?Tied up with SemGas: Recently, a Delaware federal bankruptcy judge granted SemGas parent SemGroup LP’s request to free cash for paying employees and suppliers and continuing business while the fallen Tulsa, Okla.-based energy giant works out its potentially bleak, debt-ridden future. The fatal debt was incurred when SemGroup bought up other companies, then lost $2.4 billion in hedged oil trading. Until the cash starts flowing, gas producers are caught in the middle.


One producer, chatting at Summer NAPE 2008 in Houston, revealed that he had sent some 160 million cubic feet of gas into a SemGas pipeline during May and June. At one point, some of the 1,125-Btu gas was worth $11.50 per thousand cubic feet.


“It’s a legal nightmare,” he said. “I am not getting paid for the production, but I still have to send the gas into that pipeline. These wells have been operating for five years in some cases, and if I shut them in, either they won’t come back online with the same level of production, or they might not come back at all.


“I know the cash is not completely lost, but right now, it’s not in my pocket. I saw some interesting properties here at NAPE, but I can’t do any transactions because I don’t have the cash flow from those wells. It’s happening to producers all over Texas, Kansas, Oklahoma, in places like the Marietta-Ardmore Basin and Grayson County—wherever SemGas has pipelines.”