Case study of a gas plant alliance at Zama Lake

The definition of gas processing effectiveness varies according to whether a producer emphasizes maximized production, or the greatest wellhead netback, or the greatest return on investment. The producer's vision and objectives can change over time, depending on his financial needs, changes in the investment market, shareholder perceptions, or management motivation. This article describes how a third party processor like Novagas Canada Limited (NCL) can help a producer achieve his objectives. The case of NCL's Zama Lake investment and alliance with Phillips Petroleum is used to illustrate the process. Based on this example, a third party processor can provide important midstream services such as raw gas gathering, field compression, gas processing, sales gas transmission, natural gas liquids recovery, transportation and fractionation. In addition, they can provide access to associated energy industries such as oil and electricity, or any combination of the above, by structuring their services to suit the individual needs of each producer. A third party producer can also reduce risk and cost, provide increased reliability, add new processing capacity, and increased netback. Details of how the alliance between NCL and Phillips Petroleum came about and the advantages that each partner derived from the partnership are described. By entering into an alliance with NCL, Phillips Petroleum gained value by divesting risk and acquiring low cost midstream services, while NCL gained by increasing its presence and by adding economies of scale and greater flexibility in its investment decisions