STEPHENS ENERGY CORP. - The Railroad Commission of Texas

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RWAL M. STEPHENS
Prcrident
RE: Springtown EPI C o n t r a c v
Gentlemen,
February 2,2005
It pains me to write you in this way, however, the improper gas gathering practices of Enbridge
are putting me out of business, slowly but surely.
First, you have not responded in writing to my letter to you dated January 5,2005. Instead, 1
received a phone call from your gas accounting department which was non-committal and
inconclusive. I repeat my demand that you immediately pay me $4182.90 to make up for your
improper taking of my November 2004 gas at a ridiculously low price. I had that gas sold at a
much higher price until you grabbed it for yourself without my agreement.
In my January 5 letter to you, I reminded you that you were not authorized to take any of my
December gas for yourselves as you had not ever notified me of any contract changes. You
took my gas anyway, as noted on my gas payment paperwork. This is a contract violation of
which you were warned in advance. 1 demand $632.40 from Enbridge to make me whole for
your December contract violation.
LUG: short for Lost and Unaccounted Gas. Each month, Enbridge subtracts some percentage
of my gas gathered through your Springtown Plant for fuel use and LUG. Together, this is gas
for which I receive nothing. It is by far the largest component of what it costs me to get my gas
past Enbridge and to a free market.
For my December gas at your Springtown Plant, you (Enbridge) subtracted 24% of my
wellhead gas for fuel and LUG combined. My experience is that fuel by itself cannot be more
than 3-5%. This means that approximately 20% of my gas just disappeared into thin air. Who
are you kidding? I believe there are three possible explanations.
1. Perhaps you really are losing 20% of the gas in your gathering system, as you claim.
That would require huge leaks and would be an environmental disaster requiring state or
federal intervention.
2. Perhaps you just made up that 20% LUG number. That would be fraud and require an
investigation by either the RRC or Attorney General.
3. My guess is that your actual Springtown system LUG is much lower, perhaps 1-3%.
My guess is that you allocate zero or very low LUG to gas where it is advantageous for you,
and then pile all the remainder LUG on the rest of us producers. In which case you are not