We are often retained on behalf of buyers, financial institutions, and other stakeholders, including minority owners to perform technical, operational, and commercial due diligence on midstream assets, including natural gas gathering systems, treating and processing plants, storage facilities, and pipelines. We are also frequently engaged to provide independent assessment or formal audits associated with gathering, processing, marketing, purchase/sale, transportation and storage contracts. Our consultants draw on the same knowledge base to advise clients in workout, bankruptcy, and reorganization situations and we also have experience providing interim operations and commercial management services when change of ownership or management is required.
Pearson Adair industry experts are experienced witnesses offering testimony in numerous royalty disputes, including those involving issues such as the marketability of natural gas, reasonable deductions for gathering, compression, processing, and treating, and the market value or net proceeds of natural gas, NGL, and condensate production. Our consultants have given testimony in state and federal courts as well as arbitrations, mediations, and in legislative settings. Whatever your needs with respect to natural gas and NGL, Pearson Adair’s expertise delivers results.
Marketability of Natural Gas
Prepared expert report and testified in state court on behalf of a producer in the DJ Basin related to certain claims made by royalty owners. Provided opinions as to use of natural gas quality specifications associated with wellhead purchases and gas gathering/transmission, common practices used by producers and midstream companies, quality and composition of gas produced in the Basin, and commercial usability and consumption of gas as produced and prior to treatment or processing.
Expert Testimony Natural Gas Gathering and Processing Contract Dispute, South Texas
Retained by integrated international petrochemical manufacturer with gas processing and olefins manufacturing capacity in South Texas to evaluate claims made by gas gatherer and marketer under gas processing and product sales contract. Completed evaluation of large wet gas gathering system, gas supplies, gas quality, measurement, and gathering operations as well as gas plant processing operations, including compression, treating, processing and product qualities. Provided analyses and conclusions with respect to evaluations and damages model of other experts and offered expert testimony at deposition and trial.
Midstream Due Diligence
Assisted pipeline company with due diligence and evaluation of a potential acquisition of midstream assets valued at over $1 billion. Performed contract reviews, prepared financial model of existing and proposed facilities, and estimated costs for new process unit. Prepared a cost estimate, new source/supply analysis, and competitive assessment for proposed new Gulf Coast NGL fractionation facility. Other assets evaluated included new Gulf Coast NGL import/export terminal and partial interest in large gas processing plant.
Federal Unbundling of Cost Deductions
Unbundled the processing costs incurred by a major exploration and production company under a non-arm’s length contract for its offshore natural gas production. Evaluated the operating conditions of each unit operation performed by the gas processor at its NGL extraction facility. Estimated capital investment and operating expenses for each unit operation and determined allowable vs. non-allowable deductions as a percentage of the processing costs per Federal royalty regulations.
Refined Products Pipeline Strategy Expert Testimony, Valuation of Overriding Royalty Interest, Equatorial Guinea
Retained to analyze and formulate expert opinions regarding the methodology being utilized by Integrated International Oil and Gas Company to determine the market value of NGL and condensate being produced in Equatorial Guinea for export. Analyses included completion of an audit of prior payments made to the holder of the Overriding Royalty Interest as well as evaluation of the fair market value of the products based on netback methodology.
Processing Cost Allowances on NGL Royalties
Provided expert reports and testimony on behalf of 12 major and large independent gas producing companies in Federal Qui Tam litigation. Responded to Relator’s claims to exclude re-compression costs from the processing cost allowances allowed by the MMS. Reviewed the design and operation of numerous gas plants, and demonstrated that re-compression is integral to the cryogenic turbo-expander process and its associated costs were fully deductible.
Project Development Advisory
Retained by the Department of Revenue and the Department of Natural Resources to analyze and provide input regarding the negotiations with potential developers of the Alaska Gas Pipeline. Analyzed potential project development scenarios, including evaluation of product market supply/demand, expected gas processing scenarios and commercial terms for gas processing and product sales. Provided NGL pricing forecast advice and audited project financial models.
Investigation of Gas Processing Plant Accident
Assisted a major oil company in the investigation of an explosion and fire with resulting failure of natural gas supply from onshore crude oil, condensate, and natural gas processing facilities located near the Bass Strait of Australia. Reviewed facility design, operating, and maintenance standards and assisted in the preparation of testimony before a Royal Commission formed by the State of Victoria.
Natural Gas Processing Plant Construction Delay
On behalf of a state-owned oil company, reviewed Engineering and Construction contractor’s claims of delay and disruption associated with a major de-bottlenecking project for a 2.4 billion standard cubic feet per day (Bsf/d) natural gas treating facility located in the Middle East. Claims were associated with the design and construction of a high-pressure DGA unit, a 535,000 ton per day sulfur recovery unit, and new high-pressure flare systems.
Processing Plant Start-up Assistance
Assisted owner with start-up and commissioning of a two-train 150 MMscf/d propane refrigeration gas processing plant in Kazakhstan. Evaluated various process design and mechanical equipment issues including hydrates, paraffin deposition, oil/water emulsion formation, level control instrumentation problems, and troubleshooting of amine circulation system. Assisted operators in establishing optimum operating conditions and preparation of start-up and performance test procedures.
Business Strategy, Management of Royalty Trust
Provided business management, administration, and oversight for $100 million oil and gas royalty trust. Retained by owners of the trust as agent of the General Partner of the trust to manage day‐to‐day business functions, confirm production, invoice and confirm payments, and administer oil and gas marketing contracts as necessary. Managed the transition of the agent from Enron‐affiliated management post‐bankruptcy.
NGL Product Contamination
Investigated the design and operation of a NGL fractionation, storage, and loading facility located on the Red Sea to determine potential causes of alleged hydrogen sulfide contamination of propane cargoes. Matter was filed in London High Court of Justice, Queen’s Bench Division Commercial Court.
Expert Testimony, Market Valuation of Wellhead Natural Gas
Retained to evaluate the market value of unprocessed natural gas at the wellhead in southwestern Wyoming. Analyzed the market for raw natural gas in the producing region, evaluated the capabilities of gas processing plants in the area, evaluated the residue gas and NGL markets, and assessed the processing costs for the natural gas to formulate expert opinion regarding the best method to determine the market value of the unprocessed gas at the wellhead. Appeared in numerous cases before the State Board of Equalization in Wyoming, providing expert testimony on behalf of various producers with gas production and processing assets in southwest Wyoming.