Superior Natural Gas Corporation

Case Study: A route to higher returns.

In analyzing the connection options of a new offshore well for a producer client, Superior identified two potential pipeline options. Pipeline A offered a less costly connection with side valves available both to the north and south of the desired location. Pipeline B had no side valves available and would require hot tapping the pipeline. Moreover, connecting Pipeline B would require an additional 3,500 feet of pipeline, all of which would cost an additional $2.8 million.

Careful analysis revealed that while Pipeline A offered lower initial cost of connection, it also promised reduced gas sales revenue and lower processing margins. Through negotiations, Superior convinced Pipeline B to pay for and install the hot tap and discount the cost of gas transportation. That resulted in $2.8 million in savings for our client, neatly compensating for the difference in the short term and ultimately delivering higher revenue.

Case Study: Leveraging relationships, mitigating risk.

Recently, on an extremely cold winter day, a major natural gas pipeline company issued an Operational Flow Order. Known as an OFO, it warned of severe financial penalties for any counterparty whose actual daily production fell below their scheduled quota. During this period, one of Superior’s customers had an unfortunate and unplanned loss of production, exposing them to the OFO penalty as defined by the pipeline’s tariff.

Facing more than a half-million dollars in OFO fines, the customer called on Superior to help mitigate the penalties. As a result of Superior’s relationships with the pipeline, other industry customers and an understanding of the tariff, timing and greater context, Superior was able to have 100 percent of the impending penalty eliminated for the customer.

Case Study: Proactively stepping in.

One of Superior's producer customers signed a gas-processing contract in which it was obligated to deliver 100 percent of its gas to a south Louisiana processing plant via a FERC-regulated interstate gas pipeline. Without being asked, Superior entered into a series of new firm transportation agreements, new firm "capacity release" agreements, and discounted interruptible agreements—all of which reduced the producer's transportation costs over an 8-month period by 45 percent ($837,270) compared to the FERC-regulated interstate gas pipeline maximum interruptible transportation rate.