CHAPTER 8 SETTLEMENTS OF GAS CONTRACT DISPUTES

• Jurisdiction: United States

Federal and Indian Oil and Gas Royalty Valuation and Management Vol. 1
(Jan 1992)
CHAPTER 8
SETTLEMENTS OF GAS CONTRACT DISPUTES
Milton K. Dial
Minerals Management Service
Denver, Colorado

TOPICS

• BACKGROUND AND ORIGIN OF NATURAL GAS CONTRACT DISPUTES AND SETTLEMENTS

• FORM OF SETTLEMENT AGREEMENTS

• ELEMENTS ADDRESSED BY SETTLEMENT AGREEMENTS

• EXAMPLES OF SETTLEMENT AGREEMENTS

• MMS REPORTING REQUIREMENTS

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• FEDERAL PRICE REGULATION OF NATURAL GAS

• THE NATURAL GAS POLICY ACT OF 1978

• GAS PURCHASE CONTRACTS OF THE 1970'S

- High degree of conformity of provisions throughout the industry

- Heavy reliance on a regulated pricing structure

- Consistent inclusion of take-or-pay provisions in contracts

• GAS SUPPLIES OF THE LATE 1970'S AND EARLY 1980'S INCREASED IN THE FACE OF DEMAND DECLINE

• REDUCTION IN PURCHASER TAKES WITH AN INCREASE IN MARKET-OUT PRICING PRACTICES LED TO PRODUCER/PURCHASER LITIGATION PARTICULARLY FOR TAKE-OR-PAY

[Page 8-3]

Various Graphs

Omitted From Electronic Version

[Page 8-5]

OVERVIEW OF REPORTED TAKE-OR-PAY

1983-1986

DATA SOURCE: FERC STAFF SUMMARY REPORT OF RESPONSES TO THE COMMISSION'S AUGUST 26, 1987 DATA REQUEST (DOCKET NO. RM 87-34)

[Page 8-6]

• SPECIAL MARKETING PROGRAMS AND FERC ORDERS 436 AND 500 EMERGED TO CHANGE THE MECHANICS OF THE GAS MARKET

• THE NEED EXISTED FOR PRODUCER/PURCHASER SETTLEMENT OF PAST CONTRACT DISPUTES AND ESTABLISHMENT OF FUTURE CONTRACTUAL ARRANGEMENTS

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