Friday, July 27, 2012

Natural Gas Primer -- RBN Energy -- A Must Read For Newbies

There is so much thrown at you and me on a daily basis regarding the Bakken, oil and gas, etc., that it is hard to sort out what it worthwhile to read.

If you are a newbie to the oil and gas industry in the Bakken, a couple of quick points. The Bakken is considered an oil field. The natural gas has been considered a by-product. Others may have been interested in this by-product but the company that stands out in my mind with regard to natural gas in the Bakken is ONEOK. Search the site for ONEOK, if interested.

There is the dry natural gas everyone talks about, the natural gas that is selling for $2 to $3 right now due to a huge nationwide glut. Oil and gas companies are switching emphasis from natural gas to oil due to the glut.

However, only recently are "we" learning that the Bakken has a high percentage of wet natural gas (natural gas liquids). A Bentek Energy study commissioned by the NDIC and released earlier this week suggests an impending (wet) natural gas boom in the Bakken. This was a huge story.

I get a lot of questions regarding wet natural gas. RBN Energy provided an outstanding wet natural gas primer today.

In addition to explaining natural gas terminology, RBN Energy also explains pricing of wet natural gas, a question that came up recently at this site:
There’s one more aspect of NGL markets that must have been designed to confuse outsiders, because it certainly does.  NGL quantities are quoted in barrels.  NGL prices are quoted in gallons.  Really.  So I’ll sell you 10,000 barrels of non-TET normal butane for $1.36 per gallon.  It never occurs to NGL people to convert either the quantity to gallons or the price to a per barrel number.  They think of everything multiplied by or divided by 42.  Go figure.  And BTW, propane retail people do think in gallons - but that’s another story.
You can't find any language more clear. That's how every RBN Energy essay is written: very, very easy to understand. 

See also my FAQ page, and specifically questions 57 and 58.

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