Only the recovery factor (F in the formula) remains to complete the 

 calculation. Many gas fields have been produced to exhaustion — some in recent 

 enough times for complete production figures to be available. Recoveries run 

 very high, and with proper location of wells, one could recover about all the 

 gas in a water-drive reservoir. But, because of improper structural location of 

 wells, lenticularity, and other irregularities, recoveries seldom run over 90 

 percent. On the Gulf Coast in water-drive fields, the factor of 85 percent is 

 commonly used at this time. 



In confined reservoirs where only gas expansion drive is available, it is 

 usual to fix some abandonment pressure. Trunk-line carriers do not desire gas 

 at a pressure of less than 500 to 750 pounds per square inch — as the saying goes, 

 "it will not buck the line" at lower pressures. Gas at less than line pressure 

 must be compressed before it can be sold, and compressing requires equipment 

 and costs money. Depending on the outlet to which the gas is going, an aban- 

 donment pressure of 500 pounds or more is allowed for in fields where the pres- 

 sure will decline. If one neglects supercompressibility change with pressure, the 

 recovery factor is equal to the original-minus-abandonment-pressure difference 

 divided by the original pressure. 



For the example lease, a water-drive recovery factor of 85 percent is used. 

 The calculation therefore is 36,310,912 X 158 X 1-225 X 0.825 X 0.85, a 

 total of 4,928,368,853 feet of recoverable gas. As gas is sold in 1000-cubic-foot 

 units, this amount would be written as 4,928,368 mcf — and as reserves are 

 usually estimated in millions of cubic feet, this amount would be written as 

 4928 mmcf. From production data, it is found that 227 million cubic feet have 

 been produced, and that a reserve of 4701 million cubic feet is left. 



The converting of gas reserves into dollars is the same as for oil, except 

 possibly that it is more of a certainty. Gas is sold under long-term contracts, 

 usually 10 to 20 years, at stipulated prices; for this reason the price does not 

 fluctuate as greatly or as rapidly as the price of oil. It is easier to foresee what 

 the gas price is to be in years ahead, and it is much more likely to remain at 

 the present level than is oil. Also, gas deliveries are scheduled for years ahead, 

 so it is easier to estimate over how long a period gas production will be extended. 



If the future price and future deliveries of the well are not covered by 

 contract, it is assumed that the rate of production and price will remain the same. 

 A schedule of future income year by year is set up, with expected future ex- 

 penses deducted. The costs of operating gas wells are usually much lower than 

 costs for oil wells. The present value of each year's income is discounted back 

 to present value; final salvage value is discounted; and these are all added to- 

 gether to give the total present worth of the property. 



Many gas wells, particularly those in high-pressure reservoirs, produce a 

 liquid called "condensate." This liquid was in the sand, but it was there as a 

 vapor. It condenses into a liquid when brought to the lower pressure and 



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