Alaska Administrative Code
Title 11 - Natural Resources
Part 3 - Oil and Gas
Chapter 25 - Royalty Election Under Alaska Gasline Inducement Act
11 AAC 25.070 - Allocation of gas and costs upstream of the Alaska mainline

(a) Unless otherwise provided in this chapter, a lessee calculating the monthly value of the state's royalty share of qualified gas under this chapter shall allocate gas and costs upstream of the inlet to the Alaska mainline as provided in this section.

(b) Qualified gas must be allocated to each North Slope lease producing royalty-bearing gas that has pipeline transportation access to the Alaska mainline. Qualified gas and nonqualified gas must be allocated among leases held by a lessee on the basis of a percentage for each lease represented by a ratio, the numerator of which is the lessee's quantity of royalty-bearing gas produced from a North Slope lease with pipeline transportation access to the Alaska mainline and the denominator of which is the lessee's quantity of royalty-bearing gas produced from all North Slope leases with pipeline transportation access to the Alaska mainline. For purposes of this subsection, quantities must be measured in MMBtus.

(c) Unless prohibited under (d) of this section or 11 AAC 25.160 - 11 AAC 25.220, a lessee may deduct costs of pipeline transportation allowed under this chapter for a pipeline upstream of the inlet to the Alaska mainline. The deduction will be allowed for pipeline transportation from the boundary of the unit of production to a gas treatment plant located outside the unit of production, or, if the lease of production is not within a unit, the lessee may deduct the costs of pipeline transportation from the boundary of the lease of production to a gas treatment plant located off the lease of production.

(d) If carbon dioxide exceeding the percentage of carbon dioxide allowed into the Alaska mainline is transported in a pipeline upstream of the Alaska mainline, the lessee shall allocate transportation costs between the excess carbon dioxide and all other gas based on their relative volumes. A deduction may not be taken in calculating the monthly value of the state's royalty share of qualified gas for costs allocated to excess carbon dioxide under this subsection.

(e) Except for a cost that may be deducted under 11 AAC 25.060(a) (4) or (5), a lessee in calculating royalty on qualified gas under this chapter may not deduct a cost of the lease or unit of production, a cost to meet the specifications for acceptance into the Alaska mainline, or a cost of putting gas and associated substances in marketable condition, including the cost of a gas treatment plant upstream of the inlet to the Alaska mainline.