Ann: Trading Halt-CVN.AX, page-25

On Condensate :
Gas in the reservoir may contain larger molecules that are liquid at surface temperatures and pressures. The main gases (that are gases at surface conditions) are normally dominated by Methane, with lesser amounts of Ethane Propane and Butane. .. but when there is condensate, larger and more complex molecules are present such as Pentane, Hexane, cyclohexane etc. In producing the gas, when the gas is released from the reservoir into a lower pressure environment, it expands and cools, and if it cools enough (below the dewpoint), these larger molecules drop out (condense) as condensate. The amount of cooling depends on the amount of pressure drop.

Under the right conditions, with a high permeability reservoir, the main pressure drop occurs at surface, where the condensate can be separated from the gas stream, and sold. Condensate can add very significant additional value to the gas stream as the condensate is in effect a very light oil at surface with commensurate value per barrel.

Conversely, condensate can also greatly reduce the value by inhibiting production of gas from a tight reservoir. This is because in a tight (low permeability) reservoir the pressure drop required to get a commercially adequate gas rate may take the gas-condensate below the 'dewpoint' in the reservoir. This then causes the condensate to form in the reservoir near the wellbore, and the liquid fills and blocks up the porethroats, further lowering permeability, further limiting flow and compounding the problem.