Saturday, December 12, 2009

NM gas producers file complaint over rates

By SUSAN MONTOYA BRYAN - Associated Press Writer - Associated Press

Friday, December 11, 2009

"A coalition of natural gas producers has filed a complaint with New Mexico regulators alleging that a Houston-based pipeline company is charging excessive rates for transportation services in one of the nation's largest natural gas basins.

The coalition argues that Enterprise Field Services LLP has increased its gathering rates in the San Juan Basin by 240 percent over the last several years and that New Mexico stands to lose nearly $440 million in direct tax and royalty revenues over the next 15 years as a result.

Gene Gallegos, a Santa Fe attorney representing the coalition, said Friday that rate increases for gas gathering services result in direct cost increases for New Mexico gas producers and that, in turn, affects tax and royalty payments made to the state.

"What you deduct from the wellhead price reduces severance tax, it reduces royalties on state leases and it reduces our share of federal royalties. That's a lot of money, and it couldn't be a worse time," Gallegos said.

New Mexico is facing a potential budget gap of $500 million to $600 million next year, and the revenue outlook is grim as the economy continues to sputter."


And even though the New Mexico Oil and Gas associations have been fighting regulations, such as the New Mexico Oil Conservation Pit Rule, the article continues, "Gallegos said the case could set precedent nationwide since fees charged by gas gathering companies go largely unregulated.

Federal jurisdiction starts with interstate pipelines at the outlet of processing plants. Everything between the wells and the processing plants is left up to states.

Gallegos said no one has complained about the lack of regulation until now. He explained that fees had held steady for decades until Enterprise purchased the basin's gathering system and raised rates four times in the last five years." More>>>>

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