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Title: Elements Of Gas Contracts
Author: James F. Babb
Source: 1976 International School of Hydrocarbon Measurement
Year Published: 1976
Abstract: Few areas of the natural gas industry have experienced such far-reaching changes as have occurred in natural gas contracts in the past three years. The increasing importance of natural gas in supplying energy for our nation and the resulting decreasing supply are reflected in the evolution of the gas purchase contract. From the day in which natural gas was a by-product of oil and was sold at a price of 2 or 3 cents per MCF or less to the day of directional drilling and highly technical searches for natural gas and the resulting increase in price from an area of 15 to 16 cents in the early 1960s to the price approaching 2 in todays market. We have seen the change from the day in which producers had difficulty in selling gas intrastate to the day of shortage in the intrastate market and from the day when a gas purchase contract was primarily concerned with the day to day sale of an unwanted product to today when a gas purchase contract is an important tool in acquiring long term supply. While the subject of our discussion today focuses on a brief review of basic elements of gas contracts more particularly wellhead purchase contracts, it might be worthwhile to spend a few moments taking a short retrospective glance at some of the circumstances surrounding recent changes in the gas supply picture and the resulting shift in emphasis in gas contracting practices.

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