05.07.2009

Reservoir risk can be appraised according to the reservoir pressure, which is analyzed by a pressure survey. One of the basic principles of a natural gas reservoir is if you remove one cubic feet of gas from a reservoir that is 100 cf in volume you have taken out 1% of the volume and the pressure should thus drop by 1% because the pressure is linear with the volume. After 5 years if you have taken out 1/3 of the gas from a 15 year field the usual pressure will have dropped equally by 1/3 of the original pressure, so that after 5 years a competent operator would know how much gas he has left in his field. After one year the operator should do a pressure survey then carry out another one annually to see the drop in pressure and just as importantly to establish the trend. If you have an initial pressure of 2000 PSI and after 5 years you have 1500 PSI the operator should conclude that he has 15 years worth of gas left. Reservoir risk can either be borne by the developer or be part of a force majeure clause depending on the strength of the strength of the negotiating parties in a GSA.

Gina Cohen
Natural Gas Expert
Phone:
972-54-4203480
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