Prowers Gas Gathering Requests Contract Review from LUB

Lamar Utility Board

Lamar Utility Board

Art Pansze, a partner and manager of Prowers Gas Gathering, requested a review of the contract his company has with the Lamar Utilities Board during their November 10th meeting. Citing the lower price for natural gas prices over the past four years and the cost of drilling new wells, Pansze requested consideration for the $120,000 paid by his company to Lamar Light and Power for the use of the company’s pipeline route in southeast Colorado.  He also requested a return to the original three year agreement between his operation and the board instead of the current year-to-year contract.

Prowers Gas Gathering pays a set fee to the LUB per the amount of gas that is delivered through the pipeline system. Pansze explained, “We don’t own or operate any gas or oil wells, we just operate the pipelines and the gas processing plants.”  He said their associate company, Berry Energy, operates and owns some of the wells, approximately 20 in the area, but they are separate entities from Prowers Gas Gathering.  Pansze estimated that since 2005, his company has contributed about $3M into the local economy and around $1M to the Lamar Utilities Board through the annual payments.  “At the time that was a reasonable price and it worked out for the initial years, but prices have dropped the past few years so the situation is becoming untenable for us to continue,” he stated.  He explained that about 63% of the $120,000 minimum has come from transporting gas and his company has had to pay the balance to the point that they’re down about 61% in revenues over the past two and a half years.  The wells owned by Berry Energy are producing 50% less gas from 2010 to 2014.  He cited the $400,000 price tag for drilling a new well as one of the reasons production has fallen off and said it’s hard to attract investors to our area because of a reputation of a high percentage of dry holes versus a gas producing well.

Pansze asked the board to reconsider the $120,000 minimum payment and to replace the year to year renewal with the original three year agreement. “We don’t want to get to the point where we shut down the wells because with their age, they may not come back.  Under the current circumstances we may have to terminate the operation as we can’t keep losing money.”  He said that Atmos, the local gas supplier, has other sources they can call on to maintain local gas generation to area customers.

John Lefferdink, attorney for the Lamar Utilities Board, asked if Prowers Gas Gathering would open its books to an audit, noting that the rates Prowers Gas Gathering fees charged to Atmos are not under regulation by the PUC. “It’s just based on negotiations as you don’t have to follow any regulations,” he asked.  Pansze said his company would agree to that as well as profit and loss statements or tax returns.

The board took no action at the meeting, but told Pansze they would review the finances of Prowers Gas Gathering and discuss the impact any financial changes would make on their operation. The board has only two meetings before the end of the year; one on November 24th and the final one on December 15th.

By Russ Baldwin

Filed Under: BusinesscommunityEconomyEnergyFeaturedLamarProwers CountyUtilities

Tags:

About the Author:

RSSComments (0)

Trackback URL

Comments are closed.