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1. Heating Value (Dry vs. Saturated) What Heating Value do I Use?

2. Heating Value (Dry vs. Saturated) • The relationship between heating value and the physical measurement of natural gas impacts the verification of product values used in calculating royalties. • Natural gas is the only commodity that is valued on a different unit basis than it is measured. • Measured in Mcf • Valued in $/MMBtu • A conversion must be applied at standard conditions of 14.73 psia and 60 degree F.

3. Heating Value (Dry vs. Saturated) • In addition to pressure and temperature, the measurement of natural gas is affected by the presence of non-hydrocarbon contaminants such as: • Carbon dioxide • Nitrogen • Water vapor Just to name a few. Our focus for this talk is on water vapor.

4. Heating Value (Dry vs. Saturated) • Definition of Saturated – Gas contaminated with significant amounts of water vapor. • Dehydrated gas – Gas with very small amounts of water vapor. • The amount of water vapor that can be contained in 1MMcf at standard conditions is: • 820 pounds of water • 1.74% of total volume • Fully saturated

5. Heating Value (Dry vs. Saturated) • Most sales contracts require that water vapor be removed from the natural gas to prevent the formation of hydrates in the pipeline. Gas thus treated is called “dehydrated” gas. • At standard conditions, dehydrated gas is defined to be : • No more than 7 lbs of water per 1MMcf • No more than 0.015% of the total volume • Considered dry • Commercial dehydration involves various mechanical and chemical processes that are performed after the ordinary separation at the wellhead. Dehydration removes approximately 99% of any water vapor that is present in the gas.

6. Heating Value (Dry vs. Saturated) • The heating value of a gas can be described three different ways depending on the amount of water vapor present or assumed to be present in a sample: • Dry • Wet or saturated • Real or actual • In the vast majority of cases, the actual water vapor content of a gas is not determined through analysis; therefore, the amount of water vapor that exists in the sample must be assumed.

7. Heating Value (Dry vs. Saturated) • The heating value is on a dry basis if it is assumed the gas sample contains no water vapor. • If it is assumed that the sample is saturated with water vapor, the heating value is on a “wet” or saturated basis. • Heating value reported on a wet basis is about 98.3 percent of the heating value on a dry basis. • In rare instances where the water vapor content of the gas sample is determined through analysis, no assumptions regarding water vapor content are needed. • The heating value is based on the actual amount of water vapor that is detected. This is called a “real” or “actual” heating value.

8. Heating Value (Dry vs. Saturated) • BLM policy is that when verifying the heating value reported on OGOR-B, the dry reporting basis from the gas analysis must be used unless the water vapor content was determined as part of the analysis, in which case the heating value will be used. • The BOEMRE regulation at 30 CFR 202.152(a)(1)(i) state: • Report gas volumes and British thermal unit (Btu) heating values, if applicable, under the same degree of water saturation.” • BLM has interpreted this to mean a dry or real reporting basis and here is why.

9. Heating Value (Dry vs. Saturated) • In order to determine gas volumes, the relative density of the gas must be known. • The relative density is determined from the same gas analysis that are used to determine heating value. • Because water vapor cannot be detected by most gas chromatographs, the vast majority of gas analysis do not include water vapor as a constituent. • While adjustments to the heating value of the gas can be made based on assumptions of water saturation, relative density is rarely adjusted to account for the water vapor.

10. Heating Value (Dry vs. Saturated) • In essence, the relative density used to determine volume is almost always on a “dry” basis because water vapor is excluded from the calculation. • The “dry” relative density is included in the calculations to determine gas flow rate and gas volume; therefore, the volume is ultimately determined on a “dry” basis. • According to the BOEMRE regulations cited above, if volume is reported on a “dry” basis, heating values must also be reported on a dry basis.