Organization of a Natural Gas Marketing Entity

Joseph M. Paul

For those producers considering a full-scale marketing program for their natural gas, the availability of supply should not lead one to believe that the sales of those supplies can be accomplished by a simple phone call to several potential purchasers. This paper traces the history of natural gas marketing since the passage of the Natural Gas Policy Act through the implementation of the Federal Energy Regulatory Commission's Order 500.

Marketing of natural gas in the late 1970s usually involved selling to the nearest pipeline buyer. A preprinted contract was signed with little if any negotiation. Today's buyers are more varied (local distribution companies, large industries, and commercial end users) and more sophisticated.

Sellers of natural gas must now also be marketers. They must have at their disposal their own sales contracts, a sales force, and the ability to compete in a competitive market. Sellers must also be aware of the impact that regulation has on their ability to sell and must be able to anticipate changes in such regulations.

One of the basics of a natural gas sales organization is to be prepared before the first phone call or knock on the door is made. Transportation, dispatching, and customer service are also basic to successful salesmanship. A seller of gas also must be a provider of a service. In a competitive marketplace, one needs to differentiate oneself when selling a product that has essentially no qualitative difference from a competitor's.

Natural gas marketing is not a part-time endeavor. It requires full-time attention to maximize cash flow and deliveries.

AAPG Search and Discovery Article #91031©1988 AAPG Eastern Section, Charleston, West Virginia, 13-16 September 1988.