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Co-Ownership of Natural Gas in Place and as Produced

Edward B. Poitevent, II, Oil and Gas Operations in Federal and Coastal Waters (1989)

The problem of gas imbalances has also been created (or worsened) either by the failure of many parties to enter into properly negotiated gas balancing agreements or by the fact that historically little attention has been paid to gas balancing agreements. Although this may reflect the low historic value of gas prior to 1978, it also reflects the ability of parties heretofore to negotiate informal agreements by which their interests were brought into balance when imbalances occurred. The dramatic run-up in prices for natural gas experienced since the passage of the NGPA has, however, focused all eyes on the importance of natural gas to the energy needs of the United States, as well as on the bottom line of the companies producing it. This has, therefore, more sharply focused interest on the development of a more formal approach to gas imbalances and, hence, gas balancing agreements, among other things. At the same time, numerous developments have occurred in laws and regulations which have had an impact on the subject. Unfortunately, then, the natural gas industry is presently confronted with increasing instances of imbalances with no formal or clear mechanism for resolution of the problem. It is the intent of this paper to focus on the state of the question of gas imbalances and to suggest certain avenues to resolve various problems, both between the marketing parties and the r