Alaska’s Gasline Glossary of Terms Glossary of Terms BCF Abbreviation for billions cubic feet, a unit measurement used in the oil and gas industry. Bids for Capacity A pledge by a business interest that wants to secure room to ship product on a natural gas pipeline. If negotiations prove successful the bid for capacity converts into a Firm Transportation Agreement. Commercial Alignment The point at which the financial needs of competing shippers and pipeline owners line up to allow a project to move forward. Conditioned Bids A pledge by a shipper to contract for a volume on a pipeline for a length of time if the pipeline operator can satisfy certain conditions. Debt to Equity Ratio The balance between the portions of a pipeline that are constructed with company cash and borrowed money. This is an important data point since pipeline companies are allowed to generate a profit on equity dollars they invest. If a larger portion of the construction is paid for with company cash, the cost/tariff to move product on the pipeline will be higher since a larger portion of the pipeline investment is allowed to earn profit. Federal Energy Regulatory Commission (FERC) This is the federal regulatory body that regulates pipeline activity that delivers product across state borders. In order to build an interstate pipeline, sponsors must first apply for and receive a FERC Certificate of Public Convenience and Necessity. Firm Transportation Agreement (FT Agreement) A contract between a shipper and pipeline owner for a specific volume of natural gas to be moved on a pipeline for a certain period of time. The period of the initial FT Agreement is usually long enough for the original pipeline investment to be paid back in full. Fiscal Certainty Freezing of the state’s ability to make changes to monetary terms that affect the production of oil and gas for an unlimited or specific length of time. This action would restrict or eliminate the state’s ability to modify production taxes, property taxes, corporate taxes or royalty rates on oil and gas production. Fiscal Terms The financial component of an agreement between two or more parties. Gas Conditioning The process of removing impurities from natural gas. Natural gas on the North Slope must be conditioned by removing carbon dioxide, hydrogen sulfide, and moisture before it is ready to be transported via pipeline. Gas Treatment Plant (GTP) Facilities used to condition natural gas before it is placed in a pipeline system for shipping. Gas conditioning removes naturally occurring impurities such as carbon dioxide and moisture that would cause corrosion in a pipeline. Lateral Line A spur line that branches of perpendicular to a larger pipeline to shop a portion of the gas to an additional location. Off-Take A location along the length of a pipeline where a portion of the product being shipped can be removed. Open Season A period of time in which project sponsors propose key business terms and design parameters to prospective project shippers and solicit bids for capacity on a proposed pipeline. Precedent Agreement A contractual agreement signed between a pipeline sponsor and a shipper. Through this agreement, the prospective shipper agrees to underwrite a portion of the future design and permitting cost to move a pipeline project to construction. Project Sanction A decision point when the Board of Directors of a pipeline company determine to take a project to construction. Project Shipper A company, or consortium of companies, that agree to enter into binding take or pay contracts on a natural gas pipeline. Project Sponsor A business entity proposing to build a pipeline. A project sponsor can be a single company or a consortium of companies. In the North America market, natural gas pipeline project sponsors are generally private sector pipeline company which may share the ownership with one or more gas producing companies. Raw Gas Untreated or unconditioned natural gas. Royalty In-Kind The obligation of an oil or gas producer to share a predetermined amount of the hydrocarbons with the land owner as the commodity is produced. If the state takes its royalty share in-kind, it must then pay for the transportation and marketing of the product from the point of possession. Royalty In-Value The obligation of an oil or gas producer to compensate a land owner by paying them a market price at the wellhead for their share of the hydrocarbons produced from a well. Shipping Commitments The contractual obligation of a shipper to move a certain volume of a commodity on a pipeline for a specific length of time. Spur-Line A relatively short segment of pipeline that branches off a mainline, delivering product to a separate location. Take or Pay Contract The obligation of a shipper to pay for the volume on a pipeline that he has contracted for whether he uses the space or not. Treated Gas Natural gas that has been treated or conditioned to remove impurities and moisture.