Technical terms used in contracts, such as “condensate,” may be ambiguous in practice. Baker & O’Brien was engaged in a commercial arbitration that hinged on identifying the precise point when “field condensate” became “plant condensate.” Our expert report and deposition testimony assisted the arbitration panel in its decision.

In the energy sector, technical terms are often treated as settled, but their definitions can shift in practice. Take “condensate”—the liquid hydrocarbons that condense from natural gas streams. Because condensate carries a significant premium over the gas from which it forms, its point of origin can be a flashpoint in high-value ownership disputes between producers and processors. This highlights the value of clearly distinguishing between “field condensate,” which collects in the field at gathering systems and compression stations, and “plant condensate,” which is recovered at a gas processing plant.

In practice, however, the boundary is not always clear. Seasonal temperature drops and pipeline compression further promote the formation of liquids, increasing the volume of condensate recovered from the gas. Baker & O’Brien was engaged in a commercial arbitration where the outcome hinged on this distinction. The ownership of the condensate depended on where it formed: i) in the field, and gathering lines before a gas processing plant; or ii) collected at a gas processing plant.

Baker & O’Brien delivered an expert opinion on what is typically meant in industry by “condensate,” and related terms concerning gas gathering, compression, and processing. Specifically, we opined on an industry understanding of the point beyond which “field condensate” becomes “plant condensate.” Furthermore, based on a review of the detailed technical drawings of the processing plant, we opined on whether the plant was physically able to differentiate between “condensate drip” and “plant condensate.”

We presented our findings in an expert report and through testimony in a deposition. Our testimony and findings assisted the arbitration panel in deciding on this rather technical subject.