The old conversion / valuation rule of thumb of gas to BOE (6 MCF gas =1 BOE) was based on calorific values and at one point presumably comparative values. 6 MCF gas may generate say $6 (in fact PANR proposing supplying the pipe line at maximum price of $1/MCF) against some $70 / bbl for ANS crude. Using BOE this way greatly overvalues the gas .
Thanks Tom. Indeed the precedence agreement values the gas up to a certain volume that way. For anything in excess of that I think it is up for negotiation.
The base scenarios 1-4 don't use the gas volumes though.
The old conversion / valuation rule of thumb of gas to BOE (6 MCF gas =1 BOE) was based on calorific values and at one point presumably comparative values. 6 MCF gas may generate say $6 (in fact PANR proposing supplying the pipe line at maximum price of $1/MCF) against some $70 / bbl for ANS crude. Using BOE this way greatly overvalues the gas .
Thanks Tom. Indeed the precedence agreement values the gas up to a certain volume that way. For anything in excess of that I think it is up for negotiation.
The base scenarios 1-4 don't use the gas volumes though.
Agreed, still plenty of upside without gas.