FYI
 -----Original Message-----
From: 	Graham, Charlie  
Sent:	Tuesday, June 19, 2001 2:42 PM
To:	Delaine Kurth (E-mail)
Subject:	Mt. Jesus Condensate

Delaine,

The Operating Agreement between Northern and KN (now Oneok) entitles Oneok to all condensate and drip liquids removed from any of the Northern pipelines, equipment or facilities upstream of Oneok's Bushton Plant.  That agreement also provides that Oneok will be responsible for picking-up, hauling and providing a detailed accounting of such liquids removed.  In addition Oneok is to pay Northern for the shrinkage attributable to such condensate and drip.  Northern invoices Oneok monthly for a cash reimbursement of the mmbtu's attributable to the condensate removed.

Effective April 2000, Oneok began short paying its invoices.  The table below summarizes the amount shorted through April 2001 as $67, 889.36.  This short payment reflects Oneok's refusal to reimburse Northern for removal of condensate attributable to the Mount Jesus Drip, lease # 71176.  Oneok has indicated to Northern that Oneok's contract hauler contends the liquid removed from Northern's system at this point is water.  In spite of evidence provided by Northern to the contrary, Oneok accepts its contractor's contention, apparently pays a disposal fee, and refuses to reimburse Northern for the mmbtu's lost.  

This location produced condensate prior to the March 31, 1997 agreement and no change to Northern's pipeline operations that would impact condensation dropout has occurred.  Oneok was properly reimbursing Northern prior to April 2000.  In addition, the attached analysis of liquid removed from the location on September 20, 2000, demonstrates that hydrocarbon condensate continues to be collected at the drip.  Northern must insist that compensation for these BTU's removed from Northern's System be made by Oneok.  Your immediate attention to this matter is appreciated.

Thanks

Charlie
(402) 398-7061


Northern Natural Gas Company											
Shortpay Analysis											
Mt. Jesus Drip											
											
						(BBLS * 42)		(GAL * .116)			
Date		Rate		BBLS		Gallons		Mmbtu		Amount	
Apr-01		 $ 4.9474 		345.00 		   14,490.00 		    1,680.84 		 $  8,315.80 	
Mar-01		 $ 4.9851 		180.00 		     7,560.00 		      876.96 		 $  4,371.76 	
Feb-01		 $ 5.5555 		200.00 		     8,400.00 		      974.40 		 $  5,412.96 	
Jan-01		 $ 8.0133 		180.00 		     7,560.00 		      876.96 		 $  7,027.33 	
Dec-00		 $ 8.7182 		240.00 		   10,080.00 		    1,169.28 		 $10,194.02 	
Nov-00		 $ 5.2090 		205.00 		     8,610.00 		      998.76 		 $  5,202.54 	
Oct-00		 $ 4.8727 		140.00 		     5,880.00 		      682.08 		 $  3,323.57 	
Sep-00		 $ 4.8503 		240.00 		   10,080.00 		    1,169.28 		 $  5,671.36 	
Aug-00		 $ 4.2166 		140.00 		     5,880.00 		      682.08 		 $  2,876.06 	
Jul-00		 $ 3.8249 		140.00 		     5,880.00 		      682.08 		 $  2,608.89 	
Jun-00		 $ 4.0792 		380.00 		   15,960.00 		    1,851.36 		 $  7,552.07 	
May-00		 $ 3.2884 		160.00 		     6,720.00 		      779.52 		 $  2,563.37 	
Apr-00		 $ 2.8424 		200.00 		     8,400.00 		      974.40 		 $  2,769.63 	
											
				2,750.00 		 115,500.00 		13,398.00 		 $67,889.36