STEPHENS ENERGY CORP. - The Railroad Commission of Texas

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Unaccounted Gas (LUG), which is gas that leaks from its lines or otherwise disappeers into the etbu. Once at the plant, my remaining allocated gas is then pllocessod into liquids and dry gas. Under my Gordon gathering contract, Cantera delivered my allocated gas to the tailgate, whm I could sell it to the highest bidder. Cantera would charge me either so many cents per allocated MMBTU or 10% of my allocated MMBTU for gathering and processing, or a combination thereof. I have enclosed graphs showing how much of my gas was left after Canten! subuacted gas for fuel, LUG, and for gathering fees. Under my Springtown contract. Cantera kept 20% of both the dry gas and liquids after processing my allocated gas. 80% of the dry gas was delivered to the tailgate where I wuld sell it to the highest bidder. 80% of the liquids were sold for me by Cantera and Cantera paid me the proceeds. I have never been able to determine how or to whom these liquids I. are sold. So as you can see, there arc many terms in the equation, and Cantm has the oppomity to squeeze a little more profit out of every calculation. If 1 can get my MMBTU's to the tailgate of the Cantera plant, I can sell at true market price. It is getting there that is the mck. Because there are so many different variables in gathering contracts, I calculate the effective gathering charge in a very simple manner. I simply need thm numbers. I start with the net dollars received for my monthly gas and liquid (if any) sales through a particular gas plant and divide by the total wellhead MMBTU's. This gives me the effective wellhead price for my gas. i.e. what I actually received for each wellhead MMBTU. I then compare that effective wellhead price against the market price I received for the gas I sold at the plant tailgate.In a perfect world, there would be zero deductions for fuel gas or LUG or for low-priced liqyi$. hthlsjerfect world, I would sell 100% of my wellh;ad MMBTU's at the tailgate for.markct price and the effective gathering charges would be zero. However, in ~'d Texas, the difference between the tailgate S ce anh the effective wellhead price is the effective gathering fee which I have graphed. I suspect that Cantera has played with all these many factors in order to increase its profits. As you can see by the wpics of the force majeure letters it sent to all gas producers, it imposed whatever terms it wished. I complained to no avail. I think'thc graph of Cantera's combined deduction for fuel gas and LUG is especially illuminating. ~ oie the letter from Enserch in 1998 which says fuel and LUG combined at Sprin$itown would be about 6%. Cantera wqdcducting 1
TTEPHE~~S ENERGY CORP, RANDAL M. STEPHENS Pruiden~ - Re: Request for RRC Investigation of Enbridge Lost and Unaccounted Gas Dear Mr. March 7.2005 In case you have not received this slrrady, I am attaching a copy of the 02/28/2005 letter I received from-, Director of Enbridge Gathering (North Texas) L.P. In my opinion, Enbridge has dirstly challenged the authority, wmpetence, and determination of the Railmad Commission of Tcxas. If you will recall, I testified before the House Energy Resouras Committee on 03/02n005 concaning HB 821. In my testimony and in my previous lettm to Enbridge, I have said that 25% of my gas is going unpaid for because Enbridge is deducting 25% of my gas for fuel and Lost and Unaccounted Gar (LUG). I doubted that these huge gas losses were real, but instead suspected they were the result of creative allocation of both residue gas and lost gas by Enbridge for their financial advantage. You will note that some of the language explaining these mysterious gas losses by Mr. i r r o r s the language used by one of the gas lobbyists at the hearing. I suspect there has been a strategy session by the gathering companies because this issue cuts directly to their bottom line. I suspect that Enbridge and other gatherers have concluded that thcy have been painted into a wrner. If they admit that the 25% missing gas is fictitious, a result of their bookkeeping, they are liable for lriple damages and possibly criminal palties. So thcy are forced to take the position that they are indeed mysteriously losing 25% of the gas in their gathering systm. Mr.- is so confident that Enbridge can m~euvcr their way out of this tight spot, that he actually lays out their strategy for all to see. He clearly states that these mysterious huge gas losses cannot be measured and therefore will not be explained to anyone, including the RRC. He then states that Enbridge will in the near fuhlre make expensive, unspecified fixes. At that point, the huge mysterious gas losses will go away and Enbridge will begin charging us producers a fee to pay for these expensive fixes.
Page 1 and 2: STEPHENS ENERGY CORP. RANDAL M. STE
Page 3 and 4: months of excessive fuel+LUG deduct
Page 5 and 6: allocating LUG proportionately as r
Page 7 and 8: CONTRACT REVIEW BELOW OmnlCManenb ~
Page 9 and 10: - cM@#&g& May 29,2003 P.O. Box 1JC
Page 11 and 12: Re: - Due lo the changing industry
Page 13 and 14: inmhangubitity, subjc* to TXU GAS'
Page 15 and 16: "POINT DESIGNEE" (Nouca and invoice
Page 17 and 18: Auyst 13,2001 Re: 4^ Opnating Agree
Page 19 and 20: Imcrchmgeabillty, subject to TXU GA
Page 21 and 22: March 24, 2003 ~.06rmu B 1 T H b h
Page 23 and 24: 3.2 lbrthiagtothceon~bminconlaincdn
Page 25 and 26: RE: RoposedGasPmdmseAgrsmwt~CitoriO
Page 28 and 29: --- mu- OUlg.mn1PMI ~P-9gcofRwadsdP
Page 32: magically go away, and in& fa will
Page 35 and 36: a&essment of th-e bpe andlor Intern
Page 37 and 38: March 2,2005 Chairman Houde Energy
Page 39 and 40: New Horizon Investments, Ltd. P.O.
Page 41: ~ ~ f ,316 El Dorado Drive Fc t Wor
Page 44 and 45: The logic of all this is, a long as
Page 46 and 47: u RUSSOI N. TAYLOR am Texas Allianc
Page 48: If -one hu read a Yn: eoatraec. h g

STEPHENS ENERGY CORP. - The Railroad Commission of Texas

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