CaseMark 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
- Party information — legal names, state of formation, FERC designations or operator numbers
- Well/acreage description — well locations, dedicated acreage boundaries, production data
- System description — gathering infrastructure scope (pipelines, compressors, meters, treating facilities)
- Commercial structure — fee type (per-MMBtu/Mcf, percentage-of-proceeds, or hybrid), initial rate, escalation
- Regulatory posture — jurisdiction (state PUC, FERC-jurisdictional or non-jurisdictional), environmental permits
- 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
| Term | Content |
|---|---|
| Gas / Natural Gas | Quality specs, composition, heating value, contaminant limits |
| Gathering System | Pipelines, compressors, meters, dehydration/treating facilities |
| Point of Receipt / Delivery | Custody and risk transfer locations |
| Gathering Services | Scope: gather, compress, dehydrate, treat, transport |
| Dedicated Acreage | Geographic scope with metes-and-bounds or plat reference |
| Volume/Measurement | API MPMS or GPA standards [VERIFY current edition]; pressure base, temperature correction, Btu specs |
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
| Element | Details |
|---|---|
| Fee structure | Per-MMBtu/Mcf; percentage-of-proceeds; or hybrid |
| Escalation | Fixed annual, index-based, or periodic renegotiation |
| Billing | Monthly; payment due [X] days after invoice |
| Disputes | Written notice within [X] days; undisputed amounts paid timely |
| Late payment | Interest at [prime + X%] or statutory rate |
| Audit rights | Producer audit of meters on [X] days' notice |
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