids by
passing through a separator near the well or at a central
gathering point. After separation, the gas continues to contain
entrained natural gas liquids (NGL's) which interfere with
domestic or commercial use of the gas as an energy source. A
processing plant is needed to remove the NGL's from the gas and
to condition the gas in order to produce processed (dry) gas.
Approximately 81 percent of the gathering systems deliver raw gas
directly to petitioner's processing plants or to processing
plants owned by unrelated third parties. The other gathering
systems dehydrate raw gas and deliver it directly to intrastate
and interstate transmission pipelines without processing.
Regardless of whether or not the gas is processed before
delivery, title to the gas usually transfers to petitioner at the
point where petitioner's gathering system connects with a
producer's separation facilities. Title to the gas also passes
to petitioner in some cases at a common field point where raw gas
from two or more wells has been gathered.
The majority of the natural gas that flows through
petitioner's systems is purchased by petitioner under long-term
contracts with producers. Most of these contracts are
"percentage of proceeds" contracts under which the parties
thereto share revenues from sales of dry gas and NGL's that occur
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Last modified: May 25, 2011