Quote:
Originally Posted by Fighting Banana Slug
While I generally agree with your take in the second post, I don't see how that equates to a "producer's reticence to make and stick to commitments". As you mentioned, a producer will almost certainly be in a take or pay situation. I don't think it unreasonable for them to balk at taking all of the construction risk, essentially cutting a blank cheque for the costs of the pipeline. As someone more in the producer space, I think it is less to do with the volume, and more to do with the risk allocation on building the thing in the first place.
|
Yeah, producers work in their own self-interest and don't understand / empathize that it takes multiple producer contracts to put it all together.
Producers are pretty entitled. "Somebody build me a pipe". Get your own product to market then?
If nobody takes risk then nothing gets built. The producers also don't really take construction risk, they sign a contract for a fixed commitment, all they gotta do is produce. They can negotiate in clauses that if it doesn't get built they don't owe anything, eliminating construction risk. Once they agree to the fixed toll it's the midstreamer taking on construction risk not the producer.