Gas Gathering Agreement

Gas Gathering Agreement

Drafts a producer-gatherer agreement governing gathering services from receipt point to delivery point, with FERC compliance, industry-standard measurement, and mutual risk allocation.

Prerequisites

1. Party information — legal names, state of formation, FERC designations or operator numbers
2. Well/acreage description — well locations, dedicated acreage boundaries, production data
3. System description — gathering infrastructure scope (pipelines, compressors, meters, treating facilities)
4. Commercial structure — fee type (per-MMBtu/Mcf, percentage-of-proceeds, or hybrid), initial rate, escalation
5. Regulatory posture — jurisdiction (state PUC, FERC-jurisdictional or non-jurisdictional), environmental permits
6. Desired term — initial term, renewal structure, conditions precedent

If any prerequisite is missing, pause and ask — do not assume.

Output Structure

1. Parties & Recitals

• Full party identification with organizational capacity and regulatory IDs
• Recitals: producer's gas ownership, gatherer's system ownership, regulatory framework, compliance intent

2. Definitions

3. Grant of Rights & Services

• Exclusive vs. non-exclusive dedication within contract area
• Gatherer rights: construct, operate, maintain facilities; easements/ROW
• Producer obligations: deliver conforming gas; scheduling and nomination protocols
• Gatherer obligations: accept and transport subject to capacity and quality specs
• MVC, take-or-pay, or ship-or-pay terms if applicable

4. Rates, Fees & Payment

5. Term & Termination

• Initial term: 5–20 years (capital recovery driven); commencement date and conditions precedent
• Renewal: Auto-renew [X]-year terms unless [X] days' notice of non-renewal
• For cause: Material breach ([30]-day cure), bankruptcy, regulatory prohibition
• For convenience: If available; notice period and early termination fee
• Post-termination: Decommissioning, final settlement, survival of payment/indemnity
• Dedication release: Acreage releases on termination; specify tail obligations

6. Representations, Warranties & Covenants

Producer: Title/right to produce; no conflicting dedications; gas meets quality specs; compliance with production laws

Gatherer: Authority to operate; permits current; system capable of handling dedicated volumes

Mutual: Due organization; no conflicting agreements; environmental compliance; prudent industry practices

7. Indemnification & Insurance

• Mutual indemnity for each party's negligence/willful misconduct
• Knock-for-knock structure if applicable
• Address separately: environmental contamination, personal injury, property damage, third-party claims
• Insurance: CGL, auto, workers' comp, employer's liability, pollution liability — all at $[X]M minimums [VERIFY market standards]
• Carriers rated A- or better (A.M. Best); additional insured; 30-day cancellation notice

8. Force Majeure

• Covered: Acts of God, war, terrorism, strikes, governmental action, fire, flood, epidemic
• Excluded: Economic hardship, market changes, commodity prices, lack of profitability
• Prompt written notice with description and estimated duration; duty to mitigate
• Extended FM (>[6–12] months): either party may terminate without liability

9. Governing Law & Disputes

• Governing law: state where system primarily located
• Tiered: (1) executive negotiation [30 days]; (2) mediation [30 days]; (3) binding arbitration under AAA Commercial Rules [VERIFY current rules]
• Prevailing party fees if applicable; jury trial waiver

10. Miscellaneous

• Notices by physical address and email
• Assignment: consent required except affiliates or asset sales; runs with the land
• Entire agreement; written amendments only; severability; counterparts

11. Signature Blocks

• Entity-appropriate blocks with name/title/date
• Notary acknowledgment if recordable; e-signature compliance

Guidelines

• FERC jurisdiction: Confirm jurisdictional vs. non-jurisdictional status — provisions vary significantly [VERIFY current FERC gathering exemption standards]
• State PUC: TX, WY, CO and others impose gathering-specific rules; confirm applicable state requirements
• AAPL forms: Reference AAPL model gathering agreement where applicable [VERIFY current editions]
• Environmental: Include SPCC, Clean Air Act, and state compliance covenants; address produced water if applicable
• Dedications: Confirm consistency with upstream lease, JOA, and mortgage/lien requirements — conflicts with senior liens are a common defect
• Measurement: Specify API MPMS chapter and GPA standard editions in definitions [VERIFY current citations]
• Out-of-spec gas: Address gatherer's right to reject, curtail, or treat at producer's cost
• All regulatory citations must be verified against current editions before execution