Balancing Agreement

Balancing Agreement

Balancing Agreements are used to define procedures for the use of capacity in pipelines or production from a gas field:1) Pipelines: A balancing agreement for a pipeline is an agreement between a pipeline owner and other users of the pipeline on the procedures to be adopted to ensure that gas volumes input to and removed from the pipeline are equal over a given period of time. Pipelines commonly require daily balancing, but some require balancing over shorter periods, down to an hour, especially where there is a heavy power generation load on the pipeline. Others may allow longer periods e.g. 3 days up to monthly. Monthly balancing is only appropriate where third party loads are very small (a few percent) in relation to the main user’s loads.2) Reserves: A balancing agreement for reserves is an agreement between the owners of a gas field who are marketing their shares of the gas independently of each other. Since each buyer may have a different demand pattern, the owners agree between themselves that they will not withdraw reserves at a rate which will cause imbalance in the ownership of the remaining reserves to exceed certain agreed tolerances. The agreement also defines the remedies that are to be taken should these tolerances be exceeded. The purpose is to ensure that the ownership share of the remaining reserves remains constant for all practical purposes.

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