Notice of the Annual Price Threshold Determination, 31502-31504 [E8-12225]
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31502
Federal Register / Vol. 73, No. 106 / Monday, June 2, 2008 / Notices
2006 and July 2006, respectively. The
revised charter states that the Council
will provide advice and guidance to the
Federal Government through the
Department of the Interior and the
Department of Agriculture.
The Council will hold a meeting on
the date shown in the DATES section at
the address shown in the ADDRESSES
section. The meeting will include a
session for the public to comment.
Dated: May 27, 2008.
Phyllis T. Seitts,
Designated Federal Officer, Sporting
Conservation Council.
[FR Doc. E8–12203 Filed 5–30–08; 8:45 am]
BILLING CODE 4310–55–P
DEPARTMENT OF THE INTERIOR
Minerals Management Service
Notice of the Annual Price Threshold
Determination
Minerals Management Service
(MMS), Interior.
AGENCY:
Notice of annual price threshold
determination and annual average oil
and gas market price calculations, along
with their effects for the Gulf of Mexico
royalty relief programs.
ACTION:
SUMMARY: This notice provides the
official MMS documentation of which
Gulf of Mexico price thresholds have
been exceeded by annual market prices
for oil or gas, by lease vintage, for
calendar year 2007. This notice also
explains in detail how MMS calculates
the annual oil and gas prices and
applicable price thresholds used to
determine whether royalty relief applies
in calendar year 2007 for our various
deepwater and deep depth royalty relief
programs.
FOR FURTHER INFORMATION CONTACT:
Marshall Rose, Chief, Economics
Division at (703) 787–1536.
SUPPLEMENTARY INFORMATION: By various
laws (Outer Continental Shelf Lands
Act, Deep Water Royalty Relief Act,
Energy Policy Act) and regulations (30
CFR 203.47, 203.54, 203.78, 260.110,
and 260.122), MMS has authority to
impose price thresholds for royalty
relief. As prescribed in applicable
regulations or lease terms,
notwithstanding any provisions for
royalty relief, companies are required to
pay royalties for those calendar years
when annual average New York
Mercantile Exchange (NYMEX) market
prices for oil or gas exceed the adjusted
price thresholds levels. As a courtesy,
MMS tracks, calculates, and posts on its
Web site a variety of relevant
information about applicable oil and gas
prices and the price threshold levels to
be used in determining whether a
particular lease continues to be eligible
for deep gas, deep water, or other
royalty relief. The information
contained in this published notice was
previously posted on the MMS Web site.
The following table represents the
official MMS price threshold and
market price calculation determinations
made for calendar year 2007. Any
subsequent inflation adjustments or
market price adjustments will not affect
these official results or their implication
for royalty relief on the designated
categories of leases.
APPLICABLE PRICE THRESHOLDS AND MARKET PRICES FOR CALENDAR YEAR 2007
Product
Lease vintage
(sale held in)
Deepwater oil ................................................................
Annual
average
NYMEX
price
($/bbl or $/
mmbtu)
Before 1996; 1996–19971;
20001; 2002–3/2004;
2007.
2001 .................................
8/2004–2006 ....................
Before 1996; 1996–19971;
20001; 2002–3/2004;
2007.
2001 .................................
8/2004–2006 ....................
3/2001 ..............................
8/2001–2003 ....................
Before 2001, 2004–2007;
Reg 30 CFR 203.47.
All years ...........................
Deepwater oil ................................................................
Deepwater oil ................................................................
Deepwater gas ..............................................................
Deepwater gas ..............................................................
Deepwater gas ..............................................................
Deep gas ......................................................................
Deep gas ......................................................................
Deep gas (0–200 meters) .............................................
Deep gas (200–400 meters) and Ultra-Deep gas (0–
400 meters).
Adjusted price
threshold level
($/bbl or $/mmbtu)
Royalty
relief
suspended
$72.39
$36.39 ......................
Yes
72.39
72.39
7.12
32.64 ........................
42.37 ........................
4.55 ..........................
Yes
Yes
Yes
7.12
7.12
7.12
7.12
7.12
4.08 ..........................
7.06 ..........................
4.08 ..........................
5.83 ..........................
10.15 ........................
Yes
Yes
Yes
Yes
No
7.1
TBD2.
bbl = barrel, mmbtu = million British Thermal Units.
1 Leases issued in Deepwater during the years 1996–1997 and 2000 may be affected by the outcome of pending litigation on price thresholds
imposed at that time. The MMS has sent correspondence to the affected lessees addressing the impact of the litigation during the interim.
2 The Energy Policy Act of 2005 mandated additional royalty relief for deep gas in shallow water in the Gulf of Mexico. The MMS published a
proposed rule on May 18, 2007 (72 FR 28396), to implement this new relief, including a gas price threshold. The level of that price threshold and
how it applies will be set in the final rule for ultra-deep wells spud after the date of the proposed rule.
jlentini on PROD1PC65 with NOTICES
Technical Documentation
The data and methodology used for
making the 2007 calculations and
determinations are discussed below.
This same information for all years
since 1996 is available at the Economics
Division Web site https://www.mms.gov/
econ/DWRRAPrice1.htm. Additional
information and notes about
VerDate Aug<31>2005
19:06 May 30, 2008
Jkt 214001
understanding this web site are
included at the end of this notice.
Methodology for Calculation of the
Actual Annual Average NYMEX Nearby
Delivery Price
1. We use the price for the nearby
delivery month or front month. That is,
the price for the first contract or earliest
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Frm 00078
Fmt 4703
Sfmt 4703
month that you can get the delivery/
inventory for buying and selling today’s
product. For example, on October 1,
2007, the nearby delivery month was
November 2007. There are prices for
other delivery months that can be
bought and sold on October 1, 2007,
such as December 2007, January 2008,
etc., but the ‘‘nearby delivery month’’
E:\FR\FM\02JNN1.SGM
02JNN1
31503
Federal Register / Vol. 73, No. 106 / Monday, June 2, 2008 / Notices
would be November 2007. However, the
nearby delivery month is not always the
next month because the last trading day
of the month differs for oil and gas
futures. For example, on March 27,
2008, the nearby delivery month for
light sweet crude oil is May 2008 while
for natural gas it is still April 2008.
2. The daily NYMEX closing price is
listed as the settle price at the end of
business trading hours for each
commodity. These are listed at https://
www.nymex.com and also summarized
at https://www.oilnergy.com.
3. The daily closing average is used to
calculate the monthly average. For
holidays and weekends, we use the
previous business day’s closing average.
For example, Table A illustrates the
calculation of the average NYMEX oil
price for the month of November 2007
(Note—this methodology is different
from the Minerals Revenue
Management’s Royalty In-Kind Program
that excludes weekends and holidays).
Our analysis indicates that inclusion or
exclusion of weekends and holidays
does not bias the annual average price
calculation in either direction. We chose
to include the weekends and holidays,
as highlighted in Table A, to avoid the
necessity to keep track of actual trading
days each month all year, and because
our source summarizes the monthly
price data with the inclusion.
TABLE A.—EXAMPLE OF MONTHLY AVERAGE PRICE CALCULATION
Day
Date
Daily
closing
price ($/bbl)
Day
Date
Thursday ...............................................
Friday ....................................................
Saturday ...............................................
Sunday ..................................................
Monday .................................................
Tuesday ................................................
Wednesday ...........................................
Thursday ...............................................
Friday ....................................................
Saturday ...............................................
Sunday ..................................................
Monday .................................................
Tuesday ................................................
Wednesday ...........................................
Thursday ...............................................
...............................................................
11/1/2007
11/2/2007
11/3/2007
11/4/2007
11/5/2007
11/6/2007
11/7/2007
11/8/2007
11/9/2007
11/10/2007
11/11/2007
11/12/2007
11/13/2007
11/14/2007
11/15/2007
....................
$93.49
95.93
95.93
95.93
93.98
96.70
96.37
95.46
96.32
96.32
96.32
94.62
91.17
94.09
93.43
....................
Friday ...................................................
Saturday ...............................................
Sunday .................................................
Monday .................................................
Tuesday ................................................
Wednesday ..........................................
Thursday (Holiday) ...............................
Friday ...................................................
Saturday ...............................................
Sunday .................................................
Monday .................................................
Tuesday ................................................
Wednesday ..........................................
Thursday ..............................................
Friday ...................................................
...............................................................
11/16/2007 .........
11/17/2007 .........
11/18/2007 .........
11/19/2007 .........
11/20/2007 .........
11/21/2007 .........
11/22/2007 .........
11/23/2007 .........
11/24/2007 .........
11/25/2007 .........
11/26/2007 .........
11/27/2007 .........
11/28/2007 .........
11/29/2007 .........
11/30/2007 .........
Average .............
4. The monthly average is used to
calculate the annual average. For
example, Table B illustrates the
calculation of the NYMEX oil price for
2007. The calculation for the year-todate average consists of the monthly
averages so far in the year. The dollar
amount of the result is rounded to the
nearest tenth decimal point (i.e., cents).
We do not weight the average each
month by the number of days in that
month, again to avoid adding
superfluous complexity.
TABLE B.—EXAMPLE OF ANNUAL
AVERAGE PRICE CALCULATION
Average closing price
($/bbl)
Month
jlentini on PROD1PC65 with NOTICES
January .....................
February ....................
March ........................
April ...........................
May ...........................
June ..........................
July ............................
August .......................
September .................
VerDate Aug<31>2005
$54.70
59.52
60.78
64.21
63.61
67.43
74.13
72.40
79.11
19:06 May 30, 2008
Jkt 214001
Daily
closing price
($/bbl)
$95.10
95.10
95.10
94.64
98.03
97.29
97.29
98.18
98.18
98.18
97.70
94.42
90.62
91.01
88.71
95.19
TABLE B.—EXAMPLE OF ANNUAL AV- official MMS determination is made,
ERAGE PRICE CALCULATION—Con- any subsequent revisions in the
underlying source of the inflation
tinued
Average closing price
($/bbl)
Month
October .....................
November ..................
December ..................
Average .....................
85.83
95.19
91.75
72.39
Methodology for Calculation of the
Applicable Oil and Natural Gas Price
Thresholds
1. The price thresholds are estimates
until they are locked-in for a calendar
year based on the most current inflation
data available after the close of the year.
In conjunction with the calculation of
the annual market prices for oil and gas
above, once the price thresholds are
locked in, MMS makes an official
determination regarding whether these
market prices have exceeded the
applicable price thresholds for the
calendar year for a given vintage of lease
and royalty relief program. After this
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
figures will not affect the locked-in
price thresholds or the determination of
eligibility for royalty relief for that
calendar year.
2. The source for inflation data is the
Department of Commerce, Bureau of
Economic Analysis (BEA) https://
www.bea.gov: The U.S. Economic
Accounts—Gross Domestic Product
(GDP), National Income and Products
Account (NIPA) Table 1.1.9. The 4th
quarter implicit price deflator is not
available from BEA until late March of
the subsequent calendar year.
3. The implicit price deflator for GDP
is used to calculate the applicable
annual inflation rate, as illustrated in
Table C. The deflator from the
applicable year is divided by the
deflator from the previous year and
subtracted by one. For example, the
inflation rate used to set the 2007 price
threshold is calculated as
{(119.66 / 116.57)¥1 = 2.7%}.
E:\FR\FM\02JNN1.SGM
02JNN1
31504
Federal Register / Vol. 73, No. 106 / Monday, June 2, 2008 / Notices
TABLE C.—INFLATION RATES (CURRENT AND LOCKED-IN)
[Derived from BEA Data]
Implicit price
deflator for GDP
(base = 1996)
Calendar year
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
.........................................................................................
jlentini on PROD1PC65 with NOTICES
4. Because price thresholds are fixed
for previous years, the current inflation
rate displayed in Table C above may not
correspond precisely to the rate actually
employed to calculate previous price
thresholds. For example, the GDP
deflator posted on the BEA Web site in
March 2008 shows an inflation rate for
2004 of 2.9 percent. However, back in
March 2005, when the 2004 price
threshold was locked-in, the BEA Web
site showed an inflation rate of 2.1
percent, resulting in a change for the
deepwater oil price threshold for most
leases, as shown in the first column of
the Deepwater Table on the Web site,
from $32.81/bbl in 2003 to $33.50/bbl in
2004. Note that the figures that were
shown on the BEA Web site in March
of each year would be consistent with
the adjustments made in the price
thresholds from year to year. Rounding
explains any remaining small
differences between calculated lockedin inflation rates and those rates
depicted on the MMS Web site.
Therefore, to replicate the calculation
for previous price thresholds, use the
locked-in inflation rate. To replicate the
calculation for the estimated price
threshold, prior to March of the
subsequent year, use the current
inflation rate.
Additional Information and Notes
About the Web Site
1. Beginning in the second quarter of
each year, the MMS will estimate the
average market price at which oil or gas
would have to sell during the remainder
of the calendar year for the estimated
price threshold to be exceeded for that
year. If that estimated market price is
shown in the table as a zero, the average
price at which oil or gas would have to
be sold during the rest of the calendar
year as of that time is guaranteed to
VerDate Aug<31>2005
19:06 May 30, 2008
Jkt 214001
Implicit price
deflator for GDP
(base = 2000)
$96.01
98.10
100.00
101.95
103.20
104.65
107.04
..............................
..............................
..............................
..............................
..............................
..............................
..............................
$100.00
102.40
104.19
106.40
109.46
113.00
116.57
119.66
exceed the estimated price threshold for
the calendar year.
2. The yellow highlight shown for
selected actual annual market prices
indicates years in which at least some
leases were not eligible for royalty relief
because actual prices exceeded the
applicable price thresholds set for those
leases. The coral highlight indicates
years in which no leases were eligible
for royalty relief because actual prices
exceed all applicable price thresholds.
For example, in calendar year 2007, the
actual average price of natural gas of
$7.12 (per mmbtu) exceeded the shallow
water, deep natural gas price threshold
levels of $4.08 for leases issued in Sale
178 (2001), and $5.83 for leases issued
in all other Gulf of Mexico Sales held
from 2001–2003 that did not exercise
the option to switch terms offered under
30 CFR 203.48, but did not exceed the
price threshold level of $10.15 for all
other leases with relief under 30 CFR
203.47.
3. Production generated royalty-free
under the deep gas program counts
against the remaining royalty
suspension volume, with one exception.
That exception involves production
from March 1, 2004, through May 2,
2004, from deep wells that qualified for
royalty suspension under 30 CFR 203.40
through 203.48 (see 69 FR 24055).
4. Regulations pertaining to price
thresholds include 30 CFR 203.47,
203.54, 203.78, 260.110, and 260.122.
Dated: April 21, 2008.
Chris C. Oynes,
Associate Director for Offshore Minerals
Management.
[FR Doc. E8–12225 Filed 5–30–08; 8:45 am]
BILLING CODE 4310–MR–P
PO 00000
Frm 00080
Fmt 4703
Sfmt 4703
Current
annual
inflation rate
Locked-in annual
inflation rate
2.2
1.2
2.1
2.9
3.2
3.2
2.7
2.2
1.2
1.7
2.1
2.8
2.9
2.7
INTERNATIONAL TRADE
COMMISSION
[Investigation No. 731–TA–1013 (Review)]
Saccharin From China
United States International
Trade Commission.
AGENCY:
Institution of a five-year review
concerning the antidumping duty order
on saccharin from China.
ACTION:
SUMMARY: The Commission hereby gives
notice that it has instituted a review
pursuant to section 751(c) of the Tariff
Act of 1930 (19 U.S.C. 1675(c)) (the Act)
to determine whether revocation of the
antidumping duty order on saccharin
from China would be likely to lead to
continuation or recurrence of material
injury. Pursuant to section 751(c)(2) of
the Act, interested parties are requested
to respond to this notice by submitting
the information specified below to the
Commission; 1 to be assured of
consideration, the deadline for
responses is July 22, 2008. Comments
on the adequacy of responses may be
filed with the Commission by August
15, 2008. For further information
concerning the conduct of this review
and rules of general application, consult
the Commission’s Rules of Practice and
Procedure, part 201, subparts A through
E (19 CFR part 201), and part 207,
1 No response to this request for information is
required if a currently valid Office of Management
and Budget (OMB) number is not displayed; the
OMB number is 3117–0016/USITC No. 08–5–183,
expiration date June 30, 2008. Public reporting
burden for the request is estimated to average 15
hours per response. Please send comments
regarding the accuracy of this burden estimate to
the Office of Investigations, U.S. International Trade
Commission, 500 E Street, SW., Washington, DC
20436.
E:\FR\FM\02JNN1.SGM
02JNN1
]]>Agencies
[Federal Register Volume 73, Number 106 (Monday, June 2, 2008)]
[Notices]
[Pages 31502-31504]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-12225]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Minerals Management Service
Notice of the Annual Price Threshold Determination
AGENCY: Minerals Management Service (MMS), Interior.
ACTION: Notice of annual price threshold determination and annual
average oil and gas market price calculations, along with their effects
for the Gulf of Mexico royalty relief programs.
-----------------------------------------------------------------------
SUMMARY: This notice provides the official MMS documentation of which
Gulf of Mexico price thresholds have been exceeded by annual market
prices for oil or gas, by lease vintage, for calendar year 2007. This
notice also explains in detail how MMS calculates the annual oil and
gas prices and applicable price thresholds used to determine whether
royalty relief applies in calendar year 2007 for our various deepwater
and deep depth royalty relief programs.
FOR FURTHER INFORMATION CONTACT: Marshall Rose, Chief, Economics
Division at (703) 787-1536.
SUPPLEMENTARY INFORMATION: By various laws (Outer Continental Shelf
Lands Act, Deep Water Royalty Relief Act, Energy Policy Act) and
regulations (30 CFR 203.47, 203.54, 203.78, 260.110, and 260.122), MMS
has authority to impose price thresholds for royalty relief. As
prescribed in applicable regulations or lease terms, notwithstanding
any provisions for royalty relief, companies are required to pay
royalties for those calendar years when annual average New York
Mercantile Exchange (NYMEX) market prices for oil or gas exceed the
adjusted price thresholds levels. As a courtesy, MMS tracks,
calculates, and posts on its Web site a variety of relevant information
about applicable oil and gas prices and the price threshold levels to
be used in determining whether a particular lease continues to be
eligible for deep gas, deep water, or other royalty relief. The
information contained in this published notice was previously posted on
the MMS Web site.
The following table represents the official MMS price threshold and
market price calculation determinations made for calendar year 2007.
Any subsequent inflation adjustments or market price adjustments will
not affect these official results or their implication for royalty
relief on the designated categories of leases.
Applicable Price Thresholds and Market Prices for Calendar Year 2007
----------------------------------------------------------------------------------------------------------------
Annual
average Adjusted price
Product Lease vintage (sale NYMEX price threshold level ($/ Royalty relief
held in) ($/bbl or $/ bbl or $/mmbtu) suspended
mmbtu)
----------------------------------------------------------------------------------------------------------------
Deepwater oil.................... Before 1996; 1996- $72.39 $36.39.............. Yes
1997\1\; 2000\1\;
2002-3/2004; 2007.
Deepwater oil.................... 2001................ 72.39 32.64............... Yes
Deepwater oil.................... 8/2004-2006......... 72.39 42.37............... Yes
Deepwater gas.................... Before 1996; 1996- 7.12 4.55................ Yes
1997\1\; 2000\1\;
2002-3/2004; 2007.
Deepwater gas.................... 2001................ 7.12 4.08................ Yes
Deepwater gas.................... 8/2004-2006......... 7.12 7.06................ Yes
Deep gas......................... 3/2001.............. 7.12 4.08................ Yes
Deep gas......................... 8/2001-2003......... 7.12 5.83................ Yes
Deep gas (0-200 meters).......... Before 2001, 2004- 7.12 10.15............... No
2007; Reg 30 CFR
203.47.
Deep gas (200-400 meters) and All years........... 7.1 TBD\2\..............
Ultra-Deep gas (0-400 meters).
----------------------------------------------------------------------------------------------------------------
bbl = barrel, mmbtu = million British Thermal Units.
\1\ Leases issued in Deepwater during the years 1996-1997 and 2000 may be affected by the outcome of pending
litigation on price thresholds imposed at that time. The MMS has sent correspondence to the affected lessees
addressing the impact of the litigation during the interim.
\2\ The Energy Policy Act of 2005 mandated additional royalty relief for deep gas in shallow water in the Gulf
of Mexico. The MMS published a proposed rule on May 18, 2007 (72 FR 28396), to implement this new relief,
including a gas price threshold. The level of that price threshold and how it applies will be set in the final
rule for ultra-deep wells spud after the date of the proposed rule.
Technical Documentation
The data and methodology used for making the 2007 calculations and
determinations are discussed below. This same information for all years
since 1996 is available at the Economics Division Web site https://
www.mms.gov/econ/DWRRAPrice1.htm. Additional information and notes
about understanding this web site are included at the end of this
notice.
Methodology for Calculation of the Actual Annual Average NYMEX Nearby
Delivery Price
1. We use the price for the nearby delivery month or front month.
That is, the price for the first contract or earliest month that you
can get the delivery/inventory for buying and selling today's product.
For example, on October 1, 2007, the nearby delivery month was November
2007. There are prices for other delivery months that can be bought and
sold on October 1, 2007, such as December 2007, January 2008, etc., but
the ``nearby delivery month''
[[Page 31503]]
would be November 2007. However, the nearby delivery month is not
always the next month because the last trading day of the month differs
for oil and gas futures. For example, on March 27, 2008, the nearby
delivery month for light sweet crude oil is May 2008 while for natural
gas it is still April 2008.
2. The daily NYMEX closing price is listed as the settle price at
the end of business trading hours for each commodity. These are listed
at https://www.nymex.com and also summarized at https://www.oilnergy.com.
3. The daily closing average is used to calculate the monthly
average. For holidays and weekends, we use the previous business day's
closing average. For example, Table A illustrates the calculation of
the average NYMEX oil price for the month of November 2007 (Note--this
methodology is different from the Minerals Revenue Management's Royalty
In-Kind Program that excludes weekends and holidays). Our analysis
indicates that inclusion or exclusion of weekends and holidays does not
bias the annual average price calculation in either direction. We chose
to include the weekends and holidays, as highlighted in Table A, to
avoid the necessity to keep track of actual trading days each month all
year, and because our source summarizes the monthly price data with the
inclusion.
Table A.--Example of Monthly Average Price Calculation
----------------------------------------------------------------------------------------------------------------
Daily Daily
closing closing
Day Date price ($/ Day Date price ($/
bbl) bbl)
----------------------------------------------------------------------------------------------------------------
Thursday........................ 11/1/2007 $93.49 Friday............. 11/16/2007........ $95.10
Friday.......................... 11/2/2007 95.93 Saturday........... 11/17/2007........ 95.10
Saturday........................ 11/3/2007 95.93 Sunday............. 11/18/2007........ 95.10
Sunday.......................... 11/4/2007 95.93 Monday............. 11/19/2007........ 94.64
Monday.......................... 11/5/2007 93.98 Tuesday............ 11/20/2007........ 98.03
Tuesday......................... 11/6/2007 96.70 Wednesday.......... 11/21/2007........ 97.29
Wednesday....................... 11/7/2007 96.37 Thursday (Holiday). 11/22/2007........ 97.29
Thursday........................ 11/8/2007 95.46 Friday............. 11/23/2007........ 98.18
Friday.......................... 11/9/2007 96.32 Saturday........... 11/24/2007........ 98.18
Saturday........................ 11/10/2007 96.32 Sunday............. 11/25/2007........ 98.18
Sunday.......................... 11/11/2007 96.32 Monday............. 11/26/2007........ 97.70
Monday.......................... 11/12/2007 94.62 Tuesday............ 11/27/2007........ 94.42
Tuesday......................... 11/13/2007 91.17 Wednesday.......... 11/28/2007........ 90.62
Wednesday....................... 11/14/2007 94.09 Thursday........... 11/29/2007........ 91.01
Thursday........................ 11/15/2007 93.43 Friday............. 11/30/2007........ 88.71
........... ........... ................... Average........... 95.19
----------------------------------------------------------------------------------------------------------------
4. The monthly average is used to calculate the annual average. For
example, Table B illustrates the calculation of the NYMEX oil price for
2007. The calculation for the year-to-date average consists of the
monthly averages so far in the year. The dollar amount of the result is
rounded to the nearest tenth decimal point (i.e., cents). We do not
weight the average each month by the number of days in that month,
again to avoid adding superfluous complexity.
Table B.--Example of Annual Average Price Calculation
------------------------------------------------------------------------
Average closing price ($/
Month bbl)
------------------------------------------------------------------------
January................................... $54.70
February.................................. 59.52
March..................................... 60.78
April..................................... 64.21
May....................................... 63.61
June...................................... 67.43
July...................................... 74.13
August.................................... 72.40
September................................. 79.11
October................................... 85.83
November.................................. 95.19
December.................................. 91.75
Average................................... 72.39
------------------------------------------------------------------------
Methodology for Calculation of the Applicable Oil and Natural Gas Price
Thresholds
1. The price thresholds are estimates until they are locked-in for
a calendar year based on the most current inflation data available
after the close of the year. In conjunction with the calculation of the
annual market prices for oil and gas above, once the price thresholds
are locked in, MMS makes an official determination regarding whether
these market prices have exceeded the applicable price thresholds for
the calendar year for a given vintage of lease and royalty relief
program. After this official MMS determination is made, any subsequent
revisions in the underlying source of the inflation figures will not
affect the locked-in price thresholds or the determination of
eligibility for royalty relief for that calendar year.
2. The source for inflation data is the Department of Commerce,
Bureau of Economic Analysis (BEA) https://www.bea.gov: The U.S. Economic
Accounts--Gross Domestic Product (GDP), National Income and Products
Account (NIPA) Table 1.1.9. The 4th quarter implicit price deflator is
not available from BEA until late March of the subsequent calendar
year.
3. The implicit price deflator for GDP is used to calculate the
applicable annual inflation rate, as illustrated in Table C. The
deflator from the applicable year is divided by the deflator from the
previous year and subtracted by one. For example, the inflation rate
used to set the 2007 price threshold is calculated as {(119.66 /
116.57)-1 = 2.7%{time} .
[[Page 31504]]
Table C.--Inflation Rates (Current and Locked-In)
[Derived from BEA Data]
----------------------------------------------------------------------------------------------------------------
Implicit price Implicit price
Calendar year deflator for GDP deflator for GDP Current annual Locked-in annual
(base = 1996) (base = 2000) inflation rate inflation rate
----------------------------------------------------------------------------------------------------------------
1994................................ $96.01
1995................................ 98.10
1996................................ 100.00
1997................................ 101.95
1998................................ 103.20
1999................................ 104.65
2000................................ 107.04 $100.00
2001................................ ................. 102.40 2.2 2.2
2002................................ ................. 104.19 1.2 1.2
2003................................ ................. 106.40 2.1 1.7
2004................................ ................. 109.46 2.9 2.1
2005................................ ................. 113.00 3.2 2.8
2006................................ ................. 116.57 3.2 2.9
2007................................ ................. 119.66 2.7 2.7
----------------------------------------------------------------------------------------------------------------
4. Because price thresholds are fixed for previous years, the
current inflation rate displayed in Table C above may not correspond
precisely to the rate actually employed to calculate previous price
thresholds. For example, the GDP deflator posted on the BEA Web site in
March 2008 shows an inflation rate for 2004 of 2.9 percent. However,
back in March 2005, when the 2004 price threshold was locked-in, the
BEA Web site showed an inflation rate of 2.1 percent, resulting in a
change for the deepwater oil price threshold for most leases, as shown
in the first column of the Deepwater Table on the Web site, from
$32.81/bbl in 2003 to $33.50/bbl in 2004. Note that the figures that
were shown on the BEA Web site in March of each year would be
consistent with the adjustments made in the price thresholds from year
to year. Rounding explains any remaining small differences between
calculated locked-in inflation rates and those rates depicted on the
MMS Web site. Therefore, to replicate the calculation for previous
price thresholds, use the locked-in inflation rate. To replicate the
calculation for the estimated price threshold, prior to March of the
subsequent year, use the current inflation rate.
Additional Information and Notes About the Web Site
1. Beginning in the second quarter of each year, the MMS will
estimate the average market price at which oil or gas would have to
sell during the remainder of the calendar year for the estimated price
threshold to be exceeded for that year. If that estimated market price
is shown in the table as a zero, the average price at which oil or gas
would have to be sold during the rest of the calendar year as of that
time is guaranteed to exceed the estimated price threshold for the
calendar year.
2. The yellow highlight shown for selected actual annual market
prices indicates years in which at least some leases were not eligible
for royalty relief because actual prices exceeded the applicable price
thresholds set for those leases. The coral highlight indicates years in
which no leases were eligible for royalty relief because actual prices
exceed all applicable price thresholds. For example, in calendar year
2007, the actual average price of natural gas of $7.12 (per mmbtu)
exceeded the shallow water, deep natural gas price threshold levels of
$4.08 for leases issued in Sale 178 (2001), and $5.83 for leases issued
in all other Gulf of Mexico Sales held from 2001-2003 that did not
exercise the option to switch terms offered under 30 CFR 203.48, but
did not exceed the price threshold level of $10.15 for all other leases
with relief under 30 CFR 203.47.
3. Production generated royalty-free under the deep gas program
counts against the remaining royalty suspension volume, with one
exception. That exception involves production from March 1, 2004,
through May 2, 2004, from deep wells that qualified for royalty
suspension under 30 CFR 203.40 through 203.48 (see 69 FR 24055).
4. Regulations pertaining to price thresholds include 30 CFR
203.47, 203.54, 203.78, 260.110, and 260.122.
Dated: April 21, 2008.
Chris C. Oynes,
Associate Director for Offshore Minerals Management.
[FR Doc. E8-12225 Filed 5-30-08; 8:45 am]
BILLING CODE 4310-MR-P
