Commingling Application

Oil and Gas Leasing Help
1

I received a letter from a law firm in Louisiana to a Louisina Office of Conservation regarding an application to Commingle per Continuous Metering and Well Tests specifically for the Sligo Field, Bossier Parish, Louisiana. It looks the applicant is asking for: 1) To permit the applicant to commingle in its proposed Sligo Commingling Facility gas and liquid hydrocarbons produced from certain units and leases, 2) to permit the appplicant to commingle, upstream of the gas sales meter, such gaseous hydrocarbon production commingled in the proposed Sligo CF No. 1 and 3) to permit the applicatnt to use continuous individual metering of the full well streams, conbined with well tests conducted periodically, to allocate gas and liquid hydrocarbon production back to the properties.

what does this mean to me as a mineral owner?

2

Dear Doug,

Comingling means that production of many wells are run through common facilities.

The short answer is that it is an economy saving matter on the part of the field operator. Typically this occurs when production does not necessarily support separate separators, heaters, dewatering systems, etc and economies of scale can occur.

The effect to the mineral owner is that fields can now be produced long past the economic life of a single well, due to the improved field economics. You will get more money this way.

Continuous metering is not universal in nature. Texas, for example, requires semi-annual metering tests. To me, that induces error because of a small sample size over a period of time vs a continuous metering system. Louisiana is ahead of he curve in this matter, in my opinion.

Best,

Buddy Cotten