This paper presents an analysis of the natural gas transportation cost mechanisms used by major pipelines for gas moving on the spot market. The paper also presents an analysis of natural gas upstream (purchase) price and downstream (sales) price mechanisms used by gas marketers in the spot market. It is an attempt to document basic algorithms used for determining the transportation component of gas cost and for establishing natural gas prices at both ends of the pipeline. These issues are explored so market potential can be more easily evaluated and gas transactions can be better understood by non-gas marketers.

Keywords:
interest owner, transaction, liquified natural gas, receipt point, contract, gas monetization, receipt amount, transportation cost, transportation rate, fuel amount
Subjects:
Pipelines, Flowlines and Risers, Natural Gas Conversion and Storage, Liquified natural gas (LNG)
Copyright 1992, Society of Petroleum Engineers
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